Cost penalty for refusing mediation

Costs penalty following a refusal to mediate is not necessarily an
automatic sanction

It had been thought that if a party refused ADR in the form of mediation
that there would be a costs penalty against that party even if they were
successful in the case. In a recent case this principle has been slightly
undermined. In Gore v Naheed & Anor [2017] EWCA Civ
Lord Justice Patten, giving judgment held (at paragraph 49):

“… Speaking for myself, I have some difficulty in accepting that the
desire of a party to have his rights determined by a court of law in
preference to mediation can be said to be unreasonable conduct
particularly when, as here, those rights are ultimately vindicated.
But, as Briggs LJ makes clear in his judgment

[in PGF II SA v OMFS Company 1 Ltd [2013] EWCA Civ 1288

], a failure to engage, even if unreasonable, does not automatically
result in a costs penalty. It is simply a factor to be taken into
account by the judge when exercising his costs discretion.

Patten LJ in referring to the facts of the case said at paragraph 50:

“In this case the judge did take it into account but concluded that it
was not unreasonable for Mr Gore to have declined to mediate. His
solicitor considered that mediation had no realistic prospect of
succeeding and would only add to the costs. The judge said that he
considered that the case raised quite complex questions of law which
made it unsuitable for mediation. His refusal to make an allowance on
these grounds cannot in my view be said to be wrong in principle.”

It seems that if this case is followed that the previous position that
parties must take part in mediation or possibly be penalised in costs might
be qualified. It remains to be seen but it may well be that such a sanction
may not be automatic if parties to litigation do not wish to take part in
mediation/ADR and they have good reason for not doing so – as in the Gore