Court of Appeal imposes costs sanctions for unreasonable refusal to mediate

In Rolf v De Guerin [2011] EWCA Civ 78, the UK Court of Appeal considered an appeal from a successful claimant about liability for the costs of a small building dispute, in circumstances where the defendant had refused several offers to mediate until the eve of trial. The Court of Appeal allowed the appeal and exercised its discretion to make no order as to costs. It held that refusing to participate in settlement negotiations or mediation was unreasonable and ought to bear materially on the exercise of the court's discretion.This case is another warning to parties, even where they are partially successful, of the potential adverse costs consequences of refusing to mediate. Indeed, in the opening line of the judgment, Rix LJ described the matter as "a sad case about lost opportunities for mediation". He also said it demonstrated how, in certain disputes, such as the small building dispute in this case, litigation can be "wasteful and destructive" and a trial should be regarded as a solution of last resort. The judgment is another strong reminder (if one was needed) that litigants and their lawyers must now routinely consider whether their dispute is suitable for ADR.