What happens if you lie in a mediation? The extraordinary case of the “unsaleable” house that had already sold

A mediation position statement says that a house is unsaleable. Its owner claims the entire £817,000 value of the property as compensation. Negotiations continue, and the dispute eventually settles for £225,000, including costs.

There is just one extraordinary problem: before the settlement was agreed, the homeowner had sold the supposedly unsaleable house for £780,000.

In Thames Water Utilities Ltd v Imber [2026] EWHC 2720 (KB), Deputy Master Marzec granted summary judgment for fraudulent misrepresentation, rescinded the settlement agreement and ordered repayment of the settlement sum.

The decision is a striking reminder that statements made for mediation can have consequences long after the mediation meeting ends.

The house that supposedly could not be sold

Mrs Imber’s home in Woodford Green had suffered sewage flooding in 2006 and 2007. Her earlier proceedings against Thames Water settled in 2013 for £500,000.

A further flood in 2014 prompted another claim. An expert valued the property at £817,000 on the hypothetical basis that it had no flooding history, but considered that there would probably be no willing buyer given its actual history.

Mrs Imber’s mediation statement, dated 11 July 2023, described her as “trapped” in an “unsaleable” property. She claimed £817,000 for diminution in market value, together with approximately £144,000 under other heads of loss.

Yet she had already accepted an offer of £780,000.

The mediation took place on 20 July 2023 without producing a settlement. Negotiations continued. Contracts for the house sale were exchanged on 2 August, and completion followed on 3 August.

Mrs Imber accepted Thames Water’s settlement offer on 19 August. A formal settlement deed followed in September, and Thames Water paid £225,000.

Thames Water did not know about the completed sale.

Wasn’t “unsaleable” just an opinion?

That argument did not succeed.

The court accepted that describing the property as unsaleable might be an expression of opinion. However, it also carried implied factual representations: at the very least, that the property had not been sold and that there was no prospect of a future sale.

Those representations became false when the sale completed.

This mattered because the alleged inability to sell was the foundation of the largest part of the claim. Selling the house for £780,000 fundamentally changed that factual basis.

The case was therefore about more than an optimistic valuation or forceful negotiating language.

A statement can become false after it is made

For the summary judgment application, Thames Water focused on the failure to correct the position after completion, rather than asking the court to determine whether the original mediation statement was dishonest when written.

That distinction is important.

A representation made during negotiations may continue to operate until a settlement is agreed. If circumstances change so that it becomes false, a failure to correct it can amount to misrepresentation.

The practical lesson is that approving a position statement is not necessarily the end of the exercise. Material factual developments during continuing negotiations may require an update.

This does not create a general obligation to volunteer every fact or reveal a party’s negotiating bottom line. It concerns correcting a representation that would otherwise continue to mislead.

What about telling the mediator?

Mrs Imber said that she had told the mediator, in her solicitor’s presence, about the accepted offer, while stressing that she did not expect the sale to complete. She said she expected the mediator to pass this information to Thames Water.

Even taking her account at its highest, the court distinguished between an uncertain prospective sale and an actual completed sale.

By 3 August, she knew that her expectation had proved wrong. The property had sold, and she was no longer trapped in it.

There is also a practical lesson for mediation participants: do not assume that information mentioned in a private session has reached the other party. Be clear about what the mediator is authorised to communicate, and ensure any necessary factual correction actually reaches its intended recipient.

Did reliance on her solicitor provide a defence?

Mrs Imber relied on her understanding of her solicitor’s knowledge and advice. Her former solicitor disputed significant parts of her account.

The court expressly made no findings of misconduct against him.

Crucially, however, the court concluded that even on Mrs Imber’s own version of events, she had no realistic prospect of resisting a finding of dishonesty at trial.

Applying the test in Ivey v Genting Casinos, the court considered her actual knowledge and beliefs, then assessed her conduct by the standards of ordinary decent people.

She knew the property had sold. She nevertheless continued to pursue and settle a claim whose central factual premise was that it could not be sold, without informing Thames Water of the completed sale.

The court held that this was dishonest, even if she did not appreciate the legal significance of a continuing representation.

Thames Water disputed her claim anyway. Why did that matter?

Thames Water had consistently maintained that the property could be sold and had suffered no diminution in value.

That did not defeat its claim.

Relying on Hayward v Zurich Insurance, the court explained that inducement does not require the recipient to believe the representation. A disputed assertion can still materially influence a settlement because of the risk that a court might accept it.

Knowing that the house had actually sold would have fundamentally changed the negotiations. The court considered it impossible to imagine Thames Water agreeing the same settlement had the sale been disclosed.

Can mediation confidentiality protect a false statement?

This decision should not be read as abolishing mediation confidentiality or without prejudice protection.

The judgment did not undertake a general analysis of those protections or decide when mediators can be required to give evidence.

It nevertheless demonstrates that a mediation position statement can feature in proceedings challenging a settlement for fraud. Parties should not assume that describing a document as confidential or without prejudice makes a fraudulently induced settlement immune from challenge.

What happened to the settlement?

The court rescinded the settlement agreement and ordered Mrs Imber to repay £225,000. Any further damages pursued by Thames Water would require assessment.

It did not simply deduct the apparent £37,000 difference between the expert valuation and the sale price. That difference was not itself a judicial assessment of recoverable diminution in value.

Nor was the earlier £500,000 settlement the settlement rescinded in these proceedings.

The lesson for mediation

Mediation allows parties to test arguments, assess risks and compromise disputed claims. Its effectiveness depends on participants being able to make informed decisions.

This case shows the danger of allowing a central factual representation to remain uncorrected after events have overtaken it.

Before signing a settlement, parties and advisers should check whether the factual basis presented during negotiations remains accurate. A settlement intended to bring finality may otherwise become the beginning of another dispute.

Considering mediation?

ProMediate helps parties resolve civil and commercial disputes — including property and boundary disputes — through independent mediation. Contact us to discuss a suitable mediator and arrangements for your dispute.

This article provides general information and is not legal advice on any individual dispute. It reports a civil judgment; no criminal conviction was involved, and the court made no findings of misconduct against the defendant’s former solicitor.