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Understanding Mediation

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3rd June 2015

Mediation, which is the facilitation of agreements between the parties rather than the imposition of a solution offered by litigation or arbitration, is becoming increasingly recognised as a cost-effective, quick and civilised way of resolving disputes.

It is particularly suited to disputes relating to leasehold property, where the parties are likely to have to maintain a relationship after the particular dispute is resolved.

The very process of mediation may also help the parties to resolve future disputes more satisfactorily.

The advantages of mediation as compared with litigation include:

• Speed
• Confidentiality
• Lower cost and avoidance of costs risks
• Certainty of outcome
• Control over the outcome
• Finality
• Choice of mediator
• Choice of time and place of the mediation
• Flexibility

Speed

If the parties decide to go down the court or tribunal route they must make a claim or application. Then, if the dispute relates to service charges and the like, there will probably be a case management conference, followed by directions and the preparation and exchange of evidence and bundles of documents. If experts are involved there will be meetings between them to identify and narrow the issues. And then a wait for the hearing, delay while waiting for the decision, and possibly an appeal. Complex hearings in the FTT are often adjourned part heard for weeks or occasionally months because of inadequate time estimates and the need to find dates which suit the parties and the members of the tribunal.

All this takes time – generally months, sometimes longer. With mediation, on the other hand, all that is usually necessary, particularly in simpler cases, is to prepare and provide to the mediator a few essential documents, which the mediator will specify, and a brief position statement setting out the background facts and the outcome which each party would like to achieve. Almost invariably the mediation will take no more than a day, sometimes less, and, with a reasonable amount of good sense from the parties and help and encouragement from the mediator, a binding agreement will be reached and signed on the day. In complex or high value cases the parties, having reached heads of agreement at the mediation, may wish to discuss the detailed drafting with their own advisers shortly afterwards, but that will usually not be necessary. In enfranchisement and lease extension cases they will generally wish to ask their own surveyors to prepare an agreed valuation based on the terms at which they have arrived by mediation. The whole process from start to finish need take no longer than two months at most.

Confidentiality

A court or tribunal decision is a public document which may well contain criticism, sometimes unfair, of parties and their witnesses. Mediation is a confidential process. Any publicity of the agreement will be controlled by the parties by agreement. Usually there will be none.

Lower cost and avoidance of costs risks

Application and hearing fees in service charge and similar cases are now fairly substantial. The legal costs associated with the preparation of bundles and representation at a possibly lengthy hearing or hearings may be vast, and there is always the risk that one of the parties may be ordered to reimburse fees and/or pay the other side’s costs. For leaseholders there is the risk in service charge cases that the landlord will be entitled to place its costs on the service charges so that the leaseholders will is effect pay not only their own costs but also the landlord’s. Even more alarming for leaseholders is the possibility that the landlord may seek to recover its costs in full, not as a service charge and therefore shared between all the leaseholders, but as incurred incidentally to the service of a section 146 notice for forfeiture of the lease and recoverable from the individual leaseholder. In mediation, not only are the costs likely to be very significantly less but it will normally be agreed that the costs of the mediation will be shared equally between the parties and that the costs of preparation for the mediation will be borne by the party incurring them.

Certainty of outcome

The outcome of litigation is by its nature uncertain. The object of mediation is to hammer out an agreement on the day, thus saving the uncertainty associated with waiting (sometimes for weeks or months) for a judgment followed, on occasions, by an appeal.

Control over the outcome

This is perhaps the greatest advantage of mediation. The mediator aims to help the parties to arrive at terms which each of them can live with. If a party will not agree to a term, that term will not be in the agreement, but usually, given good sense from the parties and encouragement and help from the mediator, and given also the knowledge that the alternative to success is likely to be expensive and protracted litigation, an agreement, or at any rate agreement in principle, will be reached on the day and it will by definition be one with which all concerned are reasonably content. This could hardly be more different from litigation, where the result is imposed and may well suit none of the parties particularly well.

Finality

The object of a mediation is a binding agreement, signed on the day or very shortly thereafter. Quite often, even if a final agreement is not reached on the day, the issues will have been narrowed, and sufficient common ground established during the mediation, to enable the parties to reach agreement between themselves after the mediation. Compare that with the uncertainties and delays of litigation.

Choice of mediator

Choosing the judge is not an option, but the choice of mediator is for the parties.

Choice of time and place of the mediation

A mediation, unlike litigation, can be held anywhere and at any time agreeable to the parties. It can take place anywhere suitable. In leasehold disputes, for example, the managing agent will probably provide a room at little or no cost.

Flexibility

With litigation, particularly in a tribunal, the ambit of the dispute is inevitably restricted, not only by the limits of the tribunal’s jurisdiction but also by the pleaded case or by the issues identified at the case management conference. Not infrequently the judge may think it fair to make a particular order but will lack the jurisdiction to do so. The mediator, on the other hand, can deal with virtually any dispute that the parties wish to be resolved. Quite often the underlying cause of the problems between the parties is not something with which a tribunal, or even a court, can or will deal, but all sorts of problems can be resolved through mediation.

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