On 11 May, the Court of Appeal gave its reserved judgment in the two consolidated appeals of Halsey v Milton Keynes General NHS Trust and Steel v Joy and Halliday. Judgment was delivered by Lord Justice Dyson. Drawing attention to the rights enshrined in Article 6 of the European Convention on Human Rights, the court firmly expressed the view that it was not part of its function to compel any party to participate unwillingly in mediation.
Until now, this had not been so clearly understood.
The judgment also makes it clear that the use of alternative dispute resolution (ADR) is to be encouraged and that such encouragement “may be robust”. So, is there likely to be much difference between robust encouragement and compulsion? And what is it likely to mean for personal injury (PI) and clinical negligence practitioners?
ADR to become the norm
ADR is defined in the civil procedure rules glossary as a “collective description of methods of resolving disputes otherwise than through the normal trial process”. Generally speaking, that means mediation. There are now clear signs that mediation will become the norm rather than the exception in PI and clinical negligence work.
Orders by district judges requiring both the claimant and a representative of the defendant’s insurers to attend court one hour in advance of a case management conference hearing are becoming common. So too are orders obliging the parties to consider resolution by ADR and requiring a party unwilling to agree to mediation to file a statement explaining their reasoning at court.
The NHS Litigation Authority is said to require solicitors representing NHS bodies to offer mediation in suitable cases. In Halsey, Dyson LJ, having noted the increasing role of ADR in clinical negligence claims, said that the Court of Appeal saw no reason why orders encouraging the use of ADR “should not also routinely be made at least in general personal injury litigation”.
Manchester pilot scheme
ADR in its simplest form is a ‘round table’ or joint settlement meeting between the lawyers on each side. The attendance of solicitors and counsel at such meetings can be costly and so its use is generally confined to higher value claims. It is nothing new, but its use in high-value brain and spinal injury cases is now commonplace. If the mediation results in an agreement – and it often does – the costs of trial and the time of medical experts will have been saved. If agreement is not reached then the meeting will sometimes have narrowed the issues and will at least have encouraged the parties to give closer thought to the other side’s points.
This practice might now find itself formalised, depending on the outcome of a pilot scheme in Manchester. On 1 May, Mr Justice Leveson, the presiding judge of the Northern Circuit, issued a notice applying to all PI actions in the Manchester District Registry and Manchester County Court where the claim exceeds £100,000. The notice provides that at any case management conference, the court should consider whether to order a joint settlement meeting (JSM). If any party expresses the view that a JSM is not desirable, they are likely to be asked to give reasons justifying that position. Under this pilot scheme, the parties will also be required to return an outcome-monitoring report so that data can be collected. This data will then be considered when a decision comes to be made about whether to apply this practice to all courts.
It would be surprising if the data eventually collected from this pilot scheme did not show that the cases to which it had been applied settled earlier and in greater numbers. In the future, we can probably expect some form of JSM order to be made as a matter of course in high-value claims with settlement potential.
Costs penalties for refusal
What then of those high-value claims where a party, usually the defendant, says that their case is watertight and refuses to countenance mediation, whether by JSM or otherwise? Such a litigant will presumably be ordered to set out their reasoning and if that reasoning is sufficient, the matter will be allowed to run its course to trial. A party cannot be compelled to mediate if they are unwilling to do so. So what then happens about costs? Is the defendant who has declined the opportunity to mediate and is successful at trial still at risk of being denied their costs because of their earlier refusal to mediate?
The appellants in Halsey argued that although they had been the unsuccessful parties at trial, the successful parties should nevertheless have been denied their costs because of their failure to accept an earlier invitation to mediate. Their appeals were unsuccessful. The court held that the fact that a party reasonably believes they have a watertight case “may well be sufficient justification for a refusal to mediate”. One might surely expect that a defendant whose refusal to concede any liability to the claimant has been entirely vindicated by the judgment of the court, will generally be regarded as having refused mediation reasonably. The Court of Appeal determined that in these circumstances, the burden of showing that mediation would have had a reasonable prospect of resolving the case will rest upon the unsuccessful party who objects to paying the victor’s costs. In cases where the defendant justifiably never had the slightest intention of paying the claimant anything at all, that burden will surely be difficult to discharge.
At the other end of the scale, the defendant who refuses to mediate and is then found liable after a trial can presumably look forward to paying costs on an indemnity rather than standard basis. Perhaps new rules prescribing even further financial penalties for such litigants will be introduced.
Other cases might not be so straightforward. What of the defendant who, having made a Part 36 payment to settle a claim, which they say is sufficient, then refuses to mediate? If at trial the claimant fails to beat the sum paid in by a narrow margin, are they going to be ordered to pay the defendant’s costs in the usual way? Or might the judge be persuaded by the claimant not to make the usual order on the basis that, had the defendant agreed to mediate after the claimant’s rejection of his Part 36 payment, there was at least a reasonable prospect of agreement and the value of the subsequent saving in costs and time would have outweighed any additional payment in damages by the defendant?
Things are changing. The financial pressures imposed on our justice system by the consuming demands of criminal, family and immigration work mean that it will endeavour to end what it sees as a culture of late settlement in PI and clinical negligence cases. Insistence on a trial will remain a party’s right, but it is likely to become an increasingly high-risk option.
Ralph Lewis QC is a barrister at No5 Chambers in Birmingham and London