Beauty Star Limited v Shiraz Janmohammed
On 24 March 2014 the above matter was heard before Laws LJ, Davis LJ and Ryder LJ in the Court of Appeal. It was held that (1) where parties have entered into a binding mediation agreement but mistakes have occurred in its implementation which one party alleges have led to an unfair result, that party still remains bound by the outcome of the agreement and (2) the court cannot interfere with a report produced by an expert who was appointed by the parties rather than by the court.
The Claimant is a wholesaler and the Defendant a retailer. In 2006 the Claimant issued a claim against the Defendant for sums allegedly due in respect of goods sold to the Defendant. The Defendant counterclaimed on various grounds. Schedules of invoices and payments were exhibited to the pleadings of both parties. Eventually the parties agreed to mediate and a mediation agreement was signed in 2008.
That agreement required the parties to take certain steps (including the Claimant confirming the accuracy of their schedule) before appointing an accountant to determine who owed what to who based on the exhibited schedules, with the outcome being binding on both parties. The relevant steps were taken, the accountants were appointed and they determined that the Claimant owed the Defendant the sum of £178,434.60. The Claimant refused to pay on the basis that numerous invoices had been omitted from their schedules, there were arithmetical errors in the report and they were not therefore bound by the agreement. The Defendant accepted the report and relied on the agreement as being binding.
Orders were made in the course of the proceedings on the basis of which the Claimant sought to argue that the accountant was a court appointed expert rather than appointed by the parties under the agreement. Proceedings continued and after a three-day trial, the Judge found in favour of the Defendant on the basis that there was no mistake in the mediation agreement itself. The mistake – if any – was in the Claimant’s failure to check their schedule and discover any inaccuracies or omissions.
The Judge also found that the accountant was appointed under the mediation agreement as the parties’ appointed expert and was not a court appointed expert, so even if there were errors in the report, it was binding on the parties and could not be investigated by the Court. The Claimant’s remedy if any was against the accountants, but as between the parties the matter was final.
The Claimant sought permission to appeal, which was refused on paper but limited permission was granted after an oral hearing. At the full appeal hearing the judgment at first instance was upheld in all respects and the appeal was dismissed with costs.