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Background of the case
The Court was considering an appeal relating to ownership and delivery of the gearbox to a Ferrari 250 GTO, which had cost US$44 million.
There were a number of issues with the substantive action which we will not address here but two interesting issues as regards legal procedure were raised at the end of the appeal by their Lordships.
Males LJ, agreed to by Simler LJ and Jackson LJ, commented on these two issues as referenced below:
‘It appears that the list of issues agreed by the parties in this case was produced as a result of a trawl through the pleadings, picking up every point where there was a dispute between the parties. That is not in general likely to be a helpful approach and was not in this case. Nor is it in accordance with the Circuit Commercial Court Guide, which provides at para 6.11 that “the list of issues is intended to be an agreed record of the principal issues of fact and law arising in the case” and, as such, is a key document for case management purposes. I would emphasise the word “principal”. I would draw attention also to the more detailed provisions set out at para D6.1 of the Commercial Court Guide, which also make clear that “the list should identify the principal issues in a structured manner, such as by reference to headings or chapters. Long lists of detailed issues should be avoided, and sub-issues should be identified only when there is a specific purpose in doing so”.
As these provisions explain, the list of issues is intended to be the servant of good case management. There is a danger, not altogether avoided in this case, that rigid adherence to the terms of an unduly detailed and unstructured list will obscure rather than reveal what the case is really about. At the case management conference stage when the list of issues has to be prepared by the parties and approved by the court, the court has little choice but to rely heavily on the co-operation of the parties to provide a useful list. But judges should not feel fettered by the list of issues agreed at this stage if, as the case develops, it becomes apparent that it is not serving its purpose.’
‘I have already observed that it would have been in the interests of both parties, if they were unable to resolve matters themselves, to have engaged the services of a skilled mediator at an early stage, and before this dispute escalated to court proceedings. When giving permission to appeal to this court I observed that:
“The case does not fall within the [Court of Appeal] pilot scheme for mediation, but the parties are strongly encouraged to consider attempting to resolve their dispute by mediation.”
When we asked Mr Shepherd what steps had been taken in the light of this observation, his answer was succinct. He told us that the answer was “none”. When we asked Mr Hooper the same question, he told us that in view of Mr Carl’s failure to respond to settlement offers in the past (including a Part 36 offer which had been beaten at the trial), it was not thought worthwhile to pursue this suggestion. This is highly unsatisfactory. Strong encouragement from the court to consider mediation merits careful consideration and is not simply to be ignored or rejected out of hand. Also unsatisfactory is the way in which Mr Carl’s case has changed during the hearing of the appeal. I would invite submissions as to the consequences which should follow.’
It is clear that the Courts are looking to take a more robust approach to how cases are managed with the emphasis on the parties to make it clear to the Court as to what issues are “live” so reasonable case management orders can be put in place so as to manage not just costs but the Court timetable.
It is also clear that a party or the parties’ failure to engage in mediation is likely to be frowned upon by the Court and that penalties will be applied for their failure. This is going to be an ongoing and evolving area that all Solicitors and legal practitioners need to be aware of.
Whilst this case did not at the time it was handed down address directly what penalties should be applied, in the case of Wales -v- CBRE Managed Services Ltd and Aviva  EWHC 16 (Comm) the Court penalised a party for their failure to engage in mediation by allowing only 50% of their costs for the period in which they had refused mediation up to the date when they made an offer to settle the proceedings, and then only 80% of their costs from a later date when they refused a second request to mediate.
It is a powerful tool to have in one’s toolbox if one can demonstrate to a Court that an offer for mediation has been refused by a party for an unjustifiable reason and the costs consequences that follow can be quite severe.
Ignore mediation at your peril!
At A&M Bacon Ltd, we have a team of costs experts who are well versed in the current arguments in the Courts as to conduct as governed by CPR 44.2 and CPR 44.4 and the discretion that the Courts have as to a party’s conduct. We can assist with any costs arguments that may arise out of the same. Should you have any queries in relation legal costs, please do contact our specialists and award-winning team. You can contact a team member on 01733 350 880 or visit our website www.aandmbacon.co.uk for more information.
Published 29 July 2021
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