Not all refusals to mediate are unreasonable...                                                 2021:3

Pallett v MGN, (2021) EWHC 76 (Ch)

Facts

The Daily Mirror (MGN) hacked into Ms Pallett’s voicemails.  She sued for breach of privacy, and MGN’s solicitors proposed mediation.  She insisted on waiting months until the parties had been through a very expensive disclosure process.  She then indicated by CPR 36 that she would accept damages of £99,500 plus costs.  MGN delayed accepting this offer until 21 days gone by which meant that the issue of costs was not automatic, but in the discretion of the Court.

She applied for her costs, which normally under CPR 36 would go to her, as her offer had been accepted.  MGN relied upon case-law that a party which unreasonably refuses an offer to mediate risks a costs sanction, except in “exceptional circumstances”.

Held

It was not possible for this claimant to know the extent of the breach of her privacy until she had obtained full disclosure of the very many occasions on which her voicemails had been hacked.  Only then could she assess the amount of damages she was entitled to.  She had therefore not unreasonably refused the offer to mediate.  Costs awarded to Ms Palett.

Comment

MGN relied upon several  Court of Appeal decisions; in PGF v OMFS the Court’s view was that to remain silent in the face of an offer to mediate is, (absent exceptional circumstances), unreasonable conduct meriting a costs sanction, even in cases where mediation is unlikely to succeed.  Similarly in Thakkar v Patel,  Jackson LJ said: “The message which the Court sends out in this case is that in a case where bilateral negotiations fail but mediation is obviously appropriate, it behoves both parties to get on with it.  If one party frustrates the process by delaying and dragging its feet for no good reason, that will merit a costs sanction.”

Despite this robust messaging, Mann J concluded that the circumstances of this case were indeed exceptional, and Ms Pallet had not acted reasonably.  However, the judge was anxious to stress the singularity of this particular case, “because it turns on its own facts, it should not be taken as a green light for all claimants to decline to enter into negotiations before disclosure is complete.… Claimants should not seek to apply this case too generally.”

This case should therefore be seen as a valid illustration of what “exceptional circumstances” look like; it does not change the general rule.  All prudent litigants should be ready and willing to mediate whenever they get the opportunity.