07 January 2017

Mediation

Last month the NSW Law Reform Commission released its Consultation Paper 18 - Dispute resolution: Model provisions. The paper reflects 2013 Terms of Reference aimed at improving legislative provisions dealing with alternative dispute resolution, in particular recommendations regarding 'a consistent model or models for dispute resolution in statutory contexts, including court ordered mediation and alternative dispute resolution'(excluding dispute resolution under the Commercial Arbitration Act 2010 (NSW) or Industrial Relations Act 1996 (NSW).)

The Commission comments
Alternative dispute resolution (“ADR”) is generally regarded as providing many benefits for disputing parties, especially in reducing costs and delays as compared with litigation. Our terms of reference require us to consider improving or updating the legislative provisions dealing with ADR and to consider the possibility of recommending a consistent model or models for ADR. ... 
In undertaking this review the Commission should have regard to:
  •  the desirability of just, quick and cheap resolution of disputes through use of mediation and other forms of dispute resolution in appropriate contexts 
  •  issues of referral powers (including timing of referrals), confidentiality, status of agreements reached, and proper protections required for the parties, mediators, and others involved in dispute resolution 
  •  the proper role for legislation, contract and other legal frameworks in establishing frameworks for dispute resolution 
  •  any related matters the Commission considers appropriate. ...
ADR can provide many benefits for disputing parties. It can reduce the costs and delays associated with litigation and facilitate flexible outcomes. In the context of litigation, ADR can keep disputes private (instead of being exposed in public hearings) and can ensure cases are managed effectively, for example, by narrowing the issues in dispute. It can also assist the parties in preserving, repairing or improving ongoing relationships. 
[We] sought submissions on a variety of ADR processes in NSW statutes. Mediation emerged from this as the focal point of stakeholder discussion. Mediation and quasi-mediation processes in NSW statutes vary in detail and coverage and are often inconsistent. This patchwork contributes to uncertainty among users. In particular, it is sometimes unclear exactly what types of dispute resolution are available and what safeguards apply in particular statutory contexts. Further, there are currently no provisions that protect parties during commercial/consensual mediation outside a judicial or statutory context. 
Despite the patchwork nature of the statutory provisions in NSW, we are not persuaded that there would be significant benefit in attempting to rationalise these provisions into one or a small number of models. Rather we see a benefit in developing model provisions that would apply to mediations taking place outside any statutory or judicial context, unless their application was excluded.
The Commission accordingly recommends model provisions, that in summary are -
Model provision 1: Definitions of accredited mediator and mediation (page 5) 
“Accredited mediator” means a person who is accredited by a Recognised Mediator Accreditation Body in accordance with the National Mediator Accreditation System. “Mediation” means a process in which the parties to a dispute, with the assistance of a third party dispute resolution practitioner (the mediator), come together in an endeavour to resolve their dispute. It includes a process that fits this description even when such a process is described as “conciliation” or “neutral evaluation”. 
Model Provision 2: Confidentiality and admissibility of mediation communications in evidence 
(1) Definitions “Mediation communication” means (a) anything said or done (b) any document prepared, or (c) any information provided, for the purposes of mediation, in the course of mediation, or to follow up mediation including any invitation to mediate or any mediation agreement. “Tribunal” means a tribunal established under statute and includes both administrative and arbitral tribunals. 
(2) Confidentiality of mediation communications
(a) A person must not disclose a mediation communication except as provided for by Model Provision 2(2)(b) or (2)(c). 
(b) A person may disclose a mediation communication if: (i) all the parties to the mediation consent and, if the information relates to the mediator, the mediator agrees to the disclosure (ii) the disclosed information is publicly available, but is not information that is only in the public domain due to an unauthorised disclosure by that person (iii) the disclosure is made for the purpose of seeking legal advice (iv) the disclosure is required for the purposes of carrying out or enforcing a settlement agreement (v) the disclosure is required to bring a claim for mediator misconduct or to respond to such a claim (vi) the disclosure is made for research, evaluation, or educational purposes and is made without revealing, or being likely to reveal, whether directly or indirectly, the identity of any party, mediator, or other person involved in the conduct of the mediation (vii) the disclosure is required by law, or  (viii)the disclosure is required to protect the health or safety of any person. 
(c) A person may disclose a mediation communication with leave of the court or tribunal under Model Provision 2(4). 
(3) Admissibility of mediation communications in evidence A court or tribunal may admit a mediation communication in evidence in any proceedings (including judicial, arbitral, administrative or disciplinary proceedings) only by leave under Model Provision 2(4). 
(4) Leave for disclosure or admission of evidence
(a) A court or tribunal may, on application by any person, grant leave for a mediation communication to be disclosed under Model Provision 2(2)(c) or admitted in evidence under Model Provision 2(3). 
(b) For the purposes of Model Provision 2(4)(a), the court or tribunal must take into account the following matters in deciding whether to grant leave: (i) whether the mediation communication may be or has been disclosed under Model Provision 2(2)(b) (ii) whether it is in the public interest or the interests of justice for the mediation communication to be disclosed or to be admitted in evidence, notwithstanding the general public interest in favour of preserving the confidentiality of mediation communications, and (iii) any other circumstances or matters that the court or tribunal considers relevant. 
(c) Where a person seeks disclosure of admission of the mediation communication in evidence: (i) before a court, the application must be made to the court before which the proceedings are heard (ii) before a tribunal, the application must be made to the tribunal before which proceedings are heard, and (iii) in any other case, the application must be made to NSW Civil and Administrative Tribunal. 
Model Provision 3: Mediator’s immunity (page 10) 
(1) No matter or thing done or omitted to be done by a mediator subjects the mediator to any personal action, liability, claim or demand if the matter or thing was done for the purposes of a mediation session under this Act. 
(2) Model Provision 3(1) does not apply if the claimant can show an absence of good faith on the mediator’s part. (3) This section is not intended to alter the operation of s 33 of the Civil Procedure Act 2005 (NSW) or cl 2 of sch 1 of the Civil and Administrative Tribunal Regulation 2013 (NSW). 
Model Provision 4: Termination of mediation (page 12) 
(1) Where the question of whether a mediation has been terminated arises in any proceedings, the court or tribunal must determine whether the mediation has been terminated. 
(2) Unless evidence to the contrary is adduced, the court or tribunal must presume a mediation has terminated if: (a) the mediator purports to terminate a mediation (b) a party purports to terminate a mediation (c) a time limit for the mediation (and any extensions) agreed by the parties expires, or (d) litigation commences or recommences. 
Model Provision 5: Enforcement of mediated settlement agreements (page 14) 
(1) “Mediated settlement agreement” means an agreement by some or all of the parties to mediation settling the whole, or part, of their dispute. 
(2) If a party to a mediated settlement agreement fails to comply with its terms, another party wishing to enforce the agreement may, on notice to all other parties who signed the agreement, apply to the Court for orders to give effect to the agreement if:
(a) the agreement is reduced to writing and signed by the parties, and 
(b) the mediation was conducted by an accredited mediator, and 
(c) a party against whom the applicant seeks to enforce the settlement agreement has explicitly consented to such enforcement, whether by the terms of the agreement or other means. 
(3) The mediator must draw the attention of the parties to the effect of Model Provision 5(2) before the mediated settlement agreement is signed. 
(4) The Court may refuse to give orders under Model Provision 5(2) only:
(a) at the request of the party against whom it is invoked, if that party furnishes to the Court proof that the agreement is void or voidable on grounds of incapacity, fraud, misrepresentation, duress, coercion, mistake or other invalidating cause, including that the agreement is void or voidable after a court has found it is unjust in the circumstances relating to the contract at the time it was made under the Contracts Review Act 1980 (NSW), or 
(b) if the Court finds that: (i) any of the terms of the agreement cannot be enforced as an order of the Court, or (ii) making the order would be contrary to public policy, or (iii) the mediator failed to draw the parties’ attention to the binding nature of the agreement before it was signed. 
(5) Any undertaking by one or more of the parties to a mediated settlement agreement to pay the fees and expenses of the mediator is enforceable if: (a) the amount of such fees, or (b) the means for their calculation, is specified in the agreement. 
As proposal 1 (Removal of statutory defamation privilege) the Commission recommends'
Provisions establishing a defence of absolute privilege to defamation proceedings arising from the conduct of mediations should be repealed.
Under  Implementation options the paper states
Option 1: Application to mediation under an agreement (page 19) 
This Act applies to any mediation conducted under an agreement to mediate entered into after the commencement of this Act if the mediator is an accredited mediator and: (a) the mediation is wholly or partly conducted in NSW, or (b) the agreement to mediate provides that the law of NSW is to apply to the mediation, unless the parties exclude or have excluded the operation of the Act or any provision of the Act, by agreement. 
Option 2: Application in existing and future statutes (page 20) 
The model provisions should be: (a) inserted in terms or by reference into each of the statutes that in our view would benefit from the provisions listed in Appendix A, and (b) used as a template for future legislation providing for mediation, unless the circumstances otherwise require. 
In discussing confidentiality the Commission comments
2.9 Submissions support a uniform approach to confidentiality and admissibility of mediation information in evidence. This approach should apply unless the context dictates otherwise. A strong regime in this area is essential to allay parties’ concerns that information disclosed during mediation might be used in subsequent litigation or disclosed to the public if the mediation proves unsuccessful. Although the common law provides some degree of protection, a legislative regime would provide additional certainty, allowing courts to protect information appropriately and quickly. For example, in accordance with the Mediation Ordinance 2012 (Hong Kong), the High Court of the Hong Kong Special Administrative Region struck out a defence and passages of affidavits that were based on information obtained in mediation. 
The model provisions draw upon aspects of the Mediation Bill 2016 (Singapore), the Mediation Ordinance 2012 (Hong Kong) and the Commercial Mediation Act 2010 (Ontario). Submissions identified these as appropriate models. The provisions also align with provisions in the UNCITRAL Model Law, and with the exceptions to confidentiality and inadmissibility recently expounded by the UK Supreme Court. NADRAC has recommended a similar general rule about confidentiality and privilege subject to specified exceptions. 
We propose that confidentiality and admissibility be dealt with together, with courts and the NSW Civil and Administrative Tribunal (“NCAT”) placed in a supervisory role under Model Provision 2(4). This reduces procedural complexity and clarifies the relationship between confidentiality and “without prejudice” privilege by integrating both protections into the one regime. The provisions encourage regularity by imposing a default position against admissibility, subject to the aggrieved party being able to justify why the default position should not apply under Model Provision 2(4)(a). 
The factors in Model Provision 2(4)(b) that the courts or NCAT must consider are broadly similar to those imposed by s 138 of the Evidence Act 1995 (NSW) with respect to the admission of illegally or improperly obtained evidence. A number of submissions supported introducing a provision like Model Provision 2(4)(b)(ii), which relates to the public interest. An example of the other circumstances or matters referred to in Model Provision 2(4)(b)(iii) is where there is no concluded settlement but one party to the negotiations has made a clear statement, intending the other party to act on it and the other party has in fact acted, giving rise to an estoppel. 
The exceptions to confidentiality in the recommended provision are broadly consistent with those provided by s 131 of the Evidence Act 1995 (NSW) that exclude evidence of settlement negotiations. Section 131 prevents evidence from being introduced if it concerns communications between disputing parties. This applies in the context of legal proceedings and is not likely to operate where formal legal proceedings have not yet been instituted. The model provisions would expressly extend this protection beyond the litigation context. This supports the role of mediation as a dispute resolution option in its own right.
Comments on the removal of the defamation privilege are
A defence of absolute privilege to defamation proceedings arising from mediations was first introduced by the Community Justice Centres pilot project in 1980. The co-ordinating committee thought it likely that mediations might involve “a heated exchange of views, accusations and abuse” and considered it desirable to protect the parties to a mediation from possible suits for defamation. Along with subsequent provisions based upon it,, this privilege has never been tested. Similarly, there is no known evidence to support the claim made when justifying its insertion into the Land and Environment Court Act 1979 (NSW) in 2007 that “without the protection afforded by [defamation privilege], parties involved in a [mediation] might be less frank and less willing to make concessions to settle a dispute”. 
However, given that mediation communications are inadmissible, purportedly defamatory statements made in the course of mediation will be inadmissible in any attempt to prosecute a defamation claim, unless one of the proposed exceptions applies. Likewise, as mediation communications are confidential and thus cannot “leave the room”, the risk of damage from any purportedly defamatory statement is limited. The good faith immunity provided to mediators also protects them against liability for defamation. 
An express statutory privilege against defamation is, therefore, superfluous. The absence of defamation privilege in any international mediation legislation supports this conclusion. We therefore propose that NSW repeal provisions that establish a defence of absolute privilege to defamation claims. Such a privilege should not be included in any generally applicable statute on mediation.