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Winning defendants lose 25% of costs after spurning ADR

Winning defendants lose 25% of costs after spurning ADR

Successful county court defendants who flatly rejected offers to mediate have been denied some of their costs as a penalty.

His Honour Judge Mithani KC, sitting at Nuneaton County Court, last week dismissed a claim in a property dispute over a site in Bedworth.

In Conway v Conway & Anor , the judge wrote that it ‘seriously concerns me’ why the defendants in the case did not agree to mediation when it was put to them. He added: ‘The defendants will have to advance compelling reasons why the offer of mediation was rejected out of hand by them.’

It emerged this week that in his ex tempore judgment, Mithani applied a 25% reduction to the costs the defendants could recover because they had unreasonably refused to engage in ADR. The court rejected the claimant’s invitation to apply a 100% reduction as being too draconian.

It is understood that before proceedings were issued in 2022, the claimant’s solicitor made an offer for pre-action mediation. This received no response.

Later that year, a second offer of mediation was made: the defendants replied setting out that the dispute was unsuitable for mediation, mediation would delay any final determination and increase costs, and any agreement reached at mediation would not be final and binding.

The final mediation offer was made after the first day of trial (the hearing lasted eight days in the end) when the claimant made a without prejudice offer which was rejected without counter-offer. The defendants said this final offer was ‘absurd’ and the trial went ahead.

It is understood the judge found the decision to turn down mediation in October 2022 was misconceived and that the defendants were minded to continue with the litigation. He added that it was not possible for the defendants to say they were almost certainly likely to win and so mediation had no merits whatsoever.

The county court ruling is not binding, but will be interpreted as another sign from the courts that a failure to mediate will not be tolerated.

The Court of Appeal held last year in Churchill v Merthyr Tydfil County Borough Council that the courts could order parties to engage in alternative dispute resolution, or stay proceedings to enable them to engage.

Read the complete article here.

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