Halsey is Not Quite Dead Despite Churchill: But Should be Soon!

A recent 2025 decision reminds us that Halsey is not yet quite dead, although it highlights the need for the new approach engendered by Churchill and the October 2024 changes to the CPR to be recognised and embodied consistently in judicial decision-making.  

Assensus Ltd v Wirsol Energy

In Assensus Ltd v Wirsol Energy[1], A had sought payments from the defendants WE over work they had done for them on a development. The claim had failed completely, but C Ltd argued that they should only pay 70% of WE’s costs because WE had refused mediation. The facts are hard to piece together from what is only a judgment on costs, but it appears that both parties made Part 36 offers in October 2022, WE of £100,000 and A of just over £1 million, with a further offer made by A to accept £725,000 in September 2023. The trial was in February 2025 and judgment given in March 2025. The judge was persuaded that mediation would not have succeeded and that refusal to mediate was only one of several factors to be taken into account, having been directed to Gore v Naheed[2] by WE’s counsel.

Churchill Decision

Churchill was decided in November 2023 and the CPR were amended in October 2024 - particularly the overriding objective in CPR 1 - to require everyone (including judges) to adopt the mindset of “promoting and using” mediation and other forms of dispute resolution process. There is not one word in the Assensus judgment about either of these fundamental changes in the law and practice relating to dispute resolution which had come into effect during the lifetime of the Assensus claim. The authorities cited on the topic are very limited: indeed, A relied upon OMV v Glencore which (as the judge rightly pointed out) concerned enhanced interest on damages and not refusal to mediate. Far better to have relied on a full interpretation of PGF v OFMS[3], and on Thakkar v Patel[4], TMO Renewables v McBraida[5] and Northamber v Genee World[6], the last of which explained PGF v OFMS and the over-interpretation of it in the frankly perverse decision of Gore v Naheed, where several judges felt there was no point in criticising a party for refusing to sit down with a neighbour to discuss how long he might be able to park to make deliveries.

Yet again in Assensus, we have the entirely unsurprising spectacle of counsel for the successful party, under no burden of proof over resisting a costs sanction, arguing that mediation had had no reasonable prospect of success, thus justifying her client’s escape from a sanction for refusing to mediate. The judge shows no sign of recognising that “she would say that, wouldn’t she?” Mediators have been repeatedly outraged about the willingness of judges to find that a gap was too big for mediation to have any chance of success. In Assensus, the gap appears to have been £100,000 and £750,000. Gaps of this size are closed by mediation time and time again in all sorts of case. How and why? Because parties come into a confidential environment in which no actual or implied concession made in the shape of an offer can be used against them if the case does not settle. Parties can confront each other in a secure setting with their own strengths and the other’s perceived weaknesses. There is time for each party and their lawyers to re-evaluate their positions without public loss of face, revisiting the risks they may in reality face in court, and therefore making risk-adjusted confidential proposals to each other. These lead time and again to settlement on discounted terms. The process can even lead to virtual capitulation by one party to another. The time-honoured dictum on this came from Waksman J in Garritt-Critchley v Ronnan[7], in which he said “Parties don’t know whether in truth they are too far apart unless they sit down and explore settlement”.

Of course Halsey does still provide a source for testing out whether a costs sanction should be imposed for refusing to mediate. But many cases have been decided on those factors which have demonstrated a significant dilution of its effect. In an apparent attempt to stem the tide, in Gore v Naheed[8], Patten LJ interpreted Lord Briggs’ judgment in PGF like this:

But, as Briggs LJ makes clear in his judgment, a failure to engage, even if unreasonable, does not automatically result in a costs penalty. It is simply a factor to be taken into account by the judge when exercising his costs discretion”.

This seems an almost wilful misinterpretation of what Briggs LJ said, which was:

Silence in the face of an invitation to participate in ADR is, as a general rule, of itself unreasonable, regardless of whether an outright refusal, or a refusal to engage in the type of ADR requested, or to do so at the time requested, might have been justified by the identification of reasonable grounds. I put this forward as a general rather than invariable rule because it is possible there may be rare cases [my emphasis] where ADR is so obviously inappropriate that to characterise silence as unreasonable is pure formalism.[9]

He goes on perhaps to excuse an administrative error over receiving the invitation, though placing the burden for excusing that on the invitee. Briggs LJ does not talk about “one of a series of factors”: this is an interpretation placed on what he said by Patten LJ to suit his own distaste for sanctioning refusal to mediate which he had articulated immediately before his “one of several factors” proposition quoted above, put startlingly as a private opinion:

Speaking for myself, I have some difficulty in accepting that the desire of a party to have his rights determined by a court of law in preference to mediation can be said to be unreasonable conduct particularly when, as here, those rights are ultimately vindicated.

This passage is even noted with apparent approval by Constable J in his Assensus judgment

Conclusion

Looking at the facts in each case, in PGF, the defendant ignored two offers to mediate and simply made a Part 36 offer, and was sanctioned for refusal. The same facts occurred in Assensus. There is no suggestion that the judge in Assensus suspected that A’s offers to mediate were not genuine. It is very surprising therefore that, especially after the radically changed climate produced by the CPR changes in October 2024, six months before Assensus, the judge (and indeed counsel in their submissions) ignored those changes. Patten LJ’s personal distaste for penalising a winning party’s refusal to mediate is simply inconsistent with the wording of the overriding objective now. And it is to be hoped that cases in which there is a retrospective inquest into pre-trial refusals to mediate and whether they should be sanctioned will become a thing of the past. Parties genuinely wanting to mediate before trial, faced with a refusal, will now be able to apply to the court for an order with a high expectation that it will be made (that is, where directions requiring the parties to mediate have not already been given). Mediation may succeed even where opposed by one party – as happened in DKH Retail v City Football Group Ltd[10], decided in November 2024 and also not cited in Assensus - where the judge ordered mediation shortly before trial and settlement emerged. Where mediation does not settle the claim, the parties can then proceed to trial secure in the knowledge that any signal given during the mediation of willingness to compromise, or even any unreasonable rejection of terms offered, will be kept from the judge.

Sources

[1] [2025] EWHC 503 (KB)

[2] [2017] EWCA Civ 369

[3] [2013} EWCA Civ 1288

[4] [2017] EWCA Civ 117

[5] [2022] EWCA Civ 1409

[6] [[2024] EWCA Civ 428

[7] [2014] EWHC 1774 (Ch)

[8] para 48

[9] para 34

[10] [2024] EWHC 3231 (Ch)