Will I be Bound by an Agreement Reached at a Mediation?

If you find yourself involved in Court litigation, it is highly likely that you will be required to participate in a mediation to attempt to resolve your dispute with the other parties.  As such, it is important to understand whether you will be bound by an agreement reached at the mediation.

The recent case of Fiona & John Sinclair Pty Ltd v Burns Bay Services Pty Ltd [2023] NSWSC 789 found that parties who entered into an agreement at a mediation were bound by the terms, even if the formal requirements of a deed were not complied with.

Facts

The parties were involved in complex Supreme Court proceedings and attended a mediation to attempt to resolve their dispute. At the mediation, the three participants agreed for the mediation to take place without their lawyers being present. After a period of back and forth offers, a final figure and payment plan were agreed. A document recording the settlement was then drafted by the mediator and signed by the parties (the deed).

A few days after the mediation a dispute arose as to whether the deed was binding and enforceable.

Decision

The Court found the deed failed to comply with the formal requirements under section 38 of the Conveyancing Act 1919 (NSW),  however, the parties were nevertheless bound to the deed. The evidence of what occurred at the mediation objectively indicated that the parties intended to be bound by the terms of the deed.

Some of the circumstances which the Court took into consideration to support its decision were:

  • the parties were informed by the mediator of the deed’s ‘full and final’ and ‘binding’ nature and agreed that they understood and strongly desired this;
  • the very object of the mediation was to resolve all the issues between the parties;
  • the parties rejected the mediator’s suggestion that the deed be drafted on another day and they all stated they wanted to sign on that day;
  • the material terms had been agreed on a final basis; and
  • the language of the deed’s terms suggested the parties intended to be ‘immediately’ bound.

Conclusion

Unless there are sufficient circumstances demonstrating that the parties did not intend to be bound, an agreement signed at the conclusion of a mediation will likely bind the parties. This case highlights the importance of parties having legal representation at a mediation so to ensure any agreement reached is recorded accurately and will be enforceable. This will avoid a further dispute amongst the parties and bring finality to your matter.

If you require any assistance with preparation for and representation at mediation, please contact us to discuss further.

Rita Khodeir

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