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   Court Annexed Mediation in Australia – an Overview

Speech by Law Council President ©John North to the
Malaysian Law Conference – November 17 2005

Introduction

Thank you for inviting me here to Kuala Lumpur to speak on behalf of the Law Council of Australia.

The Law Council, Australia’s peak legal representative body, greatly values its long and close relationship with the Bar Council of Malaysia. Personally, I am grateful to be given this opportunity to share with you the Law Council’s perspective on an increasingly important aspect of the Australian legal profession – Court annexed mediation.

Today I would like to talk a little about the evolution of court annexed mediation in our legal system, what it actually involves and how it works.

What is Court annexed mediation?

Most Courts in Australia have legislation and rules which empower judges, or an officer of the Court, to refer matters to mediators at any time during the litigation process. 

This is referred to as “Court annexed” – or “Court referred” – mediation. It’s a form of alternative dispute resolution.

In some Courts, that power may be exercised with or without the consent of the parties. The power is often used before matters are listed for trial. It is not uncommon, however, for matters to be referred to mediators during a trial.  

The rules by which different Courts refer matters to mediation are, on the whole, quite similar. The rules generally allow the Court to refer matters to a mediator; they provide that the order for reference to mediation will not operate as a stay of the proceeding; they provide for the confidentiality of the process by providing that no evidence shall be admitted on anything said or done by any person at the mediation; and they give the mediator the same immunity from suit as an arbitrator or a judge of the Court.

History

Court annexed mediation began in Australia in 1983, when the Victorian County Court Building Cases List made provisions for matters to be referred to mediators for the resolution of cases. 

The Federal Court of Australia has had a mediation program for alternative dispute resolution since 1987. It began as a pilot program in the New South Wales District Registry. In June 1991 the Federal Court of Australia Act 1976 was amended to allow the court, with the consent of the parties, to refer the proceeding or any part to a mediator or an arbitrator for mediation or arbitration.

What started as a ripple on the mediation front in the early-to-mid 1980s, became a wave in the 1990s. Practitioners realised that unless they learned to surf this “new wave” of mediation and alternative dispute resolution, they would be left floundering at sea without the proverbial paddle.

The mediation movement in Australia gained particular impetus and credibility in the early 1990s. In 1992, the then Chief Justice of the Supreme Court of Victoria, Justice Phillips, concluded that delays in the Supreme Court could only be resolved by a “massive and mighty effort using mediation as a vehicle for getting cases resolved.” 

This led to the so-called ‘Spring Offensive’ in Victoria in 1992, in which 762 cases waiting for trial were reviewed by a Panel of judges. Two-hundred-and-eighty of these cases were sent for mediation and 104 were settled at mediation. Mediations were conducted mainly by barristers and senior solicitors. There was no training in mediation required.

By 1993 mediation was on the rise and was described by the editor of the Australian Law Journal as “the flavour of the year”.

In 1995, the Federal Attorney-General announced the establishment of the National Alternative Dispute Resolution Advisory Council (NADRAC) to foster the expansion of alternatives to court action in civil matters.

In announcing the establishment of NADRAC, the Attorney-General said "the Government was encouraging the expansion of Alternative Dispute Resolution as part of its strategy to lower legal costs and improve access to justice".

NADRAC's terms of reference include advising the Attorney-General on issues of effectiveness, efficiency, fairness and standards for alternative dispute resolution services.  A number of committees were established and discussion papers were circulated.

During this period, there were sceptics who questioned whether mediation was a waste of time. Others described the process as merely “a novelty” or “an experiment”.

History has proven otherwise.

As dictated by necessity, the resistance of the profession to settling disputes other than by judicial determination was replaced by a culture where practitioners advised the availability of mediation processes. The profession, in turn, began to enjoy the benefits of taking part in these processes – saving costs, their health, their resources and the risk of an unexpected judicially imposed outcome.

It became quite common to make enquiries, even mid-trial, as to whether further mediation might assist the parties. Court-annexed mediation was used as a “judicial tool” by judges. And some judges will indicate that they will not sit on a particular day to enable mediation to take place during the trial. Often, the cases that have settled save a lot of cost, court time, stress and emotion. 

The Council of Chief Justices of Australia and New Zealand, in an important move in March 1997, agreed that it is a function of the State to provide the necessary mechanisms for the resolution of disputes and that Court annexed mediation was part of that process.

The “wave” of mediation popularity probably reached its peak in Australia in about the last 2-3 years.

The Law Council’s Constituent Bodies, the various law societies, law institutes and bar associations in Australia, have fostered alternative dispute resolution processes within the legal profession and have been responsible for providing pilot schemes in some courts.

The New South Wales Law Society, for example, encourages its members to advise clients of the advantages of mediation through the publication of guides and codes of practice. The law societies of the Australian Capital Territory, New South Wales, Queensland, South Australia, Victoria and Western Australia offer dispute resolution services or maintain a register of approved alternative dispute resolution practitioners, which is made available to the public. The Law Council has also been involved in the development of standards for mediators and model rules for courts and tribunals.

This “wave” has had an impact. In the financial sector, for example, it has been estimated that more than 130,000 consumers per year rely upon industry based alternative dispute resolution schemes. Recent figures indicate that less that six per cent of all commercial disputes are winding up within the court system.

Informal surveys among senior mediators and practitioners indicate a number of trends emerging in the area of mediation in Australia.

• In 2005, practitioners seem to be better prepared for mediation.

• Because of mediation, practitioners appear to make more productive use of their time.

• More solicitors are appearing in mediations representing clients.

It’s also worth noting that the Council of Legal Education in Victoria, when reviewing the list of subjects for studying Law, recommended that Alternative Dispute Resolution be taught as a core subject in law schools. This illustrates the extent to which court annexed mediation has become an import and valued aspect of our legal system.

Effective Court annexed mediation

When done effectively, Court annexed mediation provides:

• A less intimidating process in which the parties have control over the decision and can explore a range of options.

• A process providing an opportunity for disputants to express their interests without fear that their legal rights will be compromised or their relationships jeopardised by the process of dispute resolution.

But to be effective, a mediation process has four fundamental needs: It must be economical; it must be fast; the parties must perceive it to be fair; and it must minimise the risk to the parties. 

There are two other needs that it are desirable: The process should be amicable; and it should facilitate an ongoing relationship between the parties.  In order to meet each of these needs, any court-annexed mediation process must be flexible.

The mediation process also usually takes account of the psychological need of a person to be heard and to be understood. This is a need which is generally not satisfied by the litigation or arbitration process because of their very formal and rigid nature and the insistence by the tribunal quite properly, that all evidence be relevant and that it be otherwise admissible.

Witnesses are prevented from giving their account in their way. Instead, they are asked to answer questions designed to bring out evidence in the manner the lawyers think most appropriate. Much evidence is excluded by rules of evidence which, while logical to lawyers, are not logical to their clients. Clients frequently feel that they have failed to get their message across to a judge because of the formal and rigid nature of the process and the application of the rules of evidence. They are therefore psychologically dissatisfied. 

You can imagine the delight of participants when they are given feedback showing that the mediator understands and acknowledges the concerns being expressed. It is part of human nature to want to justify an action that has been taken not only to the opposing party but also to a significant other person.  That is why, despite the encouragement of the mediator to look and talk to the other party, a client will address the mediator rather than the other party.  

We all have a need to tell our story to a significant other person. That need increases if, for instance, our company's finances are affected by our actions or if our own reputation or prospects are affected.

Role of judges in court annexed mediation

Before I finish, I would like to touch upon the role of judges in Court annexed mediation.

In a submission to the Australian Law Reform Commission, the Law Council’s Alternative Dispute Resolution Committee stated that it was inappropriate for ADR services to be provided by judges, judicial registrars, registrars or any other court officials.

The fundamental principles and advantages of mediation require that the parties have the utmost faith in the mediator's ability to receive information and keep the information confidential without fear that knowledge of any part of that information by the trial judge might prejudice that party's right to a fair and impartial hearing on the merits. Indeed, that party's attitude and willingness to compromise might affect, even unwittingly, a fair judgment of the case. 

Form talking to those who have conducted debriefing sessions after many mediations, it is clear that parties do not, at least until close to the very end of a negotiation, reveal the true limits of their settlement parameters, or their true hidden underlying agendas. That is a necessary by-product of any negotiation.  

If a judge, who is ultimately required to hear and determine cases entrusted to them, act as a mediator, parties will be even more guarded in their willingness to share with the judge or mediator their concerns and interests, and be less willing to disclose their true "positions" for fear that disclosure might prejudicially affect the judge's attitude toward that party.  

The mere fact that the judge/mediator is, or perceived to be, "part of the Court system" in which the trial judge is part, will destroy, if not prejudicially affect, the trust and candour which is paramount for a successful mediation.

A mediator, through training and experience, approaches different parties in different ways.  Because a mediator will not be deciding the case, both the mediator and the parties are free to discuss without fear of any consequence the ramifications of settling a particular dispute as opposed to litigating it.  This is one of the reasons that a mediator must generally preserve and maintain the confidentiality of all mediation proceedings.

In contrast, the judge's role is to decide the controversy fairly and impartially, and consistent with established rules of law.

In short, mediation should be left to the mediators – and judging, to the judges.

Thank You.

*This paper was delivered at the 13th Malaysian Law Conference.