AUSTRALIAN CENTRE FO R COURT AND JUSTICE S YS TEM INNOVATION
(ACCJSI)
MONASH UNIVERSITY
PROFES SOR TANIA SOUR DIN
Resolving Disputes without Courts
Measuring the Impact of Civil Pre-action Obligations
Background Paper, March 2012
RESOLVING DISPUTES WITHOUT COURTS
2
RESOLVING DISPUTES WITHOUT COURTS
Contents
Executive Summary ……………………………………………………………………………………..7
1. Introduction ................................................................................................................... 9
Overarching Aim and Objectives of the Research Project............................................ 10
The Research Team ..................................................................................................... 11
2. Background................................................................................................................... 12
What Are Pre-action Obligations? ............................................................................... 12
Obligations and Scheme Arrangements ....................................................................... 13
Recent Changes and Additional Obligations ................................................................ 16
Pre-litigation Approaches ............................................................................................ 19
3. Analysis of Literature ..................................................................................................... 21
Introduction ................................................................................................................ 21
Recent Australian Reports ........................................................................................... 22
Requirements in the Family Dispute Resolution Area ................................... 28
System Design Work ..................................................................................... 30
United Kingdom Approaches: The Jackson Report ...................................................... 31
Conclusions ................................................................................................................. 36
4. Case Study Information ................................................................................................ 38
Application of Pre-action Obligations – Case Study Approach ..................................... 38
Introduction .................................................................................................. 38
Retail Tenancy Unit in NSW ......................................................................................... 40
Retail Tenancy Scheme within the VSBC ...................................................................... 42
Research Approach ...................................................................................................... 46
5. Concerns, Issues and Next Steps.................................................................................... 48
Introduction ................................................................................................................ 48
Contents
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RESOLVING DISPUTES WITHOUT COURTS
Lawyer and Judicial perspectives ................................................................................. 48
Evaluations of Non-Court Dispute Resolution Processes ............................... 54
Literature Concerning Evaluation of Mediation ............................................. 55
Next Steps .................................................................................................................... 63
4
Contents
RESOLVING DISPUTES WITHOUT COURTS
Figures
Figure 1.1: The relationship between the number of disputes and method of
resolution .................................................................................................................... 20
Contents
5
RESOLVING DISPUTES WITHOUT COURTS
Abbreviations
AAT
Administrative Appeals Tribunal
ABS
Australian Bureau of Statistics
ADR
Alternative Dispute Resolution
ADT
Administrative Decisions Tribunal NSW
ALRC
Australian Law Reform Commission
ASIC
Australian Securities and Investments Commission
Cth
Commonwealth
DOJ
Department of Justice, Victoria
DSCV
Dispute Settlement Centre of Victoria
FICS
Financial Institute Complaints Service
ICJ
Institute for Civil Justice
NADRAC
National Alternative Dispute Resolution Advisory Committee
NMAS
National Mediation Accreditation Standards
NSWCA
New South Wales Court of Appeal
NSWLR
New South Wales Law Reports
SPSS
Statistical Package for the Social Sciences
SCVCA
Supreme Court of Victoria Court of Appeal
VCAT
Victorian Civil and Administrative Tribunal
VLRC
Victorian Law Reform Commission
VSBC
Victorian Small Business Commissioner
6
Contents
RESOLVING DISPUTES WITHOUT COURTS
Executive Summary
The aim of the Pre-action Obligations Research Project (this Project) is to assess the
use and effectiveness of pre-action schemes and obligations that encourage people to
resolve their disputes before filing proceedings with a court or tribunal. This
Background Paper provides information about the Research Project and about the
common pre-action obligation approaches used in Australia. A Research Report will
be published in September 2012 that explores issues relating to pre-action obligations
and approaches in more detail and will include some more statistical analysis.
There are many different ways in which people can be encouraged or required to
attempt to resolve their disputes before entering the litigation system, and this
Research Project explores the most common approaches in use within Australia. It
also considers issues that have been raised about these types of obligations. Some
concerns about pre-action or pre-litigation obligations are that they may increase
costs or provide a ‘hurdle’ and prevent people from accessing the court and tribunal
system. On the other hand, pre-action requirements may reduce costs by supporting
early and more effective dispute resolution.
To examine the use and effectiveness of pre-action obligations, the Research Project
explores pre-action protocols and obligations in the context of a literature review, an
examination of available statistics, stakeholder input as well as qualitative and
quantitative work in two selected schemes where Alternative Dispute Resolution
(ADR) processes are used to support earlier pre-filing obligations. The key research
questions are whether or not pre-filing processes can be:

effective and efficient and produce lasting outcomes?

accessible and timely?

considered by the parties to be just or fair?

efficient in terms of the resources used?

improved, extended or supported more effectively?
This Background Paper contains Six Chapters:
Chapter One: Outlines the research objectives and methodology.
Chapter Two: Considers the background to the introduction of pre-litigation or
pre-action requirements
Chapter Three: Discusses Australian and UK reports regarding issues and
approaches relating to pre-action requirements
Chapter Four: Explores available statistics and commentary about the two case
study areas
Chapter Five: Examines evaluations in the ADR area and the primary concerns
that have been expressed about these types of requirements.
Executive Summary
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RESOLVING DISPUTES WITHOUT COURTS
The Research Report to be produced in September 2012 will contain specific
suggestions and recommendations about pre-action obligations and will draw upon
this work.
A range of research methodologies is being used to conduct the research. These
include:

a detailed literature review of issues and past work that has been
focused on pre-action obligations and protocols (this Background Paper
contains some of the literature review material);

a review of available statistics from schemes that exist in the family and
business sectors;

a quantitative and qualitative analysis of disputes finalised in a NSW
scheme and a Victorian scheme directed at Retail Lease Disputes in the
pre-action area (‘case study analysis’); and

direct interviews and focus groups held with stakeholders who include
disputants, representatives and those involved in schemes or
arrangements that exist outside the case study areas.
Your comments about this Research Project and any aspect of this Background Paper
are welcome.
Making Comments
The closing date for comments is 14 June 2012.
Comments and enquiries may be emailed to:
Professor Tania Sourdin Email: Tania.Sourdin@Monash.edu
ACCJSI may draw upon, quote from or refer to comments in publications.
ACCJSI also accepts submissions and comments made in confidence; please
accompany such comments with a clear indication that the contents are
intended to be confidential.
8
Executive Summary
RESOLVING DISPUTES WITHOUT COURTS
1
1. Introduction
1.1 The Resolving Disputes without Courts – Measuring the Impact of Civil Pre-action
Obligations Research Project (the Research Project) explores the application and
effectiveness of pre-action obligations that encourage disputants to resolve their
disputes before commencing court or tribunal proceedings. This is a Background
Paper setting out the research approach, methodology and results of the
literature review that has been undertaken so far. A Research Report will be
published in September 2012 and will contain a more detailed analysis of issues
involved in the use of different types of pre-action obligations.
1.2 This Research Project is being undertaken to assist policy-makers, the courts,
service providers, disputants and others to evaluate existing pre-action
obligations and processes and to make informed decisions regarding the future
implementation of dispute resolution obligations and options. To date, only a
limited amount of research into the effectiveness of pre-action protocols and
obligations has previously been conducted within Australia and internationally.
The Australasian Institute of Judicial Administration (AIJA) has commissioned the
Australian Centre for Court and Justice System Innovation (ACCJSI) at Monash
University to undertake this project to assist in supporting discussion regarding
this important topic and in planning Alternative Dispute Resolution (ADR) 1 and
court-related strategies into the future.
1.3 Pre-action obligations have been introduced in a range of jurisdictions within and
outside Australia in recent years. These obligations, which arise outside court and
tribunal settings, are imposed as a result of agreements to enter into ADR
processes, legislative arrangements, regulatory schemes as well as through court
or non-court protocols and guidelines. Some pre-action protocols require
disputants to engage in ADR or consider using ADR as a precondition to
commencing legal proceedings. Others require that ‘would-be’ litigants take steps
or file a statement about what they have done to resolve their dispute if they are
1
Alternative Dispute Resolution is used to describe the processes that may be used within or outside
courts and tribunals to resolve or determine disputes where the processes do not involve traditional trial
or hearing processes. The term ADR is used also to describe processes that may include conferencing,
mediation, evaluation, case appraisal and arbitration.
Introduction
9
RESOLVING DISPUTES WITHOUT COURTS
unable to resolve it and then commence court or tribunal proceedings. Most preaction requirements have “opt out” provisions. For example, certain categories of
litigants are not required to comply with some types of pre-action obligations and
requirements if there is urgency or violence or the category of cases is exempt for
some other reason.
1.4 The reasons for introducing pre-action protocols and obligations include that, by
focusing on earlier dispute resolution, time and cost can be saved and a better
outcome may be achieved. In this regard, there is a concern that commencing
adversarial court proceedings can lead to the destruction of existing business and
other relationships, and the polarising of disputant positions can limit the options
available to resolve the dispute.
1.5 On the other hand, some commentators consider that pre-action protocols and
obligations can limit access to justice, access to the courts and increase time and
cost when matters do not resolve or when costs are “front loaded”. There is also a
concern that people may reach a compromise without adequate legal advice or
that, because commencing legal proceedings is too expensive or too difficult, they
may be unable to exercise their legal rights. These concerns have been explored
in Australia in a number of reports (including a Senate Subcommittee Report) and
in the United Kingdom in the Jackson Review (discussed in more detail below) and
will be considered further in the Research Report of this Project (to be published
in September 2012).
Overarching Aim and Objectives of the Research
Project
1.6 The overarching aim of this Research Project is to assess the use and effectiveness
of pre-action obligations by referring to specific examples and by drawing upon a
review of available literature. Specific additional objectives of the Project are to:

consider the effectiveness of some types of pre-action processes – this
involves reviewing selected current pre-action approaches and their
impact upon the timeliness and cost of dispute resolution;

explore how pre-action services that occur as part of a ‘scheme’ can
operate with those that simply impose an obligation (with no scheme of
referral);

discuss the timeliness of outcomes achieved within the pre-action
environment with outcomes achieved through litigation processes
(including matters that do not proceed to a hearing but are resolved
once legal proceedings are commenced); and,

consider the impact of pre-action approaches on matters that might
otherwise progress into the litigation system in terms of cost, case
activity and complexity.
1.7 These objectives are addressed by using a range of research methodologies that
include a detailed literature review, an examination of obligations in a range of
jurisdictions as well as a closer in-depth qualitative and quantitative analysis of
10
Introduction
RESOLVING DISPUTES WITHOUT COURTS
matters mediated in two pre-litigation schemes, which enables a case study
approach to be taken. The two schemes the subject of this in-depth analysis are
the retail lease schemes operating in Victoria and NSW. Each scheme has been
operating for a considerable period of time (the NSW scheme has been in place
for well over a decade and the Victorian scheme has been operational for nine
years). Each scheme also has slightly different operating arrangements (see
Chapter 4). This case study work and associated surveying work has already
commenced and has been the subject of a University ethics approval process.
1.8 The final Research Report will consider the broader obligations framework as well
as information about the disputes mediated in the Victorian and NSW schemes
and will explore issues relating to cost, delay and outcomes with direct interviews
with stakeholders. As a result of this approach, this Background Paper provides
information about the characteristics of different dispute arrangements and
explores the issues and concerns about pre-action arrangements that have been
raised in the context of recent Commonwealth legislation in this area as well as
postponed NSW legislation. These more recent arrangements have not been the
subject of a detailed case study analysis for a number of reasons (including the
methodological difficulty involved in obtaining a survey sample given their recent
introduction). However, views about these schemes will be the subject of
stakeholder input through focus group processes and a submissions process.
1.9 The Research Project is intended to provide information about pre-action
arrangements in a number of jurisdictions as well as the processes, outcomes and
perceptions of those involved in the two selected pre-action schemes. The
attitudes and perspectives of various stakeholders are explored in the Research,
namely disputants, lawyers and others. In addition, the benefits and challenges
associated with these external schemes are compared to the situation where a
looser framework of obligations is used.
The Research Team
1.10 The researchers involved in this Project are located at the Australian Centre
for Court and Justice Innovation (ACCJSI) at Monash University. They include Prof
Tania Sourdin, who is the Project Director and primary author 2 as well as
researchers who are gathering and collating background material and qualitative
and quantitative material – Jen Hitchman (senior researcher) and Adrien March
(project researcher), Alan Shanks (expert qualitative and quantitative analyst) and
Sarah Russell (editor).
2
th
Parts of this Background Paper draw upon T Sourdin, Alternative Dispute Resolution (2012, 4 ed,
Thomson Reuters) with kind permission.
Introduction
11
RESOLVING DISPUTES WITHOUT COURTS
2
Background
What Are Pre-action Obligations?
2.1 In this Project, the term “pre-action obligations” has been interpreted widely and
can include requiring or even considering whether to take some action (including
preparing a statement) that is directed at exploring dispute resolution or
attending a form of Alternative Dispute Resolution (ADR) (whether or not as part
of a scheme where the ADR process is arranged) before court or tribunal
proceedings are commenced. Pre-action protocols and obligations can include:

the need to disclose information or documents in relation to the cause
of action;

the need to correspond, and potentially meet, with the person or
entity involved in the dispute;

undertaking, in good faith, some form of alternative dispute resolution
(ADR); and

conducting genuine and reasonable negotiations with a view to settling
without recourse to court proceedings.3
2.2 Pre-action obligations exist in the social, community, health, family, business,
personal injury and online consumer and business sectors. They have been in
existence in Australia for many years. There are considerable differences in the
way in which they operate and whether or not they are linked to any systemic
arrangements, and if so, how they are so linked. They can incorporate
requirements to arbitrate, mediate or use an ADR or EDR (External Dispute
Resolution – for example, in the Banking and Financial sector) scheme, and they
3
Australian Law Reform Commission, Discovery in Federal Courts (Consultation Paper No 2, November
2010), 160, citing Victorian Law Reform Commission, Civil Justice Review, Report 14 (2008), 109; and M
Legg and D Boniface, ‘Pre-action Protocols in Australia’ (2010) 20 Journal of Judicial Administration 39,
39.
12
Background
RESOLVING DISPUTES WITHOUT COURTS
have recently been the subject of considerable discussion in the Australian legal
environment as a result of legislation that has been proposed or enacted that
extends the application of protocols and obligations to a broader category of
disputes.
Obligations and Scheme Arrangements
2.3 By far, the largest pre-litigation scheme that imposes mandatory attendance by
disputants in a dispute resolution process in Australia operates in the family
dispute area. 4 Initiatives that have been phased in since 2006 (under the Family
Law Act 1975 (Cth)) represent a significant change in family law. 5 The explanatory
memorandum to the Family Law Amendment (Shared Parental Responsibility) Act
2006 (Cth) notes that “this is a key change to encourage a culture of agreement
making and avoidance of an adversarial court system”. 6
2.4 The 2006 amending Act requires compulsory dispute resolution, pursuant to
Subdiv E of Div 1 of Pt VII of the Family Law Act. Section 60I provides for
compulsory attendance at family dispute resolution in a range of circumstances
prior to lodging an application with the court. The requirement for compulsory
certificates in respect of family dispute resolution as a prerequisite to the filing of
all new parenting matters (subject to certain exceptions, for example, where
there is urgency, family violence or the abuse of a child and where delay could
have a negative impact) came into force on 1 July 2007. Disputants are also
advised that:
When applying to the court, you will need to provide information to
demonstrate that one of the exceptions applies to you .7
2.5 In State jurisdictions, there are various ad hoc other requirements that encourage
would-be litigants to use courts as a “last resort”. Many of these requirements
have operated for more than a decade. For example, in South Australia,
legislation can require parties in civil disputes to notify one another of a claim
before the initiating process is filed. 8 Some other jurisdiction-specific State
legislation requires mandatory attendance at some form of ADR session as a pre-
4
EDR Schemes deal with large numbers of disputants (it has been estimated that these exceed 250,000
disputes per year): see T Sourdin, Alternative Dispute Resolution 4th ed, 2012 Thomson Reuters);
however, these usually are not mandatory for consumers.
5
See the Family Law Amendment (Shared Parental Responsibility) Act 2006 (Cth), Revised Explanatory
Memorandum (2006) p 1.
6
Family Law Amendment (Shared Parental Responsibility) Act 2006 (Cth), Revised Explanatory
Memorandum (2006) p 20.
7
See Family Relationships Online, Family Dispute Resolution, available at
<www.familyrelationships.gov.au/Services/FamilyLawServices/FDR/Pages/default.aspx> (accessed 21
September 2011).
8
See Supreme Court Civil Rules 2006 (SA) r 33, available at
http://www.courts.sa.gov.au/lawyers/sc_rules/2006/SCR-2006-consol-am18.pdf (accessed 22 February
2012). Under the rule, parties in most matters are required to serve an unfiled process on another party
90 days before filing in a court.
Background
13
RESOLVING DISPUTES WITHOUT COURTS
condition to litigation. 9 The legislation can require different pre-litigation
reporting standards and notice periods.
2.6 In addition, many States have legislation in a number of different areas to prevent
court proceedings being commenced without mediation or some other form of
ADR occurring first. For example, the Farm Debt Mediation Act 1994 (NSW)
provides that mediation must occur before a creditor can take possession of
property or other action under a “farm mortgage”. Similarly, according to s 1, the
purpose of the Farm Debt Mediation Act 2011 (Vic) is to require “… a creditor to
provide a farmer with the option to mediate before taking possession of property
or other enforcement action under a farm mortgage”.10
2.7 There are many examples of other schemes. The Legal Profession Act 2004 (NSW)
specifically provides for disputes between clients and legal practitioners to be
referred to mediation; participation by the parties in mediation is not voluntary in
relation to some types of cost disputes. 11 The Strata Schemes Management Act
1996 (NSW) provides for the mandatory mediation of strata scheme disputes
prior to any application being made to the registrar for an order concerning the
dispute. 12
2.8 Apart from these schemes, an extensive array of dispute resolution schemes exist
that are mandatory for “members”, but not consumers, and apply to disputes in
the insurance, banking and other sectors. Membership of such schemes can form
part of mandatory licensing requirements, and members are not permitted to
litigate without first using the schemes. These dispute resolution schemes have
been set up in various industries to provide low-cost (or free), effective and
relatively quick means of resolving consumer complaints about products and
services. These schemes are often funded by a cooperative of industry members
(examples include the Telecommunications Industry Ombudsman (TIO), and the
Financial Ombudsman Service (FOS)) and are intended to deal with disputes
between business and consumers.
2.9 The Australian and New Zealand Ombudsman Association website lists seven
Australian industry-based Ombudsman schemes (energy and water,
telecommunications and public transport) and three New Zealand industry-based
Ombudsman schemes plus the statutory South Australian WorkCover Scheme,
which investigates complaints about the WorkCover Scheme. 13 All of these
schemes and those noted above provide dispute resolution services, and
9
For example, Family Law Act 1975 (Cth), s 79(9); Retail Leases Act 1994 (NSW), Pt 8; Farm Debt
Mediation Act 1994 (NSW) http://www.austlii.edu.au/au/legis/nsw/consol_act/fdma1994163/,
(accessed 22 February 2012), r 7.12.
10
See ABC News, ‘Banks Forced to Offer Farm Mediation’, available at <www.abc.net.au/news/2011-0630/banks-forced-to-offer-farm-mediation/2777152> (accessed 24 September 2011).
11
Legal Profession Act 2004 (NSW), Pt 4.3 (Mediation); and Pt 3.2, Div 8 (Mediation of Costs Disputes)
(see s 336) http://www.austlii.edu.au/au/legis/nsw/consol_act/lpa2004179/ (accessed 22 February
2012).
12
Strata Schemes Management Act 1996 (NSW), s 125
http://www.austlii.edu.au/au/legis/nsw/consol_act/ssma1996242/ (accessed 22 February 2012).
13
Australia and New Zealand Ombudsman Association Ombudsman Services in Australia & New Zealand
http://www.anzoa.com.au/ANZOA_Ombudsman_services_Australia_NewZealand.htm
14
Background
RESOLVING DISPUTES WITHOUT COURTS
engagement in the scheme processes can be a pre-condition to commencing
litigation (in most cases).
2.10 Generally, the scope of these pre-litigation schemes (in the insurance,
banking, telecommunication and similar sectors) is limited in that they do not deal
with internal disputes or disputes with contractors, suppliers or other business
entities. In 2008, reforms were introduced that enabled many of these schemes
to merge; for example, FICS, BFSO and IOS merged to become the Financial
Ombudsman Service (FOS). On 1 January 2009, the Credit Union Dispute
Resolution Centre (CUDRC) and the Insurance Brokers Disputes Ltd (IBD) also
joined the FOS. The Credit Ombudsman Service Ltd (COSL) also handles
complaints about credit unions, building societies, non-bank lenders, mortgage
and finance brokers, financial planners, lenders and debt collectors, credit
licensees and credit representatives. While there are already common “help
lines”, these processes may mean that it is easier for consumers to access
services.
2.11 Dispute resolution for domain name disputes in the e-commerce realm
(pursuant to the .au Dispute Resolution Policy, the auDRP) is undertaken by .au
DomainAdministration Ltd (auDA), which is an incorporated membership-based
non-profit organisation from the Australian internet community. Complainants
are not obliged to use the system and may instead choose to pursue other means
of resolving their dispute, such as traditional litigation. The appeal of the auDRP
is, however, in the fulfilment of its stated aim of providing ‘a cheaper, speedier
alternative to litigation for the resolution of disputes between the registrant of a
.au domain name and a party with competing rights in the domain name’. 14
Matters will be referred to an independent arbitral panel of one or three panel
members to determine the complaint. There is no appeals process. Nonetheless,
if the unsuccessful party is not satisfied with a decision, they may decide to
initiate legal proceedings. Some ADR industry-based schemes face criticism when
decisions are made that are binding on industry members but not consumers.
2.12 The industry-based schemes for dispute resolution with specified service
providers can change rapidly, and for small business this can be confusing. The
schemes have, therefore, attempted in recent years to offer more standardised
processes. In 2010, new dispute resolution processes were created by FOS, to
better reflect a single standardised procedure (as the FOS now incorporates what
were previously a number of agencies) and with a focus on ‘early’ dispute
resolution. 15 Organisations such as the FOS deal with a significant number of
disputes each year. For example, 23,790 new disputes were initiated in the 2009–
2010 reporting period (an increase of 6 per cent on the previous year). 16 The
overwhelming majority of the 21,543 disputes resolved in 2009–2010 were
14
Australian Domain Name Administrator (auDA), au.Dispute Resolution Policy (August 2010), available
at <www.auda.org.au/pdf/auda-2010-05.pdf> (accessed 14 September 2011).
15
Financial Ombudsman Service, Dispute Handling Process in Detail, available at
<www.fos.org.au/centric/home_page/resolving_disputes/dispute_handling_process_in_detail.jsp>
(accessed 14 September 2011).
16
Financial Ombudsman Service, 2009–2010 Annual Review, p 27.
Background
15
RESOLVING DISPUTES WITHOUT COURTS
resolved by consent17 – only 12 per cent of matters resulted in a determination by
FOS.
2.13 Other schemes exist in the commercial area. Often, disputants can be
contractually required to use a form of ADR before being permitted to access the
courts. These contractual requirements can specify various forms of dispute
resolution. For example, more formal models of dispute resolution may operate in
different States and Territories under the Commercial Arbitration Acts 18 and
become relevant as a result of contract requirements.
Recent Changes and Additional Obligations
2.14 The subject of pre-litigation obligations has received greater interest in recent
years as there have been attempts to extend additional obligations to federal and
State disputes. Federally, the Civil Dispute Resolution Act 2011 (Cth) (CDRA) is a
recent piece of legislation that increases the use of pre-litigation obligations. In
terms of pre-litigation requirements, the Act requires that disputants file a
“genuine steps” statement that sets out what attempts have been made to
resolve their differences before commencing litigation in respect of a range of
civil disputes.
2.15 This legislation was controversial and prompted a Senate Subcommittee
Inquiry. 19 The Senate Subcommittee took submissions in 2010 and early 2011 and
recommended amendments to the legislation. The content of the submissions
made to the Senate Inquiry is discussed in Chapter 3 and Chapter 5 of this
Background Paper. In essence, the Inquiry reported that:
There was general support in evidence for the intent of the Bill with
recognition of the importance of mechanisms, including alternative
dispute resolution (ADR), which assist with the resolution of matters
before they proceed to court or provide a means to clarify and narrow
issues in dispute. Resolving disputes or clarifying issues reduces costs
and delays for all parties. 20
2.16 Despite the legislation, there are concerns about the implementation of the
“genuine steps” requirement. In the recently released Case Management
Handbook,21 the Federal Court of Australia sounds some warnings about the
17
Financial Ombudsman Service, 2009–2010 Annual Review, p 70, available at
<www.fos.org.au/centric/home_page/publications/annual_review.jsp> (accessed 21 February 2012).
18
For example, Commercial Arbitration Act 2010 (NSW)
http://www.austlii.edu.au/au/legis/nsw/consol_act/caa2010219/ (accessed 22 February 2012).
19
See
http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=legcon_ctte/civil
_dispute_resolution_43/index.htm (accessed 15 March 2012).
20
See
http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=legcon_ctte/civil
_dispute_resolution_43/index.htm (accessed 15 March 2012).
21
The Federal Court of Australia Case Management Handbook [aims] ‘First, to highlight the scope of the
case management tools and techniques that are available to the Court and practitioners to assist in
ensuring the quick, inexpensive and efficient resolution of proceedings before the Court; and
16
Background
RESOLVING DISPUTES WITHOUT COURTS
proportionality of costs of “genuine steps to resolve a dispute” under Part 3 of the
CDRA. While reiterating the court’s broad discretion to order costs with regard to
the “genuine steps”, the Handbook states that
5.19 A party who attempts to take genuine steps still faces the risk that
those steps will “fall upon deaf ears” and/or that the cost of
undertaking genuine steps will not be recoverable. This is because an
order for costs is usually made on a party-party basis based upon the
relevant scale of costs (Schedule 3 of the FCR). Schedule 3 does not
contain any scale items for genuine steps undertaken before the
commencement of proceedings.
5.20 The CDRA does not ameliorate this position. Some of the genuine
steps identified by the CDRA have the potential to be very costly,
depending on the nature of the dispute.
2.17 Recent case law at the Federal level dealing with the CDRA requirements
suggest that the Federal Court may deal with some of these issues in other ways.
One recent Federal Court case suggested that a failure to comply could lead to an
adverse costs order and potentially could lead to action against legal
representatives. In Superior IP v Ahearn Fox 22 no genuine steps statement was
filed by Applicant or Respondent as required by s6 and s7 Civil Dispute Resolution
Act 2011 (Cth) (CDRA) and Rules 5.03 and 8.02 of the Federal Court Rules 2011.
The lawyers had made no efforts to resolve the dispute, no discussion had
occurred between lawyers to resolve the dispute (prior to adjournment for that
purpose), or to limit client and Court resources being wasted, in accordance with
the objects of the CDRA, principles of proportionality and the ethical obligations
of lawyers.
2.18
Justice Reeves held that the lawyers’ management of the dispute was:
….the absolute antithesis of the overarching purpose of civil practice
and procedure set out in s 37M of the FCA Act, viz the just resolution
of disputes according to law and as quickly, inexpensively and
efficiently as possible. It is not overstating the matter to observe
that this is the sort of conduct that brings the legal profession into
disrepute, that significantly undermines the efficient disposal of civil
litigation and that has the potential to erode public confidence in
the administration of justice in this country. 23
2.19 Under s 9 of the Civil Dispute Resolution Act, a lawyer acting for a person who
is required to file a genuine steps statement has a duty to advise that person of
that requirement and to assist that person to comply with that obligation. In
Secondly, and more importantly, to gather and distill the experience of practitioners and judges alike as
to the merits and perils of specific techniques in different contexts.’: p 6 (13 October 2011), available at
http://www.lawcouncil.asn.au/sections/federal-litigation/casemanagementhandbook.cfm (accessed 10
February 2012).
22
Superior IP v Ahearn Fox [2012] FCA 282 (23 March 2012) available at
http://www.nswbar.asn.au/circulars/2012/mar/superior.pdf (accessed 27 March 2012) p3
23
Superior IP v Ahearn Fox [2012] FCA 282 (23 March 2012) available at
http://www.nswbar.asn.au/circulars/2012/mar/superior.pdf (accessed 27 March 2012) p3
Background
17
RESOLVING DISPUTES WITHOUT COURTS
Superior IP v Ahearn Fox , the total legal and filing fees involved approached twice
the amount of the statutory demand in dispute, with affidavit evidence in excess
of 400 pages. A usual order for costs for the successful party in the matter was
not made and the hearing on the issue of costs adjourned for submissions. Justice
Reeves ordered that the lawyers be joined as parties and that the original parties
to the proceedings obtain independent legal advice on the issue of costs. In
addition, His Honour directed that copy of his reasons be released to the
Queensland Law Society, the Bar Association of Queensland and the Legal
Services Commission, to take such action as they consider appropriate in relation
to the conduct of the two lawyers concerned.
2.20 In New South Wales, attempts have been made to introduce similar
requirements to those introduced at the Commonwealth level. These attempts
have also been somewhat controversial and have generated significant comment.
Legislative amendments made in 2010 were postponed. In announcing this
postponement in 2011, the New South Wales Attorney-General noted the
following:
Part 2A of the Civil Procedure Act 2005 requires parties to take
reasonable steps to resolve their dispute by mutual agreement or to
more narrowly define the contentious issues before commencing court
action. The provisions were passed in late 2010, but would only have
applied to matters filed from 1 October 2011.
… the reasonable steps provisions would be postponed by 18 months to
enable NSW to monitor the success of similar provisions that
commenced in Federal courts on August 1.
The NSW Government will ultimately make informed decisions about
the future of Part 2A, using all of the available evidence …
Compliance with pre-trial obligations should reduce, not add to, the
cost of resolving disputes. The purpose of this postponement is to
24
ensure this is the case.
2.21 In Victoria, there was also an attempt to introduce a “reasonable steps”
obligation in 2010 as part of a broader scheme of overarching obligations that
was intended to bind courts, lawyers and litigants to a more ‘reasonable’ standard
of behaviour. This scheme originally set out more extensive pre-litigation
requirements that required prospective litigants to take steps, exchange material
and documents, and consider dispute resolution options. Although enacted, the
section of the Civil Procedure Act 2010 (Vic) dealing with pre-litigation
requirements was repealed in 2011 following a change of government. However,
the changes that were made mean that courts can still make rules relating to prelitigation requirements.
24
G. Smith (NSW Attorney-General), NSW Government to Postpone Pre-Litigation Reforms, Media
Release (23 August 2011).
18
Background
RESOLVING DISPUTES WITHOUT COURTS
Pre-litigation Approaches
2.22 This Research Project seeks to consider pre-action obligations and schemes
and provide useful comment on the impact of these types of variations as well as
the broader operation of these schemes. As noted above, these types of
arrangements are not new (some of the arrangements have been in place for two
decades or more), and the arrangements have generally not been introduced in
Australia as a result of experimentation in overseas jurisdictions. For example,
many of the reforms in this area within Australia predated the UK Woolf Reforms
(for example, in the retail lease sector) and have become models of reform for
overseas jurisdictions.
2.23 However, the newer arrangements under the CDRA or the NSW proposals to
create pre action obligations are not coupled with and do not create an
infrastructure or strict dispute resolution regime – for example, to meet the CDRA
requirements a disputant is not required to attend a mediation or ADR service or
obtain any certification (this is more commonly the case under many existing prelitigation arrangements).
2.24 The most recent reforms in the family and federal sector are, however, in
response to the articulation at a policy and government level of a wider view of
justice and are predicated on the notion that disputants can make their own
dispute resolution arrangements to suit their own particular circumstances. This
approach assumes that dispute resolution arrangements can exist outside courts,
tribunal and schemes. For example, recently, the Commonwealth explored how
this broader dispute resolution system (that includes pre-action schemes) works. 25
In deciding to adopt a broader view of justice, a number of theorists were cited
and it was noted that:
Just as health is not found primarily in hospitals or knowledge in
schools, so justice is not primarily to be found in official justicedispensing institutions. Ultimately, access to justice is not just a matter
of bringing cases to a font of official justice, but of enhancing the justice
quality of the relations and transactions in which people are engaged.26
2.25 In the 2009 report of the Access to Justice Taskforce, A Strategic Framework
for Access to Justice in the Federal Civil Justice System, the Australian civil and
family justice system was mapped as a complex and somewhat winding pathway
with few matters progressing to court proceedings. This reality – that most
disputes are resolved away from the court and tribunal system – has also
informed recent approaches to pre-action protocols and obligations.
2.26 Figure 1.1 of that Report (below) shows the relationship between the number
of disputes and method of resolution employed. Essentially, pre-action
25
See the reports published by the Access to Justice Taskforce, A Strategic Framework for Access to
Justice in the Federal Civil Justice System (Attorney-General’s Department, Commonwealth of Australia,
Canberra, 2009), available at <www.ag.gov.au/a2j> (accessed 21 August 2011).
26
M Galanter, ‘Justice in Many Rooms’ in M Cappelletti (ed), Access to Justice and the Welfare State
(Sijthoff and Noordhoff, Alphen aan den Rijn, 1981), 147–181 at 161–2.
Background
19
RESOLVING DISPUTES WITHOUT COURTS
obligations are introduced to support the earlier resolution and management of
disputes.
Figure 1.1: The relationship between the number of disputes and method of resolution
Source: Access to Justice Taskforce, A Strategic Framework for Access to Justice in the Federal
Civil Justice System (2009), p 4.
2.27
20
The issues that relate to the systemic approach to dispute resolution have
been considered in many government reports. However, a specific focus of this
Research Project is to explore how effective dispute resolution arrangements can
be supported in the pre-litigation area – particularly where there may be few
guidelines or protocols to support constructive negotiation and dispute
resolution engagement in ADR processes.
Background
RESOLVING DISPUTES WITHOUT COURTS
3
33
Analysis of Literature
Introduction
3.1 Various reports and publications have been reviewed to gather information about
the use and effectiveness of pre-action schemes and protocols and to inform the
development of this Background Paper. In addition, information regarding ADR
standards, criteria and past evaluations has also been reviewed. Relevant sources
have included the relevant Retail Tenancy websites and reports (which are
discussed further in Chapter 4), as well as international and Australian reports
that are concerned more generally with pre-action requirements.
3.2 Much literature in this area is ‘hidden’ as evaluations that may be useful are not
always publicly available and overseas literature may not be readily located. In
addition, professional groups that may have views about pre-action schemes may
not publish submissions or other material that is relevant to this Research Project.
The views that are available from the legal professional area are explored in
Chapter 5. Given that this material may not fully represent the available
literature, additional relevant material and information is sought and
contributions are welcomed to inform the Research Report that is to be published
in late September 2012.
3.3 It should also be noted that, despite this Background Paper’s focus on pre-action
protocols and obligations, it has been necessary to consider, to a limited extent, a
wider focus on civil justice reform. For example, many initiatives in the pre-action
area have been coupled with civil litigation reform objectives. The reforms can
expressly include the introduction of pre-action protocols and judicial case
management to lower costs, encourage cooperation between disputants and
avoid litigation wherever possible. In the United Kingdom, the impetus for
change, as Lord Woolf identified, arises from a number of problems with the civil
justice system namely that:
[i]t is too expensive in that the costs often exceed the value of the
claim; too slow in bringing cases to a conclusion and too unequal: there
is a lack of equality between the powerful, wealthy litigant and the
under resourced litigant. It is too uncertain: the difficulty of forecasting
what litigation will cost and how long it will last induces the fear of the
unknown; and it is incomprehensible to many litigants. Above all it is
too fragmented in the way it is organised since there is no one with
Analysis of Literature
21
RESOLVING DISPUTES WITHOUT COURTS
clear overall responsibility for the administration of civil justice; and too
adversarial as cases are run by the parties, not by the courts and the
rules of court, all too often, are ignored by the parties and not enforced
by the court.27
3.4 These concerns are shared by a number of other common law jurisdictions,
including Australia, as demonstrated by the substantial work undertaken by law
reform bodies, legal ‘think tanks’, professional organisations, courts, tribunals,
legislatures and governments across the common law legal world. 28 The reports,
findings and recommendations that have resulted have given rise to a wealth of
new legislation, court rules and standards aimed at ensuring that there is access
to justice, as well as the cost-effective and efficient delivery of court
administration and the civil justice system more broadly.
3.5 In Australia, significant efforts have been dedicated towards further refining
access to justice ‘core principles’ with a particular emphasis on reducing cost and
delay in the legal system and have increasingly been focused on the pre litigation
area. 29 These reports are explored further below. In addition there has been
considerable discussion in the United Kingdom about whether or not would-be
litigants should be required to attempt to resolve their disputes before
commencing proceedings. One significant UK report that has considered the
subject of pre-action protocols is the widely studied and comprehensive UK
Report of Lord Justice Jackson, entitled the Review of Civil Litigation Costs
(Jackson Report),30 published in 2009.
Recent Australian Reports
3.6 There are many Australian reports that have considered the use and introduction
of pre-action obligations and protocols. This work has mostly been directly linked
to the introduction of legislation dealing with these issues. For example, the Civil
Dispute Resolution Act 2011 (Cth) that essentially requires disputants to file a
27
The Right Honourable the Lord Woolf, Master of the Rolls, Access to Justice: Final Report, para
2 p. 2 (July 1996) HMSO available at
http://webarchive.nationalarchives.gov.uk/+/http://www.dca.gov.uk/civil/final/contents.htm
(Accessed 22 February 2012).
28
See, for example, pp. 85-86 of the ALRC Report Managing Justice: A Review of the Federal Civil
Justice System (ALRC Report No. 89, February 2000), which notes a number of leading overseas
reports, particularly in and across Canada and the United States, as well as the Woolf inquiry and
subsequent reform papers.
29
See, for example, Commonwealth Attorney-General’s Department, A Strategic Framework for
Access to Justice in the Federal Civil Justice System: A guide for future action (Access to Justice
Taskforce Report, September 2009); National Alternative Dispute Resolution Advisory Council
(NADRAC), The Resolve to Resolve—Embracing ADR to Improve Access to Justice in the Federal
Jurisdiction (Report to the Commonwealth Attorney-General, September 2009); Commonwealth
Parliament (The Senate), Legal and Constitutional Affairs References Committee, Access to
Justice (December 2009); Victorian Law Reform Commission (VLRC), Civil Justice Review (Report
No. 14, May 2008).
30
Lord Justice Jackson, Review of Civil Litigation Costs Final Report (December 2009), available at
http://www.judiciary.gov.uk/publications-and-reports/reports/civil/review-of-civil-litigationcosts/civil-litigation-costs-review-reports.htm (accessed 21 September 2011).
22
Analysis of Literature
RESOLVING DISPUTES WITHOUT COURTS
‘genuine steps’ statement that sets out what attempts have been made to resolve
their differences before commencing litigation in respect of a range of civil
disputes was preceded by a number of reports and inquiries. For example, this
legislation was specifically considered by the Senate Subcommittee appointed to
comment on the draft legislation 31 (see Chapter 2) and was the subject of a
number of submissions. 32 The final conclusions of the Senate Subcommittee were
that:
3.58 The committee notes that the Civil Dispute Resolution
Bill 2010 is part of the government's moves to improve access to
justice. It also reflects a cultural shift in how the position of the
courts is perceived in the justice system. Through the 'genuine
steps' obligation, the Bill aims to support the resolution of
certain civil disputes in the Federal Court and the Federal
Magistrates Court before litigation is commenced. The
committee considers that the introduction of this obligation is an
important initiative in ensuring that there is a focus on resolving
a matter before costly and time consuming litigation is
undertaken. Even when matters are not resolved, there will be a
benefit to parties as the issues in dispute will be clarified and
narrowed.
3.59 The committee has carefully considered arguments that
the Bill introduces mandatory pre-action protocol. The
committee is satisfied that this is not the case. Rather, while it is
obligatory to provide a genuine steps statement, the Bill
provides flexibility to the parties to determine the steps that
they wish to take to resolve their dispute and allows for
circumstances when genuine steps cannot be undertaken. The
Bill provides examples of genuine steps but does not mandate
those that should be taken. This is the case with ADR: although
witnesses focused on mandatory ADR, the Bill only provides ADR
as an example of a genuine step, not a mandated step.
3.60 However, the committee believes that the Bill would
benefit from the addition of an inclusive definition of 'genuine'
to better reflect the intention of the NADRAC report and to
provide guidance to the parties involved. 33
31
See
http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=legcon_ctte/civil
_dispute_resolution_43/index.htm (accessed 15 March 2012).
32
See
http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=legcon_ctte/civil
_dispute_resolution_43/index.htm (accessed 15 March 2012). Submissions were made by Prof Tania
Sourdin, the Federal Court of Australia, the Human Rights Law Resource Centre and PILCH Homeless
Persons' Legal Clinic, the Castan Centre for Human Rights Law, the National Legal Aid, the Law Council of
Australia, the Federation of Community Legal Centres (Vic), the Insolvency Practitioners Association
(IPA), the NSW Department of Justice and Attorney General, the National Alternative Dispute Resolution
Advisory Council (NADRAC) and the Attorney-General's Department.
33
See
http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=legcon_ctte/civil
_dispute_resolution_43/index.htm (accessed 15 March 2012).
Analysis of Literature
23
RESOLVING DISPUTES WITHOUT COURTS
3.7 The requirements in the “genuine steps statement” are modelled on the
recommendations in the National Alternative Dispute Resolution Advisory Council
(NADRAC) report, The Resolve to Resolve – Embracing ADR to Improve Access to
Justice in the Federal Jurisdiction. 34
3.8 The Commonwealth Act states in s 4:
4 Genuine steps to resolve a dispute
(1A) For the purposes of this Act, a person takes genuine steps to
resolve a dispute if the steps taken by the person in relation to the
dispute constitute a sincere and genuine attempt to resolve the dispute,
having regard to the person’s circumstances and the nature and
circumstances of the dispute.
(1) Examples of steps that could be taken by a person as part of taking
genuine steps to resolve a dispute with another person, include the
following:
(a) notifying the other person of the issues that are, or may be, in
dispute, and offering to discuss them, with a view to resolving the
dispute;
(b) responding appropriately to any such notification;
(c) providing relevant information and documents to the other person
to enable the other person to understand the issues involved and how
the dispute might be resolved;
(d) considering whether the dispute could be resolved by a process
facilitated by another person, including an alternative dispute
resolution process;
(e) if such a process is agreed to:
(i) agreeing on a particular person to facilitate the process; and
(ii) attending the process;
(f) if such a process is conducted but does not result in resolution of the
dispute—considering a different process;
(g) attempting to negotiate with the other person, with a view to
resolving some or all the issues in dispute, or authorising a
representative to do so.
(2) Subsection (1) does not limit the steps that may constitute taking
genuine steps to resolve a dispute.
3.9 In New South Wales and Victoria, attempts that have been made to introduce
similar requirements have been linked to law reform and review reports. The
legislative attempts have also been somewhat controversial and have generated
significant comment (see below). In New South Wales, legislative amendments
made in 2010 were postponed. In announcing this postponement in 2011, the
New South Wales Attorney-General noted the following:
Part 2A of the Civil Procedure Act 2005 requires parties to take reasonable steps to
resolve their dispute by mutual agreement or to more narrowly define the
34
National Alternative Dispute Resolution Advisory Council (NADRAC), The Resolve to Resolve –
Embracing ADR to Improve Access to Justice in the Federal Jurisdiction, Report (prepared for the
Attorney-General of the Commonwealth of Australia, September 2009).
24
Analysis of Literature
RESOLVING DISPUTES WITHOUT COURTS
contentious issues before commencing court action. The provisions were passed in
late 2010, but would only have applied to matters filed from 1 October 2011.
… the reasonable steps provisions would be postponed by 18 months to enable NSW
to monitor the success of similar provisions that commenced in Federal courts on
August 1.
The NSW Government will ultimately make informed decisions about the future of
Part 2A, using all of the available evidence …
Compliance with pre-trial obligations should reduce, not add to, the cost of resolving
disputes. The purpose of this postponement is to ensure this is the case. 35
3.10 As noted at 2.21, in Victoria, there was also an attempt to introduce a
“reasonable steps” obligation in 2010 as part of a much broader scheme of
overarching obligations to bind courts, lawyers and litigants to a more
“reasonable” standard of behaviour. The section of the Civil Procedure Act (2010)
(Vic) dealing with pre-litigation requirements was repealed in 2011 following a
change of government although the changes that were made mean that courts
can still make rules relating to pre-litigation requirements.
3.11 Each of the legislative responses has been in response to a series of reports
that have highlighted the utility and benefits of ADR processes in the pre-litigation
area. For example, the Victorian proposal emerged after consideration of the
Victorian Law Reform Commission (VLRC) report36 that focused on civil justice
reform.
3.12 The VLRC Civil Justice Review Report (2008) (the VLRC Report) provided a
comprehensive overview of the litigation system in Victoria and made a series of
recommendations. The report considered the aims of the civil justice system and
the principles that should guide the rules of civil procedure, summarised factors
influencing the justice system and assessed the performance of the civil justice
system using empirical data and feedback. It suggested that many litigants in the
higher Courts are dissatisfied as a result of delay, inefficiency and
disproportionate legal costs. 37 The report made specific recommendations for
reform, including increasing the use of alternative dispute resolution. 38 Proposals
for the provision of an increased array of ADR processes, more effective industry
specific ADR schemes and additional provisions for mandatory referral to ADR
were a prominent feature of the Report. 39 The report also suggested that there is
a need for ongoing civil justice review as well as other reform proposals.
3.13 The Commonwealth response to these issues was informed by a more specific
ADR focus and a consideration of the extensive pre-existing litigation reforms
already present at the Commonwealth level (mainly in the family sector). The
35
The Hon Greg Smith (NSW Attorney General), NSW Government to Postpone Pre-Litigation Reforms,
Media Release (23 August 2011).
36
Victorian Law Reform Commission (VLRC), Civil Justice Review, Report No 14 (2008).
37
Victorian Law Reform Commission, Civil Justice Review Report (Victorian Law Reform Commission,
Melbourne, March 2008), p 10.
38
Victorian Law Reform Commission, Civil Justice Review Report (Victorian Law Reform Commission,
Melbourne, March 2008), p 11.
39
Victorian Law Reform Commission, Civil Justice Review Report (Victorian Law Reform Commission,
Melbourne, March 2008), p 11.
Analysis of Literature
25
RESOLVING DISPUTES WITHOUT COURTS
New South Wales approach considered each of these responses and their
approach in supporting pre-action obligations emerged after a detailed discussion
and consultation process. 40
3.14 To some extent, the response in each area has been informed by the work of
NADRAC as well as regulatory changes in the ADR sector. 41 NADRAC reports have
specifically considered the use of pre-action protocols and have reviewed and
considered concerns that, although such protocols would reduce the number of
disputes progressing into the litigation system, they could also potentially lead to
the front loading of work and legal costs.
3.15 Pre-action obligations were considered, to a limited extent in terms of their
use as an alternative to traditional discovery procedures, in the Australian Law
Reform Commission (ALRC) Report on Discovery in Federal Courts (November
2010) (Discovery Report). 42 The advantages and disadvantages of pre-action
protocols are summarised in the Discovery Report as follows:
5.5 In jurisdictions where they have been implemented, pre-action
protocols have been met with some criticism. However, their potential
to promote access to justice, efficiency, and promote cultural change
has also gained currency. 43
Advantages of pre-action protocols
5.6 In many instances pre-action protocols place obligations on parties
to disclose relevant information and documents with the aim of
facilitating settlement. Where no settlement is reached, the procedures
aim to narrow the issues in dispute between the parties in a manner
that expedites the trial process. 44 In principle, this should aid in reducing
the need for, and cost of, any subsequent discovery of documents.
5.7 Moreover, the simplification and standardisation of the claims
process may offer consistency for litigants, and help to promote a
culture of cooperation and settlement of cases at an earlier stage. Paula
Gerber and Bevan Mailman note in relation to pre-action protocols in
construction disputes that:
Pre-action protocols represent a philosophical shift in the way litigation
is commenced and conducted ... towards a full consideration of
alternative means of resolving differences. Pre-action protocols do this
40
NSW Justice and Attorney General, ADR Blueprint – Draft Recommendations Report 1: Preaction Protocols & Standards (NSW Justice and Attorney General, Sydney, 2009), available at
<www.ipc.nsw.gov.au/lawlink/ADR/ll_adr.nsf/vwFiles/ADR_blueprint_draft_recs1_preaction_protocols.
pdf/$file/ADR_blueprint_draft_recs1_preaction_protocols.pdf> (accessed 21 September 2011).
41
These changes include the adoption of self- and industry-regulated mediation accreditation
under the National Mediator Accreditation System (NMAS) that has operated from 1 January 2008.
42
Australian Law Reform Commission, Discovery in Federal Courts (Consultation Paper No 2, November
2010) (Discovery Report).
43
See, for example, R Byron, ‘An Update on Dispute Resolution in England and Wales: Evolution or
Revolution?’ (2001) 75 Tulane Law Review 1297, 1311.
44
Victorian Law Reform Commission, Civil Justice Review, Report 14 (2008), 109.
26
Analysis of Literature
RESOLVING DISPUTES WITHOUT COURTS
by forcing parties to fully investigate the merits of their claims and
defences as a condition precedent to filing a law suit. 45
5.8 Many pre-action protocols also play an important role in
encouraging parties to pursue ADR. Where ADR is successful, it results
in cost savings to both individuals, and to the public in terms of reduced
burden on the courts. Alternatively, it has been argued that proper preaction protocols should reduce the need for ADR. 46
Disadvantages of pre-action protocols
5.9 A major concern with pre-action protocols relates to ‘front-loading’
of costs by requiring parties to spend more resources at an early stage
of the process. For example, in complex cases where the parties are
unlikely to reach early settlement, imposing onerous pre-action
requirements may do no more than add to delay and costs for both
parties in complying with the pre-action protocols.47
5.10 Pre-action protocols also raise a number of access to justice issues,
especially for individual litigants. For example, individuals may not
necessarily have the monetary resources to comply with relevant
protocols, or may be pressured into settlement for fear of having
adverse cost orders made against them for non-compliance with the
protocols.48
5.11 Additionally, pre-action protocols may open up a battlefield for
‘satellite litigation’, by way of interlocutory applications as to whether a
party has or has not complied with the relevant protocol. 49 This
becomes more likely if parties risk adverse cost orders for not complying
with the protocol, and has an obvious impact for courts and the
judiciary, as well as adding to delay and the cost of litigation.50
5.12 Finally, some have argued that pre-action protocols may be
challenged on human rights grounds, if their effect is to impede an
individual’s right of access to the courts.51
3.16 There are many other Reports that are relevant to this Research Project.
These reports include law reform reports (referred to above) as well as reports
directed more at dispute resolution arrangements. One of the most significant
reports and studies has been undertaken in the family dispute resolution area.
45
P Gerber and B Mailman, ‘Construction Litigation: Can We Do It Better?’ (2005) 31 Monash University
Law Review 237, 238.
46
Sir Igor Judge, ‘The Woolf Reforms after Nine Years: is Civil Litigation in the High Court Quicker
and Cheaper?’ (Presentation at the Anglo-Australian Lawyers Society), 16 August 2007.
47
See M Legg and D Boniface, ‘Pre-action Protocols in Australia’ (2010) 20 Journal of Judicial
Administration 39, 50.
48
See, for example, Victorian Law Reform Commission, Civil Justice Review, Report 14 (2008), 140–41
where a number of submissions are summarised making this point.
49
M Legg and D Boniface, ‘Pre-action Protocols in Australia’ (2010) 20 Journal of Judicial Administration
39, 55; National Alternative Dispute Resolution Advisory Council (NADRAC), The Resolve to Resolve—
Embracing ADR to Improve Access to Justice in the Federal Jurisdiction (Report to the Attorney-General
of the Commonwealth of Australia, September 2009). 31.
50
See, for example, National Alternative Dispute Resolution Advisory Council (NADRAC), The Resolve to
Resolve—Embracing ADR to Improve Access to Justice in the Federal Jurisdiction (Report to the AttorneyGeneral of the Commonwealth of Australia, September 2009).31.
51
Victorian Law Reform Commission, Civil Justice Review, Report 14 (2008), 161 to 163 available at
http://www.alrc.gov.au/publications/discovery-federal-courts-alrc-cp-2 (accessed 9 March 2012).
Analysis of Literature
27
RESOLVING DISPUTES WITHOUT COURTS
Requirements in the Family Dispute Resolution Area
3.17 The initiatives that have been phased in since 2006 (under the Family Law Act
1975 (Cth)) have represented a significant change in family law and have
introduced pre action requirements in this sector. 52 The explanatory
memorandum to the Family Law Amendment (Shared Parental Responsibility) Act
2006 notes that “this is a key change to encourage a culture of agreement making
and avoidance of an adversarial court system”. 53
3.18 The 2006 amending Act requires compulsory dispute resolution, pursuant to
Subdiv E of Div 1 of Pt VII of the Family Law Act. Section 60I provides for
compulsory attendance at family dispute resolution in a range of circumstances,
prior to lodging an application with the court. The requirement for compulsory
certificates in respect of family dispute resolution as a prerequisite to the filing of
all new parenting matters (subject to certain exceptions for example where there
is urgency, family violence or the abuse of a child and where delay could have a
negative impact) came into force on 1 July 2007. Disputants are also advised that:
When applying to the court, you will need to provide information to
demonstrate that one of the exceptions applies to you. 54
3.19 An extensive evaluation of the 2006 reforms in the family area 55 found that
these reforms had resulted in a significant increase in the use of non-court
services, and a decrease in matters filed in the Family Court of Australia and the
Federal Magistrates Court. Importantly and unlike the most recent changes in the
civil pre-action area, the reforms were accompanied by the establishment of
Family Relationship Centres which were designed to provide dispute resolution
and other services:
The changes to the family relationship services system included the
establishment of 65 FRCs throughout Australia (designed to provide a
gateway to the system for families needing assistance), funding for new
services, and additional funding for existing services. 56
3.20 The evaluation report found that there was a significant decrease in the work
of the Courts:
52
See the Family Law Amendment (Shared Parental Responsibility) Act 2006 (Cth), Revised Explanatory
Memorandum (2006) p 1.
53
Family Law Amendment (Shared Parental Responsibility) Act 2006 (Cth), Revised Explanatory
Memorandum (2006) p 20.
See Family Relationships Online, Family Dispute Resolution, available on
<www.familyrelationships.gov.au/Services/FamilyLawServices/FDR/Pages/default.aspx>
(accessed 21 September 2011).
55
R Kaspiew , M Gray, R Weston, L Moloney, K Hand, L Qu and the Family Law Evaluation Team,
54
Evaluation of the 2006 Family Law Reforms, Summary Report (Australian Institute of Family Studies,
December 2009) available on www.aifs.gov.au/institute/pubs/fle/index.html (accessed 21 February
2012).
56
See http://www.aifs.gov.au/institute/pubs/fle/summaryreport.html at para 1.1.
28
Analysis of Literature
RESOLVING DISPUTES WITHOUT COURTS
While the number of applications for final orders relating to children's
matters that were made to the FMC between 2005-06 and 2008-09
increased, this increase was more than offset by the decrease in the
total number of such orders that were lodged across the system.
Specifically, the overall number of such applications declined by 22%
from 18,752 in 2005-06 to 14,549 in 2008-09 (Figure 2). The number of
applications to the FCoA declined by 72% from 7,479 to 2,086 over this
period and the number to the FMC increased by 17% from 9,405 in
2005-06 to 10,987 in 2008-09 and the number of applications to the
57
FCoWA decreased by 21% from 1,868 to 1,476.
3.21
In addition, the Report found that:
There was an increase in the number of clients for all [Family
Relationship Services Program] services over the period 2006–07 to
2008–09. The number of:

[Family Relationship Centre (FRC)] clients increased from about
14,000 to 60,000;

[Family Dispute Resolution (FDR) (including Regional Family
Dispute Resolution (RFDR) clients] increased from about 14,500
to 22,500;
[Children’s Contact Services (CCS)] clients increased from about
11,000 to 23,500;


57
[Parenting Orders Program (POP)] clients increased from about
3,000 to 8,000;
http://www.aifs.gov.au/institute/pubs/fle/summaryreport.html at para 3.12
Analysis of Literature
29
RESOLVING DISPUTES WITHOUT COURTS


[Specialised Family Violence Services (SFVS)] clients increased
from about 3,500 to 7,000;
[Men and Family Relationships Services (MFRS)] clients increased
from about 24,000 to 28,000;

counselling services clients increased from about 63,500 to
101,000; and

[Education and Skills Training (EDST)] clients increased from
about 32,000 to 49,500.58
System Design Work
3.22 Other relevant government reports have considered these issues from a
system design perspective. For example, in May 2011, the Commonwealth
Government released a consultation paper ‘Resolution of Small Business Disputes
Options’59 to seek views on four models of a national scheme to resolve small
business disputes, including an option to provide a referral service to tackle some
of the confusion and lack of awareness of available schemes. The options paper
included a survey of the dispute resolution services open to small businesses in
Australia, nationally and on a state-by-state basis. 60 In March 2011, this listed 13
national dispute resolution services (ranging from Court provision to Codes of
Conduct) and 34 State- or Territory-based services including Courts and referral
organisations.
3.23 The ‘Resolution of Small Business Disputes Options’ summary report of
submissions received (together with some of the original submissions) was
published by the government in August 2011. The emerging themes pointed to an
appreciation of the timely and low cost nature of ADR and a lack of publicity and
awareness of the availability of those schemes to intervene before disputes
reached a ‘toxic’ point:
It was widely held that small businesses generally have a low awareness
and understanding of the range of dispute resolution services that are
currently available to assist them. Many were of the view that a national
information and referral service could provide a reliable centralised
point of information to assist small businesses to navigate the range of
initiatives already provided by state and territory governments in a
simple and convenient way. The educational element under this option
58
R Kaspiew, M Gray, R Weston, L Moloney, K Hand, L Qu and the Family Law Evaluation Team,
Evaluation of the 2006 Family Law Reforms, Summary Report (Australian Institute of Family Studies,
December 2009) at [3.2], available on<www.aifs.gov.au/institute/pubs/fle/index.html> (accessed 16
September 2011).
59
Options Paper: Resolution of small business (business-to-business) disputes at:
http://innovation.gov.au/SmallBusiness/DisputeResolution/Documents/SBDisputesOptionsPaper.pdf
(accessed 23 December 2011).
60
Options Paper: Resolution of small business (business-to-business) disputes Appendix 1 at:
http://innovation.gov.au/SmallBusiness/DisputeResolution/Documents/SBDisputesOptionsPaper.pdf
(accessed 23 December 2011).
30
Analysis of Literature
RESOLVING DISPUTES WITHOUT COURTS
aimed at assisting small businesses in avoiding and better managing
61
disputes before they reach a toxic stage also received strong support.
3.24 Other reports have considered obligations by focusing on specific sectors
where disputes arise. For example, in the federal area, there are extensive
requirements that have been introduced to support government in dealing with
disputes. NADRAC’s 2010 guide, Managing Disputes in Federal Government
Agencies: Essential Elements of a Dispute Management Plan,62 aims to help
Commonwealth agencies to develop and regularly review dispute management
plans, including by ensuring appropriate use of ADR principles and processes. The
guide sets out the essential topics and issues that agency-specific plans should
address.
3.25 NADRAC has noted that dispute management plans should apply to internal
and external disputes, from the point at which conflict first emerges, and can
usefully deal with dispute avoidance, management and resolution. The guide is
currently being used by a range of government departments and agencies to
create ‘plans’ that will incorporate more extensive use of ADR.
3.26
In launching the guide in 2010, the then Federal Attorney-General noted:
Commonwealth agencies are the single biggest litigator in the federal
civil justice system. Agencies should therefore be leading the way in a
cultural shift away from litigation, towards actively engaging with
disputes early, in a strategic way.
In doing so, we will build a civil justice system that is practical, cost
efficient and timely in resolving disputes. 63
United Kingdom Approaches: The Jackson Report
3.27 The Jackson Report focused on the increasing cost of civil litigation within the
United Kingdom, which was found to act as a significant impediment to access to
justice. As is made clear in the Jackson Report and discussed in Australian
reports64, the attempt to use pre-action protocols across a range of areas and
61
Resolution of Small Business Disputes Summary Report of Submissions p1 August 2011
http://www.innovation.gov.au/SmallBusiness/DisputeResolution/Documents/SummaryReportofSubmiss
ions.pdf (accessed 27 December 2011).
62
NADRAC, Managing Disputes in Federal Government Agencies: Essential Elements of a Dispute
Management Plan, available on
<www.nadrac.gov.au/www/nadrac/nadrac.nsf/Page/AboutNADRAC_NADRACProjects_DisputeManagem
entPlan> (accessed 16 September 2011).
63
Federal Attorney-General The Hon R McLelland, Getting Ready for Dispute Management Plans (speech
at National Press Club, 16 February 2010), available on
<www.ag.gov.au/www/ministers/mcclelland.nsf/Page/Speeches_2011_FirstQuarter_18February2011AGSGovernmentLawGroupseminar> (accessed 16 September 2011).
64
Lord Justice Jackson, Review of Civil Litigation Costs Final Report (December 2009), available at
http://www.judiciary.gov.uk/publications-and-reports/reports/civil/review-of-civil-litigation-costs/civillitigation-costs-review-reports.htm (accessed 21 September 2011). The Australian Law Reform
Commission Discovery in Federal Courts reviews the issue of front loading of costs, notably in the UK
from paragraph 5.25 in Ch 5 Alternatives to Discovery available at
Analysis of Literature
31
RESOLVING DISPUTES WITHOUT COURTS
jurisdictions in England and Wales may have led to the ‘front loading’ of costs in
some areas. Therefore, while these UK protocols may have reduced the time
taken to resolve disputes, they may have increased the average cost of settlement
in some areas. Lord Justice Jackson found that “there was a high degree of
unanimity that the specific [pre-action] protocols serve a useful purpose”. 65
3.28
Lord Justice Jackson noted in a summary of the Report that:
6.1 Pre-action protocols … There are ten pre-action protocols for
specific types of litigation. By-and-large they perform a useful function,
by encouraging the early settlement of disputes, which thereby leads (in
such cases) to the costs of litigation being avoided. I recommend that
these specific protocols be retained, albeit with certain amendments to
improve their operation (and to keep pre-action costs proportionate).
6.2 On the other hand, the Practice Direction – Pre-Action Conduct,
which was introduced in 2009 as a general practice direction for all
types of litigation, is unsuitable as it adopts a “one size fits all”
approach, often leading to pre-action costs being incurred unnecessarily
(and wastefully). I recommend that substantial parts of this practice
direction be repealed. Were this to occur, however, it would not give
carte blanche to claimants to whom no specific protocol applied to act
unreasonably, e.g. by commencing proceedings with no prior warning to
the defendant of the claim or the nature of the claim. Cost sanctions
will apply to curb unreasonable behaviour.
6.3 Alternative dispute resolution. Alternative dispute resolution
(“ADR”) (particularly mediation) has a vital role to play in reducing the
costs of civil disputes, by fomenting the early settlement of cases. ADR
is, however, under-used. Its potential benefits are not as widely known
as they should be. 66
3.29 It was also noted that earlier use of ADR in the United Kingdom could
decrease pre-action costs. 67 The Jackson report was very much focused on costs –
not just pre-action protocols. The key findings of the Jackson Report in relation to
costs (and making reference to the Chapter headings in the Jackson report) are as
follows:68
-
Proportionality - the costs system should be based on legal expenses that
reflect the nature/complexity of the case (Chapter 3);
http://www.alrc.gov.au/publications/Discovery%20in%20Federal%20Courts%20%28ALRC%20CP%202%2
9/5-alternatives-discovery (accessed 9 March 2012)
65
Lord Justice Jackson, Review of Civil Litigation Costs Final Report (December 2009), available at
http://www.judiciary.gov.uk/publications-and-reports/reports/civil/review-of-civil-litigation-costs/civillitigation-costs-review-reports.htm (accessed 21 September 2011). The Right Hon R Jackson LJ, Review of
Civil Litigation Costs: Final Report (Ministry of Justice, TSO, 2009) p 345.
66
The Right Hon R Jackson LJ, Review of Civil Litigation Costs: Final Report (Ministry of Justice, TSO,
2009) pxxii.
67
See R Jackson, Review of Civil Litigation Costs: Final Report (Ministry of Justice, TSO, 2009) p xxii.
68
See also the press release of the Judicial Communications Office, Judiciary of England and Wales,
entitled ‘Jackson Review calls for a package of reforms to rein in the costs of civil justice’ (14 January
2010), available at http://www.judiciary.gov.uk/media/media-releases/2010/media-release0210
(accessed 19 October 2011).
32
Analysis of Literature
RESOLVING DISPUTES WITHOUT COURTS
-
Success fees and after the event insurance premiums should be irrecoverable
in no win, no fee cases (CFAs – Conditional Fee Agreements), as these are the
greatest contributors to disproportionate costs (Chapters 9 & 10); To offset
the claimants having to pay for success fees and conditional fee agreements
from their damages, general damages awards for personal injuries and other
civil wrongs should be increased by 10% (Chapter 10);
-
Referral fees should be scrapped - these are fees paid by lawyers to
organisations that ‘sell’ damages claims but offer no real value to the
litigation process (Chapter 20);
-
Qualified ‘one way costs shifting’ - claimants will only make a small
contribution to defendant costs if a claim is unsuccessful (as long as they have
behaved reasonably), removing the need for after the event insurance
(Chapters 9 & 19);
-
Fixed costs to be set for ‘fast track’ cases (those with a claim up to £25,000) to
provide certainty of legal costs (Chapter 16);
-
Establishing a Costs Council to review fixed costs and lawyers’ hourly rates
annually, to ensure that they are fair to both lawyers and clients (Chapter 6);
-
Allowing lawyers to enter into Contingency Fee Agreements, where lawyers
are only paid if a claim is successful, normally receiving a percentage of actual
damages won (Chapter 12); and
-
Promotion of ‘before the event’ legal insurance, encouraging people to take
out legal expenses insurance as, for example, a part of household insurance
(Chapter 8).
3.30 The findings and recommendations in relation to costs are important because
the Jackson Review suggests that without appropriate cost rules and principles,
pre-action protocols may not work as effectively as is possible.
3.31 As identified above, soon after their introduction in England and Wales, the
use of pre-action protocols were subject to criticism for ‘front loading’ the costs
for litigation – and it was claimed that, in some instances, they led to an increase
in the total cost of settlement and litigious actions. It was noted in the Discovery
ALRC Report69 that one comprehensive cross-section and time-series data study
concluded that “it seems overall case costs have increased substantially over pre2000 costs for cases of comparable value”, with the Woolf reforms being one
possible explanation for this increase.
3.32 This accords with some views that pre-action protocols in the UK “provided
quicker, although not necessarily cheaper, justice and sensible, effective case
handling”. 70 Dingwall and Cloatre71 noted a further potential issue with the use of
69
P Fenn, N Rickman and D Vancappa, ‘The Unintended Consequences of Reforming Civil Procedure:
Evidence from the Woolf Reforms in England and Wales’ (Paper presented at 26th Annual Conference of
European Association of Law and Economics, Roma, Italy), 28, as noted in the ALRC Report on Discovery
in Federal Courts (Consultation Paper, 15 November 2010): Chapter 5 “Alternatives to Discovery”.
70
R Byron, ‘An Update on Dispute Resolution in England and Wales: Evolution or Revolution?’ (2001)
75 Tulane Law Review 1297, 1312, cited in ALRC Report, at [11.29].
Analysis of Literature
33
RESOLVING DISPUTES WITHOUT COURTS
pre-action protocols, namely that by encouraging parties to resolve their disputes
out of court, the creation of precedent and case law may be undermined by
insufficient litigation, which may create difficulties in settlement negotiation, due
to a lack of precedent to define bargaining power (which necessarily operates in
the “shadow of the law”). This echoes concerns expressed more than two decades
ago by a very small number of theorists who considered that the settlement of
disputes and the use of dispute resolution processes other than court-based trial
could weaken the foundations of judicial and social systems. 72
3.33 In February 2012, the UK Government responded to the March 2011
Consultation paper on civil justice. 73 The response notes that the aim of the civil
justice reform in England and Wales is that:
… the system helps people to resolve their problems quickly, efficiently
and cost-effectively … a system that prevents the unnecessary
escalation of disputes before cases reach the court room; where courts
offer quicker and more efficient services where they are needed; where
judgments can be enforced fairly; and where costs are borne in a fair
way.74
The Government’s concern was that:
… too often disputes get bogged down in the legal system that could
have been resolved outside it. Once in the system, cases are resolved
too late, too expensively, with complex procedures and an adversarial
climate imposing costs that sometimes dwarf the value of the contested
claim.’75
3.34 In February 2012, the UK Government indicated that it would extend and
further support pre-action protocols in the family law area. 76 The key
recommendations in the 2012 Report have included the expansion of ADR and
other pre-action protocols:
71
R Dingwall and E Cloatre (2006) ‘Vanishing Trials?: An English Perspective’ Journal of Dispute
Resolution 2006.
72
Owen Fiss (1984) ‘Against Settlement’, 93 Yale Law Review 1073.
73
UK Ministry of Justice ‘Solving disputes in the county courts: creating a simpler, quicker and more
proportionate system: A Consultation Paper on reforming civil justice in England and Wales’, March 2011
available at http://www.justice.gov.uk/downloads/consultations/solving-disputes-county-courts.pdf
(accessed 12 February 2012).
74
Ministry of Justice Solving disputes in the county courts: creating a simpler, quicker and more
proportionate system: A consultation paper on reforming civil justice in England and Wales
The Government Response (February 2012) p3
available at http://www.justice.gov.uk/downloads/consultations/solving-disputes-in-cc-response.pdf
(accessed 12 February 2012). See also http://www.justice.gov.uk/news/features/feature090212a
(accessed 15 March 2012).
75
Ministry of Justice Solving disputes in the county courts: creating a simpler, quicker and more
proportionate system: A consultation paper on reforming civil justice in England and Wales
The Government Response (February 2012) p3
available at http://www.justice.gov.uk/downloads/consultations/solving-disputes-in-cc-response.pdf
(accessed 12 February 2012).
76
See Ministry of Justice, ‘The Government Response to the Family Justice Review: A system with
children and families at its heart’, available at
https://www.education.gov.uk/publications/eOrderingDownload/CM-8273.pdf (accessed 15 March
2012).
34
Analysis of Literature
RESOLVING DISPUTES WITHOUT COURTS

An automatic referral scheme to mediation for those claims
under GBP5,000 (this scheme to be evaluated before
expansion to a proposed new financial limit of the Small
Claims Track (currently GBP5,000)). This is not mandatory
mediation but a requirement to engage with a small claims
mediator;77

(There was a strong view from the judiciary that a
scheme ought to be provided via a scheme from
current Court Mediation services);

An existing telephone mediation has been evaluated
with a high customer satisfaction rating;

Higher value claims are not being automatically referred to
ADR but action on promoting knowledge of ADR is planned;

No mandatory pre action directions or mediation information
sessions are being introduced (which had been proposed for
those civil cases between the Small Claims track (£5,000) and
a £100,000 claims level) allowing parties themselves directly
to “be given information about the mediation process and its
benefits from a mediator”;78 given a lack of appetite and
support for these;

An extension to the April 2010 Pre Action Protocol for Low
Value Personal Injury Claims in Road Traffic Accidents;79

Planned similar pre action protocols for employers’ and public
liability claims following stakeholder consultation;80

Similar protocols for low value clinical negligence claims may
follow evaluation of a pilot scheme with the National Health
Service Litigation Authority and Department of Health;81
77
Ministry of Justice Solving disputes in the county courts: creating a simpler, quicker and more
proportionate system: A consultation paper on reforming civil justice in England and Wales
The Government Response (February 2012) p 4, available at
http://www.justice.gov.uk/downloads/consultations/solving-disputes-in-cc-response.pdf (accessed 12
February 2012).
78
UK Ministry of Justice Solving disputes in the county courts: creating a simpler, quicker and more
proportionate system: A consultation paper on reforming civil justice in England and Wales (para 164) p
49, available at http://www.justice.gov.uk/downloads/consultations/solving-disputes-county-courts.pdf
(accessed 12 February 2012).
79
UK Ministry of Justice Solving disputes in the county courts: creating a simpler, quicker and more
proportionate system: A consultation paper on reforming civil justice in England and Wales
The Government Response (February 2012) (para 44) p 14, available at
http://www.justice.gov.uk/downloads/consultations/solving-disputes-in-cc-response.pdf (accessed 12
February 2012).
80
UK Ministry of Justice Solving disputes in the county courts: creating a simpler, quicker and more
proportionate system: A consultation paper on reforming civil justice in England and Wales
The Government Response (February 2012) (para 16) p 10, available at
http://www.justice.gov.uk/downloads/consultations/solving-disputes-in-cc-response.pdf (accessed 12
February 2012).
Analysis of Literature
35
RESOLVING DISPUTES WITHOUT COURTS

Mandatory pre action directions for money claims under
GBP100,000 remain under consideration following assessment
of current protocols’ effectiveness (though compulsion is
dismissed for the existing protocols for rent arrears and
mortgage proceedings requiring ADR);

A majority of respondents supported this and the
Government’s view in its consultation document was
that the impact would be fewer claims progressing to
Court;

The extension of the fixed recoverable costs system proposed
by Lord Jackson;82

Increased consideration of on paper and by telephone Court
hearings;83

Consultation is planned about the domestic implementation
of the EU Mediation Directive;84

Ensuring the robust accreditation of mediators. 85
Conclusions
3.34 The more recent reports from the UK suggest that pre-action protocols and
requirements continue to be supported at the government and policy-making
level, however they are often coupled with additional requirements relating to
81
UK Ministry of Justice Solving disputes in the county courts: creating a simpler, quicker and more
proportionate system: A consultation paper on reforming civil justice in England and Wales
The Government Response (February 2012) (para 66 to 68) p 19, available at
http://www.justice.gov.uk/downloads/consultations/solving-disputes-in-cc-response.pdf (accessed 12
February 2012).
82
UK Ministry of Justice Solving disputes in the county courts: creating a simpler, quicker and more
proportionate system: A consultation paper on reforming civil justice in England and Wales
The Government Response (February 2012) (para20) p 11, available at
http://www.justice.gov.uk/downloads/consultations/solving-disputes-in-cc-response.pdf (accessed 12
February 2012).
83
UK Ministry of Justice Solving disputes in the county courts: creating a simpler, quicker and more
proportionate system: A consultation paper on reforming civil justice in England and Wales
The Government Response (February 2012) (para26) p 12, available at
http://www.justice.gov.uk/downloads/consultations/solving-disputes-in-cc-response.pdf (accessed 12
February 2012).
84
UK Ministry of Justice Solving disputes in the county courts: creating a simpler, quicker and more
proportionate system: A consultation paper on reforming civil justice in England and Wales
The Government Response (February 2012) (para27) p 12, available at
http://www.justice.gov.uk/downloads/consultations/solving-disputes-in-cc-response.pdf (accessed 12
February 2012).
85
UK Ministry of Justice Solving disputes in the county courts: creating a simpler, quicker and more
proportionate system: A consultation paper on reforming civil justice in England and Wales
The Government Response (February 2012) (para28) p 12, available at
http://www.justice.gov.uk/downloads/consultations/solving-disputes-in-cc-response.pdf (accessed 12
February 2012).
36
Analysis of Literature
RESOLVING DISPUTES WITHOUT COURTS
costs and sanctions. It would also seem that the extension of protocols beyond
low value claims will continue to be the subject of evaluation and somewhat
cautious expansion. The continuing concern that pre-action requirements could
equate to a “one size fits all” approach is also being recognised by either
establishing specific protocols in particular areas or adopting the approach of
applying general principles and giving examples (as in the CDRA 86).
86
See
http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=legcon_ctte/civil
_dispute_resolution_43/index.htm (accessed 15 March 2012).
Analysis of Literature
37
RESOLVING DISPUTES WITHOUT COURTS
4
Case Study Information
Application of Pre-action Obligations – Case Study
Approach
Introduction
4.1 The application of pre-action obligations can be far-reaching. As stated above,
they can apply in social, community, health, family, business, personal injury
and online sectors. To explore how these schemes work and their impact on
litigation, disputants and others, this Research Project is considering a range
of schemes and arrangements and is conducting a detailed analysis of two
schemes that operate in the retail lease sector in New South Wales and
Victoria. The retail lease schemes have been chosen as specific case studies in
this Project for a number of reasons, including:
38

The schemes have been in operation for a number of years and are well
developed. They have statistical material that can be used for
comparison purposes and well-developed protocols and obligations.

Considering schemes, rather than self-referral dispute resolution
options, has provided the researchers with file-based material and a
pool of accessible survey recipients.

The researchers can focus on business disputes – an area where “front
end” cost loading appears to be more likely (according to UK Reports –
see below).

The schemes have some differences that are worthwhile exploring in the
pre-litigation or pre-action environment – the New South Wales scheme
imposes a “good faith” obligation on the participants with a mediator
certification and the “mandatoriness” of each scheme differs. Each
scheme and the legislation supporting each scheme suggests that
mediation is a prerequisite to commencing court proceedings, but some
court cases (discussed below) have interpreted the requirements in a
less comprehensive way. The basic scheme requirements are set out
below.
Case Study Information
RESOLVING DISPUTES WITHOUT COURTS
4.2 In NSW, sections 65 and 68 of the Retail Leases Act 1994 (NSW) require that
parties to a tenancy dispute apply to the Retail Tenancy Unit of NSW Fair
Trading for mediation before proceedings can commence in the
Administrative Decisions Tribunal. 87
4.3 Under the legislation, court proceedings are not normally commenced until a
certificate has been provided by the Registrar of the Retail Tenancy Disputes
unit or a court has satisfied itself that the dispute is unlikely to be resolved by
mediation. 88 However, Justice Price in Fordham Laboratories Pty Limited v Sor
& Anor89 noted that “[t]he requirement to mediate is not a condition
precedent to the commencement of proceedings, but the court may not
proceed to hear and determine the dispute unless satisfied that mediation
under Part 8 is unlikely to resolve the dispute.”90 The participants are required
to participate in “good faith” in the mediation and a certificate is issued to
this effect.
4.4 The mediation referred to in the Act includes not only formal mediation, for
which there are application fees and ongoing costs, but also “preliminary
assistance in dispute resolution such as the giving of advice”91 for which there
is no charge. This assistance is:
… designed to ensure that the parties are fully aware of their rights and
obligations and that there is full and open communication between the
parties concerning the dispute.92
4.5 In Victoria, the retail lease scheme in its current form was set up nearly a
decade after the NSW scheme. A pre-action requirement of “alternative
dispute resolution for retail tenancy disputes” was introduced by section 87
of the Retail Leases Act 2003 (Vic). Issuing proceedings in the Victorian Civil
and Administrative Tribunal (VCAT) requires that the Office of the Victorian
Small Business Commissioner (VSBC) certify in writing that:
… mediation or another appropriate form of alternative dispute
resolution under this Part has failed, or is unlikely, to resolve it.93
4.6 The Victorian scheme that operates under the Retail Leases Act 2003 (Vic)
does not impose the same type of framework as the NSW one in that:
If a respondent (or an applicant) declines to participate in
mediation, the Small Business Commissioner may issue a certificate
87
Retail Leases Act 1994 (NSW), sections 65 and 68 (as amended by the Retail Leases Amendment Act
1998 (NSW) No 169).
88
Retail Leases Act 1994 (NSW), s 68(2).
89
[2011] NSWSC 706.
90
Fordham Laboratories Pty Limited v Sor & Anor [2011] NSWSC 706 at para 43.
91
Retail Leases Act 1994 (NSW), sections 66 and 67 (as amended by the Retail Leases Amendment Act
1998 (NSW) No 169).
92
Retail Leases Act 1994 (NSW), section 67 (as amended by the Retail Leases Amendment Act 1998 No
169) http://www.austlii.edu.au/au/legis/nsw/consol_act/rla1994135/ (accessed 22 February, 2012).
93
Retail Leases Act 2003 (Vic), section 87
http://www.legislation.vic.gov.au/Domino/Web_Notes/LDMS/LTObject_Store/LTObjSt6.nsf/DDE300B84
6EED9C7CA257616000A3571/2F472D206F890AB7CA2578F50076BBAB/$FILE/034aa015%20authorised.pdf (accessed 22 February 2012).
Concerns, Issues and Next Steps
39
RESOLVING DISPUTES WITHOUT COURTS
under section 87(1) of the Act to the effect that mediation is unlikely
to resolve this dispute. The applicant (or respondent) may then
present the certificate to the Victorian Civil and Administrative
Tribunal (VCAT). It is important to note, however, that section 92(2)
of the Act gives VCAT the power to order any party that refuses to
94
take part in a mediation to pay the costs of the other party.
4.7 In effect, cost penalties can apply for those who do not use the pre-litigation
mediation scheme, although mediation is not mandatory in the Victorian
retail lease scheme.
4.8 The researchers have considered a number of reports that are specifically
relevant to the case study areas but which also comment on some
overarching issues. For example, Productivity Commission Reports have
considered issues relating to timeliness and cost when evaluating the
schemes. 95 In addition, Annual Reports in respect of each case study area –
NSW96 and Victoria97 – have been examined as well as evaluation reports. The
Annual Reports provide information in summary form and also explore the
other operations of each unit. This information will be supplemented by the
file review process that is being undertaken, the disputant surveys and focus
groups which are ensuring that a more comprehensive qualitative and
quantitative analysis can take place.
Retail Tenancy Unit in NSW
4.9 In NSW, the Retail Tenancy Unit (RTU) that supports pre-action dispute
resolution and mediation in the retail tenancy area has been in existence
since 1994. It has been located within three Government Departments. It was
recently incorporated into the NSW Small Business Commissioner’s Office that
was created in 2011, having previously run within the NSW Department of
State and Regional Development and moving from 2009 – 2011 to Fair Trading
NSW. The RTU provides advice and informal and formal mediation services to
retailers, landlords, real estate agents, solicitors and industry advisors with a
94
See Office of the Victorian Small Business Commissioner, Dispute Resolution, available on
<www.sbc.vic.gov.au/retail-leasing-matters/dispute-resolution> (accessed 26 September 2011).
95
The Market for Retail Tenancy Leases in Australia Inquiry Productivity Commission Inquiry Report No.
43, 31 March 2008, published 27 August 2008 p209 at
http://www.pc.gov.au/__data/assets/pdf_file/0009/82746/retail-tenancy-market.pdf (accessed 27
December 2011).
96
Fair Trading NSW Annual Report 2010-11 p 25 at
http://www.fairtrading.nsw.gov.au/pdfs/About_us/Publications/Annual_reports/FT450_Year_in_review
_1011.pdf (accessed 22 February 2012).
97
Annual Report of the Victorian Small Business Commissioner 2010/11 p 21 at
http://www.sbc.vic.gov.au/images/stories/vsbc_AnnualReport_2010_11.pdf (accessed 7 February
2012).
40
Case Study Information
RESOLVING DISPUTES WITHOUT COURTS
dispute relating to retail leases or bonds. 98 The New South Wales Government
set up the RTU in 1994 to provide:
a timely and cost effective information and alternative dispute
resolution service for parties involved in retail leases. Mediations are
conducted by a panel of independent professional mediators with retail
99
lease experience and/or Retail Tenancy Unit staff.
4.10
Because the Unit has moved within government departments, there is
limited material available concerning its operations. From the publicly
available Annual Reports, the NSW RTU has dealt with more than 4000
mediations since 2004, and more than 80 per cent of disputes are resolved in
mediation. Currently, information about the RTU and its role over a somewhat
limited period remains available on the Fair Trading website. 100
4.11
This information does however indicate high rates of settlement at
mediation in what is essentially a mandatory pre-action scheme (a recent case
discussed at 4.3 has made it clear that the Court still retains jurisdiction in this
area to determine whether mediation is unlikely to resolve the dispute – prior
to this decision in 2011 it was assumed that mediation was essentially a precondition to commencing court proceedings). The Centre has a limited
staffing and the staff deal with enquiries and also conduct informal mediation.
Formal mediation involves the referral of matters to experienced external
mediators. Those in dispute share the costs of the external mediation and
must sign a mediation agreement and comply with ‘good faith’ requirements
when mediating.
NSW Retail Tenancy Unit matters
20042005
20052006
20062007
Enquiries
received
7148
8232
8150
Mediations
765
824
514
Formal
Mediation
353
Informal
Mediation
161
Mediation
resolution rate
81%
20072008
263
20082009
20092010
20102011
8000
5831
6576
616
1296
241
217
375
1079
372
81%
98
Fair Trading NSW Annual Report 2010-11 p25 available at
http://www.fairtrading.nsw.gov.au/pdfs/About_us/Publications/Annual_reports/FT450_Year_in_review
_1011.pdf (accessed 7 February 2012).
99
About the Retail Tenancy Unit at
http://www.fairtrading.nsw.gov.au/About_us/Publications/Retail_tenancy_info_kit/index.html
(accessed 7 February 2012).
100
Fair Trading NSW http://www.fairtrading.nsw.gov.au/Businesses/Retail_tenancy.html (accessed 7
February 2012).
Concerns, Issues and Next Steps
41
RESOLVING DISPUTES WITHOUT COURTS
Retail Tenancy Scheme within the VSBC
4.12
In May 2003, the Office of the Victorian Small Business Commissioner
(VSBC) was established under the Small Business Commissioner Act 2003 (Vic)
to promote greater fairness in business through its four main functions:
information and education, review of government practices, investigation of
small business complaints and dispute resolution. 101 Under the 2003 Act,
among the functions of the office under section 5 are the provision of
information:
S5(b) - to promote informed decision-making by small businesses in
order to minimise disputes with other businesses;
and
S5(c) - to receive and investigate complaints by small businesses
regarding unfair market practices and mediate between the parties
involved in the complaint.
4.13
The VSBC mediates matters under the Retail Tenancy Act 2003 (Vic), the Small
Business Commissioner Act 2003 (Vic), the Owners Drivers and Forestry
Contractors Act 2005 (Vic), and in December 2011, the Office of the Small
Business Commissioner began to provide the mediation scheme set out under
the Farm Debt Mediation Act 2011 (Vic). The 2011 Annual Report suggests that
approximately 75 per cent of the VSBC’s dispute resolution activities usually
come from the Retail Tenancy sector,102 and that in 2011, the figure was around
70 per cent.103
4.14
From 1 May 2003 until 31 December 2010, more than 8000 small business
matters have been referred to the VSBC, and it has maintained a dispute
resolution rate of more than 80 per cent. 104
101
Office of the Victorian Small Business Commissioner http://www.sbc.vic.gov.au/about-the-vsbc/howcan-the-small-business-commissioner-help (accessed 7 February 2012).
102
Annual Report of the Victorian Small Business Commissioner 2010/11 at
http://www.sbc.vic.gov.au/images/stories/vsbc_AnnualReport_2010_11.pdf p 5 (accessed 7 February
2012).
103
Annual Report of the Victorian Small Business Commissioner 2010/11 p11 at
http://www.sbc.vic.gov.au/images/stories/vsbc_AnnualReport_2010_11.pdf (accessed 7 February
2012).
104
Office of the Victorian Small Business Commissioner http://www.sbc.vic.gov.au/about-thevsbc/statistics (accessed 7 February 2012).
42
Case Study Information
RESOLVING DISPUTES WITHOUT COURTS
VICTORIAN RETAIL TENANCY MATTERS DISPUTE RESOLUTION
Dispute resolution rate
105
2002
2003
20032004
20042005
20052006
20062007
20072008
20082009
20092010
20102011
Total
Total
completed
disputes
44
376
614
599
588
1001
1110
1219
1427
6978
Agreement
reached
23
267
466
437
755
805
871
871
925
5034
Settled
prior to
mediation
12
99
175
173
151
355
372
416
503
2256
Successful
mediation
11
168
310
293
286
400
433
455
422
2778
No
agreement
21
109
129
133
151
246
305
348
502
1944
No
mediation
12
47
60
62
80
151
200
215
387
1214
Unsuccess
-ful
mediation
9
62
69
71
71
95
105
133
115
730
Successful
outcome
52.3
%
71.0%
79.0%
77.8%
74.3%
75.4%
72.5%
71.5%
64.8%
72.1
%
Settled
prior to
mediation
27.3
%
26.3%
28.5%
28.9%
25.7%
35.5%
33.5%
34.1%
35.2%
32.3
%
Successful
mediation
25.0
%
50.5%
48.9%
48.6%
40.0%
39.0%
37.3%
29.6%
39.8
%
Unsuccess
-ful
outcome
47.7
%
47.7%
29.0%
22.2%
25.7%
24.6%
27.5%
28.5%
35.2%
27.9
%
No
mediation
27.3
%
12.5%
9.8%
10.4%
13.6%
15.1%
18.0%
17.6%
27.1%
17.4
%
No
agreement
20.5
%
16.5%
11.2%
11.9%
12.1%
9.5%
9.5%
10.9%
8.1%
10.5
%
44.7%
105
Annual Report of the Victorian Small Business Commissioner 2010/11 p33 at
http://www.sbc.vic.gov.au/images/stories/vsbc_AnnualReport_2010_11.pdf (accessed 7 February
2012).
Concerns, Issues and Next Steps
43
RESOLVING DISPUTES WITHOUT COURTS
Victorian Retail Tenancy Matters
Total
disputes
completed
through
mediation
Agreement
reached at
mediation
Unsuccess
-ful
mediation
Total
disputes
completed
through
mediation
20
230
379
364
357
495
538
588
537
3,508
11
168
310
293
286
400
433
455
422
2,778
9
62
69
71
71
95
105
133
115
730
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Successful
mediation
Unsuccess
-ful
mediation
55.0
%
45.0
%
73.0
%
27.0
%
81.8
%
18.2
%
80.5
%
19.5
%
80.1
%
19.9
%
80.8
%
19.2
%
80.5
%
19.5
%
77.4
%
22.6
%
78.6
%
21.4
%
79.2
%
20.8
%
*May - June 2003
4.15 The VSBC provides preliminary assistance and support to help
disputants resolve their own disputes. The table above shows a row
“Settled prior to mediation’ that demonstrates that this preliminary
assistance may play an important role in the resolution of disputes.
Preliminary assistance can include:
- initial telephone contact with parties to work out a solution;
- providing information to the parties regarding their
responsibilities; and
- discussions with the parties to possibly resolve the dispute without
formal mediation.106
4.16 The 2011 VSBC Annual Report notes that “preliminary assistance” was
identified (in KPMG’s major evaluation of the activities of the Office
during the previous four years) as a:
huge, but to date largely overlooked, benefit of real value.107
The VSBC also deals with telephone enquiries and
… helps callers understand their rights and obligations under retail
tenancy legislation and assists in avoiding many disputes.108
106
VSBC Annual Report available at
http://www.sbc.vic.gov.au/images/stories/vsbc_AnnualReport_2010_11.pdf p15 (accessed 7 February
2012).
107
Annual Report of the Victorian Small Business Commissioner 2010/11 at
http://www.sbc.vic.gov.au/images/stories/vsbc_AnnualReport_2010_11.pdf p 17 (accessed 7 February
2012).
44
Case Study Information
RESOLVING DISPUTES WITHOUT COURTS
4.17 The VSBC has a website that sets out more information about its role
and functions under the Small Business Commissioner Act 2003 (Vic) 109
and a brochure “Speaking Up For Small Business”110 that sets out the ways
in which the VSBC aims to assist small businesses. Also available are
Annual Reports since the Office’s creation in 2003 111 and a Guide to
Mediation with the VSBC. 112
4.18 Additionally, the 2011 VSBC Annual Report includes a client
satisfaction survey across its mediation services which sets out that client
satisfaction rates with the mediation/facilitation service are at 92.8 per
cent. Interestingly, the parties themselves appear more satisfied than
their representatives within that survey.
Overall, how satisfied are you with the mediation/facilitation services provided by the Office of
the Victorian Small Business Commissioner?
Mediation Role
% Satisfaction
with the
mediation/
facilitation
service
Applicant
Applicant’s
Representative
Respondent
Respondent’s
Representative
93.3
89.8
93.0
91.9
VSBC Annual Reports show surveys of perceived time and money saved within their mediation
(which as noted above includes mediation in schemes other than the Retail Tenancy
scheme).113 Clients’ views on time and money saved using the VSBC mediation service 2011
2010/11
Responses
Yes
No
Not Sure
No response
Saved time?
553
400
82
71
81
100.0%
72.3%
14.8%
12.8%
108
VSBC Annual Report p 19 at
http://www.sbc.vic.gov.au/images/stories/vsbc_AnnualReport_2010_11.pdf.
109
Office of the Victorian Small Business Commissioner (a) http://www.sbc.vic.gov.au/about-thevsbc/how-can-the-small-business-commissioner-help (accessed 21 February 2012).
110
Office of the Victorian Small Business Commissioner (b) at
http://www.sbc.vic.gov.au/images/stories/VSBC_SpeakingUp_june11.pdf (accessed 21 February 2012).
111
Office of the Victorian Small Business Commissioner (c) at http://www.sbc.vic.gov.au/about-thevsbc/annual-reports (accessed 21 February 2012).
112
Office of the Victorian Small Business Commissioner (d) http://www.sbc.vic.gov.au/about-thevsbc/guide-to-mediation (accessed 21 February 2012).
113
Annual Report of the Victorian Small Business Commissioner 2010/11 at
http://www.sbc.vic.gov.au/images/stories/vsbc_AnnualReport_2010_11.pdf p 31 (accessed 7 February
2012).
Concerns, Issues and Next Steps
45
RESOLVING DISPUTES WITHOUT COURTS
2010/11
Responses
Yes
No
Not Sure
No response
Saved
money?
537
346
90
101
97
100.0%
64.4%
16.8%
18.8%
4.19 The retail tenancy dispute resolution schemes in NSW and Victoria
have operated and evolved over a period of years to include both
schemes of preliminary assistance to prospective litigants and formal
mediation as part of a pre-action obligation. Reports about the schemes
operations and activity indicate high levels of client satisfaction and timeand cost-saving impacts. However, a critical question in this research is
whether the schemes prompted early resolution and whether or not
resolution would have taken place in any event.
Research Approach
4.20 The retail tenancy dispute resolution area can provide a clear example
of how civil pre-action procedures, allied with scheme-based ADR
mechanisms, are used and how they operate. By considering the impact
of the pre-action protocols through a literature review, participant
surveys of those in dispute and of professionals involved in the area, the
Research Project hopes to assess what the impacts are and what may be
useful in a defined pre-action protocol scheme.
4.21 The retail tenancy scheme information provides information about
some, but not all, relevant research questions. Information about what
takes place outside the schemes must also be considered – that is, what
happens in those matters that are not resolved in the schemes. In
addition, the characteristics and operation of other schemes within
Australia and internationally are being considered. The retail case study
information supports some, but not all, of the core objectives of the
study, which are to:
46

Evaluate and consider the effectiveness of a class of preaction processes – This involves reviewing selected current
pre-action approaches and their impact upon the timeliness
and cost of dispute resolution. The case study information
assists to meet this objective, which will also be met through
broader focus group information and literature review
mechanisms.

Benchmark pre-action services that occur as part of a
“scheme” with those that simply impose an obligation (with
no scheme of referral). The case study information provides a
benchmark point. To determine the broader impact, statistics
in other jurisdictions and views about other schemes will be
considered.
Case Study Information
RESOLVING DISPUTES WITHOUT COURTS

Compare the timeliness of outcomes achieved within the preaction environment with outcomes achieved through litigation
processes (including matters that do not proceed to a hearing
but are resolved once legal proceedings are commenced).
Information about court and tribunal statistics on timeliness
will be considered.

Assess the impact of pre-action approaches on matters that
progress into the litigation system in terms of cost, case
activity and complexity. Focus group and case study
information will assist to address this objective.
4.22 At present, file information is being gathered and surveying has
commenced in the case study area, which will supplement the statistical
reporting referred to above. Focus groups will follow this process to
provide additional qualitative information as will a deeper consideration
of matters that have progressed into the litigation schemes and the
overarching issues relating to pre-action requirements in other
jurisdictions. The next steps to be undertaken in the project are discussed
at the end of the next Chapter.
Concerns, Issues and Next Steps
47
RESOLVING DISPUTES WITHOUT COURTS
5
Concerns, Issues and Next
Steps
Introduction
5.1 This Chapter considers broad overarching research in this area as well as
some of the specific concerns that have been raised about pre-action
requirements by lawyers and the judiciary. While some of these concerns
have been explored in earlier Chapters in the context of government, law
reform and policy reports, some other concerns have been raised by the legal
profession and the judiciary and require specific attention and discussion.
5.2 This Chapter also considers the next steps in the Research Project and is
intended to encourage and invite further input from those interested in this
area and discussion to ensure that the project is informed by the wide range
of views in this area.
Lawyer and Judicial perspectives
5.3 Apart from government and law reform reports, the topic of pre-litigation
protocols has been the subject of much commentary within the community,
with different views being expressed by different commentators. Some
commentators consider that pre-action obligations will increase legal costs,114
while others consider that they will lead to forced settlements and a
114
See R Ackland, ‘Mediation more pork for lawyers’ Sydney Morning Herald, 5 August 2011, available at
http://www.smh.com.au/opinion/politics/mediation-more-pork-for-lawyers-20110804-1iddm.html
(accessed 14 March 2012).
48
Case Study Information
RESOLVING DISPUTES WITHOUT COURTS
reduction in lawyer involvement in dispute resolution. There is however little
research to support either point. The concerns vary, however some lawyers
and judges remain opposed to pre-litigation obligations.
5.4 Pre-litigation protocols are designed to prevent the worst excesses of
adversarialism. As the 2011 UK Report in relation to civil justice reforms
noted:
Despite significant improvements following the Access to Justice
reforms, it remains the case that there are too many claims being
brought in to the legal system inappropriately. Once in the system they
are being resolved too late, too expensively, with business in particular
115
exposed to high and disproportionate costs.
In the same report, it was noted that:
Late settlement is something on which Lord Justice Jackson commented
1
on in his Review of Civil Litigation Costs :
“A number of cases, which ought to settle early, in fact settle late in the
day. Occasionally these cases go to trial. The cause of such futile
litigation is (a) the failure by one or both parties to get to grips with the
issues in good time or (b) the failure of the parties to have any effective
dialogue.” 116
and that the criticism of the Woolf reforms included:
… the lack of sanctions on those who failed to act reasonably in their
pre-action negotiations. 117
5.5 The UK material suggests that much of the criticism in respect of pre-action
obligations is related to the failure of lawyers and disputants to act
“reasonably” or “proportionately”. Pre-action schemes that impose
obligations to act in “good faith” or create a scheme structure may support
more reasonable behavior; this issue will be the subject of exploration in the
final Research Report. In contrast to this view, some lawyers consider that
pre-action protocols are undesirable for other reasons.
5.6 For example, Australian lawyers Kambar and Walsh from Maurice Blackman
recently set out their concerns about pre-litigation obligations. In their view,
these obligations could mean that:
115
Ministry of Justice, UK, Solving disputes in the county courts: creating a simpler, quicker and more
proportionate system - a consultation on reforming civil justice in England and Wales Presented to
Parliament by the Lord Chancellor and Secretary of State for Justice by Command of Her Majesty
March 2011 at p 4, available at http://www.justice.gov.uk/downloads/consultations/solving-disputescounty-courts.pdf (accessed 15 March 2012).
116
Ministry of Justice, UK, Solving disputes in the county courts: creating a simpler, quicker and more
proportionate system - a consultation on reforming civil justice in England and Wales Presented to
Parliament by the Lord Chancellor and Secretary of State for Justice by Command of Her Majesty
March 2011 at p 9, available at http://www.justice.gov.uk/downloads/consultations/solving-disputescounty-courts.pdf (accessed 15 March 2012).
117
Ministry of Justice, UK, Solving disputes in the county courts: creating a simpler, quicker and more
proportionate system - a consultation on reforming civil justice in England and Wales Presented to
Parliament by the Lord Chancellor and Secretary of State for Justice by Command of Her Majesty
March 2011 at p 19, available at http://www.justice.gov.uk/downloads/consultations/solving-disputescounty-courts.pdf (accessed 15 March 2012).
Concerns, Issues and Next Steps
49
RESOLVING DISPUTES WITHOUT COURTS

parties bear their own costs of pre-litigation steps 118

it can be difficult to recover costs for complying with the
process119

the costs of disputes may be increased and further delays
created. 120
5.7 Kambar and Walsh suggest that the recent Australian civil pre-action
requirements require only “reasonable” or “genuine” attempts at settlement
and are concerned by the lack of structured timescales that they argue may
lead to delay, adding the time for pre-action steps to the current delay
created in issuing proceedings. They point to the Victorian repeal of
legislation as demonstrating the:
… impracticality of formalizing informal early dispute resolution
121
processes that are already widespread in the legal community.
5.8 In a similar vein, some commentators consider that pre-action requirements
may be impractical or may not work or increase disputant time and cost if
lawyers do not engage with them appropriately. For example, the Chief
Justice of NSW recently noted that:
The mistakes that are made in referring the wrong cases to alternative
dispute resolution or entering alternative dispute resolution at the
wrong time are largely a product of this being a relatively new form of
dispute resolution and one that was not taught to the vast majority of
practitioners as a major part of their legal education. 122
5.9
His Honour equates the “genuine steps” requirements with
mandatory mediation and states that:
I have serious reservations about any legislation requiring parties to
take ‘genuine steps’ to resolve a dispute before commencing litigation,
as they are required to do under the Commonwealth’s Civil Dispute
Resolution Act 2011 before commencing proceedings … At the most
basic level, I do not believe that such legislation is necessary. Given the
expansion of alternative dispute resolution services, and the extent to
which parties and lawyers now consider alternative dispute resolution
methods as their primary means of dispute resolution, I think it is
118
R Kambar and G Walsh, A Critical Evaluation of the Pre-Litigation Protocols p43 PRECEDENT; (106)
September / October 2011: 42-45, available at
http://www.mauriceblackburn.com.au/media/985340/scan_11-51.pdf) (accessed 10 February 2012).
119
R Kambar and G Walsh, A Critical Evaluation of the Pre-Litigation Protocols p44 PRECEDENT; (106)
September / October 2011: 42-45, available at
http://www.mauriceblackburn.com.au/media/985340/scan_11-51.pdf) (accessed 10 February 2012).
120
R Kambar and G Walsh, A Critical Evaluation of the Pre-Litigation Protocols P44 PRECEDENT; (106)
September / October 2011: 42-45, available at
http://www.mauriceblackburn.com.au/media/985340/scan_11-51.pdf) (accessed 10 February 2012).
121
R Kambar and G Walsh, A Critical Evaluation of the Pre-Litigation Protocols P44 PRECEDENT; (106)
September / October 2011: 42-45, available at
http://www.mauriceblackburn.com.au/media/985340/scan_11-51.pdf) (accessed 10 February 2012).
122
Justice Tom Bathurst, “Dispute Resolution: repertoire or revolution”, Address to UNSW 40 years –
Dispute Resolution Forum, 1 December 2011 at p 8, available at
http://www.lawlink.nsw.gov.au/lawlink/supreme_court/ll_sc.nsf/vwFiles/Bathurst011211.pdf/$file/Bath
urst011211.pdf
50
Case Study Information
RESOLVING DISPUTES WITHOUT COURTS
difficult to accept that parties would not be aware of ADR or would be
discouraged from using it were it to remain optional.
More fundamentally, I believe that forcing parties to alternative dispute
resolution will undermine the justice system’s goals of justice and
fairness. In more complex cases, it is not unusual for parties to lack a
clear understanding of the strength and merits of both their own case
and the opponent’s case. In circumstances where parties do not yet
possess sufficient information to make a rational determination about
whether to compromise proceedings, compulsory mediation is likely to
either fail or to produce results that do not accurately reflect the legal
position of the parties.
Moreover, compulsory pre-trial mediation may paradoxically result in
the courts being burdened by satellite litigation in which the court
investigates what occurred or should have occurred during mediation
before being able to determine the merits of each party’s case. 123
5.9 In the UK, the various views aout pre-action requirements have been
expressed and summarised in The Government Response to the County Court
Reform Proposal released in February 2012 (referred to previously in Chapter
3). In that report, it is clear that lawyers and non-lawyers hold different views
about the efficacy of pre-action protocols. In the report, it was noted that:
Q16: Do you agree that mandatory pre-action directions should be
developed? If not, please explain why.
This question was answered by 211 respondents, 129 (61%) of whom
were in favour of the proposal, whilst 82 (39%) were against it.
In favour of mandatory pre-action directions
All insurers and the majority of mediation providers supported
mandatory pre-action directions. The common view expressed by
insurers was that mandatory pre-action directions would reduce legal
costs, particularly if the directions were underpinned by a fixed costs
regime. Many also suggested that mandatory directions would promote
effective case management, discourage non-meritorious cases and
provide an early focus on the issues between the parties. However,
whilst being in favour in principle, some were concerned about the level
of detail required to ensure all eventualities were accounted for and
that this may be counter-productive. There were also concerns about
compliance, with many insurers keen to see robust sanctions for those
who fail to comply.
42% of the 112 legal representatives that responded were also in favour
of this proposal. Many showed support for the current suite of preaction protocols and considered that they could be strengthened to
ensure compliance. A common reason for support amongst all
123
Justice Tom Bathurst, ‘Dispute Resolution: repertoire or revolution’, Address to UNSW 40 years –
Dispute Resolution Forum, 1 December 2011 at p 8, available at
http://www.lawlink.nsw.gov.au/lawlink/supreme_court/ll_sc.nsf/vwFiles/Bathurst011211.pdf/$file/Bath
urst011211.pdf
Concerns, Issues and Next Steps
51
RESOLVING DISPUTES WITHOUT COURTS
categories of respondent was that mandatory pre-action directions
would encourage early settlement.
Whilst almost all mediators who responded were in favour of the
proposal, most included caveats, such as ensuring that the pre-action
directions do not render the process disproportionate and that access
to justice remains a right, not a privilege. One mediator suggested a
pilot at a number of courts in order to test the benefits of such a
prescribed process before it is rolled out more widely. 124
5.10
In contrast in the UK the views of those opposed to the extension of
pre-action protocols (which differ in many ways from the CDRA arrangements
as they include specific requirements) were summarised in the Government
Response Report as follows:
Against mandatory pre-action directions
Respondents who were against the introduction of mandatory pre-action
directions included all of the judiciary and the majority of the legal
profession. In addition, 5 out of the 7 financial institutions who responded
were against the proposal. Their concern was that for money claims,
admission of liability is often not the issue; it is the debtor’s ability or
willingness to pay. Therefore court action is usually used as a means of
enforcing the debt. One respondent pointed out that where the debt is
regulated by the Consumer Credit Act, there is a standard pre-action
process which companies must follow.
A common view amongst all those against the proposal is that mandatory
pre-action directions would place undue burdens on parties, particularly
claimants, and this would introduce delay and increase upfront costs. Many
were concerned that enforced mediation/ADR, particularly in debt cases
where the debtor refused to pay, was inappropriate.
Many respondents, including members of the judiciary, were of the view
that the existing pre-action protocols go far enough, but recognised that
these could be strengthened, particularly around sanctions for noncompliance. The judiciary in particular said that cases should be managed
by the court, with tailored case-specific directions and referral by a judge to
mediation/ADR only where appropriate.125
These views suggest a concern relating to the application of protocols to debt
recovery cases and also the view of the surveyed judiciary that courts need to
supervise dispute resolution arrangements.
124
UK Ministry of Justice Solving disputes in the county courts: creating a simpler, quicker and more
proportionate system: A consultation paper on reforming civil justice in England and Wales
The Government Response (February 2012) (para28) para 86 – 88, available at
http://www.justice.gov.uk/downloads/consultations/solving-disputes-in-cc-response.pdf (accessed 12
February 2012).
125
UK Ministry of Justice Solving disputes in the county courts: creating a simpler, quicker and more
proportionate system: A consultation paper on reforming civil justice in England and Wales
The Government Response (February 2012) (para28) p 12, available at
http://www.justice.gov.uk/downloads/consultations/solving-disputes-in-cc-response.pdf (accessed 12
February 2012).
52
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RESOLVING DISPUTES WITHOUT COURTS
5.11
The Australian Senate Subcommittee Report 126 summarised many of
these views (after considering the submissions) and it seems that the
concerns can be grouped into four areas:
1. That pre-action requirements could increase the time and cost
involved in dispute resolution – particularly if lawyers behave
inappropriately and such costs may not be recoverable.
2. Satellite litigation may result from the obligations as they are
interpreted by courts.
3. The role of the courts may be adversely impacted or disputants may
resolve matters that should be litigated or may resolve matters without
the benefit of information. This is sometimes linked to the view that
courts should play a central role in dispute resolution and in supervising
dispute resolution.
4. Lawyers and clients are already aware of ADR and use it before
commencing litigation so there is no need to introduce additional
requirements or obligations.
5.12
In contrast to these views (where concerns have been expressed
about the extensive nature of pre-litigation obligations), other commentators
suggest that they do not go far enough. These commentators suggest that
pre-litigation mediation, not just protocols or obligations, should be
mandatory in a wider class of disputes in order to:
… remove the ability to go straight to litigation … force parties to sit
down together in a mediation context and confront their case, their
witnesses, their lawyers and their claims at a stage in the dispute where
strong business decisions can be made127
5.13
Within Australia, access to fair, cost-effective, early dispute resolution
is an essential element of many government strategies 128 and how best to
foster this and support effective dispute resolution is an ongoing area of
policy development and reform. The next section of this paper considers the
research relating to mandatory and non-mandatory ADR schemes – as distinct
from pre-litigation obligations and requirements.
126
See
http://www.aph.gov.au/Parliamentary_Business/Committees/Senate_Committees?url=legcon_ctte/civil
_dispute_resolution_43/index.htm (accessed 15 March 2012).
127
Michael Redfern, The Elephant in the Room – Should Pre-Litigation Mediation Be Mandatory? (8
September 2011) p 15, available at http://www.leadr.com.au/kongres2011/papers-ppts/michaelredfern.pdf (accessed 21 February 2012).
128
Department of Justice, New Directions for the Victorian Justice System 2004–2014: Attorney General’s
Justice Statement May 2004 (Department of Justice, Melbourne, 2004) p 13. The Attorney-General’s
Justice Statement 2 was published in October 2008. This set out that “a series of initiatives would focus
on expanding Appropriate Dispute Resolution (ADR) in Victoria so the community, business and industry
have better options for resolving disputes quickly and cheaply”: Department of Justice Roadmap of
Reform for Victoria's Justice System (14 Oct 2008), available at
http://www.justice.vic.gov.au/home/about+us/news+stories/news+archive/justice++roadmap+of+reform+for+victorias+justice+system+(news) (accessed 21 February 2012).
Concerns, Issues and Next Steps
53
RESOLVING DISPUTES WITHOUT COURTS
5.14
In this Research Project, further information, evidence, comments,
submissions or information to support any of these perspectives is sought
from members of the profession, the judiciary and others.
Evaluations of Non-Court Dispute Resolution Processes
5.15
Several publications 129 reviewing the use and effectiveness of ADR
were consulted in this Research Project, as were previous studies and
reports130 evaluating ADR processes. Of particular relevance to the present
research were four Department of Justice reports, completed in 2007 and
2008, and focused on various industries and areas where ADR is used.
5.16
The Alternative Dispute Resolution in Victoria - Community Survey
2007 Report131 was commissioned by the Department of Justice. This project
sought to survey the community, measuring the attitudes towards and
experiences of Alternative Dispute Resolution schemes operating throughout
Victoria. The report featured a questionnaire and involved 502 telephone
interviews, focusing on those aged 18 years and over. The survey was
designed to be representative of adult Victorian populations. The report132
surveyed Victoria’s small business community, measuring attitudes towards
and experiences of ADR in Victoria. Using a weighting method, results were
obtained from a survey of 500 small business owners and operators (fewer
than 20 employees). Surveys were designed to be representative of the small
business populations of Victoria.
5.17
Key findings of the survey were: 133
129
National Alternative Dispute Resolution Advisory Council (NADRAC), Court Referral to ADR: Criteria
and Research (Attorney-General’s Department, Canberra, 2003), available at
http://www.nadrac.gov.au/www/nadrac/nadrac.nsf/Page/Publications_PublicationsbyDate_CourtReferr
altoADRCriteriaandResearch (accessed 21 February 2012); Australian Law Reform Commission,
Managing Justice – A Review of the Federal Civil Justice System (Australian Law Reform Commission,
NSW, 2000); T Sourdin, Alternative Dispute Resolution (4th Ed, Thomson Reuters, NSW, 2012).
130
NL Hollett, MS Herrman, DG Eaker and J Gale, ‘Assessment of Mediation Outcomes: The Development
and Validation of an Evaluative Technique’ (2002) Justice System Journal; N Paulsen, D Rooney and P
Ashworth, An Evaluation of the Primary Dispute Resolution Services of the Federal Magistrates Court
(unpublished paper, 2004); T Sourdin, Dispute Resolution Processes for Credit Consumers (La Trobe
University, Melbourne, 2007); T Sourdin and J Elix, Review of the Financial Industry Complaints Scheme –
What Are The Issues? (La Trobe University, Melbourne, 2002); T Sourdin and T Matruglio, Evaluating
Mediation – New South Wales Settlement Scheme 2002 (La Trobe University and the Law Society of New
South Wales, Melbourne, 2004).
131
Department of Justice, Alternative Dispute Resolution in Victoria - Community Survey 2007 Report
(Department of Justice Date of Publication, Copyright: State of Victoria, Melbourne, 2007). See
http://www.consumer.vic.gov.au/resources-and-education/research to request a copy (accessed 21
February 2012).
132
Ipsos Australia Pty Ltd, Alternative Dispute Resolution in Victoria - Small Business Survey 2007 Report
(Department of Justice, Copyright of State Government of Victoria, Melbourne, 2007): see
http://www.consumer.vic.gov.au/resources-and-education/research to request a copy (accessed 21
February 2012).
133
Ipsos Australia Pty Ltd, Alternative Dispute Resolution in Victoria - Small Business Survey 2007 Report
(Department of Justice, Copyright of State Government of Victoria, Melbourne, 2007) p iii. See
54
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RESOLVING DISPUTES WITHOUT COURTS

That over one third of Victorian small businesses had
experienced at least one dispute during the 12 months leading
up to May 2007, with 637,000 disputes reported overall;

That the largest proportion of disputes (15 per cent) were in
relation to debts or late payment of bills by consumers;

That over two thirds (69 per cent) of all disputes involving small
businesses were resolved without the involvement of a third
party; and

That it cost small businesses about $1.8 million in time and
expenses, to resolve disputes.
5.18
The Alternative Dispute Resolution in Victoria - Supplier Survey
134
Report was based on a survey inviting feedback from selected industry and
government providers of Alternative Dispute Resolution services. The survey
responses provided insight into how Alternative Dispute Resolution schemes
operate in Victoria. Schemes based in both private and public sectors,
throughout a range of industries, were assessed. The processes ranged along
the spectrum from mediation through to arbitration.
5.19
The Alternative Dispute Resolution in Victoria - Supply Side Research
135
Report explored the organisation of the supply of ADR services in Victoria.
This qualitative and quantitative research was obtained following reviews of
existing organisational material as well as interviews with stakeholders, such
as courts and tribunals, industry ombudsmen, academics and government
agencies. The report addressed questions regarding types of ADR processes
provided in Victoria, how those services are funded and identified a number
of issues for consideration by the Victorian Government. Those issues are
important as one of the questions in this Project is how those accessing ADR
can be supported – particularly if there is no ‘scheme’ to support a pre action
requirement. The Report suggested that a relatively healthy pre-action
environment exists (at least in Victoria) although more education of
gatekeepers might be required.
Literature Concerning Evaluation of Mediation 136
5.20
Evaluation of pre-action processes, obligations and schemes is related
to the issue of comparing the cost and benefits of these processes with those
of traditional litigation. In any comparison with the cost of those cases that go
http://www.consumer.vic.gov.au/resources-and-education/researchto request a copy (accessed 21
February 2012).
134
Department of Justice, Alternative Dispute Resolution in Victoria - Supplier Survey Report (Department of
Justice, Copyright: State of Victoria, Melbourne, 2007).
135
Department of Justice, Alternative Dispute Resolution in Victoria - Supply Side Research Report (Chris
Field Consulting Pty Ltd, Melbourne, 2007).
136
Parts of this discussion are drawn from T Sourdin, Alternative Dispute Resolution (4thEd, Thomson
Reuters, NSW, 2012).
Concerns, Issues and Next Steps
55
RESOLVING DISPUTES WITHOUT COURTS
to trial, results will often be flawed because many civil cases are settled out of
court through negotiation. 137
5.21
In addition, some of the possible benefits of pre-action obligations are
difficult to measure. The increased use of pre-action processes may, for
example, lead to a decrease in litigious or adversarial behavior, 138 foster
better relationships between parties to disputes or result in higher levels of
compliance with outcomes. Some recent evaluations have compared different
mediation and litigation processes; however, even where large-scale research
has been undertaken, it may not be comparable (often because of definitional
issues – it can be hard to determine what processes are used). 139
5.22
Despite this difficulty in providing cost to benefit analysis, there have
been numerous attempts in the past decade to evaluate mediation and other
ADR processes. These attempts have at times been made in the context of a
broader inquiry into justice (as with the ALRC Report) or case management
(see the RAND Report140 discussion below) or in response to specific ADR
initiatives.
5.23
Other Australian empirical studies have focused on specific industries,
cultural groups and demographic areas. These evaluative studies vary in terms
of their objectives and are often not comparable because of different
contexts. For instance, there have been evaluative studies addressing ADR in
the financial industry,141 for credit consumers 142 and within small business
137
For discussion of the methodological difficulties in evaluating ADR programs, see T Matruglio,
Researching Alternative Dispute Resolution (Justice Research Centre, Sydney, 1992); S Caspi, ‘Mediation
in the Supreme Court – Problems with the Spring Offensive Report’ (1994) 5(4) Australian Dispute
Resolution Journal 4; S Keilitz (ed), National Symposium on Court Connected Dispute Resolution
Research – A Report on Current Research Findings – Implications for Courts and Research Needs (State
Justice Institute, USA, 1994); see also National Alternative Dispute Resolution Advisory Committee
(NADRAC) Research Forum Findings 2007 and 2010 at
http://www.nadrac.gov.au/www/nadrac/nadrac.nsf/Page/ADRResearch_NationalADRResearchForum_N
ationalADRResearchForum (accessed 21 February 2012).
138
It has been suggested that those exposed to cooperative dispute resolution processes develop more
constructive communication patterns and less obstructive behaviour: P Wanger, ‘The Political and
Economic Roots of the “Adversary System” of Justice and “Alternative Dispute Resolution”’ (1994) 9(2)
The Ohio State Journal on Dispute Resolution, p 203.
139
See T Sourdin and T Matruglio, Evaluating Mediation – The NSW Settlement Scheme (La Trobe
University and the Law Society of New South Wales, Melbourne, 2004); J Elix and T Sourdin, Review of
the Financial Industry Complaints Scheme – What Are the Issues? (La Trobe University, Melbourne 2002),
available at http://www.uq.edu.au/acpacs/e-library (accessed 23 July 2008). See also R Kiser, M Asher
and B McShane, ‘Let’s not make a deal: An Empirical Study of Decision Making in Unsuccessful
Settlement Negotiations’ (2008) 5(3) Journal of Empirical Legal Studies, pp 551-591.
140
J Kakalik, M Oshiro, D McCaffrey, M Vaiana, N Pace, T Dunworth and L Hill, An Evaluation of
Mediation and Early Neutral Evaluation under the Civil Justice Reform Act (RAND, Santa Monica,
California, 1996).
141
J Elix and T Sourdin, Review of the Financial Industry Complaints Service 2002 – Final Report
(Community Solutions, La Trobe University and University of Western Sydney, 2002). P Khoury, D Russell
and F Guthrie, Independent Review. Banking and Financial Services Ombudsman (The Navigator
Company Pty Ltd, Victoria, November 2004), available at
http://www.bfso.org.au/ABIOWeb/ABIOWebSite.nsf/0/E28FD200B7ECEF5DCA256FF600203DE5/$file/BF
SO+Review+2004.pdf (accessed 21 February 2012).
142
T Sourdin, Dispute Resolution Processes for Credit Consumers (La Trobe University, Melbourne, 2007).
56
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settings. 143 Court-connected ADR evaluation projects144 often will include an
analysis of aspects of ADR relating to the system of litigation, 145 civil justice 146
and case management. 147 There are also more general evaluations of ADR
processes such as arbitration and conciliation and the pre-trial aspects
associated with these,148 as well as discussion of developments in ADR by
comparison of programs over time. 149 Further analysis of ADR in relation to
market forces affecting its use and effectiveness has been conducted over the
past few years,150 much of which has fed into research about the quality of
ADR services. 151
143
Marsden Jacob Associates, Survey of Small Business Attitudes and Experience in Disputes and their
Resolution (Attorney-General’s Department (Cth), Canberra, 1999).
144
S Davidson, ‘Court-Annexed Arbitration in the Sydney District Court: An Evaluation of the
Effectiveness of Court-Annexed Arbitration in the Disposal of Cases in the Sydney Registry (Civil) of the
District Court of New South Wales’ (1995) 6 Australian Dispute Resolution Journal at 195; R Ingleby, In
the Ball Park: Alternative Dispute Resolution and the Courts (Australian Institute of Judicial
Administration, Melbourne, 1991); F Kingham, Evaluating Quality in Court Annexed Mediation (Deputy
President, Land and Resources Tribunal, Queensland, September 2002); K Mack, Court Referral to ADR:
Criteria and Research (Australian Institute of Judicial Administration Incorporated and the National
Dispute Resolution Advisory Council (NADRAC), Attorney-General's Department, Canberra, 2003). See
also T Sourdin and N Balvin, Interim Evaluation of Dispute Settlement Centre of Victoria Projects: The
Neighbourhood Justice Project. The Corio/Norlane Community Mediation Project (The University of
Queensland, June 2008).
145
Australian Law Reform Commission, Review of the Adversarial System of Litigation. ADR - Its Role in
Federal Dispute Resolution (Issues Paper 25 Australian Law Reform Commission (ALRC), Sydney, June
1998).
146
District Court Civil Jurisdiction Steering Committee, Civil Claims in the District Court of South
Australia: A Review of Court Management Processes and Practices (Courts Administration Authority,
Adelaide, September 1997); *T Matruglio, Researching Alternative Dispute Resolution (Civil Justice
Research Centre and Law Foundation of New South Wales, Sydney, August 1992).
147
Law Institute of Victoria, Mediation in the Spring Offensive 1992: An Initiative of the Supreme Court of
Victoria. (Law Institute of Victoria, Melbourne, February 1993); *Magistrates Court (Civil) General
Jurisdiction Steering Committee, General Civil Claims in South Australia: A Review of Court Management
Processes and Practices (Courts Administration Authority, Adelaide, September 1997).
148
M Delaney and T Wright, Plaintiffs’ Satisfaction with Dispute Resolution Processes: Trial, Arbitration,
Pre-trial Conference and Mediation (Justice Research Centre and Law Foundation of New South Wales,
Sydney, January 1997).
149
M Dewdney, B Sordo and C Chinkin, Contemporary Developments in Mediation within the Legal
System and Evaluation of the 1992–3 Settlement Week Program (Law Society of New South Wales,
Sydney, April 1994); National Alternative Dispute Resolution Advisory Council (NADRAC), ADR Research:
A Resource Paper (Attorney-General’s Department, Canberra, March 2004); National Alternative Dispute
Resolution Advisory Council (NADRAC), ADR Statistics: Published Statistics on Alternative Dispute
Resolution in Australia (Attorney-General’s Department, Canberra, 2003); National Alternative Dispute
Resolution Advisory Council (NADRAC), ADR Research: Background Paper for Research Round Table
(Attorney-General’s Department, Canberra, December 2002); National Alternative Dispute Resolution
Advisory Council (NADRAC), Online ADR (Background Paper, Attorney-General’s Department, Canberra,
January 2001); T Sourdin and T Matruglio, Evaluating Mediation – New South Wales Settlement Scheme
2002 (La Trobe University and University of Western Sydney, 2004). See
http://www.endispute.com.au/page.php?pid=10700 (accessed 21 February 2012).
150
I McEwin, Cost of Legal Services and Litigation Access to Legal Services: The Role of Market Forces
(Senate Standing Committee on Legal and Constitutional Affairs, Canberra, February 1992) – Background
Paper; Senate Standing Committee on Legal and Constitutional Affairs, Cost of Legal Services and
Litigation Access to Legal Services: The Role of Market Forces (Canberra, February 1992) – Background
Paper.
151
T Sourdin and N Harding, A Review of Manly Council's Development Application (DA) Process. (La
Trobe University and Nina Harding Mediation Services, 2006), available at
Concerns, Issues and Next Steps
57
RESOLVING DISPUTES WITHOUT COURTS
5.24
Specific areas of law that utilise ADR are also addressed in these
projects. Areas such as family law 152 are often candidates for ADR evaluation,
as are cases that deal with children and custodial issues. 153 Mediation and
conferencing in relation to violence, 154 juvenile offenders155 and restorative
justice programs 156 also feature in evaluative studies. Many of these programs
http://www.manly.nsw.gov.au/IgnitionSuite/uploads/docs/Review%20Report_Manly%20Council%20DA
%20Processes.pdf (accessed 21 February 2012).
152
S Bordow and J Gibson, Evaluation of the Family Court Mediation Service, Research Report 12 (Family
Court Research and Evaluation Unit, Sydney, March 1994); D Muller and Associates and Relationships
Australia, Use of, and Attitude to, Mediation Services among Divorcing and Separating Couples Report
(Commonwealth Department of Family and Community Services, Canberra, 1998); *Family Court of
Western Australia, Family Court of Western Australia Mediation Service Evaluation (The Court, Perth,
August 1996); Attorney-General’s Department, Family Services Branch, Evaluation of the Marriage and
Relationship Counselling Sub-Program (Legal Aid and Family Services, August 1996); Family Court of
Australia, Self-Represented Litigants: A Challenge, Project Report (Family Court of Australia, December
2000); J Fisher and M Blondel, Couples Mediation: A Forum and A Framework (New South Wales
Marriage Guidance, NSW, 1993); L Moloney, A Love and T Fisher, Managing Differences: Federallyfunded Family Mediation in Sydney: Outcomes, Costs and Client Satisfaction (Legal Aid and Family
Services, Attorney-General’s Department (Cth), Canberra, July 1996); N Mushin, ‘Court-annexed
Mediation in the Family Court of Australia: The Experience of Working with Cultural Diversity’ in D
Bagshaw (Ed), Mediation and Cultural Diversity (Second International Mediation Conference
Proceedings, South Australia Group for Mediation Studies, University of South Australia, Adelaide, 1996).
153
Commonwealth Department of Family and Community Services, Through a Child’s Eyes: Child
Inclusive Practice in Family Relationship Services (Commonwealth Department of Family and Community
Services, Canberra, 2001); Commonwealth Department of Family and Community Services, Family and
Child Mediation Survey Final Report (Commonwealth Department of Family and Community Services,
Canberra, March 1998); *A Love, L Moloney and T Fisher, Federally-funded Family Mediation in
Melbourne. Outcomes, Costs and Client Satisfaction (Legal Aid and Family Services, Attorney-General’s
Department (Cth), Canberra, January 1995); J Peirce, ‘Mediators, Children’s Access Services, Violence
and Abuse’ in: D Bagshaw (Ed), Mediation and Cultural Diversity (Second International Mediation
Conference Proceedings, South Australia Group for Mediation Studies, University of South Australia,
Adelaide, 1996).
154
K Young, Research/Evaluation of Family Mediation Practice and the Issue of Violence: Final Report
(Legal Aid and Family Services (Cth), Attorney-General’s Department, Canberra, July 1996).
155
K Dalyet al, Research on Conferencing, Technical Report No 1: Project Overview and Research
Instruments (South Australian Juvenile Justice, South Australia, 1998); K Daly K et al, Research on
Conferencing, Technical Report No 2: Research Instruments in Year 2 and Background Notes (South
Australian Juvenile Justice, South Australia, 2001); K Daly, South Australia Juvenile Justice and Criminal
Justice (SAJJ-CJ) Technical Report No 3: Archival Study of Sexual Offence Cases Disposed of in Youth Court
and by Conference and Formal Caution (School of Criminology and Criminal Justice, Griffith University,
QLD, 2003); K Daly, Sexual Offence Cases Finalised in Court, by Conference, and by Formal Caution in
South Australia for Young Offenders, 1995-2001, Final Report (School of Criminology and Criminal
Justice, Griffith University, QLD, August 2003); J People and L Trimboli, An Evaluation of the NSW
Community Conferencing for Young Adults Pilot Program (NSW Bureau of Crime Statistic and Research,
Attorney General’s Department, Sydney, 2007).
156
H Hayes and K Daly, Conferencing and Reoffending in Queensland(School of Criminology and Criminal
Justice, Griffith University, QLD, 2004); L Sherman, H Strang and D Woods, Recidivism Patterns in the
Canberra Reintegrative Shaming Experiments (RISE) (Centre for Restorative Justice, Australian National
University, Canberra, 2000); L Sherman and H Strang, Restorative Justice: What We Know and How We
Know It, Jerry Lee Program on Randomized Controlled Trials in Restorative Justice (Working Paper,
University of Pennsylvania, USA, Lee Center of Criminology and Centre for Restorative Justice, Australian
National University, Canberra, 2004); H Strang, Restorative Justice Programs in Australia: A Report to the
Criminology Research Council (Australian National University, Canberra, 2001), see
http://www.criminologyresearchcouncil.gov.au/reports/strang/index.html (accessed 21 February 2012);
H Strang, G Barnes, J Braithwaite and L Sherman, Experiments in Restorative Policing: A Progress Report
on the Canberra Reintegrative Shaming Experiments (RISE) (Law Program, Research School of Social
Sciences, Australian National University, Canberra, 1999) at
58
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have been associated with Community Justice Centres.157 Evaluations of these
initiatives display varying methods and results in relation to research
methodologies and outcomes. ADR evaluation research has also focused on
Native Title disputes and Aboriginal and Torres Strait Islander issues. 158 Many
of these studies are reports on pilots, providing qualitative and/or
quantitative feedback about the effectiveness of the resolution process from
the perspective of the parties and other stakeholders. Some studies regarding
Indigenous issues have a particular focus on family law. 159
5.25
Restorative Justice initiatives and peer mediation in schools 160 have
also been evaluated, and studies have involved questionnaires for school
children and their parents, while decisions regarding Legal Aid funding 161 have
been based on predominantly qualitative research conducted in this area over
the past few years. Finally, WorkCover disputes have also been the focus of
ADR evaluation, with an emphasis on the types of processes used and the
effectiveness perceived by those involved. 162
5.26
In addition, research and monitoring data is increasingly being
produced by performance measurement technology that is in place within
some pre-action schemes in the health care area and in the personal injury
area (extensive arrangements exist in the workers compensation and motor
vehicle accident area in a number of States). These systems can now help to
http://www.aic.gov.au/criminal_justice_system/rjustice/rise/progress.aspx (accessed 21 February
2012).
157
C Bourne, Mediation and Community Justice Centres: An Empirical Study, Research Report 12 (NSW
Law Reform Commission, October, NSW, 2004); J Schwartzkoff and J Morgan, Community Justice
Centres. A Report on the New South Wales Pilot Project 1979–81 (Law Foundation of New South Wales,
Sydney, 1982).
158
T Bauman and R Williams, The Business of Process Research Issues in Managing Indigenous DecisionMaking and Disputes in Land (Research Discussion Paper No. 13, AIATSIS, Canberra, 2004); The
Indigenous Facilitation and Mediation Project (IFaMP) Community Mediation Centres - Native Title
Representative Bodies Forum (Summary of Proceedings and Outcomes, Australian Institute of Aboriginal
and Torres Strait Islander studies, Native Title Research Unit, Canberra, 0ct 2004). See also National
Alternative Dispute Resolution Advisory Committee (NADRAC), Indigenous Dispute Resolution and
Conflict Management (Attorney-General’s Department, Canberra, January 2006) at
http://www.nadrac.gov.au/www/nadrac/nadrac.nsf/Page/Publications_PublicationsbyDate_Indigenous
DisputeResolutionandConflictManagement (accessed 21 February 2012).
159
C Cunneen, J Luff, K Menzies and N Ralph, ‘Indigenous Family Mediation: The New South Wales
ATSIFAM Program’ (2005) AILR 1. See: http://www.austlii.edu.au/au/journals/AILR/2005/1.html
(accessed 23 July 2008); National Alternative Dispute Resolution Advisory Council (NADRAC), Indigenous
Dispute Resolution and Conflict Management (Attorney-General’s Department, Canberra, January 2006)
at
http://www.nadrac.gov.au/www/nadrac/nadrac.nsf/Page/Publications_PublicationsbyDate_Indigenous
DisputeResolutionandConflictManagement (accessed 21 February 2012).
160
S Grose and W Alford, ‘The Dispute Resolution Project: Peer Mediation in Schools’ in Bagshaw D (Ed),
Mediation and Cultural Diversity (Second International Mediation Conference Proceedings, South
Australia Group for Mediation Studies, University of South Australia, Adelaide, 1996).
161
Rush Social Research and John Walker Consulting Services, Legal assistance needs phase I: estimation
of a basic needs-based planning mode (Legal Aid and Family Services Division, Australian Government
Attorney-General’s Department, Canberra, 1996).
162
See for example, T Beed, The Role of Conciliation (Civil Justice Research Centre and Law Foundation of
New South Wales, Sydney, November 1990). There are many more recent evaluations in NSW and
Victoria.
Concerns, Issues and Next Steps
59
RESOLVING DISPUTES WITHOUT COURTS
indicate where and how intervention and finalisation may occur. Refinements
in these areas will hopefully enable a clearer analysis of mediation and ADR
referral processes in the future.
5.27
Some overseas large-scale empirical evaluations have shown
significant benefits in using ADR once court proceedings have commenced
and it seems clear that even with extensive pre-action schemes there will
always be some matters that do not settle. For example, an Ontario study,
which analysed more than 3000 cases in Ontario, found that there were
positive impacts upon the pace, costs and outcomes of litigation when ADR
processes were used. 163 Within the United States of America, there are many
reports that have analysed ADR use, and many have found significant benefits
although some have focused only on small non-comparable samples and tend
to be focused on matters where litigation has already commenced. 164
However, many evaluation reports both within Australia and overseas remain
“unreported” as part of internal court or tribunal circumstances or are not
comparable in the Australian setting,165 and this problem can be magnified in
the pre-litigation area where annual and other reports and reviews may not
be available.
5.28
ADR processes can reduce costs and be less expensive than litigated
options if the dispute is resolved. The benefits increase where disputes are
likely to consume proportionally large amounts of time in a hearing. Where
agreement is not reached and the matter is then litigated, costs can be
inflated as additional preparation and conferencing time can be expended.
However, mediation and other forms of ADR may narrow the issues in
dispute, reduce the need for interlocutory hearings or pre-trial processes and
contribute to a shorter hearing.
5.29
It has been suggested that, when disputes are not subject to an early
ADR process, they may take longer to resolve when a process is eventually
commenced. 166 Despite this, the evaluation of the NSW Settlement Scheme
suggested that ADR processes, such as mediation, could provide great
benefits even in older, more complex cases where significant legal costs had
been expended. In this regard, the Evaluation of the NSW Settlement Scheme
noted that even if a mediation was not attended, a mediation scheme may
163
R Hann and C Baar, Evaluation of the Ontario Mandatory Mediation Program (Queens Printer,
Ontario, 2001) p 3.
164
See Resolution Systems Institute, Bibliographic Summary of Cost, Pace and Satisfaction Studies of
Court – Related Mediation Programs (2nd Ed, 2007).
165
th
T Sourdin, Alternative Dispute Resolution (4 Ed, Thomson Reuters, NSW, 2012) at Appendix G; see,
for example, N Paulsen, D Rooney and P Ashworth, An Evaluation of the Primary Dispute Resolution
Services of the Federal Magistrates Court (Communication Partners, July 2004).
166
US Office of Personnel Management, Alternative Dispute Resolution: A Resource Guide, Section 1:
Alternative Dispute Resolution Techniques and Agency Practices. (US Office of Personnel Management,
Washington, DC). See http://www.opm.gov/er/adrguide/Section1-a.asp (accessed 21 February 2012).
60
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still have “a catalytic effect, as parties in many disputes (went on) to resolve
their disputes without attending a mediation conference.”167
5.30
Many mediation processes have been evaluated in a court-connected
context, and for this reason some studies can provide a comparative
reference point. It is considered that some of the specific advantages of
mediation over litigation are speed, convenience, informality, cost saving,
greater control of the process, confidentiality, preservation of ongoing
relationships and compliance with outcomes. In comparable studies these
features are sometimes examined. The degree to which processes meet
objectives and the degree of priority given to objectives varies according to
the areas where mediation is used.
5.31
The ALRC Report, Managing Justice – A Review of the Federal Civil
Justice System,168 highlighted the need for ongoing empirical evaluation
research in the general civil justice area. As noted in its executive summary:
The commission acknowledges the importance of ADR as a tool in
resolving cases quickly, less expensively and to the satisfaction of
parties. However, the commission also cautions against uncritical
acceptance of ADR as a panacea for all ills of litigation, much in the
same way that tribunals were intended to provide the “solution” to
litigation problems in the 1970s. The commission makes some targeted
recommendations aimed at ensuring that the benefits of ADR are
realised but it is not taken to substitute for appropriate adjudication. 169
5.32
The ALRC research in the Family Court, AAT and Federal Court areas
concentrated on timing, case management and costs. The focus on mediation
only formed a small part of the research. This is partly because the amount of
mediation practised in each of those jurisdictions was at that time relatively
small. Also, the primary focus of the ALRC was judicial adjudication, case
disposal and the quality of outcomes, rather than other key issues that are
also of relevance to ADR practitioners, theorists and policy-makers (for
example, findings as to satisfaction and compliance with outcomes). Despite
not being the primary research focus, some findings, particularly in the family
law area, are of interest. In this regard, the ALRC noted:
On the Commission’s analysis, consensual resolution was more likely to
be achieved if both parties were represented. Lawyer-led negotiation
appeared a significant factor encouraging settlement. Parties made
repeated attempts at settlement at all stages of the process, including
before filing their applications. Settlements were often achieved later in
the process. As stated in Chapter 5, unrepresented parties were more
likely to withdraw, cease defending or have their cases determined
following a hearing. They were much less successful in brokering a
consent outcome. Unrepresented parties most frequently nominated to
167
T Sourdin and T Matruglio, Evaluating Mediation – New South Wales Settlement Scheme 2002. (La
Trobe University and the Law Society of New South Wales, Melbourne, 2004) p 77.
168
Law Reform Commission, Managing Justice – A Review of the Federal Civil Justice System. (Australian
Law Reform Commission, NSW, 2000).
169
Law Reform Commission, Managing Justice – A Review of the Federal Civil Justice System. (Australian
Law Reform Commission, NSW, 2000) p 14.
Concerns, Issues and Next Steps
61
RESOLVING DISPUTES WITHOUT COURTS
the Commission “frustration with the process” as the important reason
they withdrew or settled their cases. 170
5.33
The conclusions of the ALRC in the family context are of interest to
ADR and legal practitioners as they suggest that in many circumstances
lawyers are aiding the negotiation process in somewhat unexpected ways.
This conclusion is at odds with suggestions that lawyers can hinder
negotiations and may suggest that often pre-action schemes can succeed if
lawyers support them. This raises issues about whether pre-action
requirements will work better if there are additional obligations placed on
lawyers to behave in particular ways – for example, to negotiate in good faith.
5.34
Clearly, some of the concerns expressed by the legal profession and in
the UK Reports about pre-action requirements are that some lawyers or
disputants may act inappropriately or inflate costs. It is partly for this reason
that the Senate Subcommittee considered the wording of the pre-action
requirements carefully (in particular, whether or not they should import a
reasonable, genuine or sincere standard of conduct). It is also for this reason
that “good faith” is required of participants in the pre-action NSW retail lease
(more or less) mandatory mediation case study scheme.
5.35
Another question therefore in this research is whether or not
additional conduct requirements can help support pre-action obligations. In
this regard, “good faith” now features as the most widely used standard of
conduct prescribed by federal and State/Territory legislation for those
involved in ADR processes. However, as noted in NADRAC’s 2009 report The
Resolve to Resolve – Embracing ADR to Improve Access to Justice in the
Federal Jurisdiction, while several federal and State laws impose “good faith”
obligations on participants in ADR processes, there is limited legislative
guidance on the meaning of the phrase in the ADR context. 171 Clearly,
however, a critical issue in any analysis of “good faith” is how it can be
determined that someone has acted in bad faith in ADR processes that are
intended to be confidential and where evidence of what has transpired in an
ADR process would not otherwise be admissible in court proceedings. These
issues of confidentiality, admissibility and practitioner obligations are also
closely related to this topic and require separate consideration. 172
170
Australian Law Reform Commission, Managing Justice – A Review of the Federal Civil Justice System.
(Australian Law Reform Commission, NSW, 2000) p 547.
171
NADRAC, The Resolve to Resolve – Embracing ADR to Improve Access to Justice in the Federal
Jurisdiction Report (prepared for the Attorney-General of the Commonwealth of Australia, September
2009) pp 142–146.
172
th
See Chapter 12, T Sourdin, Alternative Dispute Resolution, 4 ed (2012, Thomson Reuters, Sydney)
which explores the impact of changing obligations on confidentiality.
62
Case Study Information
RESOLVING DISPUTES WITHOUT COURTS
Next Steps
5.39
Your comments about any aspect of this research are invited. The
next steps in the Research Project include:

Adding to the literature review. We are currently surveying other
jurisdictions – Canada, the United States and Europe. We welcome
comments and additions that will help to inform this review.

Regular meetings of the Project Advisory Committee to support the
development of the research Project.

Inviting comments from interested people as well as experts in this area
(April, June and August 2012).

Undertaking file surveys in the Retail Lease areas in NSW and Victoria
(February / March / April 2012).

Undertaking telephone surveys of Retail Lease mediation participants
(March /April / May 2012).

Facilitating focus groups of Retail Lease mediation participants (April /
May / June 2012).

Facilitating focus groups of lawyers involved in Retail Lease mediation
(June / July 2012).

Facilitating focus groups and exploring perceptions of lawyers and
experts in the broader dispute resolution arenas (June/July 2012)

Analysing and cleaning data and considering additional and descriptive
material (August 2012)

Writing up the Final Research Report due for publication at the end of
September 2012.
Concerns, Issues and Next Steps
63