Lead Forensics
Prettys Solicitors Ipswich



Silence in the face of an offer to mediate

May 2017 - Issue 93

Thakkar & Anr v Patel & Anr [2017] EWCA Civ 117 was an appeal against a costs order, with one of the principal issues being the consequence of failure to mediate.

The claim in question was a dilapidations claim for £210,000 which was met by a counterclaim of just over £40,000. In their allocations questionnaire, both parties requested a stay for ADR (alternative dispute resolution). In the Court of Appeal, LJ Jackson noted that there seemed to have been a desire to settle on both sides. Both parties initially, at least, expressed a willingness to mediate and the claimants were proactive in making arrangements for a mediation. This was contrasted with the conduct of the defendants who were “slow to respond to letters and raised all sorts of difficulties”. Eventually, the claimants decided that no progress was possible and explained why in a letter as follows:

“Our clients have made all reasonable attempts to arrange a mediation but have been thwarted by your clients’ conduct…..Understandably, our clients no longer have any confidence that a mediation can be arranged given your clients’ conduct and do not feel that it is reasonable that they should continue to have to amend their travel plans and work commitments…..when the likelihood is that further ‘circumstances’ will arise that will lead to the postponement of any future date.”

The ADR stay was lifted and the trial took place. The claimants were awarded £45,000 and the defendants £17,000, leaving a balance owing to the claimants of £28,000.

On the question of costs the trial Judge described the defendant as having been “relatively unenthusiastic or lacking in the preparedness to be flexible” but noted that it was the claimants who had actually closed down the ADR. He concluded that there were real prospects of settlement had mediation taken place. The Judge ordered the defendant to pay 75% of the claimants’ costs of the claim and the claimants to pay the defendants’ costs of the counterclaim. The defendants appealed.

LJ Jackson agreed with the trial Judge that if there had been a mediation there would have been a real chance of settling. The costs of litigation were vastly greater than the sums in issue. The Judge at first instance had said that:

“Any mediator…would have pointed out (a) the small gap between their respective positions, and (b) the huge future costs of the litigation. In those circumstances I would be astonished if a skilled mediator failed to bring the parties to a sensible settlement.”

LJ Jackson referred to PGF II SA v OMFS Company where the Court of Appeal held that silence in the face of an offer to mediate was, as a general rule, unreasonable conduct meriting costs sanctions. Here, the prospects of a successful mediation were good. The defendants did not refuse to mediate, but “dragged their feet and delayed until eventually the claimant lost confidence in the whole ADR process”. It was against that background that the trial Judge ordered the defendants to pay to the claimants 75% of the costs of the claim whilst recovering their costs of the counterclaim. LJ Jackson made the following comment:

“The message that the court sends out in this case is that where bilateral negotiations fail but mediation is obviously appropriate, it behoves both parties to get on with it. If one party frustrates the process by delaying and dragging its feet for no good reason, that will merit a costs sanction. In the present case, the costs sanction was severe, but not so severe that this court should intervene.”

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