Confidentiality in mediation: Do the decent thing

The reaction was a sulk. I was the mediator. It was first thing in the morning at the “all sitting around the table” meeting. A whippersnapper assistant solicitor opened her notebook and began to write. “Put it away,” said I (though I said it much more nicely than that). Hence the sulks. Oh come on, don’t be silly. The sight of one of the parties in a private, nay secret, mediation taking notes gives the other parties the willies. Do you remember me writing here about what goes on in mediation being nobody’s business?

Well now, here is a smack bang up to date court case in the Technology & Construction Court where this very point is considered. Her Honour Judge Kirkham was faced with an application for disclosure of documents arising out of or in connection with two mediations. And said no.

There have been a fair number of disputes about the foot and mouth epidemic in 2001. Contractors galore were engaged by Defra to do the clean-up. And when the smoke blew away Defra started sulking about the bills. Then more sulks from the contractors when they said millions were yet to be paid. Those of us on the outside but familiar with construction disputes will not sulk. We know what it’s like to do any job on the hoof, as it were. We know it leads to hefty rows about the final account.

Cumbria Waste Management and Lakeland Waste Management were at odds with Defra. It was for £4.54m and £1.72m respectively. They settled in two mediations for £3.9m and £1.4m, but not without a sulk. That led to the two companies turning on the solicitors who drafted the contract between them and Defra. The firms argue that they lost money in the mediated settlement. They say their losses are as a result of the solicitors’ negligence in negotiating, drafting and advising on the terms of the contract. The allegation is that the contract contained ambiguities and inconsistencies. Hence the dispute; hence the compromise … hence the loss.

If the courts appeared willing to open up what happens in mediation there will be a lot more sulks.

These folk are now on their way to trial.

En route, the solicitors under attack came to court for pre-trial disclosure of the bumf that was on the table in the mediation. Remember, the mediation was about the final account. The solicitor now being sued by the contractors wasn’t in on the mediation of course. It is only after the mediation that the court action about the so-called negligently drafted contract arose. Well now, says the defendant solicitors to the contractors, if you were forced to settle with Defra in the mediation, give us chapter and verse on why. Up popped Defra, and said no way; the mediation talks are secret.

Defra does not want brightly burning lights cast on the settlement. Why? Well, Defra is in dispute with other contractors as well. After all, it is only seven years since all that nasty work was done and final accounts rendered. Defra’s objection to a public airing of its private affairs is based on “privilege”, “confidentiality”, “contract” and “relevance”. Look, the law is founded on keeping secret what went on in discussions intended to encourage settlement of a dispute. There are a very few special reasons for going behind that rule. None applied here. In another case some time ago the Court of Appeal went as far as to say … the parties are entitled in mediation to adopt whatever position they wish, and if as a result the dispute is not settled, that is not a matter for the court, (Halsey vs Milton Keynes). A lot of people applauded that. True in 1996 in a Court of Appeal case called Muller the court did order disclosure of the negotiations. But that went to whether a party had acted reasonably to mitigate its loss in its conduct of negotiations. Defra is different; first it is its private business that is being prised open. Second the action about alleged negligence is nothing to do with it.

I dare say that if the courts appeared willing to open up what happens in mediation there will be a lot more sulks. Nobody could then happily recommend mediation. It would take away this ever so useful part of equipment available to rescue parties from their disputes. Mind you, I dare say that the whippersnapper assistant solicitor would brighten up. Out would come her note book and in would go the half of the story that she hears, half of which would not be accurately written down and then there could be a dispute about the notes. Keep mediation free for commercial head-bangers … with just a sprinkling of commercially minded lawyers to tend the herd.