Should every letter of claim include an offer to mediate?

At the Claims Magazine Conference on 25th March 2014 Professor Dominic Regan reviewed PGF II SA v OMFS 1 Ltd, a case I have previously written about on this blog. He said as a result of the case “every claimant without exception should include an offer to mediate in the letter of claim”. Briefly, in the PGF case the Court of Appeal confirmed that ignoring an offer to mediate amounts to an unreasonable refusal to mediate. It applied Halsey v Milton Keynes NHS Trust and dismissed the appeal against the High Court’s decision to deny the defendant about £250,000 costs that it would normally have be entitled to under Part 36.

However a mechanistic inclusion of an offer to mediate in every letter of claim is unlikely to provide the costs protection suggested. At para 2 of the judgment Briggs LJ describes the offer as “a serious and carefully formulated written invitation by the claimant’s solicitors to participate in mediation” and at para 42 says “the first request was couched in such detailed and sensible terms that it could not reasonably have been regarded as mere tactics”.

The claimant in the PGF case was unable to recover the approximately £250,000 it spent on costs after the payment in to court. This loss could possibly have been avoided had it taken some action in the face of the defendant’s lack of response to the offer. It was open to the claimant to ask the court to order a stay whilst the parties investigate the possibility of settlement by some form of ADR.

As defendants are usually the paying party in personal injury claims it appears they have the most to gain (or save) from the PGF case. My approach as a defendant would be to make an offer, and if it was not accepted, respond by making a serious offer to mediate especially if there was a gulf between the current offers. In dismissing the respondent’s argument that mediation would not succeed because Part 36 offers had been made Briggs LJ said, “Nor do Part 36 offers necessarily or even usually represent the parties’ respective bottom lines. There was, accordingly, no unbridgeable gulf between these parties’ respective Part 36 offers, which could not in any circumstances have been overcome in a mediation.”

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