DISTRICT COURT OF QUEENSLAND

1. [1]
   The first and second defendants are lawyers who advised the plaintiffs in relation to the sale of a property. The transaction involved provision of vendor finance to the purchaser company secured by the personal guarantee of a director. The purchaser company defaulted and proceedings were instituted against it and the guarantor. The guarantor was declared bankrupt and the company went into liquidation. The plaintiffs’ judgment against the purchaser remains unsatisfied.

2. [2]
   The plaintiffs claim the defendants either breached their retainer or were negligent in their advice on that transaction. They claim damages comprised of the funds advanced to the purchaser plus interest and the costs of recovery proceedings.

3. [3]
   The plaintiffs and the defendants bought applications which were heard together. Each party opposed the other’s application. The plaintiff applied for an order dispensing with the defendant’s signature on the Request for Trial Date and for dates to be fixed for the trial. The defendants sought orders the plaintiffs disclose any costs agreements with the lawyers engaged in the recovery proceedings and orders directing the parties to mediate. The applications raise three issues:

• Whether the parties should be directed to mediation despite the objection of a party.
• Whether the client costs agreements are directly relevant to any issue in the proceedings.
• Whether the request for trial date should be dispensed with and dates for trial fixed.

Mediation

4. [4]
   The defendants contend all reasonable prospects of settlement have not been properly explored and a skilled mediator could assist the parties to resolve all matters in dispute between them. The male plaintiff is the only active party, the female plaintiff having assigned to him her right and interest in the litigation. Mr Skalski is opposed to mediation and contends it would be futile and a waste of resources.

5. [5]
   Mr Skalski’s attitude to mediation is not determinative. He does not contest the Court’s power to refer a dispute for mediation without the consent of all parties. (s 97 District Court of Queensland Act (1967) and r 320). 

6. [6]
   The circumstances in which a non-consensual referral may be made are not prescribed. The objects of Part 7 of the District Court of Queensland Act provide some guidance (s 89).  They are:

1. to provide an opportunity for litigants to participate in ADR processes in order to achieve negotiated settlements and satisfactory resolution for disputes; and
2. to introduce ADR processes into the Court system to improve access to justice for litigants and to reduce cost and delay; and
3. to provide a legislative framework allowing ADR processes to be conducted quickly, and with as little formality and technicality as possible; and
4. to safeguard ADR processes –
   1. by ensuring they remain confidential; and
   2. by extending the same protection to participants in an ADR process they would have in a dispute before the District Court.

7. [7]
   Those objects indicate a legislative intention to promote timely resolution of disputes and reducing the costs and delay of an oral hearing, where appropriate.

8. [8]
   The factors relevant to the Court’s discretion to make a non-consensual referral have been canvassed in previous decisions of this Court, including Barrett v Queensland Newspapers and Stevenson v Landon Pty Ltd. 

9. [9]
   In Landon (at [12]), Newton DCJ enumerated the following as the factors identified by Samios DCJ in Barrett which favoured referral:

i.That he could not conclude the mediation would be unsuccessful;

ii.The estimated length of trial would be 10 days;

iii.Three of the four parties were prepared to engage in mediation;

iv.One had offered to pay another parties costs of the mediation;

v.That it is of the essence of mediation that a third party may be able to assist the parties to reach agreement to resolve the dispute;

vi.The application had been made early in the action before substantial costs had been incurred;

vii.There is a risk in litigation, and even though a party may wish to engage in litigation notwithstanding such risk, the implication of the ADR provisions of the Act are that other parties ought not to be put at risk; and

viii.A suitable mediator with the necessary skill could be appointed to be the mediator.

10. [10]
    In Barrett, those factors favoured the referral.  In Landon, his honour concluded consideration of those factors in the circumstances of that case did not favour referral where one party had a clearly stated preference to continue with the litigation.

11. [11]
    Barrett and Landon identify factors of particular relevance in the circumstances of those cases.  Neither judgment purports to exhaustively recite matters to which a Court may have regard. In exercising the Court’s discretion I have been guided by what appears to me to be in the interests of justice in this case, bearing in mind the Court’s overriding obligation to apply the rules so as to avoid undue delay, expense and technicality and to facilitate the purpose of the rules.  That is to facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense.  (r 5)

12. [12]
    For the reasons which follow, I have concluded that this is a case which should be referred to mediation despite Mr Skalski’s objection.

13. [13]
    I am not persuaded that there is little prospect of success if this matter is referred to mediation. The nature of the issues alive in this case in themselves would not preclude a mediated outcome. It is not an all or nothing case. Both causation and damages are in contest and, even if the matter cannot be completely resolved, mediation may well narrow the scope of the dispute. There are no broader public interest issues which would militate against a private settlement. Further, in recent correspondence, Mr Skalski has signalled his ongoing willingness to negotiate by inviting settlement offers from the defendants. This is somewhat at odds with the professed futility of mediation.

14. [14]
    Mr Skalski’s current reluctance to mediate is not necessarily a good indication of the prospects of settlement. No party can be forced to reach agreement but they can be directed to participate reasonably and genuinely. More importantly, a skilled mediator can promote meaningful involvement. Mr Skalski’s invitation of further settlement offers indicates he is not intransigent or unwaveringly set upon a course for trial.

15. [15]
    Whilst there has been one unsuccessful settlement meeting, it is evident Mr Skalski did not seriously engage in the discussions. He was present in the room for only half an hour and left the building after a further 30 minutes. This case can also be distinguished from those which proceed under prescriptive legislative regimes directed to identifying, narrowing and resolving issues before matters can proceed. This appears to have been a factor of some significance to Newton DCJ in Landon. 

16. [16]
    These proceedings have had a relatively short and straightforward history if the Court record is any indication. The claim was filed in October of 2007 and these are the only interlocutory applications which have been made. Once the remaining issue of disclosure is resolved, there are no outstanding interlocutory issues which would hinder mediation. The substantial expense of preparing for trial has not yet commenced. Preparation for and participation in mediation does involve a potential risk of wasted expense if it proves unsuccessful. Against that, some of the work which will be involved in preparing for mediation will, in any case, be necessary to prepare for trial. Even if it is entirely unsuccessful, the risk of wasted expenditure is one both parties bear and the plaintiffs are exposed to no greater prejudice. A three day trial is certainly not a lengthy trial, yet the expense of a trial is significant in the context of the size of the claim. Mr Skalski‘s willingness to bear the risk of litigation should not consign the defendants to unwillingly assuming it as well, when there are positive indications for a mediation.

17. [17]
    Finally, there is another unresolved dispute between Mr Skalski and the defendants. The defendant’s costs in proceeding 186/2003 have not yet been assessed. The defendants are willing to include that dispute in the mediation. The opportunity to resolve all matters in dispute between the parties in one process is only available through mediation and is another factor weighing in favour of the defendant’s application.

18. [18]
    There is no suggestion that the request for mediation is a delaying tactic to prevent the matter proceeding to trial. It is unlikely that trial dates could be fixed much before March 2009. The solicitor for the defendants readily conceded trial dates could be fixed now with the mediation taking place in the interim. Despite Mr Skalski’s reluctance to mediate, this is a matter which is suitable for referral.

Disclosure

19. [19]
    The defendants seek an order requiring the plaintiffs to disclose their client costs agreements with the solicitors who represented them in proceedings to recover the loan from the purchaser. Mr Skalski argues any such agreements are not directly relevant to any issue in the proceedings (r 211). A document is directly relevant if it is or contains something that tends to prove or disprove an allegation in issue (Robson v REB Engineering Pty Ltd; Mercantile Mutual Custodians Pty Ltd v Village/9 Network Restaurants & Bars Pty Ltd.

20. [20]
    The defendants contend the costs agreements are directly relevant to proving what amount the plaintiffs were required to pay their lawyers in pursuing the action against the purchasers. They argue that, pursuant to the legislative regime which then applied to recovery of legal costs, if there is no client costs agreement the plaintiffs would have been required to pay costs assessed against the Court scales not those fixed by agreement. If the plaintiffs have paid more than they were obliged to they may have failed to mitigate their loss, leading to a reduction in damages awarded to them. As such the agreements are directly relevant to an allegation in issue, what damages were suffered as a result of the alleged breach or negligence of the defendants. The plaintiffs should disclose the client costs agreements, if any.

Fixing Trial Dates

21. [21]
    The plaintiffs’ representative signed the request for trial dates when there was still a dispute about disclosure. As such that document is affected by an irregularity (r 371). Until the order to disclose is complied with, the irregularity will not be remedied.

22. [22]
    The scope of outstanding disclosure is confined to a few documents. There is no reason to believe that step cannot be taken promptly. Neither party asserts there are further interlocutory matters which should delay the trial. Subject to disclosure, there is no impediment to the matter proceeding to trial. The matter could be listed for mention at a call over scheduled for 24 November 2008 so that trial dates can be allocated. Fixing trial dates will not prejudice the mediation, which can proceed in the interim before trial. These seem appropriate circumstances in which to exercise the Court’s powers to fix trial dates (r 476(2)).

23. [23]
    My orders are:

a)On or before 23 November 2008 the plaintiffs disclose to the defendant any client costs agreements relating to the costs claimed by the plaintiffs in paragraph 23 of the Statement of Claim.

b)Subject to compliance with the order to disclose, this matter is listed for mention at the next civil call over (scheduled for the 24^th of November 2008) so that trial dates may be allocated.

c)The plaintiffs and the defendants are directed to attend, participate in and act reasonably and genuinely in mediation.

d)The mediator must be selected by the parties.

e)The plaintiff must provide the mediator with all relevant documents.

f)The mediator must be informed of their appointment by the plaintiffs.

g)The period of mediation is fixed at a maximum of one day unless the parties agree to extend it.

h)The parties must negotiate a fee with the mediator.

i)The parties must equally bear the costs of the mediation.

j)The parties must pay their share of the costs as soon as practicable after the mediation.

k)If the mediation has not been completed within three months of this referring order the parties must provide a report to the Registrar setting out the circumstances of the matter.