The continuing influence of Halsey on mediation (Part I) (ALSO READ PART II OF THIS ARTICLE)

The Court of Appeal, in Halsey v Milton Keynes General NHS Trust, laid out the courts’ approach to alternative dispute resolution, and particularly mediation. The appeal raised a question of considerable importance: 'when should the court impose a costs sanction against a successful litigant on the grounds that he has refused to take part in an ADR?' 

The court considered the value of mediation, the need to advise clients to consider it, costs sanctions where a party refused to mediate, and the inability of the court to examine the content of a particular mediation. The case would become a truly important case about mediation, alongside Dunnett v Railtrack plc whose judgment it followed.

Perhaps the most important aspect of the judgment as a whole for lawyers is summarised by Dyson LJ:-

“All members of the legal profession who conduct litigation should now routinely consider with their clients whether their disputes are suitable for ADR.”

Mediators will recall that Halsey was a clinical negligence case. The claimant, a widow, sued a health authority for causing the death of her husband but failed in her claim. Consequently, she asked the court to be punitive towards the health authority in respect of costs because it had repeatedly refused to mediate. The court declined this request holding that the health authority was justified in refusing to mediate because it reasonably believed it would win.

From Halsey we know that:-

(1) The court did not have jurisdiction to order parties to mediate against their will as this would be an unacceptable violation of their right of access to the court under Article 6 of the European Convention on Human Rights. The court's role was to robustly encourage ADR.

(2) The burden was on the unsuccessful party to show why there should be a departure from the general rule that the unsuccessful party pays the costs of the successful party. Therefore it must be shown that the successful party acted unreasonably in refusing to agree to ADR.

(3) There was no presumption in favour of mediation and regard must be had to all the circumstances of the case. The factors relevant to the question whether a party had unreasonably refused ADR included:

  1. the nature of the dispute – most, but not all, cases were suitable for ADR;
  2. the merits of the case;
  3. whether other settlement methods have been attempted;
  4. whether the costs of the mediation would be disproportionate;
  5. any delay; and                                 
  6. whether the mediation had a reasonable prospect of success refuting the previous narrow approach adopted in Hurst v Leeming .

(4) If the court has encouraged ADR, this is another factor to take into account. The stronger the encouragement the easier it will be for the unsuccessful party to show the successful party's refusal was unreasonable.

(5) An order for the parties to consider ADR and justify why the case was not suitable for ADR should be routinely made in general personal injury litigation.

In October 2010 Lord Dyson made a compelling speech to the Chartered Institute of Arbitrators reflecting on the Halsey case where he questioned the attitude of Lord Clarke, then the Master of the Rolls, in 2008 who suggested that Halsey was wrong on the Article 6 point.  Lord Clarke’s argument was that mediation is compulsory in parts of the EU and, unlike arbitration, forms part of the court process.  Dyson insisted that:-

In any event I remain of the view that I expressed in Halsey that, whatever the art.6 position may be, the real question is not whether a power exists to order mediation.  It is rather whether the court should exercise that power. In my view the court should not exercise that power if it is satisfied that the parties are truly unwilling to embark upon a mediation.”

There have been numerous cases and journal articles post-Halsey which comment upon its impact and effect. 
For example in 2008 John Sorabji contrasted the Halsey refusal of one party to mediate with the lateness of a party’s decision to mediate once a large proportion of costs had been expended as heard in Nigel Witham Ltd v Smith & Isaacs . On the one hand the court particularising burdensome costs at an early stage along with sufficient disclosure to allow mediation to be considered at pre-trial case management could be seen as an advantage.  On the other hand the courts adopting a more robust approach to penalising parties for failing to prosecute cases allowing mediation as a viable option is considered to be a disadvantage.

In 2009 Matthew Brunsdon-Tully quotes critics of the effect of the Halsey decision.  He himself concludes that it does not allow parties to proceed without regard to costs on the basis that there is an important matter of law in need of a ruling (see Royal Bank of Canada Trust Corp v Secretary of State for Defencee >). He claims that:-

a refusal to use ADR in such a case will still be deemed unreasonable by the court, with costs consequences. This is a harsh view. Granted that case involved public money, but it may also be that public servants are better placed to decide whether an authoritative ruling may save public money in the long run.

Anecdotal evidence suggests that post-Halsey, defendants have been reluctant to refuse mediation, even in unmeritorious claims, because they risk being penalised in costs. There are authorities where successful defendants have been penalised for refusing to mediate, so the fear is not groundless.

Several cases have been heard in the Court of Appeal citing Halsey as an authority.

In a trademark/copyright case Reed Executive Plc v Reed Business Information Ltd (Costs: Alternative Dispute Resolution) amongst other issues, ADR had been proposed by the claimant late in the action when it was in a negotiating position of considerable strength, having obtained judgment in its favour at first instance. The defendant had had a reasonable and justified belief in its prospect of overturning the judgment on appeal and had not been unreasonable in rejecting the proposal of ADR given the wide disparity between the parties. The possibility of ADR was not, therefore, a relevant factor to take into account when adjudicating on the costs order.

Daniels v Commissioner of Police of the Metropolis related to a situation where the appellant appealed against a costs order made in favour of the respondent police force after she had lost her claim for personal injury against it.  The mere fact that the Met  had rejected her numerous Part 36 offers was not a reason to depart from the general rule that costs followed the event under CPR r.44.3(4).  On an assessment of costs the conduct of the parties could be taken into consideration. However, the refusal to accept an offer made under Part 36 was not included as conduct that could be taken into account under r.44.3(5). It was hard to envisage circumstances where a successful defendant should ever be deprived of all costs solely on the basis that it had rejected a Part 36 offer. Only unreasonable conduct could lead to the depriving of some or all of the costs. It was entirely reasonable for a defendant, particularly a public body, to take a view that it would contest a claim in order to deter other similar unworthy claims. If defendants routinely faced unfounded claims, and chose to contest them, the courts should be slow to characterise that conduct as unreasonable.

S v Chapman presented a very distressing mental health and civil procedure case where a father, being a practising solicitor representing himself, faced a refusal to mediate in pursuing litigation on behalf of his severely autistic son.  It was decided that the defendant Board of Governors were entitled to await the outcome of its application to strike out for insufficient particulars of claim before deciding whether or not it was either necessary or advantageous to enter into mediation of the substantive issues with the claimant.

More recent cases will be the subject of a further article in the future.


Aldo Navato
LPC graduate.

[2004] EWCA Civ 576.

[2002] EWCA Civ 302.

[2004] EWCA Civ 576 at para 11.

[2002] EWHC 1051 (Ch)

C.J.Q. 2008, 27(4), 427-432 – “Costs - further developments from Halsey: Nigel Witham Ltd v Smith & Isaacs and S v Chapman”

[2008] EWHC 12 (TCC)

C.J.Q. 2009, 28(2), 218-237 – “There is an A in ADR but does anyone know what it means any more?”

[2003] EWHC 1479 (Ch).

[2004] EWCA Civ 887

[2005] EWCA Civ 1312

[2008] EWCA Civ 800