You can refuse to mediate. At present, the courts do not force parties to settle their dispute – if you want to go to court, it is your right in law. The real question is: “Are there risks associated with refusing to mediate,” and the simple answer is yes. A successful mediation will save you money, but if you go to court and have refused to mediate, you may face financial penalties even if you win the case.
The General Position – ‘Costs follow the event.’
The general position is ‘costs follow the event’ in simple terms; this means the winner recovers his or her costs from the loser. For example, Party A sues Party B for £50,000 and wins, the general principle is that Party B is responsible for Party A’s costs. The idea is that the winner should not be out of pocket for having to go to court.
It is essential to understand that the court has the discretion to alter this position; there are many reasons they may do this. One such reason which has increasingly gained traction is to punish a party for unreasonably refusing to engage in Alternative Dispute Resolution (ADR), particularly mediation.
Departing from the general position
Lawyers refer to the Halsey Principles, which described in a little more detail in my article on mandatory mediation here. In short, an unsuccessful party to litigation may be able to reduce the level of costs they pay or even shift the costs entirely onto the winning party if they can show that the winning party acted unreasonably in refusing to engage in ADR. Although the case of Halsey is now 16 years old, it remains good law, and these principles are still valid today.
What has changed in recent times is the court’s willingness to punish a successful party in costs where they unreasonably refused to mediate. There are three decisions worth exploring in a little more depth, two of them being decisions of the High Court and one being a decision of the Court of Appeal.
Wales (t/a Selective Investment Services) v CBRE Managed Services Ltd & Anor  EWHC 16 (Comm)
Mr Wales, the claimant, was unsuccessful in his claim for damages for a sum over £200,000. However, he convinced the court that the defendant (who was successful) should not recoup all of his costs as he had unreasonably refused to engage in mediation, which had been offered by Mr Wales at the outset of the dispute. The court disallowed a substantial portion of the defendant’s costs (50%) by way of sanction.
DSN v Blackpool Football Club Ltd  EWHC 670 (QB)
In this matter, the claimant was successful and the defendant, having lost, had to pay close to £20,000 in damages. As costs follow the event, the claimant was entitled to recover his legal fees from the defendant. However, as the defendant had unreasonably refused to mediate, it was argued that the claimant should receive his costs back on an indemnity basis. The result was the defendant having to pay the claimant’s costs of £200,000.
In this instance the defendant relied too heavily on what it felt was a strong defence – that alone is rarely good enough to refuse to mediate, and the consequence is clear – the defendant paid ten times more in costs than he did in damages for the claim.
Lomax v Lomax  EWCA Civ 1467
The judgment in Lomax considered the issue of whether or not a court could order an unwilling party to take part in a specific form of ADR, namely Early Neutral Evaluation. Moylan LJ, giving the leading judgment held that the court could do so. Although other types of ADR were not considered in this matter the Chancellor of the High Court, Sir Geoffrey Vos has strongly hinted that the position may be the same for mediation. Therefore, in future, we may see a much stronger push toward mediating a dispute before entering the court.
The risk is your money.
The cautionary tale weaved throughout this post is simple, going to court costs money and risks losing even more – if you refuse to mediate you may end up losing money even if you are the overall winner of the case (think DSN v Blackpool above). Where possible attempt an ADR method – mediation is highly successful and infinitely cheaper than a court case!
How can we help
At DF Mediation, we are a provider of first-rate mediation services, be it face-to-face or online. The success rate in mediation is incredibly high (over 90% of matters result in a settlement), and the cost is far more palatable than a bill from the court. Further benefits of mediation are listed here.
Mediation Information Meetings – NEW
Some matters do need to go before a court; if a party has offered mediation and you are not sure, then it may be worth taking part in a mediation information meeting. This hour-long session aims to introduce you to the process and its benefits and to meet the mediator. If you do not wish to mediate, you will receive a certificate of attendance that can be shown to a court to prove that mediation has been considered. This has the potential to avoid any nasty cost consequences down the line. For more information see here