The short answer (reinforced in the recent Court of Appeal judgment in Gore v Naheed) is no, provided there are good reasons for the refusal.

Fifteen years have now elapsed since the Court of Appeal in Dunnett v Railtrack Plc (2002) highlighted the need for lawyers and litigants to consider Alternative Dispute Resolution (ADR), failing which a successful party might be penalised in costs. Mediation is the most common form of ADR.

In 2004 in Halsey v Milton Keynes General NHS Trust, the Court of Appeal laid down some helpful guidelines as to whether a party was acting unreasonably in refusing to participate in ADR. These include the nature of the dispute, where the merits lie, what other attempts to settle have been made, whether the costs of mediation are disproportionate to the dispute, the prospects of success at mediation and whether mediation might delay the trial.

In PGF v OMFS (2013) the Court of Appeal, following Halsey, dealt with the question of silence in the face of an invitation to participate in ADR.  It concluded that, as a general rule, such silence would of itself be unreasonable, regardless whether an outright refusal might have been justified by the identification of reasonable grounds.  But the court reiterated that the trial judge retains a discretion and there would be no automatic imposition of a costs penalty.  It is simply one aspect of the parties’ conduct which needs to be addressed in a wider balancing exercise.

Gore v Naheed was a case that involved a dispute between neighbours as to the extent of an easement created almost a century ago over a common driveway.  The claimant declined to mediate because he felt that mediation had no realistic prospect of success and would only add to the costs.  He preferred that the extent of the easement should be clarified by a court.

The claimant won his case in the county court and was largely successful in the Court of Appeal. The Court did not regard his refusal to mediate as unreasonable.

Lord Justice Patten, giving the judgment of the Court of Appeal concluded:

“I have some difficulty in accepting that the desire of a party to have his rights determined by a court of law in preference to mediation can be said to be unreasonable conduct particularly when, as here, those rights are ultimately vindicated…a failure to engage, even if unreasonable, does not automatically result in a costs penalty.  It is simply a factor to be taken into account by the judge when exercising his costs discretion.”    

In summary, a litigant will not necessarily be penalised in costs if they refuse to mediate, but he or she must provide clear and good reasons to refuse an opponent’s invitation to mediate and must not ignore it.

Mediators and litigants will have experience of seemingly intractable disputes being resolved with the aid of a skilful and experienced mediator. A refusal to mediate is not a decision to be taken lightly and should always be carefully considered and then explained.