Potential Costs Implications if Due Consideration is not given to Mediation in Legal Proceedings

 

Section 14 of the Mediation Act 2017 provides that there is a legal obligation on a Practising Solicitor, prior to issuing proceedings, to advise the client to consider Mediation, as a means of attempting to resolve the dispute, which will be the subject of the proposed proceedings, and to provide information with respect to the availability of Mediation Services, together with details of the benefits of resolving the dispute by way of Mediation, and other ancillary matters.

The relevant section also provides that the Solicitor must swear a Statutory Declaration confirming compliance with the obligations imposed upon the Solicitor under the Section, at the same time as issuing the proceedings.

Section 21 of the Mediation Act 2017 provides that in dealing with the issue of legal costs, the Court can have regard to the failure of any party to consider the use of Mediation.

In a recent High Court judgment delivered by Mr. Justice Kennedy of the 5th of June 2024, in the case of Byrne v Arnold, Mr. Justice Kennedy considered the costs implications of a failure on the part of the Solicitor acting for the Plaintiffs, to issue the appropriate advices, in relation to Mediation, as set out in Section 14 of the 2017 Act, and the consequent failure to swear a Statutory Declaration, confirming compliance with the Section, at the time of the issuing of the proceedings.

In this case, Mr. Justice Kennedy, applied a 5% reduction in relation to the Order for Costs in favour of the Plaintiffs, which was specifically intended to reflect the default on the part of the Plaintiffs with respect to compliance with Section 14 of the Mediation Act 2017.

Mr. Justice Kennedy went on to state: –

“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”.

In this case, during the hearing of the action, the Court enquired, as to the position with respect to compliance with Section 14. The 2017 Act obliges the Court to adjourn proceedings, in the event of any failure to meet the requirement. The Judge rose to allow the advices to be provided, in accordance with Section 14 of the 2017 Act. The Court also made it clear that the Court would not necessarily extend such latitude in future if such situations were to recur.

The statutory obligation under Section 14 is a mandatory one, made in the public interest, which creates a legal obligation on Practising Solicitors, to furnish detailed advices, to prospective Plaintiffs, in relation to Mediation, as an alternative to the Courts, and it is clear from this Judgment that the Courts will, impose sanctions, particularly in relation to costs, in circumstances where this mandatory obligation has not been complied with.

Pat Mullins
Partner
CEDR Accredited Mediator
O’Flynn Exhams LLP
Solicitors