Good Reason to Refuse Mediation ?

Dear all,

Good Reason to Refuse Mediation ?

I am Natalia Cheung, a Hong Kong International Arbitration Centre (HKIAC) Accredited Mediator and a practising solicitor in Hong Kong.

I would like to share with you information on whether the reasonable belief of a party of having a strong case could be regarded as a good reason to refuse mediation.

In the recent water leakage case of Good Try Investments Ltd. v Easily Development Ltd. (DCCJ 3346/2011), the Plaintiff claimed that it has a strong case and therefore refused to attempt mediation of a settlement of its claim.

The Hong Kong District Court has to decide whether it is a good reason to refuse mediation if the Plaintiff reasonably believes that it has a strong case.

In deciding on this issue, Deputy District Judge Tracy Chan referred to Dysan LJ’s speech in Halsey v Melton Keynes General NHS Trust [2004] 1 WLR 3002 which was cited by Lam J, as he then was, in Golden Eagle International (Group) Limited v GR Investment Holdings Limited HCA 2032/2007:-

“27. The fact that a party reasonably believes that he has a strong case is relevant to the question whether he has acted reasonably in refusing ADR. If the position were otherwise, there would be considerable scope for a claimant to use the threat of costs sanctions to extract a settlement from the defendant even where the claim is without merit. Courts should be particularly astute to this danger.”

“28. Large organizations, especially public bodies, are vulnerable to pressure from claimants who, having weak cases, invite mediation as a tactical ploy. They calculate that such a defendant may at least make a nuisance-value offer to buy off the cost of a mediation and risk of being penalized in costs for refusing a mediation even if ultimately successful.”

21. Lam J was of the opinion that the scenario as referred to by Dysan LJ was unlikely to occur in Hong Kong. Further he cited another passage in the judgment of Dyson LJ to illustrate in what circumstances a party could say that the he has reasonable belief of a strong case:-

“30. Some cases are clear-cut. A good example is where a party would have succeeded in an application for summary judgment … Other cases are more borderline. In truly borderline cases, the fact that a party refused to agree to ADR because he thought that he would win should be given little or no weight by the court when considering whether the refusal to agree to ADR was reasonable. Borderline cases are likely to be suitable for ADR unless there are significant countervailing factors which tip the scales the other way.”

Applying the above principle to the facts of the case, Deputy District Judge Tracy Chan did not agree with the Plaintiff that the liability of the Defendant for being the source of water leakage was a clear cut matter. The Court noted that the source of water leakage, which was not easy to locate, was very often a hotly argued issue at trial. The Court was not convinced that the Plaintiff had a good reason to refuse mediation.

For further information on mediation, please contact Ms. Natalia Cheung 

[(852)-6777 5767]

E-mail: natalia@plaw.hk

 

Natalia Cheung 

HKIAC Accredited Mediator & Hong Kong Solicitor

Pang Kung & Co., HK Solicitors & Notaries & Civil Celebrants of Marriages

 

Disclaimer: The above is for your information and reference only. The contents do not constitute legal advice or a substitute for legal advice in individual cases.