The decision in Farm Assist Limited (In Liquidation) v The Secretary of State for the Environment, Food and Rural Affairs (No.2) [2009] EWHC 1102 (TCC) is an important one for anyone involved in Mediations. A mediation took place in June 2003 resulting in a settlement agreement being signed. However, Farm Assist Limited ("FAL") later sought to have this set aside on the basis that it claimed to have entered into it under "economic duress". In the court action, The Secretary of State for the Environment, Food and Rural Affairs ("DEFRA") called the mediator to give evidence.
The mediator wrote to DEFRA to advise that given the time that had elapsed since the mediation, coupled with the fact that she had not taken any notes and had no recollection of the one day mediation, any evidence that she would give would not be of any merit to either party. The mediator also relied on the terms of the parties' Mediation Agreement in relation to the issues of privilege and confidentiality and a clause which stated that she could not be called as a witness in any future litigation.
The court commented on each aspect of this as follows:
- "Without Prejudice" Privilege: It was acknowledged that the mediation was covered by a without prejudice privilege. However, the judge held that this was a privilege that existed between the parties and was not a privilege of the mediator. The privilege could be waived by those parties and that had happened in this case.
- Confidentiality: Unlike privilege, confidentiality affects not just the parties, but also the mediator and governs all of the dialogue between the respective parties. This could not be waived without the consent of all parties. The mediator could reserve the right to enforce the Mediation Agreement's confidentiality provision. However, where in the interests of justice it was necessary for evidence to be given on matters that would otherwise be held as confidential, the Court could order such evidence to be given.
- The Exclusion Clause: The parties had agreed that the mediator could not be called as a witness to give evidence "in any litigation...in relation to the Dispute". The Dispute was defined as relating to work carried out by FAL on behalf of DEFRA during the foot and mouth outbreak in 2001. The dispute in the current litigation was whether or not FAL had entered into a settlement agreement under economic duress. The judge held that these were not one and the same.
- The Mediator's Argument That She Had Little Or No Recollection Of The Mediation: The judge was not convinced by this. He held that memories can be jogged when a witness is shown evidence and anything that she could recall of what was said or done at the mediation would be important to either party's position.
The judge refused the mediator's application. The judgement is likely to attract some criticism from proponents of mediation, but there are obviously two sides to the coin. On the one hand, in order for parties to elect to mediate and to acknowledge mediation as a serious form of dispute resolution, the Courts must recognise that the mediation process needs to be protected and afforded professional privilege. On the other hand, it is widely acknowledged in all legal fields that the principles of privilege and confidentiality have their limits and exceptions and that it is a matter of balancing the interests of justice in determining whether evidence is to be given.
Given the rise in popularity of mediation, parties signing up to mediation agreements ought to pay careful consideration to exactly what they are signing up to and the parameters of mediation. Mediators may wish to consider carefully the terms of Mediation Agreements.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
