REUTERS | Navesh Chitrakar

Why mediate a delay claim?

This post considers some of the advantages (financial and otherwise) of mediating, as well as looking at how best to prepare for the mediation of a delay claim and how best to present a delay claim at a mediation.

Potential financial advantages

With any dispute, parties need to consider the potential financial advantages of using mediation to resolve their dispute. It may be that there is an adjudication clause in the contract which means that, whoever wins the dispute, each party will pay their own costs of the adjudication. It may be that, if the case went to court, there would be an issue about proportionality of costs, such as that discussed in Willis v MRJ Rundell & Associates Ltd. There the total of both parties’ costs budgets was about £1.6 million in relation to a maximum claim of £1.1 million, as to which Coulson J said:

“In other words, it will cost significantly more to fight this case than the claimant will ever recover. On that basis alone [the total of both sides’ costs budgets compared to the maximum value of the claim], it seems to me that the costs in the costs budgets are both disproportionate and unreasonable.”

Indeed the same point was made in Rattan v UBS, where Males J said in relation to a claim of (the US dollar equivalent of) about £1.3 million where the total of both parties’ budgets was £2 million that:

“…despite my attempts at the CMC to reduce the parties’ costs budgets to more proportionate figures, this will still be an expensive case to fight having regard to the amount at stake. It is in my view a case which cries out for mediation.”

The same analysis was used in McLennan Architects Ltd v Jones, when Akenhead J (on hearing two applications: one for expert evidence and one for security for costs) remarked that:

“This claim is for £235,875.54. That is disputed by the Defendants who also counterclaim for £325,544.33… The Defendants’ cost budget estimate is for some £316,000 whilst McLennan’s is for some £201,000. It can readily be seen that, if these cost estimates are reasonably accurate, the costs will broadly equate to what is in issue.”

After dealing with the applications, which included granting security, Akenhead J said this in conclusion:

“Whilst I am aware that the Court Settlement Process has not proved successful, this case is crying out to be settled given the financial position of McLennan. I would very strongly urge the parties to think again and seek to resolve their differences amicably.”

There may be costs sanctions

There is also the question of potential costs sanctions if a party unreasonably refuses to participate in ADR. This was discussed previously in the cases of PGF II SA v OMFS Company 1 Ltd and Garritt-Critchley v Ronnan.

Other reasons to mediate

Other matters that motivate parties to take their dispute to mediation include:

  • Keeping the dispute and its outcome confidential.
  • Avoiding setting a precedent.
  • Seeking to maintain business or personal relationships.
  • Resolving the dispute earlier, perhaps even while the project is ongoing.
  • Bringing other connected parties, issues or disputes into one forum and resolving everything with everyone at once.

Also, as was emphasised in PGF, mediation is not necessarily about an “all or nothing” outcome. Parties also need to consider using mediation to take some issues off the table or, as Briggs LJ, said:

“ADR may succeed only in part, but lead to a substantial narrowing of the issues.”

In terms of delay claims, mediation may allow some of the causes and effects of delay to be agreed.

So how do you approach preparing for the mediation of a delay claim?

With any mediation, the key is advance preparation that is focused on mediating the dispute, rather than litigating or arbitrating it. Fundamentally, the decision makers need to be aware that in a facilitative mediation, it is their role (and the role of their team) to persuade the decision maker on the other side of their position, and not the mediator.

Delay claims often bring complicated factual scenarios. It may be that several events have caused separate delays which happened at separate times or at the same time. Different parties may be said to be responsible for different events. The challenge is therefore to distinguish individual effects from individual causes.

The hours of the mediation day go quickly and should be spent wisely. Plainly the majority of the time should be spent on the most important points which, in a delay claim, are likely to be the events that have had the greatest impact on each party’s case, should they win or lose them. Each party must therefore understand the profile of their case.

One method for understanding the profile of your case is to rank the individual items in dispute in order of priority based on each item’s impact and influence on the outcome. You can then indicate (perhaps in your position paper or at any pre-meeting) that you will wish to spend a certain amount of time on the mediation day discussing priority items.

It is also important that each party knows the strengths and weaknesses of their case so that they can recognise a “good deal”. A method for doing this is to carry out a risk assessment to test the robustness of your position on each individual event from both a liability and impact perspective. Your risk assessment or profile does not have to be shared with the other party; it can (and should) however be kept in your pocket and revisited and tested throughout the mediation as the other party challenges (or accepts) a position taken. Often, as the mediation evolves, your risk profile will look very different to how it looked at the start of the day. As a result, your perceptions of a “good deal” will change throughout the mediation day accordingly.

How do you present a delay claim at a mediation?

As with any mediation, consideration needs to be given to presenting your claim in a clear, logical, concise and persuasive manner. This should be aimed not only at the lawyers or experts on the other side, but also at the decision makers who – perhaps – have previously had little involvement in the dispute.

When it comes to presenting your case on the period of the delay and its cause or causes, some things to consider include:

  • Your delay expert giving a presentation (perhaps using power point) at an opening or other joint session, which sets out his views on the basis of what he has seen. Ideally the presentation should be graphical and underpinned by supportable facts.
  • Preparing simple annotated programmes demonstrating the cause and effect in graphical terms that can be easily understood by non-planners. Annotations can be used to highlight pertinent facts and provide explanation.
  • Showing photographs of different stages of the project, which are perhaps annotated to make the points you wish to make.
  • Marking up drawings of the project to show which sections were affected at different times. This is particularly helpful where there is an accumulation of items that result in multiple open work fronts due to wide-spread disruption and disturbance to regular progress.
  • Using any available 3D or 4D model.
  • Showing any available videos of the project showing how it developed in real-time and fast-time.

Conclusion

Delay claims are being mediated more and more, and there are ways and methods to deal with them in mediation. As always, the key to a successful mediation is preparation.

3 thoughts on “Why mediate a delay claim?

  1. Thank you for a very helpful article. As a mediator I often see parties trying to persuade me of the wisdom/strength of their case rather than their opponent.

    As an advisor to parties in mediation it is important for them to identify the effect of not reaching settlement in terms of costs and otherwise. They also need to consider the impact of irrecoverable costs which will arise in other dispute resolution mechanisms.

  2. Well summarized.
    Indeed, mediation is the best practical way particularly in construction claims to save time and cost for both Claimant and Defendant, and the society.
    Thanks

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