Refusal to Engage in ADR/Mediation and Costs Sanctions

James Peters, Senior Costs Consultant

PIC’s James Peters, Senior Costs Consultant asks to what extent a refusal to engage in ADR/Mediation merits sanction in respect of costs, following the case of Nicholls v. Nicholls.


A full copy of the transcript can be found on Gordon Exall’s highly informative website – Civil Litigation Brief. Click here to view.


To what extent a refusal to engage in ADR/Mediation merits sanction in respect of costs is an issue that recently came back before the Courts in the case of Nicholls v Nicholls.

Mediation or any other form of ADR, should by now be an issue at the forefront of thinking in any litigation. The overriding principle set out in the Practice Directions for Pre-Action Protocols does include the provision that litigation should be a last resort and parties should consider whether some form of ADR might enable them to settle their dispute.

Unreasonable failure to acknowledge or to refuse ADR is now largely accepted as a conduct issue and under CPR 44.2 (4) (a) conduct is an issue the court can take into account when assessing costs.

The presumption as set out in Halsey v Milton Keynes General NHS Trust [2004} EWCA Civ 576 is that a successful party van be deprived of part or all of its costs if it unreasonably refused to participate in ADR. The Judgement also went on to set out the criteria a Court should consider to establish whether a refusal to engage in ADR was unreasonable.

The Halsey case was followed some ten years later by PGF (SA) v OMFS [2013] EWCA Civ 1288 in which the Court extended the guideline set out in Halsey by affirming the comments set out in chapter 11.56 of the Jackson ADR Handbook, in that silence in the face of an invitation to participate in ADR is, as a general rule, of itself unreasonable, regardless of whether a refusal to engage in ADR may have been justified. On that basis you should at least respond to an offer of ADR, even if it is to decline the offer.

The test of what constituted a reasonable refusal to participate in ADR was looked at again in Laporte v The Commissioner for the Police of the Metropolis [2015] EWHC 371. The Court relied on the test set out in Halsey and concluded that just because a party believed ADR would not be successful, is not grounds for refusing to participate. In this case the refusal to participate cost the receiving party 1/3 of their costs.

Thakker v Patel [2017] EWCA Civ 117, took the conduct argument one stage further, concluding that frustrating ADR (agreeing in principle then frustrating or delaying the process) also constituted unreasonable behaviour.

The recent case of Nicholls v Nicholls adds further weight to the conduct arguments arising from ADR. The case again addressed the principle of to what extent a party should be sanctioned in costs due to a failure to a refusal to engage in ADR. The Court again affirmed the position that whilst a refusal to engage in ADR does not carry an automatic costs penalty it is unreasonable conduct and it is open to the Court to impose a costs sanction if it considers the conduct sufficient to warrant such a sanction. This case was an estate dispute in which the paying party was ordered to pay only 50% of the receiving party’s costs.

So, whilst refusal to participate in ADR (or ignoring a request for ADR or frustrating arrangements for ADR) may not automatically carry a costs sanction, it is a conduct issue of considerable weight and in these days of proportionality it is best to avoid any allegation of having acted unreasonably. Both paying parties and receiving parties should be mindful that any costs sanction imposed due to conduct can work both ways. Don’t ignore a request, don’t frustrate or drag out the process and if you do wish to refuse ADR, make sure you have valid reasons to do so and that these are clearly set out to the other side.

If you would like to contact James about this article or if you would like a training session to cover this or any other costs related issue please click here.