The short answer to this question is, in most cases, no. But as always with this topic, the position is not straightforward. There continue to be different views about the extent to which the courts can, and should, push litigants towards mediation and other forms of ADR. Lord Neuberger and Lord Phillips, both former presidents of our Supreme Court, are among those calling for more emphasis on mediation and conciliation in commercial disputes in order to avoid a deluge of litigation in the wake of the pandemic.
In this article we look at the circumstances in which a party can reasonably refuse to mediate and review the message coming from the courts in recent months. We also offer practical guidance about remote mediation in a world of mandatory social distancing.
When can you refuse to mediate without fear of sanctions?
The clearest endorsement of a refusal to mediate was given by the Court of Appeal in Swain-Mason v Mills & Reeve LLP (2012). The court found that the successful defendant, Mills & Reeve, had been entitled to refuse to mediate throughout a long professional negligence dispute. The firm had been correct in its assessment of the strength of the claimants’ case on breach of duty, the parties had at all times been “100 miles apart”, nothing had happened during the case to cause it to re-evaluate its case on liability, and as a professional defendant the firm had been entitled to vindicate its reputation at trial.
Swain-Mason tends not to be cited in more recent cases and it’s not clear that the same conclusion would be reached now. It was followed, however, in Parker Lloyd Capital Ltd v Edwardian Group Ltd (2017) where the judge found that the successful defendant reasonably believed the claimant's case was hopeless and that the claimant had proposed mediation as a tactic designed to extract a nuisance payment. It was material that, as in Swain-Mason, the issue in the case - whether a contract existed - had been binary. The claimant’s witness was also held to have had lied.
It is worth noting here that the binary argument had previously been given short shrift in Garritt-Critchley v Ronnan (2014) where the judge said the point was misconceived. The judge, referring to the seminal decision in Halsey v Milton Keynes General NHS Trust (2003), said that the only cases by nature unsuitable for mediation are those where a party needs to resolve a point of law, obtain a binding precedent or injunctive or similar relief. He didn’t mention Swain-Mason.
Looking at this issue from the perspective of a successful claimant, the Court of Appeal in Gore v Naheed (2017) upheld a judge’s refusal to sanction the successful claimant’s failure to mediate. The claimant’s solicitor thought that mediation had no realistic prospect of success and would only add to the costs. The judge accepted this as a valid excuse and also said the case “raised quite complex questions of law which made it unsuitable for mediation”. As in Swain-Mason and Parker Lloyd, the court’s sympathy clearly lay with the successful party whose belief in the strength of their case proved to be justified.
Is there a trend in recent cases?
The cases referred to above seem to be increasingly out of line with the mood of the time. The comments in Garritt-Critchley to the effect that parties should mediate even where they believe they have a watertight case on a binary issue, such as breach of professional duty or the existence of a contract, are more in keeping with current judicial attitudes to allocation of court time and resources.
In two sex abuse injury cases this year raising limitation and vicarious liability issues, the defendants were held to have unreasonably refused to engage in settlement discussions or mediation. The successful claimants who had beaten their Part 36 offers were awarded indemnity costs for a longer period than that prescribed by CPR 36.17.
In DSN v Blackpool Football Club Ltd the defendant failed to respond to three Part 36 offers (except to reject the final one) and refused to mediate because it believed it had a strong defence. A failure to respond to offers or an invitation to mediate in itself justifies a costs sanction (OMV Petrom SA v Glencore International AG and PGF II SA v OMFS Company Ltd). Unsurprisingly, the “strong defence” argument tends not to work where the claim succeeds.
The judge commented that no defence however strong by itself justifies a failure to engage in any kind of dispute resolution. A sum paid in settlement may compare favourably with the irrecoverable costs of an action. In addition to a saving in financial cost, a trial requires a significant expenditure of time, including management time, and it may take a heavy toll on witnesses.
In BXB v Watch Tower and Bible Tract Society of Pennsylvania the parties had been ordered to serve a witness statement giving reasons for a refusal to engage in ADR. The defendant had failed to do so. The fact that the claimant recovered much less than the sum claimed was no excuse. The defendant was ordered to pay indemnity costs from the date of its unreasoned refusal to engage with the invitation to attend a meeting.
Attitude to compulsory mediation
In 2019 the Court of Appeal gave what was to many a surprising ruling that early neutral evaluation (ENE) could be imposed on the parties even if one of them did not consent. It held in Lomax v Lomax that an ENE hearing is not an obstruction to parties' access to the courts but is part of the court process.
The judgment refers to the passage in Halsey that “to oblige truly unwilling parties to refer their disputes to mediation would be to impose an unacceptable obstruction on their right of access to the court … the court's role is to encourage, not to compel”.
The question of what Halsey determined and the extent to which it remains good law was raised in Wright v Michael Wright Supplies Ltd (2013). Ward LJ asked whether a stay for mediation to be attempted was really “an unacceptable obstruction” to the parties’ right of access to the court. The Court of Appeal in Lomax avoided having to decide this question by drawing a distinction between judge-led ENE and mediation. Moylan LJ concluded “I would only comment that the court's engagement with mediation has progressed significantly since Halsey was decided”.
Earlier this year the Vice Chancellor referred to Lomax in McParland & Partners Limited v Whitehead. He had mentioned to the parties that Lomax “inevitably raised the question of whether the court might also require parties to engage in mediation despite the decision in Halsey” but the point no longer arose because the parties had agreed to mediate.
The effect of the lockdown
These recent cases help us anticipate the court’s attitude to parties who use the lockdown as an excuse for failing to mediate. They indicate a strong lack of sympathy for litigants who press on to trial and refuse to engage in ADR. The pressures on the court administration and the shortage of judges in recent years have hardened attitudes against the “everyone is entitled to their day in court” approach to court litigation. As can be seen from the DSN case, the issue is not just about cost. There is equal concern about the need to share limited public resources fairly and to avoid pressures on court staff and witnesses.
This doesn’t mean that there won’t be good excuses for a refusal to mediate in the next few months (it will be harder to come up with a good excuse to refuse to take part in a joint settlement meeting). Some parties may be unable to participate in a mediation or there may be other good reasons why this is not the right time to mediate. But the fact alone that a mediation will have to be conducted remotely is not a good excuse.
We can see from Re Blackfriars Ltd, where the judge refused to grant an adjournment of a five week trial due to begin in June, that the courts are getting to grips with online trials which pose much greater challenges than mediations. The legislation and the guidance from the courts makes it clear that as many hearings as possible should be conducted remotely. Everyone is acutely conscious of the problems that will be created by a huge backlog of cases once the present crisis is past. Mediation is the obvious way to minimise this risk.
Practical tips for remote mediation
Fortunately there is plenty of help out there for solicitors and litigants needing to mediate remotely. Many mediators are offering online services via a suitable video conferencing platform. Many appear to be using Zoom Pro at the moment but any other system offering a waiting room function (allowing the mediator to admit participants held on individual lines) and virtual breakout rooms will be suitable. It is possible to mediate by phone or using a less sophisticated free and/or time limited video conferencing system but it will be harder work – if that is the only option, a joint settlement meeting might be a better choice at this point.
These are some keys to success:
- Choose the mediator carefully – ideally it should be someone you have worked with before who is also a really good communicator and unfazed by technology.
- Limit the number of those attending to essential participants.
- Consult sources of practical guidance in advance such as the detailed guide for mediators about online mediation from the Centre for Effective Dispute Resolution (CEDR) – there is also a client version.
- Prepare in more detail than usual, including advance discussions with your participants.
- Check that all participants have a laptop or tablet with a microphone and a camera and a strong secure internet connection.
- Ensure everyone has downloaded the relevant software and tested the connection beforehand.
- Work out a backup strategy in case there are technological problems for all or some participants
- As suggested in Re Blackfriars, it may work best for some participants to join from a single location while social distancing. We have found that if there are two solicitors acting for a party, it works well for them to sit at opposite ends of a large room in the office so they can confer easily.
- Agree how you will conclude a settlement eg by an exchange of emails and electronic signatures. Make sure to define who will be signing and what is meant by electronic signature: typing the name into the agreement, using a scanned copy of a handwritten signature or signing through an e-signing platform.