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ECA hosts South East Branch Demonstration Mediation 2 September 2006
Sixty members of the Electrical Contractors' Association's (ECA) Greater London Region, fuelled by a hotel breakfast and the horrors of commercial disputes, assembled in the Grand Hotel, Eastbourne, for their conference which included an introduction to mediation.
Rod O'Driscoll opened for the South East branch by defining mediation and explaining the advantages over adjudication, arbitration and litigation.
A display of cost estimates for these processes were compared with those of mediation and supported the conference theme - "Effective Steps You Can Take to Maximise Profitability".
The demonstration mediation was delayed by the late arrival (scripted) of Tony Hardwick, the Employer's Representative from the Dartford Hospital for Obstreperous Old-timers (Oldies).
Tony's lack of punctuality and his request to leave early gave the mediator (Ken Tracey, ECA and CIArb) the opportunity to emphasise to both parties the importance of being courteous to each other throughout the mediation and that the reality of not taking enough time for the mediation could involve them in spending considerably more time preparing and attending court later.
The mediator asked the parties to introduce themselves. Peter Bowes (ECA member) played the Managing Director of Loud & Clear Communications Ltd (Loud & Clear) who was claiming £50,000 from Oldies. The parties had chosen to mediate prior to any legal action and were not represented.
The mediator introduced himself and reminded both sides that he was neutral and that the mediation was for a fixed period of one hour. Both parties confirmed that they had authority to settle and the mediator went on to explain the mediation process and that it was conducted on a voluntary basis with the individuals deciding themselves on the solution. The mediator then called on Peter to make his opening statement for Loud & Clear.
Peter needed reassurance that his statements would be heard in confidence. The mediator confirmed that the process was confidential and that only the parties and himself would hear what Peter had to say. There was then a short pause for the laughter of 60 onlookers to subside.
Loud & Clear had received an order from Oldies for the replacement of the intercom and paging system at the hospital in the sum of £210,000, work to be completed in one year. There was also a requirement for the existing system to function until the new one was operational. Complications arose due to the hospital staff being unclear how the system worked and the record drawings and reference information listed in the contract documents not being made available.
A consultant employed by Oldies proved to be low on technical knowledge and expertise. Loud & Clear claimed for a number of large variations and the work was delayed.
Following negotiations, Oldies paid Loud & Clear an additional £60,000 and granted an extension of time of one year.
At the end of year two, the work was completed but Oldies refused to pay the full revised contract sum of £270,000. Loud & Clear submitted a final account claim of £320,000.
In Tony's opening statement for Oldies, he said that he was not satisfied that the new system could perform all the functions of the old one and was therefore only willing to pay the balance of the revised contract sum, i.e. up to £270,000. Also, in view of the shortcomings of the new system, the hospital required a further defects liability period of one year.
After opening statements and a degree of "sabre rattling" the mediator first listed the issues raised by the parties on a flip chart then directed them to their separate "rooms", asking Tony 'in private' to consider the contribution that Oldies had themselves made to the delays and extra costs on the project. In the meantime, he would attend caucus with Loud & Clear.
Loud & Clear were firm in their position, they wanted £50,000 and did not feel obliged to provide maintenance for a further period. Questions from the mediator revealed that should Loud & Clear proceed to court, then they would require the costly assistance of a consultant to prepare their contractual claim on top of legal costs for preparation and representation. The mediator, concerned that the precious hour was running out, asked Peter to contemplate how much Loud & Clear really needed to settle the dispute and to consider how much they had contributed to the delays and extra costs themselves.
The caucus with Tony revealed needs making settlement at mediation of the utmost importance to Oldies.
Tony admitted that his consultant had contributed to the problems but did not want the mediator to pass this information on to Peter. He confessed that the consultant was his brother-in-law, an ex-captain in the catering corps and that his employment was based on Tony's charity rather than the man's competence. The electrical contractors found this particularly amusing and there was a short pause until their laughter subsided.
Tony confided that he was due to retire in the near future and was horrified at the suggestion that he could be required to forsake his rose garden to prepare for and attend a court hearing. He was also concerned about retiring with the installation in its current condition in case he should be called out to sort problems that arose. He needed an extended maintenance period for the installation to settle down, he also had budgetary problems and could not meet Loud & Clear's financial demands. He therefore had a strong desire to settle and wished to make a proposal to the other side. It was decided a further discussion in a joint meeting should take place.
Tony presented his proposals; he could only offer a further £20,000 due to restraints on the hospital's budget. However, there was a separate maintenance budget and from this the hospital could offer Loud & Clear a 2-year contract to maintain the installation for payment of £12,000 per year. In return, they would require a 12-month extended defects period from Loud & Clear before the maintenance contract began. These proposals would address Tony's fears of system failure and were within his budgets.
Loud & Clear were quick to realise that the maintenance contract could provide opportunities for further profit. Peter remarked that he liked the offer of a maintenance contract but had qualms about taking the money.
"Take the money!", urged 60 electrical contractors in unison. The parties then stood and shook hands. The mediator drafted an agreement, which the parties signed.
Finally the mediator demonstrated the confidentiality of mediation by tearing up the flipchart listing the issues for resolution.
The event was well received by the ECA members and stimulated questions beyond the conference room.
Thanks were given to the CIArb South East Branch, Mediation Focus Group including Rod O'Driscoll and David Simmonds who assisted with the preparation and to Peter Bowes of M&E Solutions (Fire & Maintenance) Ltd.
Ken Tracey