Paul Rose – BSc Hons FRICS FCI Arb Chartered Arbitrator, IMI accredited Mediator, Panel and Advisory Board Member.
45 years ago, my first employer taught me a valuable lesson. It was “never assume”. So when I trained to be a mediator with the RICS, I was able to understand a particularly valuable lesson taught namely “expect the unexpected.” I commend this phrase to all lawyers and mediators.
The case involved a landmark office building, a major financial institution and a respected corporate landlord. Anticipating readers’ curiosity, as is the norm, the identities of all three remain confidential.
The case was simple although the numbers and detail were complex. The lease of the building had come to an end. The financial institution, the tenant, decided not to renew and instead, re-locate to more modern accommodation. The landlords’ surveyors inspected and listed a substantial percentage of a million pounds worth of dilapidations. The vacating tenant objected and the parties chose to mediate, following the standard question posed by the Court. The expectation was for a meeting to take place with a structured negotiation facilitated by the mediator.
The mediation was held in the offices of a major City of London law firm and accommodated in their meeting room. This was fortuitous because the landlord was represented by their solicitor, a junior, their expert valuation surveyor, their expert building surveyor; and the managing director of the property company. The tenant was represented by their solicitor, a senior executive of the Institution, their expert valuation surveyor and their expert building surveyor. Along with my trainee mediator, herself a qualified solicitor experienced in landlord and tenant matters, thankfully the host firm had provided a long table and plenty of seating. The mediation began with each side’s principal giving their corporate position. As usual I asked the parties who wanted to speak first and the landlord’s managing director offered to commence; and as he spoke I told myself that this would be the last time I ever permitted myself to assume anything.
The managing director made it plain from the outset that he was aggrieved with his opposite number. He was not aggrieved about the level of dilapidations. He was aggrieved because his opponent had not bothered to discuss the schedule of dilapidations and instead had immediately adopted an aggressive defence, contradicting, as the landlord put it, a relationship of trust, understanding and mutual cooperation built up over the length of what had been a very long tenancy – over 20 years. This managing director astonished me. I had assumed that he would take a purely commercial stance. Instead, completely surprising me – and doubtless, his opponent – he spoke with a depth of passion which I found quite moving. For any mediation advocates reading this, I do commend this approach, for the result it achieved was remarkable. It not only broke the ice; it started a general discussion between the parties which was done in a most cordial atmosphere. I felt almost guilty coming in once or twice only at appropriate pauses to offer a reflection and a summary.
The conversation went on for a while until it came time to talk about actual works of repair and the financial loss to the landlord. Since the actual principals were getting along with each other splendidly, it seemed appropriate to ask the expert building surveyors to retire to another room and to discuss the schedule of dilapidations between themselves. This was going to involve a great deal of technical detail so to start this I sent off my trainee to supervise the discussion in the knowledge that I would check up on progress; while I focussed the majority of time with the principals. I joined the meeting between the building surveyors after a half hour or so and it was clear that my trainee was learning how to keep their discussions on track; and that they were managing to agree a number of items. All seemed to be going well. I checked in with both principals who by now were each taking advice from their valuation surveyors on the diminution in value which would place a cap upon the financial costs of undertaking the actual repairs and outstanding decorations in accordance with the lease. After some time, I returned to the experts’ room where they had been “hot tubbing” the schedule. By this stage, they appeared to have agreed upon effectively all the items on the schedule. So a break was called for lunch.
It is hoped that Mediators and those lawyers wishing to become mediation advocates or mediators, reading this might question whether the lunch break was such a good idea after all. They would be right – it was not.
In an intensive mediation, a food break can be very helpful to top up dwindling energy and concentration levels. The problem is that it can also act as a break in focus, thankfully rarely, but nevertheless if it happens, with disastrous results. On this case the parties luck ran out. On this case all the good work in the morning session between the building surveyors was thrown out of the window. The tenant’s building surveyor left the “hot tub” room and went to take advice and then instructions from his client. The landlords’ building surveyor thought that a deal had been structured before they each had left the room and reported this to his client.
As an office lunch was served, the tenant’s surveyor had left the building. On his return a half hour later, further discussions occurred between the two building surveyors, while, in the meantime, I supervised another hot tubbing session between the two valuation experts, whose cooperation with each other was strained. For this, I used a flip chart to examine each of their valuation cases. This is a tool which mediators are trained to use but do not do so often enough. I commend it to aspiring mediators for it helps to focus perceptions on a problem. It worked for after a long session each valuation surveyor went away to advise their clients on the outcome with their recommendations for a settlement.
Shortly afterward, around tea time, I was summoned into the landlords’ private room to be informed by an irate managing director that the entire mediation was a waste of time and money and a farce with disrespect and bad faith demonstrated by the tenant. It transpired that the tenant’s building surveyor had informed his counter-part that the deal struck before lunch was no longer a deal. The tenant’s surveyor disagreed on a number of points upon which, before lunch he had agreed. This was a major crisis which was about to turn into a disaster.
There are two things a mediator can do in such a situation and there are two things that a mediator must never do. I deal with the “don’ts” first. 1. Do not panic. Ever. It only makes it worse. 2. Do not feel despondent. It does not help the mediator think clearly.
Of the “do’s” the mediator is well advised to 1. Acknowledge the problem and then take 5 minutes in private to think it through; and 2. Only take 5 minutes including forming a plan of action and then act upon it immediately. Even if that plan of action involves asking a lot of questions and investigating the cause, that is a positive plan of action. The parties expect and pay the mediator to put in a great deal of effort to hold the mediation together. There is no sense in taking too long because upset parties have a tendency to pack up and go home. At that point, the mediation is then aborted. It is something to be avoided at all costs. Trying to persuade a party with wounded pride to return to the negotiating table is one of the hardest tasks a mediator can face. It is not often successful.
My trainee asked me if the expert building surveyors should meet again, being the obvious solution. However mediation also involves thinking beyond the obvious. It is called thinking “outside the box”. It is the art of adding value to the negotiation to make it work. It requires skill and focus. That focus should include an important facet of mediation which is observation of all the parties present in the room. For someone sitting in the background silent through most of the process may well prove to be the decision maker for the party concerned. Another focus is to ascertain what motivates everyone.
In this case, I had to find a solution rapidly if the mediation was to continue. It occurred to me that the managing director’s opening statements had had a profound effect on his opponent. While he was clearly emotional about the tenant’s building surveyor re-siling on an agreement made, albeit without prejudice and non – binding, nonetheless, his reaction also indicated that he was anxious that the mediation should work and his company be kept out of Court. There were two questions. 1. Was the landlord’s managing director bluffing or genuine and would walk out? 2. whether the tenant’s senior executive wanted the case to settle or go to court. They were the decision makers and their reactions were key to the process.
Thinking outside the box, I took a risk and offered both principals to meet with me in private without their legal teams and their experts, in a principals “hot tub”. I had very little time left before the landlords’ managing director would actually walk out. I persuaded him to stay while I spoke with the tenant’s executive; who fortuitously agreed to meet in private.
This solution was novel but thankfully it worked. Having calmed down the landlord, he met up with his counter-part and explained calmly why he felt upset. He explained that the tenant’s building surveyor had behaved badly. This presented an appropriate juncture to intervene and I asked the one obvious question namely why the building surveyor had changed his mind. The alternative to doing this would have been to have done this in private caucus with the tenant’s building surveyor and the tenants legal team and senior executive. I formed a view that it would have produced a convoluted response. I appreciated that what would satisfy the landlord’s managing director was a straightforward, honest answer. In my room with just him, I and the tenant’s executive, he heard his answer. The building surveyor had simply taken fright at the amount of damages to which he had had to conceded. The fellow was more concerned about his reputation than the effect on the client in the mediation process. Hearing this frank admission, the landlord’s managing director thanked his opponent for his candour, actually shook hands with him and then said he would stay to work on a respectable settlement proposal. He asked the tenant’s executive to leave the room and return with a sensible settlement proposal within a half hour. With literally one minute unexpired, the tenant’s executive returned with a substantial settlement proposal, which was rejected; but with a smile and he thanked his opponent for acting in good faith.
There then followed in swift succession a series of proposals and counter-proposals, not far spaced apart. Around 9.30 p.m. that evening, the experts having gone home, a deal was reached. It took the solicitor another two hours in which to form an acceptable consent order; and both the principals signed, completing the process. The litigation thus ended without bloodshed.
As to the lessons re-learnt?
- Never panic.
- Never turn a crisis into an irredeemable disaster.
- Think outside the box to add value; that is what the parties are paying the mediator to do.
- Never assume. Think it through first and quickly – that is what the parties are paying for.
- Expect the unexpected!
If the reader requires further information on mediators able to deal with difficult disputes, please contact the Administration Team at The Dubai Mediation Centre run by Natalie Dixon. She will discuss such matters as fees, timetable and suggest suitable mediators and arrange a suitable appointment.
Paul Rose FRICS DipArb FCIArb is a Chartered Surveyor, a Chartered Arbitrator and an IMI certified Mediator. He is a member of ArbDB Chambers. a panel member of the Dubai Mediation Centre, a member of the Presidents’ panel of Arbitrators of both the Chartered Institute of Arbitrators and RICS; and a panel member of both the Arbitration and Mediation panels of the Kuala Lumpur Regional Arbitration Centre. He specialises in property disputes.