This case is not an employment case - it involves an argument over goods and payment between two organisations - but it highlights the importance of wording in contracts and the potentially binding nature of mediated settlements, as well as the courts' reluctance to interfere with contractual agreements, regardless of their unfairness.

The claimant supplied beauty products to the defendant, who owned retail premises. The claimant sued for non-payment, the defendant counter-claimed on the basis of late delivery, faulty goods and the like. The difference between them ran to tens of thousands of pounds.

After much toing and froing, and arguments over bills, mediation was proposed. The defendant was legally represented at the resulting mediation; the claimant appeared by its managing director, Mr Singh. The mediator was an experienced barrister. The meeting resulted in a signed Mediation Agreement made on 12 March 2008.

The Mediation Agreement provides several clauses, including the following:

"1. That the action no: 6WD03783 between the parties be stayed for a period of two months to enable the parties to reach settlement in accordance with the provisions of this agreement reached at mediation on 12.3.08.

2. The claimant will confirm through legal representatives by 4 p.m. on 19 March 2008 that the schedules attached to the Reply and Defence to Counterclaim dated 17 January 2007 served on its behalf accurately record all invoices issued by the claimant to the defendant between 1 January 2001 and 5 June 2006.

3. In the event that the defendant indicates by 2 April 2008 that it is prepared to resolve this dispute the following terms shall be binding u pon the parties..."

The claimant agreed to the settlement but other discrepancies were later found and it sought to move outside the mediated agreement.

The Court of Appeal has rejected the appeal by the claimant. Davis LJ, providing the lead judgement stated:

"So, as I see it, nothing has gone wrong here with the Mediation Agreement. What has gone wrong is the mistake of the claimant in thereafter providing confirmation as to the accuracy of its schedules when in fact (as it says) it inadvertently had o mitted reference in those schedules to the missing invoices for January and February 2005. But the claim for rectification has failed; and there is no leave to appeal in that regard. In such circumstances it is contrary to all established principles of interpretation of contracts for the court to rewrite the bargain which the parties have actually made simply in order to achieve a result said to be fairer and more reasonable, having regard to supervening events and to subsequent mistakes in implementation...

"It is most unfortunate that matters have remained unresolved for so long. But the court cannot rewrite the parties' agreement, or the court's previous Order, to bring about a result the claimant considers right: in circumstances, moreover, where it was for the most part the intervening errors of the claimant itself which have brought about the result it does not like."

Practical lessons from this decision

Mediated settlements outside of employment that are intended to be binding will generally be enforced by the courts. Employment cases are a special case, where legislation specifically allows for contracting out of statutory rights only where there is a valid compromise agreement or a settlement reached under the auspices of the LRA in Northern Ireland or Acas in GB.

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