Can you refuse an invitation to mediate without risking adverse cost orders? The short answer is yes, provided you have strong grounds for doing so. This was confirmed by the Court of Appeal in its recent judgment in Atlantic Shellfish Limited v The County Council of the County of Cork.
THE COURT RULES
Court rules allow judges in the High Court to adjourn legal proceedings at the request of one of the parties, or on their own initiative, to allow the parties to engage in alternative dispute resolution (ADR).
The rules also allow judges, when determining who should bear the costs of proceedings, to have regard to a party's refusal "without good reason" to participate in ADR.
The power to make adverse cost orders discourages parties from simply refusing, without any good reason, to consider alternatives to having their dispute resolved by the courts.
Does this mean that if a party refuses to accept an invitation to mediate, he should be automatically penalised in costs? The Court of Appeal considered this for the first time in Atlantic Shellfish Limited v The County Council of the County of Cork.
THE ATLANTIC SHELLFISH CASE
The plaintiffs were the operators of an oyster fishery in Cork Harbour, which was closed permanently in 2002 due to water contamination allegedly coming from a nearby sewage treatment plant. They sought damages from Cork County Council and the State in a complex set of proceedings, which have continued over many years. They applied to the High Court for an order inviting the defendants to mediate the dispute.
The State defendants argued that the case was not suitable to mediation as it raised significant public law issues, the implications of which extended far beyond the parameters of the case. They also emphatically denied liability (as did the other defendants) and argued that the plaintiffs only applied to the High Court for mediation so that they could trigger an application for costs at the conclusion of the trial.
The High Court refused to adjourn the proceedings to allow mediation to occur and the plaintiffs appealed to the Court of Appeal.
THE APPROACH OF THE COURT OF APPEAL
The Court of Appeal said that a court should only exercise its discretion to adjourn proceedings to allow parties to engage in ADR where it is "appropriate" to do so, having regard to all the circumstances of the case.
How can a court assess whether it is "appropriate" to adjourn the proceedings? It must first be satisfied that the issues in dispute are reasonably suitable to resolution by ADR. The Court of Appeal accepted that not all disputes are readily amenable to ADR.
If the court is satisfied that the dispute is amenable to ADR, it must then consider any other circumstances that might weigh in favour or against adjourning the proceedings. Helpfully, the Court of Appeal set out examples of what these 'other circumstances' might include:
- the manner in which the parties have conducted the litigation up to the date of the application;
- whether any interlocutory (pre-trial) orders have been made;
- the nature and potential expense of the proposed ADR;
- the likely effect of the adjournment on the progress of the litigation if ADR proves unsuccessful;
- the potential saving in time and cost by engaging in ADR;
- the extent to which ADR can or might potentially narrow the issues between the parties;
- any proposals made by the applicant concerning the issues that might be dealt with in the course of the ADR; and
- any proposals as to how the costs of the proposed ADR process might be borne.
THE COURT OF APPEAL DECISION
The Court of Appeal refused to adjourn the proceedings in the Atlantic Shellfish case to facilitate mediation. It said that the particular dispute was not amenable to mediation as it raised novel and complex legal issues. The Court also said it was not unreasonable for the State defendants, against whom complex legal claims had been made which could have ramifications beyond the case, to maintain their entitlement to have those issues resolved by a court.
REFUSING AN INVITATION TO MEDIATE
The courts, while supportive of mediation, acknowledge that it may not be appropriate in all cases to interpose mediation in the middle of an ongoing legal case, particularly where complex legal issues are involved. If a case is not amenable to mediation, the courts will not make adverse cost orders against a party who refused to accept an invitation to mediate.
However, before you refuse an invitation to mediate, consider each of the factors identified by the Court of Appeal and how these apply to your case. If the other side applies to court for an adjournment to facilitate mediation, you will need to show that you have strong grounds for resisting the application. No more so than in any area of litigation, each case will be judged on its own facts.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.