Employment & Pensions Blog: Refusal to Enter into Judicial Mediation Could Amount to Unreasonable Conduct

In the recent case of Ms Leeks v University College London Hospitals NHS Foundation Trust, the Employment Appeals Tribunal (EAT) found that an Employment Tribunal (ET) had erred in law in holding that: a) a claim should be struck out because a witness had left the employment of the Respondent, which meant that a fair trial was no longer possible; and b) a refusal to enter into judicial mediation (a voluntary process) could not amount to unreasonable conduct. In this blog we focus on the latter decision. 

Background

At a Preliminary Hearing to consider the Respondent’s strike out application, the Employment Judge recorded that the Claimant had pleaded with the ET to list the matter for judicial mediation. However, the ET held that judicial mediation was offered to parties in certain appropriate cases and that the process was entirely voluntary. Therefore, consent to mediate was required from both parties before it could go ahead. In the ET judgment in which this point was considered, the ET did not suggest that the reasons, or circumstances, as to why the Respondent had refused to enter judicial mediation were considered by the ET. Instead the ET had simply taken the Respondent's refusal to take part in judicial mediation from the answers the Respondent had provided in the Case Management Agenda prepared for the Preliminary Hearing. Namely, the fact that the Respondent had stated “no” to the questions: “Is this a case that might be suitable for judicial mediation?” and “Are the parties interested in the possibility of judicial mediation?". 

The Claimant appealed to the EAT for the Tribunal to consider whether the Respondent’s refusal to engage in judicial mediation could amount to unreasonable conduct that could result in an award of costs. The EAT therefore had to consider the extent of the Tribunal’s discretion under Rule 76 of the Employment Tribunal Rules (ET Rules) which allows the Tribunal to make a costs order if a party acts vexatiously, abusively, disruptively or otherwise unreasonably. The Respondent argued that a distinction could be made between mere refusal to engage in judicial mediation and the reasonableness of the decision to do so. 

Decision

Having reviewed some key decisions in the Civil Courts on costs, the EAT ruled that the ET had erred in law when finding that refusal to enter judicial mediation or assessment could not amount to unreasonable conduct, and ordered that the Claimant’s costs application be remitted to the ET for redetermination. 

The EAT held that Rule 76 of the ET Rules does not place a limit on what type of conduct might be “unreasonable conduct” and that there is no absolute prohibition on refusal to engage in judicial mediation being unreasonable conduct. 

The EAT rejected the Respondent’s argument that a distinction can be made between mere refusal to engage in judicial mediation and the reasonableness of the decision to do so. The EAT held that the test will always be that of whether there has been “unreasonable conduct” in refusing to engage in judicial mediation which will depend on all the circumstances of the case. It will be incumbent on the party seeking an award of costs to establish what it was about the circumstances and actions of the party that refused to enter into judicial mediation or assessment that made it unreasonable. That analysis will always have to take account of the fact that the process is voluntary, and that particular care must be taken to protect the sanctity of without prejudice discussions in the lead up to judicial mediation or assessment and anything said during those processes. In this case the ET had failed to consider the reasons or circumstances as to why the Respondent had refused to engage in judicial mediation or assessment.

Comment

This decision is significant as this is an EAT case, and therefore the decision is binding and could have a potential impact on future decisions where a party has said no to engaging in judicial mediation. Employers will need to ensure that they meaningfully consider judicial mediation as an option, and if they decide to reject it as an option, they must be prepared to demonstrate that they have good reasons for doing so, otherwise they face the risk of their conduct being deemed unreasonable.  

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