The cost of the NHSLA’s refusals to mediate

 

At the end of my piece on Bleak House and the Court of Chancery, I wrote:

“In another blog I will write about the need for a greater understanding of the value of mediation in resolving inheritance disputes, however intractable: I helped to resolve many of them myself during the days I practised as a mediator after I had retired from the Bench.”

I will be fulfilling this promise very soon. In the meantime I want to respond to a comment I received from Jonathan Dingle. Jonathan is a leader in the field of civil mediation training, and he used to be, like me, a director of Trust Mediation Ltd, a small company specialising in personal injury mediation. He wrote:

“When will NHSLA begin to mediate? How much more public money will be wasted?”

He was referring to the National Health Service Litigation Authority, the body which manages the defence of claims made against NHS authorities in England.

This led me to try and find out what he was talking about. It is now 13 years since my judgment in Dunnett v RailTrack made it clear that parties might not be able to recover some or all of their costs if they unreasonably refused to mediate, and 11 years since the Court of Appeal in the important case of Halsey re-affirmed this principle.   I also recall a visit I made to the University of Warwick about five years ago when I addressed a captive audience of NHSLA panel solicitors on the importance of mediation and the very effective results it was beginning to show in the context of clinical negligence disputes. I made that visit because lawyers acting for claimants had been complaining that NHSLA panel solicitors were refusing mediation in appropriate cases almost as a matter of routine.

I therefore had a strong feeling of déjà vu when I read Jonathan’s message. His reference to the waste of public money is particularly poignant because of all the angst that Government has been expressing about what it perceives to be the excessive cost of clinical negligence litigation.

It turned out that he was referring to two very recent decisions by costs judges. I have set out a summary of the effect of those decisions in an Annex below. In short, after a long delay the NHSLA’s solicitors refused an invitation to mediate the Claimant’s costs bill in each case. In the first case (Reid) they gave no reasons at all.  In the other (Bristow) they said only that the case had now been set down for a detailed assessment. In other words, they did not think there was any need for them to justify their refusal.

In each case an experienced costs judge held that their refusal to mediate was unreasonable.  In each case the Defendants were ordered to pay the Claimant’s  costs of the costs dispute on an indemnity basis, not the usual standard basis. In the first case Master O’Hare said that this order carried the implication that there would be no inquiry as to whether those costs were proportionate.[1] In each case the Defendants also had to pay interest at the rate of 8% p.a. on the unpaid costs until the date of judgment.

They also had to pay their own costs of the detailed assessment: in the first case, where they failed to “beat” a Part 36 offer, they had to pay the Claimant a 10% uplift of £13,000 on the award of costs as well.

Since taxpayers’ money was at risk, it would be good if the Claimants’ solicitors (who were the same in both these cases) could collaborate with the NHSLA in reporting to the public just how much money was in fact wasted by the stance adopted by the Defendants’ representatives in each case.

If, by way of illustration, the taxpayer had to pay £50,000 in each case more than he would have had to pay if those representing the NHSLA had behaved prudently and reasonably, that would mean that £100,000 of public money went down the drain for no real purpose. Oh dear.

The solicitor who acted for the Claimant in the later case has told a journalist that these rulings had not altered the NHSLA’s tactics in the two months that followed them:

“We had this ruling at the beginning of November and we have still not had one mediation.

Insurers have been slow on the uptake but have accepted mediations in some cases. They care about the bottom line.”

In my blog on Bleak House, I reproduced what Dickens thought about lawyers:

“The one great principle of the English law is to make business for itself. There is no other principle distinctly, certainly, and consistently maintained through all its narrow turnings.”

If the Government is to be serious about reducing the cost of civil justice, it must get the message through not only to the panel solicitors but also to the costs lawyers and law costs draftsmen who represent it that this principle should now be regarded as being as dead as the dodo. All these professional men and women must always act reasonably in their clients’ interests. This entails being willing to involve themselves in mediations even if they perceive that they may be losing business for themselves thereby.

ANNEX

First Case

In Reid v Buckinghamshire Healthcare NHS Trust Master O’Hare was concerned with a costs assessment in a clinical negligence case. A 10-day trial on liability was averted when the defendants admitted liability more than a year before the trial date. Judgment was then entered against them, with an order for costs to be assessed, on 7th January 2015.

In the event, the costs were agreed in a sum of about £130,000 at the start of the second day of the two-day hearing, so that the Master was concerned only with ruling on the costs of the costs dispute.

On 24th July 2015 the Claimants had invited the Defendants to proceed to a mediation, an invitation that was refused, apparently with no reasons being given, about six weeks later. The Claimants then made a Part 36 offer in respect of all the costs to be assessed. The Defendants did not accept it, and because they failed to beat this offer, they had to pay a10% uplift (about £13,000) on the costs they had agreed to pay.

The Master ordered the Defendants to pay interest on the £130,000 at the rate of 8% p.a. from 7th January until 28th October 2015 (the date of his judgment): about £8,500.   He also ordered them to pay the costs of the costs dispute at the standard rate up to 27th July 2015 (the date when they were likely to have received the offer to mediate)

However, because he found that the Defendants had unreasonably refused to accept the invitation for mediation, he ordered them to pay the costs of the costs dispute on an indemnity basis from 27th July to 28th October 2015.

Finally, he ordered them to pay interest at the rate of 8% p.a. on all the sums he had ordered them to pay in relation to the costs of the costs dispute from 28th October 2015 until the date of payment.

At the end of his judgment he said this:

“I want to end with a brief note of caution about sanctions imposed on parties who unreasonably refuse to mediate. Case law on this topic is largely about penalties imposed on parties who are in other respects the successful party. In Halsey v Milton Keynes NHS Trust [2004] EWCA Civ 576 and in other cases, penalties imposed upon winners. They do not involve the imposition of further penalties upon losers. One can see that throughout the judgment in Halsey. I will read out a sentence from paragraph 28:

‘As we have already stated, the fundamental question is whether it has been shown by the unsuccessful party that the successful party unreasonably refused to agree to mediation.’

There are many other such references to this being a penalty against winning parties, for example, see paragraphs 13 and 34.

If the party unwilling to mediate is the losing party, the normal sanction is an order to pay the winner’s costs on the indemnity basis, and that means that they will have to pay their opponent’s costs even if those costs are not proportionate to what was at stake. This penalty is imposed because a court wants to show its disapproval of their conduct. I do disapprove of this defendant’s conduct but only as from the date they are likely to have received the July offer to mediate. “

Second Case

Bristow v Princess Alexandra Hospital NHS Trust (Case HQ 12X02176)[2] was another clinical negligence case in which the Claimant’s solicitors were seeking detailed assessment of their costs. They lodged a bill for £239,000 which the Master reduced to £135,000[3].   Because of the substantial reduction he had made, he held that they were only entitled to receive 80% of their costs of the assessment. He gave judgment on 4th November 2015.

On 1st April 2015, however, the Claimants’ solicitors had issued an offer of mediation. The Defendants’ solicitors did not respond for three months. They then rejected the offer, giving no reasons other than the fact that the case had now been set down for a detailed assessment. At the hearing it appears that they told the Master that they had rejected mediation because the parties were so far apart. The Master ordered them to pay all the costs of the costs dispute (namely, 80% of the full assessment) on an indemnity basis. He said he was applying what he described as a

“major principle that parties should be encouraged to enter into mediation and that if they fail to do so unreasonably then there should be a sanction”

He thought it was a reasonable request made by the Claimants, which it had taken the Defendants three months to reject, and “they gave no good reason other than the fact that the case had already been set down for a detailed assessment.”

 

 

 

[1] They would have to be reasonable, but the burden would be on the Defendants to show that they were not reasonable.

[2] Although Master Simons’s judgment has not yet been published on BAILII, I have read a transcript of it.

[3] He found that the bill was inaccurate and that it had included significant amounts (relating to their claim against other defendants) which should not have been included.

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