We are now starting to see the impact of recent changes to the Civil Procedure Rules and the consequences of the Court of Appeal decision in Churchill in 2023 in the Court’s approach to mediation.
In the recent case of DKH Retail Ltd and others v City Football Group Ltd [2024] EWHC 3231 (Ch), the High Court granted the claimants' application to order that mediation take place before trial - despite the defendants' objections and unwillingness to engage in mediation.
The case is believed to be the first reported case in which the Court was required to consider and exercise its discretionary powers to order unwilling parties to attend mediation since the amendments to the Civil Procedure Rules (CPR) were implemented, following the decision in Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416.
In Churchill, the Court of Appeal confirmed that the Court had the power to lawfully order parties in court proceedings to engage in non-court-based dispute resolution processes such as mediation so long as the order did not impair a claimant's right to a fair trial, the order is in pursuit of a legitimate aim (i.e., resolving the dispute), and is proportionate to achieving the legitimate aim.
The CPR were amended with effect from 1 October 2024 to provide the Court with the power to order the parties (and thus unwilling parties) to engage in ADR.
Background
DKH involved a trademark dispute between the claimant, the owners of the Superdry clothing brand, and the defendant, the company which runs Manchester City Football Club's commercial operations. The trademark dispute centred around whether the promotional branding on the Manchester City professional players' kit, which included the words "Super" and "Dry", was likely to be seen by the public as branding that denoted the Superdry clothing brand, or branding denoting the clubs sponsor Asahi Super "Dry" 0.0% lager.
At the pre-trial review hearing in the Shorter Trials Scheme Mr Justice Miles was required to consider the claimant's application for an order for compulsory mediation before the trial.
The claimant argued that the changes following the Churchill judgment and the subsequent amendments to the CPR recognised a 'sea-change' in the Court's approach to ADR, with this case being one in which the Court should exercise its discretionary power to order compulsory mediation to take place.
The claimant submitted that the case was not particularly complex and capable of resolution and that mediation might allow for more flexibility in out-of-court compromises than would be available to the Court when making its judgment. Additionally, the ability to attend 'short, sharp. mediation' could potentially avoid further significant costs to the parties in a case that had already incurred substantial costs.
The defendant did not dispute the Court's power to order mediation but submitted that the Court should only do so when there was a 'realistic prospect of success'. The defendant asserted that this was not the case here. Mediation was not realistically likely to lead to a settlement between the parties, with the defendant entitled to a judicial determination in order to know 'once and for all' whether it could use Asahi branding on the player kit. They also argued that the claimant's application was made very late in the day, with the trial date imminent and the defendant's availability limited.
The Judgment
The defendant's submissions were acknowledged and considered, however, in making the order that the parties were to attend mediation prior to trial the judge observed the following:
‘In many cases the parties’ positions in the litigation are diametrically opposed and it may easily be said that each party requires a judicial determination. But nonetheless the parties come through ADR to recognise the desirability of settling for less than their strict legal rights and compromising their positions. Experience shows that mediation is capable of cracking even the hardest nuts. The process sometimes succeeds in cases where the parties appear at first to have intractable differences.’
The argument that it was too late to order mediation was given some merit, but the judge saw this as more of a benefit that could assist mediation, as the parties' positions had already been crystallised through their pleadings and witness statements. Mediation would also not significantly affect the parties' ability to prepare for the trial.
The submission that the prospect of success was low and that a Court decision was required could not be accepted, as meditation would offer the parties a range of options to resolve matters that would not be available to the Court.
It is clear from the judgment that the Court was careful to consider whether mediation was suitable in the case's specific circumstances.
Interestingly, the postscript to the judgment confirmed that the parties had settled their dispute before trial though it is not known whether this settlement took place at mediation.
Commentary
It is highly likely that we will now see an increase in the Courts' use of its discretionary powers to encourage (and, in doing so, order) parties to attend mediation - even when a party or parties are unwilling to do so. Such decisions are entirely consistent with the direction of travel under the current Master of the Rolls.
What is particularly interesting about this particular judgment is that it rejected commonly argued points as to why mediation would not be suitable: that there was no realistic prospect of success, and that mediation was being ordered late in the day, particularly for a case in the Shorter Trial Scheme.
Many disputes proceed to mediation already of course, and over time it is likely that the vast majority of disputes will be mediated before any trial takes place.
*The Association of South West Mediators is committed to providing quality mediators for mediations taking place in the South West. Contact us to see how we can assist.
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