At a case management hearing in the LVT (as it then was) back in March 2013, the chair said that, whilst normally he would direct that the parties to that dispute should attempt mediation, he was aware that it was "usually pointless" doing so where public funds are at stake as public bodies generally cannot justify the arbitrary reductions that can be necessary for a mediation to succeed, and fear creating some form of precedent. Misguided as I thought the chair was, it did seem likely that he might have been speaking from many years of experience.
In that case, I was acting for a local authority, and they were respondents to in excess of 15 conjoined applications to the LVT for a determination of their liability to pay service charge bills exceeding £15k each in respect of major works. There were, as there always are, difficulties on both sides. There were, as there always are, risks on both sides.
Encouragement pays off
Don't shout it about too loudly; but undeterred, I encouraged my client to mediate. Whilst a mediation with 15-20 parties sounds like a recipe for disaster, there were a number of "ringleaders" within the group of applicants, and in fact it soon became apparent that there was sufficient commonality to their complaints that it would be perfectly possible to achieve a good result for all. Of course, my client (the housing department) was somewhat nervous about the process. They had never before attempted mediation, didn't know what to expect, and were concerned as to justification of the outcome.
The reality in these situations is that the collection of service charges is never certain until there has been a determination of some form as to the amount due. It was highly likely in the circumstances of this particular case that the tribunal would have reduced the sum due. We also knew that, tribunals being tribunals, it was difficult to predict what the outcome of the tribunal hearing would be. Further, the matter had been listed for a 4 day hearing in the new year, with all the attendant costs having to fall somewhere, and most likely my client.
A commercial approach
What was required was a commercial approach to achieve the best reasonably achievable outcome for my client, and thus the best reasonably achievable outcome for the public funds involved. There is nothing wrong in such approach, and it should make no difference, in my view, that public funds are at stake in such a situation. If anything, fighting a case on principle to "force" a decision is less justifiable with public funds than with private.
The mediation was successful (I have now been instructed as counsel on 16 mediations, and every single one has succeeded – a reflection of the process rather than myself I fear!). My client secured in excess of £200k, probably far more than they would have achieved at trial. The leaseholders secured agreement to a number of additional works being carried out at no extra cost to them to resolve some of their concerns (something that could not have been ordered by the tribunal). Unusually for litigation, it seemed that both parties were happy with the outcome. And a confidentiality provision and the lack of a formal published decision meant that concerns regarding setting precedents were unfounded.
Mediation can often be overlooked. In financial cases such as this, it simply makes commercial sense. But I have no doubt mediation could equally work in other types of cases within the social housing sphere. Those who haven't tried it, should. It works!
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