PGF applied again – Don’t ignore a request to mediate!

January 4, 2016

In a case for rent arrears of £6,000 and other claims on both sides, the legal costs amounted to £100,000 on one side and £85,000 on the other (NJ Rickard Ltd v Holloway & ors, CA (Civ Div) 03/11/15 unreported).  The word disproportionate springs to mind. The Court of Appeal stated ‘those circumstances made as strong a case as was possible that there should be some form of limitation on the costs recoverable in these cases’. It further applied PGF II SA v OMFS Co 1 Ltd [2013] EWCA Civ 1288 and observed ‘no dispute was too intractable for mediation’.

The landlord and tenant agreed that approximately £6,000 in rent arrears was owed. The tenant disputed the landlord’s other claims namely £20,000 for physical damage to the property and consequential loss of rent. The tenant argued that the breach of covenant of quiet enjoyment and the landlord’s failure to address the property’s state of disrepair outweighed the landlord’s other claims. The district judge decided that as the landlord had succeeded financially, the tenant, despite succeeding on other issues, was liable to pay the costs of the landlord’s claim for rent arrears. The tenant appealed the costs order.

The Court of Appeal stated that after much time had been taken by the landlord unsuccessfully taking numerous points it could give less weight to the fact that on balance, the landlord had ultimately been successful. The Court went on to observe that the landlord had made a ‘very realistic’ offer and the tenant should have considered it more. However, the tenant had received no response to his many requests for mediation. The Court found the district judge had insufficiently considered the parties’ conduct. In particular silence towards an invitation to engage in alternative dispute resolution was in itself unreasonable, PGF II SA v OMFS Co 1 Ltd [2013] EWCA Civ 1288, [2014] 1 W.L.R. 1386 applied. The tenant had won more issues than the landlord, even if the latter had succeeded financially. A fair and balanced approach was to make no order as to costs which is what the Court did.

Mediation would have saved both sides time, money and stress. If the Court of Appeal says ‘no dispute is too intractable for mediation’, it would be interesting to understand the reasons for parties to believe otherwise.

Garden Court Mediation

Garden Court Mediation