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The Court of Appeal has overturned a trial judge's refusal to impose costs sanctions on a party who failed to respond to an offer to mediate, where that party also breached a court order requiring any decision not to agree to an ADR proposal to be explained in a witness statement: Northamber Plc v Genee World Ltd [2024] EWCA Civ 428.

While that ruling is not in itself surprising, the Court of Appeal's reasoning is of interest as an indicator of its current approach to the issue of when a party's failure to engage with ADR will warrant costs sanctions.  As we have previously commented, that issue is likely to be the subject of renewed attention as the courts explore how the costs sanction power will operate alongside the newly-recognised power to compel parties to mediate.

The decision applies established authority that silence in the face of an invitation to mediate should generally be regarded as in itself unreasonable, regardless of whether a refusal might have been justified in the circumstances. However, it also usefully confirms that that is the case regardless of whether the invitation is actively followed up for a response. The judgment makes clear that, once a party receives a clear offer to mediate, the onus is on it to respond – not on the offeror to chase. It suggests that the absence of any follow-up will not usually on its own be a valid basis for a court to treat the offer as half-hearted or less than genuine, or to otherwise disregard it.

The judgment also sends a clear message from the Court of Appeal to the courts below that they should not ignore breaches of case management orders intended to encourage engagement with ADR.    

The costs sanction ultimately imposed by the Court of Appeal in this case was quite modest – increasing the defendant's 70% liability for the claimant's costs by 5%.  That contrasts with another recent High Court decision, in which a wholly successful defendant reportedly had its costs entitlement reduced by 25% where it had either ignored or rejected mediation proposals on three occasions. As this demonstrates, the question of what sanction (if any) the court will impose for an unreasonable failure to engage in ADR will be highly fact-sensitive.


The proceedings concerned alleged breaches of an exclusivity agreement for the distribution of IT equipment, including claims against a company and an individual (Mr Singh) for inducing breach of contract. This post concerns the costs award made against Mr Singh. The Court of Appeal's decision regarding the substantive claims is discussed in this post on our Litigation Notes blog.  

A case management order had been made in the following standard terms:

“At all stages the parties must consider settling this litigation by means of alternative dispute resolution. Any party not engaging in any such means proposed by another must serve a witness statement giving reasons within 21 days of that proposal; such witness statement must not be shown to the trial judge until questions of costs arise.”

The claimant later wrote to Mr Singh's solicitors reminding them of that order, inviting to them to consider the claimant's prospects of success, noting its costs incurred to date and stating:  

“Whilst the Claimant remains committed to pursuing the action it also remains open to mediation as a method of resolving the dispute.
We would ask you to take instructions from your clients and for an indication, by return, as to their willingness to mediate. You will be aware of the consequences if a party refuses to mediate..."

There was no response on behalf of Mr Singh and no witness statement was served as required by the case management order.

At trial, the claimant was partially successful against Mr Singh. In his judgment on costs, the trial judge ordered Mr Singh to pay 70% of the claimant's costs, taking into account the extent of success as well as Mr Singh’s conduct. However, he rejected the claimant's argument that the costs order should be increased to take into account Mr Singh’s failure to respond to the letter offering to mediate. His reasons for rejecting that argument were as follows:

"I have no evidence before me that the claimant ever chased ... for a reply. I would describe the letter … appearing as it did after very considerable costs had been incurred and a long way through the litigation as a half-hearted attempt – if indeed it was an attempt at all – by the claimant to suggest a mediation, enabling the claimant to say at the end of the trial, as it does, that it had suggested mediation but without any expectation that there would be a mediation, but it did not follow it up at all when the ... defendant’s solicitors did not reply."

The claimant appealed that decision.


Arnold LJ gave the leading judgment, with which Phillips and Lewison LJJ agreed.

The court held that the trial judge had erred in his approach to this issue.

It noted that it is over 10 years since the Court of Appeal held in PGF II SA v OMFS 1 Ltd [2013] EWCA Civ 1288 (discussed here) that silence in the face of an invitation to mediate should generally be regarded as in itself unreasonable, even if a refusal might have been justified in the circumstances. On that basis, Mr Singh's non-response to the offer was clearly unreasonable conduct.

That was compounded here by the fact that his non-response also breached a court order requiring him to explain any refusal to mediate. The Court of Appeal commented:

"If breaches of such orders are ignored by courts when deciding costs, parties will have no incentive to comply with them. That would undermine the purpose of making them, which is robustly to encourage parties to mediate."

The trial judge’s reasoning ignored those points. In particular:

  • The fact that the litigation had been underway for a long time by the time the offer to mediate was made, with substantial costs already incurred, was certainly relevant to the court's discretion regarding Mr Singh's (non) response. However, the litigation continued for more than eight months after that, including a nine-day trial, incurring substantial further costs which could have been avoided by a successful mediation.
  • The judge seemed to have considered that the onus lay on the claimant to chase for a response. There was no basis for that. Once the claimant had made a clear offer to mediate (with a reminder of the case management order), "the ball was in Mr Singh’s court". The claimant was entitled to assume that a chasing letter would not have produced a positive response.
  • There was no basis to castigate the offer to mediate as “half-hearted” - particularly in the absence of any reasons from Mr Singh explaining his refusal to mediate.
  • Although the judge stated that he was taking the breach of the case management order into account, in reality he did the opposite.

The Court of Appeal considered the more difficult question to be how Mr Singh’s unreasonable conduct should be reflected in costs. It noted that an unreasonable refusal to mediate does not automatically require a costs penalty (eg. Gore v Naheed [2017] EWCA Civ 369) but, rather, is a factor to be taken into account among the other circumstances of the case.

The court rejected a submission that Mr Singh's costs liability should be increased from 70% to 100% of the claimant's costs. In the court's judgment that "cannot possibly be justified" by the failure to respond to the offer to mediate.  Equally, however, it would not be right to impose no sanction at all. The court considered the correct response was to impose a "modest, but not insignificant" penalty by increasing the claimant's costs recovery by an additional 5%, to 75%.

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Jan O'Neill

Professional Support Lawyer, London

Jan O'Neill

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Jan O'Neill photo

Jan O'Neill

Professional Support Lawyer, London

Jan O'Neill
Jan O'Neill