QUESTION 1: MEMORANDUM
To: Sonia Krakowski From: Trainee Solicitor Date: 22 January 2026 Reference: 290143/3078/SK/TR Subject: Fleet Autos Limited (“Fleet”) v Beck Halshaw Limited (“Beck”) – Advice on Mediation
This memorandum addresses the advisability of proposing mediation to resolve the current dispute with Beck, the potential consequences if Beck refuses to mediate or fails to engage, and related evidential issues.
a) Should Fleet propose mediation to Beck?
In my view, Fleet should propose mediation to Beck. Alternative Dispute Resolution (ADR), including mediation, is actively encouraged by the courts as a means of resolving disputes in accordance with the overriding objective of the Civil Procedure Rules ("CPR") to deal with cases justly and at proportionate cost (CPR 1.1). The court has a duty to manage cases which includes encouraging the parties to use an ADR procedure if the court considers that appropriate (CPR 1.4(2)(e)).
Advantages for Fleet
There are several advantages for Fleet in pursuing mediation:
- Confidentiality: The process is private and confidential. This directly addresses Lucy Myerson’s concern about the litigation's impact, especially as Fleet is seeking investment and wishes to avoid public disclosure of a dispute.
- Cost and Speed: Mediation is generally significantly cheaper and faster than proceeding to a full trial. This aligns with the desire to avoid draining senior management’s time and resources.
- Commercial Flexibility: Unlike a court, which is limited to legal remedies (primarily damages), mediation allows for flexible and creative commercial solutions. A potential settlement could involve a structured payment plan, an agreement on confidentiality, or even a public retraction of Beck’s allegations of misuse, which might appeal to Ms Myerson’s desire for vindication without the risk and expense of trial.
- Control: The parties, not a judge, control the outcome. A settlement is only reached if both parties agree to it. This avoids the "all or nothing" risk of a trial.
Disadvantages and Risks
There are also risks to consider:
- Opponent’s Attitude: Kim Chan has been unresponsive and described as “flaky”. Successful mediation requires a degree of good faith and willingness to negotiate from both sides. There is a risk that Beck may not engage constructively.
- Wasted Costs: If mediation is unsuccessful, the costs incurred will have been wasted, adding to the overall expense of the dispute.
- Client Expectations: Ms Myerson wants to "teach him a lesson". A confidential, negotiated settlement may not provide the public victory she desires. This is a point that will need to be carefully managed with the client.
Potential Settlement
A settlement reached at mediation could involve Beck agreeing to pay a sum of money to Fleet to compensate for the cost of having the cars re-fitted. This sum would be a matter for negotiation but would likely be less than the full £800,000 claim value. The settlement agreement could also include a strict confidentiality clause, which would be beneficial for Fleet’s business reputation and its search for new investment.
Conclusion
Despite the risks associated with Mr Chan’s attitude, the significant benefits of speed, cost-effectiveness, and confidentiality align closely with Fleet’s stated commercial objectives. Therefore, proposing mediation is a sensible and strategically sound next step.
b) Implications and sanctions if Beck refuses an offer of mediation
If Fleet makes a reasonable proposal to mediate and Beck refuses, there can be significant consequences for Beck in relation to costs later in the proceedings.
The leading case is Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576. This case established that the court has the power to sanction a party for unreasonably refusing to consider ADR by making an adverse costs order against them. The burden is on the refusing party to show that its refusal was reasonable. The court in Halsey set out non-exhaustive factors to consider, including:
- The nature of the dispute (this is a commercial dispute, which is very suitable for mediation).
- The merits of the case (if Beck strongly believes it has a watertight case, this might support a refusal, but it is still a high-risk strategy).
- Whether other settlement methods have been attempted.
- The cost of mediation (which would be proportionate to an £800,000 claim).
- Whether mediation had a reasonable prospect of success.
More recently, in PGF II SA v OMFS Company 1 Ltd [2013] EWCA Civ 1288, the Court of Appeal held that silence in the face of an invitation to participate in ADR is, as a general rule, unreasonable in itself.
Therefore, if Beck were to refuse a reasonable offer to mediate, or simply ignore it, Fleet would be in a strong position to argue for a costs sanction against Beck at the conclusion of the case. Under CPR 44.2, the court has a wide discretion on costs and must have regard to the conduct of the parties. An unreasonable refusal to mediate is considered relevant conduct. The sanction could mean that even if Beck were to win the case at trial, its recovery of legal costs could be substantially reduced. If Beck were to lose, it could be ordered to pay Fleet's costs on a more punitive (indemnity) basis.
c) Implications of non-engagement at mediation and evidential difficulties
(i) Implications for Beck
If Beck agrees to mediate but its representative, Kim Chan, attends but refuses to engage in the process, the court is likely to view this as unreasonable conduct, equivalent to a refusal to mediate in the first place. The courts expect parties to engage genuinely in the process. Simply attending the meeting to "tick the box" is not sufficient. In Thakkar v Patel [2017] EWCA Civ 117, the court made a costs order against a party who had failed to engage properly with the mediation process. Therefore, if Mr Chan’s non-engagement led to the failure of the mediation, Beck would again be at risk of an adverse costs order at the conclusion of the litigation.
(ii) Evidential Difficulties
Proving that a party did not engage properly in a mediation presents significant evidential difficulties. The core of this problem is that mediations are conducted on a “without prejudice” basis. This legal privilege means that communications made in a genuine attempt to settle a dispute cannot be put before the court as evidence. This rule is designed to allow parties to speak freely during negotiations without fear that their statements will be used against them later.
To ask a court to make a costs order based on Mr Chan’s conduct, Fleet would have to present evidence of what happened during the mediation. This would likely breach the "without prejudice" rule. The courts are very reluctant to investigate the content of without prejudice negotiations. While there are exceptions to the rule, they are narrow. In Farm Assist Ltd v Secretary of State for the Environment, Food and Rural Affairs (No 2) [2009] EWHC 1102 (TCC), the court suggested it might be possible in clear and exceptional cases, but this remains a high hurdle. The Court of Appeal in Gore v Naheed [2017] EWCA Civ 369 also showed a reluctance to look behind the "without prejudice" veil to examine conduct during a mediation.
Therefore, it would be very difficult for Fleet to prove Mr Chan's lack of engagement without the consent of both parties or, in very rare circumstances, the mediator. The practical reality is that while the court can sanction such behaviour, it is a challenging thing to prove.
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QUESTION 2: MEMORANDUM
To: Sonia Krakowski From: Trainee Solicitor Date: 28 April 2026 Reference: 290143/3078/SK/TR Subject: Fleet Autos Limited (“Fleet”) v Beck Halshaw Limited (“Beck”) – Preparation for Case Management Conference (CMC)
This memorandum addresses the questions raised concerning expert evidence and attendance at the forthcoming CMC on 1 May 2026.
a) Would it be appropriate for Dr Ian Keane to be appointed as an expert?
It would be highly inappropriate to instruct Dr Ian Keane as Fleet’s expert witness in these proceedings.
The primary duty of an expert witness is not to the party instructing them, but to the court (CPR 35.3). This duty overrides any obligation to the person from whom the expert has received instructions or by whom they are paid. An expert must be independent and impartial. The principles for expert conduct, established in cases like The Ikarian Reefer [1993] 2 Lloyd's Rep 68, emphasise that an expert should provide an unbiased opinion.
Dr Keane is the brother of Lucy Myerson, a director of Fleet. This close personal relationship creates an obvious conflict of interest, or at the very least, a strong appearance of bias. While a conflict of interest does not automatically disqualify an expert (Toth v Jarman [2006] EWHC 1656 (QB)), it must be fully disclosed. In this case, the relationship is so close that Dr Keane’s independence and objectivity would be very likely to be challenged by Beck and questioned by the court. The weight attached to his evidence would be significantly diminished as a result.
For these reasons, instructing Dr Keane would be a serious tactical error that would damage the credibility of Fleet’s case. An independent materials expert with no connection to the parties should be instructed instead.
b) Is this a case in which the use of a single joint expert (SJE) might be suitable?
This case is not suitable for the appointment of a single joint expert.
Under CPR 35.7, the court can direct that evidence be given by a single joint expert instructed by all parties. This is usually considered in cases where the sum in dispute is not large, or the expert issue is not complex (Practice Direction 35, para 7).
This case has a claim value of £800,000, which is a substantial sum. The Commercial Court Guide notes that SJEs are less common in the Commercial Court (para H2.10). Furthermore, the expert issues are complex and contentious. They involve assessing the quality of leather hides against a contractual specification, determining the cause of alleged defects (inherent quality vs. usage), and interpreting compliance with both domestic and European regulations. These are matters on which different experts could reasonably hold different opinions.
Given the value of the claim, the complexity of the issues, and the fact that the parties are far apart in their positions, the instruction of an SJE would be inappropriate. The court is much more likely to direct that each party instruct its own expert, and for those experts to subsequently meet to identify the areas of agreement and disagreement between them (CPR 35.12).
c) If Dr Keane is not used, would his report need to be disclosed and made available for inspection if Model D extended disclosure was ordered?
Fleet would not be required to allow Beck to inspect Dr Keane’s report, even if Model D extended disclosure is ordered.
Dr Keane’s initial report was commissioned by Ms Myerson after the dispute arose and KC became unresponsive. It was therefore prepared for the dominant purpose of anticipated litigation and is protected by litigation privilege.
Litigation privilege allows a party to withhold inspection of confidential documents created for the dominant purpose of litigation. The fact that the report might contain some points that are unhelpful to Fleet’s case (e.g., that "some of the issues experienced may have been down to usage") does not destroy the privilege.
Under the disclosure regime in the Business and Property Courts (Practice Direction 57AD), parties who are ordered to give Extended Disclosure under Model D must disclose "known adverse documents". However, PD 57AD para 3.2 expressly states that the Practice Direction does not override any right to withhold inspection of a document on the grounds of privilege.
Therefore, Fleet will have to list the report in its list of documents, but it will be entitled to claim litigation privilege over it and will not have to provide a copy to Beck for inspection. The privilege is only lost if Fleet chooses to rely on and serve the report in the proceedings, which it should be advised not to do.
d) On the question of who should attend the CMC
(i) Would it be appropriate for your fellow trainee to attend the CMC in your place?
No, it would not be appropriate. The Commercial Court Guide is clear that a CMC should be attended by the legal representatives who are familiar with the case and have the client’s authority to deal with all matters that are likely to be raised (para D7.1). This is reinforced by CPR Practice Direction 29, para 5.2.
A trainee solicitor, however able, is very unlikely to have the requisite experience or authority to handle a CMC in a substantial Commercial Court claim. The judge will expect to deal with a representative who can make decisions on complex directions, costs budgets, and the future conduct of the case. Sending a trainee would be a disservice to the client and would likely attract criticism from the court. Either you, as the solicitor with conduct, or counsel should attend.
(ii) Lucy Myerson has asked if she should attend, what would be your response?
While it is not mandatory for the client to attend the CMC, it is often advisable. The Commercial Court Guide states that it is often “desirable” for the client to be present or, at a minimum, to be available by telephone (para D7.1).
My advice would be that if Ms Myerson’s schedule permits, her attendance would be beneficial. It would enable her to give immediate instructions on any unexpected issues that arise and demonstrates to the court that Fleet is taking the litigation seriously. However, if she cannot attend in person due to her other commitments, she should be advised to make herself available to be contacted by telephone for the full duration of the hearing. This is a common and acceptable alternative.
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QUESTION 3: BRIEFING NOTE
To: Sonia Krakowski From: Trainee Solicitor Date: 2 July 2026 Reference: 290143/3078/SK/TR Subject: Fleet Autos Limited (“Fleet”) v Beck Halshaw Limited (“Beck”) – Analysis of Settlement Offer
This note provides advice on the settlement offer received from Beck’s solicitors, its consequences, and the potential for Fleet to make its own offer under CPR Part 36. For the purposes of this analysis, I will assume the letter from Beck (Document C) is a ‘without prejudice save as to costs’ offer to pay Fleet the sum of £350,000, with each party bearing their own legal costs.
a) Whether the proposal would meet Fleet’s current objectives and needs
Fleet’s current objectives are to receive payment within six weeks, to resolve the matter to avoid disclosing litigation to potential investors, to minimise the drain on management time, and to secure a payment of around £600,000.
An analysis of Beck's offer against these objectives is as follows:
- Financial Objective: The offer of £350,000 is substantially below Fleet’s target of £600,000. Furthermore, as the offer requires Fleet to bear its own costs, the net amount received would be significantly lower still, after our firm's fees are deducted. This offer fails to meet Fleet’s financial needs.
- Timing Objective: If accepted, the offer would lead to a payment which would likely be made within 14 days of acceptance. This would meet the objective of receiving funds within six weeks.
- Confidentiality and Management Time: Accepting the offer would end the litigation, thereby meeting the objectives of saving management time and avoiding the need for disclosure to investors.
Conclusion: While the offer meets Fleet’s procedural objectives (timing and confidentiality), it fails on the most critical point: the financial outcome. It is therefore not an acceptable offer in its current form, but it does indicate a willingness from Beck to negotiate.
b) The consequences for Fleet if it does not accept the offer
The offer is likely a 'Calderbank' offer, meaning the court can take it into account when exercising its discretion on costs under CPR 44.2. The consequences of rejection vary depending on the trial outcome.
(i) Fleet succeeds at trial and recovers more than the sum offered (£350,000)
In this scenario, Fleet will have been justified in rejecting the offer. As the successful party, the general rule is that Fleet would be entitled to an order that Beck pays its legal costs for the entire proceedings. There would be no adverse costs consequences for rejecting the offer.
(ii) Fleet succeeds at trial but recovers the same as or less than the sum offered
If Fleet wins but is awarded damages of £350,000 or less, it will face a significant costs risk. Beck would argue that Fleet acted unreasonably by rejecting the offer and incurring further substantial legal costs to achieve a result it could have had months earlier.
The court would have the discretion to penalise Fleet on costs. A likely order would be that Beck pays Fleet’s costs up to the date the offer should have been accepted, but Fleet would be ordered to pay Beck’s costs from that date onwards. This could mean that Fleet's final recovery, after the adverse costs order is set off against its damages, is very small or even negative.
(iii) Fleet’s claim fails
If Fleet loses at trial, it will be the unsuccessful party. The general rule is that Fleet would be ordered to pay Beck’s costs of the whole action. The rejected offer would be largely irrelevant in this outcome, as Beck would have been vindicated in its defence of the claim.
c) Whether a Part 36 offer by Fleet would achieve Fleet’s objectives
A Part 36 offer by Fleet would be a very effective strategic tool to achieve its objectives and put significant pressure on Beck.
Part 36 of the CPR provides a formal mechanism for making settlement offers which have automatic and powerful costs consequences if they are not accepted. Fleet could make a Part 36 offer to settle for a sum it is willing to accept, for example £595,000 (just under its target of £600,000).
This would put pressure on Beck for the following reasons:
If Beck rejects Fleet’s Part 36 offer and Fleet proceeds to trial and obtains a judgment that is at least as advantageous as its offer (i.e., wins £595,000 or more), then Beck will be penalised under CPR 36.17(4). The court will, unless it considers it unjust to do so, order Beck to pay:
- Indemnity Costs: Fleet’s legal costs on the more generous indemnity basis from the date the offer expired.
- Enhanced Interest on Damages: Interest on the judgment sum at a rate of up to 10% above the base rate.
- Enhanced Interest on Costs: Interest on the costs awarded, also at an enhanced rate.
- An Additional Amount: A lump sum of up to £75,000, calculated as 10% of the first £500,000 of damages and 5% of the amount above that.
These consequences make it extremely risky for Beck to reject a reasonable Part 36 offer. It forces Beck’s management and its lawyers to conduct a very serious risk analysis of their prospects at trial. The risk of not just losing, but losing and having to pay a significantly inflated bill for costs and interest, provides a powerful incentive to settle.
By making a well-judged Part 36 offer, Fleet can proactively drive the settlement process, protect its own position on costs, and maximise the pressure on Beck to settle for a figure close to Fleet's £600,000 objective. This is a far stronger position than simply reacting to Beck's low offer.
References
Cases
- Calderbank v Calderbank [1976] Fam 93
- Farm Assist Ltd (in liquidation) v The Secretary of State for the Environment, Food and Rural Affairs (No 2) [2009] EWHC 1102 (TCC)
- Gore v Naheed [2017] EWCA Civ 369
- Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576
- PGF II SA v OMFS Company 1 Ltd [2013] EWCA Civ 1288
- Thakkar v Patel [2017] EWCA Civ 117
- The Ikarian Reefer [1993] 2 Lloyd's Rep 68
- Toth v Jarman [2006] EWHC 1656 (QB)
Legislation and Rules
- Civil Procedure Rules 1998
