laurence boulle, alternative dispute resolution

8/14/2019 Laurence Boulle, Alternative Dispute Resolution

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Faculty of Law

Law papers

Bond University Year 2002

Alternative dispute resolution, case

management and the rule of law

Laurence BoulleBond University, [email protected]

This paper is p osted at ePublications@bond.

http://epublications.bond.edu.au/law pubs/86


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Australians have the right of access to the courts, wherethey can afford it? Yes, that's trite. After all access to thecourts is guaranteed by M agna Carta, the Australian consti-tution and the Rule of Law (unless the High Court refusesspecial leave). Well perhaps it was, but that's no longer quiteso obvious. The Rule of Law (RL) is currently being chal-lenged by th e conjoint twins of case management (CM) andalternative dispu te resolution (ADR).ALRC - Managing Justice Report

It all started, as they say, with the access to justice move-ment in th e 19 90s. Amon g many d evelopments at this time,the federal Attorney-General asked the Australian LawReform C omm ission to investigate and report on the federalcivil justice system. Its final report was handed down in2000 (ALRC Report 89, Managing Justice) but in the inter-vening period the dog s had stolen the bones - in every juris-diction in the country CM and ADR had already begun tochange the civil litigation system.Case m anagement - a system in which judges and courtofficials closely manage and sup ervise civil litigation an dmake discretionary orders on time lines, exchanges ofinformation, man datory referral to ADR (see below), andso forth.AD R - processes other than litigation, such as concilia-

tion, case appraisal mediation or arbitration, used toresolve disputes and often incorporated into the case man-agement sy stems (see above) of courts and tribunals.The following cases provide a basis for discussing howCM and AD R are challenging som e of the basic assumptionsof our justice system and the RL.The case of the stipendiary magistrate and theSunday paper

(aka Bnrrett v Queensla~zd Newspapers PQ Ltd vQ~ieenslnndNewspapers and others [I9991 QDC 150 (19Ally 1999).The plaintiff, a Queensland magistrate, had sued a pub-lisher for defamation, alleging that an article 'He's Too So ft'implied that the magistrate treated criminal offenders toolightly and was responsible for a high crime rate in theHervey Bay area.The defence of the newspaper and other defendantsrevolved around fair comment and qualified protection.Pleadings (which is the process of the plaintiff and defendantindicating the arguments and issues they intend to present inthe litigation) had closed and discovery and inspection hadbeen completed (this is the process of the parties indicatingwhat relevant do cuments they have in their possession) andthe defendant applied for a referral order to mediation interms of the relevant CM rules.The defendants argued that, given the complexity of thedispute and the prospect of aj ur y trial, a hearing time of 10days would be required. Preparation for a complicated

lengthy trial would be 'expensive' and the defendantswanted a reasonable compromise before incurring extensivecosts. The defendants submitted that a mediation would onlytake a single day and result in extensiv e savings.The plaintiff, unobligingly, oppo sed the application, sub-mitting that defamation was not suitable for ADR. It wasargued that the defendant was not likely to accept liability,that more than one day's mediation would be required todeal w ith the complexities, that issues of credit would not beresolved, that the pursuit of exemplary damages (damagesthat are in excess of actual loss in a case of behaviour thatjustifies a punishment aspect to court decision) made itproblematic, and that 'defamation trials rarely settle atmediation'.Th e udge (who as a barrister had previously do ne a medi-ation workshop at a well-known university) was faced witha common phenomenon where ADR is available under CMand referrals can be m ade over the objections of on e or moreparties - what factors should be taken into account in exer-cising the judicial d iscretion?For Sam ios DCJ there was no established case law on thematter, though L egal Eagle was to reveal subsequently whata wealth o f jurisprudence was developing.There was, however, the relevant legislation. Its purposewas to make ADR available to litigants so that they couldachieve 'negotiated settlements and satisfactory resolutionsof disputes.' However the legislation and rules p rovided noguidance on factors to take into account when decidingwhether to make a referral. Nevertheless the cou rt held thatthe statutory scheme allowed it to have a 'pre-disposition' torefer to mediation if on e party sough t an order.Th e court first reflected first on the following m atters:Th e extent to which the interests of litigants other than thepresent parties could be considered. T he defamation trialwould dominate the two week circuit sitting in HerveyBay, requiring other matters to go on hold before beingheard. Not only did S amios DC J regard this as a relevantconsideration but he w ent on to endorse the m erits of rou-

tine mediation of all matters so that thdse capable of medi-ated resolution would not stand in the way of those reqnir-ing court adjudication. (No reference to the R of L here.)The extent to which the discretion maker could takeaccount of the prospects of succ ess (or failure) at media-tion. Here Samios DCJ held that this might be inappropri-ate, on the basis that even where one party was stronglyopposed to it and there were grounds for being dubiousabout success, mediation still provided the best op portu-nity for dispute resolution, better than settlement on thesteps of the court.Return ing to the factors relevant to the exercise of the dis-cretion, Sainios DCJ held that in the circumstances of thepresent case the following were relevant:1. The fact that he could not conclude that mediation wouldnot be successful (note the double n egative).


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2. That the trial might take longer than 10 days and detractfrom court tiine available to others.3. That three of th e four parties were supportive of media-tion.4. That the second defendant, without adinitting liability,had agreed to pay the plaintiff's share of the mediator'sfee and venue costs.5. That the application was made early in the action when

substantial costs would be saved by all parties.6. hat there were risks in litigation, even for the party o ppos-ing the referral order.7. That a skilled mediator might be ab le to assist the parties,despite the difficulties inherent in the case.In the light of these factors the ref el ~a l rder to mediationwas made.

The case of the lawyer and the Gambling M an(aka Waterhouse v Perkins & Ors 120011 NSWSC 13 ( 25January 2001). This ca se arose out of the publication of a

book entitled The Gambling Man, which made regularappearances on t he defamation list of the New South WalesSupreme Court.Again the defendan t applied for a compulsory mediationordel; obligingly offering to pay the costs of the mediation,and th e plaintiff opposed it. The defendants argued that therewould be an all issues jury trial, with an estimated hearingtime of six weeks. Part of the plaintiff's reluctance to acceptmediation centred around the fact that the defendants hadnominated the proposed mediator. Counsel for the plaintiffsuggested that even if the defendants suggested theArchangel G alr iel they would not accept mediation. In factthe de fendants were offel-ing neither the archangel's ser-vices, nor even those of a mere a~-chbish op.Levine J (who had not attended the course refen-ed toabove) noted th e plainliff's subinission that an impel-laatingi-edient of the remedy in a defa natio n action is publicvind icatio n. He held, however, that it was at least 'Lheol-eti-

cally possible that the outcome of a mediation conducted ingood faith by all parties could be a mechanism for the pub-lic vindication of the plaintiff. It migh t not neces sarily be so,but to say i t is iinpossible is quite ingenuous'.For Levine J the issues relevant to the referral discretionwas:The matter had been runnin g for 10 years and was unlikelyto be heard soon;The hearing would be of at least six weeks in duration;. he defendants were concei-ned about the extent of costsacciuing;The plaintiff was concerned abou t vindication and m edia-tion could provide it;The d efendants have offel-ed to pay the co sts of the me di-ator and the venue;Th e plaintiff need only pay for his legal costs during themediation;The total cost of mediating com pared to litigating the mat-ter could not be considered to he a disproportionate diver-sion of I-esources;Parties are obliged to act in good faith, therefore, thepotential outcome should be viewed positively when com-pared against litigation; andThere is no rational reason fo r not ordering m ediation inthis case (note, again, the dou ble negative).In the light of these factors it was ordered that the wholeof the proceedings be referred to m ediation.

The c ase of the vacuu m cleaner, a zealous seller,a disabled purchas er and the corporate regulator(aka ACCC v Lux Pty Ltd [2001] FCA 600 (24 May2001)).Here the court had to deal with the applicant's ai-gument

that its public interest functions made i t inappropriate for theACCC (Australian Consumer and CompetitionCommission) to negotiate a settlement of the litigation. Ithad originally applied to the Federal Court for certain decla-rations in respect of Lux Ltd. The se related to its supply of avacuum cleaner to a complainant who was illiterate andintellectually disabled, and to its marketing to other cus-tomers with diminished mental capacities.In dealing with the application to set aside the originalmediatio n refe rral 01-der, RD Nicholson J first r ef ei ed to thefact that a mediation originally ordered was designed tofollow on from a meeting of experts at which they wereintended to reduce the points at issue. The mediation wouldbenefit from and further assist in reducing the points inissue. The meeting of experts, inexplicably, had not bee11called. For Nicholson J this was 'an important considera-tion', in that the purpose of the refening order could nolonger be served. However this was not a conclusive consid-eration and did not on its own render mediation inappropri-ate.The judginent went on to deal with other argume nts as towhy mediation might be inappl-opriate,namely:. The fact that the compla inant had an intellectual disabilityand could be vulnerable in mediation, as she was in buy-

ing appliances - the power imbalan ce a igum ent. This ai-211-ment earl-ied no we ight in the court's I-eckoning. On thecontrary, i t felt that mediation could have the positiveeffect of avoiding the pressure on a person with liiniledmental capacities being called as a witness in court pro-ceedings.Bond University School of L,lw proudly suppans the N;ilional Legal Eagle 9


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The fact tbat there were many disputed facts and issues,the respondents had not admitted liability and there wouldbe negligible prospects of success at mediation. Here thecourt indicated that it was the app!icant which wasattempting to impose preconditions on the mediation(necessitated by its public interest functions) and that itcould not be inferred that the respondents would notattempt to reach a mediated settlement (note that doublenegative yet again).T he argum ent that mediation had limited prospects of suc-cess a lso carried little weight. Here it was suggested thatmediation could still be productive if it resolved onlysom e of the issues, or even led to a reduction in the costsof litigation.Th e fact of the identity of the applicant, the ACC C, whosefunctions are to ensure compliance with the TradePractices Act. This, it was argued, creates a public interestbest served by allowing courts to decide where allegedbreaches of the legislation have occurred. Nicholson Jacknow ledged that this was not an inappropriate conside r-ation in relation to whether the court should revoke theearlier mediation order. However, in the circumstances ofthe vacuum cleaner case, the court did not regard theACCC's public interest responsibilities as sufficient torender m ediation inappropriate. This was because in medi-ation th e ACCC cou ld still investigate the prospects of anyadmissions by the respondent of their liability. It couldalso investigate the making of public declarations, consid-eratio n of the issues defined by the experts in their confer-ence, and consideration of w hether the parties could agreeon the issues for trial so as to preclude the complainantfrom giving evidence.Th e fact that o ne party, the applicants, was now resistingthe referral to mediation. Here Nicholson J suggested that'effective communication about the dispute' entailed 'thepossibility that they might reach agreement'.In the result it was held that the mediation should proceed,once th e conference of experts had been held.And the story continues...It is not in every case that judges make referral ordersagainst the wishes of the parties. In Morrow v chinadot-corn [2001] NSWS C 209 (28 March 2001) there were twocommercial parties with legal advisers and the necessaryadvice on the pros and cons of AD R processes; if they didnot se e the value in ADR then Barrett J felt there w ould belittle advantage in forcing them to pay lip service to it - itcould b e an exercise in futility.Likewise in Harrisorz v Schipp [2002] NSWCA 27 (15 Feb2002) Mason P declined to make an order where the par-ties wer e 'staring each other down like nineteenth centurygunfighters' where the opposing party would have to bearadditional costs and the prospects of a mediated settlementwere not very high.In Higgirzs v Higgirzs [ZOO21 NSWSC 455 (20 May 2002)the c ourt emphasised that in exercising their discretion torefer courts would, without any predisposition, takeaccount of a vely wide range of relevant factors (in thiscase, too, no referral order was actually made.)In Li v Snlrnon C orzstn~ctions ty Ltd [2002] QBT 26 (26Feb 2 002) costs were ordered against the party who failedto com ply with directions to attend mediation without rea-sonable excuse and where there was unreasonable disad-vantage to the consenting party.

Back to the R ule of LawThere is little doubt that there will be many more decidedcases on this topic. We can only hope tha t they involve arch-bishops, drugs, gambling and the o ccult (though not all in asingle case) to retain ou r interest.From a practical poin t of view it is not easy, even with thebest CM system , to ascertain whether a matter is suitable forgenerally AD R - and, if so, for what form of ADR in partic-ular. How ever courts will continue to ma ke judgm ents o n the

exercise of their discretion and a new jurisprudence willemerge. This is undoubtedly a good thing - reasoned judg-ments require judges to articulate their criteria for makingdiscretionary referrals where there might otherwise be inar-ticulate premises, intuition and unreasoned decisions.We can infer from the above cases a generally favourableendorsement by the courts of the mediation process and theskills of mediators, though this 'predisposition' is notfounded in survey studies or other 'scientific' resources. Weknow from the cases that a party's objection to mediationwill at times be overridden by the court and that in exercis-ing their discretion courts w ill also look beyond immediatecircumstances to factors such as the availability of courttime and the needs of other litigants. Even parties wishingfor vindication through the courts or with a mandate touphold the public interest might be forced into ADR.Through the use of the 'jurisprudence of the double nega-tive' the courts have provided a cautious suggestio n that theywill not be inclined not to prefer referral orders rather thanrefuse them.On the other hand the cases show that in some situationsthe 'futility' argument will carry weight, and the courts cer-tainly will not allow a defendant to use their spare cash tobuy off the plaintiff into accepting a free mediation. Thecases now provide us with lists of factors that the courtsregard as relevant. As is the case w ith all of life's lists, how-ever, it is the w eight which i s attributed to each factor that isimportant and so far there has been no indication as to howthe weighting game will be played out.None of the cases thus far exam ines the more fundamen-tal issue concerning the right of plaintiffs to access thecourts. This is a fundamental principle of the Rule of Lawand due process of law, namely that all are equal before thelaw and are entitled to a disinterested determination by aninterested judge. One m ay w ell ask w hether these cases are,in a subtle way, changing som ething fundame ntal in our con-stitutional and justice systems? After all the courts are say-

ing, without any double negative obfuscation, that the inter-ests of some litigants must in certain circum stances give wayto those of others. While it is a reality of the tim es that courtresources ar e finite and no indiv idual has an infinite claim onthem, there is also little doubt tbat it will be argued in thefuture that this approach involves a preference for oneparty's 'constitutional right' to access the formal justice sys-tem over that of another.The othe r interesting factor is the way in which courts aremaking s om e of the dispu te resolution ch oices that have cus-tomarily been made hy the actual litigants. In two of theabove cases legally-advised law yers, doubly convers ant withthe vicissitudes of litigation, were told, metaphorically, topack their mediation kits and travel to the nearest mediator.This is not quite the fizedorn of choice philosophy tharclaims to operate in many other areas of social decision-

10 Bond University School of La w proudly supports the National Legal Eagle


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11d4ng. Here part of the risk assessment about dispute reso-lution options is undertaken by the coust, potentially in dis-regard of a litigant's own wishes, as il becomes the publicsponsor of private settlement.Of course it i s tsue that a m ediation refessal order is not anabsolute denial of access to judicial justice, it is merely adeferment of your 'day in couit'. Nevertheless in some cir-cumstances it could am ount to the sam e thing. All this por-tends an important policy debate for the future - how shouldthe paternal institution of the Rule of Law be reconciled withthe modem twins of case management and alternative dis-pute resolution?

Glossary:Mediation - a process of alternative dispute resolutionwhere disputants assisted by a neutral person see k to isolatedisputed issues with the aim of developing options and alter-natives to reach a consensual agreement to accommodate th eneeds of the pat ies .Conciliation - similar to mediation except the conciliator

is expected to contribute his or her ideas du iing the process.Arbitration -in volve s a voluntary submission of a disputeto a neutral third p a t y who must determine it by making anaward if it cannot b e otherwise settled. The arbitrators aw ardwill normally bind the parties.

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laurence boulle, alternative dispute resolution

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