Be prepared to mediate or prepare to pay

The High Court has ordered costs on an indemnity basis after a continuing and unreasonable failure on the part of the Defendant to engage with mediation before then accepting a Part 36 offer late following trial.

In Garritt-Critchley, the Defendant continually failed to engage in any settlement discussions or mediation in relation to a dispute regarding the issue of shares.  This was on the basis that they were:

"extremely confident of their position and [did] not consider there [was] any realistic prospect that [the claimant] will succeed, the rejection [was] entirely reasonable"

The defendant then accepted a Part 36 offer outside the relevant period, after trial but before judgment was handed down. The Claimant unsurprisingly applied for indemnity costs and the court agreed stating that the refusal to mediate was unreasonable.

It is, of course, not compulsory for parties to engage in mediation, but a party must consider it carefully, and if it will not engage in mediation, should be prepared to justify that exceptional stance clearly in line with the guidelines in Halsey.  

For the full facts of the case and case comment please click here.