A Reasonable Refusal to Mediate

Profession:Herbert Smith
 
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The Court of Appeal's decision in Dunnett v

Railtrack plc [2002] 2 All ER 850 highlighted the necessity for

lawyers and parties to consider ADR, failing which a party may be

penalised in costs (see Litigation e-bulletin - Issue No. 2). This has

been further highlighted by the judgment of Lightman J in Hurst v

Leeming [2002] EWHC 1051.

Background

The claimant, Mr Hurst, was a partner in a firm of solicitors which

was later dissolved. Disputes arose between Mr Hurst and his former

partners and Mr Hurst issued proceedings against them. Part way through

the trial of those proceedings, Mr Hurst instructed Mr Leeming QC

through his solicitors.

Mr Hurst lost at first instance, in the Court of Appeal and in the

House of Lords. Those unsuccessful proceedings led to his bankruptcy. Mr

Hurst blamed the failed proceedings and his consequent financial

situation on his legal advice and representation at the time he

instructed Mr Leeming. He was unable to bring proceedings against Mr

Leeming, his counsel, due to the immunity from suit for negligence in

the conduct of proceedings enjoyed by barristers at that time.

Therefore, Mr Hurst sued his solicitors, in effect as vicariously

liable for the alleged negligent conduct of the proceedings by Mr

Leeming. Mr Hurst issued these proceedings in the Chancery Division. The

action was struck out and Mr Hurst was refused permission to appeal by

the Court of Appeal. Mr Hurst then commenced fresh proceedings against

the solicitors in the Queen's Bench Division. That action was struck out

as an abuse of process.

Following the House of Lords decision in Arthur J.S. Hall &

Co. v Simons [2000] 3 WLR 543 removing counsel's immunity from suit,

Mr Hurst brought proceedings against Mr Leeming alleging negligence.

This action was dismissed by Lightman J who then had to deal with the

issue of the costs of the action. In the ordinary case Mr Leeming would

be entitled to his costs as the successful party, but Mr Hurst submitted

that no such order should be made as both prior to and after the

commencement of the proceedings, he had invited Mr Leeming to proceed to

mediation and Mr Leeming had refused.

Mr Leeming gave a number of reasons for refusing to proceed to

mediation:

the legal costs already incurred in meeting the allegations and

the threat of proceedings;

the seriousness of the allegations of professional negligence;

the total lack of substance of the claims made;

the lack of any real prospect of a successful outcome to...

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