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WEXTED DIVERSIONS: THE MONEY OR THE BOX? WHAT ARE THE BENEFITS AND PITFALLS OF MEDIATION?

ACTIONS HAVE CONSEQUENCES

 

There is a real debate at the moment about actions and consequences. Worldwide, some governments have imposed severe tariff impositions. Our own government has spent heavily to secure another term of government. There are lots of issues at play, coming at a great cost. Debt is being incurred and long-term budget deficits locked in, for (in this case) securing a term of government and avoiding an uncertain and highly contested outcome. There are a number of factors at play including the political motivations of governments, the accuracy of modelling, the future of welfare, security and so on. 

In this article, we look at the measurement of a particular outcome and whether steps should be taken to speed the process towards a conclusion, where that is in the measured interests of a certain outcome.


LITIGATION EQUALS UNCERTAINTY


In a recent article:  News & Insights  |  Diversions: Litigation - There's a whole lot of relevance in the circus, we discussed the pros and cons of litigation.
 

Litigation requires investment and preparation, whilst it grinds out a result, it comes at a price.  The process is difficult to control, uncertain, expensive, and polarises opponents.  It is important to ensure the cost of the process matches the benefits, in quantum and timing.  The owner of the process (a Director, or a Liquidator, etc) must consider whether, in commencing a Proceeding, there is the prospect of either an early or very significant return from managing the process correctly.  When was the money advanced?  What connection does a return in three, five or eight years have to the original advance?  Are the stakeholders still there and how relevant is the outcome?  Who are the winners?


Moral authority is a big issue here.  There is a responsibility to get it right and dispassionately look at the context of the dispute.  It is unwise to look at a particular legal action in isolation of the issues that resulted in the failure of the issue or the company.  Sometimes failed entities put significant store into one large legal action that will “save the day” and generate the big dividend.   The full context of a failed company’s activities needs to be understood so that defences to an action are considered. Why did the company fail? What representations did it make? Are we going to ‘win’ and do we deserve to?

MEDIATION AND SETTLEMENT - IT COULD BE CANNING OR MOUNTBATTEN!


When Barry Jones appeared on Bob Dyer’s "Pick a Box" in the 1960’s, he had more information than the questioners!! Look at this exchange about the Governor General of Bengal! 

 

 

We are not all as smart as Barry Jones, and in real life we don’t have all the answers.  That’s why opportunities to settle or mediate are sought.   Provided the principals are not emotional, each party can “afford to lose”, neither is betting on a long shot, or one party is in possession of some “dynamite” evidence, the prospect of a settlement should be considered actively.


The advantages of formal or informal mediation as a settlement tool include:

 

AdvantagesSummary
Efficiency
  • An average mediation takes only a couple of weeks preparation and a couple of days to achieve, much less than expended in preparing for a trial
Discovery
  • Depending on the trial strategy and time chosen to try and mediate, some discovery may be avoided by focusing on the key parts of the dispute in a structured position paper.  There is also less formality in relation to witness preparation and discussions are off the record
Promotes a ‘roadmap’ to settle
  •  If both sides approach their dispute with a desire to put it behind them, a ‘spirit’ of settlement, then good mediator can help them find a way to do so
No first mover advantage
  • The parties are less likely to be standing on ‘scorched earth’, first mover disadvantage is eliminated, and parties are more likely to continue to engage with a view to settlement
Usually some outcome
  •  Even where a party’s attitude leaves no room for compromise, mediation can nonetheless help define and hopefully limit the issues to be decided
Control
  • Since the whole process is voluntary, the parties have complete control over the outcome; if they do not agree, there is no resolution and you can still kick the issue into touch for a judge to decide
Confidentiality
  • The process is private and confidential. This allows people to openly discuss issues without the possibility of public exposure

 

TAKE THE PAIN TODAY


After you weigh up the potential impact of litigation delay and expense, consider initiating pre-dispute settlement: Anecdotal evidence says that best chance of settling a dispute is before proceedings are commenced. If a recovery lawsuit could take (say) a year to resolve in court, then I would be looking for alternatives as part of the process. This is because one can never predict how long the litigation process will take with any degree of certainty. It can take a long time before a court gets to hearing a case after the original dispute occurred – often many years. In the case of (say) the Bell Resources litigation, a generation passed by whilst the matter works its way through the Courts.

 

Conclusion

 

There is no short route to pain relief. If you commence litigation without a process to settle it, it can be a long journey. The longer the litigation progresses the less relevant the outcome becomes to stakeholders… so set up the process to settle, build settlement into your strategy. 
 

Published 7th May 2025

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By Joseph Hayes

Partner

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