“The time has now come for this court firmly to endorse the advice given in Chapter 11.56 of the ADR Handbook, that silence in the face of an invitation to participate in ADR is, as a general rule, of itself unreasonable…”.
– Lord Justice Briggs
We know that refusing a reasonable part 36 offer could (and likely will) amount to cost sanctions against the party if they go on and lose at trial.
I have been vocal in the past about ADR, in particular Mediation being a a first stop got Landlord and Tenant disputes (this being backed up be some more experienced practitioners also). Unfortunately funding and local resources have hampered this avenue. Though some of my Local Boroughs (Hounslow and Ealing) have mediation officers or links / fund mediation services.
In the recent case of PGF II SA v OMFS Company 1 Limited [2013] EWCA Civ 1288 as above thoroughly backed that ADR will now be considered if refused unreasonably.
The facts (as held) are as follows:
- In the present case, a serious and carefully formulated written invitation by the claimant’s solicitors to participate in mediation was met with complete silence by the defendant. The offer was repeated just over three months later and, despite promising a full response to the letter in which it was contained, the defendant’s solicitors thereafter made no reply or comment about it at all. After the case was compromised, save as to costs, by the last minute acceptance by the claimant of the defendant’s Part 36 offer, the trial judge Mr Recorder Furst QC, sitting as a deputy judge of the Queen’s Bench Division in the Technology and Construction Court, acceded in part to the claimant’s application for a costs sanction on the ground that the defendant had unreasonably refused to mediate, by depriving the defendant of the costs to which it would otherwise have been entitled under Part 36, but he declined to take the further step of making the defendant pay the claimant’s costs, incurred during the same period. The judge decided first that the defendant’s silence amounted to a refusal and secondly, applying the Halsey guidelines, that its refusal had been unreasonable.
- Both parties appealed. The defendant submitted that the judge had been wrong on both points. Its silence did not amount to refusal, and even if it did, that refusal was on reasonable grounds. For the claimant, Mr. Jonathan Seitler QC made what he acknowledged was a novel submission, namely that silence in response to an invitation to participate in ADR was itself unreasonable regardless whether it amounted to a refusal, or whether there were reasonable grounds to refuse. He said that a civil litigant’s first duty in response to such an invitation was to engage with it, rather than ignore it, even if such engagement led in due course to a reasonable refusal or to the pursuit of some different, or differently timed, process of ADR than that contained in the invitation.
The costs amounting to a whopping £500,000 were disallowed as per the trial judges discretion allowed him.
LJ Briggs ended by stating:
- Finally, as is recognised by the weight placed on the judge’s decision in the passage in the ADR Handbook to which I have referred, this case sends out an important message to civil litigants, requiring them to engage with a serious invitation to participate in ADR, even if they have reasons which might justify a refusal, or the undertaking of some other form of ADR, or ADR at some other time in the litigation. To allow the present appeal would, as it seems to me, blunt that message. The court’s task in encouraging the more proportionate conduct of civil litigation is so important in current economic circumstances that it is appropriate to emphasise that message by a sanction which, even if a little more vigorous than I would have preferred, nonetheless operates pour encourager les autres.
With cost sanctions, strict time limits litigation is becoming more hazardous for all litigators (and probably negligence claims are on the up too). ADR and settling quickly seems to a be a path that is highly encouraged.
Further reading:
PGF II SA v OMFS Company 1 Limited [2013] EWCA Civ 1288
Gardencourt Mediation
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