Courts Alive To Disingenuous Applications To Mediate

Author:Mr Andrew Lenny, Elizabeth Upton and Sinead Reilly
Profession:Arthur Cox
 
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While very supportive of genuine proposals to resolve disputes outside of the court room, the courts are alive to the possibility that some parties may seek an adjournment seemingly to facilitate mediation, but really for tactical purposes. The courts scrutinise contested applications to mediate, and look to the motives and intentions of the party seeking mediation.

COURT RULES

The Mediation Act 2017 and court rules allow the courts to adjourn legal proceedings so that the parties can engage in mediation or other forms of alternative dispute resolution (ADR). A party who refuses an invitation by the Court to mediate, without good reason, may later be penalised in costs.

'OUT OF THE BLUE' MEDIATION

The High Court, and Court of Appeal, recently refused an application to adjourn proceedings to allow the parties to mediate where the application was brought in somewhat unusual circumstances (Danske Bank v SC). In refusing the application, the Court had regard to the:

conduct of the litigation; stage of the proceedings potential effect of an adjournment on the proceedings; likely success of the mediation; and bona fides of the application. THE BACKGROUND

Danske Bank obtained judgment against a borrower for €5.7 million. In separate family law proceedings, the borrower's estranged wife obtained an order for maintenance against rental income from certain properties in his name. The bank issued proceedings against the wife, claiming that it was entitled to the rental income from these properties. It also sought an interlocutory injunction to ring-fence the rental income pending the determination of the full dispute.

When the matter came before the High Court, the wife's counsel asked the Court to adjourn the proceedings to allow the parties to mediate. This request came completely 'out of the blue': there had been no suggestion of mediation, either in conversations or correspondence with the bank, prior to this.

THE CONDUCT OF THE LITIGATION

The High Court made it clear to the wife that before making an application to the Court, she had to engage with the bank to see if it was willing to go to mediation. Subsequently, and on the bank's suggestion, the parties agreed to have a settlement meeting, instead of a mediation. But without notice to the bank, the wife issued a court application for mediation, which was due to be heard by the High Court the day after the settlement meeting. The wife obtained permission from the Court for short service...

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