Refusal to Mediate and Part 36 Offers: Lessons from Chassy v Left Shift IT Ltd [2025] EWHC 1701 (KB)
In a judgment handed down on 4 July 2025, Bruce Carr KC (sitting as a Deputy High Court Judge) delivered a detailed ruling in the case of Chassy v Left Shift IT Ltd & Ors which serves as a cautionary tale about both the limits of Part 36 and the continuing judicial scrutiny of parties’ conduct in refusing mediation.
The case revolved around a claim brought by the claimant, Mr Mark Chassy, against three defendants—his former employer Left Shift IT Ltd and two of its directors—for unpaid remuneration and related contractual claims. He succeeded only against the company (the First Defendant), and not against the individual directors.
Although damages were awarded in excess of £275,000, the battle over costs proved just as contentious, highlighting two key issues:
- Whether the First Defendant’s failure to beat a Part 36 offer should trigger enhanced costs consequences.
- Whether the refusal to engage in mediation should result in an indemnity costs order.
Part 36: Joint Offers and Justice
The claimant had made a Part 36 offer in June 2023, addressed to all three defendants jointly, proposing to settle for £178,491.51 plus standard basis costs.
The First Defendant ultimately failed to beat this offer. However, the judge refused to apply the enhanced consequences under CPR 36.17—such as indemnity costs, interest on damages, and the additional 10% uplift—because the offer had been made jointly to all three defendants and not severally.
Relying on Re IT Protect Ltd [2020] EWHC 3001 (Ch), the judge held that it would have been unjust to impose CPR 36.17 consequences on the First Defendant alone. Acceptance of the joint offer would have required the Second and Third Defendants—who were ultimately found not liable—to become liable for costs and damages they had no legal obligation to pay. In such a scenario, the practical inability to accept the offer without exposing the innocent defendants to liability meant it would be wrong to treat the offer as having the force contemplated by CPR 36.17.
Key takeaway:
When making a Part 36 offer in multi-defendant litigation, care must be taken to specify liability on a several basis. Failure to do so may render the offer ineffective for triggering CPR 36.17 even where the offer is technically beaten.
Refusal to Mediate: Was It Unreasonable?
The claimant also argued that indemnity costs should be awarded because the defendants had refused to mediate when it was proposed as early as June 2022.
The defendants responded that their refusal was not categorical, and they had indicated willingness to consider mediation after their application to set aside default judgment had been dealt with. Later correspondence in 2023 also included a proposal to settle the claim against the First Defendant alone, reinforcing the defendants’ view that this was never a case suitable for mediation due to the substantial gap between the parties and the disputed liability of the individual directors.
Carr KC accepted that this was not a case where mediation was likely to succeed, noting the wide divergence in the parties’ positions on both quantum and liability. He stopped short of censuring the refusal to mediate, effectively treating it as reasonable in the circumstances.
This is an important reminder that while courts are increasingly robust in criticising unjustified refusals to mediate, they still retain discretion to examine the practical reality of settlement prospects.
Conclusion: Mediation and Part 36 Are Powerful, But Context Matters
The Chassy decision reinforces several key points for litigators and parties:
- Make Part 36 offers severally, especially in multi-defendant cases with uncertain or differing liability outcomes.
- Don’t assume a refusal to mediate will always attract judicial criticism—the courts will look at the full context, including the timing of the offer, procedural posture, and likelihood of success.
- Where a party succeeds only partially, costs will often be apportioned—here the claimant recovered only 75% of his costs despite a substantial damages award.
This case is a valuable addition to the growing body of jurisprudence at the intersection of alternative dispute resolution and costs consequences, showing both the power and limitations of procedural tools like Part 36 and judicial encouragement of mediation.
Case Citation: Chassy v Left Shift IT Ltd & Ors [2025] EWHC 1701 (KB)
Judge: Bruce Carr KC (sitting as Deputy High Court Judge