Mediator Refusal Cost Sanctions

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Yet again the courts highlight the consequences of refusing mediation and the services of a mediator. Several cases over the years have highlighted this very point; however the recent decision of the High Court echoes, strengthens and reinforces the decisions of all the previous cases.

The case itself, Phillip Garritt-Critchley & Others -v- Andrew Ronnan & Solarpower PV Limited [2014] EWHC 1774 (Ch) (Garritt-Critchley), in which His Honour Judge Waksman QC held the defendants continual mediation refusal as unreasonable, finding for the claimants and awarding them indemnity costs.

The dispute itself concerned shares in a company which its alleged the defendants failed to allot in line with an alleged agreement that was in place between the parties. It was for the Court to ascertain if there was in fact a binding agreement between the parties or not.

As to the mediator refusal, the claimants stated in their letter before action that they would like to enter into an alternative dispute resolution process such as mediation, to which the defendants clearly refused to do so at that stage.

At the Allocation Questionnaire stage again the defendants refused the offer of mediation, equally their solicitors made it clear that they and their clients were aware of the cost consequences of refusing mediation but considered their refusal to fall within the scope of a reasonable refusal to mediate which is viewed by the Court as an acceptable stance, if it is correct.

As the litigation between the parties ensued, the claimants continually offered mediation, where the defendants continually refused to participate.

A series of events led to a four day trial in January 2014, whereby the defendants accepted the Claimants Part 36 offer that had been made in November 2013. At a costs hearing in February 2014 the claimants successfully obtained an indemnity costs award against the defendants for their failure to use a mediator.

The Judge concluded that the defendants stance concerning the reasonableness to refuse mediation was not applicable in this case; mediator refusal is suited more to cases where parties wish to resolve a point of law or consider a binding precedent to be required. His Honour felt that this case was very suited for mediation. This decision yet again reinforces the consequences of refusing to mediate and that how serious the Judiciary take mediation!

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