Why compulsory mediation in small claims cases is a bad idea
The Ministry of Justice is seeking views on whether to make telephone mediation compulsory in small claims cases, making people engage with the free Court small claims mediation service. This is expressed to be with a view to extending this in future to other higher value cases, using private mediators as they say that the“future ambition” is to extend compulsory mediation from small claims to all county court users.
As a result, it is also considering whether to increase government involvement in regulating the mediation sector.
The MOJ has also suggested that there would be sanctions for those who try and avoid small claims mediation, such as having to pay the other side’s costs or having your case struck out.
It has published its consultation on the proposals, https://consult.justice.gov.uk/dispute-resolution/increasing-the-use-of-mediation/ ,which is open until 4 October.
This followed the Civil Justice Council’s report on compulsion in ADR, which concluded that it was arguable that parties could be compelled to use ADR and this would not deprive them of a right to a fair trial. In 2021 there was a call for evidence by the MOJ into compulsion and ADR. BEIS also issued a paper and consultation regarding consumer ADR.
In my view, the proposal to make telephone mediation compulsory in small claims cases worth less than £10,000 will not lead to more cases settling.
In small claims cases the parties often just want their day in Court and for the judge to make a decision, as in an arbitration. Furthermore, as someone who does quite a few small claims mediations before proceedings are issued and runs an ADR Provider under the ADR Regulations dealing with low value disputes between businesses and consumers, the offer of free mediation after proceedings are issued will likely result in the parties delaying mediating and waiting for the free mediation, rather than mediating before proceedings are issued. The simple fact is that people prefer not to pay, so the proposals will mean less mediation of small claim disputes before proceedings are issued. In other words, beware the law of unintended consequences. The proposals are likely to result in fewer mediations before proceedings are issued.
The MOJ is completely ignoring the ADR providers and ADR system whereby traders are encouraged to offer ADR when a dispute with a consumer cannot be resolved. This existing system could easily be scaled up to offer mediation before proceedings are issued.
I also have reservations as to whether the small claims service will have capacity to scale up because in the past they have not had sufficient capacity to deal with current cases.
Also, one hour by telephone is simply not enough in a lot of cases in my experience. We mediate small claims via Zoom and normally allow a minimum of 2 hours. £10,000 is a lot of money for many people and small claims can be as complex, or even more, than higher value cases. They deserve more than a cursory 1 hour mediation process. It seems that the MOJ is trying to cut down on the number of small claims trials which take up a disproportionate amount of the Courts’ time. Small claims make up 61% of county court cases, so a cynic would say that is easy to see why the MOJ is interested in reducing them.
I am in favour of compulsion to consider mediation before issuing proceedings, not afterwards using civil service mediators. It seems to me that their primary duty is to their employers, the Court service. There are plenty of independent civil mediators or ADR providers to do the job.
I have been working as a commercial and civil mediator for over 10 years and have witnessed first hand the benefits of mediation in a wide range of disputes such as TOLATA claims, boundary disputes and contentious probate disputes as well as contract claims.
By “compulsion” I do not mean forcing people to settle and depriving them of their day in Court, but to making it a step to try ADR before starting proceedings, using the ADR Regulations in consumer disputes, or requiring a mediation certificate before starting proceedings, certifying that the parties have offered to mediate.
In my view it is better to try mediation early on in a dispute rather than leaving it to close to trial, or even after proceedings have been issued, when costs can be an impediment and by the time the Judge is considering costs sanctions and whether someone has unreasonably refused to mediate, it is too late as the costs have been incurred.
If proceedings are issued I would like to see fast track and multi track cases being referred to mediation using an external mediation service, like the Manchester Mediation pilot scheme where local qualified mediators on a list are available to mediate disputes from the Court. I support the introduction of a “Notice to Mediate” procedure similar to that in place in Ontario. Small claims can also be referred to independent external mediators, rather than being dealt with by civil service mediators.
I am also in favour of early neutral evaluation by a judge. In small claims cases the Courts in some areas list a Dispute Resolution hearing before the judge to try to resolve cases or make directions.
So I will not be supporting the proposals, but advocating the use of mediation before proceedings are issued and in fast track and multi track cases.