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Mediation update: compulsion, failure to attend and drafting settlement agreements

Recent weeks have seen a flurry of decisions relevant to mediation, considering issues as varied as the courts’ ability to compel parties to mediate, failure to attend a mediation and the drafting of settlement agreements.

Compulsion (or not)

In Ryan v Walls Construction Ltd, a personal injury case, the Irish Court of Appeal was asked to decide whether the Irish High Court’s order compelling the parties to mediate should be upheld. That order was made under section 15 of the Civil Liability and Courts Act 2004, which gives the Irish High Court jurisdiction to compel parties in personal injury cases to mediate regardless of whether they consent or not. (As a general rule, the Irish courts are only permitted to adjourn proceedings to allow the parties to engage in an ADR process; they are not permitted to compel it.)

In deciding to make such an order, Kelly J said that the court had to consider that mediation would “assist in reaching a settlement”, which it would not if the mediation had little prospect of success and would only run up further costs and cause delay.

Kelly J overturned the Irish High Court’s decision to compel mediation and made some general observations about the section 15 jurisdiction, including that:

  • The court should be slow to invoke compulsory mediation where parties had not themselves tried to settle the case in the normal way used in personal injury cases, that being face to face negotiation.
  • In considering whether a section 15 order would have any realistic prospect of assisting in reaching a settlement, the court was entitled to bear in mind “the poorer chance of success in a mediation which is not undertaken on a voluntary basis”.

Although a decision of a different jurisdiction, Kelly J’s observations that compelling parties to mediate dilutes its prospects of success is one that will no doubt be of interest to English practitioners and courts alike.

Failure to attend an agreed mediation

In Gresport Finance Ltd v Battaglia, the defendant applied for security for costs. In resisting the application, the claimant made a number of points, including that the defendant, having agreed to attend a mediation, did not show up or give a good reason (or any reason) for his failure to do so.

The judge, Chief Master Marsh, considered this failure to be a “very serious matter” not only because of the costs the claimant incurred in relation to the failed mediation, but also because the defendant had “shown himself unwilling to engage in a serious attempt to resolve this litigation”.

Although the defendant’s conduct did not directly relate to a court order (and therefore was not an abuse of process), the judge said:

“…parties are under a duty to try to resolve their differences by ADR and the failure to attend a mediation meeting, having agreed to do so, is serious misconduct the court is entitled to take into account in an application where that party is asking the court for relief on the ground that it is just to make the order sought.”

Security for costs was refused, with the court holding that it would not be just to make such an order where it was highly likely the defendant would be ordered to pay a substantial sum to the claimant. However, even if that conclusion was wrong, the judge said all the other factors taken together (including the failure to attend the agreed mediation) were such that it would not be just to order security.

The judge then went further by saying:

“Even absent any other factors, to my mind, the defendant’s misconduct in failing to honour his agreement to attend a mediation would be sufficient to entitle the court to dismiss the application.”

This decision is another reminder of the importance the courts place on the parties’ duty to attempt to resolve their dispute by ADR. It is also a useful illustration of how a party’s conduct can influence the court’s decision, even on a seemingly unrelated matter.

Settlement agreements and drafting in advance

In Andrew John Bolton v Tameside Metropolitan Borough Council, the Upper Tribunal (Lands Chamber) was asked to construe a settlement agreement drawn up after a mediation. The parties disagreed about whether certain costs were included in the sum stated in one paragraph of the agreement, or were to be paid separately and additionally.

The judge, HHJ Nigel Gerald, construed the settlement agreement, finding the costs were to be paid additionally and separately to the sum stated. In coming to this conclusion, the judge underlined that:

“In general, where parties reach a negotiated settlement or compromise, they are free to reach whatever agreement or terms they wish and to describe that which they have agreed in any manner they wish, and refer to the several heads of compensation separately or collectively as one global sum. It is up to them, and then a matter to construe that which has been reduced into writing objectively. There is no law controlling the meaning of words used within a negotiated compromise or how it is expressed.”

The judge also reminded parties that their respective understanding or intent was inadmissible and the question was ultimately one of “straight-forward construction” of that which the parties expressed in writing in the agreement.

In terms of drafting settlement agreements, I’ve previously discussed parties (privately) drafting in advance of the mediation.

Conclusion

The courts continue to promote and encourage ADR and mediation. Indeed in Ryan v Walls Construction Ltd, Kelly J said litigation can be “damaging to both reputations and relationships” and “uncertain as to outcome”. He also described mediation as the “prime ADR process after face to face negotiation fails” and one which had:

“…proved itself to be highly beneficial and successful… in bringing about settlements in seemingly intractable disputes.”

He reminded parties (as Briggs LJ did in the English Court of Appeal in PGF II SA v OMFS Company 1 Ltd) that:

“…even if a mediation is unsuccessful, it frequently succeeds in disposing of some of the issues in dispute.”

Keating Chambers Elizabeth Repper

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