Frost v Wake Smith and Tofields Solicitors [2013] EWCA Civ 772

In many respects Frost is a case that highlights the benefits of mediation as a mechanism of resolving disputes. Two brothers, David and Ron Frost, engaged in a long-running and acrimonious dispute, sought to extricate themselves from their shared property and business interests. In addition to the bitter relationship between the brothers, the legalities of their business interests were complex and opaque, with the Judge at first instance referring to the shared property portfolio as "a conveyancer's nightmare". At an impasse, the brothers both sought legal representation and ultimately sought to mediate the dispute.

Despite the strained relationships and the complexities in their business interests, and due in large part to the "extremely skilled" mediator present, an agreement was reached in principle during the course of the mediation. Having reached an agreement, the brothers left (separately) for dinner whilst David Frost's solicitor, Mr Serby, sought to document the terms of the agreement, which was then signed by the Frosts on their return.

The agreement was not, however, legally binding. It lacked detail leading to uncertainty as regards a number of the provisions, for example the failure to accurately describe the properties, to deal with the issue of charges over those properties, or to deal with the tax consequences of the agreement. Nonetheless, David Frost left the mediation under the impression that a binding agreement had been reached; a view that Mr Serby did nothing to disabuse him of, despite the fact that, as Lord Justice Tomlinson points out, it would have been apparent to any competent solicitor applying his mind to it that "whilst considerable and perhaps unexpected progress had been made, much remained to be done, discussed and agreed before this agreement in principle could mature into an enforceable contract".

Issues arose almost immediately following the mediation which required a further mediation to resolve. David Frost brought proceedings against Mr Serby's firm, claiming that he had been negligent, inter alia, in failing to ensure that a legally binding agreement was reached at the end of the first mediation.

The Judge at first instance held that Mr Serby had not acted negligently or in breach of retainer. It was acknowledged that, given the complexities of the case, production of a binding agreement was practically impossible. The Court of Appeal dismissed Mr Frost's appeal.

Comment

The case really boils down to one of managing expectations: whilst the mediation had clearly been worthwhile in assisting the parties to reach an agreement in principle (and to avoid the full costs of court litigation in the process), Mr Selby had failed to explain that a legally binding agreement had not yet been reached.

Nonetheless, it serves as a stark reminder to those in the legal profession to ensure that, even at the end of a long and tiring day at mediation, it is crucial to spend the necessary time documenting what has been agreed or, where that is simply not possible, ensuring that those present understand the need for further work to be undertaken to conclude the settlement.

Despite the fact of litigation being brought, the case serves as a reminder as to the potential benefits of mediation in resolving disputes.


Benefits of Mediation
  • Flexibility – solutions not available to the court in litigation are available to the parties.
  • Confidentiality – the process is completely confidential, and there will usually also be a confidentiality clause in any agreement reached at the end.
  • Convenience – usually a mediation can be set up relatively quickly, on a date and at a location which is convenient to all parties.
  • Cost – in comparison to a full trial, a mediation is very cost-effective.

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