It is well established that a refusal to mediate can lead to an adverse costs order but it is not inevitable- it is in the discretion of the judge.
In the case of Ineos Upstream Ltd & Ors v Boyd & Anor (Re Consequential Matters) [2023] EWHC 1756 (Ch) (14 July 2023)
URL: http://www.bailii.org/ew/cases/EWHC/Ch/2023/1756.html the judge was asked to make an indemnity costs order against a party for various reasons including refusal to mediate. The case concerned a claim for legal costs arising from an earlier judgment of the Court.
The judge found that
“I accept that D6 did offer a costs mediation in September 2022 to take place in October which I take that into account. No response was received to that proposal but given the context in which the offer was made and the 3 working days it was open for acceptance and without any advance information about the overall costs figures it carries very limited additional weight.”
The judge decided not to penalise the party for refusing the invitation to mediate because it was made with only 3 days to accept. The judge continued:
“As set out in the Judgment, an order for indemnity costs is one that is made where the court is satisfied that a party’s conduct falls outside the norm, see in particular Three Rivers DC v Bank of England [2006] EWHC 816 (Comm) at [25] and the general comments made at [98] – [111] of the Judgment.
A difference between the position in the Judgment and the position now is that I am considering the broader conduct of the parties in relation to the Costs of the Remitted Costs, not the question of what the appropriate Remitted Costs order was.
The judge found “that none of the offers made were ones which could have mandatory costs consequences in the sense, for example, of Part 36. Consideration of those offers and the questions of delay are all simply factors or circumstances for the court to take into account when considering the claimants’ conduct and whether it falls outside the norm as part of the exercise of its broad discretion when determining whether in this case it should award indemnity costs for some or all of the period covered by the Costs of the Remitted Costs.”
The judge explained that after the judgment in the case:
“ D6 offered to accept 60% of the Remitted Costs and all of his further costs, both to be assessed on the standard basis and with the claim against D6 to be withdrawn. The offer was sent by email at around 2.30pm on 4 July and was said to remain open for acceptance until 5.30pm on 5 July. The claimants responded on the same day raising issues in relation to the contents of the offer and noting that there was insufficient time to either consider the offer or for it to provide any costs protection. The claimants say this was unreasonable conduct on the part of D6.
On Friday 16 September 2022 D6 offered to engage in a costs mediation in October 2022 in relation to D6’s costs. As part of that mediation process D6 offered to produce his CFA together with a summary schedule of costs but not otherwise. D6 required a response by no later than Tuesday 20 September 2022, at best 3 working days later. That approach itself puts into perspective the offer of a costs mediation. The claimants’ failure to agree to it is relied on by D6 as a basis for seeking indemnity costs. A refusal to mediate should be taken into account and weighed in the balance when the court exercises its discretion but has to be considered in the context in which it was made.”
So, the lesson to take from this decision is not to make an unreasonable offer to mediate with conditions or with insufficient time to consider it. The Court will look at the context.