A Judge’s Order to Mediate – A New Zealand Perspective

by Tony Allen

A special thanks to Nina Khouri for highlighting this decision.

“One Factor Among Many”

My article “One factor among many: sanctioning refusal to mediate” noted a trend among some judges of flinching from imposing costs sanctions on a party who refused to mediate, even unreasonably.

Costs sanctions are currently the highest form of intervention that courts will adopt for such a failure.  Although the Civil Justice Council report Compulsory ADR suggested that mandating mediation was not only lawful but desirable, nothing has yet come of that in practical terms.  The only provision in the CPR for ordering ADR in non-family civil claims in in CPR3.1(2)(m), which provides that:

(m) take any other step or make any other order for the purpose of managing the case and furthering the overriding objective, including hearing an Early Neutral Evaluation[1] with the aim of helping the parties settle the case.

Lomax v Lomax

Lomax v Lomax[2] glossed over that provision by finding that the court could order a judicial evaluation even if one party opposed the idea.  Counsel for the party opposing a judge-made evaluation order cited Halsey v Milton Keynes NHS Trust, seeking to argue that ENE (by analogy with mediation) could not be ordered without consent of the parties, and that if one party said no to ENE it could not be required of them by court order.  The crucial part of the appeal judgment in Lomax reads:

  1. I do not consider that Halsey v Milton Keynes assists with the proper interpretation of subparagraph (m) because it was dealing with a very different situation. It was concerned with whether a court can oblige parties “to submit their disputes to mediation”.  It does not, therefore, in my view assist with the interpretation of subparagraph (m), which is dealing with an ENE hearing as part of the court process.
  1. In any event, ENE does not prevent the parties from having their disputes determined by the court if they do not settle their case at or following an ENE hearing. It does not, in any material way, obstruct a party’s access to the court.  Insofar as it includes an additional step in the process, this is not in any sense an “unacceptable constraint”, to use the expression from Halsey.  In my view, it is a step in the process which can assist with the fair and sensible resolution of cases.   

These comments are both right and wrong!  Halsey was not strictly about whether courts could order ADR against a party’s wishes, but whether a party who turned down an inter-party proposal to mediate could or should be penalised in costs for that refusal.

Article 6 ECHR

Unfortunately (and much criticised ever since, even to the extent of a public recantation on this point by Lord Dyson who delivered the Halsey judgment!) the court chose to make what were undoubtedly obiter observations on whether courts could order ADR against a party’s wishes as well – primarily, it was argued, on the basis that such an order would offend access to a public trial as required by Article 6 of the ECHR.  But no court order to mediate had been made in Halsey, yet the Court of Appeal strangely devoted half its judgment to a theoretical proposition unrelated to the facts of the appeal[3].

Strikingly the point made in para 25 of the Lomax appeal judgment quoted above precisely supports the criticism that was made of the Halsey comments on mandating ADR, which was said to obstruct the path to court on the ECHR Article 6 point.  At last, the Court of Appeal has acknowledged in a formal judgment that ordering an ADR process does not obstruct the path to court or offend Article 6.

In Lomax this referred to ENE, but the same is just as true of mediation.

Substitute the term “mediation” for “ENE” in para 25 above and this is readily demonstrated.  This has always been true, and sadly the Court of Appeal got this wrong in Halsey.  In Halsey[4], at least one party said they had wanted to mediate while the other had refused.  In a decision shortly after Lomax – McParland & Partners v Whitehead[5] –  Sir Geoffrey Vos MR coyly raised the possibility that Lomax  meant that courts could (as he seemed to want to) order mediation.   Even in Lomax, Moylan LJ adds:

I would only comment that the court’s engagement with mediation has progressed significantly since Halsey was decided. 

Venning J in Wright v Pitfield and Wright

Very interestingly, this last sentence from Lomax is also quoted in the judgement of Venning J in Wright v Pitfield and Wright[6],  a decision in the New Zealand High Court in March 2022.  This was a Trusts Act 2019 dispute between trustees over the disposal of property within a trust.  Trial was due in three months time.  The second respondent sought an order for either a judicial settlement conference or for mediation.  The plaintiff opposed this.

High Court rules allowed a judge to order a settlement conference even if opposed by one party[7], and to order mediation if parties consent.  Additionally the Trusts Act 2019 allowed a judge to order mediation in relation to “internal matters” which Venning J found aptly described this dispute.  In refusing to order a settlement conference, he said:

10..…a settlement conference may have particular value where the judge can give the parties assistance with legal issues. But the legal issues in this case are relatively straightforward and will be well-understood by the parties given their experienced counsel. The principal issues between the parties in this case are factual and practical rather than legal.

11     Next, the conduct of a settlement conference and the techniques available to a judge at a settlement conference are quite different to the process of mediation and the tools available to a mediator. A judge at a settlement conference does not have the flexibility that a mediator has in the conduct of a mediation. If the present issues between the parties are to be resolved by way of assisted dispute resolution (ADR) I consider mediation to be the appropriate forum.

However, he decided to order the parties to mediate despite the opposition of the plaintiff, of whose view he said:

the issue before the Court concerns breach of duties as a trustee and the dysfunctional relationship between the three trustees. She says the removal of the trustee is a narrow issue, not one that lends itself to mediation. However, I consider the dispute between the parties raised on the pleadings is broader than just the issue of the ultimate relief sought. If the issues of control of the assets and sale of the principal asset can be resolved, the issue of whether one or both trustees should be removed will fall away. That supports the reference to mediation.[8]

Venning J rather dismissed Halsey, commenting that:

it can be confined to its facts. That case involved the difficult issue of whether the Court should impose a costs sanction on a successful party on the grounds they had refused to take part in ADR.

He noted that there had been considerable criticism of the decision, citing comments by Lord Phillips and Lightman J, and (as noted above) Moylan LJ in Lomax:

I would only comment that the court’s engagement with mediation has progressed significantly since Halsey was decided. 

Of course Venning J was able to rely on a specific permitting provision in the Trusts Act 2019, whereas the only CPR provision currently in force merely permits judicial evaluation.  In buttressing his decision, Venning J commented:

42    To require Ms Wright to attend mediation is not to deny her access to the Court. There is a fixture date for her proceeding. The substantive hearing in this Court is scheduled for 20 June 2022. That fixture remains in place. There will be time for the parties to engage in a mediation in advance of that date.

43    There will be additional costs incurred in the mediation, but against that, there is the chance of avoiding the costs of the hearing itself, if not the preparation for it. Further, removal of one, or both of the trustees will not necessarily see all of the issues between the parties concerning control of the trust property resolved whereas a mediation may achieve that.

44   It is also relevant that if the matter is resolved at ADR that would maintain commercial confidentiality. A public dispute in this Court between the parties will not enhance the prospects of sale of the principal asset or the value at which that principal asset, namely New Zealand Hearing Ltd, or its shares can be sold.

Venning J’s decision reads:

47    For the above reasons I consider the interests of justice support the application. There will be an order accordingly requiring the parties to this matter to participate in a mediation process in person (although they may be accompanied by their legal representatives). The Hon Rhys Harrison QC is to be the mediator. The costs of the mediation are to be paid out of the trust property.

The emboldened phrase reminds us that “the interests of justice” may take on different meanings in different jurisdictions.  In England & Wales they have been used to underline the court’s paramountcy[9].  In New Zealand a wider view is articulated here.

Finally, perhaps the most telling part of Venning J’s judgment appears as the addendum at para 51, which reads:

Following the delivery of the judgment, the parties attended mediation on 29 April 2022, with the Hon Rhys Harrison QC. The parties settled all issues between them at the mediation.

I have argued before that judges are really never aware of the fact that mediation settles huge numbers of cases which would otherwise require trial, and that a small step towards correcting this would be for Tomlin Orders to be required to show that settlement was reached at a mediation on a given date.

It is good to see that in New Zealand at least, the civil justice system was assiduous in checking the result of ordering mediation where one party had opposed it but had still settled.

The quotation by Venning J from Lord Phillips makes a good postscript to this article:

Those opposed argue that compulsion is the very antithesis of mediation. The whole point of mediation is that it is voluntary. How can you compel parties to indulge in a voluntary activity? ‘You can take a horse to water, but you cannot make it drink’. To which those in favour of compulsory mediation reply, ‘yes, but if you take a horse to water it usually does drink.’ Statistics show that settlement rates in relation to parties who have been compelled to mediate are just about as high as they are in the case of those who resort to mediation of their own volition.

The Power to Order Mediation

Wright v Pitfield is a vivid example from New Zealand of a horse drinking despite previous reluctance to come to the water.

Surely it is time to give judges in England & Wales the power to order even a reluctant party to mediate wherever necessary.

The voluntariness of mediation relates to continued participation in the process once started, and as Venning J noted, being ordered to mediate does not deprive a party of access to a trial, and there is no evidence of lower settlement rates where parties are compelled to attend.

Any party to a mediation can always choose to reject unacceptable terms and revert to litigation without opening themselves to criticism and without having compromised their case in any way, as New Zealander and CEDR CEO James South’s article Mandatory Mediation – everything you need to know[10] makes clear.

It is also noteworthy that the New Zealand court was able to commend and approve the identified mediator.

While it is sensible for there to be broader regulation of mediation standards in the UK there are nevertheless a large number of extremely skilled and experienced mediators available now, in possession of internationally recognised accreditation and who are well known to all levels of the legal profession.

These mediators are capable of mediating any kind of dispute and already do so.  With the courts under such pressure and with litigants and judges keen to see resolution achieved as early as possible, the time has surely come for automatic mediation to be acknowledged for all but exceptional situations, always allowing judges to satisfy themselves where necessary that mediators under consideration are suitably qualified and that the timing is right.

The English Commercial Court has been exercising this form of oversight for nearly twenty years.   Judicially ordered mediation has no need to wait for greater regulation of mediators, as good ones are in place already.

Generally applicable automatic referral in non-family civil cases certainly needs to be based around referral to properly qualified and registered mediators, probably with the Civil Mediation Council.

Meanwhile, there may be a case for piloting automatic requirements for mediation – even at pre-issue stage – in a sector or sectors where mediation is already firmly established with skilled mediator panels in place, such as in clinical negligence.

[1]   As was pointed out forcefully in the Civil Justice Council Working Party report ADR and Civil Justice, the “Early” in ENE is usually a misnomer, as a sound evaluation is rarely possible before considerable evidence has been assembled.

[2]   [2019] EWCA Civ 1467

[3]   With supreme irony, Parker J at first instance in Lomax refers to an appeal judgment by Ward LJ (who had actually presided over the court in Halsey, albeit that the judgment was given by Dyson LJ) in which he suggested that Halsey was wrong in this point.  Parker J quotes as follows:

In Wright v Wright [2013] EWCA Civ 576 Ward LJ stated that he may been wrong in Halsey to have been persuaded that to order the parties to mediate would contravene Article 6 of the European Convention on Human Rights; but he did not form a clear conclusion; and the point was not in any event before him.

The irony is that the Halsey finding as to contravention of Article 6 was equally a point that was not or should not have technically been before the Halsey court either

[5] [2020] EWHC 298 (Ch)

[6]  [2022] NZHC 385

[7]  Matching the provisions of CPR 3.1.(2)(m) and Lomax v Lomax

[8]   At para 27.

[9]   See my article The security of mediation and “the interests of justice”

[10]  https://www.cedr.com/mandatory-mediation-everything-you-need-to-know/

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