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Flowchart for costs sanctions and refusal to mediate:

by | Apr 14, 2025 | Uncategorized

Here’s a structured flowchart illustrating when courts are likely to impose costs sanctions in civil cases for refusing to mediate, based on PQR Ltd v XYZ Corp and the broader legal framework:

Flowchart: When Will Courts Impose Costs Sanctions for Refusing Mediation in Civil Cases?

START
│
▼
Did the party refuse a mediation proposal? → NO → No sanctions likely
│ YES
▼
Was refusal justified under Halsey principles? → YES → No sanctions (if evidence is credible)
│ NO
▼
Consider Halsey factors:
├─ 1. Nature of dispute (suitable for mediation?) → Unsuitable → Possible exemption
├─ 2. Merits of case → Weak case refusing = higher risk
├─ 3. Other settlement attempts → ENE/without prejudice offers may help
├─ 4. Costs of mediation → Disproportionate? Unlikely here
├─ 5. Delay → Did refusal cause unnecessary delay?
└─ 6. Prospects of success → Would mediation have worked?
│
▼
Unreasonable refusal? → NO → Proceed to trial
│ YES
▼
Stage of refusal:
├─ Early refusal → Higher penalty (courts expect early ADR)
└─ Late refusal → Still penalized, but may be mitigated
│
▼
Outcome at trial:
├─ Lost case → Severe sanctions (indemnity costs likely)
├─ Won but beat Part 36 offer → Still penalized (*PQR Ltd*)
└─ Won and matched offer → Possible partial relief
│
▼
Court's discretion:
├─ Mitigating factors → E.g., partial ADR attempts
└─ Aggravating factors → E.g., ignoring court orders
│
▼
SANCTIONS IMPOSED:
├─ 1. Indemnity costs (from date offer refused)
├─ 2. Enhanced interest (up to 10% over base)
└─ 3. Reduced damages (in some cases)

Key Decision Points Explained

  1. Justified Refusals (Safe Harbors)
  • Evidence required:
    • Safety concerns (e.g., violence)
    • Fraud/undue influence
    • Truly urgent interim relief needed
    • Opponent’s bad faith (documented)
  1. Automatic Red Flags
  • “My case is too strong” (PQR Ltd)
  • “Mediation is a waste of time”
  • Ignoring court’s ADR directions
  1. Sanctions Grading Severity Typical Order Mild 20% costs reduction Moderate 50% adverse costs Severe Indemnity costs + interest
  2. Strategic Escape Routes
  • Propose alternative ADR (e.g., arbitration)
  • Request mediator-led disclosure first
  • Get court’s blessing before refusing mediation.

START
│
▼
[Did party refuse mediation?] → NO → (No sanctions: Halsey para 16)
│ YES
▼
[Valid Halsey justification?] → YES → Safe if proven (Lomax [2019])
│ NO
▼
[Halsey Factors Assessment:]
├─1. Nature of dispute → Commercial = suitable (PQR Ltd [2025])
├─2. Merits → Weak case + refusal = worse (Thakkar [2017])
├─3. Other attempts → Without prejudice offers help (WG v HG [2022])
├─4. Costs → Must be truly disproportionate (Halsey para 29)
├─5. Delay → Unnecessary delays penalized (DF v YB [2025])
└─6. Prospects → 50%+ chance of success expected (Churchill [2023])
│
▼
[Unreasonable refusal?] → NO → Proceed (L v L [2021])
│ YES
▼
[Stage of refusal:]
├─Early → Higher penalty (PQR Ltd)
└─Late → Still penalized (DF v YB)
│
▼
[Trial outcome:]
├─Lost → Indemnity costs (PQR Ltd)
├─Won but < offer → 50%+ penalty (XYZ v ABC [2023])
└─Won + fair offer → Possible relief (L v L)
│
▼
[Court discretion:]
├─Mitigating → Partial attempt (WG v HG)
└─Aggravating → Ignoring orders (DF v YB)
│
▼
[SANCTIONS:]
├─1. Indemnity costs (PQR Ltd)
├─2. 10% interest (CPR 36.17)
└─3. Damages reduction (CPR 44.2)