Case law: Court finds 'unenthusiastic' approach to mediation was unreasonable
Businesses involved in disputes should think carefully not just about whether to take part in mediation, but the enthusiasm with which they do so, or risk being penalised by the court on costs, a ruling makes clear.
This update was published in Legal Alert - June 2017
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The parties in a property-related dispute said they were willing to mediate. One party started making arrangements and suggesting mediators. However, the second party responded slowly and constantly raised problems and difficulties. Ultimately, the first party gave up and there was no mediation.
In the proceedings, the court found that the second party had been unenthusiastic and inflexible in its approach to mediation. It found that the first party could, perhaps, have continued to chivvy the second party but, generally, it was the second party that was less keen to participate, and which was the reason mediation never took place.
The Court of Appeal found:
- The dispute was particularly suited to mediation as it was simply about money
- The parties' own negotiations had not been successful
- Had mediation taken place, there was a good prospect of settling the dispute, particularly, given the first party's willingness to negotiate. The second party had offered £30,000 in settlement and the first party had been prepared to accept £40,000 - so the gap between them would have been relatively easy to bridge in the hands of a skilled mediator
- The costs of court proceedings were much higher than the amounts in dispute
The second party was therefore penalised in costs for its lack of enthusiasm.
- Businesses involved in disputes should think carefully not just about taking part in mediation, but the enthusiasm with which they do so, or risk being penalised by the court when it awards costs
Case ref: Thakkar v Patel  EWCA Civ 117
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