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For in-house counsel

Published On: 26 February 2015

A number of recent developments will have an impact on disputes which get as far as formal litigation. The changes are likely to affect the recoverability of costs and will change behaviours.

Mediation: the courts are now more likely to penalise parties for unreasonably refusing to mediate. Parties must exercise care in considering settlement offers and offers to mediate disputes, even where they consider that they have a strong case. Irrespective of the strength of the case or the scale or complexity of a dispute, a request to mediate should be given full consideration as a willingness or lack thereof to mediate will be an important factor in deciding costs following trial.

It is possible to derive one or two lessons from recent case law:

  • A party which refuses to mediate or which fails to negotiate will be at risk of a reduced costs award in its favour, or an enhanced costs award against it, in all but the most unusual cases. In Garritt-Critchley v Andrew Ronnan and Solarpower PV Ltd [2014], the High Court awarded indemnity costs against a losing defendant that persistently refused to mediate. The defendant's contention that the parties were too far apart for mediation to be successful was rejected by the court.
  • Parties that display aggressive behaviour in correspondence or which are seen to be 'posturing' before the court are more likely to be penalised by the court; where both parties engage in such behaviour the court may award neither party costs.

Part 36 is changing, and with it the rules about accepting, changing and withdrawing an offer to settle. It remains to be seen how these rules will play out in practice, but greater use of imaginative offers will be rewarded.

Court fees are due to increase substantially according to a sliding scale. This is likely to discourage smaller claims within the range of £10,000 and, say, £500,000, when the fee will be 5% of the value of all claims over £10,000 with a maximum fee to issue proceedings of £10,000. The fee will of course be recoverable against unsuccessful defendants, and will be a further factor encouraging settlement before proceedings are issued.