Failure to mediate – failure to mitigate?

Jacqui Joyce Law 0 Comments

If you do not mediate in a case in which you are involved as a result of your previous solicitor’s negligence, can this be treated as a failure to mitigate?

That was the question that was raised in Orientfield Holdings Ltd v Bird & Bird [2015] EWHC 1963]

The claimant had exchanged contracts to purchase a property for over £22m and paid a deposit of 10%. However the property suffered from serious defects about which their solicitor failed to advise them. They refused to complete, and became involved in proceedings against the vendor for rescission of the contract and return of the deposit.

There was no mediation in those proceedings.

Just before trial, the case settled with 50% of the deposit being recovered. Now the claimant sought to recover the balance of the deposit and its litigation costs from its former solicitors. The defence alleged that the claimant had failed to mitigate its loss, by failing to mediate the dispute with the vendors.

The Judge decided that in the circumstances of the particular litigation against the vendors, the decision of the litigation solicitors to press on with the case and not to mediate was not unreasonable. Therefore this could not amount to a failure to mitigate. However, the judgement seems to leave open the possibility that a clear and unjustified refusal to mediate in another case might be considered as a failure to mitigate.

The judgment makes reference to a discussion about the appropriate time to mediate being after the exchange of witness statements (para 76). It is commonly felt that mediation should take place after such exchange. However, there are clear arguments going the other way. Firstly, there is nearly always something in witness statements that will cause the other side offence and thus make settlement more difficult. Secondly, witness statements are expensive to produce and costs are often a hindrance to settlement.

Finally, one should always have strong regard to the fact that a mediation is not a mock trial. When parties in a mediation put too much emphasis on the merits of the case they so often overlook that the purpose of a mediation is to find out what the parties really want and then see if a sensible and agreeable solution can be found that will meet their needs.

Alan Langleben

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