The general rule in civil litigation is that costs follow the event: the unsuccessful party pays the successful party’s costs. But the rule is a starting point, not a guarantee, and the court has a wide discretion — under CPR Part 44 — to take the conduct of the parties into account. For twenty years, one species of conduct has attracted particular judicial attention: the unreasonable refusal to engage in alternative dispute resolution.

The Halsey principles

In Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576, the Court of Appeal confirmed that a successful party may be deprived of some or all of its costs if it unreasonably refused to mediate. The burden lies on the unsuccessful party to show that the refusal was unreasonable, and the court will consider all the circumstances, including:

  • the nature of the dispute, and whether it was in truth suitable for mediation;
  • the merits of the case, and whether the refusing party reasonably believed it was strong;
  • whether other settlement methods had already been attempted;
  • whether the costs of mediation would have been disproportionately high;
  • whether any delay in arranging mediation would have been prejudicial; and
  • whether the mediation had a reasonable prospect of success.

Silence is not an option

The jurisprudence has only hardened since. In PGF II SA v OMFS Company 1 Ltd [2013] EWCA Civ 1288, the Court of Appeal went further: a party who simply ignores a serious invitation to mediate acts unreasonably as a general rule, whatever the merits of its position might have been. Silence, in other words, is itself a sanctionable refusal. And in Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416, the Court of Appeal confirmed that the courts may lawfully stay proceedings and order the parties to engage in non-court-based dispute resolution — laying to rest the notion that participation is always and entirely voluntary.

What this means in practice

The practical consequences for any litigant are three.

First, treat every invitation to mediate as a document that a costs judge will one day read. If you decline, decline in writing, promptly, and with reasons that engage the Halsey factors — and be prepared to have those reasons tested.

Second, do not confuse confidence in your case with immunity from sanction. Parties who won at trial, comprehensively, have nonetheless been deprived of substantial portions of their costs because they refused a process that might have spared everyone the trial altogether.

Third, and most importantly: the cheapest way to avoid the sanction is to accept the invitation. A mediation costs a fraction of a trial, concludes in a day, and fails — when it fails — without prejudice to any position. Measured against the risk of an adverse costs order, the reasonable course is rarely in doubt.

The courts have made their policy plain. The party who refuses to talk should expect the refusal to carry a price.