Siblings, Settlements and Settlement Regret

Since the whole idea of mediation is to avoid getting anywhere near a court room, there are very few reported cases on actual mediations.  The recent case of Aujla -v- Aujla provides an interesting insight into the role of a mediator in helping the parties to reach a settlement.

The original dispute involved two brothers arguing about the ownership of two properties.  They agreed to mediate and a mediator was appointed.  Both parties were legally represented and after about 9 hours of mediation, a draft Tomlin Order was agreed including a detailed schedule confirming the terms of settlement.  As part of the overall deal, one of the brothers was to pay the other brother £117,500.

Within 2 weeks of the mediation the paying brother’s solicitors wrote to their opponents saying that their client wished to rescind the agreement because he alleged that it was signed under duress, he was extremely dissatisfied with the conduct of the mediator and subsequently that the settlement was the result of undue influence.  Another argument that the settlement amounted to an unenforceable gratuitous promise was later abandoned.

Since a lot of the exchanges were without prejudice, the court first had to consider whether that correspondence could even be considered.

After the paying brother had changed solicitors he made a complaint about the mediator’s conduct to CEDR, the mediator’s accreditation body but this was rejected by them.

In the meantime, the receiving brother’s solicitors submitted the draft Tomlin Order to the court which was subsequently approved and made into a formal court order.  The paying brother then made an application to the court to set aside that order.

In his witness statement, the paying brother asserted that the mediator was biased, threatening and over bore his free will.  In contrast his barrister did not express any concerns about apparent bias but did criticise the mediator for having raised their voice.

In terms of warnings by the mediator to the paying brother that there would be substantial costs if the matter ended up going to trial, the paying brother said that the mediator had told him to make offers which he did not wish to make.  He also said that the mediator had pointed out certain weaknesses in his case.  However the barrister advising this brother was present throughout and advised him that he did not have to make offers which he did not wish to make and did not have to sign the draft Tomlin Order.

The judge said that as mediation is a voluntary process the paying brother could have walked away at any time and was of course legally represented throughout the process.

Whenever it is sought to avoid a contract on the basis of third party duress or undue influence the court must be satisfied that the party seeking to enforce the agreement:-

• Had actual notice of the duress/undue influence or
• Had constructive notice of the duress/undue influence or
• Procured the making of the contract through the agency of a third party, in this case the mediator

Having considered the evidence of the paying brother, his wife and his counsel, the judge concluded that it was completely untenable for him to argue that the mediator’s conduct amounted to either duress or undue influence.

Apart from anything else the judge decided that the receiving brother could not possibly have had actual notice of any duress or undue influence because they were not in the same room as their brother.  The judge was similarly unimpressed by the claim that the mediator was the receiving brother’s agent.  In the light of the above, the judge decided that the application to set aside the Tomlin Order should itself be dismissed such that it remained fully enforceable.

Mediations can be very lengthy and in the worst cases go on into the early hours of the morning.  Particularly in the field of contentious, wills, trust and probate mediations, it is not uncommon to have elderly parties.  Part of the mediator’s job is to engage in reality testing of both party’s cases and to point out the downside of going to trial in terms of the substantial costs per side coupled with the prospect of the losing party having to make a significant contribution towards the winning party’s costs.  It is by no means uncommon in my experience (once all of the parties have provided estimates of the costs of going to trial) for the total of those to exceed the value of the estate.

A mediator must at all times remain independent and impartial notwithstanding that part of the job on the day is to convey offers from one party to another.  Most, if not all mediators, are naturally concerned about their success rates but that must never be allowed to take precedence over ensuring that whatever deal the parties decide to do is enforceable especially if in the days following the mediation one of the parties suffers from settlement regret.

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