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06 July 2022

Have we reached the high water mark for mediation?

Have we reached the high water mark for mediation?

Author: Peter Causton

Many personal injury lawyers take the view that mediation is not required in these cases because of the need for expert evidence to be finalised and because they are used to holding joint settlement meetings to resolve cases, meaning that a mediator is surplus to requirements. In clinical negligence claims the NHSR has operated a panel mediation service for some time now. In the commercial litigation and civil arena, mediation has become increasingly popular as it has a good success rate and can save costs in many cases. It also offers the parties to have their “day in Court” without a judge imposing their own view. The parties can often agree to terms which would not be available in Court like agreeing to apologise. I have heard of and dealt with cases where an apology has been a crucial make or break part of a settlement, so it is not just an urban myth. Frequently people talk about the ability to restore relationships through mediation, although in my experience this is less likely to occur.

I have to admit that I am biased as I have been working as a commercial and civil mediator for over 10 years and have witnessed first had the benefits of mediation in a wide range of disputes such as TOLATA claims, boundary disputes and contentious probate disputes as well as contract claims. I have seen a great weight lift from the shoulders of people through mediation although obviously not every dispute settles on the day. Until recently I was optimistic that mediation and ADR would increase at an exponential rate, becoming an integral part of the justice system rather than an alternative option on the sidelines. All the messages we were getting were that mediation was viewed as being part of the solution for court backlogs and costly civil disputes. The Courts appeared willing to impose costs penalties against parties who refused to mediate unreasonably.

However, recent events have shown that the law does not always go in a straight line of development. Take human rights in the UK and abortion law in the US, for example, or the proposal to bring back imperial measurements. Like many I thought that the arguments had been won and there was no going back.

During the pandemic mediation and Court hearings went virtual and there were some advantages to this and also some disadvantages. In my view, the advantages from an environmental and cost saving perspective outweighed the reduction in personal contact but there are problems with remote hearings when dealing with litigants in person and vulnerable litigants in particular.  The balance now appears to have tipped back the other way towards in person hearings, although many mediations are still proceeding online. It also seems that there is no rush towards making mediation or ADR a compulsory part of the justice system. By “compulsion” I do not mean forcing people to settle and depriving them of their day in Court, but to making it a step to try ADR before starting proceedings or as part of the Court process, like early neutral evaluation by a judge. In the small claims arena some Courts in Lancashire list a Dispute Resolution hearing before the judge to try to resolve cases or make directions. In my view it is better to try mediation early on in a dispute rather than leaving it to close to trial when costs can be an impediment and by the time the Judge is considering costs sanctions and whether someone has unreasonably refused to mediate, it is too late as the costs have been incurred.

The UK government recommended using ADR to resolve disputes arising because of the pandemic. Lord Neuberger, a retired judge suggested parties have a “breathing space”  and use ADR before litigating. Many parties turned to online mediation to resolve disputes and found it to be beneficial in terms of cost, time and speed of resolution.

This followed a report by Lord Briggs in 2016 which recommended integrating ADR into the Court system and reinstating the national mediation helpline and bringing in an online Court system. The Court mediation pilots in Manchester, Exeter and London were set up following this report. I am in charge of the Manchester Mediation pilot which continues, but uptake is disappointingly low.

Lord Briggs’ review was followed by a report on ADR produced by the Civil Justice Council which recommended encouraging the use of ADR and proposed a Notice to Mediate procedure.   This would mean that the Court would issue a mediation notice and put forward mediators from a panel to mediate a dispute. This would be an “opt out” system.

A judicial liaison committee of the Civil Justice Council was set up to take matters further, of which I am a member. It was suggested that the seminal case of

Halsey v Milton Keynes General NHS Trust (2004) EWCA Civ 576

In which the factors to be taken into account when deciding whether there had been an unreasonable refusal to mediate were set out, should be revisited to tighten up the test for unreasonable refusal to mediate. There does not seem to have been much progress in that regard. 

In a further case of PGF II SA v OMFS Company 1 Limited it was held that it was unreasonable to even ignore an offer to mediate. A recent Court of Appeal case is authority for the proposition that the courts can order Early Neutral Evaluation (ENE) under the Civil Procedure Rules even though all the parties to the dispute have not consented to it. In Lomax -v- Lomax [2019] EWCA Civ 1467 it was held that the consent of the parties is not required for the court to exercise its discretion under CPR 3.1(2)(m) to order ENE.

This suggested that compulsory ENE was a valid approach the Courts could take. It was thought that ENE would be particularly suitable in neighbour or boundary disputes.

In 2021 the Civil Justice Council published a report on compulsion in ADR, concluding that it was arguable that parties could be compelled to use ADR and this would not deprive them of a right to a fair trial. In 2021 there was a call for evidence by the UK Ministry of Justice into ADR. BEIS in the UK also issued a paper and consultation regarding consumer ADR and a response to that has been published.

The government responses are not as radical as had been anticipated by mediators although they could be described as adopting a “balanced” evidence based approach, and evidence seems hard to come by.

The MOJ announced the conclusion of its call for evidence on Dispute Resolution in England and Wales. A summary of responses is available at the following address: Dispute Resolution in England and Wales: Call for Evidence – GOV.UK (www.gov.uk).

The report does not focus solely on civil but also deals with family cases. This is somewhat confusing as the two areas are distinct and different considerations apply. The MOJ makes some positive comments about the benefits of mediation, but also makes some negative points. 

On the professions and the Courts’ influence the report was quite critical saying that 

“Another key theme was the vital role played by the legal profession (both solicitors and the judiciary) in successfully encouraging parties to engage with dispute resolution. Some respondents felt that, despite court protocols recommending that solicitors make an early referral to mediation, owing to their vested interests in pursuing lengthy litigation, referrals of clients by solicitors did not regularly take place. The adversarial language used by lawyers was also viewed by some to aggravate tensions between parties and provide an additional barrier to engagement with dispute resolution. In parallel to this, many respondents felt that the courts and judiciary could do significantly more to endorse and encourage parties to engage with dispute resolution. It was suggested this might be achieved not only through more rigorous cost sanctions for non-compliance with protocols involving dispute resolution (as mentioned above), but also through softer incentives such as improved and more visible guidance.” 

On compulsion, the jury was still out according to the MOJ which said that:

“On the issue of compulsion, the views of respondents were mixed. The majority of supportive responses came from the consumer and public services sector, insurers, and from mediators and mediation bodies, particularly in civil cases. The Civil Mediation Council, for example, is strongly in favour of automatic referral to mediation (with opt-out provision), citing the successful application of a similar system in Ontario where the Mandatory Mediation Program has been in place since 1999. Some representatives of the legal profession also recognised a need for greater compulsion, including the Law Society, which promoted the use of Early Neutral Evaluation. Respondents in favour of compulsion generally viewed directive systematic reform (with scope for exemptions where appropriate) as the only means of achieving a meaningful culture change. Some also felt that compulsion would remove the unhelpful perception of weakness attached to using dispute resolution.

Unsupportive respondents came largely (although not exclusively) from the legal profession, academia, and the advice sector. These respondents opposed compulsory participation for a number of reasons, based upon its potential impact upon the quality of the process and outcome of dispute resolution. Some felt that compulsion would undermine the fundamentally voluntary nature of the dispute resolution process and thereby jeopardise its efficacy. Others expressed the view that compulsion would risk dispute resolution becoming a “tick-box” exercise in which parties did not genuinely engage and therefore simply an additional barrier (both in terms of time and cost) to users’ ability to access justice. Many respondents also spoke to the significance of timing regarding the prospective success of dispute resolution and cautioned that mediations held at ill-timed junctures often deterred parties from future attempts. The most widespread and substantial concerns raised, however, related to fears that compulsion could prevent cases which involved safeguarding issues or significant power imbalances being managed effectively, particularly in family matters, and may lead to victims being placed in positions of danger, as well as unfair outcomes. The potential unintended consequences of introducing compulsion were also mentioned, as well as the risks of a blanket implementation which did not consider the particularities of different types of dispute.

However, many of these respondents did support a greater degree of compulsion. Multiple respondents raised the point that compulsion to find out about dispute resolution options is not the same as mandating participation in the process itself. As such, a number of (but not all) respondents supported compelling both parties to family disputes to attend a compulsory MIAM session, and some suggested the extension of a MIAMs across other jurisdictions to educate and reinforce the benefits of mediation. Even more prevalent was the support from respondents to develop and more forcefully apply the court’s powers under pre-action protocols to direct the use of dispute resolution and utilise cost sanctions for non-compliance.”

The MOJ say that the “information gathered from this consultation exercise will inform the government’s consideration of dispute resolution and the role it will play in delivering swifter, more cost-effective and more consensual access to justice. We will further engage with stakeholders as our work in this area continues.”

 

The MOJ did not decide to go down the mandatory mediation route. The report sets out the pros and cons and sunmarises the responses without saying which direction it should go in. 

There has also been a further recent case on unreasonable refusal to mediate:

In the case of Richards & Anor v Speechly Bircham Llp & Anor (Consequential Matters) the court considered what costs orders to make following a professional negligence claim.

The defendant firm argued that its approach to mediation was reasonable and that a refusal to mediate was only one aspect of a party’s conduct. It was pointed out that both parties had failed to beat their own Part 36 offers, with the claimants at one point offering to settle for £4.25m.

The judge held that the firm’s approach to mediation was ‘unreasonable’, saying there had been ‘general passivity on the ADR process’ over a period of almost three years.

However the Judge held that the failure to engage constructively with mediation did not justify an order for costs on an indemnity basis. 

The judge said: ‘In circumstances where neither side made a cost-effective Part 36 offer, the defendants’ unreasonable conduct in relation to mediation is in my judgement sufficiently marked by an order that they pay the claimants’ costs down to and including trial on the standard basis.

‘That is an appropriate “sanction” for them not engaging in a process of ADR which might have curtailed those costs in a significantly lower sum at an earlier stage of the proceedings.’

The judge referred to an earlier case where the conduct was much more unreasonable. The Court also cast doubt on the power of hindsight, looking at the refusal to mediate in the context of the outcome of the case.

In short, the Court did not consider that unreasonable refusal to mediate trumped all and required a punitive sanction such as an indemnity costs order. 

To conclude, it is unclear whether the MOJ will go further down the mandatory mediation route and there is no indication of the Courts revisiting Halsey and taking a tougher line on parties who unreasonably refuse to mediate. So perhaps we have reached the high water mark for mediation and the tide will now turn back against compulsion?

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