An offer you can't refuse

The overriding objective of the Civil Procedure Rules is to "deal with cases justly" and this applies with equal weight and importance to cases before the Technology and Construction Court.

The courts are obliged to further this objective by "actively managing cases". This includes "encouraging the parties to co-operate with each other in the conduct of the proceedings", "encouraging the parties to use an alternative dispute resolution procedure if the court considers that appropriate", and "helping the parties settle the whole or part of the case".

In order to give the parties some incentive to respond to the court's active case management, the court must, when assessing whether costs were proportionately and reasonably incurred for the purposes of its award, have regard to "the efforts made, if any, before and during the proceedings in order to try to resolve the dispute" – rule 44.5(3)(a)(ii). The efforts of the parties in Frank Cowl & others vs Plymouth City Council to settle their dispute outside formal court proceedings came under the scrutiny of Lord Woolf and two other Court of Appeal judges on 14 December 2001.

The case concerned Plymouth council's ratification of the decision by its social services committee to close a residential care home for elderly people owned and run by the council. The claimants were the occupants of the home, and they applied for judicial review.

In an effort to forestall an application to court by the residents, the council had offered to treat their grounds for seeking judicial review and their evidence submitted in support as a complaint, to be put before a panel as soon as possible and to be chaired by an independent person.

Lord Woolf thought this was a very sensible proposal to make, which should at least have been the subject of negotiations, and that the court should have allowed an adjournment to encourage this. He did not think that the "alternative remedy" had to fulfil all the functions of judicial review if the claimants were not to be entitled to proceed with their application for review. He found that the 10 reasons advanced by the claimants as to why the complaints procedure was not suitable established no basis on which the claimants could reasonably object to it, and suggested that the claimants could in any event have tried mediation as an alternative to proceeding to litigation.

A costs order was duly made against the claimants, and an agreement to refer the dispute to a complaints review panel was reached and attached to the judgment. Lord Woolf laid particular stress on the indefensibility of failing to adopt alternative dispute resolution where public money is involved, but seemed to expect a level of acquaintance with ADR across the board such that its merits would be apparent in any suitable case.

On 22 February 2002, the case of Susan Jane Dunnett vs Railtrack was heard by the Court of Appeal. The claimant had kept horses in a field adjoining a railway line. There was a gate in the field which opened out on to the track. When the claimant asked a representative of Railtrack for permission to padlock the gate, she was told that this would be illegal. She therefore did not padlock the gate, and a month later three horses wandered on to the line and were killed.

The lesson for us all is perhaps to focus on making a just peace in the war rather than winning a pyrrhic victory in the next battle

The claimant's negligence claim failed because the court found that it had not been reasonable for her to rely on the advice of the Railtrack representative that she contacted. On appeal she did not try to challenge this finding but introduced a fresh angle by arguing that the gate was not self-closing and so did not fulfil Railtrack's statutory duty. Her appeal was dismissed on the basis that she had not previously pleaded this line of argument.

Railtrack was not allowed to recover its costs against her, however, on the grounds that it had refused a suggestion when permission to appeal was granted that arbitration or mediation be attempted to resolve the dispute.

The Court of Appeal's fingers were pointed at Railtrack's lawyers in this case. It apparently "dismissed the opportunity for arbitration or mediation out of hand", and was consequently made to "suffer uncomfortable consequences" by the court when it came to costs.

The claimant's former lawyers were also left to "suffer uncomfortable consequences" at the hands of the claimant, who in the court's view "was right to feel badly let down" by them.

Perhaps the court's commendation of the results that could be achieved by skilled mediators should be seen against this backdrop of failure by legal representatives on both sides.

It might seem disproportionate to disallow the successful party's claim for its costs in its entirety on this ground alone. The circumstances were slightly unusual, however: the court had dismissed the appeal on a technicality, while hinting that the claimant's unpleaded "fresh angle" had merit. It was easy to see, therefore, that the failings of the claimant's lawyers had put "doing justice" beyond the powers of the court hearing the claim as presently pleaded.

This case did not allow the losing party to avoid paying the winning side's costs in their entirety solely because it did not mediate. However, it seems likely that parties that refuse an offer to mediate without good reasons, which are explained at the time, may find their position on costs seriously disadvantaged.