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The Detail:
This was an appeal from a decision by His
Honour Judge Peter Coulson QC in the Technology and Construction
Court – a decision that had been widely seen as supporting
privilege in mediations. Lord Justice May gave the decision of
the Court of Appeal.
The history was that an order had been made
on 19 July 2005 in the following terms:
"By 23.9.05, the parties' architectural
experts … do meet without prejudice and prepare a statement of
the issues upon which they are agreed and those upon which they
are not agreed with a brief statement of the reasons for the
disagreement."
A
statement was prepared and signed (after the words “without
prejudice” had been removed from the preceding draft). Prime
Meridian said they were entitled to use the statement in the
proceedings because it was ordered by the Court under Rule
35.12; Mr and Mrs Aird said it was a statement prepared for the
purpose of the mediation and was used in the mediation such that
it was a privileged document that could not be used in the
proceedings.
Lord Justice May decided that the order made
on 19 July 2005 was an order pursuant to Rule 35.12. In
construing the order, he said that the Judge had been wrong to
give weight to what he believed was the intention of the Judge
who made that order: to assist the mediation by ordering an
expert’s statement at a much earlier date than would have
otherwise been the case. The matter had to be looked at
objectively.
Mr and Mrs Aird’s Counsel had emphasised to
the Court of Appeal the public policy issues that relate to
mediation and that the experts were only involved at the stage
they were because of the proposed mediation. However, Lord
Justice May said two things about that. Firstly, the order for a
joint statement was clearly worded in relation to Rule 35.12 and
the statement that was produced was a joint statement for use in
the court proceedings. Secondly, the joint statement that was
produced was not mediation material subject to the without
prejudice tag, so there was nothing unfair or unjust that arose
– the joint statement was ordered by the court for use by the
court.
Whilst this decision contains impeccable
legal analysis, it will certainly impact negatively on the way
the Courts respond to considering the making of orders to assist
mediation and it will also affect the conduct of mediations
themselves.
As to the Courts, slowly but surely, some
Judges had begun taking steps to make orders to assist the
conduct of mediations, such as early disclosure of certain
categories of documents needed for the purposes of mediation or
early experts meetings and statements (as here). As to that kind
of approach, which is now to be regarded as something the Courts
should not do, Lord Justice May said:
“In the present case the
court ordered and later extended a stay of the proceedings
for mediation. The court did not order the parties to
mediate. The court would never, I think, sensibly make such
an order, since the court cannot, in the real world, compel
a party who does not want to to participate in a mediation.
The court can and does order a stay of proceedings for
mediation, almost always when all parties have indicated
that they are willing to try. The court may also perhaps, on
occasions, consider making an adverse costs order against a
party who is shown to have unreasonably refused to
participate in mediation, although I personally regard that
as a power to be exercised with caution. Since the court
cannot order the parties to participate in mediation,
neither can the court make orders stipulating the details of
how the parties should conduct a mediation. The most the
court can do is to encourage.” [Emphasis added]
and
“…in my view, the court has
no power, nor would it be remotely sensible for it to have a
power, to order parties to produce a privileged statement.”
Advocates will now have to be careful about
what they ask a court to order in support of a mediation.
Perhaps the safest course is simply to have the timetable in
relation to the directions the court would normally give set out
in such a way that necessary steps for mediation are completed
prior to the mediation. An opportunity may have been lost as a
result of this decision for the courts to work on ways that can
assist mediation, without imposing its will on the mediation.
Time will tell.
As to conducting mediations themselves,
clearly parties must be alert about their experts agreeing an
open statement for the purposes of a mediation where a Rule
35.12 order has been made because such a statement will not be
privileged. Clearly experts will continue to be needed to assist
in mediations and any such work they do, jointly or alone,
should be clearly marked as being for the mediation and without
prejudice so as to avoid any possibility that any such documents
could be treated as being for use by the Court.
This case has interesting reflections in the
USA. A Judge in Michigan in Irwin Seating –v- IBM
(available on Westlaw) has restrained experts for the plaintiff
from giving evidence at trial because counsel for the plaintiff
gave them confidential mediation statements from the defendant
to read in preparing reports for the litigation. The experts
said the confidential material did not influence them, but the
court emphasised the importance of mediation confidentiality and
“settlement privilege” in concluding that the experts not be
allowed to give evidence.
It certainly looks like England
and Wales is now ploughing a different furrow from that in New
South Wales, Australia, where, as a necessary adjunct to the
courts’ power to order mediation against the opposition of one
or more parties, the court has taken jurisdiction to make court
ordered mediations efficacious, by, for example, compelling
attendance of parties
(Rajski and
Another v Tectran Corporation and Others
[2003] NSWSC 478). |
