To: Sonia Krakowski, Supervising Solicitor From: Trainee Solicitor Date: 22 January 2026 Reference: 290143/3078/SK/TR Subject: Fleet Autos Limited v Beck Halshaw Limited – Advice on Mediation
This memorandum addresses the questions you raised following your meeting with Lucy Myerson ("LM") of Fleet Autos Limited ("Fleet") regarding their dispute with Beck Halshaw Limited ("Beck").
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a) Should Fleet propose mediation to Beck to resolve the dispute?
Yes, I would advise that Fleet should propose mediation to Beck. While I note LM's frustration and her desire to litigate, mediation offers several significant advantages that align with Fleet's wider commercial interests.
Arguments in Favour of Mediation:
- Cost and Management Time: LM has indicated that Fleet's senior management team is at full capacity and that the business has recently made significant upfront expenditures. Litigation is a notoriously expensive and slow process that consumes vast amounts of management time. Mediation is generally a much quicker and more cost-effective method of dispute resolution. A successful mediation would allow LM and her team to focus on their core business and expansion plans, rather than on managing a lawsuit.
- Confidentiality: The dispute centres on the quality and reputation of Fleet's prestige vehicles. A public court hearing risks airing these issues openly, which could cause reputational damage, regardless of the outcome. Mediation is a private and confidential process. This would protect Fleet's brand image from negative publicity.
- Control and Flexibility: In litigation, a judge imposes a binary win/loss outcome. In mediation, the parties themselves control the outcome. They can agree to flexible and creative commercial solutions that a court cannot order. For example, a settlement could involve a structured payment plan or specific undertakings on confidentiality, which would be beneficial for Fleet.
- Preserving Business Relationships: Although the relationship with Beck appears to have broken down, mediation is a less adversarial process than litigation. While LM's desire is to "teach him a lesson", this may not be the most commercially sensible objective. A mediated settlement avoids the bitterness of a trial.
Potential Settlement:
A settlement reached at mediation would likely involve a compromise. Given that Fleet has already had the cars refitted, a primary objective would be financial compensation. Dr Keane's report suggests that while the hides were not to specification, some issues might be due to usage. This indicates some litigation risk for Fleet. Therefore, a settlement would likely involve Beck paying a sum less than the full £800,000 claimed, reflecting a discount for these risks and the costs saved by avoiding trial. An agreement could also impose strict confidentiality obligations on both parties.
Despite the uncooperative attitude of Kim Chan ("KC"), the significant commercial benefits for Fleet make proposing mediation a sensible and necessary first step.
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b) What are the implications for Beck if it refuses an offer of mediation?
The Civil Procedure Rules ("CPR") and case law strongly encourage parties to consider Alternative Dispute Resolution (ADR), including mediation. A party that unreasonably refuses to mediate faces a significant risk of costs sanctions.
The court has discretion on costs under CPR 44.2. In exercising this discretion, it will consider the parties' conduct, including their efforts to settle. The Court of Appeal in Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 established that a party's unreasonable refusal to engage in ADR is a key factor. While the court in Halsey stated it could not compel parties to mediate, the recent Court of Appeal decision in Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416 has clarified that courts can order parties to engage in a dispute resolution process, provided it is proportionate and does not deny their right of access to the court.
If Beck were to refuse an invitation to mediate, the court would likely consider this refusal to be unreasonable. This is a straightforward commercial dispute over quality of goods, which is highly suitable for mediation. A refusal would be viewed as unconstructive.
The potential sanction is that even if Beck were to successfully defend the claim at trial, the judge could penalise it in costs. This could involve ordering Beck to pay some of Fleet's costs, or depriving Beck of some or all of its own costs which it would normally recover as the winner. This risk of a severe costs penalty is a powerful incentive for Beck to agree to mediate.
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c) If proceedings are commenced
(i) What are the implications for Beck if Kim Chan refuses to engage in the process on the day of the mediation?
Attending a mediation but refusing to engage constructively is viewed by the courts as being as bad, if not worse, than refusing to attend at all. It demonstrates a lack of good faith and wastes the time and costs of the other party.
In PGF II SA v OMFS Company 1 Ltd [2013] EWCA Civ 1288, a successful party that had simply remained silent in response to an invitation to mediate was penalised in costs. Conduct such as KC attending but refusing to participate would almost certainly be considered unreasonable conduct by the court.
If this were to happen, and the case proceeded to trial, Fleet could ask the court to consider Beck's conduct when making a costs order. The likely implication would be a costs sanction against Beck. For example, the court could order Beck to pay all of Fleet's costs of the abortive mediation, potentially on the more punitive indemnity basis.
(ii) What evidential difficulties could this give rise to and why?
The main difficulty is proving to the court what happened during the mediation. Mediations are conducted on a "without prejudice" basis. This means that communications made in the mediation, whether written or oral, are privileged and generally cannot be put before a court as evidence. This principle encourages open discussion by allowing parties to make admissions or offers without fear that they will be used against them later.
Therefore, Fleet could not simply tell the judge that KC was uncooperative. To do so would breach the "without prejudice" rule. The mediator is also bound by confidentiality and cannot usually report on the parties' behaviour.
There is a narrow exception to this rule. Case law, such as Farm Assist Ltd (in liquidation) v The Secretary of State for the Environment, Food and Rural Affairs (No 2) [2009] EWHC 1102 (TCC), suggests that evidence of a party's conduct in a mediation might be admissible for the purposes of a costs determination. However, this is a difficult area.
The most practical way to overcome this evidential problem is to address it in the mediation agreement. The parties can agree that the mediator will be permitted to report to the court on whether the parties participated in good faith. Without such a provision, it would be very difficult for Fleet to prove KC's conduct without breaching privilege.
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To: Sonia Krakowski, Supervising Solicitor From: Trainee Solicitor Date: 25 March 2026 Reference: 290143/3078/SK/TR Subject: Fleet Autos Limited v Beck Halshaw Limited – Preparation for CMC
This memorandum addresses the questions you raised concerning expert evidence and attendance at the forthcoming Case Management Conference ("CMC") in the Commercial Court.
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a) Would it be appropriate for Dr Ian Keane to be appointed as an expert within the proceedings?
No, it would be highly inappropriate for Dr Ian Keane to be appointed as an expert.
Under CPR 35.3, an expert has an overriding duty to the court which supersedes any obligation to the person instructing or paying them. The expert must be independent and impartial.
Dr Keane is the brother of Lucy Myerson, a director of Fleet. This close personal relationship creates an obvious and serious conflict of interest. His independence would be immediately and successfully challenged by Beck. The court would give little or no weight to his evidence and would almost certainly refuse Fleet permission to rely on it (CPR 35.4(1)).
Guidance on the duties of an expert, originating in the case of The Ikarian Reefer [1993] 2 Lloyd's Rep 68, emphasises that an expert should not assume the role of an advocate. Dr Keane's connection to Fleet would make it impossible for him to be seen as objective. Instructing him would damage Fleet's credibility with the court and result in wasted costs.
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b) Is this a case in which the use of a single joint expert might be suitable?
It is unlikely that this case would be considered suitable for a single joint expert ("SJE").
CPR 35.7 gives the court the power to direct that evidence be given by an SJE. However, this is generally considered for lower value and less complex cases. The guidance in the Practice Direction to Part 35 (PD 35, para 7) suggests that where the claim is for a substantial sum, as this one is (£800,000), an SJE may not be appropriate.
Furthermore, the dispute involves several complex technical issues: whether the hides met the contractual specification, the effect on durability, and compliance with European regulations. These are central to the dispute. The Commercial Court Guide (at para H2.9) notes that in substantial Commercial Court actions, it is usually more appropriate for the parties to instruct their own experts. This allows the issues to be fully explored and tested through cross-examination at trial.
Given the value of the claim and the complexity of the expert issues, the court will almost certainly direct that each party instruct its own expert.
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c) If a decision is taken not to use Dr Keane would his report need to be disclosed and made available for inspection if Model D extended disclosure was ordered at the CMC?
This question engages the rules on disclosure and legal privilege. My advice is that the existence of the report must be disclosed, but it should not be made available for inspection.
The report was prepared by Dr Keane at LM's request to help her understand the problem and was subsequently passed to you to obtain legal advice. It is therefore highly likely to be protected by legal advice privilege.
Under the disclosure regime in the Business and Property Courts (CPR PD 57AD), parties are not required to provide inspection of privileged documents. However, they must disclose the existence of such documents. Therefore, Dr Keane's report should be referred to in Part 2 of Fleet's list of documents, where a party lists documents that exist but over which a right to withhold inspection is claimed.
There is a risk that if Fleet seeks permission to rely on a new expert, Beck could argue that this amounts to "expert shopping". In such circumstances, a court might, as a condition of granting permission for a new expert, order disclosure of the first expert's report (Edwards-Tubb v J D Wetherspoon PLC [2011] EWCA Civ 136). However, as Dr Keane was instructed informally before proceedings and has a clear conflict of interest, it is arguable that this situation is different from the typical expert shopping scenario. Nevertheless, this is a risk to be aware of.
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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 be entirely inappropriate for a trainee to attend the CMC.
CPR 29.3(2) is clear that the legal representative attending a CMC must be "familiar with the case and have sufficient authority to deal with any issues that are likely to arise". The Commercial Court Guide (para D8.1) reinforces this, stating that the person should be responsible for the conduct of the case and have full authority to make decisions on issues like disclosure, witnesses, and the trial timetable.
A trainee would not have the necessary experience, familiarity, or authority. Sending a trainee would be unprofessional, would likely attract judicial criticism, and could lead to an adverse costs order. It is essential that you, or another senior solicitor with conduct of the file, attends.
(ii) Lucy Myerson has asked if she should attend, what would be your response?
I would advise Lucy Myerson that while she is not required to physically attend the CMC, she must be available to be contacted.
The Commercial Court Guide (para D8.3) states that it is expected that the client will be available during a CMC to provide instructions, particularly on matters with cost implications that may arise unexpectedly.
Therefore, my advice to LM would be that she does not need to come to court, but she must be available on the telephone throughout the hearing so that the attending solicitor can obtain her instructions immediately if required.
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To: Sonia Krakowski From: Trainee Solicitor Date: 2 July 2026 Reference: 290143/3078/SK/TR Subject: Fleet Autos Limited v Beck Halshaw Limited – Settlement Offer from Beck Halshaw
This briefing note provides advice on the settlement offer received today from Smith, Jones & Webb, solicitors for Beck Halshaw Limited ("Beck").
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a) Whether the proposal set out in the letter would meet Fleet’s current objectives and needs.
Fleet's current objectives are to:
- Receive an urgent injection of funds.
- Settle the case within 6 weeks.
- Avoid disclosing the ongoing litigation to potential investors.
- Recover a sum of £600,000 and a significant proportion of their costs.
I must review the specific terms of the letter (Document C) to give definitive advice. However, assuming for the purpose of this note that the letter contains a "without prejudice" offer from Beck to pay Fleet a sum of, for example, £500,000 plus their reasonable costs, I can provide the following analysis.
- Urgency, Timescale and Disclosure: Accepting any reasonable offer now would achieve the objectives of resolving the matter quickly and ending the litigation. This would mean it would no longer need to be disclosed to investors. A settlement would provide a cash injection much sooner than waiting for a trial. In these respects, the offer would meet Fleet's objectives.
- Financial Target: An offer of £500,000 is £100,000 less than Fleet's target of £600,000. It therefore does not fully meet their financial objective.
- Costs: An offer to pay "reasonable costs" would meet the objective of recovering a significant proportion of costs.
Conclusion: The assumed offer from Beck would meet Fleet's objectives relating to timing and avoiding disclosure, but it falls short of their financial target. Fleet must now weigh the certainty of receiving £500,000 (plus costs) now against the risks, delays and further costs of continuing to trial in the hope of recovering a higher sum.
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b) The consequences for Fleet, if any, if it does not accept the offer.
The consequences of rejecting the offer depend crucially on whether it is a formal offer under CPR Part 36 or a non-Part 36 offer (often called a "Calderbank offer"). The letter must be checked carefully for any reference to "Part 36".
If it is NOT a Part 36 Offer:
The court has a wide discretion on costs under CPR 44.2. It can take a non-Part 36 offer into account when deciding costs. The key question is whether Fleet acted reasonably in rejecting it.
(i) Fleet recovers more than the sum offered: Fleet would be seen as having acted reasonably. It would likely recover its damages and be awarded its costs from Beck on the standard basis.
(ii) Fleet recovers the same as or less than the sum offered: Fleet would be seen as having acted unreasonably. It would have incurred further costs for no benefit. The judge could penalise Fleet by, for example, ordering Fleet to pay Beck's costs from the date the offer should have been accepted.
(iii) Fleet's claim fails: Fleet would recover nothing and would almost certainly be ordered to pay Beck's costs for the entire litigation. The offer would be irrelevant.
If it IS a Part 36 Offer from Beck (the Defendant):
The consequences are much more specific and punitive under CPR 36.17.
(i) Fleet recovers more than the sum offered: Fleet has "beaten" the offer. The specific costs consequences of Part 36 do not apply. The court would simply make the usual order that Beck pays Fleet's damages and costs.
(ii) Fleet recovers the same as or less than the sum offered: Fleet has failed to "beat" the offer. This has severe costs consequences. Unless the court finds it unjust, Fleet will receive its costs only up to the date the offer expired. From that date onwards, Fleet will have to pay Beck's costs. This could mean that Fleet's final damages award is wiped out by the costs it has to pay to Beck.
(iii) Fleet's claim fails: The result is the same as above. Fleet loses and pays Beck's costs.
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c) Whether a Part 36 offer by Fleet would achieve Fleet’s objectives and how it would put pressure on Beck to settle.
Yes, making a Part 36 offer would be a very effective strategic move for Fleet. It would both formalise Fleet's settlement position and place significant pressure on Beck to settle for a higher sum.
Achieving Fleet's Objectives:
Fleet could make a Part 36 offer to accept £600,000 in settlement of its claim. If Beck accepts this offer within the "relevant period" (usually 21 days), the case settles for that amount, and Beck must also pay Fleet's costs (CPR 36.13). This would achieve all of Fleet's objectives: the desired sum, a quick resolution, and recovery of costs.
Putting Pressure on Beck:
The real power of a Claimant's Part 36 offer lies in the costs consequences for the Defendant if they reject it and fail to do better at trial. If Fleet makes a Part 36 offer of £600,000, and Beck rejects it, and Fleet then goes on to win £600,000 or more at trial, CPR 36.17(4) provides for a series of awards to Fleet, unless the court considers it unjust. These are:
- Enhanced interest on the damages awarded (up to 10% above base rate).
- Costs on the indemnity basis (a more generous basis than standard) from the date the offer expired.
- Interest on those indemnity costs.
- An additional amount of up to £75,000 (calculated as 10% of the first £500,000 of damages and 5% of the rest).
These potential sanctions are a formidable "stick" that forces a defendant to seriously evaluate the risks of continuing. The prospect of having to pay not just the damages and standard costs, but also indemnity costs, enhanced interest, and a lump-sum penalty, creates immense pressure on Beck to either accept Fleet's offer or make a higher counter-offer to avoid these risks. This tool would therefore be very useful in trying to achieve Fleet’s goal of settling for £600,000.
References
Calderbank v Calderbank [1975] Fam 93
Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416
Edwards-Tubb v J D Wetherspoon PLC [2011] EWCA Civ 136
Farm Assist Ltd (in liquidation) v The Secretary of State for the Environment, Food and Rural Affairs (No 2) [2009] EWHC 1102 (TCC)
Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576
PGF II SA v OMFS Company 1 Ltd [2013] EWCA Civ 1288
The Ikarian Reefer [1993] 2 Lloyd's Rep 68
Civil Procedure Rules 1998
