This article was first published in APIL’s PI Focus magazine in May 2008.
An amended version of the Allocation Questionnaire came into use at the beginning of April 2008. A considerable focus is put on the parties’ obligations to try to settle the case without a hearing. Representatives have to confirm that they have “explained to [their] client the need to try to settle; the options available; and the possibility of costs sanctions if they refuse to try to settle.” Practitioners may tick this box without giving it too much thought secure in the knowledge that they always try to negotiate settlements for their clients. This article will examine the need to try to settle; the costs sanctions; and one of the alternative options available so that practitioners can give informed consideration to ticking the boxes in Section A.
The starting point for solicitors is The Solicitors’ Code of Conduct 2007 which provides in Rule 2.02(1)(b) (Client Care) an obligation on solicitors to “give the client a clear explanation of the issues involved and the options available to the client”. Guidance is given in the notes to Rule 2 at paragraph 15
“When considering the options available to the client (2.02(1)(b)), if the matter relates to a dispute between your client and a third party, you should discuss whether mediation or some other alternative dispute resolution (ADR) procedure may be more appropriate than litigation, arbitration or other formal processes. There may be costs sanctions if a party refuses ADR – see Halsey v Milton Keynes NHS Trust and Steel and Joy [2004] EWCA (Civ) 576.”
So in every personal injury case there is a professional obligation on the solicitor to discuss mediation or some other form of ADR with their client. The Civil Procedure Rules repeat the obligation to consider ADR. Part 1.3 states that the parties are required to help the court to further the overriding objective. The courts are to use active case management to further the overriding objective. Part 1.4 (2)(e) states that this includes
“encouraging the parties to use an alternative dispute resolution procedure if the court considers that appropriate and facilitating the use of such procedure.”
Part 44.5 (3) states that when deciding the amount of costs to be awarded the court must consider the conduct of all the parties, in particular-
“(i) conduct before, as well as during, the proceedings, and;
(ii) the efforts made, if any, before and during the proceedings in order to try to resolve the dispute;”
The Personal Injury pre-action protocol at paragraph 2.16 states
“The parties should consider whether some form of alternative dispute resolution procedure would be more suitable than litigation, and if so, endeavour to agree which form to adopt. Both the Claimant and Defendant may be required by the Court to provide evidence that alternative means of resolving their dispute were considered. The Courts take the view that litigation should be a last resort, and that claims should not be issued prematurely when a settlement is still actively being explored. Parties are warned that if the protocol is not followed (including this paragraph) then the Court must have regard to such conduct when determining costs.”
An identical paragraph is included in the clinical disputes protocol at paragraph 5.1. They are the obligations which create the need to try to settle. The courts have willingly applied costs sanctions against parties who have refused to even consider mediation. In Dunnett v Railtrack PLC [2002] EWCA Civ 302 the Court of Appeal refused to award the successful respondents their costs of the appeal because of their refusal to contemplate alternative dispute resolution. In what might be considered the leading case on this question, Halsey v Milton Keynes NHS Trust, the Court of Appeal chose not to penalise the party that refused to mediate because of the particular circumstances of the case. Dyson LJ set out the instances when it may be reasonable to refuse to mediate but indicated that “in our view, most cases are not by their very nature unsuitable for ADR.”
The court generally gave strong encouragement to ADR but some commentators, notably Lightman J who gave the judgment in Hurst v Leeming [2001] EWHC 1051 (CH), have criticised the judgment for placing the burden of showing the refusal to mediate was unreasonable upon the party making the complaint. In a speech he made in India on 8th March 2008 the Lord Chief Justice Lord Phillips said,
“But Lord Justice Dyson significantly weakened the costs sanction by saying that the burden was on the party seeking costs to show that the other party had unreasonably refused to resort to mediation, rather [than] holding that it was on the party refusing mediation to justify his conduct. I think that there is little doubt that this finding significantly reduced the pressure on English litigants to attempt mediation. After all, parties usually resort to litigation because they believe that they are going to win and, if you win, it can be quite difficult for the loser to show that you acted unreasonably on insisting on your full legal rights. At the time that Lord Justice Dyson gave his judgment in Halsey I agreed with it, but with hindsight I tend to agree with Gavin Lightman that it is a pity that he said what he did about burden of proof. There is much to be said for the robust attitude that a party who refuses to attempt mediation should have to justify his refusal.”
Conduct at the mediation will be considered (provided both parties agree to waive their privilege). In Earl of Malmesbury & others v Strutt & Parker QBD 18th March 2008 Jack J held that a party who agreed to mediate but then took an unreasonable position in the mediation was in the same position as a party who unreasonably refused to mediate.
In May of this year the Master of the Rolls Sir Anthony Clarke made a speech at the Civil Mediation Council’s annual conference. He said,
“Experience thus shows even now that far too many people know far too little about mediation. I think we can all agree that this has to change. ADR in general and mediation in particular, where it is the appropriate ADR mechanism, must become an integral part of our litigation culture. It must become such a well established part of it that when considering the proper management of litigation it forms as intrinsic and as instinctive a part of our lexicon and of our thought processes, as standard considerations like what, if any expert evidence is required and whether a Part 36 Offer ought to made and at what level… It seems to me that the court has sufficient powers at present routinely to direct the parties to take part in a mediation process or attend a mediation hearing during the course of the pre-trial stage of any proceedings.”
Given this encouragement it is notable that practitioners in personal injury litigation are still not embracing mediation as a method of resolving claims in any great numbers. According to the Association of Northern Mediators’ survey only 1.8% of their recorded mediations were personal injury disputes. This may be for many reasons. Claimant representatives may consider they have a good case which will settle eventually so mediation has nothing to offer. It may simply be unfamiliarity with the mediation process, how it works and what significant benefits it can provide for claimants and their representatives.
Ward LJ banged the drum for mediation in Egan v Motor Services (Bath) Limited [2007] EWCA Civ 1002. Having emphasised the solicitors’ duty “to take the firmest grip on the case” he went on to say
“In so many cases, and this is just another example of one, the best time to mediate is before litigation begins. It is not a sign of weakness to suggest it. It is the hallmark of common sense. Mediation is a perfectly proper adjunct to litigation. The skills are now well developed. The results are astonishingly good. Try it more often.”
So what are the benefits of a mediated settlement and who benefits? Mediation can undoubtedly benefit both the claimant, the defendant and personal injury practitioners. Whilst the benefits to clients are upper most in a lawyer’s mind it may be an understanding of the latter that becomes the real driver for an increased participation in mediation. Clients benefit from a speedy resolution of their claim. Given the choice of a year or more of litigation with the (unlikely) prospect of a trial at the end of it or a mediation meeting that can be arranged at very short notice most would opt for mediation. Claimants worry about their cases, some more than others and the prospect of having to give evidence is a major concern. A successful mediation removes that uncertainty and stress. It is much more immediate than the often slow process of written offer and counter offer. Mediators do not impose settlements so the client can take a fully active part in the mediation and is therefore more likely to be satisfied with the result. If not they can walk away at any time and return to the litigation. A mediation may result in an award for compensation and costs but it can be more. A claimant may genuinely crave an acknowledgement of wrongdoing from the defendant or an apology, the court can not order these but they can form part of a mediated settlement.
In an employer’s liability claim an undertaking to improve health and safety procedures or a particular working practice could be included in the settlement. For the practitioner an early settlement of the claim means early costs recovery. The mediation meeting should be used to settle costs which will include the costs of preparation for and attendance at the mediation. This releases WIP that could otherwise be locked into the case for another year or more. There may be cash flow benefits from recovering funded disbursements which are likely to include court fees if nothing else and even in the lowest value multi track case that is £660 up to the listing questionnaire stage.
For a busy practitioner a settled claim releases time to catch up on the backlog. Informed scepticism is a good thing, so take Ward LJ’s advice and try mediation, if not more often, then at least once.
Philip Hesketh is a full time Professional Mediator www.injurymediation.co.uk
