Failure to Mediate

Mediation is an effective tool in resolving disputes for many reasons. The use of mediation can allow a dispute between parties to be resolved both quickly and at a lower cost to those involved. However, some parties are not fully aware of the benefits of entering into mediation as an attempt to resolve a dispute and, as a result; the option can be dismissed. In addition, many parties feel that they should have their "day in court", regardless of the cost of doing so. Recently, two cases have focused on this unwillingness to participate in mediation.

In the Court of Appeal case of Rolf v De Guerin the Defendant refused to mediate. The case surrounded the construction of an extension to the Claimant`s house. An agreement was entered into between the parties but the Claimant failed to make payments to the Defendant and, as the Trial Judge found, the Claimant`s husband`s aggressive and interfering role, led to the Defendant ceasing work and treating the agreement as at an end. Before and during proceedings, the Claimant attempted to enter into settlement discussions with the Defendant; which included the suggestion of mediation. This was rejected by the Defendant.

When the Defendant was asked by the Court as to why he was unwilling to mediate, his reasons included that he would not have been able to demonstrate to a mediator what the Claimant`s husband was like and also that he wanted his "day in court". 

At trial, the Defendant won. However, the Claimant then appealed on a number of grounds, including the Order for costs made by the Trial Judge in favour of the Defendant. The Claimant`s argument was that in refusing to participate in mediation, the Defendant`s behaviour was wholly unreasonable. The Trial Judge agreed that the Defendant`s refusal to mediate was unreasonable and made no Order as to costs.

In the second case, SPGF II SA v OMFS Co & Another, consideration was again given to the fact that a successful party may not be successful in recovering its costs if it unreasonably refuses to mediate. In this case, the Defendant refused to mediate on the basis of what had happened at a previous mediation between the two parties in 2010 (in relation to a different dispute). The refusal was also based on the belief that there was not enough time for the parties to enter into and fully engage in settlement discussions prior to trial.

Again, as with the case of Rolf, the Trial Judge held that it was unreasonable for the Defendant not to respond to the suggestion of mediation. The Judge did not give any consideration to the previous conduct at an earlier mediation, which had not been raised by the Defendant at the relevant time. Rather, there had just been a straight out refusal to co-operate. 

The refusal by a party to an offer to consider mediation without true justification may therefore often be seen as unreasonable behaviour and can deprive a successful party of its costs. 

Courts are keen to encourage mediation between parties and a failure to overcome obstacles to mediation during proceedings will not be justified by excuses or the need to have a "day in court". What these cases highlight is that parties should give serious consideration to the advantages of mediation before simply dismissing them without true justification to avoid penalties for costs.

1 February 2012

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.