It's not always black and white

Many years ago, mediation was not common practice. But the process, whereby a neutral third party helps others reach an agreement, is now an accepted form of alternative dispute resolution (ADR). ?And it plays a vital role in trusts and estates cases. These disputes can divide families, rack up unnecessary costs, and tend to be fought out in a highly emotionally charged atmosphere. Mediation provides a tactical approach.

All litigators are familiar with the legal obligations in relation to ADR. The position is no different for lawyers acting in this specialised area as the Civil Procedure Rules (CPR) practice direction on pre-action conduct sets out. It reads: “Starting proceedings should usually be a step of last resort, and proceedings should not normally be started when a settlement is still actively being explored.

“Although ADR is not compulsory, the parties should consider whether some form of ADR procedure might enable them to settle the matter without starting proceedings. A court may require evidence that the parties considered some form of ADR.”

The practice direction allows the court to take into account the extent of the parties’ compliance with the pre-action protocol when making orders about who should pay costs and gives an example of non-compliance.

Lost opportunity

The courts have shown that they are very willing to make costs sanctions where appropriate if the parties have not demonstrated a willingness to consider ADR, including mediation. In Rolf v De Guerin [2011] EWCA Civ 78, the Court of Appeal made no order as to costs. The offers made about settlement negotiations and mediation was considered to have been unreasonably rejected. Rix LJ said it was “a sad case about lost opportunities for mediation”. However, there are exceptions to the rule. In Hurst v Leeming [2002] EWHC 1051 (Ch), the defendant believed that mediation had no real prospects of success, which Lightman J agreed was “quite exceptionally” justified.

The Association of Contentious Trust and Probate Specialists code of conduct (ACTAPS code) provides that members should, where appropriate, consider using ADR. The ACTAPS guidance notes for resolving trust and probate disputes specifically encourage mediation. While the ACTAPS code is not part of the CPR, it is clearly intended that judicial regard will be given to the appropriate attempt to comply with the Code in the spirit of the CPR.

Most experienced litigation lawyers will remember that in pre-CPR days, cases could last for years – much like the fictional Chancery case Jarndyce v Jarndyce from Dickens novel Bleak House. The first time any settlement discussions took place would be on the doorsteps of the court just before trial. From a cost perspective alone, the advantages of trying to resolve a dispute by way of mediation at the earliest possible stage are clear. It is expected that the parties attempt ADR pre-issue. When it doesn’t happen, the court takes an active role in encouraging ADR and/or mediation. The court cannot compel the parties to mediate although, as has been seen; its powers come from the range of possible costs sanctions available.

Good explanation

Anyone attending a case management conference must be ready to explain why mediation has not taken place. The court will want to understand the steps that have been taken and, if there has been ?no attempt at ADR, what steps the client is willing to take. The court generally and specifically in wills and trusts disputes are prepared to accommodate the parties by allowing a short stay to ?enable mediation.

In Burchell v Bullard [2005] EWCA Civ 358, the Court of Appeal confirmed that lawyers were required to discuss mediation with their clients. The Solicitors Regulation Authority Code of Conduct 2011 does not make explicit reference to ADR and mediation in the way that its predecessor, the Solicitors Code of Conduct 2007, did. Nevertheless, to comply with the mandatory outcome that clients are in a position to make informed decisions about the services they need and the options available to them, the adviser must ensure their client understands all options available to them. These include ADR and mediation.

Those parties foolhardy enough not to be persuaded may still be swayed because of the many advantages the process offers. These positives are of particular and arguably greater relevance where the dispute falls within the wide spectrum of a trust or contentious probate dispute.

Client discretion

Confidentiality is a key feature of mediation. You only have to consider a number of probate disputes that have attracted considerable press attention to understand why. The now infamous case of a Gill v RSPCA [2010] EWCA Civ 1430 and the more recent case in relation to testamentary capacity of Burgess v Hawes [2012] WTLR 423 have both received attention.

A trawl through national newspapers will bring up a number of references to probate or trusts disputes that have resulted in an acrimonious trial in the High Court. With the benefit of hindsight, the parties involved in these reported cases probably regret not reaching a resolution, which would have avoided such press intrusion. Generally, charities proceeding with a will dispute in the public eye can experience damage to their reputation that potentially leads to a drop in donations.

The media has a highly efficient process to enable it to report on the wide range of trials in open court. Family disputes about trusts and estates capture the imagination and make good headlines. Even modest claims that would appear to have no national interest are often reported in the local press, potentially causing much angst and embarrassment to the parties involved. However, if the parties enter into a mediation agreement, which should always include an express confidentiality clause, anything raised during the process remains confidential to the parties and cannot be disclosed to anyone outside of the dispute.

Alongside confidentiality is lack of prejudice. All oral and written statements and any offers to settle are inadmissible in court proceedings if mediation is unsuccessful (see Reed Executive v Reed [2004] EWCA (Civ) 887). This gives parties the opportunity to openly discuss the case without fear of their words being used against them in court.

In general, if mediation doesn’t ?work, the court cannot look into the behaviour of the parties during the process when making orders for costs, unless both parties make the decision to waiver privilege.

This is not always the case, though. In Earl of Malmesbury v Strutt and Parker and others [2008] EWHC 424 (QB), the fact that one of the parties adopted a wholly unreasonable stance during the mediation was taken into account when determining the appropriate costs order. In that case, the party’s stance was held to be unrealistic and unreasonable; to reflect this, the court reduced the costs recoverable by 20 per cent.

This was an exception. The ?court could consider the evidence and the parties’ behaviour during the mediation because both of them waived privilege in respect of the materials generated during and in connection with the mediation.

In the absence of such a waiver it would be difficult, if not impossible, to establish that there has been unreasonable conduct during the mediation and that there should be a costs sanction as ?a result.

Fresh start

One great advantage of any potential settlement reached at mediation is that the parties can be much more flexible than a court can be at trial. At mediation, the parties start with a blank piece of paper and can be creative in finding the right resolution for all sides in the dispute. The court will very often be restricted to finding in favour of one party or the other. By the very nature of the formal process and the court rules, this outcome is often unavoidable.

This greater flexibility of the mediation process is a huge positive, especially in trusts and probate disputes. It is very often the case that what goes to the very heart of these types of disputes falls outside of the strict legal issues. Sometimes, for example, what a party really wants recognised is the time and care that they gave to an ailing relative or their personal feelings that they have been the least favoured child. All contentious probate lawyers will have heard the expression from clients that ‘it is not about the money’ but a number of other issues. Any agreement reached at mediation can recognise these issues in a way that the formal court process may not be able to.

A common factor in probate disputes, whether or not the parties like it, is that there will probably be an ongoing family relationship after the dispute has ended. An agreed settlement reached through mediation offers the parties the chance to repair and restore relationships.

Timing is everything

Once the parties have agreed to mediate, there are a number of important practicalities to consider:

• The timing of when the mediation takes place is crucial, and it will vary from case to case. When both parties have a desire to settle the case, often when traditional negotiations have broken down, it is time to mediate.

• There must be enough information available to bring about a resolution. If mediation takes place too early in a case, it carries the risk of being unsuccessful. The parties will not have enough information to carry out a proper evaluation of each other’s respective positions. Equally, if mediation takes place too late the parties’ positions may have become so polarised that finding a compromise will be more challenging. The older the case, the greater the costs and thus the more challenging it is to find an acceptable middle ground.

• Selecting the mediator requires careful consideration. He or she should be independent of both parties and their legal advisers, which is essential to the integrity of the process. Their reputation is also important. There is an ongoing debate in the ADR community about whether mediators should be legally qualified. While a background in law helps, key prerequisites are simply patience and impartiality. The skill of mediation is an art in itself.

• Litigators must avoid the temptation to turn the process in to a mini-trial. Mediation is quite different from a trial, with the focus on finding a mutually acceptable resolution. The mediator is not a judge and a good mediator will never fall into the trap of trying to give a ruling or appearing to find favour with one party. Their role is to act as a conduit. A good mediator encourages the parties to be forward thinking and not to dwell on past issues.

• The mediator needs sufficient documentation and information to act effectively on the day. It is important not to swamp them with information. Less is definitely more. Typically this will include a case summary, position statements for each party and a copy of the pleadings along with any without prejudice offers that may have been made.

Open minds

During a recession, the pressure on family finances will continue. History has shown there is more litigation during hard times, so individuals and lawyers would be wise to embrace the mediation process. The court will expect the parties to have given ADR and, particularly mediation, proper consideration and it has the power to impose cost penalties where appropriate.

There are many examples of cases that settled at mediation where at the outset the parties appeared to be far apart, emotions were running high and there was an apparent complete lack of trust. While the process cannot offer an absolute guarantee, anecdotal evidence suggests the success rate is high. It is a powerful tool in the armoury of a contentious probate practitioner.

Tony Cockayne is a partner at Michelmores. He is head of disputed wills and trusts and head of charities. He is also an accredited mediator