In deciding whether to deprive a successful party of some or all of his costs on the grounds that he has refused to agree to ADR, the court should bear in mind that such an order is an exception to the general rule that costs should follow the event. The burden is on the unsuccessful party to show why there should be a departure from the general rule. The fundamental principle is that such departure is not justified unless it is shown by the unsuccessful party that the successful party acted unreasonably in refusing to agree to ADR.

Although the Court in Halsey confined itself to considering when it was appropriate to deprive a successful party of its costs, the courts may also penalise an unsuccessful party for their refusal to mediate by an award of indemnity costs. Examples of this are given below.