Chess Pieces
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Between a rock and a hard place?

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"In the resolution of a civil dispute, anyone is entitled to a fair hearing within a reasonable time, at a reasonable cost, and with appropriate independent input to ensure fairness...However, there are circumstances in which options other than litigation may be more cost effective, quicker or flexible, while still resulting in a fair outcome. The potential litigant should be sufficiently aware of, and appropriately advised about, other options. Alternative Dispute Resolution (ADR) has a long and respected history in this jurisdiction. It has received increasing support from the Civil Procedure Rules and associated Practice Directions, the judiciary, and developments in government policy. With the introduction of the Jackson Reforms on 1st April 2013, resolving disputes through ADR processes will need to be given serious consideration in almost all civil claims."

Introduction to the general principles of ADR: The Jackson ADR Handbook published by The Judicial College, The Civil Justice Council and The Civil Mediation Council 2013

Most mortgage disputes can be resolved with a little advice and assistance. LegalMortgage recommends three types of alternative dispute resolution

The main advanatge of ENE is that it secures an early indication of the likely prospects of success and the correctness of the approach being taken by the other side. It also provides a useful "reality check" for clients and their lawyers. It is an approach which is employed in Financial Dispute Resolution hearings and is now encouraged by the Technology and Construction Courts, as well as being piloted in other Tribunals. As an 'evaluative' form of ADR it avoids the adversarial approach of other forms of ADR and doesn't force a compromise for the sake of compromising. It enables the parties to consider a settlement against a backdrop of fairness - getting the right answer.

If you are content to let an issue be resolved by a judge, who is unlikely to be an expert in the field, why not have it determined early by an expert and save the cost and delay of litigation. The parties contractually agree to a final and binding determination which, unlike an arbitration, is not subject to the supervision of the court and leaves little scope for further challenge (unless the parties stipulate otherwise). The parties retain the flexibility of agreeing the terms of referral and the procedure to be adopted, subject to any further directions from the expert. A failure by one side to honour the determination will amount to a breach of contract which will be separately enforceable.

Sometimes it may not be possible or appropriate to resolve a dispute on paper. There can be a number of reasons for this. The issues may be too numerous or too complex, or the parties might simply want to thrash the issues out face to face but with the assistance of an independent third party who is an expert in the area. It differs from a straightforward mediation in which the mediator frequently has no expert knowledge of the subject matter of the dispute and will not offer an expert opinion in seeking to achieve a settlement. That's fine if you want to negotiate blind but it often incurs considerable time and expense in dealing with non-issues. If you are confident you have a good case and want the settlement to reflect this, why not try Expert Assisted Negotiation?

Which one to use?

1. The first and obvious consideration is whether there is an issue which is a stumbling block to the resolution of a dispute. In the context of mortgage-related cases, these can be many and varied. For example, there may be an issue about:

  - the meaning and effect of the mortgage terms and conditions or offer of loan

  - the extent of the land comprised in the security

- the correct calculation of the account and whether certain items should be included or not

  - whether the lender has correctly complied with its obligations under legislation; the Mortgage: Conduct of Business Rules; the Mortgage Arrears Pre- Action Protocol
or the Civil Procedure Rules

  - whether on the particular facts, the borrower has any reasonable prospect of establishing a defence to a possession claim - for example on the grounds of forgery
non est factum, undue influence or misrepresentation etc

- whether and to what extent the lender is entitled to be subrogated to the rights of a previous lender

  - whether and on what terms the borrower is entitled to suspend an order for possession on terms, or seek to stay a warrant of possession

- whether the lender has taken reasonable care to obtain the best price reasonably obtainable on a sale of the mortgaged property

2. Discuss and agree with the opposing party whether there is a willingness in principle to obtain some form of alternative dispute resolution and if so whether it is appropriate to obtain assistance from a suitably qualified expert. Consider the options and decide whether you want an evaluation, a determination or negotiation.

3. Formulate the issue; prepare a concise statement of the relevant facts and produce a bundle of relevant documents to send to the expert. The parties will  invariably be asked to sign a form of Agreement which forms a contract between themselves and the expert, and pay their share of the expert's fee. Sample forms are provided below. These can be negotiated.

4. The whole point of ADR, whichever form is adopted, is to resolve a dispute correctly as quickly and cost-effectively as possible thereby avoiding the cost, delay and uncertainty of court proceedings. It is important to remember that an unreasonable refusal to consider ADR may be sanctioned by the court in costs.

Instructing Nigel Clayton...