The Ministry of Justice recently published a study on boundary disputes and whether more should be done to encourage, or require, out of court settlement. Ultimately the decision was to do nothing but the comments made were interesting.
The report interestingly repeated a common fallacy with regard to mediation and litigation. This is that litigation is certain while mediation requires a degree of cooperation which is often absent. This is a bit of a misunderstanding of the two processes and their interrelationship but it is a common one. The error is natural in that mediation is often attempted in connection with a dispute that is litigated. However, it is simply untrue to suggest that litigation offers some degree of comfort which mediation cannot provide and equally incorrect to say that mediation only works where the parties are already in agreement to some extent.
Is Litigation Really Certain?
Litigation is certain in comparison to mediation in the sense that there will be an outcome because a court will decide the rightness of one party's case and the wrongness of another's. Mediation by contrast may fail. However, this is not the certainty that parties really want. It is not certainty to tell a party that at some future stage a decision will be made. Certainty is knowing how that decision will actually play out and what it will cost in time and money to get there. Litigation offers no such thing. The Courts are limited in the relief they can order, they are not able to do deals where North parties get something they want. Additionally the certainty offered is not an end to the disputes. Collateral issues that could have been resolved at mediation cannot always be resolved by the Court and may then simply become the new area of dispute. Additionally, as has been the case of late, there may be further appeals (and appeals of those appeals!) which could rapidly drive the cost of litigation to new and unexpected heights.
Neighbours Rarely Want to Fight
The MoJ also believes that the weakness of mediation is reliant on a degree of cooperation between the parties. I would not really be inclined to agree. What is required is that the parties can be persuaded to be realistic about their cases. This is often hard but it is usually perfectly possible. This is not the same as being reasonable or cooperative. It just requires an accurate assessment of the risks and costs of going forward and a clear understanding of what the Court can really do. The truth is that most lack of cooperation in boundary disputes and the extreme nature that the MoJ perceives them to have is based on the heavily litigated, and reported, matters that have reached the Appellate Courts. In fact, my experience in boundary disputes is that the neighbours are in dispute over the boundary but that the "fight" is actually about a complex series of associated interactions which stretch back over many years. This has included everything from property damage to insults and slights, real or imagined. Therefore the lack of cooperation often stems from issues that have little to do with the boundary issue. Successful boundary mediations (again in my experience, other may disagree) tend to be ones where I have managed to separate the boundary dispute from other issues and resolve them separately. That does not mean that some of the other issues are not also resolved but they are distinguisedh from the boundary issue. By breaking things up small forward steps can be made on some points which leads to an overall drive toward cooperation and settlement. It is this power of mediaiton to create cooperative spirit from the worst of situations which the MoJ report fails to recognise.
The MoJ has concluded from assessments of court based mediation schemes that the settlement rate at mediation of boundary and property disputes is around 66%. It is not clear whether this is considered to be particularly good or bad. It is certainly lower than the figures quoted by some in the mediation industry of over 90% but the MoJ statistics do not take into account disputes settled by mediation prior to Court proceedings. Even if the figure is as low as 66% that compares pretty favourably given the significantly lower cost of an early mediation by comparison with a complex multi-day trial. It is also worth factoring in appeal costs. Mediations are not usually appealed because an agreement has been reached. Court orders, especially in boundary disputes, are often not an acceptable outcome for at least one party and therefore there are appeals of these decisions, some of them high profile. Additionally many boundary practitioners would accept, if they were being honest, that many boundary cases are pursued on prospects of success which are less than 66% and sometimes with prospects that are less than 50%. 66% settlement prospects are odds which make mediation worth the gamble.
Two Barriers to Settlement
In my experience the two biggest barriers to settlement of boundary disputes are:
- Lawyers who can "do better in Court". I have often had a lawyer turn to his client later in a mediation day and assure them that they could do better in Court. This is again to miss the point. The correct statement here is "you could do better in Court if you win". Few lawyers phrase their advice this way. In fact, it is surprising how ineffective this statement actually is and it sometimes has the entirely opposite effect from that which the lawyer intends and creates a breach between lawyer and client which pushes the client toward settlement on precisely the terms the lawyer opposes. It is important to bear in mind if you are a lawyer that the objective of your client is not always to win, it is to end a dispute. A full day mediation often crystallises for clients the stress and emotion of the litigation process and later in the day they are reaching to settle. Telling them not to is less useful than encouraging them to hang in there and evaluate the good and bad points of the offer and then to capitalise on the good while ameliorating the bad.
- Insurance. Boundary disputes are often funded by insurance companies. The difficulty is that they are then picking up the tab. Parties who have little or no risk of legal costs are far harder to bring to settlement. This is not a flaw in mediation as a process but a simple reality of human nature. Ironically the same disputes mediated later in the process where the insurance company limit is being approached might well be far easier to settle. Insurance companies are the only people who can really resolve this, and they do have an incentive to do so. Making litigation funding for boundary disputes more conditional or releasing it tranches would do much to help here.
It may be that the MoJ's reluctance to make mediation or other ADR compulsory is irrelevant and is overtaken by events. There has been a lot of commentary about the Court's powers to compel parties to mediate by imposing a compulsory stay in proceedings for mediation. The view of the senior judiciary on this topic is hard to gauge. However, recent decisions of the Court of Appeal suggest that some judges in that Court would be supportive of imposed mediation stays, for boundary disputes at least.
Lawyers should consider carefully with their clients whether their boundary dispute would benefit from mediation. A lawyer who did not do this would be embarrassed at the least if the Court of Appeal was to later suggest that it should have been attempted. They should also make sure the client understands what the Court can, and crucially cannot, do for them and the full risk of costs if appeals are factored in. Some effort should also be made to itemsie the other disputes which may be the driving force behind a boundary matter. If this is done properly mediation becomes an increasingly atractive option, irrespective of your views on success rates.