‘First ever ruling’ punishing losing defendant for rejecting offer of costs ADR

Tom Blackburn

Blackburn: “exciting” ruling applies across the board

Irwin Mitchell is claiming to have won the first ever ruling punishing a losing defendant for rejecting an offer to mediate the costs of their dispute.

Partner Tom Blackburn said the ruling was “exciting” because it applied to all forms of litigation, not just medical negligence.

All previous cases involving the imposition of sanctions for rejecting offers of costs ADR had involved successful parties, who had seen their costs reduced by a certain amount, Mr Blackburn said.

Delivering judgement at the Senior Court Costs Office (SCCO) in Reid v Buckinghamshire Healthcare NHS Trust [2015] EWHC B21 (Costs), Master O’Hare said: “If the party unwilling to mediate is the losing party, the normal sanction is an order to pay the winner’s costs on the indemnity basis, and that means that they will have to pay their opponent’s costs even if those costs are not proportionate to what was at stake.

“This penalty is imposed because a court wants to show its disapproval of their conduct. I do disapprove of this defendant’s conduct but only as from the date they are likely to have received the July offer to mediate.”

Further, because the claimant also made a successful part 36 offer, Master O’Hare added a 10% uplift of £13,000 onto the defendant’s existing costs bill of £130,000.

Mr Blackburn said the SCCO had taken an even stronger line in another of Irwin Mitchell’s cases against the NHSLA, Bristow, and the ruling would be published before the end of the year. In that case, he reported, the court awarded indemnity costs for the whole of the detailed assessment proceedings, not simply for the period after the offer to mediate should have been accepted.

Despite the two rulings, Mr Blackburn said the NHSLA was still refusing the firm’s offers to mediate.

“You can imagine how much this is going to cost them in 2016,” he added.

Mr Blackburn predicted that Irwin Mitchell would consider changing tactics and pushing for wasted costs orders.

Last year, the NHSLA launched a mediation pilot, but the results of it are not known.


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