Hong Kong: Third party funding for mediation delayed

Hong Kong has published its long-awaited Code of Practice for third party funders and announced that amendments to the Arbitration Ordinance, which permit funding of Hong Kong arbitrations, will come fully into force on 1 February 2019.   However, proposed amendments to the Mediation Ordinance (Cap. 620) regarding non-Hong Kong mediations, costs and disclosure of mediation communications have been deferred for further consultation.

The Department of Justice has announced that commencement of these New Mediation Ordinance provisions will be deferred to a future date following further deliberation at the Steering Committee on Mediation. The DoJ will continue to engage the mediation community and relevant shareholders, so that the New Mediation Ordinance provisions may be brought into operation as soon as practicable with the necessary code of practice to complement it. Continue reading

UK: Civil Justice Council report on ADR calls for review of Halsey guidelines but stops short of recommending mandatory mediation

The Civil Justice Council’s ADR working group has released its final report on ADR and Civil Justice, following consultation on its interim report released last year. The broad mandate of the review was “to maintain the search for the right relationship between civil justice and ADR” and to promote debate over possible reforms.

The report includes various recommendations aimed at improving the awareness of ADR (both in the general public and in the professions/judiciary) and the availability of ADR (both in terms of funding/logistics and regulation of the professionals involved).

However the recommendations likely to be of most interest to users of the civil justice system in the short term are those that relate to Court/Government encouragement of ADR.  In this regard:

  • The report does not support blanket compulsion of ADR in the sense of requiring proof of ADR activity as an administrative precondition to any particular step in the litigation.
  • It also rejects the introduction of mandatory Mediation Information and Advice Meetings (as used in the family courts) as a precondition to pursuing civil claims.

Continue reading

Costs judge finds information from mediation is admissible when considering costs consequences of settlement

A costs judge has held that information about a party's costs provided for the purposes of a mediation could be used as evidence when considering the cost consequences of a subsequent settlement: Savings Advice Limited v EDF Energy Customers Ltd [2017] EWHC B1 (Costs) 

Documents produced for the purposes of mediation are generally covered by without prejudice privilege and, subject to limited exceptions, cannot subsequently be used as evidence. In the present case the costs information was provided in emails headed "without prejudice save as to costs", so it is perhaps not surprising that the costs judge concluded it could be used as evidence in subsequent cost proceedings.

However, other aspects of the reasoning for the decision are more surprising and arguably not supported by existing authorities regarding the without prejudice rule. In particular, the costs judge held that the costs information was not in any event covered by the privilege because it was a statement of pure fact rather than an admission or concession. Such distinction has been rejected in previous cases on the basis that requiring parties to a negotiation to constantly analyse whether they are making admissions or factual statements would undermine the privilege's purpose of enabling parties to speak freely in settlement negotiations (see for example the decision of the House of Lords in Ofulue v Bossert [2009] UKHL16, considered here).

While the decision will not necessarily be followed in future cases,  it serves as a reminder that parties should be aware of the limitations of without prejudice privilege and the circumstances in which information provided during mediation may be used in subsequent litigation. As a practice point, parties should ensure that they are clear as to what is intended when they provide or receive information  'without prejudice save as to costs' in the context of a mediation.

Gary Horlock (associate) and Jan O'Neill (professional support lawyer) in our dispute resolution team consider the decision further below.

Continue reading

UK: New ADR service for costs disputes

The Association of Costs Lawyers (ACL) has launched an ADR service dedicated to the resolution of costs disputes.  The service, which will initially be limited to mediation, will be provided by a panel of eight mediators, including former Senior Costs Judge Peter Hurst and three costs lawyers.   ACL plans to extend the service to include early neutral evaluation, arbitration and multi-case mediation.

Lower value disputes will be conducted via telephone mediations, involving private calls between the mediator and each party as well as joint teleconferences where appropriate. Higher value disputes (and all solicitor/own client disputes) are more likely to involve face to face mediation.  Continue reading

UK: Further guidance on when refusal to mediate may attract costs sanctions

A recent High Court decision has provided a further example of a successful defendant being deprived of a portion of the costs it otherwise would have been awarded because it was found to have unreasonably refused to engage in ADR (applying the guiding principles laid out by the Court of Appeal in Halsey v Milton Keynes General NHS Trust [2004] 1 WLR 3002):  Laporte & anor v Commissioner of Police of the Metropolis [2015] EWHC 371 (QB).

In particular, the judgment is interesting for its consideration of two arguments frequently relied on by parties seeking to justify a failure to engage in ADR: (i) the strength of the party’s case and (ii) the unlikelihood of a mediation being successful.  Notably, the court warns litigants against dismissing mediation as futile purely on the basis of the stance adopted by their opponent up to that point – ‘tactical positioning should not be too easily labelled as intransigence’.

In that regard, the decision can be seen as an example of the courts increasingly recognising the potential for mediation to be effective even where parties seem to be ‘miles apart’ prior to the process – either because of one party’s belief it has a ‘watertight’ case or otherwise.  It serves as a reminder that a party considering refusing to mediate (or to mediate at a particular time) on the grounds that a mediation would be unlikely to succeed should consider that decision very carefully  – and ensure that the reasons supporting that view are fully set out at the relevant time.

Continue reading

Failure to engage with ADR proposals: UK Court of Appeal extends the Halsey principles

The Court of Appeal has delivered a judgment strongly reiterating its support for the role of ADR in civil litigation and extending the existing principles governing the question of when a litigant's failure to engage in ADR will justify a court imposing costs sanctions upon it (as established in Halsey v Milton Keynes General NHS Trust [2004] 1 WLR 3002)

In particular, it has confirmed that a party's silence in the face of a serious invitation to mediate will, as a general rule, be considered to be of itself unreasonable and will warrant a costs sanction – even if there may have been reasonable grounds that would have justified the party expressly refusing the proposal.

In doing so, the Court has sent a clear message that it expects parties not only to participate in mediation where it is appropriate but also to engage constructively in discussion as to whether and when it will be appropriate in any particular case:  PGF II SA v OMFS Company Limited [2013] EWCA Civ 1288.

Click here to read more.

 

Jan O'NeillJan O’Neill

Professional support lawyer,
dispute resolution, London

Email
+44 20746 62202

UK High Court claim struck out as full redress was available under an ADR scheme

The UK High Court recently refused to allow a claim to proceed in relation to mis-selling of an insurance product on the basis that the claimants had already been offered full redress under a formal ADR scheme established in relation to such complaints.   The decision is a further example of the UK courts’ support for ADR and illustrates that the courts’ artillery in this regard is not limited to imposing costs sanctions at the conclusion of litigation (Christopher and Claire Binns v Firstplus Financial Group Plc [2013] EWHC 2436 (QB)).   Continue reading

UK: post Jackson reforms – are mediation costs recoverable?

Under Lord Justice Jackson’s costs reforms, the multi-track costs budget (Precedent H) requests details of the costs of ADR/settlement discussions.  This has prompted the question whether Precedent H creates a presumption that the costs of a failed or aborted mediation form part of standard recoverable costs. Continue reading

English Court of Appeal suggests a rethink of the prohibition on court-ordered compulsory mediation

In a withering attack on what he terms “the emasculation of legal aid” and the inevitable increase in unrepresented litigants in the English courts, Lord Justice Ward in the Court of Appeal has suggested that it may be time to review the rule in Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 prohibiting a court from ordering unwilling parties to refer their dispute to mediation. In this regard, the Court of Appeal addressed the power of the courts to order a stay for mediation to be attempted other than at the allocation stage under CPR 26.4(2)(b):  Wright v. Wright [2013] EWCA CIV 234 Court of Appeal 27 March 2013

Background

The case concerned a dispute between two unrepresented litigants, formerly successful business partners, who had fallen out and were pursuing litigation with a vengeance.  Despite being, in Ward LJ’s words, “intelligent and not unsuccessful businessmen”, the parties steadfastly refused to mediate despite the continued encouragement of the trial judge, which resulted in a disproportionately expensive trial and appeal process.  The appeal itself concerned an alleged procedural error by the trial judge in not acceding to a request by one party to adduce oral evidence, an error which Ward LJ considered may well have arisen, in part at least, as a result of the “chaos which litigants in person inevitably – and wholly understandably – manage to create” in such cases. 

Mediation

The rule against court-ordered mediation was set out by Dyson LJ and Ward LJ himself in Halsey in the following terms:

“It seems to us that to oblige truly unwilling parties to refer their disputes to mediation would be to impose an unacceptable obstruction on their right of access to the court.”

Delivering his judgment in Wright, Ward LJ noted that in Halsey he had been persuaded by the argument that to order parties to mediate would fall foul of the right to a fair trial enshrined in Article 6 of the European Convention on Human Rights.  In Wright, Ward LJ suggests that he may have been wrong to decide this point as he did in Halsey and rhetorically questions whether forcing the parties to go through an additional step before gaining access to court would in fact be an “unacceptable obstruction”.  Whilst he declines to answer this question, since the point was not before the court in Wright, he suggests that a “bold judge” may wish to accede to an invitation to rule on this question, in order that the Court of Appeal may revisit this aspect of Halsey in the light of developments in mediation practice over the last decade. Ward LJ also suggests in Wright that CPR 26.4(2)(b) (which allows a court at the allocation stage to stay proceedings of its own initiative in order for the parties to attempt ADR), might permit the court at any time to direct a stay for mediation to be attempted with the warning of adverse cost consequences for unreasonably refusing to attempt ADR.

Comment

The recent reduction in legal aid funding may on its face have saved expenditure in one area, but this has, in Ward LJ’s view, simply increased the costs and expense of court proceedings, both at the trial and appellate stages.  Aside from the “inevitable chaos” of a case involving unrepresented litigants (Ward LJ refers to the requirement on judges to “micro-manage” such cases and praises Judge Anthony Thornton QC in this case for his “manful, patient, polite, careful and conscientious” efforts in this regard) he considers that Wright also highlights the impossibility of shifting litigants off the trial track and onto the parallel track of mediation, a situation which he describes as “depressing”. This is particularly so since he considers mediation to be a proper alternative to be “tried and exhausted” before finally resorting to trial, especially in cases such as this where mediation is an obvious way to move forward before parties “cripple themselves with debt”.

Ward LJ’s comments, whilst persuasive, are obiter and it therefore remains to be seen whether a suitable case and a “bold judge” emerge to tackle this issue head on, as he hopes.  If this aspect of Halsey is overruled, it will be interesting to see how this will affect both the take up of mediation and its success rate. It seems likely that legislation (either adapting CPR 26.4(2)(b) or a new provision entirely) would be desirable to put matters on a clear setting. In any event, forcing a party to mediate is one thing, forcing them to settle is a different matter entirely and is fraught with theoretical and practical difficulties even in cases which are overwhelmingly ripe for mediation.  It is well established that the success of mediation often rests in large part on the parties’ willingness to engage in the process, and as Ward LJ himself acknowledged, “you may be able to drag the horse (a mule offers a better metaphor) to water, but you cannot force the wretched animal to drink if it stubbornly resists.” The increase in court-annexed mediation pilots in England & Wales (for example in relation to small claims and certain appeals) should be monitored closely and their success analysed in this regard.

Continue reading