Why mediate? Won’t a settlement meeting be just as effective? A recent case got me thinking…
At the end of last year, I mediated a case between a bank and a married couple who were property developers. It was a sadly all too familiar story of outwardly successful developers borrowing increasing sums of money against a number of properties, before the portfolio came crashing down in 2007. Since 2007, the borrowers and the bank had worked together (not always harmoniously) to attempt to resolve the position. Some 10 years after the first default, and as a precursor to the issue of legal proceedings, the parties agreed to mediate. At the mediation, a settlement agreement was entered into whereby the remaining properties were sold voluntarily over a period of time, with the proceedings divided up between the parties depending upon the overall sale value of the portfolio. The benefits to both parties were obvious: the bank got repaid; the borrowers retained their matrimonial home and were incentivised to sell the properties for the maximum amount so that they obtained a cash benefit. All good. Which got me thinking: why had the parties spent 10 years in dispute over the debt and why, despite all the many many meetings between the parties over those years, had it taken a mediation to resolve the matter?