Does anybody remember the 1970s TV series M*A*S*H which featured the antics of a Korean War American Army Field Hospital?
In one episode, the Commanding Officer, Henry Blake, and his company clerk, Radar O’Reilly are doing some paperwork. This essentially involves Radar thrusting unintelligible pieces of paper under Henry’s nose and getting him to sign them. One piece of their conversation goes something like this…
Henry “Radar, do you understand any of this stuff?”
Radar “Oh, I try not to Sir”
Sometimes, the law can be like this leaving the Henry Blakes of this world bemused and wondering what is going on, particularly as even in the best conducted civil cases tactics, paperwork and complex procedural requirements appear to take precedence over other considerations such as justice and common sense.
I was reminded of Radar’s remark recently whilst I was re-reading a November 2015 commentary of a Court of Appeal case, NJ Rickard Ltd -v- Holloway (Rickard) (England and Wales)(CA 03/11/2015). It was posted on the Nearly Legal blog, a housing law update which is selflessly and brilliantly written by Giles Peaker, a solicitor and housing specialist.
Rickard concerned a court costs issue that resulted in a hearing in the Court of Appeal. In this case, a landlord issued court proceedings claiming reimbursement for unpaid rent with interest and also seeking substantial damages on the basis that his tenant had physically damaged his property. The tenant counterclaimed, challenging the landlord’s identity and alleging that he had both failed to carry out repairs and interfered with his right to “quiet enjoyment” of the property.
During the proceedings, the tenant made a number of requests for the case to be referred to mediation, all of which were ignored. On the other hand, at one point the landlord made what is termed “a drop hands” offer i.e. each side withdrawing and bearing his own costs. In making this offer, which was apparently rejected out of hand, the landlord purported to do so within the ambit of Part 36 of the Civil Procedure Rules, the rules that govern the conduct of civil court cases in England and Wales.
Essentially, Part 36 contains a sequence of provisions which, subject to certain very specific, some might say rigorous requirements being complied with, are intended to encourage disputing parties to resolve or settle their cases early on.
Initially Rickard went to trial with something of a mixed outcome. On the identity point, the trial judge found for the landlord. The judge also upheld the landlord’s claim for rent arrears and interest and awarded him £16,000.00. As regards the counterclaim the judge found that the landlord had breached his tenant’s rights of quiet enjoyment but in this regard awarded only nominal compensation. However, the judge did accept that the tenant’s disrepair claim was valid and in this regard directed that the landlord should pay damages of £7,000.00. Effectively, the landlord recovered the quite modest sum of £9000.00.
At the conclusion of the trial, the landlord’s costs were £100,000.00 and the tenant’s were £85,000.00 –
When considering the question of costs the trial judge concluded that for the purposes of the aforementioned Part 36, the landlord’s offer was valid and awarded him quite substantial costs. The tenant disagreed and appealed to the Court of Appeal contending that the requirements of Part 36 had not been complied with.
In finding for the tenant the Court of Appeal determined that a critically important notice period had not been properly expressed in the landlord’s offer of settlement. The court also went on to look quite extrinsically at the manner in which the proceedings had been conducted.
The tenant was criticised for having not considered the landlord’s settlement offer. However the landlord was criticised for not responding to the tenant in respect of the mediation issue. Ultimately, in deciding that each side should bear its own costs the court concluded that although the tenant had “lost” because the landlord had been awarded more compensation, the tenant had succeeded on a greater number of his points of claim. Additionally the Court of Appeal looked at how much time the parties took to pursue their respective cases.
The Court of Appeal held that the landlord’s offer had been realistic and that the tenant should have given it due consideration. However, the tenant had repeatedly requested mediation and received no response. Silence towards an offer of alternative dispute resolution was itself unreasonable and no dispute was too intractable for mediation.
Additionally in noting that costs of £185,000 had been incurred, the Court of Appeal quite rightly criticised both parties for having spent so much money litigating over so little. The Court also quite emphatically stated that a very strong case had been made for there being some form of limitation on the costs recoverable in cases such as this.
What can be learned from Rickard?
All too often civil mediations take place at a relatively late stage in individual court cases by which time is likely the parties will already have incurred very substantial costs. The obvious point for civil and workplace mediators is that they should be sure that at every point in a mediation process including the bit at the end of the day when the agreement is drawn up, the parties are able to access legal advice and that particularly when a difficult issue, including a costs issue arises, it is strongly recommended that they consult with their lawyers.
Disputing parties should keep a close eye, not just on their opponents and their lawyers but also on their own advisors and ensure that costs wise they are kept up to date. Lawyers who may at some point in the future find themselves subject to court rules imposing cost capping should be very wary about vigorously disputing every single point in a particular case and should ensure that they give their clients comprehensive advice not just about whether they will “win” or “lose” but also in respect of costs. Many lawyers will vigorously claim that they do so but given what transpired in Rickard one suspects that this is not always the case.
The courts have powers to impose heavy costs penalties on those who behave frivolously or vexatiously and increasingly, these powers are being used. Accordingly, not least in the light of the comments made by the Court of Appeal in Rickard, lawyers and their clients should think very carefully before rejecting offers of settlement. Equally, as well as being very circumspect not only about ignoring or refusing requests from their opponents for mediation, they should advise their clients about this all important option at the first available opportunity and spell out the consequences of them declining or refusing to mediate.
Part 36 of the CPR is there for a reason and particularly as it is necessary to ensure that such provisions are not exploited by the greedy and the avaricious, safeguards are necessary.
However, one cannot help but question whether the Part 36 rules are unnecessarily complex, some might say labyrinthine, to the point that they effectively defeat their own object and that in reality, the tail really does wag the dog. It is not difficult to imagine a hapless Henry Blake figure having difficulty understanding the Part 36 provisions and quite possibly either falling foul of them or not being able to use them to best effect. Although he should be criticised for rejecting the request for mediation, it appears that the landlord’s settlement offer was not a frivolous one and one cannot help but notice that what many impartial observers might see as a sensible suggestion was allowed to fail because of what might be termed a technicality”.
It is perhaps deeply ironic that having considered the relevant legal provisions in some detail, the Court of Appeal ultimately disposed of this case in a manner that give or take what in the scheme of things is a quite trifling sum of £9000.00 was quite reminiscent of the landlord’s initial offer. Had he been observing the proceedings, Henry Blake may well have been observed to scratch his head and ask if it had all been worth it!
The pragmatic views expressed by Court of Appeal In this case are to be welcomed and one sincerely hopes that they will prompt a revision of Part 36. However, although the Court of Appeal should not in any way be criticised for what happened before it became involved, one cannot help feeling that in its judgment there is an element of the stable door being closed after the horse has bolted.
It is by no means uncommon for members of the senior judiciary in England and Wales to express concerns about cases such as Rickard. However, one does wonder if the message really is percolating down to those such as district and circuit judges who sit in the courts of first instance which deal with the vast majority of civil claims and who have an important overseeing role. It is they who should be setting the agenda and in the absence of individual litigants or their lawyers doing so, it is they who should be asking questions about issues such as mediation and costs limitation at the earliest available opportunity. If cases such as Rickard that benefit no one are to be avoided it is these lower court judges who should routinely take a much more proactive stance.
As has been mentioned in a previous ASM blog, although the views of seemingly intransigent government ministers and servants cannot be disregarded, the process of making a relatively small number of changes to the existing court rules should not be too difficult a task for the senior judiciary to oversee. It may be that the impending summer recess will provide an opportunity not just for reflection but also for meaningful change.
I suspect that whether as litigants, taxpayers or simply innocent bystanders the Henry Blakes of England and Wales are in truth the majority of the population. They are ill served by some aspects of a court system which as this article demonstrates, are ripe for some long overdue changes.
Principal Director of ASM PLUS, civil/commercial, workplace, employment, family and educational mediator and trainer with a judicial/legal background. He has knowledge and expertise in dispute resolution in a wide range of areas and disciplines and mediates online.