[2015] ACTSC 187

PROCEDURE - referral to mediation under court order - non-compliance by plaintiff with court order in relation to payment of mediation fee - plaintiff required to show cause why proceedings should not be dismissed - impecunious plaintiff - failure by solicitors for plaintiff to raise plaintiff's circumstances and impecuniosity - undertaking by solicitors for plaintiff to pay mediation fee and relevant costs of defendant - proceedings not dismissed - application to vary orders in relation to mediation dismissed

Human Rights Act 2004 (ACT)

Social Security (Administration) Act 1999 (Cth)

Court Procedures Rules 2006 (ACT)

White v Overland [2001] FCA 1333

1. It is now routine for matters commenced by originating claim in the Supreme Court to be subject to some form of alternative dispute resolution, most commonly mediation, prior to being heard. The Court administration arranges for private sector mediators to be available in two week blocks during which mediations, usually of no more than half a day each, can be undertaken. Many matters settle as a result of this mediation process. Because of the block listed nature of the mediations and the fact that they are conducted as part of a Court facilitated process, the costs of the mediator to parties are significantly lower than if the parties were left to arrange their own mediation with a privately engaged mediator.

2. As part of the standard directions that are made when a matter is referred to mediation is an order that the parties pay, in equal shares, the mediator's fees. If parties do not pay those fees then they are in breach of the direction of the Court and the matter is relisted in order to deal with their non-compliance. It is usual that parties who are in default will have rectified their non-compliance with the Court's orders by the date on which the matter is relisted to deal with their non-compliance.

3. In the present case the plaintiff failed to pay his share of the mediator's fee namely a sum of $750 by the required date and also failed to rectify his non-compliance with the orders of the Court by the date on which the proceedings were listed to deal with his non-compliance. As a consequence he was directed to show cause why the proceedings should not be dismissed because of that non-compliance. He foreshadowed that he may wish to have the original order for mediation amended and was directed to file any application to that effect.

4. The issues that arise are whether or not the proceedings should be dismissed due to the plaintiff's non-compliance and whether or not the orders made in relation to the payment of the mediation fee should be varied as sought by the plaintiff.

5. It is, unfortunately, necessary at the outset to outline some obvious propositions:

(a) The directions made are orders of the Court.

(b) The power to give directions is fundamental to the proper management of cases and hence to the administration of justice.

(c) Compliance with directions is essential in order to meet the goals of r 21 of the Court Procedures Rules 2006 (ACT) (the Rules) namely the just resolution of the real issues in the proceedings with a minimum of delay and expense.

(d) Lawyers representing clients in the Court have a professional duty to assist their clients to fulfil their obligations under this rule. That involves them conducting themselves honestly and professionally in the light of the recognition that: 'Litigation is not a game. It is a costly and stressful, though necessary, evil' (White v Overland [2001] FCA 1333 at [4]).

(e) The fact that a lawyer's client may be impecunious is not a factor which reduces his or her professional obligations either to the client or to other parties to proceedings.

6. In order to address these two issues it is necessary to understand more about the nature of the case and the history of the proceedings so far as they are relevant to the directions made in relation to mediation.

7. The proceedings were commenced on 26 February 2014 by originating claim. The statement of claim alleges that the plaintiff was unlawfully arrested and wrongfully imprisoned. It also alleges that the defendant breached a duty of care to the plaintiff. The factual matter of significance alleged to give rise to these two causes of action is the allegation that a judge of this Court made orders varying the plaintiff's bail conditions but the plaintiff was told that he was not required to sign a document varying his bail conditions and the Australian Federal Police was not notified that the plaintiff's bail conditions had been varied. Having regard to the evidence that was put before me for the purposes of this application as to the nature of the case and the damage suffered, the proceedings appear to be proceedings which, but for the invocation of s 18(7) of the Human Rights Act 2004 (ACT), would be well within the jurisdiction of the Magistrates Court. While I was invited by counsel for the defendant to form a view in relation to the merits of the causes of action that had been pleaded I have not formed a view about the proceedings other than that they are not manifestly unarguable.

8. At the time of the commencement of the proceedings the Deputy Registrar authorised the waiver of the filing fee on the basis of an application made by the plaintiff. That application was supported by a standard form affidavit witnessed by the plaintiff's solicitor.

9. On 21 March 2015 the solicitor for the plaintiff wrote to the solicitor for the defendant indicating that she was instructed to seek orders that a private mediation occur between the parties before June 2015. The solicitor for the defendant responded indicating the defendant's preference for a Court ordered mediation process.

10. On 23 March 2015 solicitors for the plaintiff and the defendant appeared before the Deputy Registrar and the bench sheet recorded that the parties were discussing mediation. At that point the proceedings were adjourned until 30 March 2015 at 9.30 am.

11. On 30 March 2015 both parties were represented by solicitors and the plaintiff sought an order that the matter be mediated in a court facilitated mediation. The defendant consented to that order. The Deputy Registrar made directions in relation to the service of evidence, referred the proceedings to a mediation on 5 August 2015 and made eight standard orders in relation to the conduct of the mediation. The plaintiff was required to serve his liability and quantum evidence by 11 May 2015. Included in the orders relating to mediation was an order as follows (order 6):

The costs of the mediation are to be costs in the cause. The mediator's fees are payable by the parties in equal shares. The mediator's fees are to be paid directly to the mediator by the parties by 22 JUNE 2015.

12. The Deputy Registrar also listed the proceedings for hearing in the central civil list commencing on 12 October 2015 and made directions relating to that hearing.

13. On 21 April 2015 the solicitors for the plaintiff wrote to the plaintiff notifying him that the matter had been listed for a mediation on 5 August 2015 and asking him to transfer $750 into their trust account at his earliest convenience.

14. In an email communication between the solicitors on 21 May 2015, the solicitor for the defendant made reference to the fact that the fee was payable to the mediator in the next month. On the same day the solicitor for the plaintiff responded: 'We are instructed to proceed with the matter and the mediation on 5 August 2015 ...'

15. On 1 June 2015 the solicitors for the plaintiff served a report of a clinical psychologist, Mr Greg Aldridge, dated 27 May 2015. The service of the report was therefore outside the timetable set down by the Deputy Registrar. The report included the following summary of the plaintiff's position:

1. Mr Monahan [sic] is an Indigenous man from a very dysfunctional background. He was subject to violence and abuse as a child. He also appears to be of low intelligence.
2. In his teenage years he began abusing marijuana and alcohol. This resulted in many crimes and incarceration for many years. In his early twenties he developed psychotic symptoms which were later diagnosed as chronic schizophrenia.
3. His life has been characterised by: multiple trauma, violence, drug and alcohol abuse, incarceration, unemployment and few stable relationships.

16. In relation to the formal diagnosis of the plaintiff and its causal connection to the incident alleged in the pleadings the report provided:

1. Most probably Mr Monahan [sic] suffers a formal diagnosis of an [sic] Schizophrenia. This condition is unrelated to the incident.

1. His brief incarceration was unpleasant and anxiety provoking. However it did not have any lasting effect on his mental state or life style.

17. The Acting Registrar gave notice to the solicitors for the plaintiff on 24 June 2015 that the proceedings were relisted before me on 7 July 2015 because of the failure by the plaintiff to pay his proportion of the mediator's fee directly to the mediator by 22 June 2015.

18. By letter dated 30 June 2015, having received the listing notice in relation to the non-payment of the mediation fee, the plaintiff's solicitors wrote to the defendant's solicitors requesting that the defendant pay the plaintiff's share of the mediation fee or that 'we will seek instructions to set aside the order that the parties attend [a] mediation'.

19. The proceedings were before me on 7 July 2015. No affidavit or other evidence was put before the Court on that day to explain, excuse or justify the failure of the plaintiff to comply with the Court's order of 30 March 2015.

20. On that date I ordered that the proceedings be listed on 16 July 2015 so that the plaintiff could show cause why the proceedings should not be dismissed under r 1404 of the Rules because of the plaintiff's failure to comply with directions of the Court. The power to take such a step is articulated in r 1404(4) of the Rules which provides that the Court may act under that rule either on application by a party or on its own initiative. I directed that any affidavit or other evidence to be relied upon by the plaintiff be filed and served by 10 July 2015. Further, because the solicitor appearing for the plaintiff indicated that her client wished the orders of the Court made on 30 March 2015 to be varied, I directed that any such application be filed and served by 10 July 2015 and supported by an affidavit of the solicitor responsible for the carriage of the plaintiff's case disclosing the circumstances surrounding the plaintiff's failure to comply with the directions made on 30 March 2015. I also made orders in relation to costs.

21. Notwithstanding that the plaintiff was required to file his application and any evidence by 10 July 2015 the plaintiff only filed his application and evidence as follows:

(a) 13 July 2015: affidavit of the plaintiff affirmed 8 July 2015;

(b) 15 July 2015: application in proceeding dated 15 July 2015 and affidavit of the solicitor for the plaintiff affirmed 15 July 2015.

The solicitor with carriage of the matter on behalf of the defendant filed an affidavit on 14 July 2015.

22. The solicitor for the defendant had requested by email information as to whether she should expect any application or evidence on 10 July 2015 pursuant to the orders that I made on 7 July 2015. The next day (a Saturday) the solicitor for the plaintiff responded that some documents were filed with the Court on Friday but she had not received any sealed copies back. The reference to the documents that were filed on Friday must be a reference to the affidavit of the plaintiff affirmed 8 July 2015. It is notable that there was no reference in the email of the solicitor for the plaintiff to the application that was ultimately filed or the affidavit in support of that application.

23. On 13 July 2015 the solicitors for the plaintiff wrote to the solicitors for the defendant indicating that Mr John Purnell SC had advised that he was willing to conduct a private mediation at no cost to the parties on 5 August 2015. The letter asked that the defendant's solicitors obtain instructions in relation to that proposal urgently. Also on 13 July 2015 the solicitors for the plaintiff wrote a letter requesting an answer to the proposal put in the letter of 30 June 2015 that the defendant pay the plaintiff's share of the costs of the mediation.

24. On 14 July 2015 the solicitors for the defendant indicated that the defendant did not agree to pay the plaintiff's share of the mediation fee or to pursue the proposal for a private mediation conducted by Mr Purnell SC. The solicitor who appeared for the plaintiff at the hearing before me on 16 July 2015 said that she believes Mr Purnell 'is a qualified mediator'. Mr Purnell, who happened to be present in Court during part of the hearing before me on 16 July 2015, arranged for the parties and the Court to be informed that 'he is not a registered mediator'.

25. On 14 July 2015 the solicitor for the plaintiff wrote a lengthy email to the solicitor for the defendant proposing a number of matters:

(a) the possibility of an informal settlement conference on 5 August 2015;

(b) the possibility of deferring the payment of fees to the mediator, as had been done in a previous matter in which the mediator had agreed to the deferment of her fees until the conclusion of the proceedings, but noting that such a course 'would place the mediator in a difficult position';

(c) the possibility that a 'neutral evaluation' be conducted by 'Mr Stan Grant (journalist)' under rule 1179 of the Rules;

(d) the advice from the Public Trustee for the ACT (who controls the plaintiff's finances) that the $750 fee could be paid only at the rate of $14 per fortnight.

26. The email stated that in the event that the defendant was 'not agreeable to the above suggestions' then an application would be made to vary the Court's orders so that the defendant pay the plaintiff's share of the mediator's fee on the basis that the plaintiff will reimburse the defendant by fortnightly payments of $14 over the period of 27 months to be paid by the Public Trustee on behalf of the plaintiff.

27. In relation to this email, I have not overlooked the fact that the suggestion that a journalist be appointed a neutral evaluator under r 1178 for a neutral evaluation under r 1179 appears, in the absence of some further explanation, to reflect, at best, a complete misunderstanding of the Rules.

28. On the same day the solicitors for the plaintiff sent to the solicitors for the defendant advice from the Public Trustee dated 14 July 2015 that the Public Trustee is the manager appointed to manage the property and financial affairs of the plaintiff pursuant to an order of the ACT Civil and Administrative Tribunal. The letter from the Public Trustee discloses that the only source of income is a pension payment. The letter refers to the inalienability of social security payments under s 60(1) of the Social Security (Administration) Act 1999 (Cth) and says:

Therefore, our office is obliged to make any payments to meet his basic requirements and needs prior to any other payments. As such, a minimal payment of up to $15 per fortnight can be allowed from the remainder of Mr Monaghan's pension.

The logical link between the reference to s 60 and the statement quoted is not clear.

29. In response to the email from the plaintiff's solicitors the solicitor for the defendant indicated that she was not instructed to consent to any alternative arrangement outside the scope of the orders of the Court made on 30 March 2015. She noted that no application or affidavit had been filed pursuant to the orders made on 7 July 2015. The email also noted the evidence that the plaintiff's funds are managed by the Public Trustee and questioned how he might have given instructions in relation to attendance at, and payment for, mediation (either private or Court ordered) and further noted the fact that no attempt to engage with the defendant regarding payment of fees was made until the matter was listed in the non-compliance list.

30. During the hearing on 16 July 2015, having regard to the fact that any order in relation to costs that the Court made against the plaintiff was unlikely to be of any value, I asked the solicitor for the plaintiff whether or not the plaintiff's solicitors gave an undertaking to pay the costs incurred by the defendant by reason of the plaintiff's non-compliance with the Court orders made on 30 March 2015 as well as the costs of the hearings on 30 March 2015, 7 July 2015 and 16 July 2015 on a basis no less favourable than a solicitor and client basis. The solicitor appearing for the plaintiff was not in a position to indicate whether or not such an undertaking was given. I considered that whether or not such an undertaking was given would be a matter relevant to determining what, if any, orders to make as a result of the plaintiff's non-compliance with the orders of the Court.

31. Following the reservation of my decision the Court was sent two letters from the plaintiff's solicitors. The first letter apologised to the Court for failing to raise with the Deputy Registrar on 30 March 2015 the issues concerning the plaintiff's financial capacity to pay the mediator's fee and accepted that the firm knew about the plaintiff's limited financial circumstances and failed in its duty to raise those circumstances with the Court at the directions hearing on that date. The letter also recorded the firm's apology for the delay in bringing the plaintiff's limited financial capacity to the defendant's attention until 30 June 2015. The letter finally recorded the firm's undertaking to pay the defendant's costs arising from the plaintiff's non-compliance with order 6 made by the Court on 30 March 2015 including the defendant's appearances on 30 March 2015, 3 July 2015 and 16 July 2015 on a no less favourable basis than a solicitor and client basis. The reference to 3 July 2015 is clearly an error and should be a reference to 7 July 2015. The second letter communicated the fact that the principal of the firm 'believes it is proper and reasonable that the firm pay the plaintiff's share of the mediation fees' and indicated that a cheque had been delivered to the mediator that day. It also recorded that 'the firm consents to orders in Chambers that the application dated 15 July 2015 being [sic] dismissed and the firm pay the defendant's costs on an indemnity basis pursuant to the undertaking given'. The letter also apologised to the Court and the solicitors for the defendant for the cost, inconvenience and waste of Court time. Although the letter recorded that 'the firm consents' to orders dismissing the plaintiff's application, I treat this as an indication that the plaintiff consents to that course.

32. There are a number of matters in relation to which the evidence is either absent or unsatisfactory.

33. First, there is no evidence of what steps, if any, were taken by the solicitors for the plaintiff either before or after their letter to the plaintiff dated 21 April 2015 in relation to his capacity to pay the fees associated with a mediation. The solicitor for the plaintiff, Mr Barrow, must clearly have been on notice of the potential for difficulty in relation to the payment of fees by his client having regard to the fact that he was responsible for preparing the affidavit relied upon in support of the application for waiver of filing fees when the proceedings were commenced. However:

(a) there is no evidence as to what instructions, if any, were taken in relation to payment for mediation prior to suggesting a private mediation on 21 March 2015 or proposing a Court ordered mediation on 30 March 2015;

(b) there is no evidence as to what occurred between 21 April 2015 and 30 June 2015 in relation to ensuring that the plaintiff complied with the orders of the Court relating to payment of the mediation fee.

34. Second, contrary to my direction made on 7 July 2015 there is no 'affidavit of the solicitor responsible for the carriage of the plaintiff's case disclosing the circumstances surrounding the plaintiff's failure to comply with the directions made on 30 March 2015'. In my view the affidavit of the plaintiff's solicitor is completely inadequate in circumstances where the Court has specifically required an affidavit disclosing the circumstances in which a client has failed to comply with a Court order. Where such an order was made I would expect, subject obviously to issues of legal professional privilege, a complete and frank disclosure of the circumstances so far as the relevant solicitor is aware which led to the non-compliance. In particular, I would expect enough information as to the circumstances and the conduct of the solicitor so as to be able to determine whether the non-compliance arose from the conduct of the solicitor or the conduct of the client. In the present case not only was the affidavit filed late but it contained only two paragraphs and merely annexed a trail of correspondence which mainly post-dated the plaintiff's non-compliance. Addressing the matter in that way avoided the necessity for the solicitor to depose to the facts of the case as opposed to merely annexing unsworn and argumentative correspondence between the parties. Such an approach is, in my view, obviously inconsistent with the order that I made and is an inappropriate device to adopt in order to avoid the obligation to identify on oath or affirmation what the relevant circumstances were.

35. Third, there is no evidence concerning the basis upon which the impecunious plaintiff is able to retain his solicitor. That is a matter relevant to determining whether or not the plaintiff is in fact unable to pay his share of the cost of the mediation. I infer, having regard to the plaintiff's circumstances and the nature of the case, that the solicitor for the plaintiff is retained on some form of speculative basis. It appeared to me to be inconsistent that on one hand the plaintiff could afford to obtain expert medical evidence in support of his case yet on the other he was unable to afford to pay his proportion of the fee for a mediation. A selective reluctance to pay some of the costs associated with the proceedings would be a factor which would tell against the application to vary the Court's previous orders. The solicitor for the plaintiff told me that:

(a) the medical expert whose report had been served had agreed to defer his fees until the conclusion of the case; and

(b) those fees were guaranteed by the plaintiff's solicitors in the event that the plaintiff did not succeed in his claim.

If this is an accurate statement of the position then, leaving aside the potential difficulty that might arise from this kind of a fee arrangement for an expert bound by the expert witness code of conduct, it does indicate that the solicitors for the plaintiff have an agreement with the plaintiff that they will bear at least the risk of liability for fees incurred in order to conduct the proceedings. There is no evidence whether the fee agreement between the plaintiff and his solicitors requires his solicitors to initially bear the cost of disbursements necessary in order to run the case. There is no evidence that the plaintiff has been advised that he could request his solicitors to pay the fee and there is no evidence that he has actually requested his solicitors to pay the fee whether they are liable to under this agreement or not. Finally there is no evidence about the willingness or otherwise of the plaintiff's solicitors to pay the fee if they were to be repaid by the Public Trustee at the rate disclosed in the correspondence referred to at [28] above.

36. In determining how to proceed, I take particular note of the following matters:

(a) The plaintiff is impecunious and, as the report of Mr Aldridge summarises, suffers from difficult personal circumstances. To the extent which his case has merit, he has an interest in proceeding with that case and not having his claim struck out by reason of non-compliance with Court orders.

(b) The summary of his circumstances indicates that it is unlikely that he has been making the forensic decisions as to how to address the issue of mediation and, in particular, the payment of mediation fees. Rather, it seems most likely, particularly in the light of the inadequacy of the evidence put on by the solicitor for the plaintiff, that the decisions about whether to have the matter listed for mediation, what submissions to make in relation to the payment of mediation fees and when to raise those issues have all been driven by the advice given by the plaintiff's solicitors or made by solicitors pursuant to general instructions given by the plaintiff to pursue the proceedings.

(c) The defendant is clearly an institutional litigant who, if required, is able to pay the whole of the mediation fee but has reasonably incurred costs arising out of the non-compliance by the plaintiff with the orders of the Court.

(d) The solicitors for the plaintiff have now made the apologies and undertaken to the Court to pay the costs of the defendant as referred to at paragraph [31] above.

37. In my view, although as a result of the non-compliance by the solicitor for the plaintiff with my order of 7 July 2015 the evidence is not as comprehensive as it should be, on the material available to me the non-compliance by the plaintiff and the costs incurred by the defendant as a result are the consequence of:

(a) the solicitors for the plaintiff taking inadequate instructions prior to proposing a private mediation on 21 March 2015 or seeking a Court ordered mediation on 30 March 2015;

(b) the solicitors for the plaintiff failing to take adequate instructions immediately after the order of the Court in relation to the plaintiff's capacity to comply with the Court's order;

(c) the solicitors for the plaintiff failing to make application to vary the orders of the Court before their client fell into non-compliance with the orders;

(d) following notification of the plaintiff's default, the solicitors for the plaintiff failing to put before the Court relevant evidence so that the issue of non-compliance could be finally addressed on 7 July 2014;

(e) as a result of (a) and (b), the solicitors for the plaintiff failing to properly correspond with the solicitors for the defendant at an early stage in relation to any issues in relation to the payment of the mediation fee or any alternative proposals that the plaintiff may have.

38. In my view it is not appropriate to order under r 1404(2)(b) of the Rules that the proceedings be dismissed because of the plaintiff's non-compliance with the Court's orders. The non-compliance demonstrated by the plaintiff has been the result of the manner in which his solicitors have addressed the issue of mediation and the payment of fees. In those circumstances it does not appear to me to be appropriate to visit the consequences of his solicitors' conduct upon the plaintiff if the prejudice arising from that conduct can be avoided in some other way.

39. The communication from the plaintiff's solicitor and the apology to both the Court and the defendant in my view appropriately recognise that the manner in which the matter was approached was inadequate. Most significantly, the undertaking given by the solicitors for the plaintiff to be personally responsible for the defendant's costs means that the defendant will be effectively compensated for the waste of time and money arising out of the non-compliance by the plaintiff. As a consequence there will, in my view, not be any significant ongoing prejudice to the defendant.

40. Having regard to the fact that the fee for mediation has now been paid and the plaintiff consents to dismissal of the application in proceeding dated 15 July 2015, it is unnecessary to consider whether any variation of the orders in relation to mediation or payment for that mediation needs to be made.

41. In those circumstances, the only orders that the Court needs to make are:

1. The plaintiff's application in proceeding dated 15 July 2015 is dismissed.
2. Liberty to apply is granted to either party to seek orders in relation to costs including any orders necessary to give effect to the undertaking given by the plaintiff's solicitors to the Court on 16 July 2015.

I certify that the preceding forty-one [41] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Associate Justice Mossop.