I Don’t Want To Mediate, Will This Cost Me?

Essentially if during proceedings a party unreasonably refuses to mediate then the Court has the power to deprive that party of some, or all, of its costs.

There is always a difficult question in litigation as to the appropriate time to mediate. It would, for example, be inadvisable to mediate if the parties are not yet ready. Further mediation is only likely to be successful if both parties are prepared to commit to the process and are ready to engage in settlement negotiations. If the parties, or one party, are not ready to engage in mediation, the costs of preparing and attending mediation could be wasted.

The PGF II case concerned a landlord’s claim for £1.9 million from its tenant for dilapidations at the end of the lease term. The tenant made a Part 36 offer to pay £700,000 to the landlord in settlement of the claim on 11 April 2011.

A Part 36 offer is a type of offer in litigation which has certain consequences relating to who pays for the legal costs of the case. The usual costs consequences of the tenant’s Part 36 offer being accepted are that the tenant is entitled to its legal costs from 21 days after the offer was made until the offer is accepted.

The landlord did not accept the offer until the day before trial on 10 April 2012. However twice between the date of the original offer and the date of acceptance of the offer, the landlord offered mediation and requested reasons if the tenant was not willing to mediate. The landlord received no response to either offer to mediate.

In this case the Court said that because of the unreasonable failure to mediate by the tenant, it would not award the usual costs consequences under Part 36.

The moral of the story is that all parties in litigation should consider mediation throughout litigation. If it is not the right to time to mediate when suggested, the refusing party should communicate their reasons to the other party. There is now an expectation that parties should have suggested mediation prior to getting to trial as failure to do so can lead to adverse costs awards.

It is therefore vital that you obtain legal advice on when it is appropriate to mediate. If you propose to turn down an offer to mediate, we also advise that you first take advice from us on the likely expectations of the Court and the likely implications of not meeting those expectations. Finally if you are going to reject a mediation offer, we advise taking advice on how to set out clearly your reasoning for your refusal as it may be crucial at trial.

You can contact us in respect of mediation queries or any other dispute via email on idp@gardnercroft.co.uk.