Master O’Hare in the Senior Courts Costs Office has confirmed that the rules on penalties for unreasonable refusals to mediate apply to costs litigation, not just the substantive personal injury or clinical negligence claim.
In Reid v Buckinghamshire Healthcare NHS Trust the defendant took six weeks to respond to and reject an offer to mediate a costs dispute which was heading for a two day detailed assessment hearing. The court found this to be an unreasonable refusal to mediate and following Halsey v Milton Keynes HNS Trust decided that a costs penalty should be imposed.
The penalty was to award the costs of the detailed assessment on the indemnity basis from the date the defendant was likely to have received the offer to mediate. Master O’Hare said:
If the party unwilling to mediate is the losing party, the normal sanction is an order to pay the winner’s costs on the indemnity basis, and that means that they will have to pay their opponent’s costs even if those costs are not proportionate to what was at stake. This penalty is imposed because a court wants to show its disapproval of their conduct. I do disapprove of this defendant’s conduct but only as from the date they are likely to have received the July offer to mediate.
This does not mean that you have to mediate every costs dispute. However where a case has not resolved through routine negotiations and exchange of Part 36 offers the courts do expect parties to seriously consider mediation.
The case also has significance for Claimants who may have thought a defendant in a QOCS case has nothing to lose by rejecting an offer to mediate. It shows that the risk is an indemnity costs order against it – see also the case of Garritt-Critchley v Andrew Ronnan and Solarpower PV Ltd on indemnity costs awarded unreasonable refusal to mediate.
If you have unresolved costs cases we have experienced mediators who can help you settle them by telephone or face to face mediation. Call us now 0207 353 3237