The High Court has sent a strong signal on the financial penalties of refusing to mediate in costs proceedings in two judgments against the NHS Litigation Authority, brought by claimant firm Irwin Mitchell.
In Reid v Buckinghamshire Healthcare NHS Trust, reported this week, Master O’Hare awarded the claimant its costs on the indemnity basis from three days after Irwin Mitchell had made an offer of alternative dispute resolution.
The Master said the defendant’s failure to mediate had been ‘unreasonable’, and noted that it took the defendant ‘six weeks’ to reply to the offer, declining to mediate.
In another case, Bristow - yet to be reported - the court went further, ordering all costs to be paid on the indemnity basis, from the date that work commenced rather than from the date of the offer to mediate.
In both cases, the substantive claim had been resolved, and the remaining dispute - and mediation offer - related only to costs.
Irwin Mitchell partner Tom Blackburn said the Reid case ‘is not a warning, it’s a declaration of war against any party that refuses to engage in ADR.’
He added: ‘We have known since Halsey that successful parties who refuse to engage in ADR will only recover a fraction of their costs. But [Reid] is the first case in which an unsuccessful party has been punished…
‘The court could not be clearer [in both Reid and Bristow] that there was no good reason for refusing to engage in ADR in costs cases. Parties who refuse, will face sanctions.’
Blackburn added that Irwin Mitchell has more than 100 further costs cases against the NHSLA in which its offers to mediate have not been taken up.
He said the firm was considering seeking wasted costs orders from the NHSLA’s costs advisers as an alternative to forcing the NHSLA to spend public money in sanctions.