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The Consequences Of Failing To Mediate

The recent High Court case of Wales (t/a Selective Investment Services) v CBRE Managed Services Limited and Aviva is a timely reminder for all litigants that the refusal to engage in Alternative Dispute Resolution (ADR) can result in severe financial consequences.

In that case Mr Wales, an independent financial adviser, pursued a claim for £205,000 against CBRE and Aviva for unpaid commission. The former had dispensed with Mr Wales’ services following its decision to move its employees to a new pension platform.

In his Letter of Claim, Mr Wales had indicated that he was willing to consider any proposal to settle his dispute by means of ADR including mediation in accordance with the Pre-Action Protocol in the Civil Procedure Rules.

However, CBRE did not engage with Mr Wales’ request and later stated that it would not participate in any proposed mediation. While Aviva initially indicated that it would be prepared to mediate, following CBRE’S refusal, it too demonstrated an unwillingness to mediate stating that it was concerned about the usefulness of any mediation in the absence of CBRE.

Mr Wales therefore commenced proceedings and further requests were made to mediate but all were refused by CBRE. There was some without prejudice correspondence between the parties but the matter ended up at trial without any mediation having taken place.

Mr Wales’ claim against CBRE and Aviva was ultimately dismissed. Typically, the Court would order the unsuccessful party to pay the successful party’s costs. However, in this instance, notwithstanding it had successfully defended the claim, the Court penalised CBRE for refusing to engage in ADR. The Judge found that CBRE’s conduct was unreasonable as:

  • It had repeatedly declined and refused to participate in mediation.
  • The refusal to engage in mediation prior to the issue of proceedings was in breach of the requirements of the Pre-Action Protocol.
  • There was nothing in the nature of the dispute which rendered it unsuitable for mediation.

As a consequence the Judge only awarded CBRE 50% of its costs for the majority of the proceedings and 80% after the date of certain without prejudice correspondence. Aviva was also penalised but to a lesser degree; it had its costs reduced to 80% towards the latter stages of the litigation.

This case highlights the need for parties to remain flexible in litigation and to be prepared to negotiate. This is especially so in view of the current Covid-19 pandemic when judicial resources are being substantially stretched and current court listings deferred for months.

Judges are likely to take an even dimmer view of any case that proceeds to trial where there was the possibility of it having been resolved by ADR months beforehand.

Although ADR may not always result in a settlement it could still be utilised to narrow down the issues between the parties thereby saving on both expense and court time when the matter eventually reaches trial.

If you are involved in any dispute and require assistance, please email or call us on 0113 227 9316 today.

 

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Luke Patel

Partner and Head of Dispute Resolution
Commercial Dispute Resolution
LPatel@LawBlacks.com
0113 227 9316
@LukeLawBlacks
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Luke Patel Blacks Solicitors LLP