Chartered Institute of Arbitrators Irish Branch

More developments on the mediation front in relation to the obligation of legal practitioners under section 14 of the Mediation act 2017, to advise clients in advance of issuing proceedings, as to the advantages and benefits of mediation.

Solicitors (and barristers) need to be aware of High-cost Practice Direction 127 regarding Non Jury List: Hearing of Witness Actions in the Non Jury List https://www.courts.ie/content/non-jury-list-hearing-witness-actions-non-jury-list which came into effect from 24 June 2024.

The Practice Direction sets out procedures to be followed by a party who has filed a Certificate Readiness and is looking for a trial date in respect of any proceedings to be tried wholly or partly by oral evidence. One of the requirements to be complied with is the filing of a Trial Summary Form https://www.courts.ie/acc/alfresco/e6b5ebb8-0f9b-4902-be3f-e6a393e0d405/HC127%20Trial%20Summary%20Form.docx/docx/1 which asks for confirmation

(1) as to whether there have been attempts to settle or mediate and

(2) more significantly, asks for confirmation that ALL solicitors for the parties have complied with their obligations under section 14 of the Mediation Act and

(3) asks for confirmation of the date of the giving of such mediation advices.

The need to stipulate the date of such advices is particularly interesting and important, given that section 14 requires such advices to be given before commencing proceedings.

Coming hot on the heels of the decision of Kennedy J in Byrne V Arnold [2024] IEHC 308, this latest development highlights the need of solicitors to be aware of potential delays to trial and costs penalties if they have failed to discharge their statutory duty.

To use words borrowed from a Bankruptcy Statutory Demand: "HEREIN FAIL NOT AT YOUR PERIL."

Irish High Court imposes a costs penalty for failure to comply with the section 14 Mediation Act statutory duty of solicitors to advise clients about the advantages and benefits of mediation before commencing legal proceedings - Byrne v. Arnold [2024] IEHC 308.
https://www.courts.ie/view/Judgments/5765b2ae-3f49-4b72-9f36-f78b72c2eae8/dc4993ca-e5be-4940-954a-401e3e630171/2024_IEHC_308.pdf/pdf

An interesting decision on the costs implications of failing to comply with what were described by Mr Justice Kennedy of the Irish High Court as the "not unreasonable or burdensome" obligations of a solicitor under section 14 of the Mediation Act 2017 to advise a client about the advantages and benefits of mediation before commencing legal proceedings was delivered by Mr Justice Kennedy last week in the High Court in the case of Byrne v. Arnold [2024] IEHC 308.

A 5% penalty.
Kennedy J directed that the Plaintiffs suffer a 5% penalty in terms of recoverable costs in that they would only be entitled to recover 95% of party and party costs, because of the failure of the Plaintiffs’ solicitors to comply with the statutory section 14 Mediation Act 2017 requirement to advise the client before commencing proceedings about the advantages and benefits of mediation.

Filing of a Statutory Declaration as to advices.
Kennedy J also highlighted the fact that:
"a plaintiff's solicitor must advise the client to consider mediation. The statutory duty is to explain the option, facilitating an informed decision by the client, allowing them to consider alternatives to litigation…".

Prohibition on a court dealing with proceedings in the absence of the declaration.
He also pointed out that unless and until such time as the required statutory declaration by the solicitor as to having so advised is filed, the court cannot proceed to deal with the proceedings. Kennedy J pointed out that the 2017 Act:
"obliges the Court to adjourn proceedings in the event of any failure to meet the requirement. In order to comply with the statutory requirement without subjecting the parties to the delay and expense involved in a wasted hearing (including a costs order at the Plaintiffs’ expense as the party in default), I rose to allow the advices to be provided in accordance with section 14 (but litigants should note that the courts will not necessarily extend such latitude in future if such situations were to recur)."
While in this particular case Kennedy J rose for long enough to allow for section 14 to be complied with and the statutory declaration to be filed, he specifically stated that:
"if such a failure to comply with section 14 were to occur in future, the Court may adjourn a hearing (at the Plaintiffs’ expense) and stay the proceedings until the obligations had been discharged. Significant cost sanctions will be likely in any event."
He also warned that:
"Courts may be less lenient in future".

Clients making informed decisions.
As to section 14 advices enabling clients to make informed decisions Kennedy J stated that:
"Section 14 protects clients by ensuring that they are fully informed as to options which may, inter alia, reduce their exposure to cost and risk. The provision also advances the public interest, discouraging unnecessary recourse to the courts (and legal expense) and promoting alternatives which may lead to outcomes which can be in the interests of all parties. The provision thus facilitates the earlier, cheaper, resolution of disputes. The public interest is demonstrated by the fact that the Oireachtas has imposed the extraordinary requirement of a statutory declaration by the Plaintiff’s solicitor confirming compliance and the stipulation that litigation subject to the provision (i.e. most civil claims) cannot proceed without the declaration."

Urgency not excusing failure.
Kennedy J also stated that he did not accept that urgency could ever justify default stating that even in the injunction scenarios such as in the particular case, "the advice should be given at the earliest opportunity".

The suggestion of possible futility of offering mediation also rejected.
Kennedy J also rejected the plaintiff's argument that an offer to mediate might not have been accepted and in particular case would have been rebuffed. He stated:
"the chances of the parties actually engaging at that point may have been low. However, the chances were not zero. Even if there was a 5% chance of such engagement at the outset, then the Plaintiffs should have been encouraged to at least consider an option which, if successfully pursued, could offer significant benefits for the parties and for the Courts, prior to significant costs being incurred. Secondly, there is a benefit to providing such advice at the outset. Even if the time is not right at that point for the plaintiff to propose mediation or for the defendant to engage, a seed is planted. Most cases eventually settle before trial – even if the suggestion of negotiation or mediation at an early stage does not bear fruit immediately it may ultimately help the parties engage sooner than would otherwise be the case."

A comment on reluctance to propose mediation.
Kelly J also made an interesting comment about the statutory provision overcoming possible reluctance of parties to "show weakness" by proposing mediation. He said:
"In my view, sophisticated litigators are less inclined to consider a nuanced willingness to negotiate or mediate as a sign of weakness. If all parties refused to make the first move, then no dispute would ever settle. However, if there is any such nervousness, then section 14 offers an ideal basis for an overture which can legitimately be presented as compliance with statutory and professional requirements. This should counter any such sensitivity.”

A comment on the timing of mediation.
Kennedy J also had interesting comments to make about the timing of mediation when he said:
"In any case, there will always be “known unknowns”, which can influence the timing of any negotiation or mediation. Sometimes, in order to assess their legal position, parties may genuinely need to await the close of pleadings, the exchange of discovery or of witness statements or expert reports, the opening of the case or the cross examination of each side’s witnesses. Such points may or may not be legitimate reasons to refrain from prematurely committing to mediation in particular cases or at particular points. IEGP Management CLG v Cosgrave [2023] IECA 128 is an example of a case in which mediation was deemed premature or inappropriate at a particular point. Whether mediation is premature will depend on the circumstances, but it would be wrong to rule out negotiations or mediations early in proceedings solely because the parties have only limited visibility of their strengths and weaknesses. That could be said in almost every case. The counterargument is that rejecting or delaying opportunities to negotiate or mediate could also have unpredictable costs, risks and adverse consequences. Most negotiated settlements involve a leap in the dark to some degree. Litigants, like businesspeople, must sometimes reach a decision based on the best available information, knowing that the outcome at trial could be better (or worse) but that there are also costs and risks associated with delaying such engagement. In some cases - but perhaps not as many as might be thought - waiting for more information may be prudent. The essential dynamic is that earlier negotiations offer greater potential cost savings, but each side may be less informed as to the merits (and their position may improve – or disimprove – if they delay in engaging). Other factors may affect the optimum timing in particular situations. Clients and lawyers must balance such competing factors when deciding whether and when to mediate. However, even if mediation would be premature, the Plaintiff’s solicitors must still comply with section 14."

Obligations to fully inform the court.
As to the Plaintiff's argument that a previous Order as to directions (O'Moore J) had not referenced the 2017 Act obligations and requirements, Kennedy J responded stating that the High court's directions could not be:
"taken as excusing the breach of section 14. The Court was dealing with the busy Chancery List and concerned with the immediate interim application. There is no suggestion that its attention was drawn to the breach of section 14 (although, if the Plaintiffs’ legal team had themselves been aware of the issue, then they would have been bound to draw the Court’s attention to the issue). The fact that the issue was not identified earlier in the proceedings is the Plaintiffs’ responsibility and does not excuse the noncompliance. Indeed, such a submission is inconsistent with the terms of section 14. If the issue had been raised, the Court would have insisted on immediate compliance before the matter progressed. It would have had no jurisdiction to do otherwise."

Kennedy J stated clearly that:
"I consider that the Courts should take some account of a material breach of section 14 and that I should thus have regard to the failure to comply with the statutory precondition to issuing proceedings, a provision introduced as a public interest measure to avoid unnecessary litigation and to avoid unnecessary recourse to the courts. Such a default is a relevant consideration when exercising the statutory discretion as to costs. I am entitled to have regard to the breach of the legislation either in the exercise of the Court’s inherent jurisdiction or as an element of Section 169(a) (conduct before and during the proceedings) or (c) (the manner in which the parties conducted all or any part of their cases). I consider that the situation in this case is similar to the Word Perfect scenario, in which Twomey J. concluded that, although s. 169(1)(g) did not apply, the Court could take into account the party’s conduct before and during the proceedings pursuant to ss. 169(1)(a) and (c) of the 2015 Act."

Calculating the costs penalty.
Kennedy J specifically stated that he had contemplated a 15% penalty but decided on this occasion, in the particular circumstances of this case, to limit the penalty to 5%. However, he specifically warned that: "Courts may be less lenient in future".

Encouragement to consider mediation.
Kennedy J concluded his judgement with the following wise words:
“Finally, to return to the subject of mediation, I would still encourage the parties in this case to consider mediation or negotiation. Without ascribing blame to either side, it seems to me that the current lack of engagement may be partly due to a mutual misunderstanding of each side’s position, with megaphone diplomacy shedding more heat than light. While I make no direction, I do consider that each side and their advisors would be wise to reflect at this stage on the possibility of a mediation or similar process (without preconditions) before even more significant costs are incurred.
Indeed, in most disputes, prudent litigants - plaintiffs or defendants - and their advisors, will reflect upon the alternatives before proceedings are issued. This is particularly important in family, business and partnership disputes, but it is always wise for parties and their advisors to consider the alternatives before assuming the costs and risks of litigation. Section 14 simply underscores the importance of good professional practice in this regard.”

My ongoing doctoral research on the attitude of Irish solicitors towards mediation, confirms that the majority think that ADR ("Alternative Dispute Resolution") really means "Alarming Drop in Revenues".

This week, a UK decision proved that failure to use ADR & to pursue litigation, can lead to an alarming drop in revenues - a 25% penalty/reduction in recoverable costs!

Following the UK judgment of HHJ Mithani KC in Conway v Conway & Anor (Rev1) [2024] EW Misc 19 (CC) (https://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/Misc/2024/19.html&query=(Mithani)stand) there was an decision on the costs implications of a rejection of an offer to mediate. In his substantive judgment HHJ Mithani KC had said:

“I will deal with any outstanding matters and the issue of costs when I hand judgment down. One matter that seriously concerns me is why the Defendants did not agree to mediation when it was put to them. The importance of mediation can never be over-emphasised... The Defendants will have to advance compelling reasons why the offer of mediation was rejected out of hand by them.”

In a later ex tempore decision on costs, the defendant’s costs were reduced by 25% because they rejected the claimant’s offer of mediation out of hand, even though the judge held that:

- the defendants had a strong case, (they succeeded), &

- that mediation would probably not have succeeded.

However, he held that rejecting mediation out of hand was unreasonable.

Before proceedings were issued, the claimant’s solicitor offered mediation. There was no response. A second offer was made: the defendants replied that the dispute was unsuitable for mediation, would delay determination and increase costs, and any agreement reached at mediation would not be final and binding. The final mediation offer was made after the first day of trial (the hearing lasting 8 days in the end) when the claimant made a without prejudice offer which was rejected without counter-offer. The defendants said this final offer was ‘absurd’ and the trial went ahead.

The judge found the decision to turn down mediation in was misconceived. He added that it was not possible for the defendants to say they were almost certainly likely to win and so mediation had no merits whatsoever.

The UK ruling is another sign from the UK courts that a failure to mediate will not be tolerated. The UK Court of Appeal held last year in Churchill v Merthyr Tydfil County Borough Council that the courts could order parties to engage in ADR, or stay proceedings to enable them to engage.

Will the Irish Courts follow suit? Section 16 of the Mediation Act 2017 allows a court to adjourn proceedings to enable parties to engage in ADR and Section 21 allows a court to take into account:

(a) any unreasonable refusal or failure by a party to the proceedings to consider using mediation, and

(b) any unreasonable refusal or failure by a party to the proceedings to attend mediation

Watch this space!

The dangers in the United States of the mediator within you coming out when you see a customer involved in a dispute at McDonald's.

The Injuries Resolution Board commenced offering mediation on the 14th December 2023 with the service initially being offered in employer liability claims.
From tomorrow, Claimants and Respondents will also be able to opt for mediation as a method of resolving claims arising from public place accidents, and all application forms will be updated to include mediation in both employer liability and public liability claims.
Attached is an information note on the changes with further details of how mediation will operate and how to contact the IRB, if you have queries about the new service.
Mediation will be made available in motor liability claims later this year.

Costs penalty for failure to respond to an invitation to mediate.

There was an interesting decision handed down this week by the UK Court of Appeal in Northamber PLC v Genee World Ltd & Ors (Rev1) [2024] EWCA Civ 428. https://lnkd.in/e24qxwFB

In a pre-trial directions hearing, on 5 October 2021 DJ Rouine had made a very interesting case management order, paragraph 7 of which provided as follows:

“At all stages the parties must consider settling this litigation by means of alternative dispute resolution. Any party not engaging in any such means proposed by another must serve a witness statement giving reasons within 21 days of that proposal; such witness statement must not be shown to the trial judge until questions of costs arise.”

Having regard to section 21 of the Mediation Act 2017 which provides:

"21. In awarding costs in respect of proceedings referred to in section 16, a court may, where it considers it just, have regard to— (a) any unreasonable refusal or failure by a party to the proceedings to consider using mediation, and (b) any unreasonable refusal or failure by a party to the proceedings to attend mediation, following an invitation to do so under section 16(1)."

Section 16 (1) allows the court to invite the parties to consider mediation as a means of attempting to resolve the dispute the subject of legal proceedings.

I wonder will any Irish judge be brave enough to follow the example of DJ Rouine in routinely issuing invitations to mediate, and making similar directions for the filing of statements as to the reasons why ADR and mediation in particular would not be considered. Such a standard practice would certainly focus the minds of litigators.

In the UK Court of Appeal decision, Lord Justice Arnold imposed a costs penalty on defendants for not responding to the plaintiff's invitation to mediate, proving that silence was indeed golden, but only for the plaintiff who did not receive a response to their invitation to mediate.

Peter O’Malley Chair of the Irish Branch of the Chartered Institute of Arbitrators Irish Branch is opening the AGM while Dermot Durack, incoming Chair, is patiently waiting his turn.

The Mediators Institute of Ireland is advertising for a new CEO.
Closing date 10 May.

Does Mandatory Mediation Work? Perspectives from the U.K., India, and Nigeria
Monday, 18 March, 2024 16:00-17:00 via Zoom: https://uchastings.zoom.us/j/99007155842

Interesting comment by Costello J in the case of Mascarenhas -v- Karim & Anor [2022] IECA 48 where the court (Costello, Haughton and Collins JJ) considered the question of costs and mediation and possible deductions from costs on the basis of the behaviour of the parties, in particular the response to invitations to mediate before proceeding to hearing.

Having found that the applicant had been "entirely successful within the meaning of section 169 of the Legal Services Regulation Act 2015 and he is entitled to his costs against both appellants, jointly and severally, to be adjudicated in default of agreement", the court considered making a deduction of 10% from that award because the applicant "was less than candid with the High Court and this [Appeal] court", this being "a matter to which the court may have regard when ruling on costs (s. 169(1)(a) and (c))".

However, highlighting the importance of responding to invitations to mediate, the court held that "the appellants have equally conducted the litigation in a manner which this court cannot condone and they twice refused the opportunity to resolve the dispute by mediation. For this reason, I would not in fact make any deduction from the costs of the applicant in conducting the two appeals".

Simple lesson – Fail to mediate, and suffer on costs.

The Public Appointments Service has advertised for applications for 4 lay Members of the Judicial Appointments Commission:
https://www.publicjobs.ie/en/job-search?category=17&county=&searchphrase=Lay%20Members%20of%20the%20Judicial%20Appointments%20Commission
The Commission will be composed of 4 lay persons and 4 judges, with the Attorney General serving as an ex-officio, non-voting member of the Commission. The appointment of skilled lay members is described as an important aspect of ensuring that the work of the Commission will be carried out to the highest standards.

One for the weekend.

A few years ago, I was in Florida and I met up with a group of mediators there, to talk about how things work in the US when it comes to mediation practice. As I'm sure you can appreciate, there are "regional" differences from time to time and in how lawyers and mediators do things.

Believe it or not one of the Mediators specialised in pet custody mediation. She did nothing else. Divorcing couples would ask her to mediate over the custody issue of who would get the family pet. Somehow I can't see that as being a very viable business model here, whatever about in Florida.

Enjoy your weekend.