What is
Halsey –v- Milton Keynes General NHS Trust about?
The Court of Appeal has heard
quite a few cases now in relation to mediation. For example, in Cowl
–v- Plymouth City Council in 2001 and Dunnett –v- Railtrack
in 2002, the Court of Appeal sent out the clear message that parties who
unreasonably refused to mediate their disputes would face the risk of a
serious cost consequence at the end of the litigation.
More recently, on 11 May 2004, the Court of Appeal
returned to the same subject in two cases heard at the same time:
Halsey –v- Milton Keynes General NHS Trust and Steel –v- Joy and
Halliday. This is a very important decision; Lord Justice Dyson gave
the decision of the Court, so it was also a unanimous decision.
The important points are:
The Court emphasised its general support for
mediation. It pointed out that the requirement of the Civil Procedure
Rules for “active case management” include “encouraging the parties to
use an alternative dispute resolution procedure if the court considers
that appropriate and facilitating the use of such procedure.”
The Court of Appeal expressly approved the ADR Orders
made routinely in the Admiralty and Commercial Court as set out in
Appendix 7 to the Court Guide (referring to them as “the strongest form
of encouragement”) and the form known as Ungley Orders (after Master
Ungley who devised them in clinical negligence cases – referring to
these orders as “a less strong form of encouragement”). The Ungley Order
provides:
“The parties shall by [date] consider whether the
case is capable of resolution by ADR. If any party considers that
the case is unsuitable for resolution by ADR, that party shall be
prepared to justify that decision at the conclusion of the trial,
should the judge consider that such means of resolution were
appropriate, when he is considering the appropriate costs order to
make.
The party considering the case
unsuitable for ADR shall, not less than 28 days before the commencement
of the trial, file with the court a witness statement without prejudice
save as to costs, giving reasons upon which they rely for saying that
the case was unsuitable.”
The next issue to be
considered was: does a court have power to order unwilling parties
to mediate? It was as recently as February 2004 in the Chancery
Division of the High Court that Mr Justice Blackburne ordered an
unwilling party to mediate (Shirayama Shokusan Company Limited
and Others –v- Danovo Limited).
However, Lord Justice Dyson
decided in Halsey that it is wrong to compel unwilling
parties to mediate. It was said that such compulsion would be a
breach of the right of access to the courts required by the European
Convention on Human Rights (ECHR). That finding on human rights
grounds has divided lawyers. The finding was based on the
proposition that compelling mediation would probably be regarded as
an unacceptable constraint on the right of access to the court and,
therefore, would be a breach of Article 6 of the ECHR.
The
counter-argument is simply that compelling mediation is not
depriving parties of their rights of access to the court. Rather it
is saying, you can have access to the court but while that procedure
is running, you must also attempt mediation. In any event, Lord
Justice Dyson said that even if he was wrong about the ECHR point,
he found it difficult to conceive of circumstances in which it would
be appropriate to order mediation in the face of objection from one
or more parties.
The Court of Appeal
considered the position as to legal costs where there had been an
earlier refusal to mediate by one party. It is clear that cost
sanctions will still be a big risk but the primary test now seems to
be “suitability” of the dispute for mediation.
The matters that are
relevant are: the nature of the dispute; the merits of the case;
other settlement methods had been attempted; the costs of the
mediation would be high compared to the sums in dispute; delay and
whether the mediation had a reasonable prospect of success. Many
experienced mediators would disagree with aspects of the
categorisation of suitable cases by the Court of Appeal in this part
of their judgment. In essence, the decision does, perhaps, permit of
more arguments being available for parties against the imposition of
costs sanctions but it will remain a very risky strategy to refuse
mediation if it is suggested by the other party, and highly risky if
the refusal to mediate followed a Commercial Court or Ungley type of
Order.
In relation to the
possibility of legal cost sanctions, guidelines were set out as to
which party has the burden of proof in establishing whether or not
there had been an unreasonable refusal to mediate.
All in all this decision sets mediation on a
firm course because, whilst there will be no compulsion by the
courts, the Court of Appeal have made it very clear that
consideration of the use of mediation should be at the forefront of
the minds of Judges in case management and of the parties’ legal
advisers in giving advice, with the concomitant risk of serious cost
sanctions at the end of a trial where there had been a refusal to
mediate.
(Click on
Halsey
-v- Milton Keynes General NHS Trust
and Steel -v- Joy and Halliday
for the full judgment)
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