ADS Aerospace Limited v EMS Global Tracking Limited

How to refuse to mediate reasonably

[2012] EWHC 2904 (TCC) TEDR Volume 18 Issue 1


The Court held that a successful party should not be penalised in costs for having declined to mediate, as its refusal to do so had not been unreasonable.


ADS had claimed over $16 million for breach of contract and repudiation of an exclusive distribution agreement. The defendant successfully defended the case. On the issue of costs, ADS argued that despite having brought an unsuccessful claim, it should only have to pay 50% toward EMS’ legal costs because EMS had refused to mediate.


The issue for the Court to decide was whether EMS had acted unreasonably in refusing to mediate. In deciding this issue the Court considered the parties’ attempts to settle the matter prior to the trial listed for 2 July 2012. In early March 2012, EMS tried to instigate settlement discussions and in April 2012 offered £50,000 inclusive of costs, interest and VAT. This was dismissed by ADS as a “nuisance payment”. On 31 May 2012 ADS suggested a mediation which was declined by EMS on the basis that there were no reasonable prospects of settlement as ADS was unlikely to accept much less than $16 million. ADS then made an offer of £4.246 million and repeated its request for a mediation which EMS again declined having regard to the proximity of the trial and counter offered £100,000 inclusive of costs, interest and VAT. EMS made clear it was willing to continue WP discussions.


The Court held that EMS had not been unreasonable in refusing to mediate and that ABS should pay EMS’ costs to be assessed on the standard basis for the following reasons:

1. EMS had initiated without prejudice discussions in early March 2012 and had at all times indicated it was willing to hold without prejudice discussions;

2. ADS failed to enter without prejudice discussions until 31 May 2012 despite at least four attempts by EMS;

3. ADS had made clear its belief that it was entitled to substantial compensation well above the level offered or likely to be offered by EMS;

4. The suggestion to mediate was made only 20 working days prior to trial and would have intruded upon trial preparations;

5. Mediation would have cost substantially more than without prejudice discussions;

6. EMS had not been unreasonable in taking the view that it had a strong defence.


Following the decisions in a number of cases about costs and refusal to mediated (in particular Halsey v NHS and Dunnett v Railtrack) it became fashionable for a time for defendants to claim that a refusal to mediate / engage in the Pre-Action Protocol to the fullest possible degree would deprive a successful claimant of costs. That was not ratio of those cases, but merely the law of unintended consequences in operation. The result was that parties became (over?) sensitive to such risks, even where they had a strong case, and many pointless mediations and numerous fruitless Pre-Action Protocol steps, both at huge cost in terms of time and money, resulted as parties “went through the motions” simply to protect themselves on costs.

Cases such as ADS v EMS demonstrate that the pendulum is swinging back the other way, and that (entirely rightly) the Courts are not generally willing to penalise a party who reasonably refuses to mediate. Where as here the request to mediate is made very close to trial and the parties are not close to settlement, the court may well consider the offer of quicker, cheaper without prejudice discussions a reasonable alternative.

The facts here were clear and strongly in favour of the successful claimant, and so it appears easy for the judge to decide the normal rule – costs follow the event – should apply. Cases closer to the line are likely to see parties agree to mediate, even if the intention is only to go through the motions and protect the costs position.

Smith v Co-Operative Group Limited & Mark Hammond

Judge not entitled to reject expert evidence simply on the basis of his own experience but must give reasons as to why he does not accept it

[2010] RTR 30, [2010] EWCA Civ 725 TEDR Volume 15 Issue 3

The Facts

This was a case where a 13 year old boy, on his bicycle, cycled out of a driveway and into the road where he was struck by an oncoming vehicle.

The main issue in the case was, plainly, whether the driver could or should have done more to avoid an accident. In particular, there was much debate about whether he could have sounded his horn, thus attracting attention to himself and avoiding the accident.

The Trial Judge held that the driver has been negligent in failing to sound his horn. In fact, that was the only finding of negligence on his behalf.

Thereafter, the Trial Judge considered expert evidence called on behalf of the driver. In essence, the evidence was that even had the driver sounded his horn, the accident would have been inevitable. The Judge rejected the evidence of the Expert, preferring to rely upon his own experience of reacting to the sound of a horn when driving.

The issue

Was the Judge entitled to reject the evidence of the expert on this basis?

The Decision

Lord Justice Moore-Bick held that, whilst the Judge was not bound to accept the Expert evidence if he had good grounds for not doing so, if he was going to reject it, he should have given reasons rather than just rely upon his own experience of driving. His Lordship noted that whilst it was tempting for a Judge to use his own experience, layman’s perception of matters could well be wide of the mark and thus, the temptation should be resisted.

Overall, there was no satisfactory reason for rejecting the evidence of the expert and thus the appeal was allowed.


Expert evidence can, of course, be rejected if there are reasons for so doing, however, ordinary layman’s perceptions ought not to displace expert opinion. Experts should be prepared to demonstrate why it is that the layman’s explanation is wrong or flawed if necessary.

Homepace Limited v SITA South East Limited

Expert Determiners need to know what they are doing

[2008] EWCA Civ 1 TEDR Volume 13 Issue 2

The Facts

This appeal concerned whether a certificate issued by an expert for a determination pursuant to a lease was valid and therefore binding. The lease was of commercial premises part of which involved an area where extraction of minerals can and did take place. The lease provided for early termination upon written notice by the tenant with a cessation of liability to pay rent 12 months thereafter. The lease specifically made provision for an expert to determine the validity of the notice. The Court of Appeal considered that the surveyor was given exclusive power to determine the questions to which his certificate was directed. As part of his consideration he was bound to consider “minerals” on the site. As a matter of fact, the surveyor took into account only the minerals and not the reserved minerals on the site. The issue as to the determination was whether he should have taken into account both or not.

On the facts the Trial Judge and the Court of Appeal determined that the surveyor ought to have taken both into consideration.

The Issues

What effect did this finding have upon the validity of the decision and the binding nature of that decision?

The Decision

The binding effect, or otherwise of an expert’s determination has already been considered in a number of cases over the years. Each case depends upon the terms of the contract under which the determination is made, both as to what it is that the expert has to decide, and as to how far his decision is binding upon the parties. Accordingly, it is necessary to examine the scope of the expert’s authority. If the expert goes beyond that scope, then the determination has no effect as between the parties. If it does stay within the bounds of that authority, the contract itself will govern the question of whether the determination is binding and if so, in what circumstances and to what extent that decision can be challenged.

Accordingly, it was decided that the first question was to ask what the agreement had entrusted to the expert. Thereafter the second question was whether that is what he has decided. If so, the third question is whether it can be shown he has made such a mistake as to vitiate his decision.

Accordingly, the Court considered the agreement; considered his decision; and came to the conclusion that he had only considered the minerals (as opposed to the reserved minerals as well).

Therefore, the Court of Appeal (and indeed the Court below) concluded that the expert did not proceed on the correct basis. Accordingly, his decision was not binding upon the parties.

In so determining, the Court had the benefit not only of the decision of the expert but also of a series of correspondence flowing between the disgruntled party and the expert post his decision. The expert had replied to those letters. The Court, therefore, considered those letters in regard to its final conclusions as to what the expert did and did not take into consideration. The Court made the point that:-

“Mr. Hill need not have responded to the request for clarification of the certificate and his report. If he had not done so, he could not have been compelled to explain himself. However, since he did do so, and thereby made clear the basis upon which he had proceeded, it seems to me that the Court must look at his explanations when considering what was the reasoning which led him to issue his certificate and whether it was prepared on the correct basis”.


This case re-emphasises the importance of an expert breaking down his or her precise role. That role ought to be clearly set out in the contract that governs the reference to the expert in the first place. However, it highlights the importance of the expert staying within the brief so that the ultimate decision is binding and not subject to challenge.

Further, it reinforces that (under this particular agreement) there was no necessity for the expert to explain himself further although he did do. If of course the expert then does go on to explain himself that becomes evidence which may be used in any later challenge.

Of course, the agreement itself may demand that the expert give reasons for any decision and therefore care should be taken at all times to comply with the agreement in that regard too.

Once again, the Academy of Experts “Rules for Expert Determination” state that:

Unless otherwise agreed by the parties and communicated to the Expert in writing at the time of his appointment, the Expert will not give reasons for his determination

Utilising that agreement may therefore be preferable.

Halifax Life Limited v The Equitable Life Assurance Society

Expert Determination – the dangers of (inadequate) reasons

[2007] EWHC 503 TEDR Volume 13 Issue 2

The Facts

The parties agreed to refer their dispute for determination by an Expert.

They agreed the Umpire’s terms of reference, which included terms that:

1. The decision would be binding on the parties save in the case of a manifest error;

2. The Umpire would include reasons for the decision.

A decision was given after the Umpire had held several meetings with each party and viewed various documents.

Halifax contended that the Decision was not binding because:

1. The Umpire had failed to give reasons as to why he rejected part of their contentions;

2. The Umpire failed to give reasons which explained what he had learned from his private meetings with Equitable life;

3. The Umpire therefore materially departed from his instructions and/or his decision contained a manifest error.

Equitable argued the decision should be binding.

The Issues

1. What were the terms of reference to the Umpire?

2. Therefore, what as a matter of contract had the parties agreed to remit to the Umpire by way of expert determination?

3. What was the Umpire appointed to do?

4. Has the Umpire done that which he was appointed to do?

The Decision

The decision reached by the Umpire was to be binding save for “manifest error” as per the agreement of the parties. Manifest error means, “oversights and blunders so obvious and obviously capable of affecting the determination as to admit of no difference of opinion” (See: Veba Oil Supply and Trading v Petrograde Inc [2001] EWCA Civ 1832).

In litigation, justice will not be done unless the parties understand who has won, who has lost and why? Therefore, a Judge needs to give reasons for his or her conclusions. This is the same in any judicial or quasi-judicial decision, for example arbitrations pursuant to the 1996 Act.

What of expert’s Determinations? In this particular case, the Umpire was also required to give reasons by agreement in his terms of reference.

“Reasons” need to “convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract”.They could be briefly stated but they had to explain the Umpire’s reasons for his conclusion on key or substantial points raised…”.

In this case, it was found that reasons were given but they were not adequate.

Accordingly, the Court directed the Umpire to review the matter and provide further reasons on certain specific issues.

Accordingly, the Court proceedings were adjourned for the case to be remitted to the Umpire and permission was given for the matter to be returned to Court once those reasons were available for further consideration as to whether the decision was binding.

The Court recognised that in arbitrations, there was a specific power under the 1996 Act for the Court to remit the decision for further reasons. Although there was no similar statutory power with regards to Expert Determination, the Court considered that there was power to do so whether by way of remedy in relation to the original contract or under the inherent jurisdiction of the Court or both. In any event, it was acknowledged that the Court was entitled to invite the Umpire to provide further reasons.


The importance of defining the role of the Umpire within his or her terms of reference is stressed.

It is useful to note that The Academy of Experts “Rules for Expert Determination” state that:

Unless otherwise agreed by the parties and communicated to the Expert in writing at the time of his appointment, the Expert will not give reasons for his determination

This will not relieve the Expert from the duty to act in accordance with his or her terms of reference but will seemingly avoid the type of situation in this case.

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