Mediation’s star continues to rise

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Mediation’s star continues to rise

Mediation’s star continues to rise

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August 21, 2024

Work to embed mediation in the dispute resolution (DR) process is picking up pace:

The Civil Mediation Council is setting up a new board to advise and develop standards for mediation, trainers and organisations within its remit.
The Damages Claims and Online Civil Money Claims services are enabling swifter claims processing. The latter includes an opt-out provision for mediation with mandatory mediation planned.
The Small Claims Track Automatic Referral to Mediation Pilot Scheme under Practice Direction 51ZE is a two-year pilot integrating mediation as a required, free step in most small claims money disputes valued at £10,000 filed after 22 May 2024. Designed to encourage quicker, more consensual resolution, this service aims to schedule a telephone mediation session (with no requirement to settle) within 28 days of referral.
The Civil Procedure Rules Committee is reviewing proposed rule changes arising from Churchill v. Merthyr Tydfil¹ in which the Court of Appeal (CA) held that courts can lawfully stay proceedings for, or order parties to engage in, ADR (with some provisos – see paragraph 74(ii) of the judgment). Changes proposed include inserting ADR in some form in the Overriding Objective and a change to CPR 3.1 enabling courts to order parties to participate in ADR. (*See the update below.)

Meanwhile, the judiciary continues to promote mediation and sanction parties who refuse to engage unreasonably. Take, for example, the CA decision in Northamber PLC v. Genee World Limited and others [2024] EWCA Civ 428. Disregarding the complex facts and diverse legal issues, the claimant appealed the cost order of the first instance judge (judge) based on the second and third defendants’ failure to respond to the claimant’s mediation offer.

The judge had issued a case management order (CMO) ordering the parties to consider settling the litigation by ADR and to serve a witness statement with reasons if they refused to engage. Eight months before trial, the claimant offered mediation to the defendants, reminding them of the CMO and the consequences of refusal. The third defendant acknowledged receipt but did not further follow up; the second did not reply. Neither served the CMO-required witness statement.

The judge, however, refused to sanction these failures to respond, reasoning that: (i) he had no evidence of the claimant chasing a reply; and (ii) the offer came late (when considerable costs had already been incurred) and was “half-hearted”.

The claimant appealed arguing that the judge should have given a costs sanction and that the judge’s reasoning was flawed relying on: (i) Halsey (2004)² (unreasonable refusal constitutes a form of unreasonable litigation conduct which could be sanctioned); (ii) PGF II SA (2013)³ (silence following a mediation offer is generally itself unreasonable); and (iii) the CMO explicitly required reasons which were not given.

The CA agreed, explaining that: (i) the breach of the CMO compounded matters; (ii) the late offer was a relevant factor when considering costs; (iii) the claimant was entitled to assume a chaser would not receive a positive response; (iv) it was wrong to castigate the offer as half-hearted; and (v) the defendants’ conduct was a relevant factor in considering costs − not a trigger for automatic imposition of a costs penalty.³ In the event, the second defendant’s failure to respond cost it an extra 5% in costs liability.

This CA approach is neither revolutionary nor a revelation. It is, however, reassuring for ADR advocates to see continued, robust judicial support of mediation.

This article was first published in Construction Law on 1 July 2024. Since then, The Civil Procedure (Amendment No.3) Rules 2024 have been laid before Parliament and the changes to reflect the Churchill decision will come into effect from 1 October 2024. In particular, amendments are made to CPR 1.4 under which, "the court must further the overriding objective by actively managing cases …" where "active management" includes … "(e) ordering or encouraging the parties to use, and facilitating the use of, alternative dispute resolution".