Leicester Circuits Ltd v Coates Brothers plc

[2003] EWCA Civ 333

Success in litigation does not stop ‘punishment’ of party withdrawing from mediation

Facts

The dispute in this case was over ink provided for the manufacture of printed circuit boards. On liability the judge at first instance found for the claimants. On appeal of the substantive issue, as to whether the ink had not been fit for its purpose, the Court of Appeal found for the appellants. However, the appellants had withdrawn from mediation only two days prior to it beginning, on the grounds that they felt it had no real prospect of succeeding. They had up to that point been agreeable to it.

Issues

Whether the ink was as a matter of inferential fact not fit for its purpose.

Decision

The appellants, who were successful in their appeal, were awarded the costs of the appeal. However, they were only entitled to their costs up to the date that they had originally agreed to the mediation, and therefore were not entitled to any costs of trial preparation or the trial itself. The appellants’ view that the mediation had no real prospect of succeeding did not entitle them to withdraw, as that view may have been wrong and the mediation may have been successful, thereby avoiding the need for further litigation.

Comment

It is not uncommon that a party or its advisers may take the view that given the nature of the dispute or of the party or parties on the other side and their advisers that mediation or any other type of ADR is unlikely to succeed. That view, sometimes strongly held, is short-sighted in that it fails to take into account (a) the benefits of the mediation process itself and (b) the benefits of the services of an astute mediator. What this case shows is that even for a party who is ultimately successful on the legal merits, failure to engage properly in the mediation process is likely to have a direct and distinctly adverse effect on its financial position.