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Participation is key in solving the problems of mediation

legal matters

Mediation will be the hot topic for discussion this summer.The courts' enthusiasm for mediation had reached such heights that some now provide mediators and order disputing parties to attend a mediation appointment, like it or not (AJ 29.4.04).

But for the most part, while the court may encourage the parties, if they refuse to play ball there is little that can be done about it.

One sanction that has been imposed from time to time is to deprive those who have refused to take part in an alternative dispute resolution (ADR) process of their costs, even if they are successful at the end of the day.The threat of seeing a dispute through to judgment, only to be denied the (invariably considerable) costs of so doing, ought to concentrate the mind wonderfully.

Until now, however, the basis upon which the court could exercise this sanction has not been clear.The more determined of litigants have been prepared to take a chance that, while it could happen to someone, it would not happen to them.

Mediation's detractors now have the benefit of the Court of Appeal's judgment in Halsey v Milton Keynes General NHS Trust (Judgment 11.5.04). The action concerned a claim by a widow arising out of the death of her husband in hospital.

The central issue was, however, whether the court should impose a costs sanction against a successful litigant on the grounds that they had refused to take part in ADR.

The defendant hospital trust had successfully defended Mrs Halsey's claim, but she argued that it should not be awarded its costs because it had refused to mediate.

The appeal court recognised the benefits of mediation and the support to the process given by public bodies such as the National Health Service Litigation Authority and the courts.

It also recognised, however, that mediation was a voluntary process, and that to oblige truly unwilling parties to mediate their disputes would impose an unacceptable obstruction to their right of access to the court and serve only to increase costs. The role of the court is thus to encourage, rather than compel.

The court pointed out that the general rule was that a successful party should recover their costs. To buck this trend, the loser would have to show that the winner had not just declined an invitation to ADR but had unreasonably refused to mediate.

The court then outlined six indicators of reasonableness in the circumstances:

l Not all disputes are suitable for mediation, particularly those that involve the interpretation of a particular contract or an issue of law that ought to be decided in court.

l If a party unreasonably believes that their case is watertight, that is no justification for refusing mediation. But if their belief in the strength of their case is reasonable, it may be sufficient.

l If settlement offers have been rejected, it may demonstrate an unrealistic view of the merits of the case and undermine the success of the mediation.

l For small claims the costs of an unsuccessful mediation may add disproportionately to the costs of the action. If mediation is suggested too late in the day it might delay the trial.

l The prospects of mediation success depend upon various factors including the skill of the mediator and the willingness of the parties to cooperate in the process. An obstructive party could not rely upon their own intransigence as a reason not to mediate. Ultimately it falls to the losing party to show that there was a reasonable prospect that the mediation would have been successful.

Applying these guidelines, if it can be shown that a winning party's refusal to mediate was unreasonable, it is now very likely that they will not recover their costs.

Welcome though this clarification may be, it does little to remove the practical problems of policing mediation.

The central dichotomy is that while the courts are keen to support the process, they cannot force the parties to participate.

Whether a refusal to mediate is unreasonable, and whether cost sanctions will ultimately be applied as a result, will remain open questions, in each case, until after judgment is given.

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