When I deliver training on mediation to lawyers I am often asked “Can I recover the costs of a mediation?” Well the simple answer is yes – unless you agree otherwise! In National Westminster Bank v Feeney Master Campbell said “It is common ground that mediation costs are, in principle, recoverable as costs of the action... Section 4.6 of the Costs Practice Direction to CPR 43 sets out items that may be included in a bill and provides at sub paragraph (8):-work done in connection with negotiations with a view to settlement ….” In this case mediation had been used successfully to resolve a dispute concerning possession of a property in Kent and the validity of charges secured on the property by the bank, no doubt saving the parties a huge amount of time and legal fees in the process. However the mediation agreement provided as follows “Each party will bear its own costs and expenses of its participation in the mediation.”
The Tomlin order which the parties drafted and signed at the mediation was in the terms :
“(5) There be a detailed assessment of the Defendants’ costs, the Defendants being persons who are in receipt of services funded by the Legal Services Commission.
(6) The Claimant will pay the costs on a standard basis of the Defendants’ counterclaim dated 29 June 1998 (save as regards to the costs of the possession action), such costs be subject to detailed assessment if not agreed”.
Master Campbell held that this Tomlin order did not override the terms of the mediation agreement and the parties were bound the that contract in which they had agreed to bear their own costs – irrespective of the outcome.
So beware! Read the mediation agreement. It is also advisable to explain it to your client who will also have to agree sign it (this avoids the embarrassment of being asked by your client if it is OK to sign the agreement showing that they clearly haven’t seen it before). If it is worded in this way amend it or live with the consequences. My mediation agreement provides for costs in the case. I always send it out as a draft agreement and is subject to alteration subject to agreement.
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