In Wu Yim Kwong Kingwind v Manhood Development Ltd [2015] HKEC 1475, the Court imposed an adverse costs order against a party for its unreasonable refusal to attempt mediation.
The plaintiff (“P”), losing the trial, was ordered to pay 80% of the costs of the defendant (“D”). P sought to vary the costs order for the reason that D unreasonably refused to mediate.
D argued that since the subject matter of the dispute was land, it was impossible for them to compromise. Further, it was argued that P was not cooperative in agreeing on costs related to the interlocutory proceedings and had not made any settlement offer.
The Court held in favour of P and made an adverse costs order against D. The Court did not see the nature of the claim being land would keep the parties from compromising. Despite P being uncooperative, it did not mean that D could be the same. Further, even though P did not make any settlement offer, negotiation should be mutual and it was found that D did not make any offer either. Lastly, the Court pointed out that negotiations should not be seen as a replacement for mediation.
This decision indicates what the Court considers to be unreasonable excuses to refuse mediation and the possible consequences of such unreasonable refusals regardless of winning or losing at the trial.