- This is the judgment of the court.
- These two appeals raise a question
of some general importance: when
should the court impose a costs
sanction against a successful
litigant on the grounds that he has refused to take part
in an alternative dispute resolution
("ADR")?
There seems to be some uncertainty
as to the approach that should
be adopted in answering this
question: it has been the subject of consideration by courts on a number of occasions.
A measure of its significance is that
we have received detailed and helpful submissions from
no fewer than four interveners, namely the Law Society,
the Civil Mediation Council,
the ADR Group and the Centre for Effective Dispute Resolution.
- In the appeal of Halsey,
the only ground of appeal is
that, notwithstanding that the
claim was dismissed, the judge
was wrong to award the defendant, the Milton Keynes General NHS
Trust ("the Trust") its costs, since it had
refused a number of invitations
by the claimant to mediate. There
are two grounds of appeal in
the case of Steel.
First, it is said that the judge reached the wrong conclusion
on the causation issue that he tried in the Part 20 proceedings
between the defendants ("the causation issue").
Secondly, it is submitted that the judge was wrong to
award the successful second defendant his costs against
the first defendant, since the second defendant had refused
a number of invitations by the first defendant to mediate.
We shall start by giving some guidance as to the general
approach that should be adopted when dealing with the costs issue
raised by these two appeals. We shall then turn to
the facts of the two appeals.
General encouragement of the use
of ADR
- As was explained in Lord Woolf’s
Final Report on Access to Justice
(p 11), for some time before
the Civil Procedure Rules ("CPR") came into force, resort by parties involved
in litigation to ADR had been encouraged by the courts in various ways. The CPR, practice
directions
and pre-action protocols have built on these early developments.
It is unnecessary to make extensive reference to demonstrate this. CPR 1.4(1) obliges
the court to further the overriding
objective of enabling the court to deal with cases justly
by actively managing cases, and Rule 1.4(2)(e) defines "active case management" as
including "encouraging
the parties to use an alternative dispute resolution
procedure if the court considers that appropriate and facilitating the use of such
procedure". Rule 26.4(1) provides that "a
party may, when filing the completed allocation questionnaire,
make a written request for the proceedings to be stayed while the parties try to settle
the case by alternative dispute
resolution or other means".
- The term "alternative dispute resolution" is
defined in the Glossary to the CPR as a "collective description of methods of resolving
disputes otherwise than through the normal trial process." In practice, however, references
to ADR are usually understood as being references to some form of mediation by a third
party. The general rule is that the unsuccessful party
is ordered to pay the costs of the successful party (CPR
44.3(2)(a)). The cases in which the question of displacing
this rule have been discussed have usually been concerned
with the refusal of mediation by the successful party. The
two appeals before this court fall into this category.
In what follows we shall concentrate on the cost consequences
of a refusal by the successful party to agree to mediation.
- There are those who believe that
the virtues of mediation have
not yet been sufficiently demonstrated.
There is some reference to this
by Professor Hazel Genn in her excellent report "Court-based
ADR initiatives for non-family civil disputes: the Commercial
Court and the Court of Appeal" (March
2002), at pp 58-67. But we are in no doubt that we should
proceed on the basis that there are many disputes which are suitable for mediation. This
approach is consistent with, and
(as we have seen) underpinned by, the Woolf reforms.
It is also consistent with the fact there are now a number of court-based mediation schemes
for civil non-matrimonial cases,
which operate with varying degrees of success. The virtues
of mediation in suitable cases are also recognised in the Chancery Guide (paras 17.1 and
17.3), the Queen’s Bench Guide
(para 6.6), the Admiralty and Commercial Court Guide
(para D8.8) and the Technology and Construction Court Guide (para 6.4). Judges in the Commercial
Court routinely make "ADR orders" in
the form set out in Appendix 7 to the Admiralty and Commercial
Court Guide (see further para 30 below).
- We are also mindful of the position
which has been taken by Government
on this issue. Thus, in March
2001, the Lord Chancellor announced
an "ADR Pledge" by which all Government
departments and Agencies made a number of commitments
including that: "Alternative Dispute
Resolution will be considered and used in all suitable cases wherever the other party
accepts it". In July 2002, the Department for Constitutional Affairs published a report
as to the effectiveness of the Government’s commitment
to the ADR pledge. The report stated that the pledge had been taken very seriously, and identified
a number of initiatives that
had been introduced as a direct result of it. These included
the following initiative on the part of the National Health Service Litigation Authority
("NHSLA"):
"The encouragement
of greater use of mediation,
and other forms of alternative
dispute resolution, is one of
the options considered by the NHSLA, who are responsible
for handling clinical negligence
claims against the NHS. The NHSLA
is working with the Legal Services Commission to
develop a joint strategy for
promoting greater use of mediation
as an alternative to litigation in clinical negligence disputes.
Since May 2000 the
NHSLA has been requiring solicitors
representing NHS bodies in such
claims to offer mediation in
appropriate cases, and to provide clear reasons to the authority if a case is
considered inappropriate."
- Strong support for the use of ADR
in general , and mediation in particular, has been given by the courts in cases such
as R (Cowl) v Plymouth City Council [2001] EWCA Civ 1935,
[2002] 1 WLR 803, Dunnett v Railtrack plc [2002] EWCA Civ 303, [2002] 1 WLR 2434 and Hurst
v Leeming [2001] EWHC 1051 (Ch), [2003] 1 Lloyds Rep 379.
- We heard argument on the question
whether the court has power to
order parties to submit their
disputes to mediation against
their will. It is one thing to encourage the parties to agree
to mediation, even to encourage
them in the strongest terms.
It is another to order them to do so. 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. The court in Strasbourg has said in relation to article
6 of the European Convention
on Human Rights that the right of access to a court may be waived, for example by means
of an arbitration agreement,
but such waiver should be subjected
to "particularly careful
review" to ensure that the claimant is not subject to "constraint": see Deweer
v Belgium (1980) 2 EHRR 439, para 49. If that is the approach of the ECtHR to an agreement to
arbitrate, it seems to us likely that compulsion of ADR would be regarded as an unacceptable
constraint on the right of access to the court and, therefore,
a violation of article 6. Even if (contrary to our view) the court does have jurisdiction
to order unwilling parties
to refer their disputes to mediation, we find it difficult
to conceive of circumstances in which it would be appropriate to exercise it. We would adopt
what the editors of Volume 1
of the White Book (2003) say at para 1.4.11:
"The hallmark
of ADR procedures, and perhaps
the key to their effectiveness
in individual cases, is that
they are processes voluntarily entered into by the parties in
dispute with outcomes, if the
parties so wish, which are non-binding.
Consequently the court cannot direct that such methods be used but may merely encourage
and
facilitate."
- If the court were to compel parties
to enter into a mediation to which they objected, that would achieve nothing except
to add to the costs to be borne by the parties, possibly postpone
the time when the court determines the dispute and damage
the perceived effectiveness of the ADR process. If a judge takes the view that the
case is suitable for ADR, then he or
she is not, of course, obliged to take at face value
the expressed opposition of the parties. In such a case, the judge should explore the
reasons for any resistance to ADR. But if the
parties (or at least one of them) remain intransigently
opposed to ADR, then it would be wrong for the court to compel them to embrace it.
- Parties sometimes need to be encouraged
by the court to embark on an ADR. The need for such encouragement should diminish in time
if the virtue of ADR in suitable cases is demonstrated
even more convincingly than it has been thus far. The
value and importance of ADR have been established within a remarkably short time. All members
of the legal profession who conduct
litigation should now routinely consider with their clients
whether their disputes are suitable for ADR. But we reiterate that the court’s role is to
encourage, not to compel. The form
of encouragement may be robust: see para 30 below.
The costs issue
- CPR 44.3(2) provides that "if
the court decides to make an order about costs (a) the general rule is that the unsuccessful
party will be ordered to pay the cost of the successful party;
but (b) the court may make a different order". CPR 44.3(4) provides that "in deciding
what order (if any) to make about costs, the court must
have regard to all the circumstances, including-(a) the conduct of the parties". Rule
44.3(5) provides that the conduct of the parties includes "(a) conduct before, as well
as during, the proceedings and in particular the extent to which the parties followed any
relevant pre-action protocol."
- In deciding whether to deprive a successful
party of some or all of his costs on the grounds that he has refused to agree to ADR, it
must be borne in mind that such an order is an exception
to the general rule that costs should follow the event.
In our view, the burden is on the unsuccessful party to show why there should be a departure
from the general rule. The fundamental
principle is that such departure is not justified unless
it is shown (the burden being on the unsuccessful party) that the successful party acted
unreasonably in refusing to agree
to ADR. We shall endeavour in this judgment to provide
some guidance as to the factors that should be considered by the court in deciding whether
a refusal to agree to ADR is unreasonable.
- We make it clear at the outset that it
was common ground before us (and we accept) that parties are entitled in an ADR to adopt
whatever position they wish, and if as a result the dispute
is not settled, that is not a matter for the court. As
is submitted by the Law Society, if the integrity and confidentiality of the process is to
be respected, the court should not
know, and therefore should not investigate, why the process
did not result in agreement.
- We recognise that mediation has a number
of advantages over the court process. It is usually less expensive than litigation which
goes all the way to judgment, although it should not
be overlooked that most cases are settled by negotiation
in the ordinary way. Mediation provides litigants with a wider range of solutions than those
that are available in litigation: for
example, an apology; an explanation; the continuation
of an existing professional or business relationship perhaps on new terms; and an agreement
by one party to do something without
any existing legal obligation to do so. As Brooke LJ
pointed out in Dunnett at para
[14]:
"Skilled mediators
are now able to achieve results
satisfactory to both parties
in many cases which are quite
beyond the power of lawyers and courts to achieve. This court
has knowledge of cases where
intense feelings have arisen,
for instance in relation to clinical negligence claims. But when the parties
are brought together on neutral
soil with a skilled mediator to help them resolve their differences,
it may very well be that the
mediator is able to achieve a
result by which the parties shake
hands at the end and feel that
they have gone away having settled the dispute on terms with which they are
happy to live. A mediator may
be able to provide solutions
which are beyond the powers of the court to provide."
- In deciding whether a party has
acted unreasonably in refusing ADR, these considerations should be borne in mind. But
we accept the submission made by the Law Society that mediation and
other ADR processes do not offer a panacea, and can have
disadvantages as well as advantages: they are not appropriate for every case. We do
not, therefore, accept the submission made
on behalf of the Civil Mediation Council that there should
be a presumption in favour of mediation. The question whether a party has acted unreasonably
in refusing ADR must be determined
having regard to all the circumstances of the particular
case. We accept the submission of the Law Society that factors which may be relevant
to the question whether a party has unreasonably
refused ADR will include (but are not limited to) the
following: (a) the nature of the dispute; (b) the merits of the case; (c) the extent
to which other settlement methods have been attempted;
(d) whether the costs of the ADR would be disproportionately
high; (e) whether any delay in setting up and attending the ADR would have been prejudicial;
and (f) whether the ADR
had a reasonable prospect of success. We shall consider
these in turn. We wish to emphasise that in many cases no single factor will be decisive,
and that these factors should not be
regarded as an exhaustive check-list.
- (a) The nature of the dispute.
Even the most ardent supporters of ADR acknowledge that the subject-matter of some
disputes renders them intrinsically unsuitable for ADR. The Commercial
Court Working Party on ADR stated in 1999:
"The Working
Party believes that there are
many cases within the range of
Commercial Court work which do
not lend themselves to ADR procedures. The most obvious kind is where
the parties wish the court to
determine issues of law or construction
which may be essential to the future trading relations of the
parties, as under an on-going
long term contract, or where the issues are generally important
for those participating in a
particular trade or market. There
may also be issues which involve
allegations of fraud or other
commercially disreputable conduct against an individual or group which
most probably could not be successfully mediated."
Other examples falling
within this category are cases where a party wants the court to resolve a point of
law which arises from time to time, and it is considered that
a binding precedent would be useful; or cases where injunctive
or other relief is essential to protect the position of a party. But in our view, most
cases are not by their very nature
unsuitable for ADR.
- (b) The merits of the case. The
fact that a party reasonably believes that he has a strong case is relevant to the
question whether he has acted reasonably in refusing ADR.
If the position were otherwise, there would be considerable
scope for a claimant to use the threat of costs sanctions to extract a settlement from
the defendant even where the claim
is without merit. Courts should be particularly astute
to this danger. Large organisations, especially public bodies, are vulnerable to pressure
from claimants who, having weak cases,
invite mediation as a tactical ploy. They calculate that
such a defendant may at least make a nuisance-value offer to buy off the cost of a
mediation and the risk of being penalised
in costs for refusing a mediation even if ultimately
successful.
- Some cases are clear-cut. A good example
is where a party would have succeeded in an application for summary judgment pursuant to
CPR 24.2, but for some reason he did not make such an application.
Other cases are more border-line. In truly border-line
cases, the fact that a party refused to agree to ADR because he thought that he would win
should be given little or no weight
by the court when considering whether the refusal to
agree to ADR was reasonable. Border-line cases are likely to be suitable for ADR unless there
are significant countervailing factors
which tip the scales the other way. In Hurst, Lightman J said:
"The fact that
a party believes that he has
a watertight case again is no
justification for refusing mediation. That is the frame
of mind of so many litigants."
In our judgment,
this statement should be qualified. The fact that a party unreasonably believes
that his case is watertight is no justification for refusing
mediation. But the fact that a party reasonably believes that he has a watertight
case may well be sufficient
justification for a refusal to mediate.
- (c) Other settlement methods
have been attempted. The fact that settlement offers have
already been made, but rejected, is a relevant factor.
It may show that one party is making efforts to settle, and that the other party
has unrealistic views of the merits of the case.
But it is also right to point out that mediation often
succeeds where previous attempts to settle have failed. Although the fact that
settlement offers have already been made is potentially
relevant to the question whether a refusal to mediate
is unreasonable, on analysis it is in truth no more than an aspect of factor
(f).
- (d) The costs of mediation would
be disproportionately high. This is a factor of particular
importance where, on a realistic assessment, the sums
at stake in the litigation are comparatively small. A mediation can sometimes
be at least as expensive as a day in court. The parties
will often have legal representation before the mediator,
and the mediator’s fees will usually be borne equally by the parties regardless
of the outcome (although the costs of a mediation
may be the subject of a costs order by the court after
a trial). Since the prospects of a successful mediation cannot be predicted with
confidence (see further para 27 below), the
possibility of the ultimately successful party being
required to incur the costs of an abortive mediation is a relevant factor that
may be taken into account in deciding whether the successful
party acted unreasonably in refusing to agree to ADR.
- (e) Delay. If mediation
is suggested late in the day, acceptance of it may have the effect of delaying the
trial of the action. This is a factor which it may be relevant to
take into account in deciding whether a refusal to agree
to ADR was unreasonable.
- (f) Whether the mediation had
a reasonable prospect of success. In Hurst,
Lightman J said that he considered
that the "critical factor" in that case was whether "objectively
viewed" a mediation had any real prospect of success. He continued (p 381):
"If mediation
can have
no real
prospect of success, a party may, with impunity, refuse
to proceed
to mediation on this ground. But refusal is a high risk course to take, for
if the
Court
finds that there was a real prospect, the party refusing to proceed to mediation
may, as I have said,
be severely
penalized.
Further, the hurdle in the way of a party refusing to proceed to mediation on
this
ground
is high, for in making this objective assessment of the
prospects
of mediation, the starting point must surely be the
fact
that the mediation process itself can and often does bring about a more sensible
and more conciliatory
attitude
on the
part of the parties than might otherwise be expected to prevail
before
the mediation, and may produce a recognition of the strengths and weaknesses
by each
party
of his own case and of
that
of his opponent, and a willingness to accept the give
and take
essential to a successful mediation. What appears to be incapable of mediation
before
the mediation process begins often proves capable of satisfactory resolution
later."
- Consistently with the view expressed
in this passage, Lightman J
said that on the facts of that
case he was persuaded that "quite exceptionally" the
successful party was justified
in taking the view that mediation
was not appropriate because it had no realistic prospects
of success.
- In our view, the question whether the
mediation had a reasonable prospect of success will often be relevant to the reasonableness
of A’s refusal to accept B’s invitation to agree to it.
But it is not necessarily determinative of the fundamental
question, which is whether the successful party acted unreasonably in refusing to agree to
mediation. This can be illustrated
by a consideration of two cases. In a situation where
B has adopted a position of intransigence, A may reasonably take the view that a mediation
has no reasonable prospect of success because
B is most unlikely to accept a reasonable compromise.
That would be a proper basis for concluding that a mediation would have no reasonable prospect
of success, and that for this reason A’s
refusal to mediate was reasonable.
- On the other hand, if A has been
unreasonably obdurate, the court might well decide, on that account, that a mediation would
have had no reasonable prospect of success. But obviously
this would not be a proper reason for concluding that
A’s refusal to mediate was reasonable. A successful party cannot rely on his own unreasonableness
in such circumstances. We do not,
therefore, accept that, as suggested by Lightman J, it
is appropriate for the court to confine itself to a consideration of whether, viewed objectively,
a mediation would have had a reasonable
prospect of success. That is an unduly narrow approach:
it focuses on the nature of the dispute, and leaves out of account the parties’ willingness
to compromise and the reasonableness of
their attitudes.
- Nor should it be overlooked that the
potential success of a mediation may not only depend on the willingness of the parties to
compromise. Some disputes are inherently more intractable
than others. Some mediators are more skilled than others.
It may therefore, sometimes be difficult for the court to decide whether the mediation would
have had a reasonable prospect
of success.
- The burden should not be on the refusing
party to satisfy the court that mediation had no reasonable prospect of success. As we have
already stated, the fundamental question is whether it has
been shown by the unsuccessful party that the successful
party unreasonably refused to agree to mediation. The question whether there was a reasonable
prospect that a mediation would
have been successful is but one of a number of potentially
relevant factors which may need to be considered in determining the answer to that fundamental
question. Since the burden
of proving an unreasonable refusal is on the unsuccessful
party, we see no reason why the burden of proof should lie on the successful party to show
that mediation did not have any
reasonable prospect of success. In most cases it would
not be possible for the successful party to prove that a mediation had no reasonable prospect
of success. In our judgment, it
would not be right to stigmatise as unreasonable a refusal
by the successful party to agree to a mediation unless he showed that a mediation had no
reasonable prospect of success. That
would be to tip the scales too heavily against the right
of a successful party to refuse a mediation and insist on an adjudication of the dispute
by the court. It seems to us that
a fairer balance is struck if the burden is placed on
the unsuccessful party to show that there was a reasonable prospect that mediation would
have been successful. This is not an
unduly onerous burden to discharge: he does not have
to prove that a mediation would in
fact have succeeded. It is significantly easier for the unsuccessful party to prove that
there was a reasonable prospect that a mediation would
have succeeded than for the successful party to prove the contrary.
- So far we have been considering the question
whether a successful party’s refusal of ADR was unreasonable without regard to the impact
of any encouragement that the court may have given
in the particular case. Where a successful party refuses
to agree to ADR despite the court’s encouragement, that is a factor which the court will
take into account when deciding whether
his refusal was unreasonable. The court’s encouragement
may take different forms. The stronger the encouragement, the easier it will be for the unsuccessful
party to discharge the burden
of showing that the successful party’s refusal was unreasonable.
- An ADR order made in the Admiralty
and Commercial Court in the form
set out in Appendix 7 to the
Guide is the strongest form of
encouragement. It requires the parties to exchange lists of neutral individuals
who are available to conduct "ADR procedures", to endeavour
in good faith to agree a neutral individual or panel
and to take "such serious steps
as they may be advised to resolve their disputes by ADR
procedures before the neutral individual or panel so chosen". The order also provides
that if the case is not settled, "the
parties shall inform the court what steps towards ADR
have been taken and (without prejudice to matters of privilege) why such steps have
failed". It is to be noted, however, that
this form of order stops short of actually compelling
the parties to undertake an ADR.
- Nevertheless, a party who, despite such
an order, simply refuses to embark on the ADR process at all would run the risk that for
that reason alone his refusal to agree to ADR would
be held to have been unreasonable, and that he should
therefore be penalised in costs. It is to be assumed that the court would not make such an
order unless it was of the opinion
that the dispute was suitable for ADR.
- A less strong form of encouragement is
mentioned in the other Court Guides to which we have referred at para 6 above. A particularly
valuable example is the standard form of order now
widely used in clinical negligence cases, and which was
devised by Master Ungley. The material parts of this order provide:
"The parties
shall by consider whether the
case is capable of resolution
by ADR. If any party considers
that the case is unsuitable for resolution by ADR, that party shall be prepared
to justify that decision at the
conclusion of the trial, should
the judge consider that such means of resolution were appropriate, when he is
considering the appropriate costs order to make.
The party considering
the case unsuitable for ADR shall,
not less than 28 days before
the commencement of the trial,
file with the court a witness statement without prejudice
save as to costs, giving reasons
upon which they rely for saying that the case was
unsuitable."
- This form of order has the merit
that (a) it recognises the importance of encouraging the parties to consider whether
the case is suitable for ADR, and (b) it is calculated to bring home to them that,
if they refuse even to consider that question, they may be at risk on
costs even if they are ultimately held by the court to
be the successful party. We can see no reason why such an order should not also routinely
be made at least in general personal
injury litigation, and perhaps in other litigation too.
A party who refuses even to consider whether a case is suitable for ADR is always at
risk of an adverse finding at the costs stage
of litigation, and particularly so where the court has
made an order requiring the parties to consider ADR.
Public bodies
- Another issue that has arisen
is whether the court should be particularly disposed to make an adverse costs order against
a successful public body on the grounds that it refused to
agree to ADR. We can see no basis for the court discriminating
against successful public bodies when deciding whether a refusal to agree to ADR should
result in a costs penalty.
The only reason for doing so that was suggested to us
in the course of argument was that Government departments and agencies (including the
NHSLA) should be held to the ADR pledge
(see para 7 above). We need, therefore, to consider whether
the ADR pledge has any special significance. In Royal Bank of Canada v Secretary of
State for Defence [2003] EWHC
1841 (Ch) the main issue was the true interpretation
of a lease. Lewison J said that, although it concerned
a question of law, this dispute was suitable for ADR.
He considered that the ADR pledge given by Government
was something to which he ought to attach "great weight".
At para 12 of his judgment he said:
"As I have
said, however, the most important
feature to my mind is the formal
pledge given on behalf of the
government and its various departments to use ADR in appropriate cases.
The government did not abide
by that pledge in this case.
I am not in a position to form any real view of whether a mediation would
or would not have succeeded.
It may well have done, but in my judgment a failure to abide by the formal pledge given
on the part of government, coupled
with the fact that……, justifies
a decision that the defendant
should not recover any further costs from the claimant."
- In our judgment, the judge was
wrong to attach such weight to the ADR pledge. The pledge was no more than an undertaking
that ADR would be considered and used in all suitable cases.
If a case is suitable for ADR, then it is likely that
a party refusing to agree to it will be acting unreasonably, whether or not it is a
public body to which the ADR pledge applies.
If the case is not suitable for ADR, then a refusal to
agree to ADR does not breach the pledge. It is, therefore, difficult to see in what
circumstances it would be right to give great
weight to the ADR pledge.
HALSEY v MILTON KEYNES GENERAL NHS
TRUST
The facts
- This claim is brought by Lilian
Halsey pursuant to the provisions of the Fatal Accidents Act 1976 (as amended) in relation
to the death of her husband, Bert Halsey, on 27 June 1999 at
the Milton Keynes General Hospital. At the date of his
death, the deceased was 83 years of age. The claim arose out of the allegedly negligent
treatment of him while he was a patient
at that hospital.
- He was transferred to the hospital on
25 June 1999. At that time, he was suffering from several serious health problems. It was
not in dispute that his life expectation was short. He was
being fed by means of a nasogastric feeding tube. The
basis of the claim was that his death was caused by the tube being incorrectly fitted, so
that, rather than directing liquid food
into the deceased’s stomach, it was directing it into
his left lung. Following his death, a post mortem examination was performed by Dr Mayers,
a consultant histopathologist, employed
by the defendant Trust. She concluded that the cause
of death was airway obstruction due to the introduction of nasogastric nutrition into the
airway and lung as a result of the
insertion of a nasogastric tube into the major airway.
- An inquest was held into the deceased’s
death. For this purpose, HM Coroner
requested statements from the
medical and nursing staff most
closely involved in the deceased’s
care at the hospital. The claimant instructed Messrs Osborne Morris and Morgan
("OMM") to attend the
inquest on behalf of the family. The Trust refused a
request that it should meet the
cost of OMM’s preparation and
attendance at the inquest. On
11 January 2000, OMM wrote to the Trust’s solicitors
saying:
"We should
perhaps point out that our clients would have agreed to limit their entire claim in
this matter to the costs of the representation of the inquest. Indeed
they would have been prepared to limit the preparation
and attendance to £5000. No doubt
your clients will bear this in mind when we issue proceedings
against them following the inquest. The family have been forced to issue proceedings
simply because of your clients
refusal to meet the costs of the attendance".
- The inquest was held on 14 January
2000. The Coroner heard evidence from several nurses, Dr Mayers and Dr Lanzone Miller,
a consultant physician and gastro-enterologist. Dr Miller disagreed
with Dr Mayers’ view that nutrition had entered the airway
and lung due to the insertion of the nasogastric tube into the major airway. Dr Miller
considered that the explanation
for the presence of nutritional feed in the lung was
regurgitation followed by aspiration of the stomach contents at or around the time
of death. At the conclusion of the evidence,
the Coroner recorded the medical cause of death as:
"1(a) airway
obstruction;
1(b) introduction
of nasogastric nutrition into airway and lungs;
2 chronic renal
failure; old myocardial infarct;
chronic obstructive pulmonary disease and fractured ribs".
- By a letter dated 18 January 2000,
OMM informed the Trust that the
deceased’s family would be prepared
to accept a payment of £7500 bereavement damages together with a contribution
towards their costs. The Trust’s solicitors replied on
4 February saying that they were instructed "to
take all necessary steps to resist a claim, to trial
if necessary, should one be forthcoming".
On 7 February, OMM asked the Trust whether they were
prepared to refer the matter "for
alternative dispute resolution that is, mediation, again
to ensure that unnecessary costs are incurred (sic). Our client wants to mediate this
claim".
- On 6 April 2000, OMM wrote to the Secretary
of State for Health giving him early notice of the proceedings, and saying:
"You will see
from the correspondence that I have at every juncture sought to meet, negotiate and
mediate this claim with the least amount of cost to the NHS. Unfortunately
all such attempts have been rejected. I want you to have
this correspondence in mind when the final bill payable by the NHS for legal costs
is in the region of £100,000."
- By letter dated 14 March 2000,
the Trust’s solicitors replied saying that they did not accept that there was any claim
arising out of the care provided to the deceased, and that all necessary
steps would be taken to resist a claim, to trial if necessary.
- On 25 April 2001, OMM wrote to
the Trust a letter of claim in
accordance with the clinical
negligence pre-action protocol.
The letter included an offer to accept the sum of £12,500
together with reasonable costs pursuant to CPR Part 36.
This evoked a response on 1 May
in which the Trust said that
it would be defending the claim.
On 25 July 2001 the Trust sent its protocol response
denying liability, and asserting:
"As there is
no negligence, the Trust will not be settling this claim. In view of this, I do not
believe it is appropriate to meet with you and discuss this claim
or refer this case to mediation as the Trust’s stance
will not change in this respect. Therefore, any such meeting or mediation will be unnecessary
waste of both costs and resources".
- On 5 November 2001, OMM wrote to
the Trust saying:
"We must make
it clear to you at this stage that it was never our intention to issue proceedings
since this was quite obviously a case that could have been resolved
by mediation".
- The claim form was issued on 13
May, and served on 9 September 2002. On 10 September 2002, OMM wrote:
"Despite the
fact that we have issued proceedings in this matter we are anxious to avoid unnecessary
costs being incurred. We would therefore invite you to consider
referring this case to mediation so that we can perhaps
resolve it to the satisfaction of our client without unnecessary costs being incurred".
- This request was repeated by OMM’s
letter of 13 September 2002. The Trust replied on 16 September:
"I have as
yet been provided with no evidence that it would be an effective use of NHS resources
to go to mediation on this small value claim, where liability is in
dispute. What your costs are, are obviously a matter
for you and your client, the Trust costs on this claim, even to trial will only be
low".
- On 3 April 2003, OMM wrote yet
again urging the Trust to consider either mediation or at least a meeting to discuss
a possible settlement:
"We are certain
agreement could be reached whereby further unnecessary costs would be avoided".
- The Trust replied on 4 April, repeating
its position that "on such a low quantum claim,
we do not consider this to be a cost effective use of
NHS resources". On 30 April 2003,
OMM wrote again pointing out that they had made every
attempt to try to avoid the costs of litigation, but
all such attempts had been rejected out of hand. They
referred to the decision of this court in Dunnett and that of Lightman J in Hurst, and
said that they would be relying on these decisions when the court came to consider the question
of costs,
since the Trust had acted unreasonably. On 1 May 2003,
the Trust replied saying:
"In respect
of your request that we clarify why "mediation is not
a cost effective use of NHS resources on such a low cost
claim", (a) it has little chance
of success and (b) the costs of mediation would be as
great, if not greater for such a low value claim than attending trial. … if you do
not intend to consider a "drop hands" agreement,
then I look forward to receiving your indexed trial bundle
and summary in order that we may consider and amend/agree them".
- The trial took place on 1 and 2
June 2003. The judge gave judgment
on 17 June, and dismissed the
claim. He then heard argument
on the question of costs. It was submitted by Mr Meakin on
behalf of the claimant that there
should be no order as to costs,
and in support of his submission he relied on the refusal of the Trust to agree
to a mediation. The judge was
referred to some, if not all, of the correspondence to which we
have referred. He said that he
had the feeling that the letters
written by OMM had been "somewhat tactical".
He also thought that it was unusual
to commence litigation by writing
to the Secretary of State for
Health as occurred in this case. At para 32 of his judgment, he said:
"I think that
the question for me to decide
is was the defendant’s attitude
to ADR a reasonable one, or not
a reasonable one or to use the words of Lightman J, were they
justified in taking the view
that mediation was not appropriate
because it had no realistic prospect of success? Having considered and been taken
through much of this correspondence,
although, as I say, notably not the correspondence preceding
the letter to the Health Secretary
in 2000, it seems reasonably
clear to me that although there
are a number of tactical observations
to the effect that the claimant would like ADR, it remains
perfectly clear that this is
not a case which they were disposed
to compromise on any terms which
could possibly be reasonable
to the defendants. The Defendants took the view, legitimately as I have found, that
this was
a case in which there simply
was no negligence. It is significant
that I have been told
that on 4th March of this year, fairly shortly before trial, an offer was made
by the defendant to the claimant that the matter should
be settled on the basis that both parties simply walked
away from the litigation and neither paid their costs,
but that did not attract the advisors to the claimant
or the claimant herself. She started off asking for £12,000, towards the end was offering
to accept £7,500
and funeral expenses. It seems perfectly clear that it
would only have been by the payment of some significant,
albeit modest by the standards of this type of litigation,
sum of money that the defendants would have been able
to buy off the claim, whether by ADR or in any other way. I do not think
that the CPR is designed to make parties which have a
good defence settle claims which they do not wish to
settle, when they ultimately end up winning and are vindicated in
the view that they have taken, I do not think it proper,
at least not in a run of the mill case, to say that they
should then suffer by being denied their costs. This was a perfectly
straightforward case of a kind which the defendants were
justified in defending and justified in saying that they
did not want to pay any money to the claimant in respect of. The claimant
was only prepared to settle on the basis that she was
going to be paid some money, and therefore there was
not much point in talking to any greater extent than they did. It is to
be observed that the correspondence from the defendant
was both full and reasonable."
The costs issue
- In the light of our exposition
of what we conceive to be the
correct approach, we have no
difficulty in concluding that
the judge was correct to decide that the Trust should not be deprived
of any of its costs on the grounds
that it had refused to accept
the claimant’s invitations to agree to a mediation. In our
view, the claimant
has come nowhere near showing
that the Trust acted unreasonably
in refusing to agree to a mediation.
We start by noting that this
is not a case where the court made any order encouraging mediation.
We accept that the subject-matter
of this dispute was not by its nature unsuitable for
ADR. But the Trust believed that
it had a strong defence, and
had reasonable grounds for that
belief. Moreover, the judge was
justified in saying that the letters written by the claimant’s
solicitors were "somewhat
tactical". We think that, if anything, this was an understatement. The extraordinary
letter written to the Secretary of State very early on
was an attempt to extort a sum (plus costs) in settlement
of a very small claim which, at best, was speculative.
The writing of no fewer than 5 letters asking the Trust
to agree to mediation was of a piece with this early
letter. The requirement that the Trust should pay the claimant’s
costs is of particular significance, since she had
entered into a conditional fee agreement with her
solicitors, with a 100% success fee.
- Another highly relevant feature of this
case was that the Trust reasonably took the view that the costs of a mediation would be disproportionately
high when compared with (a) the value
of the claim if liability were to be established and
(b) the Trust’s costs of a trial. The Trust was entitled to regard this as a factor strongly
militating against mediation.
- Nor did the claimant discharge the burden
of proving that mediation had a reasonable prospect of success. The Trust had taken the view
that the claim would not succeed, and had decided
not to make any payment to the claimant. Mr Allan Gore
QC submits that the claimant might have been persuaded in the course of the mediation to
drop her claim: all she really wanted
was an explanation of how her husband had died in hospital.
This possibility cannot be dismissed as fanciful, although there is no evidence to support
it. But in our judgment, the claimant
comes nowhere near proving that there was a reasonable
prospect that the mediation would have been successful. In the circumstances of this case,
the stance adopted by the Trust
cannot fairly be said to have been unreasonable.
- The final point urged by Mr Gore
is the ADR pledge. But as we
have already said, this pledge
adds nothing. If the case was
suitable for ADR, the claimant does not need the pledge; and
if the case was not suitable
for ADR, the pledge did not require
the Trust to agree to mediation. The same applies to the initiative of the NHSLA
referred to at para 7
above: the statement
merely says that NHS bodies offer mediation in "appropriate" cases.
- For all these reasons, we dismiss the
appeal.
STEEL v JOY AND HALLIDAY
The causation issue
- On 15 December 1996, the claimant
was injured in an accident involving the first defendant. On 13 March 1999, he was
injured in an accident involving the second defendant. The claimant
brought separate actions against the two defendants.
These were subsequently consolidated. The first defendant instituted CPR Part 20 proceedings
against the second defendant, seeking
a contribution in respect of any damages found payable
to the claimant. Both defendants admitted liability to the claimant. The claimant and
first defendant jointly instructed Mr M J Gibson
FRCS, a consultant spinal surgeon. Mr Gibson advised
that the claimant suffers from a congenital spinal stenosis, and that, as a result
of the first accident, symptoms of the claimant’s
pre-existing stenosis were accelerated by 7-10 years.
Of the second accident, Mr Gibson said:
"He aggravated
the pre-existing
problems producing an exacerbation of these which
would
have lasted for in the order of 3 to 6 months. Thereafter persistence of symptoms primarily
relates
to his pre-existing problem
that
started after the injury on the 15th December
1996".
- Mr Gibson was asked whether the
second
accident would have had a similar effect to the first
accident
had the claimant been free of symptoms immediately prior to the second accident. He
replied
by letter
dated 25 June 2002 that: "on the balance of probabilities, this
second accident would have exacerbated Mr Steel’s condition
by 7 to 10 years". Mr Recorder
Thomas QC summarised the effect
of the agreed medical evidence at para 10 of his judgment in these terms:
"So what it
comes to, in very simple terms, is that as a result of the first accident, the claimant’s
already existing problems were accelerated by a period of
years, in the order of 7 to 10 years. In the second accident,
two and a quarter years later, Mr Gibson makes it clear that there was an exacerbation
of 3 to 6 months by reason of the
second accident, and we understand (and when I say "we understand" this is raised
by me in argument with Counsel today), we understand
that really what he is meaning by the 3 to 6 months aggravation from the second accident
is that there was a flare-up of conditions
for that limited period of time as a result of the second
accident. He says in the report and the correspondence I have referred to that effectively,
if the first accident had not
happened, then the second accident would have had the
same effect as the first accident if the first accident had not already occurred. However,
save for the 3 to 6 months aggravation,
the second accident did not in fact affect the claimant’s
existing medical condition which had already been arrived at by then as a result of his pre-existing
condition and the first
accident".
- The trial took place on 3 July
2003.
It was agreed that the Recorder should determine the
causation
issue that had been raised on the pleadings, namely whether the second defendant had
caused
the claimant
to suffer any more damage than 3 to 6 months’ aggravation
of his
symptoms of stenosis. On behalf of the first defendant, it was submitted that
the second
defendant had also caused or contributed to the 7-10 years acceleration of the claimant’s
symptoms. The
second
defendant contested this. The Recorder found in favour
of the
second defendant. He held that the second accident "did not affect the long-term prognosis that there already
was from the first accident" (para 19), and derived support for his conclusion
from the decision of this court in Performance Cars Ltd v Abraham [1962] 1 QB 33. The first
defendant appeals against this decision.
- Mr Foster’s
primary submission is that, since there was an "exact overlap of damage",
the second accident damage can
be said to have overtaken the first accident damage, so
that
the first defendant is only liable for the damage which was
suffered
during the period between
the dates
of the two accidents. His alternative submission is that the
two defendants should
be regarded
as concurrent tortfeasors who, as regards the acceleration
of the
stenosis symptoms, both caused the same damage, and between
whom there would be rights of contribution under
section 1 of the Civil Liability
(Contribution) Act 1978.
- The first
of these submissions is completely unsustainable.
The phrase "exact overlap
of damage" is not apt on the facts of this case. The damage attributable to the first
accident (acceleration of symptoms by 7-10 years) had
already occurred by the date of the second accident. That historical fact cannot be expunged
simply because that same damage
would have been caused by the second accident if the
first accident had not occurred. In these circumstances, it is a misuse of language to describe
the acceleration of symptoms
by 7-10 years as "exactly overlapping damage", and plainly wrong to say that
the second accident damage overtook and extinguished the
first accident damage.
- Nor can we accept the alternative submission.
In our judgment, this case cannot be distinguished from Performance Cars. Mr Foster
implicitly accepts this, because he contends that Performance
Cars was wrongly decided and should not be followed. In that case, the defendant
negligently caused his car to collide with the plaintiff’s car and
damaged its front wing. It was
agreed that to make good the damage, the whole of the lower part of the car would
have to be resprayed at a
cost of £75. The plaintiff had previously been involved in another
collision in which his car had suffered damage to the rear wing which had not been made good.
This damage also
required a similar respray. The plaintiff had sued the
person responsible for the first damage and recovered judgment for £75, the cost of the respray.
That judgment had not been satisfied. This court held that the plaintiff was not entitled
to recover the cost of the respray from
the defendant, since he had damaged a car which was at
the time of the accident in need of respraying, with the result that the need for respraying
did not flow from the defendant’s
wrongdoing. Accordingly, the claim against the defendant
failed. Lord Evershed MR said that "the
necessity for respraying was not the result of the defendant’s
wrongdoing because that necessity already existed" (p 39). At p 40, he said:
"In
my judgment in the present case the defendant
should
be taken to have injured a motor-car that was already
in certain
respects (that is in respect of the need for respraying) injured;
with the result that
to the
extent of that need or injury the damage claimed did not flow from
the defendant’s wrongdoing.
It may
no doubt be unfortunate for the plaintiffs that the collisions took
place in the
order in which they did."
- Donovan LJ said at p 42:
"The question
as I see it is this: what extra
burden in the matter of respraying
was put upon the plaintiff company
by the second collision? To my mind the answer must be:
None, for the earlier collision
had already imposed the burden of respraying upon them."
- Mr Foster submits that the law
has moved on since Performance Cars was
decided and that the court
is now required to apply what
he calls "equitable pragmatism" in
a case such as this. He says
that justice requires the court
to hold that the two defendants
were concurrent tortfeasors who
were both responsible for the same damage. The analysis
adopted by the judge in the present
case would mean that, if the
first defendant had not been
before the court or had been insolvent, the claimant would not
have been compensated for his
loss: such an unjust conclusion
can, and should, be avoided.
Justice requires the court to
hold that both defendants caused the damage, and that, as
between themselves, the court
should assess the contribution
that is just and equitable having
regard to their respective responsibilities
for the damage in question: see section 2(1) of the 1978
Act.
- In support of these submissions, Mr Foster
relies in particular on Rahman v Arearose Ltd [2001]
QB 351. In that case, the claimant who was employed by
D1 was assaulted at work by two
fellow employees and suffered
an injury to his right eye. As
a result of medical negligence
committed by D2 in the course of an operation, he later lost the
sight in his eye entirely. He
also suffered post-traumatic
stress disorder and depression.
At p 364D of his judgment, Laws
LJ rejected the submission that the case was one of "concurrent torts", since on
the evidence the respective torts committed by the defendants were the causes of distinct
aspects
of the claimant’s psychiatric condition. At paras 26-33,
he discussed the issue of causation, and said: "Once it is recognised that the first
principle is that every tortfeasor should compensate the injured claimant in respect of that
loss and damage for which he should justly
be held responsible, the metaphysics of causation can
be kept in their proper place" (para
32). It is this passage on which Mr Foster places particular
reliance. But it is important to point out that Laws
LJ also said at para 34:
"Once one leaves
behind, as for the reasons I
have given one should, the dogmas
of novus actus and eggshell skulls,
there is nothing in the way of a sensible finding
that while the second defendants obviously (and exclusively)
caused the right-eye blindness,
thereafter each tort had its part to play in the claimant’s
suffering."
- And at para 36, he said:
"Here, the
question what the position would
have been if the second tort
had not been committed is highly
material: the second defendants are not to be held responsible
for damage the whole of which
had already been inflicted on the claimant by the first
defendants."
- It seems to us that there is nothing
in the decision in Rahman which supports Mr Foster’s
alternative submission.
- Reference was made during the course
of argument to Baker v Willoughby [1970] AC 467.
In that case, the plaintiff’s leg, which was injured
in a car accident caused by the negligence of the defendant, was later shot by some robbers.
The House of Lords held that the defendant
was liable for the full consequences of the injury he
caused regardless of the second incident, and had to pay damages based on the plaintiff’s
losses beyond the time when his leg was amputated
as a result of the second incident. This decision was
criticised by some of their lordships in the House of Lords in Jobling v Associated Dairies [1982]
AC 794. It is unnecessary to consider the speeches in Jobling. For present purposes,
it is sufficient to state that Baker should be regarded as an exception to the general "but-for" test,
which was justified by the principle of fully compensating
the plaintiff for damage tortiously inflicted. It was
recognised that, if the defendant’s argument were accepted,
namely that he had no liability in respect of the period
after the plaintiff’s leg had been amputated, the plaintiff
would fall between two defendants, and not be entitled to
full compensation.
- This point was most clearly articulated
by Lord Pearson who said of the defendant’s argument at p 495E:
"That is the
argument, and it is formidable.
But it must not be allowed to
succeed, because it produces
manifest injustice. The supervening event has not made the plaintiff less
lame nor less disabled nor less
deprived of amenities. It has
not shortened the period over which he will be suffering. It has made him
more lame, more disabled, more
deprived of amenities. He should not have less damages through being worse off than
might have been expected.
The nature of the
injustice becomes apparent if
the supervening event is treated
as a tort (as indeed it was)
and if one envisages the plaintiff suing the robbers who shot him.
They would be entitled, as the
saying is, to "take the plaintiff as they find him." (Performance
Cars Ltd v Abraham [1962] 1 QB 33.) They have not injured and disabled a previously fit
and able-bodied man. They have only made an already lame
and disabled man more lame and more disabled."
- Lord Reid had also referred to Performance
Cars at p 493F, and said at p 493G:
"These cases
exemplify the general rule that
a wrongdoer must take the plaintiff
(or his property) as he finds
him: that may be to his advantage or disadvantage. In the present
case the robber is not responsible
or liable for the damage caused
by the respondent: he would only have to pay for additional loss
to the appellant by reason of
his now having an artificial limb instead of a stiff leg."
- The importance of Baker for
present purposes is that their lordships recognised that Performance
Cars was good law. Both Lord Reid and Lord Pearson explicitly stated that the robbers
would not have been liable for
the plaintiff’s loss of a good leg. It was precisely because Performance Cars was
good law that under-compensation of the plaintiff could only be avoided by making
the defendant liable for the
loss attributable to the leg
injury even after the amputation.
Accordingly, the "but-for" test
could not be applied, just as
it has not been applied in cases
involving multiple tortfeasors
such as Fairchild v Glenhaven Funeral Services Ltd [2003] UKHL 22, [2003] 1
AC 32.
- In our judgment, Performance Cars is
still good law. It has been frequently referred to in the textbooks and, so far as we know,
without disapproval. As a matter of logic and
common sense, it is clearly correct. We do not consider
that it produces an unjust result. The claimant is entitled to recover damages from the first
defendant for the losses inflicted
by him; and from the second defendant for any additional
losses inflicted by him. It is true that, if the first defendant is not before the court
or is insolvent, the claimant will not
be fully compensated for all the losses that he has suffered
as a result of the two accidents. But that is not a reason for making each defendant liable
for the total loss. In Baker,
the issue was whether the tortfeasor who had caused the
first injury was liable for its consequences after they had arguably become merged in the
consequences of the second injury. In the present
case, the question is whether the second tortfeasor is
responsible for the consequences of the first injury. To that question, the answer can only
be: no. It is true that, but for
the first accident, the second accident would have caused
the same damage as the first accident. But that is irrelevant. Since the claimant had already
suffered that damage, the second defendant
did not cause it. This is not a case of concurrent tortfeasors.
The costs issue
- Proceedings against the first defendant
were started by the issue of a claim form on 14 September 1999. Proceedings against
the second defendant were commenced by the issue of a claim form
on 12 March 2002. On 29 July 2002, an order was made
consolidating the two claims. On 9 May 2003, the first defendant’s solicitors wrote
to the second defendant’s solicitors:
"To dispose
of all issues as between defendants/claimant,
our clients offer to mediate
the issues in this case. We have
no trial date yet but the trial window envisages a
trial within the first three
weeks of July. Mediation should
take place as soon as possible and certainly by early June.
This letter is being
copied to the claimant’s solicitors on an equal invitation.
We have also taken
the step of asking the ADR Group to liase with all parties with a view to proposing
potentially suitable mediators and agreeing a date for mediation
if the parties agree mediation. Please let us know immediately
if you have any objection to seeking a mediator through the ADR Group.
In the event that
any party refuses this offer
of mediation, this letter will
be drawn to the attention of
the trial judge and you will note that this is an open offer to
mediate the case. We shall ask
the judge to make a ruling as
to costs in the event that any party refuses a mediation. We believe that this case
is
eminently capable of being
resolved by mediation".
- This offer was repeated to the
claimant. By letter dated 20 May, the first defendant’s solicitors replied:
"After giving
very careful thought to the proposal,
our insurance principals have
come to the conclusion that this
would not be an appropriate case for mediation. The issue
between the defendants is one
of law and therefore is requiring
of a decision of the court. In such circumstances we cannot see there is any benefit
to either side in
mediation.
So as to make our
position perfectly clear, our
insurance principals would have
no objection to mediation taking
place between yourself and the claimant with a view to resolving the claimant’s claim".
- By their letter dated 27 May, the
first defendant’s solicitors responded, stating that they did not accept that the dispute
was incapable of resolution, although it related to a point
of law. They added:
"If your clients
persist in refusing to mediate
this case, then we will have
no option but to place this and
our earlier correspondence before the court. When the court comes
to consider the question of costs and conduct in particular
in refusing mediation."
- The second defendant’s solicitors
replied on 28 May, saying: "We are not prepared to compromise
on the point of law and therefore mediation would be
pointless".
- Having decided the causation issue in
favour of the second defendant, the Recorder turned to the question of costs. He decided
that costs should follow the event. His reasoning is set
out in the following passage of his judgment:
"Well I am
going to come to the same final
view in relation to this case
as it now arises before me. The
possibility of alternative dispute resolution was raised fairly
late in the day here as far as
the chronology of this case was
concerned. That is not to say that simply because it is raised late on means that
it is of no consequence, far
in fact from it, but it is a factor in the equation. But here, where the issue that
has arisen is the one that I
identified earlier today, which
Mr Elgot goes as far as to describe
as quite exceptional, using the language that arises
in
that case of Hurst v Leeming, it
seems to me that alternative dispute resolution would
have been likely to achieve very
little. I do accept Mr Foster’s
general point, although it is
not of application I think in
the facts of this particular case, that alternative dispute resolution
brings to bear a different set
of "tools" than formal litigation in open
court such as this, and who knows
what alternative dispute resolution
can achieve in some cases. However
here in this case, when Mr Elgot
poses for me the question what could alternative dispute resolution really have
achieved at this particular late
stage of the litigation as far
as this particular topic was
concerned, I must say I wonder really what could have been achieved."
- In considering whether the first
defendant has shown that the
second defendant acted unreasonably
in refusing the offer of mediation,
a number of points need to be borne in mind. The full value
of the claim was agreed by the
parties at £195,000. The second defendant made a CPR
Part 36 offer of £3,500 before proceedings started on the footing that this was a generous
assessment of the value of the 3-6 months’ exacerbation
of the symptoms caused by the second accident. It can be seen, therefore, that almost £200,000
turned on the causation issue that was eventually tried by the Recorder.
- As in Halsey, so in this case,
the court did not make any order encouraging the use of ADR. This is not, therefore, a case
where a party refused even to consider ADR despite
a court order that it should do so.
- This case raised the question whether Performance
Cars is
still good law, or whether it
could be distinguished. Put like
that, the claim against the second
defendant, therefore, raised
a question of law. In our judgment, the second defendant did not act unreasonably
in saying that he (or more realistically
his insurers) wanted to have
that question resolved by the
court. In these circumstances, the nature of
the dispute was one which was
towards the "intrinsically unsuitable" end
of the spectrum. It is a far
cry from a typical road traffic claim
which raises no disputes of law,
and where disputed facts are intrinsically suitable
for resolution by ADR.
- The second defendant reasonably believed
that the claim against him had no merit. We hope that we have not done injustice to Mr Foster’s
submissions, but like the Recorder we think that
the answer to the question raised by the causation issue
was plain. It follows that the first defendant has not shown that there was a reasonable
prospect that a mediation would have
succeeded. The second defendant had decided to take a
stand on the point of law. In doing so, he was not acting unreasonably.
- There are yet further factors which
the second defendant was entitled
to pray in aid in support of
the reasonableness of his refusal
to agree to mediation. First, the costs of the mediation
would have been excessive in
comparison with the costs of
litigating the issue at trial. The issue was disposed of by
the Recorder in about two hours.
Mr Christopher Purchas QC has
suggested that the total costs of a mediation involving all three parties would have
been of the order of £20,000. That figure (which was not
investigated before us) does
look surprisingly high. But on
any view this is a case where
a mediation would have been unlikely
to be successful, and would probably have been relatively expensive when
compared with the cost of a trial
which, in the event, lasted about
2 hours. Secondly, as the Recorder
pointed out, the offer
of mediation came comparatively late in the litigation
after substantial costs had already been incurred.
- Taking all these factors together, we
are in no doubt that the first defendant has not proved that the second defendant acted unreasonably
in refusing to agree to mediation in this case.
- It follows that the first defendant’s
appeal is dismissed on both issues.