Leicester Circuits Ltd. v Coates Brothers Plc

A party who agrees to mediation should ordinarily proceed with it. An unexplained withdrawal shortly before the mediation may materially affect the court’s discretion as to costs, even though the court cannot assume that mediation would have succeeded. The successful party may therefore receive no costs for a period during which its conduct contributed to the continuation of the litigation. The costs of an appeal may nevertheless follow the event. A party that has paid money in compliance with a court order should not be prejudiced by doing so, and repayment may be ordered forthwith despite financial difficulty.

The judgment concerned consequential matters following litigation between Leicester Circuits Ltd. and Coates Brothers Plc in the Queen’s Bench Division. The Court of Appeal had accepted the trial judge’s findings about the witnesses and concluded that Leicester’s documentary case was not established. Coates had succeeded on the appeal and cross-appeal, including its counterclaim.

The court considered whether to order a new trial, how the costs below and of the appeal should be allocated, and whether sums paid under a court order should be repayable by instalments. The central issues included the effect of Coates’ unexplained withdrawal from an agreed mediation and Leicester’s financial position.

1. No new trial. The court had considered the witnesses in the context of the trial judge’s findings and had examined the documents relied upon by Leicester. Its conclusion was that Leicester’s case had not been established. A new trial was therefore inappropriate.
2. Mediation and costs. The parties had agreed to mediate, but Coates withdrew shortly before the mediation at the insistence of its insurers and gave no satisfactory explanation. The court rejected the suggestion that mediation could be treated as a pointless form of negotiation because there was no realistic prospect of success. Mediation may resolve difficult disputes, and the unexplained withdrawal was significant to the continuation of the litigation.
3. The court applied the approach illustrated by Dunnett v Railtrack Plc [2002] 1 WLR 2434, where a successful party’s refusal to participate in alternative dispute resolution affected its entitlement to costs. Leicester was ordered to pay the costs below up to 1 January 2002, with no order for costs thereafter. The costs of the appeal were to follow the event, so Leicester was to pay Coates’ appeal costs.
4. Repayment and instalments. Even if the court had jurisdiction to order instalments for sums paid under a court order, repayment should be made in full forthwith. Coates should not be prejudiced by complying with the court’s order. No instalment order was made for the counterclaim or costs. Costs were to be assessed, if not agreed, and a further on-notice application could then be made.
5. Permission to appeal to the House of Lords was refused.

• Court of Appeal (Civil Division) [2003] EWCA Civ 333: declined to order a new trial, confirmed judgment for Coates on the claim and counterclaim, made a split costs order reflecting the failed mediation, required repayment of sums paid under the court order forthwith, and refused permission to appeal to the House of Lords.
• High Court of Justice, Queen’s Bench Division: the action had been tried before His Honour Judge Bradbury. The citation of the judgment is not stated in the judgment.