They have confirmed that:
- Mediation is an important tool with regard to reaching settlements in disputes.
- Mediation is a flexible process and
- Solicitors cannot be held responsible for final agreements not being reached if the parties themselves did not reach such agreement.
The case involved two brothers, who had a very complex business dispute following a breakdown of their business and personal relationship. The dispute was mediated and at an initial mediation the parties reached an agreement “in principle”. Subsequently there was a dispute about the terms of the agreement reached but eventually the “agreement in principle” matured into what became the final settlement agreement.
Frost then brought a claim against his solicitor for failing in his duty to ensure that the ‘initial’ mediation ended in an immediate binding agreement (as opposed to one that required further negotiation and perfection at a later date).
The Court of Appeal has confirmed that the solicitor does not owe clients such a duty.
The ‘initial mediation’ had resulted in an agreement in principle, however in order to be enforceable, it certainly needed further work from the heads of terms that had been reached.
In other words, it had to be put into a formal agreement setting out in detail the points that had been agreed and the practicalities of how the matter would be finalised to enable that agreement to be legally enforceable. Unfortunately the solicitor could not, without both brothers further agreement, finalise their provisional agreement.
Given the complexity of the matter, the Court made clear that they were not surprised that the mediation process had not resulted in an immediately enforceable agreement. However, the Court was keen to emphasise that mediation was a flexible process of dispute resolution. In some situations, immediate and binding agreements might be possible. However, in others (in which this case is a fine example), ‘flesh needed to be put upon the bones’.
Given the flexibility of the mediation process, the Courts are keen to ensure that practitioners continue to approach the mediation process with maximum flexibility. The Court reminded solicitors that it was a part of their duty to advise their client on the nature of the process and the status of any agreement reached as a result.
The solicitor in this case was under no obligation to achieve finality at the ‘first’ mediation because this was an impossible task.
- It was impossible from the outset, as the solicitor could not know how the mediation would develop.
- It was also impossible at the conclusion of the mediation, because matters had not developed to a point at which the parties had achieved a final settlement, and
- It is most certainly not within the solicitor’s power to fill the gaps.
From a personal point of view, I welcome this clarity and decision from the Court of Appeal because it reinforces two important points for clients to be aware of:
- It is a flexible procedure; anything can happen and anything can be agreed in terms of that agreement.
- A mediation agreement is binding if the terms of that agreement are clear. In a more complex dispute it is imperative that all the terms that are agreed are set out in detail so there can be no confusion as to what has been agreed.
- Finally, it is the participants to the mediation that reach the agreement, (not solicitors on their behalf); mediation is a process which gives back to the clients all the power.
As a firm advocate of mediation, I'm pleased the Court of Appeal saw sense on this occasion to ensure that the flexibility of mediation was not at risk.
For further information on the Mediation Services QualitySolicitors Dunn and Baker offer please contact a member of our legal team on Exeter - 01392 285000, Cullompton - 01884 33818 or Newton Abbot - 01626 330127.