MEDIATION & ALTERNATIVE DISPUTE RESOLUTION: THE FUTURE IS BRIGHT

2nd March 2022

 

This article was originally published in the Journal of Personal Injury Law in 2020 (J.P.I. Law 2020, 2, 141-147). It reproduces in part the contents of the Lexis/Nexis webinar: “Settlement & ADR” published 25th September 2019 which features Laura Elfield and Professor Regan providing a masterclass on best practice and pitfalls to avoid.

 

 

We are living in exceptional times.  As I write this article in lockdown, all of us are finding new and different ways to work, live and litigate.  It seems as good a time as any to focus on alternatives to traditional litigation and to attempt to look to the future with optimism.

Alternative dispute resolution (“ADR”) of course isn’t new.  We know that the vast majority of issued cases don’t reach trial and lawyers are well versed in negotiating and advising on settlements.   The usual order, as to ADR, is now entrenched in standard case management directions.    The Queen’s Bench Guide at paragraph 8.4.2 emphasises that the settlement of disputes by ADR can:

“(1) significantly reduce parties costs,

  • save the parties the delay of litigation in resolving their disputes,
  • assist parties to preserve their existing commercial relationships while resolving their disputes, and
  • provide a wider range of remedies than those available through litigation”.

There is no doubt though that ADR is a growth area and that the landscape is fast changing.  In its 2018 biennial audit, the Centre for Effective Dispute Resolution (“CEDR”) reported that there had been 12,000 commercial mediations in the previous 12 months, excluding small claims mediations.  This was a 20% increase since 2016.  There has been an increase in particular in scheme-related activity, including NHS Resolution, the County Court mediation pilots and the Court of Appeal mediation scheme, which account together for 45% of growth.

In November 2018, the Civil Justice Council Alternative Dispute Resolution working group published its Final Report on ADR and Civil Justice (“the CJC Final Report”).  It outlined the range of ADR techniques, from fully evaluative to wholly facilitative, to be broadly as follows:

  • Negotiation and round table meetings (least evaluative)
  • Mediation
  • Conciliations and ombudsmen
  • Judicial early neutral evaluation/private early neutral evaluation (“ENE”)
  • Arbitration (most evaluative)

This article focuses primarily on mediation, which the CJC described as the “pre-eminent non-adjudicative dispute resolution process conducted in parallel with litigation”.  It noted that mediation operates in the direct shadow of the civil courts and that almost all of the court’s decisions on ADR have been about mediation.  I will also consider and contrast ENE and in particular judicial ENE (“JENE”) in light of recent case law.

The role of the Court in overseeing, by way of inducement and sanction, ADR will be considered but also, more generally, the benefits of ADR to the parties and to the justice system as a whole.

 

Mediation

Clinical negligence practitioners in particular will be more than familiar with mediation.  The pilot of the National Health Service Resolution Mediation Scheme has now been made permanent.   While currently used less in traditional personal injury claims, APIL, FOIL and MASS joined forces in 2018 to provide a register of accredited mediators working in personal injury and clinical negligence claims, in order further to facilitate the use of mediation in these areas.  For those involved in Court of Protection work, a practitioner-led nationwide pilot scheme commenced in October 2019.

Mediation works.  CEDR reported an aggregate settlement rate of 89% in 2018, up from 86% in 2016.  The proportion of cases settling on the day of mediation is stated as 74% and those settling shortly afterwards, 15%.  A note of caution is that these figures were based on a survey of voluntary returns by 336 mediators.  Those not successfully concluding mediations may not have replied.  The small claims mediation service has resulted in about 70% of disputes being resolved and the Court of Appeal mediation scheme reports a 40 – 50% success rate.

When set against the reality that the vast majority of civil claims are settled in any event, what does mediation have to offer that can’t be found in more traditional forums such as round table meetings, or simple offers and acceptances?

The key difference between mediations and round-table or joint settlement meetings, is that mediations are managed by a trained and experienced neutral, the mediator, who has no directive authority.   The process is contractual and the mediation agreement agreed and signed by all parties, who often but not always share the costs of the mediation.  In other respects, there is real similarity: the process is confidential and without prejudice; the parties attend with authority to settle; the process is managed by each party’s consent; and the outcome is usually a formal, signed settlement agreement.

So, what can a mediation do that a without prejudice meeting cannot?  I would suggest that:

  • An independent mediator can help facilitate discussions between parties without anyone feeling that they are appearing weak by discussing the case;
  • The mediator can ask awkward questions in private; the sort of questions that the judge asks half an hour into the opening;
  • The mediator can speed up the process of concessions and offers being made, particularly where there are multiple parties;
  • The mediator can help look outside the litigation framework;
  • The mediation can allow parties to have their say, and their day, which sometimes opens the door to a settlement.

While both mediations and round-table meetings enjoy flexibility of outcomes not available in traditional litigation, it has certainly been my own experience, as both mediator and advocate, that such flexibility is more readily accessed in a mediation setting.  Where the focus is on resolution rather than compromise, an apology or the restoration of a damaged working relationship may be a truly positive, rather than merely commercial, outcome.

A final thought, in particular when comparing mediations to round-table meetings is that, depending upon the value of the case and the budget, these may not be alternatives.  Each form of ADR might be used to resolve an issue within the proceedings if not the totality of the issues.

 

ENE

At the opposite end of the spectrum is ENE, which can either involve a contractually appointed independent expert in the field or JENE, which is conducted in Court.  ENE usually results in an opinion by the judge or the independent neutral evaluator which is non-binding save that the parties can decide to be bound.

Since 1st October 2015, judicial case management powers have included the power to carry out a JENE, with the aim of helping the parties to settle the case.  The relevant provision is CPR 3.1(2)(m).  If the case is not resolved at JENE, the judge is recused from further involvement in the case.

In Robert Seals (1) Andrew Seals (2) v Florence Williams [2015] EWHC 1829 Ch, which was decided before the rules changed expressly to incorporate ENE, Norris J stated, at paragraph 3:

“The advantage of such a process (ENE) over mediation itself is that a judge will evaluate the respective parties’ cases in a direct way and may well provide an authoritative (albeit provisional) view of the legal issues at the heart of the case and an experienced evaluation of the strength of the evidence available to deploy in addressing those legal issues.  The process is particularly useful where the parties have very differing views of the prospect of success and perhaps an inadequate understanding of the risks of litigation itself.”.

I will return to JENE’s below as, although currently, at least in my own experience, a relatively underused provision, in light of recent case law I expect this will change in early course.

Most recently, Master McCloud has provided guidance on the procedure to be used in JENE’s, including a draft order, in the case of Telecom Centre (UK) Limited v Thomas Sanderson Limited [2020] EWHC 368 (QB).

 

Settlement by ADR

In the relatively more informal setting of ADR, the importance of drafting a binding settlement agreement should not be overlooked.  Recording the agreement is important as oral agreements may well be difficult to enforce.  I pause to note here that mediators can only be called to give evidence in exceptional circumstances: see Farm Assist Ltd (in liquidation) v Secretary of State for Environment, Food and Rural Affairs (No 2) [2009] EWHC 1102 (TCC).

The Jackson ADR handbook (2nd edition, 2016) emphasises, at paragraph 18.22, in relation to settlement agreements that:

  • The terms must be comprehensive and accurate.
  • All practical details should be included, e.g. dates of payment.
  • Costs and interest should be covered.
  • The agreed terms need to be enforceable.
  • Some enforcement options can be built in.

Certain jurisdictions will require further formalities to be binding: for example, employment claims will still need a formal “settlement agreement” pursuant to statute.

If Court proceedings have been issued, the terms of any agreement are likely to be recorded in a consent order, which may well take the form of a Tomlin order.  Even if no Court proceedings have been issued, the Court may still be engaged to enforce a term of the agreement or as to costs.  The Court may also become involved in relation to a vitiating factor, such as misrepresentation or fraud.

 

Role of the Court

In addition to retaining oversight of settlement agreements, the Court has a more active role in both encouraging ADR and sanctioning parties who have not reasonably engaged in it.

 

Encouragement of ADR

There are a range of provisions by which the Court is expected to encourage and emphasise the importance of ADR to the litigation which include the following:

  • There is an expectation in the pre-action protocols that parties will consider the use of ADR prior to the issue of proceedings: see paragraphs 8 – 11 of the Practice Direction on Pre-Action Conduct & Protocols.
  • The over-riding objective as CPR 1.4(2)(e) states that active case management includes:

“encouraging the parties to use an alternative dispute resolution procedure if the court considers that appropriate and facilitating the use of such procedure.”

  • Form N181, which is the Directions Questionnaire for fast track and multi-track claims, includes a section asking to what extent the litigant has been advised by their lawyer about the option of ADR and asking a party not seeking a stay for ADR to explain their decision.
  • Specialist Court guides contain guidance about the use of ADR – see the Queen’s Bench Guide at section. 8.4. This provides, at paragraph 8.4.2, that:

“The Master will, in an appropriate case, invite the parties to consider whether their dispute, or particular issues in it, could be resolved by ADR.  The Master may also either stay proceedings for a specified period of time or extend the time for compliance with an order, a rule or practice direction so as to encourage and enable the parties to use ADR.  Parties may apply for directions seeking  a stay for ADR at any time.”.

  • Finally and moving towards the role of the Court in sanctioning parties who do not engage, there is the Ungley Order, now part of standard Directions, as follows:

“The parties shall by [  ] consider whether the case is capable of resolution by ADR.  If any party considers that the case is unsuitable for resolution by ADR, that party shall be prepared to justify that decision at the conclusion of the trial, should the judge consider that such means of resolution were appropriate, when he is considering the appropriate costs order to make.

The party considering the case unsuitable for ADR shall, not less than 28 days before the commencement of the trial, file with the court a witness statement without prejudice save as to costs, giving reasons upon which they rely for saying that the case was unsuitable.”.   

The CDC Final Report set out concerns that the Rules – and indeed the case law, considered further below – to date have been:  “too generous to those who ignore ADR and in our unanimous view under-estimate the potential benefits of ADR.” (paragraph 2.6).  Further, the form of the Ungley Order means that, in general, the Court is not involved in sanctioning parties until costs stage rather than actively engaging during the course of the litigation.

The position is not helped, in my own experience, by the fact that ADR is the last stage of any budgeting exercise where the pot may be running low in any event.  Certainly the above provisions can assist in arguing for adequate provision.

The CDC recommended that:

  • the claim form and potentially also the Defence should include a requirement to certify attempts to contact the other party and achieve settlement;
  • All Court documents, protocols, guidance materials and case management directions should be reviewed to ensure that they express a presumption that ADR should be attempted at an appropriate stage;
  • The possibility of applying sanctions at an earlier stage be explored.

 

Can the Court compel the parties to engage in ADR

The short answer is no, at least not in relation to traditional ADR methods.  In Halsey v Milton Keynes General NHS Trust [2004] 1 WLR 3022, the Court of Appeal stated that such compulsion would amount to an unacceptable obstruction of the parties right of access to the Court, in breach of Article 6 of the European Convention on Human Rights.

After giving judgment in Halsey Lord Justice Ward, in an entertaining antidote, later doubted that he had got it right and, in Colin Wright v Michael Wright (Supplies)  Ltd & Anor [2013] EWCA Civ 234, after dealing with a particularly entrenched litigant, noted the difficulty with the current regime was that: “You may be able to drag the horse (a mule offers a better metaphor) to water, but you cannot force the wretched animal to drink if it stubbornly resists” (para. 3).  He invited some “bold judge” to reconsider the point.

The decision in Pauline Lomax v Stuart Lomax (as executor of the estate of Alan Lomax, deceased) [2019] EWCA Civ 1467, may well be a significant step towards a more interventionist approach.  Here, the Court of Appeal distinguished the position in relation to Court ordered JENE pursuant to CPR 3.1(2)(m) and ordered JENE against the wishes of one party.  In giving judgment, noted that:

  • There are no express rules to the effect that a JENE can only be ordered if all parties consent;
  • Commentary either way in the White Book or in the specialist Guides as to the need for the consent of the parties or otherwise did not assist;
  • Equivalent hearings in the Family Court in relation to financial remedies had been: “outstandingly successful”;
  • Halsey was concerned with whether or not a Court could oblige parties to submit to mediation. This differed from JENE which was part of the Court process and did not obstruct access to litigation.

The really interesting part of the judgment, for the purposes of ADR outside the auspices of CPR 3.1(2)(m), is that the Court of Appeal noted, at paragraph 27, that the Court’s engagement with mediation had “progressed significantly” since Halsey was decided.  The Court of Appeal declined to go further, noting that it did not need in the instant case to decide whether Halsey remains “good law”, but clearly the question remains open.

In Mcparland & Partners Limited & Ors v Stuart William Whitehead [2020] EWHC (298) Ch, at paragraph 42, Sir Geoffrey Vos, Chancellor of the High Court, mentioned to the parties that: “Lomax inevitably raised the question of whether the court might also require the parties to engage in mediation despite the decision in Halsey” but in the event the parties consented to mediation as suggested.

In fact, even the CJC in its Final Report, declined to support compulsion – in contrast to the position in Italy, for example.  Instead, as above, it has recommended a presumption in favour of ADR.

 

Costs consequences for failure to engage in ADR

The default position, since Halsey remains that an unreasonable refusal to participate in ADR will amount to unreasonable conduct of the litigation to which the Court may properly respond by imposing costs sanctions.

In Halsey the Court of Appeal emphasised that there was no presumption in favour of ADR.  Instead, it set out a non-exhaustive list of factors relevant to the question of whether a party had unreasonably refused as follows:

  • The nature of the dispute.
  • The merits of the case.
  • The extent to which other settlement methods have been attempted.
  • Whether the costs of the ADR would be disproportionately high.
  • Whether any delay in setting up and attending the ADR would have been prejudicial.
  • Whether the ADR had any reasonable prospect of success.

As above, the Court’s engagement with mediation has moved on in recent years from the position in Halsey, most notably in In PGF II SA v OMFS Company 1 Limited [2013] EWCA Civ 1288, where the Court of Appeal held that, as a general rule, silence in the face of an invitation to participate in ADR was itself unreasonable, regardless of whether there was a good reason for a refusal to engage in ADR.  A costs penalty was imposed on the winning party, who had failed to respond to two invitations to mediate.

Several further recent cases have followed this trend: see, for example, Laporte v Commissioner of Police of the Metropolis [2015] EWHC 371, where the successful party was deprived of 1/3rd of his costs for failing to engage in ADR; Bourne v Poznyak [2016] (Costs), where the winning party was deprived of 50% of his costs due to his failure properly to engage in mediation by imposing unreasonable terms on any such mediation; and Thakkar v Patel [2017] EWCA Civ 117, where the Court of Appeal refused to overturn a “severe” costs sanction on a party who had agreed to mediate but then “dragged its heels” in the arrangements to mediate, to the point where the other party ultimately abandoned the process.

However, as noted by the CJC Final Report, it is difficult to determine a common thread in the Court of Appeal’s approach in light of the rather conflicting approach in Graham Gore v Naheed & Anor [2017] EWCA Civ 369, where Patten J stated, 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.”. 

The CJC Final Report, at paragraph 21, has recommended review of the guidelines and narrowing of the circumstances in which a refusal to mediate is regarded as reasonable.  If its suggestion of a presumption in favour of mediation is adopted, then clearly that will significantly revise the Halsey approach in any event.

A final point here is that, one of the necessary limitations on the Court’s ability properly to determine whether a party has unreasonably failed to engage in mediation, is that save for any settlement agreement reached, mediation is wholly without prejudice and confidential.

What of the party who attends a mediation or indeed round-table meeting merely to announce that it won’t be engaging in negotiations?  As recognised in Reed Executive plc v Reed Business Information Ltd [2004] EWCA Civ 887, the decision in Halsey did not change the position in respect of without prejudice negotiations and, even if the Court had discretion (which it considered it did not), it should be used sparingly indeed.  The Court may therefore be in difficulties in determining the reasonableness or otherwise of a parties’ failure to engage in ADR.  It is of course still open to the parties to make Calderbank or open offers of settlement.

I have noted with interest the Lawtel summary of the case of Simon Kelly v Raymond Kelly 12/3/20 QBD.  In that case, the defendant was awarded costs on the indemnity basis after he beat his own Part 36 offer at trial.  The claimant’s argument that the defendant be deprived of those costs, in light of the defendant’s refusal to engage in further mediation failed. The Court found that the claimant had refused to stand by an offer made in previous mediation so it was understandable that the defendant was hesitant to engage in further mediation.  At the time of writing, a full transcript of the judgment is not yet available.  However, counsel for the defendant has helpfully confirmed that the parties, during disclosure, effectively agreed to waive privilege in relation to the offer made at the previous mediation.  It was only on this basis that the Court was able to consider the issue.

 

The Future

While there is much still to be done in embedding ADR in our justice system, the costs-benefit considerations of properly engaging  with alternatives to litigation are starting to seem inarguable.  In line with the recommendation of the CJC that the ADR community continue its efforts to ensure that mediation and ADR are properly publicised, I am doing my part here.

It seems to me that, in the current climate of remote working and with cases being stayed or pulled from lists, such benefits must, more than ever, be at the forefront of our minds.

 

Laura Elfield is a clinical negligence and personal injury barrister of over 20 years’ call.  She is also an accredited mediator and heads up the mediation team at 9 Gough Square .  Laura is on the faculty of the London School of Mediation.