Construction Law - Coursework Example

…………………………………………………………………………..xxxxxx ……………………………………………………………………….xxxxx …………………………………………………………………………….xxxx ……………………………………………………………………………xxxxx @2013 BE1169 Construction Law Coursework Question 3 Introduction This paper will discuss on how Halsey tried to restrict the ability of the court to award cost sanctions for a refused mediation. It will then provide the background of using mediation and use past cases to illustrate the explanations. The paper will then provide the short comings of mediation and a conclusion on the subject. Background In Hurst Vs Leerning (2001) EWHC 1051, the judgment by Mr. Justice Lightman has been long overtaken and highly enlarged by Hasley vs. Milton Keynes NHS Trust (2004) EWCA Civ 576. Those unsuccessful litigants who refuse to mediate or take part in an alternative method of dispute resolution faced sanctions like indemnity costs or are awarded sanction costs. Dunnett v Railtrack [2002] EWCA Civ 302 is named as the first case where cost penalties and sanctions were imposed by the court on a litigant for the unreasonable refusal or failure to mediate (Spencer & David 2005). In Hasley, the party which had declined to mediate seemed to have escaped sanction but the Court reviewed all the circumstances and felt it was appropriate as it confirmed its powers to do so. Halsey’s appeal appears to challenge the failure of the court to award cost sanctions to Milton Keynes General NHS Trust since it had in a number of times refused to mediate. This appeal was based on two grounds. First, it was like the court judge had arrived at the wrong conclusion on the cause of the issue which was being tried on Part 20 proceedings which took place between the two defendants. The second part is that the judge was wrong in awarding sanction costs to the second defendant against the first one and more so because the second defendant had refused on several invitations to mediate given by the first defendant (Spencer & David 2005). In this case, the first party was the successful party and the second party should have paid sanction costs to the first party. This is how the appeal by Halsey seemed to restrict the ability of the court to award cost penalties and sanctions for refusing to mediate. Court ordered mediation Halsey did not involve proposals on where the court had ordered mediation rather on inter-party mediation. However, the Court of Appeal reaffirmed the ADR orders in Commercial Court form. The Court also added that a failure to mediate after a Court recommendation could warrant the imposition of sanction costs against the successful party (Richbell 2009). A certainty on the sanction costs being ordered against that successful party would be achieved by court orders which recommend ADR to be looked for. Any party that ignores and violates these court orders faces the cost sanctions. A general rule is provided in CPR 44.3 (2) for the unsuccessful party to pay all the sanction costs to the successful party whenever the court takes a decision to make an order on sanction costs. A different order is also provided for in this section where the court can take a different order depending on the circumstances leading to the dispute (Moore 2003). Mediation proposals between parties Halsey takes a keen look at all those cases which do not require court orders for the parties to mediate. This case makes it very clear that even though it is an exception in CPR 44.3 (2) to deprive a successful party sanction costs, that costs should follow the power and the event still exist and this should be done on a unreasonable conduct basis (Palo &Trevor 2012). The Court in the case of Halsey indentified some six factors which justified the refusal to mediate in the determination of costs issues: 1. The type of the dispute at hand in which the Court warned “most cases are not, by their very nature, unsuitable for mediation” 2. The case advantages- the party had a strong belief that its case was too strong which made the refusal to mediate reasonable 3. Other methods of settlement had been attempted- it was noted that mediation succeeded during the failure of other settlement attempts, but the court regarded this reasons as part of determining the reasonable prospects of success of the mediation. 4. High cost of mediation 5. Delayed trial date which has never occurred in the experience of CEDR 6. Whether mediation has any prospects of a reasonable success- the burden of showing lies heavily on the unsuccessful party who initially proposed the mediation but not the successful party who had refused. However, what amounts to success in mediations remains open to debate (Palo & Trevor 2012). A high risk course of the refusal to mediate Hurst vs Leerning (2001) EWHC 1051 treated the refusal to mediate as a high risk as it comes with high sanction costs (Zander 1973). However, mediation does not bring a conciliatory attitude on the parties. Halsey did not give any room to layers to be contented with the advice given to the clients over ADR. It is acceptable to refuse to mediate in some cases though this is a strategy which is of high risk. The critical factor to determine whether to mediate is the prospect of success and a refusal is only reasonable where there is no existence of prospect (Palo &Trevor 2012). Hurst placed the burden on the successful party who refuses the mediation as a way of justifying the refusal while Halsey has places the burden on the unsuccessful party as a way of showing that mediation has a reasonable prospect of success. Recent case law that suggests otherwise Recent law cases suggest otherwise on the reasonable refusal of mediation. Some contradict Halsey while others follow his line of thinking. CPR 44.3 (2) provides for or allows the court to make a different order when it comes to cost sanctions associated with refused mediation. Recent law cases have seen the judges failing to give cost sanctions to the unsuccessful party as modified by Halsey. A good example is the Burchell v Bullard (2005 EWCA 358). Ward LJ put all the Halsey factors into consideration but chose not to impose any sanction costs to the defendants. The given reason for refusing to meditate was that the matter was too complex to be solved through mediation, a reason which was dismissed as plain nonsense. The law case suggest otherwise due to the application of CPR 44.3 (4) and CPR 44.3 (5) which requires the court to have a regard to all circumstances which includes the conduct of parties. The conduct of parties includes the conduct prior to and during the court proceedings and to the extent to which the parties followed the pre-action protocol. The court also gave another reason for its failure to impose cost sanctions. The reason was that the rejection of mediation had been made in May 2001, long before the start of the court proceedings (Gould, King & Britton 2010). The costs of litigation were too much as compared to the costs which would have been spent on ADR. Ward LJ believed there was a reason which made the defendant fail to mediate and so he could not condemn the parties involved as being so unreasonable to an extent that the sanction costs should follow them many years later. Rix LJ also confirmed in his judgment that he had agreed with Ward LJ that the court has the right to take unreasonable refusal to mediate based on when the account happened and more if it happened before the formal proceedings started. The court believed that mediation would have been cheap and successful (Richbell 2009). The provision made on CPR 44.3 (2) made the judge make a different ruling despite the fact that there was unreasonable refusal to mediate. In a similar case of Wethered Estate Ltd v Michael Davis and others [2005] EWHC 1903 (Ch), mediation was proposed as a pre-action to the court proceedings. Whether the delay caused by the defendant in the move to agree on mediation was reasonable were them main issue in this case. The defendant had delayed the mediation to obtain complete evidence. In the judgment by Olive Freedman QC, who sat as a deputy High Court Judge, considered both Burchell and Halsey. Based on the case facts and the decision of the defendant to defer the mediation, the judge decided that the mediation was unreasonable. He however recognized that it would be reasonable for mediation to be deferred until we reach advanced stages stages of litigation (Moore 2003). For Halsey, the court should have awarded cost sanctions to the defendant in the two cases for the unreasonable refusal to mediate. Conclusion Halsey had challenged the ruling by the court where no costs sanctions were imposed on the unsuccessful party. Recent cases show either the sanction costs were imposed on the successful party or no sanction costs were imposed for unreasonable failure to mediate. Mediation should be taken as a pre-action before court proceedings to determine whether the dispute can be solved outside the court (Clarke & Davies 1992). However, just like Halsey said, if there is unreasonable refusal to mediate and the party that refuses to mediate ends up being successful, the cost burden should be placed on that unsuccessful party as a way of showing that mediation has a reasonable prospect of success. It is extremely important for the legal profession who conduct litigation to do a routine consideration with their clients whether this dispute as suitable for ADR (Moore 2003). The two recent cases may have a different ruling from Halsey’s, and this is because a judge must judge the reasonableness of the actions against and based on the background practice of years earlier than Halsey. Based on background practice, the court on the case of Burchell v Bullard was unable to condemn the defendants as having been unreasonable for the cost sanction to follow them in many years later (Richbell 2009). However, like many areas of the developing law of dispute resolution, the issue of costs sanctions against a party who has refused to mediate but then goes on to win the subsequent litigation is bound to come before the courts soon. References Atlas N.F, Huber S.K, &Wendy T.H 2000, Alternative Dispute Resolution: The Litigators Handbook. American Bar Association Clarke G.R & Davies I.T 1992, “Mediation – When is it not an Appropriate Dispute Resolution Process” 3 ADRJ 70, at 76 and Boulle, above, n 18, at 81. Halsey v Milton Keynes General NHS Trust 2004 EWCA Civ 576, at [17], the England and Wales Court of Appeal quoted section 5 of the Commercial Court Working Party’s Second Report available at http://www.courtservice.gov.uk/using_courts/guides_notices/notices/comm/comm_adr.htm Moore C, 2003. The Mediation Process: Practical Strategies for Resolving Conflict. John Wiley & Sons Zander M, 1973. Cases and Materials on the English Legal System. Cambridge University Press. Gould N. King C, & Britton P 2010, Mediating construction Disputes: An evaluation of existing practice. Vintage Books, London Palo, G &Trevor M.B 2012. EU Mediation Law and Practice. Oxford University Press Ramsey, V &Thomas, T.L 2007, Construction Law Handbook. Thomas Telford Richbell D 2009, Mediation of Construction Disputes. John Wiley & Sons Spencer & David L 2005, Costs Sanctions Against Parties Refusing to Mediate (February 2, 2005). Australasian Dispute Resolution Journal, Vol. 16, No. 15. Available at SSRN: http://ssrn.com/abstract=1262101 Read More