Mediation is perhaps the most common form of Alternative Dispute Resolution (ADR). This is the process whereby the parties to a dispute can utilise the services of a Mediator, who will try to explore avenues that will suit both parties. When mediation should take place, and how participation in mediation may affect proceedings, depends on the allocation of a case.
Small claims
From 22 May 2024, a mandatory mediation direction was introduced for many small claims involving a specified sum of money, generally up to £10,000 (see CPR r.26.6 as modified by Practice Direction 51ZE). The scheme does not apply in all cases and excludes, for example, personal injury and road traffic accident claims. HMCTS’ Small Claims Mediation Service offers a free of charge one-hour mediation appointment, usually conducted by telephone, in order to assist the parties in resolving their dispute outside of Court. This is particularly beneficial to parties who may be acting as a Litigant in Person (rather than having legal representation), as it avoids the expense of a private mediator’s fee and helps ensure that expenditure remains proportionate to the value of the claim.
The principal aim of this change was to help free up Court time in cases where the parties could often resolve matters without a final hearing. In 2022, about 85,000 small money claims progressed through the County Court. Around 20,000 of those cases opted into voluntary mediation and more than half were settled, meaning that approximately one in eight such claims were resolved through mediation. Mediation appointments are generally arranged within 28 days of referral. The parties are required to attend the appointment, but they are not required to reach a settlement.
Fast, intermediate and multi-track
Claims on the fast, intermediate and multi-tracks are not subject to the same automatic Small Claims Mediation Service. However, following the decision in Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416, handed down on 29 November 2023 and the amendments to the Civil Procedure Rules which came into force on 1 October 2024, the Court now has an express power to order or encourage the parties to engage in ADR (see CPR rr.1.1, 1.4, 3.1, 28 and 29). In practice, parties to such claims should expect the Court to consider ADR at an early stage and throughout the proceedings.
Consequences of non-compliance
If a party fails to engage in mediation where it has been ordered in a Small Claim, the Court must consider at the final hearing whether any sanction is appropriate in all the circumstances, having regard to whether the parties attended mediation provided by the Mediation Service (see CPR r.26.6 as modified by Practice Direction 51ZE). In an appropriate case, that may include a costs sanction. Where fixed costs are recoverable, the Court may, in some circumstances, adjust the costs otherwise payable (either an uplift or a deduction), but the precise consequence will depend on the applicable rules and the facts of the case.
For matters outside of the mandatory Small Claims Mediation Service, the Court has a general discretion on costs and may penalise a party who refuses to engage in mediation without good reason, including where a party failed to comply with an order for ADR or unreasonably failed to engage in ADR (see CPR r.44.11 and CPR r.44.2).
At Dyne Solicitors, we specialise in civil litigation. For more information or a non-obligation chat, please contact Patrik Jones-Wright or Alex Sandland.