Alternative Dispute Resolution Pronouncements and Recent Mediation Case Law Summaries.
As at 8th July 2007.

Date of Judgement

Case Name

Court/Judge(s)

Remarks

1889

Walker v Wilsher 23 QBD 335

Queen`s Bench Division

Bowen LJ

Letters or conversations written or declared to be “without prejudice” cannot be taken into consideration in determining whether there is good cause for depriving a successful litigant of costs.

“In my view it would be a bad thing and lead to serious consequences if the Courts allowed the action of litigants , or letters written to them “without prejudice”, to be given in evidence against them as material for depriving them of costs.It is most important that the door should not be shut against compromises, as would certainly be the case if letters written “without prejudice” and suggesting methods of compromise were liable to be read when a question of costs arose.”

8 March 2000

Paul Thomas Construction Limited v. Hyland & Anor

TCC
HHJ Wilcox

Unreasonable conduct and failure to follow Pre-action protocol leads to indemnity costs.

23 March 2001

Lord Chancellor

Lord Chancellor issued a formal written pledge that : “Government departments and agencies make these commitments on the resolution of disputes involving them. Alternative dispute resolution will be considered and used in all suitable cases wherever the other party accepts it”

8 January 2002

Frank Cowl v. Plymouth City Council

Court of Appeal
Lord Woolf

A refusal to consider ADR (independent complaints procedure) is unfortunate.

Civil Procedure Commercial Courts Guide. Draft ADR Order. To be found in Volume 2 of the White Book 2A -163

Aside for compulsory mediation orders issued in the London Civil Justice Centre the order below forms the strongest form of encouragement short of court compulsion
DRAFT ORDER.
“1. On or before [*] the parties shall exchange lists of 3 neutral individuals who are available to conduct ADR procedures in this case prior to [*]. Each party may [in addition] [in the alternative] provide a list identifying the constitution of one or more panels of neutral individuals who are available to conduct ADR procedures in this case prior to [*].
2. On or before [*] the parties shall in good faith endeavour to agree a neutral individual or panel from the lists so exchanged and provided.
3. Failing such agreement by [*] the Case Management Conference will be restored to enable the Court to facilitate agreement on a neutral individual or panel:
4. The parties shall take such serious steps as they may be advised to resolve their disputes by ADR procedures before the neutral individual or panel so chosen by no later than [*].
5. If the case is not finally settled, the parties shall inform the Court by letter prior to [disclosure of documents/exchange of witness statements/exchange of experts' reports] what steps towards ADR have been taken and (without prejudice to matters of privilege) why such steps have failed. If the parties have failed to initiate ADR procedures the Case Management Conference is to be restored for further consideration of the case.
6. [Costs].Note: The term "ADR procedures" is deliberately used in the draft ADR order. This is in order to emphasise that (save where otherwise provided) the parties are free to use the ADR procedure that they regard as most suitable, be it mediation, early neutral evaluation, non-binding arbitration etc.”

February 2002

Aside for compulsory mediation orders issued in the London Civil Justice Centre the order below forms the strongest form of encouragement short of court compulsion
DRAFT ORDER.
“1. On or before [*] the parties shall exchange lists of 3 neutral individuals who are available to conduct ADR procedures in this case prior to [*]. Each party may [in addition] [in the alternative] provide a list identifying the constitution of one or more panels of neutral individuals who are available to conduct ADR procedures in this case prior to [*].
2. On or before [*] the parties shall in good faith endeavour to agree a neutral individual or panel from the lists so exchanged and provided.
3. Failing such agreement by [*] the Case Management Conference will be restored to enable the Court to facilitate agreement on a neutral individual or panel:
4. The parties shall take such serious steps as they may be advised to resolve their disputes by ADR procedures before the neutral individual or panel so chosen by no later than [*].
5. If the case is not finally settled, the parties shall inform the Court by letter prior to [disclosure of documents/exchange of witness statements/exchange of experts' reports] what steps towards ADR have been taken and (without prejudice to matters of privilege) why such steps have failed. If the parties have failed to initiate ADR procedures the Case Management Conference is to be restored for further consideration of the case.
6. [Costs].Note: The term "ADR procedures" is deliberately used in the draft ADR order. This is in order to emphasise that (save where otherwise provided) the parties are free to use the ADR procedure that they regard as most suitable, be it mediation, early neutral evaluation, non-binding arbitration etc.”

22 February 2002

Susan Dunnett v. Railtrack Plc

Court of Appeal
Lord Brooke LJ

An unreasonable refusal to mediate will lead to uncomfortable cost consequences. The Courts show their willingness to give significant weight to the willingness or otherwise of the parties to attempt alternative dispute resolution pursuant to Civil Procedure Rules 1998, Rule 44.3

9 May 2002

Hurst & Leeming

Chancery Division
Lightman J

If there is no realistic prospect of settling the case in mediation because of the obsessive character and attitude of the other party, then a refusal to mediate will be justified.  Burden of proof reversed in Halsey. The case sets out the circumstances when it may be justified in refusing to mediate. The case is reviewed in Halsey( see below).

July 2002

Office of Deputy Prime Minister

Office of the Deputy Prime Minister draft circular on Best Value and Performance Improvement states:

“It is everyone’s interest to work at avoiding contractual disputes in the first place and this is mirrored in the emphasis above of improving relationships between the client and contractor through team work and partnering. However, when disputes do occur it is important to have a fast, efficient and cost effective dispute resolution procedure. Local authorities should seek wherever appropriate, to provide clauses in their contracts on the use of alternatives to litigation (commonly termed Alternative Dispute Resolution) which can achieve this.”

1 November 2002

Societe Internationale De Telecommuni-
cations Aeronautiques
SC v. Wyatt Co (UK) Limited and others (v. Maxwell Batley (A Firm) part 20 defendant)

Chancery Division, Park J

A party that was successful in the litigation should not be deprived of its costs because it reasonable refused to mediate.

14 May 2003

Royal Bank of Canada v. Secretary of State for Defence

High Court, Chancery Division
Lewison J

9 June 2003

Dearling & Foregate Developments (Chester) Limited

Court of Appeal, Civil Division

Held that the court had a power to make an award of costs even where parties have settled without a trial.The case therefore offers no encouragement to litigants to defend hopeless cases up to the door of the court in the belief of no order being made as to costs by the court if a commercial settlement is reached at that stage.

1 July 2003

Corenso (UK) Limited v. Burnden Group Limited

High Court, Queen’s Bench Division
HHJ Reid QC

Both parties found by the Court to have shown a genuine and constructive willingness to resolve the issue between them and therefore neither party should be penalised in costs for not having gone along with the particular form of ADR proposed by the other.

29 July 2003

Alan Valentine v. (1) Kevin Allen (2) Simon John Nash (3) Alison Nash

Court of Appeal

1 October 2003

Thakrar v. Thakrar

Court of Appeal

Tomlin Order (agreed at a mediation) refused at first instance. Upheld on appeal.

11 October 2003

Cable & Wireless Plc v. IBM United Kingdom Limited

QBD, Commercial Court
Coleman J

This case is a variation on the principle that an agreement to agree cannot be enforced. It decided that if you have agreed to a mechanism to attempt to resolve disputes by , you can be compelled to follow that process. A dispute escalation clause was valid and enforceable

5 December 2003

Shirayama Shokusan Company Ltd & Ors v. Danovo Ltd

Chancery Division
Blackburne J

The Court has jurisdiction to order an unwilling party to mediate its dispute. No longer good law. (see Halsey)

11 May 2004

Halsey v. Milton Keynes General NHS Trust: Steel v. (1) Joy (2) Halliday

Court of Appeal
Ward LJ, Laws LJ, Dyson

The burden is on the unsuccessful party to show why the general rule on costs should be departed from.  The fundamental principle was that the normal costs rule applies unless the successful party had acted unreasonable in refusing to agree to mediation.

27 May 2004

Couwenbergh v Valkova

Court of Appeal Lord Justice Ward, Lord Justice Waller Lady Justice Hale

This case contradicts previous rulings that fraud cases were not suitable for mediation

52……..”The parties had it, and still have it, in their power to alter the destiny of this appeal and this sad case. We urged them, and continue to urge them, to do so through mediation. It is a case crying out for alternative dispute resolution.
54. When costs do finally have to be allocated, we hope these observations will be borne in mind when the court comes to apply the guidelines in Halsey v. Milton Keynes General N.H.S. Trust EWCA [2004] Civ. 576 on how to deal with failures to mediate despite the encouragement to do so.”

The rule in Walker v Wilshire (1889 see above) remains good law and the court cannot order disclosure of “without prejudice” negotiations against the wishes of one of those parties to those negotiations. This means that when it comes to deciding the question of costs the Court cannot decide whether one side or the other was unreasonable in refusing mediation. But the court went on to say that was not disastrous or damaging from the point of view of encouraging ADR.

Jacob LJ explains:
“Far from it. Everyone knows the Calderbank rules. It is open to either side to make open or Calderbank offers of ADR.
The reasonableness or otherwise of going to ADR may be fairly and squarely debated between the parties and, under the Calderbank procedure, made available to the Court but only when it comes to consider costs.”

8th March 2005

Bowman v  Fels

Court of Appeal Lord Justice Brooke Lord Justice Manse Lord Justice Manse Lord Justice Dyson.
Remark.
This is an authoritative guidance as to the position of litigators under the Proceeds of Crime Act (POCA) 2002. This is a welcome clarification confirming that the disposal of proceeding by consensual process in the context of civil litigation is also outside the scope of s.328 and just an ordinary feature of the conduct of civil litigation.
Given the Court of Appeal’s concern to encourage settlement it is presumed that s.328 of POCA  does not apply to any lawyer receiving information at the early stages of a dispute. But do take note that consensual arrangements independent of litigation could be "an arrangement" under the section which carries criminal sanctions.

17th November 2006

P4 Ltd v Unite In tegrated Solutions Plc Part 1[2007]BLR pp1-10 February 2007

Queen`s Bench Division (TCC) Mr Justice Ramsey

Helpful decision of the TCC on the effect on costs of a refusal to mediate and a failure to provide information at the pre-action stage. Ramsey J held that the defendant`s failure disentitled it from costs to which it would otherwise been entitled.

From paragraph 41 of the judgment. “Experience of mediation has shown that the vast majority of cases are capable of settlement and are, in fact, settled in this way. In my judgment, that has to be the starting point.”