Jersey Unreported Judgments

[2005]JRC098

royal court

(Samedi Division)

20^th July, 2005.

Application by the Plaintiff for payment of interest and costs following a judgment in their favour on 23^rd February, 2005.

Advocate P.C. Sinel for the Plaintiff

Advocate D.J. Benest for the Defendants

judgment

THE bailiff:

Introduction

1.        On 23rd February 2005 the Court gave judgment in favour of the plaintiff in the sum of £102,018.77.  The plaintiff now seeks interest on that sum at the court rate from 23rd February 2001 until date of payment, and costs. 

Interest

2.        Mr Benest, for the defendants, contended that certain periods of delay in bringing this case on for trial which, in his view, were attributable to the plaintiff, justified disallowing interest in relation to those periods of delay.  No authority was cited to me in support of this proposition.  Mr Sinel for the plaintiff submitted that the plaintiff had been out of its money for the entire period since the breach of contract, and an award of interest was intended to compensate a successful plaintiff in that respect.  That submission appears to me to be correct, and I accordingly order the defendants to pay interest on the sum of £102,018.77 at the court rate from 23rd February 2001 until date of payment. 

Costs

3.        Counsel for the plaintiff submitted that his client had been successful and that costs should follow the event.  Counsel for the defendants accepted that the plaintiff had enjoyed a large measure of success, but contended that a substantial reduction in the award of costs should be made for two reasons.  First, the defendants had refused an invitation to resort to mediation.  Secondly, other circumstances, including the plaintiff's failure on some aspects of its claim, justified a discount being made. 

4.        Counsel for the defendants drew my attention to the judgment of this Court in Watkins v Egglishaw 2JLR 1 where Page, Commissioner stated at page 8 the guiding principles for the exercise of discretion in awards of costs as follows:-

i.         The court's overriding objective in considering costs is, as in everything else, to do justice between the parties.

ii.        In many cases, that objective will be fulfilled by making an award of costs in favour of the 'winning' party, where a 'winner' is readily apparent.  In any event, the 'follow the event' rule can still be a useful starting point.

iii.       It is a mistake, however, to strain overmuch to try to label one party as the 'winner' and one as the 'loser' when the complexity or other circumstances of the litigation do not readily lend themselves to analysis in these terms.

iv.       The discretion as laid down in Article 2 of the Civil Proceedings (Jersey) Law, 1956 is a wide one and ought not to be treated as fettered by any particular supposed rule or practice other than that the discretion should be exercised judicially and broadly in accordance with the guiding principles referred to In re Eligindata (No.2) and A.E.I. -v- Phonographic Performance.

v.        It is, accordingly open to the court to have regard to any and all considerations that may have any bearing on the overriding objective of doing justice.  Its task is to take an overview of the case as a whole (per Lightman J. in BCCI -v- Ali and Ors.  (No 4) (1999) NLJ 1734).  The new Civil Procedure Rules governing civil litigation in the English courts provide that the court "must have regard to all the circumstances" and then go on to spell out certain matters that such circumstances include, the "conduct of the parties" being one, and "whether a party has succeeded on part of his case, even if he has not been wholly successful" another (CPR paragraph 44.3); but, to a large extent, the particular matters mentioned do no more than state the obvious and, it is unnecessary to import them verbatim, in any formal way, into the practice of the Royal Court.

vi.       It is implicit in this that, even though a party would otherwise be regarded as having been "successful", justice may require that costs should not automatically follow the event.

I agree that those are the principles which I should apply.

5.        Mediation, or alternative dispute resolution, is a method of resolving disputes which has been much encouraged by the Court.  During a speech at the launch of the amendment to the Royal Court Rules which introduced a power to refer cases for mediation, I stated that -

Experience in other countries has shown that mediation can often leave the parties in a better position than litigation.  First, if a dispute can be mediated at a relatively early stage, there can be a significant saving in cost of the parties.  Secondly, a dispute settled confrontationally through the courts will often have a bruising effect upon the parties.  There is always a loser, and sometimes there is no real winner.  A mediated settlement, while not necessarily leading to total satisfaction on both sides, can enable the parties better to understand the other's point of view and occasionally  to offer or to accept an apology.  Particularly in a small community, where trading and even personal relationships between the litigating parties may continue, the ability to settle a disagreement in private without creating lasting wounds is, in my view, an important positive factor in favour of mediation.

6.        The power to refer disputes to mediation is one also possessed by the English Courts and a number of cases in that jurisdiction have considered how far it is appropriate to go in using costs' orders to penalise parties who have unreasonably refused to engage in mediation.  In Hurst v Leeming [2003] 1 Lloyds Rep 379 Lightman J stated-

The professional negligence pre-action protocol lays down that in proceedings for professional negligence, if one party offers to proceed to mediation, the other party, if he refuses, should state his reasons.  Implicit in that protocol, and explicit in two decisions of the Court of Appeal, Frank Cowell v.  Plymouth City Council and Dunwich v. Railtrack, is the proposition that a party who refuses to proceed to mediation without good and sufficient reasons may be penalised for that refusal and, most particularly, in respect of costs.  Mediation is not in law compulsory, and the protocol spells that out loud and clear.  But alternative dispute resolution is at the heart of today's civil justice system, and any unjustified failure to give proper attention to the opportunities afforded by mediation, and in particular in any case where mediation affords a realistic prospect of resolution dispute, there must be anticipated as a real possibility that adverse consequences may be attracted. 

7.        Later in his judgment, Lightman J stated -

The fact that a party believes that he has a watertight case again is no justification for refusing mediation.  That is the frame of mind of so many litigants.  Nor is it necessarily sufficient of itself that a full and detailed refutation of the opposite party's case has already been supplied, though this may well be a very relevant consideration.

The critical factor in this case, in my view, is whether, objectively viewed, a mediation had any real prospect of success.  If mediation can have no real prospect of success a party may, with impunity, refuse to proceed to mediation on this ground.  But refusal is a high risk course to take, if the court find that there was a real prospect, the party refusing to proceed to mediation may, as I have said, be severely penalised.  Further, the hurdle in the way of a party refusing to proceed to mediation on this ground is high, for in making this objective assessment of the prospects of mediation, the starting point must surely be the fact that the mediation process itself can and does often bring about a more sensible and more conciliatory attitude on the part of the parties than might otherwise be expected to prevail before the mediation, and may produce a recognition of the strengths and weaknesses by each party of his own case and of that of his opponent, and a willingness to accept the give and take essential to a successful mediation.  What appears to be incapable of mediation before the mediation process begins often proves capable of satisfactory resolution later.

8.        This approach was considered by the English Court of Appeal in Halsey v Milton Keynes General NHS Trust [2004] for All ER 920.  At page 927, Dyson LJ stated -

In Hurst v Lemming [2003] 1 Lloyd's Rep 379 at 381, Lightman J said:  'The fact that a party believes that he has a watertight case again is no justification for refusing mediation.  That is the frame of mind of so many litigants.'  In our judgment, this statement should be qualified.  The fact that a party unreasonably believes that his case is watertight is no justification refusing mediation.  But the fact that a party reasonably believes that he has a watertight case may well be sufficient justification  for a refusal to mediate....  The fact that settlement offers have already been made, but rejected, is a relevant factor.  It may show that one party is making efforts to settle, and that the other party has unrealistic views of the merits of the case.  But it is also right to point out that mediation often succeeds where previous attempts to settle have failed.  Although the fact that settlement offers have already been made is potentially relevant to the question whether a refusal to mediate is unreasonable, on analysis it is in truth no more than an aspect of factor [sic].

9.        The fundamental principle in determining whether or not to penalise a party in costs for refusing to engage in mediation is whether the successful party acted unreasonably in so doing.  The question whether mediation had a realistic prospect of success is a factor in that equation, but only one of several.  The character of the litigants may be relevant.  The costs to be incurred in preparing for mediation may be disproportionate to the costs of preparing for trial, particularly if the offer to mediate is made at a late stage of proceedings.  Again, if mediation is proposed late in the day, there may well be an unacceptable delay in the final resolution of the dispute.  All these matters are to be taken into account.

10.      Having said all that, it must be borne in mind by all litigants and their counsel that mediation is often a cost-effective and appropriate way to resolve disputes.  It is the duty of legal advisers to consider routinely whether or not mediation may be a suitable means of brokering differences between persons in dispute.  It is one of the most useful tools in the kit bag.

11.      In this case, the offer to mediate was made by the defendants some ten weeks before trial.  The dispute had been marked by acrimonious exchanges, but that is no reason for refusing mediation; indeed it may be a good reason for engaging in the process.  The critical factors in this case, in my judgment, are that mediation was unlikely to bridge the gap between the principals of parties, given their personalities and the mutual antipathy; and the offer to mediate was made at a stage when most of the preparations for trial were complete.  The saving in cost, even if the mediation had been successful, would not have been great.  In the particular circumstances of this case, I do not therefore consider that it was unreasonable for the plaintiff to refuse the defendants' offer to engage in mediation.

12.      Counsel for the defendants pointed out that the plaintiff had been unsuccessful in some respects.  Indeed, it may be said that at the outset the claim was extravagantly framed.  The original claim in respect of this CCTV security system was £244,328 which was later reduced to £14,018.  The damages awarded under that head were £6,858.  Exaggerated claims of this kind increase the temperature of litigation, are a disincentive to a negotiated settlement, and are to be discouraged. Counsel for the defendants submitted that an offer of £70,000 had been made to the plaintiff's legal advisers prior to trial, but that the telephone conversation had been abruptly terminated; the offer had apparently not been considered.  Counsel submitted that the defendants had withdrawn some of the claims shortly before trial, reducing the quantum of the claim from £159,000 to £145,000.  Finally, counsel reminded the Court that an unsuccessful application had been made by the plaintiff at the outset of the trial to add further claims to those set out in the order of justice. 

13.      Taking all those factors into account, my decision is that the defendants should pay 85% of the plaintiff's costs on the standard basis. 

Authorities

Watkins v Egglishaw 2JLR 1.

Hurst v Leeming [2003] 1 Lloyds Rep 379.

Halsey v Milton Keynes General NHS Trust [2004] for All ER 920.