Belief in a strong defence does not justify refusal to mediate

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DSN v Blackpool FC Limited

In the latest in a long line of cases, DSN v Blackpool FC Limited [2020] EWHC 670 (QB) the court was asked to consider making an order that the Defendant should pay the Claimant’s costs on the indemnity basis upon the grounds that the Defendant had refused to mediate. The Defendant had adopted that position because it believed it had a strong case. The Defendant lost at trial and in giving judgment on the application for costs the judge expressed some strong views about the refusal to mediate

“The reasons given for refusing to engage in mediation were inadequate. They were, simply, and repeatedly, that the Defendant “continues to believe that it has a strong defence”. No defence, however strong, by itself justifies a failure to engage in any kind of alternative dispute resolution. Experience has shown that disputes may often be resolved in a way satisfactory to all parties, including parties who find themselves able to resolve claims against them which they consider not to be well founded. Settlement allows solutions which are potentially limitless in their ingenuity and flexibility, and they do not necessarily require any admission of liability, or even a payment of money. Even if they do involve payment of money, the amount may compare favourably (if the settlement is timely) with the irrecoverable costs, in money terms alone, of an action that has been successfully fought. The costs of an action will not always be limited to financial costs, however. A trial is likely to require a significant expenditure of time, including management time, and may take a heavy toll on witnesses even for successful parties which a settlement could spare them. As to admission of liability, a settlement can include admissions or statements which fall short of accepting legal liability, which may still be of value to the party bringing a claim.”

Outcome

The judge ordered the Defendant to pay the Claimant’s costs on the indemnity basis from a date which was one month after directions had been given which included a direction that the parties “at all stages” should “consider settling this litigation by any means of Alternative Dispute Resolution”. Although this was over 8 months after the Claimant's first Part 36 offer it was well before the trial costs had been incurred. The reason for the dispute over costs was clear – although the amount for which judgment was given was just over £20,000, the interim payment on account of costs was £200,000!