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Mediation is a good thing.

There are various advantages to the alternative dispute resolution process: disputing parties can reach a compromise, avoiding the expense of a trial; the scope of any settlement is completely flexible and can include commercial deals or personal apologies; and the whole process is without prejudice, conducted on a confidential basis. So you can say what you like. Or can you?

The cloak of confidentiality protects most exchanges conducted 'without prejudice'. This enables parties to negotiate their differences without fear of their offers, or concessions, subsequently being paraded in front of the court as evidence of weakness. But the banner of 'without prejudice' is not universal in its application.

If the parties strike a deal but then argue about what was agreed, or have second thoughts and dispute the deal's existence altogether, the court would need to hear about the 'without prejudice' discussions in order to sort out the muddle. Nor can 'without prejudice' be used as a curtain behind which acts of perjury, blackmail or what the courts describe as other acts of 'unambiguous impropriety' be conducted with impunity. You can't say, 'pay up, or I'll nail your wife's head to a coffee table' without prejudice.

There is an obvious tension between the get-it-all-off-yourchest approach to mediation and the don't-overstep-the-mark limits to 'without prejudice' negotiations. This fault line was explored in the recent case of Venture Investment Placement v Hall (16.05.05).

The dispute between Hall and Venture Investment went to mediation. The mediation was unsuccessful but something seems to have happened during the course of it. What actually transpired became the subject of hot debate but Hall held a one-to-one meeting with Venture Investment's chairman and subsequently alleged that the chairman had threatened to do unpleasant things to him and his family. The implication is that while the threats may not have included a coffee table, they were no less serious.

Hall then took his concerns to the police, who were involved to a limited extent and, as the court observed, with 'rather bad grace'.

When Venture Investments learnt about Hall's allegations, which was probably about the time it was interviewed by the police, it amassed a legal team and applied to the court for an order restraining Hall from recounting what had gone on in the mediation. It had, it said, done no more than put a 'macho face' on its 'hard bargaining'. In any event, without prejudice discussions were sacrosanct and ought not to be made public. The judge did not decide between the rival versions but found that, as there was a real risk that Hall would continue to repeat his allegations about the mediation, he should be restrained until trial.

This case emphasises the need to protect the confidential nature of mediation proceedings and warns against using the cloak of 'without prejudice' to mask threats and other acts of unambiguous impropriety.

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