A sad case about lost opportunities for mediation

Each party was ordered to bear their own costs following a failure either to mediate or settle a small building dispute which ended up reaching the Court of Appeal.

The Court of Appeal has recently given judgment in the case of Rolf v De Gijerin which involved a building dispute between a home owner, Mrs Rolf, and her builder, Mr De Gijerin, over the construction of a garage and a loft conversion. The contract price was £34,000 for the garage and £18,000 for the loft. The garage had been almost completed and the loft hardly started when there was a breakdown between the parties which the builder claimed was due to the conduct of Mrs Rolf’s husband. Mrs Rolf had paid £28,750 in cash and subsequently paid other builders £20,000 to complete the project.

Mrs Rolf’s claim against Mr De Gijerin was for between £44,500 and £92,500 but by the time of the trial was for £70,000. The issues were based on breach of contract and repudiation.

Mrs Rolf made proposals for settlement at £21,000 and mediation. No response was received until less than a week before trial when Mr De Gijerin offered £14,000 payable over 3 years and agreed to a mediation or settlement meeting. He stated that this was his best offer and gave details of his financial difficulties. 

The trial went ahead and Mrs Rolf was awarded just £2,500. The court also decided that Mr De Gijerin should pay Mrs Rolf’s costs from 3 weeks after she made her first offer to settle at £21,000. 

On appeal, the Court of Appeal decided that each party should bear their own costs.

• Mrs Rolf was the overall winner – but only just, having been awarded £2,500 as against £70,000 claimed.
• On an issue-based approach, Mrs Rolf had lost more issues than she had won.
• The ground which Mr De Gijerin had won (repudiation) was unpleaded and did not feature in his two witness statements.
• Mrs Rolf’s offer to settle had been rejected by Mr De Gijerin. He had given no reason for this but when considered subsequently, it was decided that he had been unreasonable. “Wanting his day in court” was not an acceptable reason when parties were expected to consider negotiation and settlement – and in this case, particularly, where it was likely that a settlement might have been reached. Conduct was relevant to costs especially in a case of this nature where the costs were wholly disproportionate.

Rix LJ described it as “a sad case about lost opportunities for mediation” and went on to say that in some disputes, such as this one over a small building dispute, litigation can be “wasteful and destructive” and that a trial should be regarded as a solution of last resort. 

The Court of Appeal has again emphasised that there may be potential adverse costs consequences if parties refuse to mediate.

Rolf v De Gijerin [2011] EWCA Civ 78 – Court of Appeal – 16^th February 2011

For more information, please contact Gary Finniss.