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Mediation Update - July 2007       © David Cornes        Republished with permission


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Are the Costs of Mediation Recoverable on Assessment?

Judgment

National Westminster Bank PLC -v- Thomas James Feeney and Linda Catherine Feeney - Supreme Court Costs Office - [2006] EWHC 90066 (Costs) - Master Campbell - and on appeal to Mr Justice Eady sitting with Assessors in May 2007 (Unreported). Click here for the report of Master Campbell’s decision and click here (with acknowledgement to CEDR) for a Note of the Appeal written by Master O'Hare .


Question Quick Overview

If a Tomlin Order settling proceedings provides for costs to be assessed, are the costs of mediation recoverable?

Both the legal cost and the mediation fees are costs that are within the definition of recoverable costs under the CPR. However, in this case, the terms of the mediation agreement prevented their recovery.

The Detail  

National Westminster Bank PLC -v- Thomas James Feeney and Linda Catherine Feeney was heard in November 2006 by Master Campbell but was the subject of an appeal to Mr Justice Eady sitting with Assessors in May 2007, which appeal is presently unreported (but noted here on CEDR's web site). Comments below about the appeal are based on a note of the decision in the appeal, not a transcript.

Briefly and incompletely, the facts were that proceedings had been settled in mediation on the basis that standard costs, to be assessed, were to be paid to the Feeneys (as well as a legal aid assessment). In the assessment, the Feeneys sought to recover from National Westminster Bank both legal costs and CEDR’s mediation fees in respect of the mediation.

Master Campbell decided (upheld on appeal) that in principle such costs fell within the relevant part of the CPR (Costs Practice Direction, Paragraph 4.6(8)) as to costs, namely “work done in connection with negotiations with a view to settlement”.

Then there had to be consideration of the interpretation and effect of CEDR’s Model Procedure incorporated into the mediation agreement. In particular, it provided that CEDR’s mediation fees (including the fee of the mediator) would be borne equally by both parties and that each party would bear its own costs of the mediation. The Judge found that the mediation agreement was binding on the parties and that its effect was not discharged by the Tomlin Order. Accordingly, neither the mediation fees nor the legal costs were recoverable by the Feeneys.

The effect of the appeal in this case seems to be that mediation legal costs and fees will only be recoverable if it is so stated in the Tomlin Order settling the proceedings or where the mediation agreement is silent as to costs. Although not considered by the court, fees and costs may possibly be recoverable where the parties expressly agree in the mediation agreement that fees and costs are to be recoverable in an assessment of costs by the court.


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