Halsey v Milton Keynes General NHS Trust

This is the judgment of the court.

These two appeals raise a question of some general importance: when should the court impose a costs sanction against a successful litigant on the grounds that he has refused to take part in an alternative dispute resolution ("ADR") ? There seems to be some uncertainty as to the approach that should be adopted in answering this question: it has been the subject of consideration by courts on a number of occasions. A measure of its significance is that we have received detailed and helpful submissions from no fewer than four interveners, namely the Law Society, the Civil Mediation Council, the ADR Group and the Centre for Effective Dispute Resolution.

In the appeal of Halsey, the only ground of appeal is that, notwithstanding that the claim was dismissed, the judge was wrong to award the defendant, the Milton Keynes General NHS Trust ("the Trust") its costs, since it had refused a number of invitations by the claimant to mediate. There are two grounds of appeal in the case of Steel. First, it is said that the judge reached the wrong conclusion on the causation issue that he tried in the Part 20 proceedings between the defendants ("the causation issue") . Secondly, it is submitted that the judge was wrong to award the successful second defendant his costs against the first defendant, since the second defendant had refused a number of invitations by the first defendant to mediate. We shall start by giving some guidance as to the general approach that should be adopted when dealing with the costs issue raised by these two appeals. We shall then turn to the facts of the two appeals.

General encouragement of the use of ADR

As was explained in Lord Woolf's Final Report on Access to Justice (p 11), for some time before the Civil Procedure Rules ("CPR") came into force, resort by parties involved in litigation to ADR had been encouraged by the courts in various ways. The CPR, practice directions and pre-action protocols have built on these early developments. It is unnecessary to make extensive reference to demonstrate this. CPR 1.4(1) obliges the court to further the overriding objective of enabling the court to deal with cases justly by actively managing cases, and Rule 1.4(2) (e) defines "active case management" as including "encouraging the parties to use an alternative dispute resolution procedure if the court considers that appropriate and facilitating the use of such procedure".Rule 26.4(1) provides that "a party may, when filing the completed allocation questionnaire, make a written request for the proceedings to be stayed while the parties try to settle the case by alternative dispute resolution or other means".

The term "alternative dispute resolution" is defined in the Glossary to the CPR as a "collective description of methods of resolving disputes otherwise than through the normal trial process." In practice, however, references to ADR are usually understood as being references to some form of mediation by a third party. The general rule is that the unsuccessful party is ordered to pay the costs of the successful party ( CPR 44.3(2) (a)) . The cases in which the question of displacing this rule have been discussed have usually been concerned with the refusal of mediation by the successful party. The two appeals before this court fall into this category. In what follows we shall concentrate on the cost consequences of a refusal by the successful party to agree to mediation.

There are those who believe that the virtues of mediation have not yet been sufficiently demonstrated. There is some reference to this by Professor Hazel Genn in her excellent report "Court-based ADR initiatives for non-family civil disputes: the Commercial Court and the Court of Appeal" (March 2002), at pp 58–67. But we are in no doubt that we should proceed on the basis that there are many disputes which are suitable for mediation. This approach is consistent with, and (as we have seen) underpinned by, the Woolf reforms. It is also consistent with the fact there are now a number of court-based mediation schemes for civil non-matrimonial cases, which operate with varying degrees of success. The virtues of mediation in suitable cases are also recognised in the Chancery Guide (paras 17.1 and 17.3), the Queen's Bench Guide (para 6.6), the Admiralty and Commercial Court Guide (para D8.8) and the Technology and Construction Court Guide (para 6.4) . Judges in the Commercial Court routinely make "ADR orders" in the form set out in Appendix 7 to the Admiralty and Commercial Court Guide (see further para 30 below) .

We are also mindful of the position which has been taken by Government on this issue. Thus, in March 2001, the Lord Chancellor announced an "ADR Pledge" by which all Government departments and Agencies made a number of commitments including that: "Alternative Dispute Resolution will be considered and used in all suitable cases wherever the other party accepts it". In July 2002, the Department for Constitutional Affairs published a report as to the effectiveness of the Government's commitment to the ADR pledge. The report stated that the pledge had been taken very seriously, and identified a number of initiatives that had been introduced as a direct result of it. These included the following initiative on the part of the National Health Service Litigation Authority ("NHSLA"):

"The encouragement of greater use of mediation, and other forms of alternative dispute resolution, is one of the options considered by the NHSLA, who are responsible for handling clinical negligence claims against the NHS. The NHSLA is working with the Legal Services Commission to develop a joint strategy for promoting greater use of mediation as an alternative to litigation in clinical negligence disputes.

Since May 2000 the NHSLA has been requiring solicitors representing NHS bodies in such claims to offer mediation in appropriate cases, and to provide clear reasons to the authority if a case is considered inappropriate."

Strong support for the use of ADR in general, and mediation in particular, has been given by the courts in cases such as R (Cowl) v Plymouth City Council [2001] EWCA Civ 1935, [2002] 1 WLR 803, Dunnett v Railtrack plc [2002] EWCA Civ 303, [2002] 1 WLR 2434 and Hurst v Leeming[2001] EWHC 1051 (Ch), [2003] 1 Lloyds Rep 379.

We heard argument on the question whether the court has power to order parties to submit their disputes to mediation against their will. It is one thing to encourage the parties to agree to mediation, even to encourage them in the strongest terms. It is another to order them to do so. It seems to us that to oblige truly unwilling parties to refer their disputes to mediation would be to impose an unacceptable obstruction on their right of access to the court. The court in Strasbourg has said in relation to article 6 of the European Convention on Human Rights that the right of access to a court may be waived, for example by means of an arbitration agreement, but such waiver should be subjected to "particularly careful review" to ensure that the claimant is not subject to "constraint": see Deweer v Belgium (1980) 2 EHRR 439, para 49. If that is the approach of the ECtHR to an agreement to arbitrate, it seems to us likely that compulsion of ADR would be regarded as an unacceptable constraint on the right of access to the court and, therefore, a violation of article 6. Even if (contrary to our view) the court does have jurisdiction to order unwilling parties to refer their disputes to mediation, we find it difficult to conceive of circumstances in which it would be appropriate to exercise it. We would adopt what the editors of Volume 1 of the White Book (2003) say at para 1.4.11:

"The hallmark of ADR procedures, and perhaps the key to their effectiveness in individual cases, is that they are processes voluntarily entered into by the parties in dispute with outcomes, if the parties so wish, which are non-binding. Consequently the court cannot direct that such methods be used but may merely encourage and facilitate."

If the court were to compel parties to enter into a mediation to which they objected, that would achieve nothing except to add to the costs to be borne by the parties, possibly postpone the time when the court determines the dispute and damage the perceived effectiveness of the ADR process. If a judge takes the view that the case is suitable for ADR, then he or she is not, of course,...