Richards & Anr v Speechly Bircham LLP & Anr

[2022] EWHC 1512

This was a costs judgment where Richards sought indemnity costs because SB did not accept four offers to mediate. SB said that their approach to mediation was not unreasonable and that an unreasonable refusal to mediate was only one part of a party’s conduct to be taken into account when determining costs. 

SB relied upon what they described as their “measured” Part 36 offer and highlighted that their initial response to the proposal of a mediation was that it should follow disclosure, and also pointed to the provision for mediation in their costs budget as an indication that they were open to mediation. 

The Judge did not agree. There was a refusal to mediate. Any concern about the need for some disclosure to shed light on certain aspects of the case could have been explored in preparation for mediation or inquired into at a mediation. Further, certain assumptions about Richards which meant that “mediation was therefore most unlikely to succeed” were just the kind of matters which a mediator would have explored. Most mediators are skilled in seeking to moderate the expectations of any party which may be based on matters collateral to the merits of its case. 

The Judge also noted that SB’s Part 36 offer was only made just over three months before the trial, the timing of which signified a general passivity in the ADR process over the period of almost three years since a mediation was first proposed. 

However, the Judge did agree with SB’s second point referring to the CA case of Gore v Naheed [2017] EWCA Civ 369, where Patten LJ said:

“… a failure to engage, even if unreasonable, does not automatically result in a costs penalty. It is simply a factor to be taken into account by the judge when exercising his costs discretion …” 

Although the Judge concluded that SB had failed to engage with the proposals for a mediation, that was only one aspect of the conduct to be considered. Here, the Judge noted that SB successfully resisted a significant part of a claim against them and did significantly better than either of Richardson’s Part 36 offers. 

Where neither side had made a cost-effective Part 36 offer, SB’s unreasonable conduct in relation to mediation was sufficiently marked by an order that they pay Richardson’s on the standard basis. That was an appropriate “sanction” for them not engaging in a process of ADR which might have curtailed those costs to a significantly lower sum at an earlier stage of the proceedings. 

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