Thoughts on Clay v. Lenkiewicz Foundation

An article in last September’s New Law Journal asked if mediators can be legally trusted, and this needs an answer. During a mediation of a reasonable provision claim from an artist’s estate, the mediator brought to the claimant the defendants’ offer of a cash sum plus one of the deceased’s painting, saying that the painting had been professionally valued at £80,000 ” if sold at auction,” producing a written valuation obtained by the defendants the previous day. The offer was accepted by the claimant “in reliance on the mediator’s representation that the valuation was a market valuation.”

However the valuation was for insuring the cost of purchasing a similar painting if lost or destroyed, rather higher than market value, so the claimant started fresh proceedings, seeking damages over the allegedly material misrepresentation which induced the mediated settlement.

The new proceedings settled before trial, but the parties apparently agreed to disclose what happened during the mediation. The claimant asserted that the mediator had actual or apparent authority as agent to make representations for the defendants who should be bound by any error. The defendants denied authorising the mediator to represent that the valuation indicated its market value, though accepting that the mediator was given the valuation (purpose unspecified) with other papers. The mediator declined to become involved. So could the claimant succeed against the defendant even if the mediator was not authorised to communicate this (mis)representation, perhaps as the defendants’ agent with apparent authority?

Any legal discussion on this would be lengthy and disputatious. Though someone can be agent for both parties (e.g. solicitors and perhaps estate agents) there is no authority on the status of mediators as agents, nor any really comparable legal role. Mediators almost always contract (by reference to their Code of Conduct) to be impartial and neutral, and to respect confidentiality with each party in private. Some decisions on analogous situations suggest that contracts can be rescinded because of innocent misrepresentation by an agent, even if the principal did not know it was made. There is a contrary authority on deceit, with the same standard applying to remedies for negligent misrepresentation under s.2(1) of the Misrepresentation Act. Can the mediator be sued, by representor or representee? This litigation field day would inevitably involve evidence of private meetings between mediator and each party to prove such allegations and mediation confidentiality would be seriously undermined….

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by Tony Allen

Tony Allen is a Solicitor, Direct Mediator and Senior Consultant for The Centre for Effective Dispute Resolution (CEDR).