Towards Compulsory Mediation

It may be that compulsory ADR or mediation in all civil cases will never become a reality in the UK, but the general direction of travel is pretty clear.

Last year the Court of Appeal in James Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416 held that the English and Welsh courts were able to order parties to engage in out of court dispute resolution processes. In doing so it effectively reversed the position as it had previously been understood in the light of Dyson LJ’s statement in Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 that “to oblige truly unwilling parties to refer their disputes to mediation would be to impose an unacceptable obstruction on their right of access to the court.”

The Court of Appeal in Churchill made express reference to the Civil Justice Council’s June 2021 Report on Compulsory ADR which included the opinion that “any form of ADR which is not disproportionately onerous and does not foreclose the parties’ effective access to the court will be compatible with the parties’ Article 6 rights” as well as saying, “we think the balance of the argument favours the view that it is compatible with Article 6 for a court or a set of procedural rules to require ADR.”

The Court of Appeal in Churchill stopped short of laying down principles as to the factors the courts might take into account in determining whether or when ADR might be appropriate. Judges in individual cases would generally be in the best position to decide whether a particular process would be likely to “bring about a fair, speedy and cost-effective solution to the dispute and the proceedings, in accordance with the overriding objective.”

In response to the Churchill decision, the Civil Procedure Rule Committee published a consultation in April 2024 on proposed amendments to the Civil Procedure Rules to reflect the decision in Churchill and the court’s power to order the parties to take part in a non-court dispute resolution process. The consultation closed on 28 May. In the meantime, mediation has been made mandatory in most small claims in the County Court (see Practice Direction 51ZE). This is plainly another milestone on a journey that is leading one way. The courts have increasingly focussed on costs as a means of punishing parties who have unreasonably refused to mediate, although there remain cases where the merits are so clear that refusal may be justified (a recent example is Invenia Technical Computing Corporation & Anor v Matthew Hudson [2024] EWHC 1302 (Ch)).

While compulsory mediation may not be ideal in every situation, the trend towards its broader implementation is one we fully endorse. At Manolete, we believe in the power of early settlement to save costs and reduce the uncertainty of trial. By embracing mediation early, both parties can steer clear of the risks and expense that come with prolonged litigation.

Stephen Baister
Board Director

Q&A

Wendy Jay-Jerome
Financial Analyst

What is your career background?
I have spent all of my career in insolvency, mainly specialising in personal insolvency with a special interest in litigation, especially antecedent transactions. Over my career, I have worked for Ernest & Young, KPMG, Jacksons Jolliffe Cork that became Tenon, RSM Tenon, Baker Tilly and latterly RSM, being an Associate Director.

How long have you been at Manolete?
I joined Manolete in May 2023. Prior to that, I had worked with the company on the funding of the litigation of a bankruptcy matter. I was very impressed with the speed in which decisions were made and the quick resolution of the matter. This experience very much helped in my decision to join the team.

What have been your main impressions?
My first impression was how impressive my new colleagues were. The legal team is made up of very well-respected and talented solicitors and the wider team members are every bit as impressive in their fields. I love the variety of my role in the Net Worth Team. Since joining, my role has expanded to reviewing bank statements, to develop claims against directors and also managing the Bankruptcy Portfolio and arranging for the appointment of Trustees.

What are the other highlights?
I really enjoy our quarterly legal meetings, when the Legal Team and the Net Worth Team get to meet. As we often work remotely it is great to catch up in person and share the latest legal updates and a couple of glasses of wine in the evening.

What do you do outside of work?
I have a busy life outside of work, keeping up with my two children. My little boy was diagnosed with ADHD last year and I am now starting to volunteer with the ADHD group that supported my family through this time and helping to get him a place at a specialist school so he can reach his full potential. I am also a Brownie leader and love to craft, when I get time. If not at home, I can be usually found at our family allotment.

Feature
Recent Judgments

There have been two recent judgments handed down which concerned cases brought by Manolete.

The case of Manolete Partners Plc v Karim & Ors (primarily brought against the directors of Evershine Travel Ltd) concerned a significant number of transactions, including unlawful dividends, alleged bonuses and extra remuneration, considerable credit card expenditure and other misuses of the company’s monies prior to its insolvent administration.

Manolete also argued the company was at all times insolvent or bordering on insolvency and that the accounts were materially inaccurate.

The Judge found in favour of Manolete on all of the claims which were valued at over £5m.

The judgment can be found by clicking here.

In addition, Manolete obtained judgment in the matter of Just Recruit Group Limited - (In Administration). Manolete Partners PLC v Norman Freed & Ors [2024].

The judgment of ICC Judge Mullen (paragraph 122) helpfully deals with the ‘limitation to shortfall and circularity’ arguments that this errant director asserted in an attempt to avoid liability and/or limit the claim value to the deficiency in the insolvent estate.

This second judgment can be found here.

Case study
The Manolete Model in Action

Events
R3 Eastern Forum: 26 September 2024

The 2024 Eastern Forum, is to be held at the Dunston Hall Hotel, Norwich on 26 September.

The Forum will bring together the restructuring and insolvency professionals from the Eastern region. The programme is filled with vital technical, topical, and thought-provoking storytelling sessions, including the Insolvency Service, with an update on Official Receiver services both nationally and locally. There are also sessions focusing on anti-money laundering, pitfalls in insolvency appointments and many more.

Alison Kirby, Manolete Associate Director for the East, will be speaking on 'The good, the bad and the ugly: legal trends in hospitality.'

The Forum also offers great opportunities to network throughout the day and at the post-forum dinner.

Location
Dunston Hall Hotel, Main Road Dunston, Norwich, NR14 8PQ

Find out more