It pays to mediate

Wales v CBRE (2020) EWHC 1050; BAIILI; Comm Ct.

Facts

Mr Wales was an insurance broker who entered into a complex arrangement with a client called CBRE and Aviva the insurance company, whereby Aviva would provide pensions for CBRE’s employees, and Mr Wales would obtain commission.

When CBRE set up a workplace pension scheme following legislative changes, Aviva stopped paying commission and clawed back some previous advances.  Mr Wales sued both CBRE and Aviva for breach of contract claiming £200,000.

The court held a case management conference at which all parties were ordered to consider settlement by ADR at all stages of litigation and to file witness statements to support any decision not to mediate.

CBRE then refused to mediate on the basis that this would be premature; later on when Mr Wales again suggested mediation they refused on the basis that there was not enough time before the trial.

At the trial, Mr Wales failed completely. As the winner, CBRE applied for costs as usual.

Held

The court disallowed a substantial percentage of the costs because of CBRE’s misconduct in refusing to engage with the ADR process.  It applied the tests in 'Halsey v Milton Keynes'.

Comment

In 'Halsey v Milton Keynes' (2004), the Court of Appeal  set out several tests to determine whether a refusal to mediate is unreasonable.

These include whether the nature of the case makes ADR inappropriate; whether the refusal was despite court encouragement to mediate; whether mediation would cause delay; or be disproportionately expensive; or other ADR has been tried; and whether a mediation could have had a “reasonable prospect of success”.

One further test from Halsey is whether the refuser reasonably believed he had a strong case. However following 'DSN v Blackpool' (CA 2020), this may carry less weight than previously in the costs argument.

Indeed, in the Wales case the judge remarked that given Mr Wales’ strong sense of grievance the refusal of CBRE to respond to his negotiations meant that to some extent CBRE brought this litigation upon itself.

Further the judge remarked that in the hands of a skilful mediator there was always a reasonable prospect that common ground could have been found on at least some of the issues and probably a basis could have been found for compromising the litigation as a whole.

For more specialist legal advice please get in touch with Lucilla Waugh on 0191 211 7984 or email [email protected]