MANDATED MEDIATION will be part of resolving disputes away from court following major reforms to the civil justice system announced on 25 July.
Mediation will be a key step in the court process for small civil claims valued up to £10,000, starting with specified money claims which make up 80% of small claims.
This could include builders or contractors recovering debts from a customer or businesses being sued by homeowners for failure on delivering a service.
The mediation will include a free hour-long telephone session with a professional mediator provided by HM Courts and Tribunals Service (HMCTS) before their case can be progressed to a hearing.
It is hoped mediation could affect up to 92,000 cases per year, freeing up to 5,000 court sitting days a year.
The changes aim to resolve disputes out of court, reducing costs and removing some of the stress of court cases.
Today’s reforms are part of wider government action to make broader changes in the culture around dispute resolution in England and Wales.
Martin McTague, National Chair of the Federation of Small Businesses (FSB), said: “An accessible, fair and affordable dispute resolution system is vital to small firms. Introducing an automatic referral to free mediation for civil disputes up to £10,000 is a welcome step and will help speed up access to justice, and avoid expensive litigation for small civil claims. “We would also like to see the small claims limit raised, so more parties can benefit from cheaper dispute resolution.”
Impact on Contractors
New research by Dispute Assist has revealed the impact of customer disputes on home improvement contractors in the UK.
According to the research, 43% of contractors are spending 2-5 hours each month dealing with disputes. One in 10 (11%) spend more than 10 hours a month.
Assuming a contractor’s hourly rate is £35, they lose the equivalent of £70 – £350 on handling disputes – a huge drain on contractor businesses.
Costs rack up even more when a customer dispute is escalated to the courts, and more than a third (36%) of contractors revealed they have had an unhappy customer make a court claim against them.
Alternative Dispute Resolution
Despite the financial and reputational damage a trip to court can create, uptake of alternative dispute resolution (ADR) services has been surprisingly slow amongst contractors. Two-fifths (42%) of those surveyed are not part of an ADR scheme, and 28% don’t know what ADR is, even though it has been a legal requirement since 2015 for traders to signpost customers to an ADR provider if a complaint cannot be resolved.
ADR includes mediation and conciliation, which helps a customer and contractor to resolve a dispute by finding a fair resolution away from court. Expert determination, which sees an expert within the field of the dispute provide a legally binding ruling, can often resolve cases within days, rather than weeks.
Ciarán Harkin, Managing Director of Dispute Assist, said: “There is currently a lot of turbulence within the home improvement sector. As the cost-of-living crisis continues, many customers are rejecting the increased costs that contractors have passed to them. Unfortunately, given the current constraints within the supply chain, these cost increases can arise unexpectedly, despite contractors’ best intentions.
“As a result, many within the sector are likely to find themselves facing a higher number of customer disputes. It is important that contractors begin to explore the range of dispute resolution options available to them.”