When Mediation Has “Nil” Prospects: What Winehouse v Parry and Gourlay [2026] EWHC 1970 (KB) Teaches About ADR and Indemnity Costs

When Mediation Has “Nil” Prospects: Winehouse v Parry and Gourlay on ADR, Aggressive Litigation and Indemnity Costs

The High Court’s costs judgment in Winehouse v Parry and Gourlay [2026] EWHC 1970 (KB) is a striking reminder that the courts’ strong encouragement of mediation does not mean that every refusal, hesitation or failure to mediate will attract a costs sanction.

The judgment is also an unusually powerful example of indemnity costs being imposed because of the overall manner in which litigation was pursued. Sarah Clarke KC, sitting as a Deputy Judge of the High Court, found that the claimant had pursued an inherently weak case aggressively, made grave and unjustified allegations of dishonesty, used the proceedings to exert pressure on two financially vulnerable defendants and adopted settlement parameters which meant that mediation had no realistic prospect of success.

The result was a total defeat for the claimant, an order that he pay both defendants’ costs on the indemnity basis and interim payments approaching £1 million.

The underlying dispute

The claimant, Mitchell Winehouse, sued as the personal representative of the estate of his late daughter, Amy Winehouse.

The dispute concerned 141 items of property which had been in the possession of the two defendants, Naomi Parry and Catriona Gourlay, and which were sold at Julien’s Auctions in Los Angeles in 2021 and 2023.

The claimant alleged that the items belonged to Amy Winehouse’s estate and that the defendants had not been entitled to possess or sell them. The defendants maintained that the items belonged to them, having been given to them by Amy or otherwise legitimately acquired during their close personal and professional relationships with her.

Following a six-day trial, the court dismissed every part of the claimant’s case. The substantive judgment was handed down on 20 April 2026 as Winehouse v Parry and Gourlay [2026] EWHC 911 (KB).

The subsequent judgment of 29 July 2026 dealt with costs.

The court ordered the claimant to pay:

• the first defendant’s costs on the indemnity basis;
• the second defendant’s costs on the indemnity basis;
• an interim payment of £569,330.99 to the first defendant; and
• an interim payment of £394,521.89 to the second defendant.

Payment was required within 14 days. The court refused to stay those payments pending any application to the Court of Appeal.

The claimant’s mediation argument

Although the claimant accepted that he had lost the claim, he argued that there should be no order as to costs. Alternatively, he sought a reduction of 75% in the defendants’ recoverable costs.

A central part of that argument was the defendants’ alleged failure to engage properly in mediation.

The claimant contended that the defendants had failed to provide adequate explanations about their ownership of the disputed items, had resisted dialogue, had rejected his settlement offers and had delayed mediation until the costs of the proceedings exceeded the value of the claim.

He submitted that the defendants had:

“drove the case inexorably towards a trial, notwithstanding the obvious costs implications.”

The claimant relied on the case management order, which required the parties to consider alternative dispute resolution throughout the proceedings. He argued that the defendants’ failure to mediate earlier had increased the costs and should deprive them of some or all of their costs, despite their success at trial.

The court rejected that argument comprehensively.

A refusal to mediate is not automatically unreasonable

The judgment restated an important principle about ADR and costs.

Where a losing party alleges that the successful party failed to engage in ADR, the burden is on the losing party to prove:

• that there was a failure to engage in ADR; and
• that the failure was unreasonable in all the circumstances.

Even where an unreasonable failure is proved, it does not automatically result in a costs penalty. It is one factor among all the circumstances which the court considers under CPR 44.2.

The court referred to Gore v Naheed [2017] EWCA Civ 369, in which the Court of Appeal confirmed that an unreasonable refusal to mediate does not create an automatic rule that the successful party must be deprived of its costs.

That principle was decisive here. The court did not simply ask whether a mediation had been proposed or whether the defendants had expressed reservations. It examined the parties’ behaviour, the nature of the allegations, the proposed settlement terms and whether mediation had any realistic prospect of resolving the dispute.

The defendants were “scared of him”

One of the most striking findings was that the defendants had good reason to be wary of engaging with the claimant.

The court found:

“I find that they were both scared of him – with good reason given his and his solicitors’ behaviour towards them.”

That is an unusually direct judicial finding.

The court accepted that the defendants had been subjected to aggressive and unpleasant correspondence, serious allegations of dishonesty and accusations which, in substance, suggested that they had stolen property belonging to Amy Winehouse’s estate.

The claimant had described his own solicitors as:

“the finest and most aggressive attorneys in London.”

The court found that the description was consistent with the manner in which the litigation had been conducted.

It concluded that the defendants had been pursued “aggressively and relentlessly” and that the claimant had sought to intimidate them into handing over the auction proceeds.

The court found that the claimant knew the defendants were financially vulnerable and had limited resources with which to defend themselves. Despite this, he escalated the proceedings, introduced serious additional allegations shortly before trial and substantially exceeded his own costs budget.

The court described the purpose of this approach in stark terms:

“I find that he deliberately turned this case into large-scale and expensive litigation, in circumstances calculated to exert commercial pressure on the defendants to settle on his terms.”

Against that background, the defendants’ anxiety about mediation was not treated as obstruction. It was treated as a rational reaction to the claimant’s conduct.

The defendants had not simply refused to mediate

The court also found, as a matter of fact, that the defendants had engaged constructively with the possibility of mediation.

They had responded to requests, agreed dates and demonstrated a willingness to participate.

One proposed mediation did not proceed because of the claimant’s own failure to progress it. A later mediation did take place between the claimant and the second defendant.

The first defendant had initially been willing to participate in a joint mediation but withdrew after the claimant’s solicitor made serious allegations of impropriety against her and her solicitor.

The court found that those accusations “should never have been made” and noted critically that they had never been withdrawn.

Accordingly, the case was not one in which successful defendants had simply ignored requests to mediate. The documentary history showed engagement, disrupted by the claimant’s conduct and by allegations which made constructive negotiations increasingly difficult.

Why the mediation had a “nil” chance of success

The court’s most important conclusion on mediation was that the process had no realistic prospect of settlement.

It found:

“the likelihood of any mediation succeeding was therefore nil.”

That conclusion was not based merely on the parties’ personal hostility. It resulted from the substance of the claimant’s negotiating position.

The court found that the claimant had no intention of settling except on terms which amounted to the defendants’ capitulation. His offers required the defendants to accept liability, pay him money and, in practical terms, leave him free to continue making public allegations that they had acted dishonestly.

The judge said:

“the claimant never had any intention to settle the case on any terms other than a capitulation by the defendants and payment of money to him.”

The defendants were entitled to refuse such terms. Their reputations were central to the proceedings and had already been damaged by public accusations of theft, dishonesty and deceit.

A financial settlement alone would not have resolved that problem. On the court’s findings, settlement on the claimant’s proposed terms could have reinforced the public impression that the defendants had admitted wrongdoing.

The court therefore accepted that the defendants were entitled “to fight to restore their reputations.”

The judgment illustrates a crucial distinction. A party cannot rely on the formal language of mediation while maintaining a position which leaves no genuine room for negotiation.

A stated willingness to mediate is not necessarily meaningful engagement. The court may look behind the label and examine whether the party was genuinely prepared to compromise. Our commercial mediation service is designed around exactly that kind of genuine, structured negotiation.

Mediation is not a requirement to surrender

The judgment should not be read as suggesting that mediation is unnecessary whenever allegations of dishonesty are made. Many serious commercial, probate and reputation-sensitive disputes can and do settle through mediation.

However, ADR does not require a defendant to surrender a complete defence, accept allegations which the defendant considers false or purchase peace on terms that leave reputational accusations unresolved.

The court found that both defendants had been wholly vindicated at trial. They succeeded on every material issue of fact and law. They were found to be reliable and truthful witnesses, while the claimant and his witnesses were disbelieved on important issues.

The defendants’ decision to defend themselves fully was therefore not retrospectively characterised as unreasonable merely because they did not accept the claimant’s offers.

The court observed:

“The defendants were fully entitled to defend their personal and professional reputations to the end.”

This is an important counterbalance to the general policy encouraging ADR. The courts expect parties to consider settlement seriously, but ADR is not intended to compel a party with a strong defence to concede liability or accept terms which do not address the true dispute.

Success at trial remained the starting point

The claimant’s mediation submissions also failed because they attempted to displace the general costs rule without giving sufficient weight to the defendants’ complete success.

Under CPR 44.2, the starting point is that the unsuccessful party pays the successful party’s costs.

The court emphasised that the claimant’s defeat was “total and comprehensive.”

He had lost on every material factual and legal issue. His claims were dismissed in their entirety. The court found no basis for departing from the normal rule.

The alleged failure to mediate was therefore considered in context. It did not outweigh:

• the defendants’ complete success;
• the claimant’s weak underlying case;
• the aggressive manner in which it was pursued;
• the unjustified allegations of dishonesty;
• the unrealistic settlement position; and
• the court’s finding that mediation had no realistic prospect of success.

What are indemnity costs?

Most civil costs orders are made on the standard basis.

On the standard basis, the court allows only costs which are proportionate to the matters in issue. Any doubt about whether a cost was reasonably incurred, reasonable in amount or proportionate is resolved in favour of the paying party.

Indemnity costs are more favourable to the receiving party.

Under CPR 44.3, where costs are assessed on the indemnity basis, the proportionality restriction does not operate in the same way and doubts about whether costs were reasonably incurred or reasonable in amount are resolved in favour of the receiving party.

As Coulson LJ explained in Thakkar v Mican [2024] EWCA Civ 552, an indemnity costs order will usually represent a significant victory for the receiving party because it materially improves the position on detailed assessment.

However, indemnity costs are not punitive damages. They are not awarded simply because a party has lost, behaved unattractively or advanced a case which the judge ultimately rejected.

The receiving party must demonstrate conduct or circumstances which take the case “out of the norm”.

Where conduct is relied upon, the conduct must ordinarily be unreasonable to a high degree, although it is not necessary to establish moral turpitude or conduct deserving moral condemnation.

The “out of the norm” test

The court applied the test derived from Excelsior Commercial and Industrial Holdings Ltd v Salisbury Hammer Aspden and Johnson [2002] EWCA Civ 879 and Three Rivers District Council v Bank of England [2006] 5 Costs LR 714.

The critical question was whether there was conduct or some other circumstance which took the litigation outside the ordinary and reasonable conduct of proceedings.

Relevant factors can include:

• pursuing a speculative, weak, opportunistic or thin claim;
• advancing allegations irreconcilable with contemporaneous documents;
• making grave allegations of dishonesty without proper foundation;
• pursuing those allegations aggressively;
• using large-scale litigation to exert commercial pressure;
• advancing an evolving or constantly changing case;
• courting publicity for damaging allegations; and
• persisting to trial despite evidence which fatally undermines the claim.

The court found that numerous such factors were present.

“Speculative, weak, opportunistic and thin”

The court’s description of the claim was unequivocal:

“The claimant unreasonably advanced, and aggressively pursued, a case which was speculative, weak, opportunistic and thin.”

The claimant had commenced proceedings without properly identifying the factual basis on which each of the 141 disputed items was said to belong to the estate.

The pleadings were described as “vague and sloppy” and the claimant had failed properly to plead how the estate had acquired the items.

Shortly before trial, he abandoned parts of the claim after finally examining the list and accepting that it was “blindingly obvious” that some items had been gifts from Amy to the defendants.

The substantive judgment had described it as “troubling that the claimant brought a claim without bothering to check the Items he was claiming for until very shortly before trial.”

The costs judge regarded that failure to apply critical thought to the claim as relevant both to credibility and to the reasonableness of pursuing the litigation.

Late allegations of dishonesty

A particularly significant factor was the claimant’s late introduction of allegations of deliberate concealment and breach of fiduciary duty.

These allegations substantially expanded the factual and legal issues. They occupied much of the witness evidence, closing submissions and trial time.

The case had been listed for three days but ultimately occupied six court days. The judge estimated that the overrun was largely caused by the additional allegations.

The allegations were rejected.

The court found that the claimant and his witnesses had known that the defendants claimed ownership of significant items and intended to sell them. Contemporaneous emails and documents demonstrated that knowledge.

The allegation of concealment was therefore inconsistent with the documentary evidence, while the fiduciary duty claim was found to be thin and flawed.

The judgment emphasised that failed allegations of dishonesty do not automatically lead to indemnity costs. Nevertheless, as the Court of Appeal explained in Thakkar, a party who makes such allegations runs a very significant risk of indemnity costs if they fail.

Here, they were not isolated allegations. They formed part of an aggressive course of conduct pursued to trial.

Publicity as litigation pressure

The court was also highly critical of the claimant’s use of publicity.

The defendants argued that the claimant had made statements to the press implying that they had dishonestly sold items belonging to the estate for personal financial gain.

The claimant had told a newspaper that he had gone to the police. In cross-examination, he accepted that this was untrue.

The substantive judgment concluded that it was difficult to see how “telling a newspaper journalist that he had gone to the police when he knew he had not, can be anything other than deliberate” and that, when combined with the accusations concerning property removed from the estate’s storage facility, it was plainly intended to damage the defendants’ reputations and place pressure on them.

The costs judgment found that the claimant had “actively courted publicity for his serious allegations” and had used public accusations to increase the defendants’ vulnerability.

The court was particularly critical because the defendants were two young women who had been close friends of Amy Winehouse, had supported her during her lifetime and had assisted the family and the Amy Winehouse Foundation for many years after her death.

“The author of his own misfortune”

The judgment became still more critical when addressing the claimant’s costs submissions.

The court found that he had shown no insight into his conduct and continued to present himself as the victim, notwithstanding the complete dismissal of his claims and the serious findings made against him.

The judge said:

“The tone and content of the claimant’s submissions on costs suggest that he continues to regard himself as the wronged party and the ‘victim’, rather than the author of his own misfortune.”

The claimant’s attempt to raise a late issue concerning the second defendant’s funding arrangements was described as “unimpressive” and as further evidence that he continued to drive up costs by advancing new and weak arguments to avoid the costs consequences of his defeat.

The court also said that the claimant appeared unable to recognise that he had suffered a “resounding defeat.”

These comments underline that the court considered the conduct to have continued beyond the substantive trial and into the costs proceedings themselves.

Why indemnity costs were ordered

The court found that the claimant’s conduct was “unreasonable to a high degree” and “outside the ordinary and reasonable conduct of proceedings.”

The order was based on the cumulative effect of the claimant’s conduct, including:

• pursuing an inherently weak and poorly pleaded claim;
• failing to consider contemporaneous evidence which undermined it;
• advancing serious allegations of dishonesty and deceit;
• expanding the case shortly before trial;
• pursuing the defendants aggressively and relentlessly;
• attempting to exploit the disparity in financial resources;
• courting publicity;
• making unrealistic settlement offers;
• using mediation only on terms requiring capitulation;
• causing the trial to overrun substantially; and
• continuing to advance weak allegations during the costs process.

The court concluded that the conduct extended into “every facet of the proceedings – pre-trial, at trial, and now in respect of his unreasonable and unrealistic approach to the issue of costs.”

That cumulative assessment is important. Indemnity costs were not awarded because of one poorly judged letter, one failed allegation or one refusal to mediate. They resulted from a sustained pattern of conduct.

The practical significance of indemnity costs

The defendants’ combined costs exceeded £1.2 million.

The first defendant’s costs were approximately £715,362, while the second defendant’s costs were approximately £487,132.

The court considered that the defendants were likely to recover the full amount of their budgeted costs and at least 85% of their unbudgeted costs on detailed assessment.

Allowing a margin for error, it ordered interim payments calculated at:

• 90% of budgeted costs; and
• 75% of unbudgeted costs.

This produced total interim payments of £963,852.88.

The size of those payments demonstrates the practical impact of an indemnity costs order. Although the final amount remained subject to detailed assessment, the court was prepared to order very substantial sums immediately because the indemnity basis made a high level of recovery likely. Our fees are a fraction of that exposure.

Lessons for mediators and litigators

The decision provides several important lessons.

First, the court will examine the reality of a party’s approach to ADR, not merely whether that party said it was willing to mediate.

A party who offers mediation but insists on complete capitulation by the opponent may struggle to establish that it genuinely attempted to settle.

Second, a successful party’s reluctance to mediate is not necessarily unreasonable. The court will consider the seriousness of the allegations, the parties’ relationship, the proposed terms, the protection of reputation and whether negotiations had any realistic prospect of success.

Third, mediation is not a process by which a party can require an opponent to accept liability. Effective mediation requires some genuine flexibility on both sides.

Fourth, allegations of dishonesty must be pleaded and pursued with exceptional care. Although an unsuccessful dishonesty allegation does not automatically produce indemnity costs, it creates a substantial risk, particularly where it is made late, pursued aggressively or unsupported by contemporaneous documents.

Fifth, a party’s conduct outside the courtroom may be relevant. Press statements, public accusations and communications calculated to exert reputational pressure can all form part of the costs assessment.

Finally, the court will consider the whole course of the litigation. A combination of weak claims, aggressive correspondence, late amendments, unrealistic offers, public accusations and disproportionate pressure may together take a case “out of the norm”, even if no single act would have justified indemnity costs by itself. Advisers dealing with commercial and contract disputes should factor that risk into strategy from the outset.

Conclusion

Winehouse v Parry and Gourlay is not an authority for the proposition that parties may disregard mediation whenever they consider their opponent difficult.

It is, however, a powerful illustration of the fact-sensitive nature of ADR costs decisions.

The court found that the defendants had not unreasonably refused mediation. They had engaged with attempts to arrange it, had good reason to be fearful and cautious, and faced settlement demands which required them to surrender their defences and compromise their reputations.

On the particular facts, the judge concluded that mediation had a “nil” chance of success.

The more serious costs consequence arose from the claimant’s own conduct. His claim was found to be weak, speculative and poorly pleaded; his allegations of dishonesty were rejected; his litigation tactics were found to be aggressive and calculated to exploit the defendants’ financial vulnerability; and his public statements were found to have caused serious reputational damage.

The judgment therefore reinforces two connected principles. Courts expect parties to engage genuinely with ADR, but they do not require a successful party to accept capitulation disguised as settlement. Equally, a litigant who pursues weak claims through aggressive, reputationally damaging and commercially oppressive tactics risks not merely losing, but paying the successful party’s costs on the indemnity basis. If you would like to discuss a dispute, contact us or request a mediation.