Consequences for Refusal to Engage in Mediation

Wales v CBRE Managed Services LTD and Aviva [2020]

 

Contact Us Today!

Sign up to our newsletter

What is Mediation?

Mediation is a form of Alternative Dispute Resolution (ADR), which is a method of settling a dispute without having to go to Court. Mediation is a form of ADR which involves resolving a dispute using a Mediator instead of a Judge.

Mediation is often a successful tool to be utilized when settling matters between parties. However, not everyone is fond of using this method, and rather than participating in mediation they refuse. Refusal to engage in mediation is not usually taken lightly by the Court, and costs sanctions often follow unreasonable refusal to mediate. 

This was demonstrated in the Wales v CBRE Managed Services Ltd and Aviva’ case when the Defendant faced a costs penalty for refusing an invitation to participate in mediation.

Wales v CBRE Managed Services Ltd and Aviva [2020] EWHC 16 (Comm)

Initially, the dispute emerged when CBRE decided to modify their employee’s pension platform, therefore disposing of Mr Wales’ services.

CBRE first declared that they were transferring their Group Pension scheme in November 2012 and Mr Wales was advised of this transfer by mid-January. Nevertheless, the Group Pension scheme was not transferred until April 2013, so Mr Wales continued to provide his services.

Due to the delay of the transfer, Mr Wales instructed Linder Myers Solicitors to send a Letter of Claim to Friends Life Services, which is now Aviva. Following this letter, Aviva provided a response which stated that “as early as summer 2012, CBRE advised Friends Life Services that Mr Wales’ services would no longer be required”.

Consequently, Wales’ new solicitors Clarke Wilmott sent a further Letter of Claim in June 2016, which alleged that “in or around September 2012 CBRE purported to terminate the contract but failed to notify our client of that termination in writing, as they were required to do”.

The case showed no signs of settling soon, thus allowing the proceedings to continue. However, Linder Myers and Clarke Wilmott had both demonstrated a willingness to engage in mediation, and thus Clarke Wilmott suggested a three-party mediation. 

Unfortunately CBRE’s legal representation, Stevens and Bolton, expressed that their client was not willing to engage in mediation as they believed the case to be unsuitable for mediation. This response prompted Aviva to alter their opinion on mediation, and they described it as “premature” as they had “concerns about the utility of a mediation in the event of CBRE refusing to attend“.

Mr Wales then warned both other parties that he was going to issue proceedings. This statement encouraged Aviva to adapt their position in regards to mediation slightly and now decided that they would engage in mediation, as long as CBRE did the same. Aviva’s change of decision was not enough to stop Mr Wales issuing proceedings.

CBRE’s Solicitors filed a statement to clarify why they had refused to engage in ADR; they described it as “premature to consider arranging a mediation pending the conclusion of proceedings”.

The case proceeded and in May 2019, Mr Wales’ Solicitor formally proposed mediation. Aviva again stated that they were willing to proceed with mediation and began to suggest appropriate dates. 

CBRE did not submit a response and later stated that there was “insufficient time to prepare, as the mediation would have interfered with their preparations needed to comply with the Court timetable.”

CBRE and Aviva were successful in the trial. In these circumstances, Mr Wales would usually be responsible for paying 100% of the successful Defendants’ costs. However, in this instance HHS Halliwell agreed that there was a “good reason” to show that CBRE’s failure to engage in ADR would be considered unreasonable conduct, and the Claimant was excused from paying part of the costs.

The Judge supported this response by stating that CBRE had not provided a detailed response to the initial Letters of Claim and in refusing to co-operate with mediation, they had “denied the other parties the opportunity to fully engage with underlying issues”. 

What did the Judge Order as a Result of the Refusal to Engage in Mediation?

HHS Halliwell concluded that the Defendants refusal to engage in mediation should result in a costs consequence. It was decided that there should be a 50% reduction in CBRE’s costs for the period up to the date when CBRE confirmed their refusal to engage in mediation. The Judge also decided that 20% of CBRE’s costs from May 2019, when they refused mediation again, should be disallowed.

Ultimately, harsh consequences were implemented onto CBRE. This decision was supported by the Halsey v Milton Keynes General NHS Trust appeal result as the Judge within the appeal stated that the Defendant was wrongly awarded costs in the original hearing because they refused to participate in mediation.

Aviva also experienced reductions in their costs as HHS Halliwell stated that they had “substantially altered the case Mr Wales had to meet” by making a late amendment. Their consequences were not as harsh as the Judge believed that it was not unreasonable of Aviva to reject an offer to mediate. He decided this on the basis that without CBRE, the likelihood of achieving a successful compromise was low.

The repercussions illustrated in this case seem reasonable when you reflect upon the inflexibility shown by parties, especially CBRE. However, the Court of Appeal in ‘Gore v Naheed’ (2017) took the view that the Claimants refusal to mediate was not unreasonable. The Claimant’s solicitors considered the case too complex to have any realistic prospect of succeeding in mediation, and therefore, they were not penalised.

What Can we Learn from Wales v CBRE Managed Services Ltd and Aviva

Parties must remain flexible within proceedings and should always be prepared to negotiate, particular under current circumstances where the Court’s resources are strained.  It is likely that the Court would take a dim view had a matter proceeded to Trial which had the possibility of being resolved via ADR.

However, mediation may not always be the best tool for settlement and there are other options for ADR, but even if a case is contested, it would be unwise to reject ADR to try and narrow the issues.

How can ARC Costs Assist?

Our highly skilled Costs Draftsmen and Costs Lawyers can provide advice on costs to ensure you maximise your recovery, or in contesting any costs claim brought against you. 

We can advise and assist in all aspects of alternative dispute resolution (ADR), such as providing representation for a Joint Settlement Meeting, mediation or arbitration.

We can also assist in the negotiation of a Bill of Costs, irrespective of whether you are a receiving or paying party.

We can be contacted by email at info@arccosts.co.uk, or by telephone on 01204 397302. For more information on legal costs, please find out more about our speciality areas of expertise and our services on our legal costs page.

 

 

 

 

Request Your Free Quotation

Contact us today for your free, no obligation quotation. Our team are on hand to help.

Location

4 Bark Street East, Bolton, BL1 2BQ

01204 397 302

info@arccosts.co.uk