With sea changes in the world of costs for litigating, brought into force in April 2013, parties would do well to remind themselves of the benefits of avoiding the courts and resolving their disputes via property mediation. Jacqui Joyce looks at the advantages of mediation.
Preserving business relationships
Property disputes are well suited to mediation. There is usually an on-going relationship between the parties eg landlord and tenant, neighbours. The parties will achieve a mutually satisfactory settlement, a ‘win-win’, unlike in arbitrations, court proceedings and expert determinations where someone will lose. Also, by avoiding the adversarial process they are more likely to have a worthwhile/amicable relationship going forwards.
A mediation can be organised within a matter of days and usually concludes within one day. This saves time and money leaving parties free to get on with pursuing their business or enjoying life without the dispute ‘hanging over them’. Compare this to the many months and thousands of pounds it will take to bring a matter to trial and all the stress that involves. Even after a day in Court, that is not the end. It could take months to get a judgment and then there is the risk of an appeal.
Mediation is conducted on a without prejudice basis. Anything said at the mediation cannot be relied on in the Court proceedings if the mediation fails. This allows parties to create a safe space to discuss their differences and explore possible solutions.
The mediation is entirely confidential. This is both externally and internally.
Externally: Nothing said in the mediation should be repeated to the outside world and it will not ordinarily be known that a mediation took place. This is particularly advantageous in commercial property disputes. 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 settlement terms, to several other tenants.
Internally: Within the mediation whatever each party says to the mediator is confidential unless they say she can tell the other side. This is to encourage frankness with the mediators so that she can see how best to help form a deal.
There is no compulsion upon any of the parties 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 during the day. It is only once the parties have arrived at a settlement that it is documented in a manner that is intended to become legally binding.
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 actually be actively sort
The mediation process, by its very nature, facilitates more creative solutions eg renegotiations of the terms of sale between vendor and purchaser, variation in lease terms etc. This gives the parties the opportunity of finding a commercial and practical solution (as opposed to a pure legal one) to their dispute. Sometimes one party will be happy with something that is changed that is unconnected to the dispute eg a lowering of rent, exchange of land, in return for giving way on another point.
Client involvement/Retention of control
The client is central to the mediation and is involved throughout. This can be a very different experience for a client than the court process where quite often they are merely observing the process. Also clients do get their ‘day in court’ in the sense that they get to make their points to the mediator and quite often to the other side as well. A mediation can often be a cathartic process. It brings a sense of ‘closure’ to the issue.
Resolving multi-party disputes
Mediations work well for multiparty disputes by getting everyone to concentrate at the same time and explore joint solutions. This works particularly well in dilapidations disputes where there is landlord, tenant and subtenant.
High success rate
The Fifth Mediation Audit carried out jointly by CEDR and the Civil Mediation Council dated 15 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 that would otherwise have proceeded through litigation, the commercial mediation profession this year will save business around £2 billion a year in wasted management time, damaged relationships, lost productivity and legal fees.’
Choice of mediator
This 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 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 the can choose someone who they trust.
The Civil Procedure Rules require parties to consider ADR and the courts are very willing to penalise parties who unreasonably refuse to do so – so why not give it a go – what have you got to lose?
(A version of this article previously appeared in the Estates Gazette)