With Jackson making sea changes in the world of costs for litigating, parties would do well to consider the benefits of avoiding the courts and resolving disputes via mediation
Property disputes are well suited to mediation. There is usually an ongoing relationship between the parties such as landlord and tenant or neighbours. The parties will achieve a mutually satisfactory settlement known as a “win-win”, unlike in arbitrations, court proceedings and expert determinations, where a party will lose. By avoiding the adversarial process, the parties are more likely to retain a constructive relationship going forward.
What are the advantages?
Speed and cost: a mediation can be organised within a matter of days and usually concludes within a day. This saves time and money, leaving parties free to pursue their business interests without the dispute hanging over them. Half-day mediations can be useful for smaller disputes, which seems attractive when compared to the many months and thousands of pounds it will take to bring a matter to trial and the stress that that involves. Even after the day in court, that is not the end: it could take months to obtain a judgment, which may then be subject to an appeal.
Without prejudice/voluntary: the mediation is conducted on a without-prejudice basis. Admissions cannot be relied on in court if the mediation fails, which enables parties to explore possible solutions without giving up their arguments.
The process is voluntary. The courts have been at pains to stress that a party cannot be compelled to mediate. However, they have also made it clear that if a party is to refuse, it should have a reasonable reason for so doing. With the increased push towards costs of proceedings needing to be proportionate, it is likely that the courts may in the future become harsher on parties that refuse to mediate.
Confidentiality: the mediation is entirely confidential, both externally and internally.
Nothing said in the mediation should be repeated outside and it will not ordinarily be known that a mediation took place. This is particularly advantageous in commercial property disputes where, for example, a landlord of a shopping centre may prefer to reach an amicable settlement with one tenant without giving publicity to the dispute, or making known settlement terms to the other tenants.
Within the mediation, whatever a party says to the mediator is confidential unless he or she says that the mediator can tell the other side. This is to encourage frankness with the mediator so that she can see how best to help form a deal.
Non-binding nature: there is no compulsion on either party to reach a settlement. Parties can only settle their disputes if they wish to do so and if the terms are acceptable to them. They can walk away at any point. However, once the parties have arrived at a settlement, it is documented in a manner that is intended to become legally binding.
Avoiding precedent: a mediated settlement does not give rise to a precedent for future, similar disputes. Again, this could be very useful for a multi-tenanted landlord, although in some cases a precedent may be actively sought.
Creative solutions: the mediation process facilitates creative solutions, such as the renegotiation of terms of sale between vendor and purchaser or the variation of lease terms. This gives the parties the opportunity to find a commercial and practical solution to their dispute, as opposed to a purely legal one. Sometimes one party will happily change something – a lowering of rent or an exchange of land, for example – that is unconnected to the dispute in return for the other party giving way on another point.
Client involvement/retention of control: the client’s central involvement throughout is different to the court process, where often they merely observe the barristers. That is not to say that they don’t get their “day in court”: they make their points to the mediator and often to the other side. In addition, a mediation can often be cathartic, particularly in residential property disputes when emotions are running high. It brings a sense of closure to the issue.
Multi-party disputes: mediations work well for multi-party disputes by cutting out the middle man and getting everyone to concentrate at the same time and explore joint solutions. This works particularly well in dilapidations disputes where there is a landlord, a tenant and a subtenant.
Let the figures speak for themselves
The fifth Mediation Audit carried out jointly by CEDR and the Civil Mediation Council in May 2012 stated that “mediators report that just over 70% of their cases settled on the day, with another 20% settling shortly thereafter so as to give an aggregate settlement rate of around 90%.”
It calculates that “by achieving earlier resolution of cases than would otherwise have proceeded through litigation, the commercial mediation profession this year will save business around £2bn in wasted management time, damaged relationships, lost productivity and legal fees.”
Taking the mediation route
Choosing a mediator is a matter of fundamental importance. Unlike the lottery of which judge will hear a case, with a mediation, the parties are free to choose the mediator that they want. Whether a lawyer or not, they can choose an individual in whom they have confidence, who has in-depth knowledge of the area of law or expert opinion in dispute, and an understanding of the commercial drivers in that market. Most importantly, they can choose someone whom they trust.
The Civil Procedure Rules require parties to consider ADR and the courts are willing to penalise parties who unreasonably refuse to do so. So why not give it a go – what have you got to lose?
Jacqui Joyce is a member of The Property Mediators, whose members specialise in mediating property disputes
