Mediation is a good thing – refuse and you pay the consequences!
February 26, 2014

In a recent case a dilapidations claim for £1.9 million was brought against the Defendant. The Trial was due to take place in January 2012.

In April 2011, the Claimant made a Part 36 Offer of £1.25 million and the Defendant made a Part 36 Counter Offer of £700k in response. Both parties incurred the majority of the legal costs after the Part 36 Offers were made.

In July and the again in October 2011, the Claimant offered to mediate. The Defendant’s solicitors however failed to respond both offers.

Just before the Trial, the Claimant accepted the Defendant’s Part 36 Offer. The effect of the acceptance, under the CPR (Civil Procedure Rules) was that the usual costs order would be made, namely that the Claimant should pay the Defendant’s costs, which were incurred from 21 days after the offer was made.

In this case however the Court decided that the Defendant’s failure to respond to the Claimant’s offer to mediate was unreasonable and accordingly refused to make an order for costs in favour of the Defendant.

Mediation should therefore always be seriously considered. If an offer to mediate has been made then clear reasons should be given supporting any decision not to mediate. On a final note, whenever the other party’s intention to mediate is questionable, consideration should be given to the inclusion of a caveat to the confidentiality clause of the mediation Agreement. The rationale being that the mediator could then be compelled to give evidence on the issue of costs. The benefit of this is that it would ensure that each party taking part in the mediation does so with good faith and not simply to create an illusion that they are willing to mediate.

For further information please contact Jennifer White on 0208 313 1300 or by email jennifer.white@marsons.co.uk or if you have any queries or need advice on a specific issue raised in this article.