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Mediation


The Court of Appeal has sent a strong warning to parties who drag their heels on mediation.

 

In the recent case of Thakkar and another v Patel and another [2017] EWCA Civ 117 the Court was asked to consider an order which required the Defendant to pay 75% of the Claimant’s costs notwithstanding the fact that the Claimant failed to beat the Defendants’ ‘withdrawn’ Part 36 offer.

 

The Claimants made a dilapidations claim against the Defendants for £210,000.  The Defendants brought a counterclaim for £41,875.  During the course of proceedings the Defendants made a Part 36 offer, under the old rules, of £30,000 plus costs.  The offer was withdrawn on 11 August 2011 and therefore lacked the Part 36 cost consequences.  The case proceeded and the Judge made an award against the Defendants in the sum of £28,183 on the overall case.  Judgment was ultimately awarded against the Defendants in the sum of £32,083.18 including interest.

 

Whilst the cost consequences of Part 36 did not apply (as the offer had been withdrawn) the Court could still exercise its discretion under Part 44.  At the time in which the Defendant withdrew its Part 36 offer the sum awarded against the Defendant would have been £28,692.55 (inclusive of interest).  As such, the Defendant argued that its ‘withdrawn’ Part 36 offer should be considered on the issue of costs. 

 

LJ Jackson noted that in August 2011 both parties were fully rehearsed as to the evidence of the claim.  However, at that stage the Claimant had only received the pleadings for the Counterclaim.  In the circumstances the Defendant was much better placed as to the merits of the overall case.  As a result it was found that the Claimants had acted reasonably in refusing to accept the Defendant’s Part 36 offer before it was withdrawn. 

 

Notwithstanding the above the Claimants actively sought to engage in mediation with the Defendants until August 2012.  In light of the Defendants lack of commitment and progress the Claimants had lost confidence and shut down the prospects of this being achieved.  The Judge asserted that if the parties had engaged in mediation there was a real prospect of a settlement being achieved.  Since the vast majority of the costs were incurred after August 2012 the Court took the view that the Defendants had dragged their heels and therefore were liable for the majority of the Claimants’ costs.

Added: 08 Feb 2018 10:29


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