Parties’ refusal to mediate or explore other forms of ADR during litigation may affect award of costs at the end of a case.  

The UK Court of Appeal in Rolf v De Guerin EWCA Civ 78 in February 2011 reconfirms this principle first introduced in the UK in, Dunnett v Railtrack EWCA Civ 302.   

Rolf involved a low value building claim between householder Rolf and construction company De Guerin for a domestic project. While Rolf at trial won on various points, costs were awarded to De Guerin which did not “follow the event” as would be usual at common law.  The Court of Appeal overturned the costs finding against Rolf and substituted no order for costs.  

The Court of Appeal decided that “parties should respond favourably to offers to mediate or settle and their conduct in this respect can be taken into account in awarding costs”.  This was based on the De Guerin’s refusal to have a settlement or mediation meeting.  

Reference was also made to the UK Jackson Report on the Review of Civil Litigation Costs emphasising the need to mediate generally and particularly on low value construction disputes.  

While the Irish courts are not obliged to follow these cases, they are likely to be of persuasive authority. This principle is also likely to come under the spotlight as Ireland is due to implement the Mediation Directive 2008/52/EC by May 2011.  

The Irish Law Reform Commission addresses these points in the draft Mediation and Conciliation Bill which was published in November 2010 which would, amongst other things implement the Directive.  

Section 18 of the Mediation and Conciliation Bill provides that the fundamental issue a court should consider where it has invited parties to consider using mediation or conciliation and is awarding costs in proceedings connected with that invitation, is if such a process would have a reasonable chance of success.   

As the Bill progresses it will be interesting to see if or how decisions such as Rolf are addressed and how it will affect parties going forward.  

For further information contact Cassandra Byrne, Associate or Jarleth Heneghan Partner, Projects and Construction Department.