AB & Ors v Ministry of Defence

A court may have wide case-management powers and may encourage mediation, but an order requiring parties to take steps towards mediation will not necessarily be helpful or appropriate. The court should consider whether such an order would achieve anything beyond existing encouragement, particularly where a party could end the mediation unilaterally or decline to engage seriously.

Applications for immediate detailed assessment or further interim payment of costs require the court to exercise its discretion in accordance with fairness, proportionality and the overriding objective. Pending appeals, the risk of repayment, the prospect of wasted expenditure and the possibility that costs will be adjusted later may justify postponing assessment and refusing further payment.

The claimants were members of group litigation concerning alleged injury arising from nuclear weapons test programmes. A limitation issue had been decided in favour of ten lead claimants by Foskett J, and the defendant had appealed to the Court of Appeal. The defendant had also been ordered to pay the costs of that issue and £7.5 million on account.

The claimants applied for an order encouraging or requiring mediation, immediate detailed assessment of the awarded costs, and a further £2 million interim payment. The central questions were whether mediation should be ordered and how the pending appeal and wider litigation affected the costs applications.

1. The application concerning mediation was refused. The court endorsed Foskett J’s encouragement of a sensible and constructive resolution, but held that an order in the proposed terms would not be helpful or appropriate. Parties could be taken to mediation without being required to mediate seriously, and a mediator could be instructed to end the process unilaterally. The court therefore considered that an order would achieve nothing material beyond encouragement.

2. Whether the court had power to order mediation, as opposed to encourage it, was left unresolved. The court considered Halsey v Milton Keynes General NHS Trust [2004] EWCA (Civ) 576 and AB & Ors v Wyeth [1997] 8 Med LR 57, together with a speech by Sir Anthony Clarke. It was unnecessary to determine the power because an order would not have been appropriate on the facts.

3. The application for immediate detailed assessment was refused. The court had a broad discretion, guided by fairness, proportionality and justice between the parties. The pending appeal might reverse the underlying order, requiring repayment, and an immediate assessment could be lengthy, expensive and wasted. Assessment could more sensibly await the outcome of the litigation so that costs could be assessed together and set-offs considered.

4. The further interim payment was also refused. Although the court accepted that the claimants were likely to recover the after-the-event insurance premium and that the earlier order could be revisited, there were substantial risks concerning repayment, the scope of the costs attributable to the limitation issue, disclosure and the possible adjustment of costs following the appeal or other issues. Costs of the day were reserved.

The judgment records that Foskett J had decided the limitation issue in favour of ten lead claimants and granted permission to appeal. The defendant’s appeal to the Court of Appeal was pending. This judgment determined interlocutory applications in the High Court and did not decide the appeal.