The property management experts at Brady Solicitors explain how you can use mediation to help resolve service charge disputes and preserve important working relationships.
Our property management solicitors are skilled at finding the best method of recovering service charge arrears. For most managing agents and their RMC clients, the ideal scenario is to secure recovery of the arrears without doing further damage to the relationship with the leaseholder. And this is where mediation can play an important role.
How does mediation work?
The role of a mediator is to work with both parties, on an independent basis, to reach a compromise that everyone can work with and move on from.
A good mediator can be incredibly valuable in resolving property management disputes, including service charge cases, so long as all those involved are ultimately willing to participate.
To explain, mediation is a voluntary, informal and confidential process that allows both sides to get together and discuss their problems with an impartial mediator. Mediation aims to help them settle their differences and reach a negotiated settlement, without the need to go to court.
The process can involve a round-table meeting with all parties but, usually, the parties will sit in separate rooms with the mediator acting as an intermediary.
All mediation is on a ‘without prejudice’ basis.
This means that, should mediation fail and the case end up in court, any matters discussed during mediation cannot be referred to in the subsequent court proceedings.
Why should we consider mediation for our service charge dispute?
First and foremost, mediation can save time and costs for both parties as it is generally much cheaper and faster than going to court.
Mediation gives both parties a chance to resolve the dispute together and is especially useful where working relationships need to be maintained.
It gives both sides the opportunity to speak openly and discuss all the circumstances, allowing them to better understand each other when emotions get in the way.
At Brady Solicitors we are increasingly encouraging our clients to consider mediation – particularly in the early stages of a service charge dispute that is showing signs of going ‘all the way’.
Refusal to mediate can have expensive sanctions..
Importantly, you are legally obliged to consider mediation as an alternative to going to court, as per Part 1 of the Civil Procedure Rules. This is to ensure proper use of the court’s limited resources, which are publicly funded.
Any refusal to mediate can have financial consequences if the matter goes to court.
Recent case law shows that even when a party is successful at a hearing, they may be refused payment of their legal costs if they refused to mediate without good reason to do so.
On the other hand, a losing party who is already obliged to pay legal costs, can be ordered to pay additional costs on top by way of a penalty if they refused to mediate without good reason.
However, it goes without saying that mediation is only suitable where both sides of the service charge dispute are willing to communicate and compromise.
Debt recovery to debt reduction
Our approach to every service charge arrears case is to try to find a resolution that settles the service charge dispute, helps the parties move forwards together, and minimises the risk of future service charge arrears.