Our Commercial Team discusses a practical and effective approach to resolving disputes.
Can you change your mind after a court-ordered mediation, and are settlement agreements reached at mediation legally enforceable?
Court-ordered mediation provides parties with an opportunity to resolve disputes without the cost and uncertainty of a trial, but any agreement reached can be legally binding and enforceable. While parties are free to continue litigating if no settlement is reached, those who sign a settlement agreement at mediation will generally be held to its terms, even if they later regret the outcome. Careful preparation and legal advice before and during mediation are therefore essential.
In both business and private life, conflicts are inevitable. However, lengthy court battles can be costly, time-consuming, and damaging to valuable relationships.
Court-ordered and court-administered mediation is a powerful alternative dispute resolution method that offers a more efficient, flexible, and collaborative approach to resolving disagreements.
What is Court Mediation?
Mediation is a voluntary and confidential process in which a neutral third party, known as the mediator, facilitates negotiations between disputing parties to help them reach a mutually acceptable resolution. A court can order the parties in a matter to attend a compulsory mediation conference. However, the compulsory nature of attendance does not mean a party is forced to agree to anything—the process remains voluntary and ultimately in the hands of the parties.
The mediator guides the parties in finding common ground and creative solutions. However, the mediator does not make a decision on the matter or impose a resolution. Instead, they may employ strategies to help the parties understand the strengths and weaknesses of their case, as well as the potential consequences if the dispute is not resolved.
If mediation is unsuccessful, the dispute continues through the court system.
A “Mutually Acceptable Resolution” – Does This Mean Mutual Satisfaction?
Master Sanderson of the Supreme Court of Western Australia noted in the 2023 decision McArthur v Gerhard Janssen as attorney pursuant to section 34 Administration Act for Veronika Logar [2023] WASC 59:
“A mediation as conducted by registrars of this court is an attempt to settle a matter without the need for a trial. Although the descriptor ‘mediation’ is used, the process could perhaps be better described as ‘aggravated negotiation’. The aim is not necessarily to bring the parties together. The aim is to compromise the action, probably to the mutual dissatisfaction of those involved.”
This concept of “mutual dissatisfaction” highlights an inherent risk in mediation: following the mediation, a party might decide they are unhappy with the outcome despite having agreed to it and perhaps having signed a heads of agreement or a deed of settlement.
What Happens if I Change My Mind After Mediation?
The answer depends on what transpired during the mediation.
If you attended a mediation where legal positions were discussed but no agreement was reached, you are free to adopt a different stance moving forward. You are not bound by anything discussed during the mediation conference. Likewise, any statements you made during mediation cannot be used against you outside of that setting due to the confidentiality of the process.
However, if an agreement was reached, it can generally be enforced.
In 2024, Master Russell of the Supreme Court of Western Australia ruled on this issue in the case of PEH v KBRG Australia Pty Ltd & Ors [2024] WASC 253.
The case involved a dispute regarding share sale and shareholder agreements, as well as a property development venture in Western Australia. The plaintiffs sought summary judgment to enforce a settlement agreement signed at mediation.
The mediation took place at the Singapore Mediation Centre of the Supreme Court of Singapore in November 2022. The plaintiffs, their solicitors, and each of the defendants—represented by their solicitors—attended. Additionally, Mr Seng Fai Chan, the defendants’ Australian lawyer and authorised representative, attended via video link. After negotiations and exchanges of draft agreements, the parties executed a settlement agreement to resolve the dispute.
Subsequently, the plaintiffs initiated proceedings in the Supreme Court of Western Australia to claim $800,000, which they alleged was due under the settlement agreement.
The defendants argued that Mr Chan lacked the authority to settle the dispute and had improperly executed the agreement on their behalf. However, the plaintiffs pointed to an Agreement to Mediate signed by the parties, which they claimed authorised Mr Chan to represent the defendants in mediation and to settle the disputes.
The Master noted that a solicitor who appears at mediation for a party is generally presumed to have the authority to settle the dispute. In this case, the defendants had signed an Agreement to Mediate confirming Mr Chan’s authority. The Master further observed that if the defendants believed Mr Chan had acted beyond his authority, that was a matter between the defendants and Mr Chan—it did not affect the plaintiffs or the enforceability of the settlement.
The court was apparently unimpressed by the defendants’ “sweeping statements” contesting the plaintiffs’ claim, particularly as they had failed to provide detailed evidence supporting an arguable defence.
Ultimately, the Master ruled in favour of the plaintiffs, ordering judgment against the defendants for $800,000 plus interest. The court also indicated that the defendants should pay the plaintiffs’ legal costs.
What Should I Know About Mediation?
Beyond the basics—such as the location of the mediation, who can attend, who will mediate, and the confidentiality of the process—if you are preparing for mediation, it is crucial to consider all the factors necessary for reaching an agreement.
This will be unique to your case.
For instance, you may need to:
- Consult your accountant or financial advisor to analyse different scenarios.
- Obtain sworn valuations of relevant assets.
- Seek comprehensive legal advice on your claim.
The defendants in PEH v KBRG Australia Pty Ltd attempted to argue that they were misled by the plaintiffs’ solicitors regarding their liability at mediation. To avoid a similar situation, you should assume that the other party and their lawyer will present their case assertively. Come to mediation fully prepared to evaluate their arguments against your own.
Having a trusted legal advisor by your side during mediation can mean the difference between reaching an agreement that is merely “mutually dissatisfying” and signing one that is entirely against your interests—one you may later regret.
At HHG Legal Group, our experienced dispute resolution professionals provide strategic advice and skilled representation to help you navigate mediation effectively, protect your interests, and achieve the best possible outcome. Contact us today to discuss how we can assist with your legal dispute.