There had been a long running dispute between the long lease holders of County Hall and the owner/operator of the art gallery housed in part of the first floor of the building known as the Versace Gallery. The first defendant, Danovo Ltd enjoyed a 20 year sub-lease from the sixth claimant, Cadogan Leisure (Investments) Ltd. There were also various license arrangements regarding the display of artwork and advertising and signage. A range of issues had developed between the parties, including claims for trespass, the service of a Section 146 Notice under the Law of Property Act, misrepresentation, and accusations of dishonesty.
Danovo had suggested mediation in correspondence, but the other parties had refused. After a change of solicitors, Danovo applied to the court to order the parties to mediate. The only issue in this case was whether the judge should issue such an order.

Reference

Mr Justice Blackburn decided that the court did have jurisdiction to direct alternative dispute resolution or mediation even in a situation where one party was not willing to submit. This was on the basis that the overriding objective in Rule 1 of the Civil Procedure Rules stated that cases should be resolved in ways that are proportionate to the amount of money involved, the importance of the case, the complexity of the issues and the financial position of each party. Further, the court rules also actively encourage the parties to use ADR and the court should facilitate such procedures. He concluded that even though one party was opposing the order he should make the Order because:

  • The parties were in a long-term relationship.
  • The parties had a shared interest in the success of the gallery because of the profit rent arrangements under the sub-lease.
  • Mediation would be able to deal with the wider matters between the parties.
  • There would be nothing lost in an attempt to mediate (but potentially much could be gained).

    He therefore ordered the parties to attempt mediation.

    *Full case details
    Shirayama Shokusan Company Limited & Others vs Danovo Ltd, 5 December 2003, Chancery Division, Mr Justice Blackburn

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    • Postscript

    In one respect, it is very encouraging to see the courts ordering a resilient party to mediate. It is often said that if the parties will attempt mediation then they are usually surprised by the process, and a large proportion of mediations settle on the day. On the other hand, one might also argue that the reason for the high settlement rate is that both parties want to be present at the mediation, enter the process willingly and are open to settlement on the day. This is not to mean that it is an easy option and there is often great pressure on the day to seriously consider the strengths and weaknesses of ones case. However, it remains to be seen that forcing resilient parties to mediate is a step too far, or whether on balance the settlement success rate is such that all litigants should be mediating their disputes.