When is it Reasonable toRefuse Mediation?
Practical Advice for Medition Users
In general, businesses and organisations should seriously consider mediation for alternative
dispute resolution (ADR). While voluntary, courts actively encourage it, and refusal to mediate
may count against you when courts consider costs. There are also many other advantages toopting for mediation.
However, lawyers in particular should note that precedents exist that may, in certain
circumstances, influence decisions about whether to opt out of mediation. We look at thesebelow.

A summary of recent casesMr. Justice Lightman‘s judgment in Hurst v Leeming [2001] EWHC 1051, formerly themain source of advice on this topic, has been overtaken and enlarged upon by Halseyv Milton Keynes NHS Trust [2004] EWCA Civ 576, a decision of Ward, Dyson and Laws
L.JJ in the Court of Appeal.
The key question is as posed at the beginning of Dyson LJ‘s judgement in Halsey:“When should the court impose a costs sanction against a successful litigant on the grounds
that he has refused to take part in alternative dispute resolution?“Unsuccessful litigants who refuse mediation already face sanctions, such as indemnity costs –see Virani v Manuel Revert [2003] EWCA Civ 1651
Dunnett v Railtrack [2002] EWCA Civ 302 was the first example of costs penalties being imposedon a successful litigant because of their unreasonable refusal to mediate. In Hurst v Leeming,
the court declined the unsuccessful claimant‘s request that costs sanctions be imposed on thedefendant for rejecting mediation. Lightman J found that mediation had no reasonable prospectof success, having made an objective assessment of the facts.
In Halsey, the party declining to mediate again escaped sanction, but the Court reviewed thecircumstances in which it might do so, and confirmed its power to do so where felt appropriate.
Dunnett remains good law, as do other cases following that decision. Thus it still remains very
important for lawyers to think carefully about advising clients whether or not to mediate a case.
They may expect close questioning at case management conferences and pre-trial reviewsand especially at the end of a case, as to why mediation was turned down, and the answers
to such questions must be informed and sophisticated. All judges are undergoing mediation
training with the Judicial Studies Board (designed and delivered by CEDR) and can be expected
themselves to understand the issues more fully now.

When is it Reasonable toRefuse Mediation? (continued)
Court-ordered mediation
Although Halsey involved inter-party mediation
proposals and not where the court had itself
recommended or ordered mediation, the Court ofAppeal reaffirmed that ADR Orders in Commercial
Court form, and also as used by Master Ungley
in relation to clinical negligence cases, were valid
and worthy of wider application. The Court addedthat to fail to mediate after recommendationby the Court to do so could well of itself justify acosts sanction against a successful party. Thus
to achieve virtual certainty about costs sanctions
being ordered against a successful party, a court
order recommending ADR should be sought. Any
party ignoring this almost certainly faces sanctions.

Inter-party Mediation Proposals
Halsey essentially looks at cases where there is no Court order to mediate. It makes it clear
that, although to deprive a successful party of costs is an exception to the CPR 44.3(2) thatcosts follow the event, the power still exists to do so on the basis of unreasonable conduct.
Indeed, variations on traditional costs orders because of unreasonable litigation conduct, lackof proportionality or failure to win on certain issues and occupying court time doing so, havebecome commonplace since the CPR. The Court in Halsey identified six factors which might
be considered as justifying refusal to mediate when determining costs issues:• The nature of the dispute, as to which the Court warned that “most cases are not, by theirvery nature, unsuitable for mediation.“• The merits of the case, by which a party which reasonably believes it has a strong casemight make refusal of mediation reasonable. Where a case is borderline, refusal is muchriskier. In truth there is a vast number of cases which fall between those extremes, andlittle safe guidance is given there.
• Other settlement methods have been attempted, though again the Court noted that“mediation often succeeds where other settlement attempts have failed“, and it regards
this reason as part of whether mediation has reasonable prospects of success (discussedbelow).
• Costs of mediation would be disproportionately high, always a proper consideration late
in a modest claim, but the cost benefit may be much better and justify mediation early in
its life.
• Delay to a trial date, this has never occurred in CEDR‘s experience.

When is it Reasonable toRefuse Mediation? (continued)•Whether mediation had a reasonable prospect of success, the burden of showing whichlies with the unsuccessful party who proposed mediation, and not with the successful party
who refused. This factor is actually rather played down by the Court in Halsey, since it may be
the attitude of a party which means that mediation has no reasonable prospect of success.
The burden is not regarded by the Court as being unduly onerous: the unsuccessful litigant
must show that there was a reasonable prospect that the mediation would have succeeded.
What amounts to ‘success‘ in mediation remains open to debate.

In Reed Executive v Reed Business Information [2004] EWCA Civ 887, a decision since Halsey,
the Court of Appeal makes it clear that the Court will have access to offers to mediate incorrespondence marked “Without prejudice save as to costs“ when considering costs orders at
the conclusion of a trial.

Refusal to mediate - a high risk course
So while Halsey modifies Hurst v Leeming in two respects, the words of Lightman J remain
in full force:“Refusal is a high risk course to take… the hurdle in the way of a party refusing to proceed tomediation on this ground is high, for in making the objective assessment of the prospects ofmediation, the starting point must surely be the fact that the mediation process itself can anddoes often bring about a more sensible and more conciliatory attitude on the part of the parties
than might otherwise be expected to prevail before the mediation.“Halsey allows no room for lawyers to be complacent about advice to clients over ADR. Perhaps
the most telling sentence in the whole of Dyson LJ‘s judgement reads:“All members of the legal profession who conduct litigation should now routinely consider with
their clients whether their disputes are suitable for ADR.“It is understood that the Law Society is currently considering what formal advice to require
solicitors to give to clients in the light of this ruling, which amounts to an articulation by the Courtof Appeal of something tantamount to a professional duty, and goes well beyond any previous
formulation of lawyers‘ responsibilities in relation to ADR.