How mediation in personal injury claims can be beneficial
The Courts are clearly of the view that mediation is something which must be considered properly by all parties who are in dispute. This view was confirmed in the recent decision of Ghaith v Indesit EWCA Civ 642.
Mr Ghaith had suffered a back injury at work while lifting washing machine parts during a stock take in 2007. He felt that there had been a breach of the manual handling regulations and so was suing his employers. The value of his claim was put at about £60,000 but liability was denied. Indesit successfully defended the claim at trial. Mr Ghaith sought to appeal the judge’s decision. To do so he had to seek permission to appeal. This was granted by Lord Justice Toulson and at the same time the judge recommended that both parties use mediation.
Mr Ghaith was keen to mediate but Indesit rejected his request. Their view was that the legal costs were already more than the amount that was actually in dispute.
Mr Ghaith’s appeal was successful and the claim was referred back to the County Court for the amount of compensation he should receive to be decided. At the time that the result of the appeal was announced the Court of Appeal made it clear that they believed Indesit were at fault for refusing to mediate and they criticised their reason for not doing so.
Lord Justice Longmore said:
“This is an inadequate response to the Court’s encouragement of mediation, since a full day in this Court would inevitably result in a substantial increase in costs…Indesit’s reaction is all too frequent and the Court has, since April of this year, decided that any claim for less than £100,000 will be the subject of compulsory mediation. It is devoutly hoped that … comparatively small claims will not have to be adjudicated by this Court so frequently in the future.”
That mediation should not have been so easily dismissed was supported by another member of the Court of Appeal panel, Lord Justice Ward. LJ Ward not only reminded litigants that granting permission to appeal shifted the balance of risk but also made obvious reference to Halsey v Milton Keynes General NHS Trust, one of the leading cases in relation to mediation.
In Halsey Lord Justice Dyson had said:
“[the] factors which may be relevant to the question whether a party has unreasonably refused ADR (Alternative Dispute Resolution) will include (but are not limited to the following:
- the nature of the dispute;
- the merits of the case;
- the extent to which other settlement methods have been attempted;
- whether the costs of the ADR would be disproportionately high;
- whether any delay in setting up and attending the ADR would have been prejudicial; and
- whether the ADR had a reasonable prospect of success.”
In Ghaith LJ Ward’s view was that:
“It is not enough, as [counsel for Indesit] suggested, that there had been some attempt in the correspondence between solicitors to settle the case. The opening bids in a mediation are likely to remain as belligerently far apart as they were in correspondence but no-one should under-estimate the new dynamic that an experienced mediator brings to the round table. He has a canny knack of transforming the intractable into the possible. That is the art of good mediation and that is why mediation should not be spurned when it is offered.”
For a party that does refuse to mediate the effect can be a hefty cost penalty at the end of the claim. In Ghaith the appeal was allowed and so there were no cost sanctions but in two other recent cases cost penalties have been applied.
In PGF II SA v OMFS Company & Anor  the offer to mediate was ignored and no reason for doing so was given until the costs hearing with Recorder Furst QC commenting “whilst there may be legitimate difficulties in mediating or successfully mediating these can only be overcome if those difficulties are addressed at the time.”
In Rolf v De Guerin  the offer of round table discussions was repeatedly rejected with no reason being given. The reasons given at the appeal were found not to be unreasonable and not to bear real examination. Lord Justice Rix said:
“It is possible of course that settlement discussions, or even mediation, would not have produced a solution; or would have produced one satisfactory enough to the parties to have enabled them to reach agreement but which Mr Guerin might now, with his hindsight of the judge’s judgment, have been able to say did him less than justice. Nevertheless, in my judgment, the facts of this case disclose that negotiation and/or mediation would have had reasonable prospects of success. The spurned offer to enter into settlement negotiations or mediation were unreasonable and ought to bear materially on the outcome of the court’s discretion, particularly in this class of case.”
The issue of mediation is not just restricted to the Court of Appeal. Recent directions received by our Personal Injury department from local County Courts have included what is known as an “Ungley Order.” The Order states that:
“The parties shall consider whether the case is capable of resolution by ADR. If any party considers that the case is unsuitable for resolution by ADR, that party shall be prepared to justify that decision at the conclusion of the trial, should the judge consider that such means of resolution were appropriate, when he is considering the appropriate costs order to make.
The party considering the case unsuitable for ADR shall, not less than 28 days before the commencement of the trial, file with the court a witness statement without prejudice save as to costs, giving reasons upon which they rely for saying that the case was unsuitable.”
Of course it is not as simple as saying that if you ignore mediation then a costs penalty will follow. The law addressed by decisions such as Ghaith is more relevant to those decisions made by a trial judge who can hear relevant submissions etc and subsequent costs order made by a Court (CPR 44.3) than on a cost assessment (CPR 44.5).
The issue of mediation is likely to be just one aspect of a parties conduct taken into account within any cost proceedings. In addition there are arguments that the Court cannot apply wholesale reductions across the board, for a period or percentage etc as there is no jurisdiction to do so. Quite simply, if they find that failure to mediate is an issue then the Court is faced with the very difficult task of reflecting that in an assessment hearing and reduction of items of cost. It sounds like the worst kind of philosophical conundrum but if mediation has not taken place then how do you assess the cost of what never happened? In addition there is case law that supports a view that a party who attends mediation with no intention to mediate should themselves be penalised in terms of costs. If this is the case then what can a genuine party do? Refuse to mediate and face cost penalties or attend a mediation they don’t believe in and incur substantial costs? It’s a case of being damned if you do and damned if you don’t.
Over time, as the Courts become more and more stretched and funding becomes more and more precious, the importance placed on mediation will only grow and it is likely that the Courts will indeed find a way to penalise the offending party in costs assessments. One thought is that if mediation becomes compulsory for all then a penalty could be imposed for breach of the particular Practice Direction. Whatever the solution the Courts decide upon it is apparent is that even now an offer of mediation should be considered very carefully by all the parties involved in a personal injury claim. If an offer is made then a reminder of the potential costs consequences should mediation be unreasonably refused, as well as a request for reasoning behind any refusal should always be included. While there may be uncertainty at the moment this is an area of law which is likely to rapidly develop. Any party considering entering into litigation (or indeed neck deep in it at the moment) should make sure that that offer to mediate is put forward early and if rejected is brought to the attention of the trial judge whenever possible.