One of the outcomes of litigations which has become increasingly difficult to predict is the nature of the costs order that might be made by the judge following a trial but there is little doubt that this will be heavily influenced by the attitude to mediation shown by each of the parties.
The point is illustrated by a case recently brought to my attention in an article by mediator Philip Hesketh and I rely upon his summary of the facts of the case.
It appears that, from the outset, the claimant had offered to engage in mediation or some other form of ADR. The defendant had repeatedly refused to mediate offering, at various different stages, the following reasons.
- They were not prepared to mediate at that pre-litigation stage of the case;
- The parties were too far apart;
- They were “extremely confident” of their prospects of success.
The court apparently made the usual orders at the CMC which included an order in the following terms
“… the court considers the overriding objective would be served by the parties seeking to resolve the claim by mediation. The parties will, no less than 21 days before trial, file in a sealed envelope a witness statement which explains why a party refused to attend mediation”.
The claimant had initially offered to settle for £170,000 and then later made a Part 36 Offer to settle for £10,000 plus costs. The defendants counter-offered on the basis that the claimant should discontinue and pay the defendant three quarters of the defendant’s costs.
The matter went to trial and judgement was reserved. However, before the judgement was delivered the defendant accepted the claimant’s Part 36 Offer. Under the court rules that would normally lead to a position in which the defendant would be required to pay the claimant’s costs assessed on a standard basis. However, the claimant asked the court to award them indemnity costs (a more favourable basis for recovering costs from the defendant) and the court apparently did so saying that the defendant had “unreasonably” refused to mediate.
Comment
Although this case will not necessarily be binding on other judges, it is an example of the exercise of the wide discretion that the trial judge has in making an order for costs. That is where the unpredictability arises. Orders for the payment of costs of this nature, which fall within the reasonable discretion of the judge, are notoriously difficult to appeal.
There is little doubt that the history of the parties’ approach to mediation will be reviewed in detail by the judge when considering any order for costs. This was a case in which no mediation had taken place. In those circumstances, the party refusing to mediate (for whatever reason) will face an uphill struggle to obtain a favourable costs order unless the outcome of the litigation falls entirely in their favour.