Mediation... can you afford not to?

01 March 2007



"The Court has given its stamp of approval to mediation and it is now the legal profession which must become fully aware of and acknowledge its value. The profession can no longer with impunity shrug aside reasonable requests to mediate … With court fees escalating it would be folly to do so" Ward LJ in Burchell v Bullard. 1

The Court of Appeal has decided: parties can no longer fight tooth and nail to a big bang trial and expect their costs to be awarded if they have unreasonably refused to try and settle the case along the way. The Courts can now impose costs penalties to discipline parties that have failed to consider mediation or other forms of dispute resolution before their case comes to trial. This means that, even if you are the winning party and you have won on every issue, you may be penalised with a costs award against you for failing to conduct your case in a way that promotes early settlement.

This particular case involved a claim by a builder, Mr Burchell, for a contractual payment and a counterclaim by the defendants for a roof that they said required dismantling and rebuilding. The final judgment in the case involved just £5,000 being paid by the defendants to the claimants. Together, both parties racked up costs in the region of £185,000. Accordingly, the court considered that this case would have been capable of settlement at mediation. The builder had proposed mediation from the outset; the defendants had unreasonably refused. The consequence of this unwise decision (admittedly on advice from their surveyor) was a hefty costs award against them.

In light of this forthright opinion from the Court of Appeal, parties who refuse mediation without a good reason can expect to be penalised even if they win their case. There are limited exceptions to this general principle, but it is an expensive gamble for litigants to take if the case does not fall within an exception. For guidance, a party should always seek legal advice on mediation and alternative dispute resolution at the earliest stage of a dispute.

Our litigation and dispute resolution practice group has two CEDR qualified mediators (Nick Hallchurch and David Pritchard) and one ADR qualified mediator (Tim Constable). Nick Hallchurch is a co-founder of the Middlesex and Thames Valley Mediators (MTVM), an expanding mediation provider. All MTVM mediators have completed comprehensive training by a recognised training organisation and have gained formal accreditation to carry out mediations.

If you want more information on mediation and how we can help resolve your disputes, call the litigation and dispute resolution practice on 01753 279037.

1 [2005] EWCA Civ 358