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Dan Sherlock

Partner - Sevenoaks and Ashford

28th August 2020

Don’t wait to mediate – it could be very costly

The recent case of Wales v CBRE Managed Services Ltd [2020] EWHC 1050 (Comm) shows the danger of resisting offers to mediate despite going on to win at trial.

The High Court applied significant penalties on CBRE in not allowing it to recover all of its legal costs because it rebuffed Mr Wales’ request for mediation

Summary

  • This case concerned a claim for unpaid commission amount to nearly £1/4 million by Mr Wales for services as an IFA. He had been taken off of management of a group pension scheme for employees of his corporate client CBRE.
  • Mr Wales alleged, amongst other things, that the contract with CBRE and by extension with the pension administrator, Aviva, was subject to implied terms that CBRE would deal honestly and/or in good faith with him. The Defendants denied they owed such a contractual duty or that there was any claim in law for breach – and the High Court agreed in dismissing his claim.

Proposals for mediation

The standard mantra in litigation is that the loser pays – but the court has a complete discretion on this issue and the case shows, it will look to penalise a winning party on costs where appropriate.

The problem for CBRE was that it was so confident of its prospects of success that it had dismissed Mr Wales’ multiple offers of mediation to avoid first of all, his issuing a court claim in the first place trial and after he had issues to avoid the case having to go to a trial.  The court was very clear that not just offers to mediate but also the timing of them will be factors it considers when addressing the liability of both sides to pay legal costs.

The first correspondence between the parties was July 2015 and the first offer of mediation was by Mr Wales in that month.  He again did so in December 2015 and again in November 2016.  Despite some initial interest, Aviva contended mediation would be premature if CBRE did not also attend. Even in June 2019 as the case progressed towards trial CBRE declined to mediate – saying it had insufficient time to prepare for both a mediation and also a trial that was listed for the following month – an excuse few judges would accept.

CBRE had brushed aside one of the first court directions made telling the parties in clear terms to consider settlement by alternative dispute resolution (“ADR”).

The Judge was having none of these excuses and went on to state that CBRE’s refusal to engage in mediation prior to issue of proceedings denied the parties “an opportunity to fully canvass and engage with the underlying issues”. The context to this was that during the trial it became clear one of Aviva’s allegations was incorrect and mediation would have allowed this to be brought to the forefront as an issue and, once out there, could have been resolved at a much earlier stage. The conclusion from this was that parties would have had better prospects of successfully compromising the case had the mediation taken place at an early stage as Mr Wales had requested.

CBRE’s intransigence meant it was only entitled to 50% of its legal costs between the start of the case up the point CBRE made a settlement offer.  After that date there was also a separate reduction of 20% of its costs from the date CBRE refused to mediate the second time.

As regards Aviva’s conduct, whilst it had not been the party refusing to mediate it had nevertheless chosen to amend its defence fairly late into the proceedings, which the judge concluded was pointless as even without that amendment Aviva would have succeeded.  Mr Wales was ordered to pay 80% of Aviva’s costs.

This is a clear reminder that all parties should take ADR seriously throughout the full life of a claim no matter how successful they assume they will be at trial or how distracting they consider it might be from preparing for trial.

Contact our Dispute Resolution team in Sevenoaks, Ashford, Uckfield, Brighton & Hove and Seaford

Rix & Kay’s Dispute Resolution Team has extensive experience of mediation and can advise you on all aspects of the claims process. To discuss how we can assist you, contact Dan Sherlock, Partner e. dansherlock@rixandkay.co.uk t.  01732 441750 or Sara Nazir, Paralegal e. saranazir@rixandkay.co.uk t.  01732 440898

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