Court-annexed Mediation

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Court-annexed mediation is mediation that is forced upon the parties by orders of the court. The discretion to refer (unwilling) parties to mediation arises under s 26 of the CPA.

  • The discretion is very wide, the only bar being if the court believes mediation would be pointless: Higgins v Higgins. Mediation is appropriate:
    • When litigation is complex and protracted.
    • When the court thinks that the parties' approach to the proceedings is being unduly influenced by subjective considerations and might benefit from a skilled conciliator.
  • Parties must participate in mediation in good faith: s 27.
  • The court can give effect to any agreement made during mediation proceedings: s 29.
  • Statements made during mediation are protected (can't give rise to defamation): s 30.
  • Mediator cannot disclose any of the information obtained in the mediation unless in one of the cases mentioned in the CPA: s 31.
  • A mediator has the same protection and immunity as a judicial officer: s 33

ADR clauses in contracts are enforceable by courts: United Group Rail Services v Rail Corporation NSW.

This topic is within Resolving Civil Disputes.

Contents

Required Reading

Dorne Boniface, Miiko Kumar and Michael Legg, Principles of Civil Procedure in NSW (2d ed 2012) Thomson Reuters, [4.250]-[4.330].

Introduction

[1] The court has the power to refer a matter to mediation even if the parties do not wish to do so (s 26 of the CPA). The rules governing court-annexed (or court-ordered) mediation are set out in Part 4 of the CPA (s 25-s 34), the most relevant of which are detailed below:

  • Parties must participate in mediation in good faith: s 27.
  • The court can give effect to any agreement made during mediation proceedings: s 29.
  • Statements made during mediation are protected (can't give rise to defamation): s 30.
  • Mediator cannot disclose any of the information obtained in the mediation unless in one of the cases mentioned in the CPA: s 31. The grounds are:
    1. With consent of the parties.
    2. In connection with the execution of his duties as mediator.
    3. If there are reasonable grounds to believe disclosure is necessary to prevent an injury etc.
    4. If disclosure is reasonably required in order to refer a party to another agency or organisation and the disclosure is made with the consent of the parties.
    5. In accordance with a legal requirement.
  • A mediator has the same protection and immunity as a judicial officer: s 33

Court ordered mediation has been criticised, but it has also been recognised that parties which refused mediation but were ordered to do it have often found mediation helpful and reached a settlement.[2]

Exercise of the discretion

Circumstances in which the court might order mediation include:

  • When litigation is complex and protracted.
  • When the court thinks that the parties' approach to the proceedings is being unduly influenced by subjective considerations and might benefit from a skilled conciliator.

The court's discretion to refer matters to mediation was discussed in Higgins v Higgins:[3]

  • Facts: the plaintiff sued her son and daughter in law over a land dispute. She then asked the court to refer matters to mediation despite the defendants opposing mediation.
  • Held: The court referred matters to mediation.
    • The discretion of the court is very wide, and the only thing that should truly bar the discretion would be if the court believes mediation would be pointless.
    • Parties opposing mediation does not mean mediation is likely to be pointless - it often happens that parties are reluctant to accept mediation but once ordered cooperate well and benefit from the process.
    • In the present case, the plaintiff was old and infirm and wished to repair the relationship, and conclude the matter quickly. That was a big consideration in favour of mediation.
    • Another consideration was that there was an available time and a pro bono mediator, and the mediation was likely to be quick.

And also in Waterhouse v Perkins[4]

  • Facts: the plaintiff brought an action against the defendants for defamation. The claim was complicated by interlocutory applications and cross claims, and was over 10 years in the process. The defendants applied for mediation, the plaintiff opposed.
  • Held: the court referred matters to mediation because of the following considerations:
    • The complexity of the case and the delay involved.
    • The likelihood that the mediation would be quick, and the fact that the defendant undertook to pay all costs bar plaintiff's legal advice.
    • The plaintiff's argument that he cannot achieve vindication to defamation through mediation is not accepted.

And also in Oasis Fund Management vs ABN Amro:[5]

  • Facts: the plaintiff were trustees who sued a superannuation company for misleading conduct etc on behalf of their investors. The plaintiffs applied for mediation because their clients were old and needed their retirement money, and because discovery etc would be very expensive. The defendants objected because they said they need discovery in order to evaluate the case against them.
  • Held: the question of whether there is enough information for the defendants to evaluate the case against them is the principal issue, but it can probably be overcome in this case by a skilled mediator. On the other hand, the arguments for the plaintiff are valid. All in all, the benefits of a possible successful early mediation outweigh the disadvantages presented by the defendant. Matter referred to mediation.

Enforceability of ADR Clause

[6] Contracts sometimes contain a 'dispute resolution clause', which entails that the parties must solve a dispute by trying ADR first. Besides arbitration, there is no legislative basis for enforcing a a dispute resolution clause - it is simply a matter of contractual construction like any other clause (the usual issue is whether the agreement to negotiate in good faith was enforceable or void for uncertainty.

This was discussed in United Group Rail Services v Rail Corporation NSW:

  • Facts: the parties had a contract which included clauses requiring them to try various methods of ADR when a dispute arose. The plaintiff claimed that all the the mediation and negotiation clauses should be void for uncertainty, and the arbitration clause cannot be severed from them and thus is also void.
  • Held: the obligation to undertake genuine and good faith negotiations had sufficient certainty - such clauses are perfectly enforceable.
    • They recognise the recent public policy to promote ADRs and the efficient use of resources. They also echo the duty of parties towards the court to try and co operate in order to isolate relevant issues and not waste resources etc.
    • The arbitration clause is also perfectly severable from the rest of the clauses.

End

This is the end of this topic. Click here to go back to the main subject page for Resolving Civil Disputes.

References

BKL refers to Dorne Boniface, Miiko Kumar and Michael Legg, Principles of Civil Procedure in NSW (2d ed 2012) Thomson Reuters.

FDR refers to Michael Legg (ed), The Future of Dispute Resolution (2013) LexisNexis.

  1. BKL, p. 222.
  2. The Hon James J Spigelman, Cheif Justice of New South Wales, Commercial Litigation and Arbitration: New Challenges (paper presented at the First Indo Australian Legal Forum, New Delhi, 9 October 2007.
  3. [2002] NSWSC 455.
  4. [2001] NSWSC 13.
  5. [2009] NSWSC 967.
  6. BKL, p. 264.
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