Court Denies Costs to Defendants Who Refused Mediation

In a recent ruling, His Honour Judge Mithani KC at Nuneaton County Court penalised successful defendants for their refusal to mediate in a property dispute. The case, Conway v Conway & Anor, involved a contested site in Bedworth.

Judge Mithani expressed serious concern over the defendants’ outright rejection of mediation offers. He noted that they would need to present compelling reasons for their refusal. As a result, the judge applied a 25% reduction to the costs the defendants could recover, deeming their refusal to engage in Alternative Dispute Resolution (ADR) unreasonable. The court declined the claimant’s request for a 100% cost reduction, considering it excessively harsh.

Upon conclusion the Judge commented as follows:

    1. I will deal with any outstanding matters and the issue of costs when I hand judgment down. One matter that seriously concerns me is why the Defendants did not agree to mediation when it was put to them. The importance of mediation can never be over-emphasised: see, for example, the recent decision of the Court of Appeal in Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416. The Defendants will have to advance compelling reasons why the offer of mediation was rejected out of hand by them.

The background of the case reveals that the claimant’s solicitor initially proposed pre-action mediation in 2022, which was ignored. A second mediation offer later that year was also rejected by the defendants, who argued that mediation was inappropriate for their dispute, would delay resolution, and increase costs without providing a final and binding agreement.

After the first day of the trial, which lasted eight days, the claimant made a without prejudice offer to mediate, again rejected by the defendants as ‘absurd’. Judge Mithani found that the defendants’ decision to reject mediation in October 2022 was misguided and noted they could not be certain of victory to dismiss mediation entirely.

This ruling, while not binding, signals the courts’ intolerance towards parties refusing to mediate. It follows the Court of Appeal’s decision in Churchill v Merthyr Tydfil County Borough Council, which affirmed the courts’ power to order parties to engage in ADR or stay proceedings for this purpose.

The Conway case also referenced Northrop v BAE Systems, where the court deemed it unreasonable for the defendant to reject mediation. As of May this year, parties in money claims up to £10,000 must attend a free one-hour mediation. The Ministry of Justice is considering mandatory mediation for higher-value claims.

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