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Summary ULAW LPC, Dispute Resolution Chapter Readings
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DR – WS1 Pre Action Steps TIFF LIAOChapter 14.3.3.6 Conduct and ADR Page 283
14.3.3.6 Conduct and ADR
- Parties MUST seriously consider ADR proposals made by the other side.
CASES
Dunnett v Railtrack plc (in Railway Administration) [2002] EWCA Civ 303, [2002] 2 All ER 850,
the Court of Appeal deprived the successful party of its costs because it unreasonably refused to mediate before the
appeal was heard.
The Court of Appeal in Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576, [2004] 4
All ER 920, laid down guidelines in this area. It held that there is no presumption in favour of mediation. The question
whether a party has acted unreasonably in refusing ADR must be determined having regard to all the circumstances of the
particular case, including:
(i) the nature of the dispute;
(ii) the merits of the case;
(iii) the extent to which other settlement methods have been attempted;
(iv) whether the costs of the ADR would be disproportionately high;
(v) whether any delay in setting up and attending the ADR would have been prejudicial; and
(vi) whether the ADR had a reasonable prospect of success.
Northrop Grumman Missions Systems Europe Limited v BAE Systems (Al Diriyah C41) Ltd [2014] EWHC 3148 (TCC),
the successful party, who had rejected an offer to mediate but who had made a without prejudice offer to settle, was NOT
held to have acted unreasonably.
NOT ALWAYS easy to decide when mediation should occur recognised in Nigel Witham Ltd v Smith [2008] EWHC 12.
The court accepted that a premature mediation simply wastes time. It can also sometimes lead to a hardening of positions
on both sides, which makes any subsequent attempt at settlement doomed to fail. Conversely, a delay in any mediation until
after full particulars and documents have been exchanged can mean that the costs incurred become the principal obstacle to
a successful mediation. SOLUTION: is to identify the point when the detail of the claim and the response are known to
both sides, but BEFORE the costs that are incurred in reaching that stage become so great that a settlement is no longer
possible.
Note that in an exceptional case where mediation occurs very late and its chances of success are very poor, if the successful
party in the litigation unreasonably delayed in consenting to the mediation then this may lead to an adverse costs order.
.
A party who agrees to mediation but then causes the mediation to FAIL by taking an unreasonable position sis to be treated
the same as a party who unreasonably refuses to mediate
held in Jack J in Earl of Malmesbury v Strutt & Parker [2008] EWHC 424.
The increasing importance the court attaches to the consideration of ADR is evidenced by the standard directions that
require a party who REJECTS a proposal for ADR to file a witness statement detailing that party’s reasons for rejecting the
proposal (see Appendix B(7)).
That witness statement will be available to the trial judge when the issue of costs is considered.
In DSN v Blackpool Football Club Ltd [2020] EWHC 670 (QB), the successful claimant argued that the defendant should pay its
costs on an indemnity basis because it had failed to engage in settlement discussions. Pursuant to the case management
directions, the defendant filed a statement indicating that it had refused to engage in ADR because, after considering all of
the evidence in the case, it continued to believe that it had ‘a strong defence to this claim and stands by the content of its
defence’. The defendant also rejected the claimant’s various Part 36 offers. The judge found that the reasons given by the
defendant for refusing to engage with ADR were inadequate and that ‘no defence, however strong, by itself justifies a failure
to engage in any kind of alternative dispute resolution’. Although the judge refused to make an indemnity order for the
whole of the proceedings, he ordered that the defendant pay the claimant’s costs on an indemnity basis from one month
after the date of the master’s case management order.
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TIFF LIAO
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