Settlement of Non-money Claims

If you can settle a dispute by agreement rather than risking starting (or continuing) litigation, that is generally a good thing. In most cases a dispute can be formally settled without needing the court's/tribunal's approval. In some types of cases you might still need the court/tribunal to make an order but, even then, if all known affected parties reach agreement, that makes the court/tribunal process much easier and less expensive.



Introduction


Even if court/tribunal proceedings have already started it is not too late for a settlement to be agreed. If the parties can agree on a settlement at any time before (or even during) the trial, the case is essentially halted (although in some cases the court/tribunal may need to make a formal order “by consent”). A settlement can be on any terms which the parties are able to agree on. That might mean agreeing a settlement in which the Claimant gets most (but not all) of what they are seeking, or a settlement which means that the Claimant gets very much less than they are seeking, or the parties might meet roughly in the middle.

Nobody can be forced to settle: everyone is entitled to have their disputes decided by a judge, but it is worth considering what (if anything) you might be prepared to settle for. Generally the advantage of settlement is that whilst you might not have exactly the outcome you want, you have certainty rather than proceeding to trial and running the risk (whether a large risk or a small risk) of the judge finding against you.

So the first thing to consider is whether there are any terms on which you might be prepared to settle or whether nothing less than a complete win will do. Most people who are claiming money would be prepared to settle for, say, 90% of what they are claiming in order to have certainty rather than take the risk of getting less or even losing completely at trial, as nothing is absolutely certain in litigation and even what seem like the strongest cases do sometimes fail for various reasons. But if you are not claiming money it may be a situation where you feel that only a complete win will do and a compromise is not feasible. This might be the case where you are claiming an injunction to prevent somebody doing something (such as constructing a building near your home in breach of a restrictive covenant) and you do not want money as an alternative: you want the injunction. A court always has a discretion to refuse an injunction and grant monetary compensation instead but if what you want is an injunction and do not want to voluntarily settle for money, then there may be no room for negotiation (indeed if you offered to accept money the court might be less likely to grant an injunction). 

But there may be some types of non-money claim where compromise is feasible. For example, in the case of disputed land between your property and a neighbour's property, a settlement could involve splitting the land between you. 

If you are willing to consider a settlement in principle – providing the terms are right - then there are two main ways of attempting to reach a settlement

  • Mediation
  • A formal written offer

Consider mediation

A Mediation is a meeting, usually lasting half a day or a day, attended by the parties and their barristers, and conducted by a professional mediator whose fees are split between the parties. You can suggest a mediation to the other side at any time and, if they agree, you can jointly appoint a mediator. Because of the cost of the mediation it would not be worthwhile unless both parties are prepared to consider compromise, and if you propose a mediation, and the other side agree, that almost certainly means they are serious about trying to reach a settlement. Mediations generally have a high success rate - much higher than "round table" meetings where the parties and their lawyers meet with no mediator. If the parties are going to have to pay their lawyers to attend for half a day or a day then having a professional mediator there as well increases the chances of success by a much higher percentage than the increase in cost (each party only pays half the mediator's fee). 

Everything said in a mediation is "without prejudice". If the mediation does not result in settlement, so that the matter proceeds to trial, the trial judge can be informed that there has been a mediation but the judge cannot be told anything about what happened at the mediation itself nor about any offers made during the mediation. However after an unsuccessful mediation, there is nothing to stop you, if you wish, asking a barrister to draft a without prejudice except as to costs offer simply repeating the offer you made in the mediation (or any other offer you wish to make) and that offer can then be seen by the judge when considering costs orders after trial, in the usual way as explained below.

A mediator should not be confused with an arbitrator. An arbitrator looks at the documents, hears witnesses, and decides who wins according to the law (in much the same way as a judge). A mediator does not do this. Rather the mediator tries to facilitate a pragmatic settlement which both parties can live with. It is usual for each party to be accompanied by their barrister so that the barrister can advise them about making or accepting particular offers during the mediation. Also, if the mediation is successful, the barristers can draft and agree the detailed wording of the formal legal agreement to give effect to the settlement terms which, when signed by both parties, are legally binding. The mediator will normally ask to see the key legal documents - and view the site if it is a dispute about land - but this is not in order to decide independently who is legally right but rather for pragmatic reasons to understand where each side "is coming from".

Making the arrangements for a mediation 

One advantage of mediation is that it is possible for you (and the other side) to say things to the mediator in confidence (i.e. not to be communicated to the other side without permission). This is useful if you have some particular concern or vulnerability which you do not want the other side to know about lest they exploit it. The mediator can take your concerns into account when proposing solutions without revealing the extent and precise nature of your concerns. The finally agreed terms of settlement can include matters which are outside what a court/tribunal could order and a mediation is usually the best way of exploring creative solutions. Because of the flexible nature of mediation it is generally best, when proposing mediation, to keep the letter/email proposing mediation simple, avoiding the temptation to say anything which could be taken as imposing pre-conditions or as excluding in advance anything from discussion. Generally you should not refer, in the initial letter/email proposing mediation, to any without prejudice except as to costs offers which have been made by either side (even if such offers are what prompts you to suggest mediation) because if mediation is refused by the other side you might, at some stage, want to show the court/tribunal that you proposed mediation so this initial/email should not contain things which make you unable to use it. Your email can simply say "I would like to propose mediation to try to come to a mutually acceptable solution to our dispute. If you can confirm that you are agreeable to mediation, we can then discuss who to jointly appoint as mediator". If the other side respond positively you can find a mediator at www.directaccessportal.co.uk/Mediators A common way of selecting a mediator is for one side to select a shortlist of three mediators and pass details to the other side, and for the other side to then select one of the three. Three rooms are needed for a mediation, one of them large enough to accommodate a joint session with everyone (both parties, lawyers, and the mediator) present. In large cities there are companies which specialise in providing rooms specifically for mediation but in most civil disputes the mediation can take place anywhere convenient where three rooms are available. If the dispute involves land it is usual for the parties, their lawyers, and the mediator, to view the site first, and often a nearby hotel with three meeting rooms available is chosen for the mediation. 


If the other side is being difficult about arrangements for the mediation

Sometimes there is a bit of to-ing and fro-ing between the parties over the arrangements for mediation (such as who the mediator is to be, and the place and date for the mediation) and it sometimes happens that the other side does not actually want to mediate, but does not want to admit that, and so just raises practical objections or delays getting back with availability dates. 

It is best to avoid being drawn into any discussion with the other side about dates for the mediation (or other practical details) before you have got to the stage where a mediator has been agreed, because once both sides have agreed who the mediator is to be, it may well be that the mediator’s own dates of availability are the limiting factor. It is pointless to have an argument early on, over the course of a week or so, with the other side over when the mediation is to take place, with each side proposing different weeks, only to find that by the time the mediator has been chosen the mediator is not available on either of the parties’ preferred weeks, or that, by that time, a week which one party spent so much time arguing against, because it appeared to be too far into the future, is now not that far away anyway!

If you think the other side is being difficult about arrangements for mediation, it is best just to chase and engage as much as you can in trying to make the practical arrangements happen. You may suspect that the other side is being deliberately difficult but it might just be inefficiency so if you want the mediation to take place try to politely chase things up and be flexible - at least until you get to the point where it is obvious beyond doubt that the other side is stalling.

You should, of course, unless and until there actually is a mediation ending with a binding settlement agreement signed by both parties, carry on, in parallel, with the normal litigation stages at the normal pace. It is a mistake to delay matters assuming that the mediation will be successful as doing so may prejudice your case - see Don’t count your chickens before they are hatched  below. Indeed if the other side appears to be delaying arrangements for the mediation that may be a deliberate tactic to try to get you to delay the normal progress of litigation in order to prejudice your case, and showing that you will not delay the normal litigation timetable will generally be more likely to bring them to the negotiating table. 

Documents for the mediation

Once a mediator has been appointed they will probably ask to be given, in advance of the mediation, some basic documents which explain what the case is about, such as the pleadings if litigation has already started. Sometimes the parties prepare "position statements" but often no extra documents need to be written just for the mediation and documents already in existence for litigation purposes can be used. Although a mediator is not a judge it is, nevertheless, usual to prepare a "bundle" of documents for the use of everyone at the mediation in much the same way as a trial bundle would be prepared for a trial before a judge. In a Bundle every page has a page number and there is an index at the front - really a table of contents - listing every document and its page number. Sufficient identical copies are produced in advance for everyone who will attend the mediation.         


It is possible to make "without prejudice except as to costs" offers

Separately from any mediation, it is possible for either side to make a written offer which will not be seen by the trial judge until after the judge has given judgment (i.e. announced who wins). Legal rules allow this because the courts and tribunals want to encourage settlement and do not want a party to be put off making a realistic offer for fear that that might subconsciously influence the judge's decision about who wins. After judgment the offer can be seen by the judge and may affect the costs order the judge subsequently makes. In many (not all) court and tribunal cases the judge normally orders the loser to pay most of the legal costs of the winner but a without prejudice except as to costs offer can affect the normal costs order. 

Example: You start a court case, claiming £100,000, in January. In early February the other party makes a without prejudice except as to costs offer of £95,000. You do not accept that offer. At the trial in November, you win, but not completely, and the judge decides you are owed £93,000. The judge might then order the other party to pay your legal costs but only up to February, and order you to pay your opponent's costs incurred from February to November, on the basis that you ought to have accepted the £95,000 offer in February because it is more than you eventually got at trial.

The above is an example in a dispute about money but in a case which is not primarily about money – e.g. a dispute about ownership of land or rights of way – the same general principle applies: if the Claimant is not completely successful the court will decide whether, broadly speaking, they have done better or worse than any offer made, and make any costs orders with that in mind. 

Because without prejudice except as to costs offers are immediately binding if accepted, and also because if not accepted they may (eventually) be seen by the judge, it is important to ask a barrister to draft them so that they are correctly worded (as well as asking the barrister to advise on what might be reasonable settlement terms).       
       
Note about terminology: A without prejudice except as to costs offer is sometimes called a without prejudice save as to costs offer or occasionally it may be called a Calderbank offer. In court cases subject to the Civil Procedure Rules, offers are normally in the form of Part 36 offers. A Part 36 offer is a particular type of without prejudice except as to costs offer.
 

Be careful how you make offers - get advice

As explained above, many offers are in a form which, if accepted, is immediately and irrevocably binding on the parties. If you want to make such an offer, get a barrister to draft it. This is because

1. It is important to get a barrister to make sure the offer is correctly worded and watertight and deals with costs in the appropriate way (e.g. are you offering to pay the other side's legal costs, are you expecting them to pay your costs, or is each side to bear its own costs, and what happens if the offer is accepted at some time in the future when costs have increased) and has adequate verification and enforcement mechanisms built in. In a case involving land, consideration may have to be given to a lasting solution which will apply not just to the current parties but to future owners of the land so that there are no problems when a party comes to sell. If an offer which is not correctly worded is sent and accepted you might end up bound by terms which you had not intended, or there may be a dispute about precisely what the terms of agreement mean which could lead to another court case! The offer which you want to make might seem simple but it is still worth getting legal advice on the wording. After all if it really is simple then it will not take a barrister long to make sure it is correctly worded and so advice on the wording should not cost very much.

2. As well as ensuring the technical wording of an offer is right, a barrister can give you an opinion about the likelihood of success at trial and, in the light of that, advise about the kind of offer it is reasonable to make. For example, if the likelihood of complete success at trial is high it might be appropriate to offer to settle on terms quite close to complete success, whereas, if there is a very real risk of losing, more of a compromise offer might be made, though ultimately it is the client's choice, not least because different people have different attitudes to risk. 

Be careful how you respond to offers - get advice

If you want to accept an offer you receive from the other side, get advice from a barrister before replying.

You can ask a barrister to give you an opinion about the likelihood of success at trial, and, in the light of that, advise about whether it might be reasonable to accept the offer. For example, if the likelihood of complete success at trial is high it might be appropriate not to accept unless the offer gives you most of what you are seeking, whereas if there is a very real risk of losing, it might be appropriate to consider even offers which are rather less attractive, though ultimately it is the client's choice, not least because different people have different attitudes to risk. 

Even if you feel sure you want to accept an offer, and do not want to pay a barrister to give you an opinion about chances of success at trial and about how good the offer is in the light of that, it is still important to ask a barrister to advise you about the wording of the offer. Is it correctly worded and watertight and does it deal with costs in the appropriate way (e.g. does it offer to pay your legal costs, or are you expected to pay the other side's legal costs, or is each side to bear its own costs) and does it have adequate verification and enforcement mechanisms built in? In a case involving land, it is generally desirable that the wording provides a lasting solution which will apply not just to the current parties but to future owners of the land so that there are no problems when a party comes to sell.

If you accept an offer which is not correctly worded, you might end up bound by terms which you had not intended, or there may be a dispute about precisely what the terms of agreement mean which could lead to another court case! The offer which you are inclined to accept might seem simple but it is still worth getting legal advice on the wording. After all if it really is simple then it will not take a barrister long to make sure it is correctly worded and so advice on the wording should not cost very much. If there are technical problems in the wording of an offer which, in substance, you would like to accept, a barrister can draft a counter-offer for you to send which is in substance the same but properly worded.

If you receive an offer which seems obviously unacceptable, you might feel that there is no point in paying for advice from a barrister about it, and you may be right (although there could be some situations where some kind of response drafted by a barrister might be appropriate - e.g. pointing out that the other side has failed to provide information which makes it difficult to properly evaluate their offer). If you are tempted to compose a reply yourself (rather than ask a barrister) remember that your reply can be shown to the judge (after judgment if the correspondence is without prejudice except as to costs or equivalent) and what seems to you to be a commonsense innocuous response might be interpreted differently. Simply not replying to an offer you do not want to accept is not considered impolite. 

You might want to make one without prejudice except as to costs offer but be careful of incurring excessive costs through having multiple offers drafted - mediation may well be a better option

It is quite common for one without prejudice except as to costs offer to be made in a case, because making such an offer can reduce the risk of an adverse costs order (if there is no settlement) but because without prejudice except as to costs offers need to be drafted by a barrister, and therefore involve a certain cost, it would be unusual for very many to be made, particularly in cases which are not just about money and where offers may have a certain complexity. Statistically settlements are much more likely to be achieved at mediations than by without prejudice except as to costs offers being accepted, so, if there appears to be a real willingness on the other side to negotiate, arranging a mediation is generally preferable to sending multiple without prejudice except as to costs offers. This is particularly so where the case is about land where the details of offers can be complex and the the cost of having a lawyer draft a series of offers and responses to offers from the other side can easily add up to more than a mediation would have cost. So although one, or possibly two, strategic without prejudice except as to costs offers might need to be made for costs-protection reasons (i.e. to reduce the risk of an adverse costs order if you do not win completely) suggesting a mediation is generally the best way of actually achieving a settlement and saving expense.

It has to be borne in mind that the other side are unlikely to accept a written offer exactly as your barrister has drafted it – they may draft a counter offer and, then, you may need to pay for advice on that, and drafting a further offer for you to send will incur further cost. So both sides might end up incurring substantial costs having various detailed offers drafted and still not reach agreement in the end. There can be a difficult moment when a client thinks “if only I had known how much this would cost I would have gone for mediation, but now that I have spent all this money I have to press on...”. Of course, at that point, even if they did then suggest mediation to the other side, the other side, having also spent considerable sums on having offers drafted, would be less likely to agree. So negotiating by written offers not only turns out to be more expensive than expected, and less likely to succeed than a mediation, it also makes it much harder to go to mediation. Some people think: let’s try written offers first and if it doesn’t work we can always try mediation then, but that doesn’t usually work – unsuccessful written negotiations tend to put both parties off mediation.      

The advantage of mediation is that you have the parties and their barristers all together for a day (plus a mediator who helps to oil the wheels of negotiation). Although all successful negotiation involves the parties gradually moving towards each other in terms of their offers, at a mediation this can be done at increasing levels of detail. The basic topics which seem likely to be fruitful can be established, then offers in principle can be made and when everything major is agreed in principle, the barristers can hammer out together the detailed wording for the agreement which will become binding once signed by both parties. Seeing the person you are negotiating with does help to save time in negotiations.

By contrast, if each side is having multiple written offers and counter offers drafted, every written offer has to be precise and complete with all Is dotted and all Ts crossed, because if an offer is accepted it then becomes immediately binding and it is too late to tweak it. You do not get the cost-saving advantage of being able to go from the general to the more specific, which is possible at a mediation.


Don't be tempted to compose offer/acceptance correspondence yourself

Because there is a cost associated with asking a barrister to draft an offer or a response to an offer, you might be tempted to draft an offer, or a response to an offer, yourself. Don't! It might look simple but the consequences of becoming bound by an offer which has something wrong with it can be dire. And if the kind of offer being contemplated really is that simple it will not cost that much for a barrister to draft the offer or response.

In cases which are about land, offers often have to have a certain complexity in order to be watertight and sometimes clients try to compose non-binding offers, or comments on such offers, themselves, to save money. But this is dangerous. There are legal rules which allow "without prejudice and subject to contract" communications but the rules are complex and it is easy to end up with a bad agreement which, by mistake, is binding. Sometimes it is unclear whether it is binding or not and you can end up with a new court case about that! Even if you avoid such pitfalls, what might happen is that when you finally reach (non-binding) agreement and you ask you barrister to tun that into a formal legal agreement, the barrister advises that that is not, because of some legal rule, actually feasible, and this false start may then make it psychologically more difficult for the parties to then agree to mediation. 


Don’t count your chickens before they are hatched

Sometimes there are settlement negotiations actually on the day of the trial - something may happen part way through the trial which makes one or both parties keen to try to settle the matter. In this case it may be less than half an hour between deciding to try to settle and a binding settlement agreement being signed. But if settlement is being considered earlier on, well before the trial, it is usual for the settlement process to take some weeks.

A mediation usually takes a day and if the mediation results in a settlement acceptable to both sides, the barristers for each side will, there and then, jointly draft an agreement which is signed by both sides and is binding. However although the mediation itself only lasts a day, before the mediation can take place one side has to suggest mediation, the other side has to respond, there then needs to be selection of which mediator to appoint and then the date for the mediation has to be arranged taking account of both side’s availability, the availability of each side’s barrister and, of course, the availability of the mediator. So it may be several weeks between when mediation is proposed and when the mediation takes place.

If a written without prejudice save as to costs offer is sent by one party, the other party will need to take time to consider it and take advice. In fact in some courts/tribunals 21 days is considered a reasonable time for a party to take when considering a formal written offer.

So you can see that trying to agree a settlement is normally a process which can easily take several weeks. It is important that during those several weeks that a settlement is being pursued that you do not stop doing the normal things you need to do to complete each pre-trial step by the court/tribunal ordered deadline. Otherwise you may find that in the end there is no settlement after all and you have missed a deadline, or in order to meet a deadline you may have to cut corners which may reduce the prospects of success at trial. If the other party misses a deadline normally the court/tribunal expects you to bring that to the court’s/tribunal’s attention (e.g. by making an application) promptly - if you do not you may get little sympathy from the court/tribunal if the effect of the other side’s delay is to make it difficult for you to meet another deadline - so you should not delay just because you are in the middle of a settlement process. In fact if you do delay the normal work of carrying out each pre-trial step because you are in the middle of a settlement process, the other side, seeing that you are doing that, may take advantage of that by stringing things out so that you miss a deadline or have difficulty meeting a deadline, and then they may ask the court/tribunal to impose a sanction of you for missing the deadline! 

So treat the ordinary work of carrying out the pre-trial steps as separate from any settlement process and just carry on with it at the usual pace unless and until a binding settlement agreement is actually signed. 

You may find that your opponent proposes mediation, or some other settlement process, not long before the deadline for exchange of witness statements, and asks you to agree to an extension of time (in some courts and tribunals the parties have a limited power to extend a deadline set by the court/tribunal without needing the court's/tribunal's approval) while the settlement proceeds. It is usually a bad idea to agree to an extension in these circumstances because the reason why your opponent has done this is probably that they have a weak case (which will become apparent when you see their witness statements) and they are probably just trying to drag things out and not serious about settling. If they do happen to be serious about settlement, then a looming deadline for exchange of witness statements (when the weakness of their case may be apparent) should encourage them to be realistic and, in any event, there is nothing to prevent any settlement process continuing after exchange of witness statements. You may come under sustained pressure to agree to extend the deadline for exchange of witness statements. For example the other side may say that they will only consider settlement if you first agree to an extension, or they may have made a non-binding offer 'in principle' which you have agreed in principle and it may seem churlish to refuse to agree to an extension, but generally (assuming you yourself are ready to exchange witness statements) you should not agree any extension before a binding settlement is signed. 


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This page was lasted updated in February 2018. Disclaimer