NHS pays indemnity costs again for failing to mediate costs dispute

The NHS has again been penalised for failing to mediate costs litigation. I wrote last month about the case of Reid v Buckinghamshire Healthcare NHS Trust where indemnity costs were ordered from the date of the offer to mediate.

In Bristow v The Princess Alexander Hospital NHS Trust & Ors [2015] EWHC B22 Master Simons went a step further and ordered indemnity costs on the whole of the detailed assessment proceedings, not just on the costs after the offer to mediate.

The receiving party made an offer to mediate the costs dispute. It took the NHS three months to respond. The response was a rejection of the offer on the basis that the matter had already been set down for a detailed assessment hearing. Master Simons was told that the NHS did not enter into mediation because the parties were too far apart. He had no difficulty in finding that:

the defendants have not given any reasonable reason why they refused to engage in mediation and I am satisfied that there should be an appropriate sanction.

The Master expressed difficulty in deciding upon the sanction as the receiving party solicitors would be the beneficiaries of any sanction and they had not actually suffered an loss as a result of the failure to mediate. He concluded:

However, there is a point of principle involved and in my judgment there should be a sanction. I am not satisfied that the sanction should be increased interest because eight per cent interest in this day and age is already a penal rate of interest and the defendant has to bear this very high rate of interest and they are being punished already by their actions because this case could have been settled by mediation.

Nevertheless I am satisfied there should still be a sanction and I think that the correct sanction is that the claimant should receive their costs on an indemnity basis on their 80 per cent costs as a sanction for the defendant’s failing to engage in mediation.

Sir Henry Brooke, a founder of Trust Mediation wrote about the case on his blog:

Since taxpayers’ money was at risk, it would be good if the Claimants’ solicitors [Irwin Mitchells] could collaborate with the NHSLA in reporting to the public just how much money was in fact wasted by the stance adopted by the Defendants’ representatives in each case.

We believe the best approach to mediation is always to try and persuade the other party by reference to the benefits of mediating, and only to use the potential costs sanctions lever if it is necessary.

If it was not apparent before then these two cases make it abundantly clear that costs penalties for unreasonably refusing to mediate apply equally to costs litigation as they do to clinical negligence or personal injury litigation. This case is another that demonstrates that “being too far apart” is not sufficient justification for not mediating.

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