Refusal to Mediate Is Normally Unreasonable—But Not in This Case
A significant decision on alternative dispute resolution (ADR) was handed down in Assensus Ltd v. Wirsol Energy Ltd, where the court ruled that the defendant’s refusal to mediate did not justify any reduction in its costs. This judgment reinforces the principle that, while parties are generally expected to consider mediation, there are circumstances where refusing it is not unreasonable—particularly when meaningful settlement offers have been made.
The Background
The claimant, Assensus Ltd, brought claims against the defendant, Wirsol Energy Ltd, but ultimately failed on all counts. Despite this, Assensus argued that Wirsol should only recover 70% of its costs because it had declined multiple invitations to mediate.
However, the judge found that this was not a case where the defendant had made no efforts to settle. In October 2022, Assensus had made a Part 36 offer to accept £1,041,589. The following month, Wirsol responded with a Part 36 offer of £100,000. Given that Assensus recovered nothing at trial, the judge described Wirsol’s offer as a “meaningful sum.”
Why Refusing Mediation Was Not Unreasonable
The court emphasized that the key issue was not whether Assensus was reasonable in rejecting Wirsol’s offer, but whether Wirsol had acted unreasonably by refusing mediation. The judge concluded that it had not, highlighting several factors:
• The case was not unduly complex, but the parties’ positions were deeply polarized. Assensus claimed entitlement to a £2.5 million bonus, while Wirsol denied any contractual right to it—a position that was ultimately vindicated.
• Despite declining mediation, Wirsol had made a reasonable settlement offer, which Assensus chose not to engage with.
• Assensus had previously rejected a discretionary bonus of £257,000, demonstrating that the gap between the parties remained vast.
• Brief discussions in September 2023 led to Assensus making a verbal offer to accept £725,000—still far higher than Wirsol’s stance, showing that mediation was unlikely to succeed.
• The judge found that Wirsol was unlikely to increase its offer, and Assensus was unlikely to accept it, making the prospect of a successful mediation “vanishingly small.”
The Court’s Conclusion
Given these factors, the judge ruled that Wirsol’s decision not to mediate was reasonable. While ADR is usually encouraged, the court recognized that, in this case, mediation would have been unlikely to bridge the substantial gap between the parties. As a result, Wirsol was entitled to recover its full costs, without any reduction for refusing mediation.
This decision underscores that while courts generally expect parties to attempt mediation, there are circumstances where standing by a reasonable settlement offer is not deemed unreasonable conduct.