The cost of professional discourtesy

The most frequently complained about breach of etiquette in this age of constant cyber communication is the failure to reply to an email. In the legal world, it is quite common for solicitors to receive an email or letter from the other side without responding, particularly if it contains an offer to settle the dispute which their client is not going to accept. Two recent Court of Appeal decisions suggest this is a practice that is going to have to change.

Request to mediate

The first of these cases is PGF II SA v OMFS Co Ltd. A serious and carefully formulated written invitation by the claimant's solicitors to participate in mediation was met with complete silence by the defendant. The offer was repeated just over three months later and, despite promising a full response, the defendant's solicitors never replied to it.

The Court of Appeal held that a refusal to respond to an invitation to mediate is in itself unreasonable conduct which may merit a costs sanction. It upheld the decision below depriving the defendant of the costs it would have been entitled to under CPR 36.14 during the nine months delay before its Part 36 offer was accepted by the claimant.

This decision was made against the backdrop of the recently published Jackson ADR Handbook. This was prompted by Jackson LJ’s conclusion in his Final Report that a culture change was needed among the civil litigation community so that the widespread benefits of participating in ADR were better recognised.

The Court of Appeal accepted the claimant’s argument that a civil litigant's first duty in response to an invitation to mediate is to engage with it, rather than ignore it, even if this ultimately leads to a refusal.

Settlement offers

The week following the decision in PGF, the Court of Appeal again commented on the significance of replies to letters concerning settlement. In Thinc Group Ltd v Kingdom the claimant rejected two Calderbank offers in one-sentence letters. The court didn’t accept the argument that the reason why the offers were unacceptable was implicit in these letters. Rejecting the characterisation of the claimant’s approach as “robust”, it preferred to describe it as “peremptory, dismissive and uncooperative”.

Several months after the defendant’s offers, the claimant made a Part 36 offer. In response, the defendant asked for details of the claimant’s costs “in order that we may properly consider the offer made”. This letter was never replied to during the five months that followed before the trial took place.

Silence - not golden but plain rude

The Court of Appeal described the claimant’s approach as one of professional discourtesy. It upheld the judge’s decision depriving the claimant of a significant part of its costs and ordering the claimant to pay the defendant’s costs for the period following the latter’s Calderbank offers, even though the claimant had done better than its Part 36 offer. The unfortunate features of the claimant’s conduct of the litigation as a whole entitled the judge to conclude that it would be unjust to apply the automatic costs consequences under CPR 36.14.

Providing details of costs

The Court of Appeal’s decision in Thinc Group could be criticised for its failure to refer to Mehjoo v Harben Barker, where the provision of information about costs was considered earlier this year in the context of Part 36. Silber J held that the fact that the claimant had not provided the defendant with requested details of his costs was not a ground for depriving him of the CPR 36.14 costs consequences. Nothing in CPR 36.2 requires details of the costs of the party making the offer to be included in the offer or to be supplied.

While it would have been preferable had the Court of Appeal in Thinc Group referred to Mehjoo, it is pretty clear that its decision would have been unaffected. The judge’s discretion to refuse to apply the automatic consequences under CPR 36.14 because it was unjust to do so was not fettered by the absence in CPR 36.2 of any requirement for the offeror to provide details of their costs. In the new world of costs budgets, the idea that a party could legitimately refuse to provide details of their costs to the other side is beginning to sound strange.

No more discourteous litigation

The real issue in Thinc Group, however, was the discourtesy of failing to reply to the defendant’s request. Holroyde J made the same point a few months ago in Parkin v Alba Proteins Ltd when he said “it is a regrettable feature of the evidence that letters sent by the claimants' solicitors have frequently received no reply”. And the Court of Appeal reminded us this month in Boyle v Commissioner of Policy for the Metropolis that “the whole thrust of the CPR regime is to require the parties to behave reasonably towards each other in the conduct of litigation”.

Don’t bother to appeal

Another message to come loud and clear from these decisions is that the Court of Appeal is going to uphold discretionary costs (and case management) decisions even where they are more draconian that it would perhaps have liked.

In PGF Briggs LJ said: “The court's task in encouraging the more proportionate conduct of civil litigation is so important in current economic circumstances that it is appropriate to emphasise that message by a sanction which, even if a little more vigorous than I would have preferred, nonetheless operates pour encourager les autres.”

Practice points for solicitors

• Reply courteously to all correspondence from your opponent, even if you can’t provide a substantive response immediately
• Ensure that invitations to mediate are well-thought out and convey a serious intent to attempt to settle the dispute
• Never reject a suggestion of mediation without providing considered reasons
• Do not assume that a bare rejection of an offer is a satisfactory response
• Respond carefully to any request by the other side for up-to-date costs information
• Remember that all your emails and letters (or lack of them) may end up being scrutinised by the court
• Avoid behaviour that could be seen as discourteous by imagining in all cases that you are dealing with a litigant in person