Order 2 Rule 11 of the ADR Rules 2022 is headed simply “Bad faith”, and it has teeth.
Rule 11(1)
Where a party fails to discharge any of that party’s duties under Order 2 rule 10, the mediator may issue a bad faith certificate in Form 3D of Schedule 2 and a copy of the certificate shall be furnished by the mediator to all parties.
Take such steps as may be necessary to ensure that the mediation conference occurs as soon as possible; participate in good faith and not impede the mediator; focus on finding a solution and refrain from engaging in legal debates or arguments; attend in person unless granted leave otherwise; and attend with full authority to settle — or, for a corporation, send an officer who has it.
See what happens at a mediation for the full list, including the six duties imposed on lawyers by Rule 10(9).
Order 2 Rule 12(3) expressly removes protection from non-attendance of a party at mediation, non-compliance with orders or directions, failure to meet any of the requirements of these Rules, and a refusal by a party to sign a record of a mediated result.
So the mediator may tell the Court what happened. The usual protection for what is said at a mediation does not shield conduct. See confidentiality.
Rule 11(2)
Where the Court is satisfied that a party has not participated in good faith in the mediation or has impeded the mediation or has otherwise failed to meet that party’s obligations under a mediation order or agreement, the Court may order —
(a) the dismissal of the proceeding; or
(b) the striking out of a defence and enter judgment; or
(c) the striking out of a defence to a cross-claim and enter judgment for a plaintiff or cross-claimant; or
(d) that any claim for relief by the defaulting party is stayed until further order;
(e) costs on an indemnity or lawyer and client basis; and or
(f) such further or other orders as it may consider appropriate in the circumstances and in the proceeding.
| Defaulting party | Principal exposure |
|---|---|
| Plaintiff | Dismissal of the proceeding — para (a) |
| Defendant | Defence struck out and judgment entered — para (b) |
| Cross-defendant | Defence to cross-claim struck out, judgment for the cross-claimant — para (c) |
| Any party seeking relief | Claim stayed until further order — para (d) |
| Any party | Indemnity or lawyer and client costs — para (e) |
Paragraphs (a) to (c) end the case, or the party’s side of it, without a trial on the merits. They are the same consequences that follow the most serious breaches of orders under Order 12 Rule 1 and the dismissal power in Order 12 Rule 40.
The message of Rule 11 is that a court-ordered mediation is an order of the Court like any other.
Rule 11(3)
The Court shall not make an order under subrule (2)(a) to (e) unless the Court has heard the parties as to why any of those heads of relief should not be granted.
A bad faith certificate does not decide anything. It puts the matter before the Court, and the party affected is entitled to be heard before any of paragraphs (a) to (e) is ordered.
Prepare properly for that hearing. An affidavit from the person who was, or should have been, at the mediation should explain what happened, why, and what the party has done since. Evidence of a genuine subsequent attempt to engage carries weight; assertions from the bar table do not.
Practical steps
- Diarise the mediation date from the mediation order, and note the two-month object in Rule 9(2) and the return date fixed by the order.
- Identify who will attend early. For a corporation it must be an officer having full authority to settle; where an insurer controls the defence, an officer of the insurer with that authority must attend each session.
- Obtain the settlement authority in advance and in terms wide enough to be useful. This is the single most common cause of a wasted mediation.
- Apply in advance if attendance in person is impossible. Rule 10(6) allows telephone, video link or other telecommunication with leave of the Court or the mediator, in consultation with the other parties — sought before the day, not on it.
- Brief the client on Rule 10(3) — the parties are to focus on finding a solution and refrain from engaging in legal debates or arguments.
- If you cannot attend, tell the mediator and the other parties immediately, in writing, with the reason. Silence is what produces a Form 3D.
Rule 10(7): where a person representing a group fails to attend after having had due notice, or fails to participate in good faith either by walking out of the mediation or otherwise impeding it, the group may if they so choose, proceed with the mediation and any agreement reached at the mediation shall be binding on the absent representatives or persons.
An absent representative may therefore find the group has bound them. See representative proceedings.
Rule 10(10): a lawyer who represents a party and does not attend and meaningfully participate in a mediation process is precluded from providing any advice that operates against a mediated agreement or proposed mediated agreement.
Sources
- Alternative Dispute Resolution Rules 2022 — O 2 rr 9–12; Sch 2 Form 3D
- National Court Rules 1983 — O 12 rr 1, 40; O 22
- National Court Act (Chapter 38) — s 7B
The ADR Rules 2022 are on PacLII as a PDF only.
Before relying on anything here, read the current text of the National Court Rules 1983 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.