Legally Binding Agreements

August 30, 2019

Three pieces of news before autumn: heads of terms agreed at a mediation were found to constitute a legally binding contract between the parties in the Abberley case; the Legal Ombudsman (LeO) is running a ‘proof of concept’ pilot as it decides whether to introduce formal mediation as one of its routes to dispute resolution and the Court of Protection is due to begin its own pilot in October.In Abberley and others v Abberley [2019] EWHC 1564 (Ch) the court considered the events of a mediation on 12 December 2011 and subsequent communication between the parties. At the mediation, the heads of terms had been written out by the mediator and signed by the parties’ respective solicitors. The issue for the court was whether as claimed by the claimants, the heads of terms created a binding contract or as argued by the defendant, the terms were only intended to set out matters agreed in principle as part of a process of arriving at an effective compromise. The defendant went on to argue the terms were insufficiently certain and this and other reasons prevented the terms constituting an enforceable agreement.

The court quoted Lord Wright in G Scammel & Nephew Ltd v HC and JG Ouston [1941] AC 251, 268, as follows: “The object of the court is to do justice between the parties, and the court will do its best, if satisfied that there was an ascertainable and determinate intention to contract, to give effect to that intention, looking at substance and not mere form”.

While the heads of terms in the signed document did not take into account all of the terms agreed by the parties, HHJ Jarman QC held that on the balance of probabilities all the terms agreed at the mediation were incorporated in the heads of terms and thus complied with the Law of Property (Miscellaneous Provisions) Act 1989 section 2. The case is a useful reminder of how clear the parties need to be particularly when nearing the end of a mediation – often after a long day – when they sign up to an agreement. 

Mediation continues to be offered as a more cost-effective way of resolving disputes. Rebecca Marsh, the Legal Ombudsman recently wrote ‘we already resolve a significant proportion of our cases through getting an agreed outcome rather than a formal Ombudsman decision’. The aim of the ‘proof of concept’ pilot is to see whether the LeO can resolve cases without the need for a full investigation. The results of the pilot are due to be measured with reference to (i) the level of take up (ii) the success rate and (iii) the types of cases which are successfully mediated. How a ‘successful’ mediation is to be defined remains to be seen: Ms Marsh already acknowledges that ‘we know that agreed outcomes where people have more involvement and choice lead to greater customer satisfaction’. The LeO will need to address the confidential aspect of mediation given the results of its voluntary data protection audit which recently revealed concerns to the ICO.

Finally, a national mediation pilot for the Court of Protection is due to be launched in October 2019. The pilot will be independently evaluated to produce research from which it is hoped the benefits as well as risks of using mediation in the Court of Protection will be better understood. Although the court may invite parties to mediate, the use of mediation will be party-led. The Office of the Public Guardian already has a 12 month pilot underway where investigators initiate mediation. It will be interesting to see what findings the OPG pilot reaches and whether these feed into the operation of the CoP pilot.


Garden Court Mediation

Garden Court Mediation