MEDIATION

MEDIATION IN Alternative dispute resolution There have been perhaps two (including arbitration, mediation principal drivers for the popularity and conciliation) in Australia of mediation in Australia. The first Monica Del-Villar has a long and distinguished is the perceived benefit of using Mallesons Stephen Jaques history. The framers of Australia’s flexible negotiation processes federal constitution expressly to address complex technical included ‘conciliation’ as a issues. In fields such as building head of legislative power for the and construction, this is an resolution of industrial disputes. important motivator because In turn, alternative dispute it reduces the risk involved in resolution processes underpinned submitting fine factual disputes Australia’s workplace relations to the rather blunt remedies system throughout the 20th available at . In commercial century, and thus played a key markets such as construction, role in some of the most bitterly– where there are increasingly few fought legal battles Australia has significant players following a witnessed. decade of mergers and corporate rationalisation, mediation also THE DEVELOPMENT OF has the advantage of preserving MEDIATION IN AUSTRALIA relationships for the future and Australia is a federation of six minimising publicity. States and a number of Federal The full–scale can no longer Territories. It was formed in be regarded as the paradigm 1901. By virtue of its British method of dispute resolution, colonial origins and lessons even for complex disputes from the American experience involving subjects of high value of the 1800s, it has a legal ... alternative means of dispute system that mixes elements resolution, conducted pursuant of the Westminster and United to the private agreement of the States constitutional systems. parties, can be expeditious, In particular, like its American flexible and tailored to particular counterpart, the Australian needs.: Sir Gerard Brennan, judicial system comprises a former Chief Justice, High federal branch and separate of Australia. institutions in each of the States, each with its own administrative The second driver of mediation and traditions. This is in Australia has been the ’ important when examining the determination to use ADR for extent to which alternative dispute the purpose of relieving strains resolution (ADR) is accepted (both in terms of time and cost) and implemented in Australia, generated by steadily–increasing particularly since courts are rates of litigation. In a concerted increasingly taking the lead in attempt to counter these referring disputes to mediation pressures, the courts today exert and expert consideration. In the much greater control over the field of building and construction formal processes of litigation. litigation, for instance, the use of Judicial administration of case mediation is increasing rapidly lists is now common. Largely and is now firmly established as gone are the days when cases a preferred dispute resolution drift towards trial in accordance tool. It is now rare to have a with court rules whose application case proceed through the lower depends on the diligence of Australian courts unless the case practitioners. Now the courts has first been to mediation or supervise their processes through pre–hearing conference. the use of regular opportunities for setting timetables as to pleadings, discovery or disclosure

34 AUSTRALIAN CONSTRUCTION LAW NEWSLETTER #105 NOVEMBER/DECEMBER 2005 of documents and the filing of for greater emphasis on ADR ‘Autumn Offensive’ settled at evidence. In appropriate cases, in Australia. In the mid–1980s, mediation.4 key steps such as pleadings commercial awoke to the Mediation is also a key form of and discovery may be excised benefits of mediation and began private dispute-resolution at the altogether from the process. to influence the development of federal level in Australia. For More and more Australian courts ADR regimes. As a result, in 1986 example: are requiring mediation at an we saw the establishment of the early stage, before massive legal Australian Commercial Disputes • Family Law Act 1975 (Cth) cost is incurred, to seek a more Centre, and in 1989 a private (Family Law Act) s16A—The Court economical and rapid resolution network of practitioners formed must, if it considers it is in the of disputes. Lawyers Engaged in Alternative best interest of the parties or their children to do so, direct or The process of adoption of Dispute Resolution (LEADR). The membership of LEADR had advise either or both parties to mediation prior to trial has been attend counselling. assisted by a recognition among increased from 815 in 1993 to governments at all levels that the 1385 in 1996 and 1822 in 1999 • Federal Court of Australia Act (including approximately 500 New 1976 (Cth) s53A—The Court may courts need help to reduce the 3 backlog of cases. Indeed, the rush Zealand members). order a proceeding, or any part by governments to introduce ADR The government firmly believes of a proceeding, to a mediator procedures into the traditional that mediation and alternative for mediation, with or without legal system has been described dispute resolution should be the the consent of the parties to the as a ‘legislative avalanche’.1 norm rather than the exception.: proceeding. It started in New South Wales Daryl Williams, Attorney-General In 1991, the Courts (Mediation and (NSW), Australia’s most populous for Australia, Press release dated Arbitration) Act was introduced, State, when in 1980 a Community 6 April 1998. facilitating court–sponsored Justice Centres (Pilot Projects) Australia’s second–largest State, mediation and arbitration in the Act was introduced. Under Victoria, was only slightly behind courts of federal jurisdiction, the Act, infrastructure was NSW in adopting mediation namely the Federal Court and established for the mediation as a central plank of its legal Family Court. In the Federal of small civil and criminal system. In 1983, mediation was Court, forms of ‘assisted’ dispute disputes by specially–trained implemented into the rules of resolution such as mediation mediators. This experiment the Building Cases List of the are typically undertaken with in state–sanctioned private Victorian County Court (the court the involvement of a Registrar mediation, designed to reduce immediately below Victoria’s or Justice of the Court, and if the number of proceedings filed superior court, the Supreme a mediation is successful, the in the lower NSW courts, was Court). In 1992, with a new State outcome is reflected in orders of subject to a sunset clause giving government and Attorney– the court. The court has reported it a three–year opportunity to General, the Supreme Court that between 1994–95 and 1998– demonstrate its worth. In 1983 commenced a ‘Spring Offensive’ 99, an average of 220 matters the project was made permanent. to reduce its list of cases, a key were referred to mediation5 each Significant investment was component of which involved the year, with 347 matters referred to undertaken in the establishment reference of 250 proceedings to mediation in 1998–99.6 and maintenance of Community mediation before senior legal VIEWS ON THE SUCCESS Justice Centres to facilitate practitioners throughout the the greater emphasis given to State. This was an important step OF MEDIATION IN mediation in the NSW justice in bringing ADR to the attention AUSTRALIA system. Now, the Community of Victorian lawyers and judges, Mediation in Australia has Justice Centres can be used for and was supported two years undeniably been very successful the resolution of neighbourhood, later by an ‘Autumn Offensive’, in resolving disputes. While family, environmental and which saw the reference of a reliable statistics about employment disputes. In the further 150 matters to mediation. this are notoriously difficult State of Queensland, by 1998 By that stage, many legal to locate (since they may there were 28 different Acts or practitioners had participated exclude settlements after an Regulations which provided for ‘unsuccessful’ mediation, to 2 in mediation training practices, ADR, typically mediation. so that had become which the mediation process It is not just courts and considerably more sophisticated. contributed), it is clear that governments that have pushed 79.35% of cases subject to the

AUSTRALIAN CONSTRUCTION LAW NEWSLETTER #105 NOVEMBER/DECEMBER 2005 35 success rates have been some instances the parties also Commission (ACCC) argued that significant. In particular: agree that the Court should only law enforcement agencies should • the Victorian Supreme Court’s be asked to determine liability or not be subject to compulsory ‘Spring Offensive’ produced a quantum.: Federal Court, Annual mediation. The ACCC has the success rate of 54% (according to Report 1998–99. role of enforcing Australian competition and consumer a study completed the following Despite the high rate of success, year);7 protection at the Federal doubt has been expressed level. The ACCC said that many of • recent studies conducted by the in some quarters about the its cases may have precedential Building Lists of the State courts effectiveness of mediation value and are brought for that indicate a settlement rate above in relieving the caseloads of purpose. In those circumstances, 75%;8 traditional courts and providing compulsory mediation may a cheaper recourse to justice. • according to Managing Justice, sometimes be inconsistent with a Critics maintain that ADR party’s objectives and priorities. a comprehensive report by processes remain expensive the Australian Law Reform in Australia, especially for MEDIATION MOVING Commission (ALRC) in 2000, the more skilled commercial FORWARD research data shows that, of mediators. And scepticism Despite scepticism among some cases completed in the Federal remains about whether mediation practitioners, mediation will Court, the Family Court and the is a cost–effective alternative to doubtless continue to establish Administrative Appeals Tribunal ordinary commercial negotiations itself as an indispensable part of (AAT—a body capable of reviewing between parties, especially when the Australian legal system. The bureaucratic decision–making), mediation is required by courts increasing disposition among the majority are resolved by as a pre–requisite to a trial. One courts to refer cases to mediation negotiation between the parties, Federal Court judge has called before trial is likely to broaden either with or without their for caution about the use of throughout the State and Federal engagement in formal ADR mediation by Australian courts: judicial systems, and to affect procedures. Australian Law more types of disputes. Reform Commission research Our experience is that not every indicated that only 5% of family case is suitable for mediation. RECENT EXAMPLES law cases, 35% of Federal Court It is often better to let a case A recent example in which I have cases and 34% of cases heard by run. Many cases settle without been involved, highlights just how the AAT go to judgment now;9 the need for any settlement or pervasive mediation has become mediation conference. One needs in the Australian courts. • the Federal Court reports that to have an appreciation of which the cases settled after court– cases are likely to be helped by It is the well reported case of annexed mediation between 1994 mediation and which are not. If State of Tasmania v Leighton and 1999 averaged 55%, but this one sends cases indiscriminately Contractors Pty Ltd, one of the figure excludes cases that were for mediation, one will impose on few Australian cases in which a privately mediated (parties are not parties the burden of unnecessary liquidated damages clause in a required to inform the court of a and wasted expenditure. This is building was ultimately 10 private mediation.); and something of which the judges held to be a penalty. In it the State • anecdotally, experienced of this Court are very conscious.: of Tasmania sued Leighton over practitioners usually credit A DeGaris, ‘The Role of Federal a 10 kilometre road project in mediation with a success rate Court Judges in the Settlement of Northern Tasmania. Leighton, between 60% and 85%.11 Disputes’ (1994) 13 University of under a design and construct Tasmania Law Review. contract, had designed the road Importantly, proponents of at a certain level where the road mediation in Australia have Concern has also been expressed passed in front of a historic pointed out that settlement rates that the eagerness of courts house. Unbeknownst to Leighton, should not be the only indicia by to refer matters to mediation the representatives of the State which the success of the process may be preventing important had promised the owner of the should be measured. cases from adding to the body of historic house that the road would Australian law. In its submission Many matters which do not settle be built in quite a deep cut. This to the Australian Law Reform proceed to trial with issues better promise was not reflected in the Commission for the Managing defined, or on the basis of agreed contract. Leightons had partly Justice report, the Australian facts, the facts being settled in built the road when the State Competition and Consumer cooperation with the mediator. In directed Leighton to stop, and to

36 AUSTRALIAN CONSTRUCTION LAW NEWSLETTER #105 NOVEMBER/DECEMBER 2005 build the road much deeper, in a matter having to be relitigated 2. Ibid. substantial cut. The landowner before a new Judge (the old 3. LEADR, Correspondence, 15 wanted the road four metres in Chief Justice having by now July 1999. cut. The State, after prolonged retired to become the Governor delays, negotiated a compromise of the State) if the appeal was 4. GH Golvan QC ‘A Decade depth with the landowner for the successful. The new Chief Justice of Mediation—The Promise road to be at 1.5 metres in cut. firmly put his foot down and told Fulfilled?’ (2000) 18(3)The Leighton claimed for the cost the parties that no aspect in the Arbitrator 136 p140. of the change and for its delay case would go any further until 5. This includes court–annexed and disruption costs. The State there was another mediation. mediations and external maintained it had acted within This was strongly opposed by one mediations recorded by the court. its rights and claimed over $2 of the parties, who claimed no million in liquidated damages for mediation would be successful as 6. Federal Court, Annual Report late completion from Leighton. two had already failed. 1998–99 p52. Unsurprisingly there was With the benefit of having the 7. C Bartlett ‘Mediation in the litigation, with the State suing Court’s findings on liability, the Spring Offensive 1992’, (1993) 67 Leighton. The trial became the whole case went to mediation Law Institute Journal 232. longest running civil trial in the before the Court’s Registrar, an 8. See for example Supreme history of the State of Tasmania, experienced practitioner who had Court of Victoria, 2002–04 Judges’ tying up the State’s then Chief conducted many mediations over Annual Report p19. Justice, three QCs and a junior the past 10 years. After two days, 9. Australian Law Reform counsel as well as a substantial all issues of quantum and four of Commission, Managing Justice— army of instructing solicitors for the six appeal points were settled. A Review of the Federal Civil three years of preparation and Prior to the hearing of the Appeal, Justice System, Report No. 89 nearly six months of hearing one of the two remaining appeal (2000). time, just on liability. The then points was withdrawn by the State Chief Justice handed down a and the last appeal point went to 10. Ibid. 153 page judgment. Leighton hearing last month. The issues was substantially successful, 11. GH Golvan QC ‘A Decade had by now been so confined of Mediation—The Promise with amongst other things, the that the appeal was heard in States liquidated damages clause Fulfilled?’ (2000) 18(3) one day. The parties now await The Arbitrator 136 p140. being held to be a penalty. As the decision on that final point. the hearing had been bifurcated, Whatever the result of the Appeal, with only liability issues being This paper was previously the parties had agreed at the presented at the Hong Kong determined, the parties now mediation that the case will not faced an estimated further two Mediation Centre Conference be returned back to a Judge for ‘The Development of the Use of to four months of hearings on further consideration, but rather quantum. To complicate matters, Mediation in Dispute Resolution: quantum has been agreed. The A Global View’, in Hong Kong the State also appealed almost only live issue is who is to bear all liability findings. The case had on 16 September 2005. It was the quantum and that depends on also published as an article by already been to two unsuccessful the outcome of the appeal. mediations, before experienced Mallesons Stephen Jaques in commercial mediators, prior to Even this seemingly intractable September 2005. The author the initial trial. case between two well–resourced gratefully acknowledges the litigants (one of whom had assistance of Dan Feldman, The new Chief Justice made it the endless deep pockets of a solicitor in the Mallesons’ clear that he could no longer let the State at its disposal) was construction group in Melbourne, the litigants tie up the judicial finally settled at mediation. in the preparation of this article. resources of the State. A further Reprinted with permission. substantial hearing on quantum was looming before a new Judge. REFERENCES A substantial multi–week appeal 1. J Wade ‘Current Trends and was also pending, and with Models in Dispute Resolution, it came the prospect of three Part II’, (1998) 9 Australian Appeal Court Justices being tied Dispute Resolution Journal 59 up for a prolonged period and p61. the further prospect of the whole

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