Everything we do in mediation is based upon the simple idea that what anyone says to the mediator is in confidence, without prejudice and off the record. Without that certainty no parties would ever engage in mediation. Parties have to be allowed to say (and shout) unreasonable, irrational and bizarre things and to a certain extent express what they feel the threats faced by the other side are.

However, according to the recent case of Ferster v Ferster, Ferster and ITC Ltd there comes a limit when the abuse of the without prejudice communication is so improper as to allow the shield to be removed and off the record comments to be exposed.

In Ferster following a mediation meeting which had concluded with no agreement the mediator continued to stay in touch and passed communications between parties.

At the meeting the Applicants in the appeal had made an offer to buy the Respondent's shares in ITC . The mediator then passed on a communication from the Applicants which set out a different offer:-

"1. We withdraw our existing offer to sell the shares of Warren and Stuart for the sum of [redacted].

2. We make a revised offer to sell the shares of Warren and Stuart to Jonathan for the aggregate sum of [redacted]. The revised offer is made subject to contract and without prejudice as part of a global compromise incorporating all the parties to the proceedings and the petition. The sale price is to be settled on completion in cash and also by the transfer to Warren and Stuart by Jonathan at market value of his share in any assets which the three brothers on jointly. Any settlements will contain amongst other provisions, confidentiality provisions.

3. We have increased our offer because we have become aware of further wrongdoings by Jonathan. Jonathan knows the extent of his wrongdoings and our client believes that Jonathan is in very serious trouble which will also have serious implications for Jonathan’s partner (Jonathan Seeds) by reason of Jonathan’s actions.

4. It is for Jonathan to assess the reasonableness of the offer we are making. Jonathan ought to realise that the offer is beneficial to him and Jonathan Seeds and HSF should take is instructions.

5. The claimant has information that Jonathan does not only hold bank accounts in England (as per his affirmation) and various additional offshore accounts are held by him or on his behalf (and/or now Jonathan Seeds).

6. It is clearly in everyone’s (and particularly Jonathan’s) interest to wrap this up speedily and quietly. If it is not settled within 48 hours there is a real risk that such a settlement may no longer be possible – the concern being that others will become aware of it.

7. Mr Watts is expected to take his client’s instructions as a matter of urgency as a settlement will obviate the need of further steps such as committal proceedings being issued.

8. If this offer is not accepted the company also proposes to accept third party funding. The amount of the company’s claim will be amended and the amount required by Warren and Stuart for the purchase of their shares will be considerably higher than [redacted] (by at least another £3m) in light of the third party funder’s share of sums recovered. Jonathan will also face the repercussions detailed below.

9. If Jonathan has misled HSF [his solicitors] and sworn false evidence Alan Watts will be aware that Jonathan will face charges of perjury, perverting the course of justice and contempt of court and is likely to be imprisoned. If Jonathan Seeds is implicated he will likewise be investigated and/or charged.

10. In the above circumstances, Jonathan’s credibility and reputation will be destroyed barring him out of the online gaming business in the future. He will also have no prospect of succeeding in this case.

11. Furthermore and hypothetically, if a substantial judgment is entered against Jonathan and it is not satisfied by assets in Jonathan’s own name, we will pursue third parties, such as Jonathan Seeds, as regards claims against them where Jonathan has sought to put assets out of the reach of his creditors. If you wish me to convey any message back once you have talked to Alan and taken your client’s instructions I am happy to assist. I do however have a very busy 48 hours coming up so we do have limited time.”

To boil it down if the Respondent doesn't accept the offer we will expose certain matters and issue criminal and civil proceedings which will land him in jail and probably his partner too.

Now, hard bargaining is all part and parcel of deal making in whatever form it comes but the parties were disputing if the communication contained such an obvious and improper threat as to allow the email to be used in evidence.

The judge handing down the appeal judgment set out his view "that the threats here did unambiguously exceed what was proper.... Firstly, the threats went far beyond what was reasonable in pursuit of civil proceedings, by making the threat of criminal action, (not limited to civil contempt proceedings). Secondly, the threats were said to have serious implications for [Respondent's] family because of [Respondent's] wrongdoings. Thirdly, the threats were of immediate publicity being given to the allegations. It is nothing to the point in this connection that [the Appellants] may have believed the allegations to be true. The threat to publicise allegations of extreme severity against [the Respondent] and his partner, and within such a short timescale, placed quite improper pressure on [Respondent]. Fourthly, the purpose of the threats was to obtain for the [Appellants] an immediate financial advantage arising out of circumstances which should accrue, if they had basis in fact, to the benefit of the company. Finally, there was no attempt to make any connection between the alleged wrong and the increased demand."

The email was permitted into evidence.

So where does that leave mediation communications? Well pretty much where we were before. The case does not raise new issues nor change the position, it simply restates that no one is permitted to abuse the use of without prejudice conversations to issue unwarranted threats. You can bargain hard, admit that your pleaded position is not based on your actual belief of what the facts are, but you cannot use the shield of without prejudice communications to hide a blatant threat which exceeds what is the proper use of that protection.

Northwest Mediation encourage all parties to be open and honest, and we continue to destroy our notes of mediation as soon as possible after the meetings to provide certainty for participants.

If you would like to speak to anyone about a confidential mediation please call Ed Johnson on 07931318347 or at ed.johnson@northwestmediation.co.uk