Costs consequences of refusing to engage with ADR proposals are not automatic

The Court of Appeal in a judgment published yesterday declined to hold that a successful party to a trial below should be penalised in costs for refusing to engage with mediation.

Lord Justice Patten, giving the sole judgment a right of way case Gore v Naheed & Anor [2017] EWCA Civ (with which Lewison and Underhil LJJ agreed) in 369, he held (at paragraph 49):

 “… Speaking for myself, I have some difficulty in accepting that the desire of a party to have his rights determined by a court of law in preference to mediation can be said to be unreasonable conduct particularly when, as here, those rights are ultimately vindicated. But, as Briggs LJ makes clear in his judgment [in PGF II SA v OMFS Company 1 Ltd [2013] EWCA Civ 1288], a failure to engage, even if unreasonable, does not automatically result in a costs penalty. It is simply a factor to be taken into account by the judge when exercising his costs discretion.”

Addressing the specific facts of Gore , he continued (at paragraph 50):

“In this case the judge did take it into account but concluded that it was not unreasonable for Mr Gore to have declined to mediate. His solicitor considered that mediation had no realistic prospect of succeeding and would only add to the costs. The judge said that he considered that the case raised quite complex questions of law which made it unsuitable for mediation. His refusal to make an allowance on these grounds cannot in my view be said to be wrong in principle.”

Whether Patten LJ ‘speaking for himself’ on this issue is authority for the general principle discouraging parties from refusing to engagement in consideration of ADR, as a counter to the judgment of Briggs LJ in the earlier PGF case will remain to be seen. Certainly, litigators should be aware of this decision and consider the litigation risk of a court refusing to make costs sanctions based upon specific facts of a case. What is clearer is that no such sanction should be seen as automatic but if parties to litigation wish not to engage in ADR, they must have consider their reasons for not doing so and expect judicial consideration of the same in due course.