The Court of Appeal upheld the judge's costs order on the basis that the claimant had failed to show that the defendant acted unreasonably in refusing to agree to a mediation.
*Full case details
Halsey vs Milton Keynes General NHS Trust, 11 May 2004, Court of Appeal, Judgment of Lord Justice Dyson.
For further information, call Tony Francis or Nicholas Gould on 0207 956 9354
There have been a number of cases at first instance where the court has penalised a successful party in litigation for refusing offers to attempt mediation by their opponents. There have been others where the court has declined to penalise a party for refusing offers to mediate, on the grounds that a mediation would have no real or reasonable prospect of success. The Court of Appeal reviewed all these decisions and clarified the test to be applied when deciding whether to impose a costs sanction upon one party for refusing to mediate: "In our view, the question whether mediation had a reasonable prospect of success will often be relevant to the reasonableness of A's refusal to accept B's invitation to agree to it. But it is not necessarily determinative of the fundamental question, which is whether the successful party acted unreasonably in refusing to agree to mediation." The Court further decided, contrary to some of the earlier cases, that the burden of proof lay with the unsuccessful party, not with the successful party: "The burden of proof should not be on the refusing party to satisfy the court that mediation had no reasonable prospect of success… It seems to us that a fairer balance is struck if the burden is placed on the unsuccessful party to show that there was a reasonable prospect that the mediation would have been successful." In this case, the court criticised the claimant's solicitors for making "tactical" offers of mediation in an effort to extort a sum of money plus costs in settlement of a small and highly speculative claim. It also endorsed the defendant's view that the costs of a mediation would be disproportionately high as a reasonable ground for refusing to mediate. The court also identified other potentially reasonable grounds for refusing to mediate, as follows: · The dispute being intrinsically unsuitable for mediation, because it turns on a point of law which one of the parties want resolved, or involves allegations of fraud, or involves a requirement for injunctive relief; · The refusing party reasonably believes that it has a watertight case; · The mediation would delay the trial of the action. The court emphasised, however, that its general approach would still be to encourage (although not compel) the use of mediation in appropriate cases. In particular, the court would be readily persuaded by an unsuccessful party that a refusal to mediate was unreasonable if the court had itself suggested mediation to the parties.