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.

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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).

 

 

CJEU holds that mandatory mediation is not inherently precluded by EU law

The Court of Justice of the European Union (CJEU) has concluded that national legislation imposing mandatory mediation as a pre-condition to litigation is not precluded by the EU ADR legislative framework, provided that the parties are not prevented from exercising their rights of access to the judicial system.  

However, to the extent that such a pre-condition required consumers to be assisted by a lawyer in the mediation process, or penalised them for withdrawing from the mediation without good grounds, it would be contrary to the Consumer ADR Directive (2013/11/EU):  Menini and another v Banco Popolare Società Cooperativa (Case C-75/16) (14 June 2017).  

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Court of Appeal sends further message on mediation: Don’t drag your heels in arranging it

A recent Court of Appeal decision is the latest instance of the court expressly sending a message to litigants confirming what it expects of them regarding mediation within the court process: Thakkar v Patel [2017] EWCA Civ 117.

Upholding a first instance decision which it described as "severe, but not so severe that this court should intervene", the court refused to overturn a costs sanction on a party who had agreed to mediate but then "dragged its heels" in the discussions over the arrangement of the mediation, to the point where the other party ultimately abandoned the process.

The Court of Appeal has in recent years made clear to litigants that it now expects them to be proactive and engage constructively with each other during proceedings to fully explore the potential for the dispute to be mediated – to the point where ignoring a mediation proposal will usually warrant a costs sanction even if the circumstances were such that an outright refusal to mediate would have been justified (PGF II SA v OMFS [2013] EWCA (Civ) 1288).

The present case confirms that, where mediation is appropriate, the constructive engagement expected by the court also requires that the parties cooperate and act proactively in the arrangement of the mediation: "It behoves both parties to get on with it. If one party frustrates the process by delaying and dragging its feet for no good reason, that will merit a costs sanction". 

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Advocate General Opinion on the Consumer ADR Directive and compulsory mediation

In a case referred to the Court of Justice of the European Union (CJEU) by the Italian courts, an Advocate General opinion has been issued which considers the scope of the Consumer ADR Directive, including whether it precludes national legislation from imposing mandatory mediation as a pre-condition to litigation:  Menini and another v Banco Popolare Società Cooperativa (Case C-75/16). 

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Hong Kong court imposes costs sanctions for unreasonable refusal to mediate

A recent Hong Kong judgment has added to the growing body of case law illustrating courts’ intolerance of litigants who refuse to engage with ADR.   The decision will be of interest to litigants not just in Hong Kong but in other jurisdictions (including England) where similar procedural rules allow a court to penalise a party whose refusal to mediate is held to have been unreasonable: Wu Yim Kwong Kingwind v Manhood Development (24/07/2015, DCCJ 3839/2012).

Of particular interest are the court’s findings that the successful defendant’s refusal to mediate could not be justified by:

  • the fact that the claim was for possession of real property, rather than a monetary claim.  The court refused to accept that this meant the claim was not susceptible to negotiation at all; or
  • the other party’s uncooperative attitude in the proceedings more generally and the fact that it had not instigated settlement negotiations itself.  Aside from the fact that bilateral settlement negotiations are not to be equated with more structured ADR procedures like mediation, the court noted that ‘one must not assume that the process of mediation would not bring about changes in attitudes’. This echoes the English High Court’s recent warning that litigants should not consider themselves justified in 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’.

Read our Hong Kong office’s briefing on the decision here.

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.

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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

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.

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