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Unreasonable refusal to mediate

An unreasonable refusal to mediate will be punished by a costs sanction. This was re-affirmed by the Court of Appeal last year in the case of PGF II SA v OMFS Company Limited. The High Court has recently awarded indemnity costs against a defendant that persistently refused to mediate.

In Garritt-Critchley v Andrew Ronnan and Solarpower PV Ltd the claimant made offers to mediate from the very start of the get go in the letter of claim. It repeated the offer a number of times right up to trial. The defendant refused the offer for various reasons such as:

  • it was not the right stage;
  • the costs were disproportionate;
  • the parties didn’t like each other; and
  • the parties were too far apart.

The court acknowledged the burden was on the claimant to show the refusal was unreasonable and examined the reasons put forward by the defendant and the other reasons listed in the well known case of Halsey v Milton Keynes NHS Trust. The court dismissed the reasons one by one. For anybody who routinely relies upon a “Halsey” reason to avoid mediation the case is a must read along with the PGF decision as both cases knock down the arguments put forward in support of justifying those reasons.

The defendants also sought comfort from the PGF case on the basis that they did not ignore the offers to mediate. Whilst the court accepted the defendant engaged in discussions about ADR as they are required to do the outcome of that engagement was an unreasonable refusal to mediate.

What are your experiences of the courts’ attitudes to costs arguments about refusals to mediate? Join the discussion below.