Correspondence about possibility of ADR was not “without prejudice” despite being marked as such

The High Court has held that inter-solicitor correspondence about the possibility of engaging in ADR was not properly to be regarded as “without prejudice” (WP) despite being marked as such. The court could therefore have regard to it in considering the appropriate costs order following judgment: Jones v Tracey [2023] EWHC 2256 (Ch).

The decision illustrates that the question of whether or not a communication benefits from WP protection depends on the true nature of the communication and how it would be understood by a reasonable recipient. While a marking of WP (or WP “save as to costs”) will be taken into account, it will not be determinative if the context and/or content of the correspondence objectively indicates a contrary intention.

The decision is also of interest for the court’s observation that, while ADR processes will generally be conducted on a WP basis, the same is not necessarily true for correspondence about the possibility of engaging in ADR. The court considered that such correspondence is “more likely to be open than without prejudice”, as the parties will often wish to be able to rely on it later – though typically such reliance is likely to be in relation to costs issues, and so corresponding on a WP save as to costs basis may equally achieve that aim.

Outside the costs context, previous authorities have held that the WP rule protected the fact of an offer to mediate and any refusal/non-response in the same way that it would protect the making or refusal of a substantive settlement offer (see for example R (on the application of Wildbur) v Ministry of Defence [2016] EWHC 821, discussed here). But of course each case will turn on its facts.

The court’s approach in the present case might be seen as reflecting the growing acceptance of ADR as a standard element of mainstream civil procedure which parties are expected to engage in  – such that a proposal of ADR cannot in itself be prejudicial to their case. Accordingly, there may be no need for such correspondence to be protected by the WP rule. That is consistent with the approach taken in the recent Civil Justice Council report on Pre-action Protocols (considered here), which proposes that the court should be able to see communications regarding proposals to engage in a pre-action dispute resolution process, and evidence of the fact that the process took place, but not anything that discloses the substance of the negotiations.

Background

Following judgment for the claimant in a contested probate dispute, an issue arose as to whether an inter-solicitor letter dated 7 June 2023, which was marked “without prejudice”, was properly to be regarded as WP. The defendant’s solicitors, who had sent the letter, contended that it was not in fact WP despite its marking and sought to rely on it to argue that the claimant’s costs should be reduced because of failure to engage with ADR. The claimant’s solicitors, who received the letter, contended that it was WP and therefore inadmissible including in relation to costs.

The 7 June letter stated:

“We refer to your letter dated 27th April 2023 with regard to your client offering to engage with alternative dispute resolution without moving the trial date. We sent an email on 3rd May 2023 that our client was in agreement to attending alternative dispute resolution.

We understand there are several forms resolving issues before a final hearing but would invite you clarify why your client was unwilling to attend mediation given that we agreed not to move the trial date. Further the offer was some two months before the final hearing.” [sic]

Neither the 27 April letter nor the 3 May email were marked WP. The claimant’s solicitors did not respond to the 7 June letter.

Decision

The High Court (Master Marsh, sitting in retirement) held that the 7 June letter was not in fact WP and was therefore admissible. He reached that conclusion because, in summary:

  1. The court’s starting point was the manner in which the letter was drafted. A WP marking will normally be taken to indicate the writer’s intention, but if it is clear from the context that a letter was intended to be open, or WP, or WP save as to costs, it will be treated as such.
  2. Where a letter falls within a chain of communications of a particular type, it will normally be treated as of the same type unless the opposite intention is obvious.
  3. The true nature of the communication must be established objectively, by reference to a reasonably minded recipient, without regard to evidence of subjective intention.
  4. Although the 7 June letter formed part of a chain of communications dealing with the possibility of ADR, all those communications were open and were obviously intended to be so. Communications about the possibility of engaging in ADR do not need to be WP and will ordinarily be open as it will usually be preferable for both parties to be able to rely upon such communications.
  5. The 7 June letter did not contain an offer and did not relate to communications about a specific offer. It would have been obvious to the reasonably minded recipient that it was not intended to be WP.

Having found that the letter was admissible, Master Marsh went on to conclude that it did not in fact warrant a reduction in the costs awarded to the claimant. Although the claimant’s failure to engage more positively with ADR was surprising, he had made offers to settle well before the claim was issued to which there had been no substantive response, the defendant’s conduct of the claim was unsatisfactory in a number of respects, and the merits of the claim weighted heavily in the claimant’s favour. On the particular facts, it could not be said that the claimant’s silence in response to the 7 June letter amounted to a refusal to undertake ADR.

Master Marsh awarded the claimant his costs on the standard basis until 21 days after the claimant had made a well-judged pre-action Part 36 offer, and on the indemnity basis thereafter, together with interest on those costs at 4% above base rate and an additional sum of 10% of the assessed costs.

Jan O'Neill
Jan O'Neill
Professional Support Lawyer, London
+44 20 7466 2202

 

UK government confirms plans for compulsory mediation in the County Court and decides against statutory regulation of the mediation sector

The UK government has announced that it is proceeding with plans to introduce compulsory mediation as a mandatory procedural step in all Small Claims in the County Court.  All parties in cases allocated to the Small Claims track (ie most claims valued below £10,000) will be required to attend a free mediation appointment with a court mediator before their case can progress to a hearing.

This is the first stage of a plan to progressively integrate a mandatory mediation step into higher value claims in the County Court: within the fast-track (£10,000-25,000) and multi-track (over £25,000).

The announcements came in the government’s published Response to the consultation process it conducted last year on “Increasing the use of mediation in the civil justice system“.  At the same time, the government announced that it has decided against introducing a centralised statutory regime to regulate the private mediation industry.

Although the new mediation procedure in the Small Claims track is modest in terms of what it demands of parties (a free, short telephone appointment), it is very significant as the first instance of mediation being made compulsory in an entire class of claims in the English courts.  It is a key development in the context of the current policy drive by both the government and the civil judiciary to make ADR an integral element of the civil justice system, including by compulsion to the extent appropriate.

Of particular interest are the government’s announced decisions as to where and how the mandatory mediation procedure will apply within the Small Claims track. The comprehensive scope of its application and the extent of sanctions for non-compliance add weight to the perception that it is intended not as a token ‘encouragement’ of ADR but the first steps in a concerted attempt to embed it fully into the system. Continue reading

New “non-consensual” ADR process in the Employment Tribunals adds to the momentum toward compulsory ADR

A new procedure has been introduced in the Employment Tribunals of England and Wales allowing judges in complex claims to require the parties to participate in an ADR process. The process is akin to judicial Early Neutral Evaluation (ENE), in which a judge not involved in the case gives the parties a non-binding opinion as their prospects in the claim, with a view to encouraging settlement.

Beyond its impact in employment disputes, this development is of wider interest in the context of the current hot topic of compulsory ADR in the civil justice system. It appears to add to the growing momentum toward relaxation of the fundamental English law prohibition on compelling ADR, which is (for the moment) still in place under Halsey v  Milton Keynes NHS Trust [2004] EWCA 576. Continue reading

UK government proposes mandatory mediation in small claims and consults on increased regulation of the mediation industry

The Ministry of Justice (MoJ) has launched a public consultation on Increasing the use of mediation in the civil justice system.

It has also given an indication that the government intends for the UK to sign and ratify the Singapore Convention on Mediated Settlements.

The consultation issues

The consultation document seeks views on two distinct issues:

  1. A government proposal to introduce mandatory mediation for all defended Small Claims in the County Court (ie most claims valued below £10,000). Under the proposal, all parties in such actions will be required to participate in a free one hour telephone mediation (not just an information session about mediation) conducted by mediators within HMCTS –  under expansion of the Small Claims Mediation Service (which is currently voluntary).
    It appears to assume that the proposal will proceed, with the consultation focusing on possible exemptions (by case category and/or on a case-by-case basis), sanctions for non-compliance, and how the court should assess whether a party has engaged adequately with the mediation process.
  2. In anticipation of extending mandatory mediation to other County Court claims and beyond, involving use of the private mediation sector, views are sought on whether there is a need for increased regulation and oversight of the mediation industry, such as through accreditation of mediators, formalising standards of conduct and/or establishment of an industry regulator.

The proposal for mandatory mediation of Small Claims, although modest in terms of what it demands of parties, is significant as the first instance of compulsory mediation being made a permanent feature of an entire area of the English courts. Of course, such reform has been clearly foreshadowed over the past year, since the Civil Justice Council’s groundbreaking July 2021 report endorsing compulsory ADR in principle, which has been fully embraced by both the MoJ and the senior judiciary (as noted here).

The current consultation also sits alongside a parallel workstream being pursued by the Department of Business, Energy and Industrial Strategy (BEIS) regarding ADR of consumer disputes outside the court system (such as through Ombudsmen and other ADR schemes). As we recently reported, it is examining the role of compulsion in such schemes as well as introducing measures to strengthen the accreditation framework for consumer ADR providers.

The current MoJ consultation closes on 4 October 2022.

Singapore Convention

Although not the subject of the consultation, the Singapore Convention is mentioned briefly in a section referring to other government initiatives to promote mediation. It notes that these include

“.. proposing to support UK’s intention to ratify the UN Convention on International Settlement Agreements (the “Singapore Convention on Mediation”)“.

It is not clear whether this should be read as confirmation that the government has made its decision on whether to sign the Convention, and we still expect a more formal announcement in that regard following its consultation on that specific question earlier this year. However, the above reference supports the current widespread expectation that it will do so.

For a discussion of the practical impacts of the Singapore Convention for mediating parties, see our earlier posts collected here.

Jan O'Neill
Jan O'Neill
Professional Support Lawyer, London
+44 20 7466 2202

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

Jan O’Neill
Professional Support Lawyer, London

 

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

Article published – ADR reform: one size does not fit all

On 6 March, the Civil Justice Council held a workshop to discuss the recommendations made in its interim report on ADR, which was subject to consultation late last year. The interim report addresses concerns regarding a perceived underuse of ADR within some sections of the civil justice system and suggests a variety of possible corrective measures. The proposals include a power for the court to determine whether costs sanctions should be imposed for unreasonable conduct relating to ADR (such as an unreasonable refusal to mediate) not only at the end of a case, as currently, but during the matter when the decisions regarding ADR are taken.

Jan O’Neill has published a post on Practical Law’s Dispute Resolution blog in which she questions how realistic the suggestion of “midstream” assessment of parties’ conduct relating to ADR would be in practice. She suggests that many of the concerns expressed in the report as to the underuse of ADR are not relevant to many larger, complex claims, and urges the working group to tailor any final recommendations to the specific courts or dispute types for which the evidence suggests they are needed and practicable.

Click here to read the post (or here for the Practical Law Dispute Resolution blog homepage).

 

 

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

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