Refusal to Mediate Justified, Rules Court

Normally, a refusal to mediate will incur the displeasure of the court and can be expensive if the court decides that the legal costs were higher than need be because of the refusal.



However, when a case is sound, mediation is not always the right answer, as a recent case illustrates.



It involved a substantial contract dispute over the termination of a licensing agreement. The claimant company repeatedly offered mediation but the defendant refused and made an offer to settle the dispute. When the matter reached the High Court, the amount awarded to the claimant by the Court did not exceed the sum previously offered by the defendant.



In such circumstances, the claimant will normally have to carry the defendant’s legal costs from the time the offer was made by the defendant. The claimant argued that its bill for the defendant’s costs should be reduced by 50 per cent because the defendant’s unwillingness to mediate meant an appearance in court that was avoidable.



Although the judge concluded that the defendant’s case was sufficiently strong to justify a refusal to mediate, its refusal had removed the potentially positive effect of keeping the negotiations going and also denied the claimant the opportunity to obtain an early settlement. However, the Court considered that this was not sufficient to justify the claimant’s contention that the defendant should carry part of its own costs. The judge said, “A refusal to mediate means that the parties have lost the opportunity of resolving the case without there being a hearing. A failure to accept the offer has equally meant that the parties have lost the opportunity of resolving the case without a hearing.”