It has been the position for some time (Dunnet v Railtrack in 2002) that a party who is successful at trial or appeal (and would therefore normally be entitled to expect to receive its costs from the other side), may be at risk of not being awarded some, or all, of those costs, if they have unreasonably refused to mediate prior to trial. What is or is not reasonable is usually decided upon the facts of each case.

A recent decision of His Honour Judge Coulson QC in the Technology and Construction Court recently takes this approach a little further.

In the case of Nigel Witham Limited v Robert Smith and Jacqueline Isaacs (No 2), the judge made comments to the effect that even where a party agreed to mediate, but did so so late in the day that the prospects of the mediation succeeding were poor, and where it could also be shown that the delay in agreeing to the mediation was itself unreasonable, then there was no reason in principle why that party should not suffer a costs penalty. Whilst in the particular case the Judge’s comments in did not result in such an order being made, it is clear that the judiciary is prepared to look at this issue and where appropriate, order that costs be reduced accordingly.

It is therefore important that parties and their advisers review the question of mediation regularly throughout all the stages of the litigation process and that they are able to respond quickly and effectively to any suggestion by the other side that mediation should take place (if they have not suggested mediation themselves).

Posted: February 26th, 2008 under Dispute Management.
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