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Mediation Cannot Always Achieve Binding Agreement

In dismissing a professional negligence claim against a solicitor, the Court of Appeal has emphasised that mediation – despite its immensely valuable contribution to the resolution of commercial disputes – cannot always result in immediate and binding agreement.

In the context of a fractured family relationship, a property developer (the appellant) had engaged in mediation with his brother in an attempt to resolve an intractable dispute in respect of the division of their shared assets. The mediator ultimately achieved ‘a small miracle’ in producing a perfected agreement whereby the brothers’ interests were successfully disentangled.

Almost six years after those events, the appellant took legal action against his then solicitor arguing that he had been negligent in failing to draft a binding agreement following the first of two mediation meetings. The appellant submitted that he had suffered substantial loss as a result of that failure.

The appellant’s case was dismissed by the High Court on the basis that there had been no breach of duty by the solicitor. The first mediation meeting had resulted only in an agreement in principle which was not, without more, sufficiently certain and complete in its terms to be legally enforceable.

Dismissing the appeal, the Court ruled that it would have been impossible for the solicitor to achieve finality after the first meeting. It could also not be said that he had been negligent in failing to warn the appellant that the outcome of the meeting was not a binding agreement from which his brother could not resile.

The Court emphasised that the mediation had ultimately been successful in resolving the brothers’ differences and noted that it should be a cause for neither surprise nor dismay that an immediately enforceable agreement was not reached after the first meeting. The case was a paradigm example of the need to put flesh upon the bones of an agreement in principle.