The recent decision of the High Court in White Young Green Environmental (Ireland) Limited v Anne Gethings [2015] IEHC 498 has raised new issues when advising clients on when to make an offer of tender of payment at a late stage in the proceedings and in particular post mediation.
Background
The case was set down for trial in April 2015 however on the
second day of the trial, following the urging of the Court, the
parties adjourned proceedings to engage in mediation and the
proceedings were stayed as a result. The mediation was unsuccessful
and a new trial date was set for January 2016.
The plaintiff subsequently made an application pursuant to Order 22
Rule 1(1) of the Rules of the Superior Courts seeking leave of the
Court to make an offer of tender of payment to the defendant in
relation to the defendant's counterclaim.
The plaintiff submitted that nothing was revealed or said during
the mediation process that would result in prejudice to the
defendant's case but acknowledged the potential litigation
disadvantage to the defendant.
The defendant argued that although no specific prejudice would
occur to the defendant's case if leave was granted, as a result
of the mediation the plaintiff gained unique insight into the
defendant's thinking and strategy in relation to the
proceedings. Additionally the defendant submitted that its expert
reports were made available to the plaintiff during the mediation
process.
Decision
The Court (Binchy J) acknowledged that it will generally accede
to applications for a late tender offer unless by doing so a
prejudice is caused to the plaintiff (or in this case to the
counter-claimant) or it is unfair to grant the application. The
Court noted the public policy consideration in bringing litigation
to a swift and economic conclusion as a determining factor.
However, the Court ultimately decided it would be unfair to allow
the application in this case for two reasons:
- The conduct of the mediation gave the plaintiff a litigation advantage(1) into the defendant's thinking in relation to the proceedings. A meaningful mediation explores legal, personal and financial issues and it seems very likely that following mediation each party will have a significantly better understanding of the attitude to the proceedings of the other party, putting the defendant in a better position to make a tender offer.
- The litigation advantage gained by means of mediation undermines the public policy objective behind mediation, which is to encourage the resolution of disputes by means of alternative dispute resolution if it helps to avoid lengthy trials and the attendant costs of same.
The Court commented that the litigation disadvantage could be avoided if the parties considered the possibility of a lodgement or tender in the event that that mediation is unsuccessful and agreed whether or not such a course could be taken in that event. The Court pointed out that when the trial of the action commenced, the defendant was not suffering from the litigation disadvantage of a tender offer, she was not obliged to participate in mediation and could have elected to continue the trial if she had wished to do so but instead acceded to the request to mediate in the hope that a two-week trial might be avoided. The Court also considered that the plaintiff had a minimum of two months in advance of trial to consider making a tender offer and could have done so at any time up to the commencement of the trial but did not do so. Against that background, it seemed fundamentally unfair to the defendant that she should now be faced with the litigation disadvantage of a tender offer.
Conclusion
This case is of particular relevance to insurers who are
permitted to make tender offers (in lieu of lodging monies into
court), however, it is of general relevance to any defendant who
wishes to avail of the rules permitting a defendant to make a
lodgement or tender offer to put a plaintiff on risk for
costs.
This case highlights the potential risk in waiting until a very
late stage in proceedings to make a tender offer. At first glance
it appears to be a significant decision with the potential outcome
that tenders will not be permitted post mediation.However, the case
would appear to turn on its facts and it is worth noting that the
mediation in this case took place at a particularly late stage, ie
after the first day of the trial of the action. A lodgement or
tender offer is permitted without the need to obtain the leave of
the court at any time after a defendant has entered an appearance
and before the action is set down for trial (except in personal
injuries actions to which different rules apply). It would
therefore appear unlikely that a defendant would be prevented from
making a tender offer post mediation but prior to the matter being
set down.
If, however, there is an agreement to mediate post setting down, it
should be considered whether an agreement should be put in place to
permit the defendant to make a lodgement or tender offer post
mediation in the event that the mediation is unsuccessful.
Footnote
1 - The issue of unfair litigation advantage was also at issue, albeit in a different context, in Persona Digital Telephony Ltd & Anor v Minister for Public Enterprise, & Ors [2015] IEHC 457 which is considered here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.