Unreasonable stance in mediation relevant to costs

In Earl of Malmesbury v Strutt and Parker and ors [2008] EWHC 424 (QB), Jack J considered the relevance to costs of the fact that the claimant had adopted a wholly unreasonable stance in a mediation which it had attended. The relevant conduct was the fact that the claimant's best offer at the mediation had been unreasonably high, and had been based upon the claimant succeeding at a forthcoming damages hearing and at an appeal from a decision on issues of law relating to the proper measure of damages. The claimant's stance was unrealistic and led to the judge imposing a 20% reduction of the costs recoverable in relation to the hearing on damages.

As a matter of law, the extension of the principle in Halsey to unreasonable conduct in the mediation is logical. However, in this case the judge was able to consider the relevant evidence because both parties had waived any privilege over the WP material generated in and in connection with the mediation. In the absence of such waiver, it may be very difficult to establish any unreasonable conduct such as may give rise to a reduction in costs.