Practical Law

Mediation is fast becoming a popular method of alternative dispute resolution in many areas of law.

The courts’ support for mediation is evident from the many decisions, including PGF II SA v OMFS Company 1 Ltd  (which I looked at last year), emphasising that parties should attempt to resolve their dispute early and without being encouraged by the courts to do so. Indeed, section 14 of the White Book 2014 (Alternative Dispute Resolution) says that the message from the courts is that parties should seriously consider engaging in ADR without troubling the court or waiting for case management directions.

Although parties are alive to the idea of mediating their dispute, questions are often raised about how it all works. This blog tackles some of the questions frequently asked.

What sort of civil disputes go to mediation?

Many different types of civil dispute go to mediation. Even disputes that some think of as impenetrable, such as neighbour disputes (which I wrote about previously), are considered by the courts to be more than capable of being settled at a mediation. Indeed, Mummery LJ said in Bradford v James, a neighbour dispute, that:

“An attempt at mediation should be made right at the beginning of the dispute and certainly well before things turn nasty and become expensive. By the time neighbours get to court it is often too late for court-based ADR and mediation schemes to have much impact. Litigation hardens attitudes. Costs become an additional aggravating issue.”

In the construction context, both Jackson LJ’s final report and the courts encourage ADR. Indeed in Burchell v Bullard [2005] EWCA Civ 358, a case where a builder claimed unpaid monies from homeowners, who in turn counterclaimed for defects, Ward LJ said:

“…it seems to me, first, that a small building dispute is par excellence the kind of dispute which… lends itself to ADR.”

The court went on to dismiss as “plain nonsense” the stated reason for refusing mediation, namely that the matter was too complex for mediation.

In Rolf v De Guerin, Rix LJ reiterated that:

“…a small building dispute between a householder and a small builder, is well recognised as one in which trial should be regarded as a solution of last resort, and one which is likely to give an unsatisfactory outcome to the parties at disproportionate cost, to which should be added the cost of disproportionate anxiety.”

Examples of construction disputes that commonly go to mediation include:

• Disputes during and after the project about payment.
• Final account disputes.
• Disputes about extensions of time and liquidated damages.
• Defects cases.
• Disputes affecting those outside the site boundary, such as issues about party walls or damage to neighbouring property.

How many parties can attend a mediation?

Mediation is an entirely flexible process. Who is a party to the mediation depends on what all the parties agree. Disputes that raise the same or similar issues and affect a number of parties are sometimes dealt with at a multi-party mediation. Examples of this in the construction context include where:

• A developer has constructed a number of homes that all suffer from issues.
• There is an issue affecting the contractual chain and – for example – the main contractor, the sub-contractor, the sub-sub-contractor and/or the supplier all attend.
• There is a workplace dispute, perhaps on site, involving a number of individuals.
• There has been an incident involving a number of individuals, all of whom have separate claims, such as damage to a number of neighbouring properties.
• There are issues affecting the community, such as noise, working hours or planning.

How do I prepare for a mediation?

The preparation required for the mediation depends on the dispute and the parties involved.

What is paramount however is that all parties bear in mind that in a facilitative mediation (which is the norm), they must persuade the other party of their case, not the mediator. Indeed, the Jackson ADR Handbook says position papers should be written in plain English, logically ordered, concise and:

“capable of being understood by the parties as well as the lawyers and the mediator.”

The Handbook also says that position papers should not read like a statement of case. It suggests including a section on the “party’s interests and objectives”, which identifies the “key objectives that the party wants to achieve at the mediation” and that can:

“draw attention to the costs of proceeding to trial, the element of irrecoverable costs, the desire to preserve relationships, the time it will take to resolve the [dispute] if mediation is unsuccessful or any other factors that influenced the party to mediate rather than litigate the dispute.”

Building disputes, irrespective of their value, can be complicated by certain factors, such as a long list of alleged defects or events. Parties sometimes wish to bypass detailed points and negotiate instead on an entirely commercial basis. However, where one or more parties wants to discuss the detail of items (or at least some of them), thought is required about how to present the case at mediation in a manageable way.

How do I present a complicated construction case at a mediation?

Ways to potentially manage complicated construction cases include:

• Where there is a list of defects, holding the mediation (entirely or in part) at site or using media to show videos or photos of the complaints.
• If pleadings are yet to be served, putting together a mini-Scott Schedule listing all or some of the complaints and identifying their value.
• Putting complaints into categories or listing items by value and suggesting or agreeing that the top five or ten items or categories in value are discussed.
• Cross referring items to a mini-bundle containing photographs of the defect or issue, a key document and a cost.
• If resolution of the dispute requires the input of an expert, agreeing in advance that experts attend the mediation (perhaps at an agreed time) and give a presentation and/or have a joint meeting to seek to narrow or resolve issues.

As to what else to consider, see my previous comments on advance planning and preparation of a draft settlement agreement.

What happens on the day?

Again, mediation is an entirely flexible process. During the mediation day, there are often open meetings that some or all of the members of each party’s team attends.

Meetings between the decision makers, either on their own or with the mediator, are common, as are meetings of legal representatives or experts. Such face to face meetings allow those with knowledge of the dispute (either directly or in a wider context) to present their position, listen to the response and directly respond or answer any queries about it.

Every mediation is different. How the mediation day unfolds depends on the parties.