Failing to mediate can result in the awarding of indemnity costs. This well established principle was applied in the recent high profile case of Gill v RSPCA. You may well have read about this case in the press. Briefly Dr Gill was expecting to inherit a farm which had belonged to her parents. When her mother died the will purported to leave the estate instead to the RSPCA (Third Defendant in the proceedings). Dr Gill successfully challenged the will in the High Court.
Update: the BBC has reported that the RSPCA has now appealed against the original ruling against them. I will of course post a further details once that appeal has been resolved.
On 7th January 2010 James Allen QC, a Deputy High Court Judge give his ruling on costs (follow the link above to read the transcript). This was complicated litigation but one element of the Claimant’s case was based on proprietary estoppel – she had relied upon the conduct and statements of her parents as constituting assurances which she relied upon to her detriment. The court found in her favour in this part of the claim and then had to consider the costs. It is useful to set out a little of the history of the litigation:-
- 13/6/08 – Defendant offers Claimant £650,000 plus costs.
- 20/6/08 – Claimant asks Defendant to reconsider ADR.
- 20/6/08 – Claimant rejects Defendant’s offer but counter offers the Defendant part of the farm worth £850,000 and all the money in the estate bank accounts. Defendant rejects the offer.
- 24/7/08 – trial adjourned part heard.
- 19/9/08 – Claimant asked Defendant to reconsider mediation.
- 29/9/08 – Defendant asked Claimant if they she had any further offers to make.
- 28/10/08 – Claimant offered to accept 219.89 acres – the remainder worth £1,060,000 to Defendant.
- 3/11/08 – Defendant rejects offer.
Judge Allen found the despite Dr Gill’s repeated attempts to resolve the matter by mediation or some other form of ADR the RSPCA remained resolute in it’s opposition and this attitude continued after the commencement of the trial. Further the RSPCA clearly displayed a lack of enthusiasm to resolve the matter by way of negotiated settlement. This attitude was unreasonable and out of step with the court’s expectations. Consequently he ordered the RSPCA to pay the Claimant indemnity costs for this aspect of the claim. He said at paragraph 77 on page 26:
In my judgment the Third Defendant’s conduct and attitude in relation to the repeated proposals of the Claimant to adopt ADR is, in the circumstances of this case, sufficient by itself to take the case out of the norm but the appropriateness of indemnity costs in relation to the claim based upon proprietary estoppel is strengthened by the various offers of settlement made by the Claimant which were rejected by the Third Defendant, which offers, if accepted by the Third Defendant, would have resulted in lesser benefit to the Claimant than she has obtained in consequence of the Judgment of this Court secured by her.
The Claimant was seeking £400,000 on account of her costs so it is not an insignificant ruling.
What do you think? Was the court right to punish the RSPCA in this way? Should costs penalties to be used to force parties to mediate? Add your comment below.
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