O'Pray v Olbrich
[2012] TASSC 3
•17 February 2012
[2012] TASSC 3
COURT: SUPREME COURT OF TASMANIA
CITATION: O'Pray v Olbrich [2012] TASSC 3
PARTIES: O'PRAY, Stephen George
v
OLBRICH, Benjamin
FILE NO/S: S47/2011
DELIVERED ON: 17 February 2012
DELIVERED AT: Hobart
HEARING DATE: 2 May 2011
JUDGMENT OF: Wood J
CATCHWORDS:
Procedure – Costs – Departing from the general rule – Conduct of parties – Other conduct – Whether magistrate entitled to take into account an informal offer of settlement made in a mediation conference.
Alternative Dispute Resolution Act 2001 (Tas), ss5, 10.
Magistrates Court (Civil Division) Act 1992 (Tas), ss19, 33.
Evidence Act 2001 (Tas), s131.
Magistrates Court (Civil Division) Rules 1998 (Tas), rr86, 138(8), 141(1).
Aust Dig Procedure [585]
REPRESENTATION:
Counsel:
Appellant: A R Cameron
Respondent: A Hay
Solicitors:
Appellant: Tierney Law
Respondent: Murdoch Clarke
Judgment Number: [2012] TASSC 3
Number of paragraphs: 63
Serial No 3/2012
File No S47/2011
STEPHEN GEORGE O'PRAY v BENJAMIN OLBRICH
REASONS FOR JUDGMENT WOOD J
17 February 2012
This appeal concerns a costs order made by Magistrate Mollard after he had heard and determined a claim and counterclaim in the Magistrates Court Civil Division. The defendant, Mr O'Pray, was unsuccessful in seeking a solicitor and client costs order and now appeals that decision. The civil proceedings centred on an agreement that the claimant, the respondent to the appeal, Mr Olbrich, would produce silage and bales of hay from the defendant's pasture. Mr Olbrich's claim sought recovery from the defendant, in the amount that the defendant had agreed to pay for the production of the silage and bales of hay. The silage was spoiled and the counterclaim by the defendant asserted a failure to produce silage of a marketable quality. It is convenient to refer to the parties to these proceedings by reference to their original status in the Magistrates Court as the claimant and the defendant.
The decision was delivered on 9 June 2010 with respect to liability and damages with regard to the claim. Further submissions were invited as to the manner of calculating damages with regard to the counterclaim. After hearing further submissions, a decision was delivered on or about 23 September 2010 with respect to this issue.
The substantive part of the claim with respect to payment for the silage failed, and it succeeded on a minor and uncontroversial aspect of the claim regarding payment for the bales of hay. The sum awarded was $532.40, substantially less than the amount claimed ($6,649.06). The counterclaim succeeded in the sum of $2,970 (amount claimed $14,055.09 on the basis that silage was sold at a reduced price and a loss was incurred). The magistrate adjourned the matter to hear submissions about costs, indicating that, given the claimant failed on the counterclaim and that "almost the entire time was taken up with the issue of the quality and nature of the product, and the hearing of the counterclaim on which issues the claimant failed" that "Perhaps the claimant should pay the defendant's costs of the action on the scale referable to under $10,000 …".
When the matter was before the magistrate it was revealed that offers of settlement had been made at a mediation held on 6 May 2008. The matter was adjourned for submissions and "evidence as to offers". Written submissions were filed on the question of costs. It was agreed that at the mediation an offer was made on behalf of the defendant that the "dispute be resolved on the basis that neither party pay the other in relation to their respective claims and that each party pay their own costs". It is common ground that not only was the defendant's offer rejected but, in fact, the claimant countered with an offer to settle the proceedings on the basis that the defendant pay the claimant's claim in full, together with his costs.
The defendant's written submissions provided to the learned magistrate referred to the fact that the "claimant did not achieve his offer, and the Defendant has bettered his". A submission was made that the appropriate order was that the defendant's costs of the proceedings be paid by the claimant and, of particular relevance to this appeal, that the costs be assessed on a solicitor and client basis from the date of the mediation conference. It was submitted for the defendant that in the circumstances of the case there had been an imprudent refusal of an offer. It was submitted for the claimant that it was not imprudent for the offer to have been rejected, given certain facts outlined in written submissions before the magistrate.
Magistrate Mollard delivered a written decision as to costs on or about 7 January 2011. His Honour rejected the defendant's submission regarding solicitor and client costs. He ordered merely that the claimant pay the defendant's costs of defending the claim and of the counterclaim, based upon the scale referrable to complex actions for sums below $10,000. The defendant now appeals that decision.
As noted, a conciliation conference was convened on 6 May 2008. The defendant's offer to settle the claim is the basis for his application for costs on a solicitor and client basis from the date it was made. His offer to settle was made verbally during the conference, it was not committed to writing or subsequently formalised as an offer of compromise.
In the decision regarding costs, the subject of this appeal, Magistrate Mollard stated that:
"There were no offers of settlement which I am entitled to take into account, assuming I infer correctly that Mr Cameron's submissions refer to offers which took place in the 'confidentiality' of a conciliation conference".
There is no question that the learned magistrate's assumption was correct that the offer was made during a conciliation conference. His Honour went on to refer to the defendant's submission. He referred to the application for costs on a solicitor and client basis as arising pursuant to r138(3). It can be inferred, given the submissions and the Magistrate Court (Civil Division) Rules 1998 ("the MCCD Rules") that this was meant to be a reference to r138(8) of those Rules. Magistrate Mollard commented that he had used this rule only sparingly, and after remarking upon his reason for that, he expressed the following reasons relevant to his rejection of the submission:
"Here, the submission is based upon the allegation that the claimant's refusal to accept an offer of compromise (paradoxically, it is clear there wasn't one) was imprudent. Not only may I not take such an alleged offer into account, but one could attribute the word to the conduct of both parties."
His Honour did not explain the reason why he may not take such an offer into account. His Honour went on to note that the parties had been invited to make further submissions and had agreed that his Honour should, if necessary, proceed to do the best he could on the submissions before him.
The sole ground of appeal is whether, in determining costs, his Honour erred in failing to take into account the offer made by the defendant during settlement discussions at the conciliation conference on 6 May 2008. It is submitted for the defendant that the learned magistrate reached an erroneous conclusion that he could not take such an offer into account. It was argued for the defendant that in the event the appeal is upheld, the matter should be remitted to the learned magistrate for determination of the application for costs according to law. It was submitted for the claimant that in the event the appeal succeeds, it can be seen that the application for solicitor and client costs would have failed before Magistrate Mollard on the merits, and that there has been no "substantial wrong or miscarriage" (Supreme Court Rules 2000, r693(6)). The merits of the application for solicitor and client costs and factors relevant to the exercise of discretion, such as the nature of the offer and the circumstances canvassed in the written submissions, have not been the focus of attention on this appeal. The ground of appeal turns on the narrow point of whether Magistrate Mollard was correct in holding he could not take into account the offer made during the conciliation conference.
An application to extend time to lodge the appeal also falls to be determined. The decision regarding costs was delivered to the parties by post, and the notice of appeal was filed within 14 days of receiving the notice, but not within 14 days of the date of the decision, as required by the Supreme Court Rules, 2000, r684(a). The application missed the expiry date for the appeal by a few days only. The application to extend time was opposed on the basis that the appeal lacked merit. I conclude that the grounds of appeal have sufficient merit to justify an extension of time, in the circumstances of this case. I will make an order accordingly.
There are a multiplicity of issues that arise for such a narrow ground of appeal. They are as follows:
· Does r141(1)(c) of the MCCD Rules, apply to the offer?
· Do the MCCD Rules permit verbal offers to be taken into account in determining whether an order for solicitor and client costs should be made?
· Could the MCCD Rules, r86, apply: was there a final judgment entered before communication of the offer?
· The effect of r86: whether it is an empowering provision that is absolute, or subject to other statutory prohibitions?
· Whether the Alternative Dispute Resolution Act 2001 ("the ADR Act"), s10, applies and over-rides r86?
· Whether an exception in the ADR Act, s10, involving waiver of privilege, applies?
I begin my consideration of this appeal by referring to the relevant statutory provisions regarding costs generally and, more particularly, solicitor-client costs, confidentiality of offers of settlement and statutory provisions limiting or barring consideration of offers, and also provisions dealing specifically with confidentiality of offers made during mediation proceedings.
The general provision as to costs, s33 of the Magistrates Court (Civil Division) Act 1992 ("the MCCD Act") provides:
"33 Costs
(1) The costs of and incidental to all proceedings are in the discretion of the Court and the Court may determine by whom and to what extent the costs are to be paid.
(2) In the due exercise of the discretion conferred by subsection (1), in any proceedings before the Court, the Court may order a practitioner to pay the costs of the proceedings or a portion of the costs."
Section 19 of the same Act is also relevant:
"19 Practice and procedure to be in accordance with rules of court
Subject to any provision made under any other Act, the practice and procedure of the Court is to be in accordance with the rules of court."
The source of the discretion to order costs on a solicitor and client basis is the MCCD Rules, r138(8), which provides:
"138 Entitlement to costs
…
(8) If the Court considers proper cause exists, the Court may order that a successful party is entitled to costs on a solicitor and client basis."
This rule appears in Pt 9 of the MCCD Rules relating to costs and as an exception to the usual order that a successful party is entitled to costs according to the applicable scale set out in the Rules (r138(1) - (6)).
There are provisions regarding consideration by the Court of offers to settle. The MCCD Rules, r86, provides:
"86 Confidentiality of offers and admissions
Any offer or admission made at a directions hearing, conciliation conference, mediation conference or listing conference is not to be communicated to the magistrate hearing the trial of the action until after final judgment."
Rule 141 deals specifically with orders for costs and provides:
"141 Consequences of not bettering offers or payments
(1) In making an order as to costs at a trial, the Court may take the following into account:
(a) an offer of compromise;
(b) a payment into Court;
(c) a refusal or failure to accept an offer or payment.
(2) Unless the Court orders otherwise, if a claimant obtains final judgment for a sum of money equal to or less than the amount of any offer or payment by the defendant –
(a)the claimant is only entitled to costs for a period up to 14 days after the date of service of the offer or the date of the payment into Court; and
(b)following the expiration of that period, the defendant is entitled to costs on the scale applicable to the amount claimed by the claimant.
(3) Subrule (2) does not apply if an offer of compromise is withdrawn."
Rule 138(8) is in the same Part of the Rules as the cost penalty rules which in effect penalise parties for not settling the proceedings, with the purpose of promoting mediation as a means of resolving claims in the Magistrates Court Civil Division. The rules affect a successful claimant's entitlement to costs with reference to the sum awarded in the final judgment compared with the offer made (r141(2)). The cost penalty rules also affect the parties' entitlement to costs when there has been an inadequate offer of compromise (r142), or an excessive claim (r143).
Other relevant provisions are the Evidence Act 2001, s131, and the ADR Act, s10. The ADR Act, s10, provides:
"10 Privilege
(1) In this section, 'mediation session' or 'neutral evaluation session' includes any steps taken in the course of making arrangements for the session or in the course of the follow-up of the session.
(2) Subject to subsection (3), the same privilege with respect to defamation as exists with respect to judicial proceedings and a document produced in judicial proceedings exists with respect to –
(a) a mediation session or neutral evaluation session; or
(b)a document or other material sent to, or produced to, a mediator or evaluator, or sent to, or produced at, a court or a registry of a court, for the purpose of enabling a mediation session or neutral evaluation session to be arranged.
(3) The privilege conferred by subsection (2) only extends to a document or other material produced –
(a) at a mediation session or neutral evaluation session; or
(b) as provided by subsection (2)(b); or
(c) for the disclosure of information as provided by section 11.
(4) Evidence of anything said or of any admission made in a mediation session or neutral evaluation session is not admissible in any proceedings before any court, tribunal or body.
(5) A document prepared for the purposes of, in the course of or as a result of a mediation session or neutral evaluation session, or any copy of such a document, is not admissible in evidence in any proceedings before any court, tribunal or body.
(6) Subsections (4) and (5) do not apply with respect to any evidence or document –
(a) if the persons in attendance at, or identified during, the mediation session or neutral evaluation session and, in the case of a document, all persons identified in the document consent to the admission of the evidence or document; or
(b) in proceedings instituted with respect to any act or omission in connection with which a disclosure has been made under section 11; or
(c) in proceedings instituted in respect of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty; or
(d) in any circumstances where all parties involved in the relevant mediation session or neutral evaluation session agree to the waiver of the privilege; or
(e) if the document was prepared to give effect to a decision taken or an undertaking given in a mediation session or neutral evaluation session."
The Evidence Act, s131, provides, in part, relevant to these proceedings:
"131 Exclusion of evidence of settlement negotiations
(1) Evidence is not to be adduced of –
(a)a communication made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute; or
(b)a document, whether delivered or not, prepared in connection with an attempt to negotiate a settlement of a dispute.
(2) Subsection (1) does not apply if –
…
(h)the communication or document is relevant to determining liability for costs; or …"
A concession is made by the defendant as to the operation of the exception in the Evidence Act s131(2)(h). While it opens the way for a court to take offers into account, it only does so providing there is not a specific prohibition in another statute which applies: see Tony Azzi (Automobiles) Pty Ltd v Volvo Car Australia Pty Ltd (2007) 71 NSWLR 140 at [12], and [22] to [26], Pinot Nominees v Federal Commissioner of Taxation (2009) 181 FCR 392, at [30], Forsyth v Sinclair (No 2) [2010] VSCA 195 at [12], and the Evidence Act, s8. Thus, an exception in the Evidence Act, s131, may only arise for consideration if it is determined that the prohibition in the ADR Act, s10, does not apply to the civil proceedings in this case.
Ordinarily, costs are awarded on a party and party basis unless there are particular circumstances which justify a departure from this practice: Australian Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (No 3) [2002] FCA 1294 at [22]. The power of the court to award costs is an unfettered discretionary power and there is not a closed category of circumstances which justify an order departing from the usual approach of the court: Safeway [22], Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233. If the justification for seeking indemnity costs or solicitor and client costs is non-acceptance of an offer of settlement, the party seeking such costs bears the onus of establishing that the non-acceptance was imprudent or plainly unreasonable: Safeway at [28]. I glean from these authorities the more general proposition that the party seeking the exceptional order faces the task of persuading the court that the particular facts and circumstances before the court warrant the making of an order for the payment of costs on a solicitor and client basis.
On behalf of the defendant it was submitted before Magistrate Mollard, and before this Court on appeal, that the claimant's refusal to accept the defendant's offer made during the mediation conference provided justification for a solicitor and client costs order. It was submitted that the MCCD Rules, r141(1)(c), was invoked and expressly enabled the refusal to accept the offer to be taken into account in determining costs. It was argued that once the refusal to accept the offer was before the court, the MCCD Rules, r138(8), provided the discretion to award costs on a solicitor and client basis.
There is no argument about the fact that the offer by the defendant was not an offer of compromise within the definition of the MCCD Rules. However, it was submitted for the defendant that sub r(1)(c) of r141 was not limited to offers of compromise and extended to the refusal or failure to accept offers or payment generally.
I reject this submission for the reason that it is abundantly clear that r141 is limited to offers of compromise and payments into court. This is clear from reading the rule as a whole, as it is meant to be read, and not sub r(1)(c) in isolation. It is a cardinal rule of statutory interpretation that the words of a statute are to be read in their context, and this contextual approach is to be taken in the first instance and not only in the event of some ambiguity (Busby v Australian Telecommunications Commission (1988) 83 ALR 67 at 71, and the dissenting judgment of Mason J (as he then was) in K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 60 ALR 509 at 514). I conclude that the verbal offer made at the conciliation conference did not fall within r141.
An alternative submission made by the defendant was that if the offer did not fall within r141, the Magistrates Court, having a broad discretion to order costs, was permitted to take into account offers and admissions by virtue of the MCCD Rules, r86. This argument glides over a preliminary point which has not been canvassed in submissions before me. The point is whether, irrespective of r86, the court may take into account verbal offers of settlement and refusal of such offers in determining an application for solicitor and client costs.
It might be argued in support of the claimant's position that as the rules make specific provision for offers of compromise to be taken into account in awarding costs, r141(1), and in light of the comprehensive regime of the cost penalty rules, that it can be inferred that other types of offers are not to be taken into account in determining the issue of costs. Thus, the only offers that could be taken into account for the purpose of costs are offers of compromise by virtue of r141. By specifically permitting offers of compromise to be taken into account it might be argued that it was Parliament's intention that other offers were not intended to be considered in relation to costs.
In having regard to this preliminary point it is noted that there is authority supporting the proposition that informal settlement offers falling outside the procedure specified in the legislation may be considered in the exercise of a broad discretion as to costs: National Mutual Life Association of Australasia Limited v Chris Poulson Insurance Agencies Pty Ltd (No 6) (1998) 8 Tas R 123. See also Azzi at 148.
In Poulson, Slicer J considered the Rules of the Supreme Court 1965, O24A, r11, which made specific provision that a plaintiff is entitled to an order for costs against the defendant taxed on a solicitor and client basis in the event of an offer of compromise made by the plaintiff. It was held that the making of a Calderbank offer and its rejection, without more, might justify a costs order. Although it is also to be noted that the view of Slicer J was that there would be at least strong circumstances militating against such order: at 8. Thus, the court's wide discretion would permit such an offer to be taken into account but, in considering the merits of the application, there are strong reasons why a mere Calderbank offer and its rejection would not provide sufficient basis for a solicitor and client costs order. In simplistic terms it could be said that a solicitor and client costs order is exceptional, and the making of such a costs order on the basis of a refusal of a Calderbank offer, even more exceptional. The reasoning of Slicer J in Poulson could be extended to verbal offers and the MCCD Rules. Noting the decision of Poulson, and noting that the discretion to order costs on a solicitor and client basis is wide, I proceed on the basis, without deciding the point, that the making of an offer falling short of an offer of compromise might, in appropriate circumstances, justify a solicitor and client costs order. I take this approach of not determining a potential obstacle to this appeal, noting the lack of submissions on this point and that, given the outcome of the appeal, it is unnecessary that I do so.
I turn then to consider the effect of r86 of the MCCD Rules. This is a provision regarding offers and provides that they may be communicated after final judgment. "Final judgment" is defined in the MCCD Rules as:
"final judgment means –
(a) a consent judgment; or
(b) any judgment given at the conclusion of a trial; or
(c) any judgment made in the terms of the acceptance of –
(i) an offer of compromise; or
(ii) a payment into Court; or
(d) a summary judgment; …"
It is argued for the claimant that final judgment had not been entered at the time the offer was communicated to the magistrate during the submissions on costs. The defendant relied upon Sirius Shipping Corp v The Ship Sunrise [2006] NSWSC 1393 as support for the proposition that final judgment may be entered with issues such as costs reserved for determination.
The question of the meaning of final judgment is to be determined by reference to the definition provision. There is support for the claimant's position in the definition providing for "any" judgment given at the conclusion of a trial, as it presupposes more than one judgment. There is further support in r86 itself which countenances the magistrate receiving information about an offer at a time after final judgment and when the magistrate was not functus officio. I accept that a final judgment is not limited to judgment entered after all issues have been resolved. I turn to consider the factual question of whether a final judgment had been entered at the time the offer was communicated to the magistrate.
The records kept on the Magistrates Court file for this matter reveal a document described as an "Order" and made on 9 June 2010, as follows:
"(1) Judgment is entered for the claimant on the claim for the sum of $532.40. Judgment is entered for the defendant on the counterclaim for an amount to be assessed."
The counterclaim was later assessed and reasons delivered in writing and sent to the parties on or about 23 September 2010. There is not a similar "Order" on the court file with regard to the counterclaim. The court file does not disclose whether judgment was entered on the counterclaim, but it would be reasonable to assume that that occurred. It is evident from the written reasons that the question of costs was reserved. At the very least there was judgment on the claim before the offer was disclosed to the magistrate. In light of these facts it is appropriate to proceed on the basis that r86 could apply, as the offer was disclosed to the magistrate after final judgment had been entered, but pending resolution of the issue of costs.
The question that then arises is what is the effect of r86? Does the rule permit the court to take into account offers of settlement after final judgment, or does the rule merely create an exception to a prohibition on communicating offers to the magistrate hearing the trial. Put another way, the question is whether the exception in r86 merely removes an obstacle otherwise imposed by r86, but not obstacles imposed by other statutory prohibitions relating to confidentiality of offers of settlement.
I consider that r86 expressly contemplates that the magistrate hearing the trial may be informed about offers or admissions after final judgment. However this rule is not the last word on the issue of whether the court may be informed about such offers after final judgment. Rule 86 is a general provision concerned with not only offers, but also admissions made by parties, and concerned with various stages of civil proceedings not just mediation conferences. It extends to offers made during directions hearings, being case management hearings held by magistrates, as well as other stages of the proceedings. It does not deal with the specific topic of costs or the specific topic of mediation. Rule 86 is a general provision which permits offers or admissions to be taken into account after final judgment in a conditional sense; providing there is not some other prohibition.
Rule 86 would not override other specific statutory provisions prohibiting the court from taking into account such offers. The effect of s19 of the MCCD Act means that the Act is subject to other legislation impinging on the practice and procedure of the Magistrates Court. As noted, r86 is a reasonably broad provision dealing with both offers and admissions made at various stages of civil proceedings and not just mediation proceedings. By comparison, the ADR Act, s10, has a specific and exclusive focus on mediation and neutral evaluation, and s10 makes special provision for confidentiality of offers made during or for the purpose of mediation.
The defendant's submissions regarding the ADR Act were two-fold. First, it does not apply to this case, as the conciliation conference was convened under the MCCD Rules and not the ADR Act. Second, even if the ADR Act, s10, applied it was evident that one of the exceptions applied to the circumstances of this case enabling the offer to be taken into account. Section 10(6)(d) is relied upon and provides:
"(d) in any circumstances where all parties involved in the relevant mediation session or neutral evaluation session agree to the waiver of the privilege; or …"
It was argued that the conciliation conference was convened under the MCCD Rules, the order for conciliation having been made under those Rules and not the ADR Act, s5. The Magistrates Court file contains a "consent order" signed by the solicitors for the parties which provides, merely:
"The Court orders that
The parties have exchanged expert reports and agree that the matter is ready to be set down for mediation".
The ADR Act, s5(1), provides:
"5 Referral by court
(1) A court may, by order, refer a matter arising in proceedings before it (other than criminal proceedings) for mediation or neutral evaluation if the court considers the circumstances appropriate and whether or not the parties to the proceedings consent to the referral.
(2) The mediator or evaluator may, but need not be, a person whose name is on a list compiled under this Act.
(3) The parties to the proceedings may agree as to who is to be the mediator or evaluator for the matter but, in default of agreement, the mediator or evaluator is to be the registrar or his or her nominee."
I make the following observations about the consent order. The order does not make reference to the specific statutory provision pursuant to which the order was made. The order does not explicitly refer the matter for mediation, in terms that reflect s5, but relates to readiness of the matter for mediation. The term "conciliation" in the order falls within the definition of "mediation" in the ADR Act, s3. Arguably, the order is in terms that may qualify as an order under the ADR Act, s5. There are provisions in the MCCD Rules which would more obviously apply and provide power to make the order in the terms made (see r78 for consent orders).
I proceed on the basis that it is not evident that the conciliation conference convened in this case was a consequence of an order under the ADR Act, s5.
The question arises as to whether the ADR Act, s10, applies only to mediations that are ordered under s5 of the ADR Act, or whether it is an over-arching provision having application to mediations ordered under the MCCD Rules and the Supreme Court Rules. Section 10 is not expressed in terms confining it to mediation or neutral evaluation ordered under s5. Section 10 is set out in [22] above. The terms "mediation session" and "neutral evaluation session" are defined in s3 as follows:
"mediation session means a meeting arranged for the mediation of a matter under this Act;
…
neutral evaluation session means a meeting arranged for the neutral evaluation of a matter under this Act; …"
The terms "mediation" and "neutral evaluation" are defined:
"(2) In this Act –
mediation, which includes conciliation, means a structured negotiation process in which the mediator, as a neutral and independent party, assists the parties to a dispute to achieve their own resolution of the dispute.
(3) In this Act –
neutral evaluation means a process of evaluation of a dispute in which the evaluator seeks to identify and reduce the issues of fact and law that are in dispute."
The ADR Act makes provision for topics regarding mediation, as well as referrals, for mediation by the court such as: a provision that parties may agree to and arrange mediation otherwise than under the Act, costs of mediation, giving effect to agreements arising from mediation by court orders, a provision that the Chief Justice and Chief Magistrate may compile a list of persons considered to be suitable mediators, confidentiality of mediations, the obligation of mediators or evaluators not to disclose information obtained in connection with mediation, immunity of mediators from liability, and provision for rules of court.
These provisions of the ADR Act are not expressed as confined to mediations resulting from an order in s5. The provisions relate to "mediation" and "neutral evaluation" and the definition of these terms in the Act are wide enough to encompass conciliations convened under the MCCD Rules or the Supreme Court Rules.
The ADR Act, s5, has the effect of enlarging the powers of the Magistrates Court and the Supreme Court. In particular, the ADR Act grants power to courts, as defined, to refer matters to mediation whether or not the parties consent. By s5, tribunals falling within the definition of "court" under the ADR Act are also empowered to make orders referring the matter for mediation.
It might be argued that because the Supreme Court Rules contain similar provisions to the ADR Act, compelling mediation (r518, and confidentiality (r520), it would not have been Parliament's intention for the ADR Act to apply to Supreme Court proceedings and therefore its application is confined. In fact, the contrary intention is revealed by a consideration of the history of the ADR Act. The historical context reveals that the ADR Act was enacted subsequent to a decision of Burke v Humphrey [2000] TASSC 178 which considered the Supreme Court Rules, r518. That rule provided for proceedings to be referred for mediation "notwithstanding the lack of consent of any party". It was held by Cox CJ that the rule was ultra vires. Subsequently, the ADR Act was enacted, and by s5, provided for compulsory mediation. The overlap of the provisions of the Supreme Court Rules or the MCCD Act, or the MCCD Rules, with the provisions of the ADR Act, is not a reliable indicator that the ADR Act was not intended to have over-arching application.
The provisions in the ADR Act regarding topics such as confidentiality and immunity are not expressed to be confined to mediation or neutral evaluation ordered under s5. Rather, these provisions apply to mediation or neutral evaluation as defined in the ADR Act. As noted these terms are defined sufficiently broadly to have application to conciliation conferences or mediation under the MCCD Rules or the Supreme Court Rules. Regardless of whether the conciliation conference was a consequence of an order under s5 of the ADR Act, or MCCD Rules (eg, rr78, 80), is not a material consideration in determining the application of s10 of the ADR Act. Section 10 applies to mediations as defined and is not confined to mediations ordered pursuant to s5 of the Act. The conciliation conference that was convened in this case fell within the definition of "mediation". The exceptional situation where the parties agree to and arrange for mediation otherwise than in accordance with the ADR Act, s4, does not apply here, as there was no such agreement.
The consequences of the approach that the ADR Act, s10, is an over-arching provision and applies to mediations ordered or convened under the MCCD Rules and the Supreme Court Rules, as well as mediations referred under s5 of the ADR Act, produces uniformity and certainty for the parties on matters such as confidentiality. Otherwise, differences of significance would flow from whether a court ordered mediation pursuant to s5 of the Act, or pursuant to the MCCD Rules. It can be ascertained from the terms of the ADR Act that uniformity was intended by Parliament. Parliament's intention in this regard is evident from the following provisions of the ADR Act :
"3 Interpretation
(1) In this Act, unless the contrary intention appears –
court means –
(a)the Supreme Court or the lower courts within the meaning of the Magistrates Court Act 1987; or
(b) a tribunal prescribed by the regulations; …
…
9 Mediators and evaluators
(1) The Chief Justice and the Chief Magistrate may compile a list or lists of persons considered to be suitable to be mediators for the purposes of this Act.
(2) The Chief Justice and the Chief Magistrate may compile a list or lists of persons considered to be suitable to be evaluators for the purposes of this Act.
(3) Different lists may be compiled for different types of matters or to take account of any other factors.
(4) A person may be included in a list under this section only if –
(a) the person consents to being included in the list; and
(b) the person agrees to comply with this Act.
(5) The Chief Justice and the Chief Magistrate may amend or revoke any list compiled under this section for any reason that he or she considers appropriate.
(6) The Chief Justice and the Chief Magistrate must review at least annually any list compiled under this section.
…
13 Rules of court
For the purposes of this Act, rules of court may be made under the Supreme Court Civil Procedure Act 1932 or the Magistrates Court (Civil Division) Act 1992."
There remains the question of the conflict between the MCCD Rules, r86, and the ADR Act, s10. As previously noted r86 applies subject to other legislation. The words in the MCCD Act, s19, "subject to any provision made under any other Act", reveal that it was intended that other legislation, such as the ADR Act, should be treated as dominant.
I also note that treating r86 as subordinate to the prohibition in the ADR Act, s10, is in accordance with the principle of statutory interpretation that where there is a conflict between general and specific provisions, the specific provisions prevail (generalia specialibus non derogant). See Smith v R (1994) 181 CLR 338 at 348. The ADR Act, s10, is a more specific provision than r86, dealing with offers made at a specific stage of proceedings, during mediations. By comparison, r86 does not deal exclusively with mediation. It deals with various stages of the proceedings and stages where concerns about confidentiality would not apply. In accordance with Commercial Radio Coffs Harbour Ltd v Fuller (1986) 161 CLR 47 per Gibbs CJ and Brennan J (as he then was) at 50, an empowering provision in one enactment, such as the MCCD Rules does not have the effect of authorising contravention of another law, in this case the ADR Act, s10.
It was submitted on behalf of the defendant that if the ADR Act, s10 applied to proceedings under the MCCD Rules, it would conflict with r141(1) enabling offers of compromise and payments into court to be taken into account, as well as the refusal or failure to accept an offer or payment. It was argued that if s10 over-rides this rule and offers of compromise and payments into court could not be taken into account, that would deprive the cost penalty rules of any operation. It was submitted that such a consequence would be contrary to the intention of Parliament.
I note that r141 is specific in its terms and, applying the principle of statutory interpretation that I have referred to, may well dictate that r141 would overrule the more general provision in the ADR Act, s10. It may be inferred that the special provisions in the cost penalty rules, including r141, were intended exhaustively to govern their particular subject matter: Refrigerated Express Lines (A/Asia) Pty Ltd v Australian Meat and Live-stock Corporation (1980) 29 ALR 333 at 347.
The consequence of the approach I have adopted means that the ADR Act applies to civil proceedings and complements the MCCD Act and Rules. That is not at odds with the terms of the ADR Act. As noted it can be gleaned that this consequence was within the contemplation of Parliament.
The second argument regarding the ADR Act is that the exception in the ADR Act, s10(6)(d), applies and that the parties agreed to waive privilege. Significantly, this assertion of fact that there was agreement to waive privilege was not made by the claimant on the costs application before Magistrate Mollard.
It is conceded that there was no express waiver of privilege by the claimant. It was submitted on appeal that an agreement to waive privilege by the claimant could be inferred. In light of the materials before Magistrate Mollard, it was not evident that the claimant or his solicitor had agreed to waive privilege. The appeal papers reveal that in a written submission on costs dated 17 November 2010, counsel for the defendant attached a letter from the solicitor for the claimant which showed that the fact of the defendant's offer and the terms of the offer were agreed. It is apparent that the details of the offer were provided by the defendant in response to a request from the magistrate after there had been mention by counsel of offers made by the respective parties but no details. The defendant's purpose in placing the correspondence before Magistrate Mollard on the costs application was merely to establish the terms of the offer. A letter of submissions from the claimant's solicitor dated 1 December 2010 referred to the written submissions for the defendant. This reference to the submissions without objection, may be regarded as no more than a concession that the details of the offer, already provided to the magistrate, were correct. Notably, the claimant's letter also contained the submission that the court was not "entitled to take into consideration an offer made at a conciliation conference that was not subsequently converted into an offer of compromise".
The question is not whether I could now draw an inference of agreement to waive privilege, but whether the learned magistrate was correct in not considering this exception in s10(6)(d). There was no assertion by the defendant, direct or oblique, that the claimant had agreed to waive privilege. As a consequence, there has been no practical opportunity for the claimant to refute any suggestion of such agreement. Waiver is a new point that is being raised for the first time on this appeal. In fact, there were no submissions at all before the Magistrate about the ADR Act. It is to be remembered that the defendant, seeking an exceptional order of solicitor and client costs, has to show justification for the order. Moreover, the justification should be articulated and it is not for the court deciding the costs application to try and divine some unsaid foundation for the order.
In the circumstances before the magistrate at the time of his ruling on costs, the exception in s10(6)(d) did not arise. There was no reliance on the exception, no concession made, and no factual finding by the magistrate that it applied. The learned magistrate was correct to hold that he could not take into account the offer of settlement, given the prohibition in s10, and that the relevant exception did not arise.
In light of my conclusion that the ADR Act, s10, precluded the taking into account of the offer of settlement, there is no need to consider s131(h) of the Evidence Act. The learned magistrate did not err in his approach and the appeal must fail.
For the reasons I have given, the orders I make are that the time for lodging the notice of appeal be extended until 25 January 2011, and that the appeal be dismissed.
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