EWHC 1805 (Queen’s Bench Division)
Who should bear the costs?
This was a contract dispute concerning the cost of goods sold and delivered, and a counterclaim on the grounds that the goods were defective. The parties engaged in considerable negotiation. The defendant made a Part 36 payment of £64,000 and later (although less than 21 days before the start of the trial) added a further £26,000.
Although the claimant was minded to accept this revised offer, permission of the court was needed in view of the proximity to the hearing date. There had been, in the course of negotiations, reference made to mediation, but the claimant had not agreed to it.
Who should bear the costs? The defendant claimed that it had offered mediation and it had been declined, which was true, but the claimant had been willing to proceed with other forms of ADR.
Neither party should be penalised in costs for the way in which the negotiations had proceeded. There was no specific obligation to mediate over other forms of ADR and in this case, ‘so long as the parties are showing a genuine and constructive willingness to resolve the issues between them,’ neither party was in the wrong. The claimant had in effect succeeded in the case and so should get its costs.
Mediation is not a magic word. It is also not the only form of ADR.
There can be a genuine difference of opinion between parties and their advisers as to the appropriate form of ADR to be adopted in a given case. There is a perception that too many legal representatives look at offers of any form of ADR not as a means of gaining an advantage for their clients (or minimising exposure) in relation to costs, in the event of a refusal by the other party to play ball. That, however, is merely a possible collateral effect of an offer of an ADR process (be it mediation or something else), whereas the paramount objective should always be to resolve the dispute and avoid the matter proceeding by way of litigation.