Businesses involved in disputes should think carefully not just about whether to take part in mediation, but the enthusiasm with which they do so, or risk being penalised by the court on costs, a ruling makes clear.
The parties in a property-related dispute said they were willing to mediate. One party started making arrangements and suggesting mediators. However, the second party responded slowly and constantly raised problems and difficulties. Ultimately, the first party gave up and there was no mediation.
In the proceedings, the court found that the second party had been unenthusiastic and inflexible in its approach to mediation. It found that the first party could, perhaps, have continued to chivvy the second party but, generally, it was the second party that was less keen to participate, and which was the reason mediation never took place.
The Court of Appeal found:
The dispute was particularly suited to mediation as it was simply about money
The parties’ own negotiations had not been successful
Had mediation taken place, there was a good prospect of settling the dispute, particularly, given the first party’s willingness to negotiate. The second party had offered £30,000 in settlement and the first party had been prepared to accept £40,000 – so the gap between them would have been relatively easy to bridge in the hands of a skilled mediator
The costs of court proceedings were much higher than the amounts in dispute
The second party was therefore penalised in costs for its lack of enthusiasm.
Businesses involved in disputes should think carefully not just about taking part in mediation, but the enthusiasm with which they do so, or risk being penalised by the court when it awards costs
Case ref: Thakkar v Patel  EWCA Civ 117
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Jonathan Waters is the founder of Helix Law. Before qualifying as a Solicitor he worked in industry and in investment banking for over a decade. He was also the Partner in charge of Commercial Litigation, Employment Law and Property Litigation at Stephen Rimmer LLP. Jonathan has wide experience of helping and advising businesses to avoid or to deal with commercial disputes and in particular construction disputes.
This article is written to raise awareness of the issues it discusses and it may not be updated after it is first written, even if the law changes. It is not intended to be legal advice and cannot be relied on as such. Helix Law is not responsible or liable for any action taken or not taken as a result of this article. If you think the matters set out affect you and you wish to apply them to your particular circumstances then we are happy to give you free initial telephone advice.