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These recently published comments do not reflect my experience at Westpac from 1980 to August 1996 and especially from 1990 to 1996 when I was Head of Dispute Resolution, or, more recently, at Sydney Ports Corporation, a State owned corporation, where our disputes generally relate to construction and engineering and, occasionally, environmental matters. Over ten years and hundreds of matters, I could count on my fingers the number of disputes that I have been involved in as an internal legal advisor and which have gone to a full hearing and judgment. What do companies consider when faced with a dispute? What are the factors that companies consider when faced with a dispute and with the need to consider whether to attempt ADR or litigate? Companies I have been associated with do routinely consider the costs, energy and time a matter will consume; whether the matter is best dealt with in a public or private forum; the range of possible remedies available via various forms of dispute resolution; whether, where mediation or negotiation is proposed, it is the right time in the life of the dispute to attempt mediation or negotiation; and, particularly since the early 1990’s, the media and public relations aspects of the dispute and how it should be progressed. However, and especially in large, complex, multi-party matters, these are rarely straightforward considerations and different parties, even if they are represented on the same side of the bar table, may assess the same factors quite differently. Thus, in the Linter matter which was successfully mediated in the first half of 1996, it took the whole of the last quarter of 1995 to get the dozens of parties to agree to attend, and participate in, a meeting to consider mediating the matter. Once the mediation had been agreed to, it took quite some time to organise (timetable, venue, attendees, agreement to mediate, position papers, etc.). The mediation itself occurred, on and off, over a ten week period and the last of the settlement documents was not concluded until three and a half weeks after the last mediation session. The process was equally as convoluted in the Tourang dispute, although that matter was settled by negotiation in May 1995 after a failed mediation a month or so earlier. Having represented a party in each of those disputes, I believe to this day that neither Linter nor Tourang could have settled any earlier than they did. I’d like to comment a little further on some of these factors which corporations take into account when faced with a dispute. Companies do recognise that the costs of a dispute may involve a loss of goodwill as well as financial considerations. However, the value of goodwill does vary from industry to industry. Today, for example, customers of financial institutions are much more mobile (as between financial institutions) and there is now less concern about keeping customers for life, so that managing a particular dispute with an on-going relationship in mind is of less importance to financial institutions now than it once was. This is different in industries such as some parts of the construction industry where the disputing parties may have to anticipate that they may be brought together at a later time by a third party on another project. Companies do recognise that goodwill may extend beyond a particular dispute and into the community or a section of the community. In 1991 and 1992, in three states, Westpac mediated with the Commissioners for Consumer Affairs and with the Consumer Credit Legal Centres in respect of certain disclosure or information breaches of the Credit Acts in those states in relation to fixed rate personal loans provided by the Bank. Westpac’s customers had suffered no losses but, under the Credit Acts, the Bank risked losing its credit charges on those loans. The parties’ agreed position arising from each mediation was submitted to the relevant tribunal in each state which, after due consideration, adopted the main elements of the mediated agreements in making their orders. Among other things, as part of the mediated agreements, the Bank established and funded in each of the three states, trust funds for the purpose of financial counselling and consumer education and research. What makes a matter suitable for mediation or negotiation or able to be mediated? In my view and experience the “right time” simply occurs when each party knows or is sufficiently comfortable with its knowledge or the strengths and weaknesses of the case to enable a proper assessment of the settlement value or purpose. In some matters that position may not be reached until well into or even after a hearing. Thus, as Gaire Blunt points out, in relation to the Westpac—Halabi mediation which concerned the Bank’s claim against one of its former foreign exchange dealers, “it was perhaps unlikely that the parties to these particular disputes ever could have got together sufficiently even to discuss the possibility of a mediation until after the very complicated factual matrix and the credibility of certain witnesses had been fully tested in court.” In the Westpac—Halabi proceedings judgment was reserved at the time mediation was agreed to and at the time mediation occurred. By that stage of any dispute there are also possible additional factors which may make mediation worth considering. These include the difficulty and cost of enforcing any judgment and the possibility of an appeal or appeals. As the Westpac—Halabi mediation shows, and as confirmed by my experience of the unsuccessful AWA mediation, where the emotion of some of the participants ran high and the views of their advisors were well entrenched, mediation may not be a feasible process until the facts are established and key witnesses are tested. Consistently, for corporations (especially where decisions as to settlement may have to be made further up the chain of command than where the matter is managed) the most difficult aspect of knowing the strengths and weaknesses of a case is determining whether there is adequate information from the opposition to evaluate their part of any case. In this respect, one of the critical decisions for parties considering mediation or negotiation is whether or not to have discovery, including third party discovery. While this is not a prerequisite to intelligent negotiation in every case, there are obvious risks of making ill-informed business judgements and receiving legal advice based on incomplete analysis. Where legal proceedings have commenced but discovery has not been reached or is incomplete and mediation is contemplated, it may become merely a matter of timing with the issue becoming one of whether or not discovery is completed or a mediation delayed. Where mediation or negotiation is contemplated prior to the commencement of proceedings the dilemma can be more significant. One solution to this problem is to agree to a voluntary exchange of information (including documents). This kind of measure requires confidence that, even without the ground rules and processes provided by courts to ensure compliance, one’s opponent will both provide and receive the information in good faith. It is a particularly difficult issue in relation to any third party information. In the final analysis, when and where to draw the line on information gathering for mediation purposes simply varies with each case and set of circumstances. The issues relating to third party discovery in the context of mediation lead on to the issue of how do you ensure that all parties actually affected by or involved in the dispute are present or represented in the mediation of that dispute. Westpac was a defendant in legal proceedings in which an unsuccessful mediation took place. It was apparent from a review of both the Bank’s materials and the plaintiff’s materials that the role of a financial advisor was a significant factor to be explored in the dispute. The plaintiffs had not seen fit to join their former advisor in the proceedings. The matter was mediated and the offer made by the Bank was conditional upon receiving an undertaking that no proceedings would be commenced against the third party. Settling the matter without such an undertaking would have left the Bank vulnerable to the possibility that the plaintiffs might still commence proceedings against their former advisor, who undoubtedly would then seek to bring the Bank back into those fresh proceedings by way of contribution. In an effort to continue with the mediation, it was suggested that the involvement of the financial advisor be sought in the proceedings. This raised the significant issue of the appropriateness of the plaintiffs joining the third party and using the Court processes to this end when the sole purpose was simply to bring him to the mediation table. He was not prepared to participate in the mediation process voluntarily. Similarly, it would be more difficult to resolve the matter by way of dismissal of proceedings if he was not a party to them. Ultimately, the Bank took the view that joinder of the advisor was a matter for the plaintiffs and it would not be a party to or condone any use of the Court’s processes which might be considered to be inappropriate. This episode is illustrative of the inappropriateness of the mediation process to secure a satisfactory and final resolution of a dispute when not all the relevant parties have been joined to the initiating proceedings and when one necessary party is not prepared to co-operate. It also highlights the care which needs to be taken in any attempt to bring the parties together for the purpose of mediation when the only way to do so is to use court procedures to join the relevant party. It is worthwhile noting that in this case all was not lost despite the fact that the mediation had to be abandoned. It served to make clear to the plaintiffs that the financial advisor was a proper party to the dispute and he was subsequently joined to the proceedings. Corporations frequently do recognise that there is a greater range of remedies available outside the courtroom than inside it. For some financial institutions this has become particularly evident in the context of mandatory farm debt mediation before enforcement action can be taken in respect of farm mortgages. Traditionally, in farm debt disputes, financial institutions have been characterised as thinking that farmers are only interested in debt forgiveness and for farmers to be characterised as always demanding debt forgiveness to a level at which they would again become viable. But it is surprising how often it emerges, through a structured negotiation, that a farmer will be concerned about things like not losing standing in the community – being able to continue to judge or be involved in the local show – or retaining the homestead in which a number of generations of one family were born and, perhaps, the homestead lot can be subdivided. I can recall one farm debt mediation where the Bank’s files revealed that the farmer had been advised some years ago by the local council that some land on the edge of his property could be sold off to meet the demands of an expanding township. He had done nothing about this at the time and, indeed, had forgotten about it until it was raised by the Bank at mediation as a way in which he could reduce all or a significant part of his debts. When is it preferable to litigate rather than mediate or negotiate and settle? The answers to this question are somewhat obvious. First, when there is a legal principle to test or prod. Financial institutions will, for example, continue to look for a set of facts to try and begin to create a contributory negligence defence in conversion cases. Secondly, where you are absolutely certain that your opponent’s expectations can never be lowered or there is really, in a material sense, nothing to fight about or bargain with. For example, one highly visible foreign currency loan case had both those features. By its own admission the applicant’s best case was less than their debt to the Bank. They would not settle unless the Bank paid them an amount greater than their best case and forgave them the debt as the price of going away. In those circumstances the Bank had to endure the publicity. Responsiveness of the System I have participated in several unsuccessful court-ordered or referred mediations in large, multi-party matters. On both occasions the direction to mediate was given in the early stages of the hearing. In light of these experiences and others described elsewhere in these notes (paragraph 7 in particular), where a court-referred mediation is contemplated, either before or in the early states of a hearing, I would urge the court to have regard to the appropriateness of the referral and to consider such matters as timing and the parties’ attitudes. A premature and unsuccessful attempt at mediation may not only be a costly exercise in its own right but it may simply serve to entrench positions further. One of the most difficult problems I have encountered in any mediation to date was one where the result of the mediation was subject to approval by a particular tribunal. It was the initial Credit Act mediation described in paragraph 6 and the dispute involved questions of public interest. A tension developed between, on the one hand, the multiple parties to this dispute, those parties having reached agreement on a substantial settlement which was satisfactory to all of them, and, on the other, the tribunal which, in endeavouring to take into account the wider public interest, was reluctant to accept the parties’ solution. The tribunal expressed the view, with which the parties did not cavil, that “it has been presented with a complex mediation agreement which [was] put before it, not as a substitute for the exercise of the Tribunal’s discretion … but … as a most significant relevant circumstance to be taken into account in determining whether or not the Tribunal should make the orders that are sought in the application”. 2 Later and in various ways the tribunal said that “[i] f parties mediate on the basis that the conduct of a hearing will be dictated by the terms of the mediation agreement that can be an unwarranted assumption because the Tribunal will ultimately attempt to control its own proceedings, and whilst no one would criticise anybody for the attempt made to settle the matter by mediation the Tribunal’s view is that it should take account of the fact that it might regard the mediation agreement as unsatisfactory …” One of the aspects of the mediated settlement which seemed to particularly trouble this tribunal resulted from the fact that the parties had agreed not to test each other’s evidence. One member of the tribunal put it this way – “we have, sitting at the Bar … people who are all on the one side and all of the one opinion … there isn’t any adversary … It does create problems in relation to matters of fact when we are getting the one viewpoint expressed all the time.” The argument against the tribunal’s concerns was put, by one of the parties to the proceedings and the mediation, in the following terms – “We are committed to supporting the mediation agreement not as a matter of contract, because the agreement expressly reserves our right to make appropriate submissions on facts and law and indeed to adduce further evidence if we wish, but because the Commissioner, having examined all the circumstances and having had the benefit of extensive inspection of the applicant’s documents, has come to the conclusion that … [that] … for which the agreement provides is … appropriate … in all the circumstances”. This was supported by one of the other parties which told the tribunal that it “needs to be satisfied between the parties there has been a thorough investigation … in order to satisfy itself not perhaps the outcome is one it would have reached after a full hearing, because it can’t do that without a full hearing, but [that] there has been a genuine and proper attempt to reach a figure, which is the appropriate figure, and with representatives of the public interest, and not merely the interested parties there … [I]t may be, at the end of the day, the Tribunal does have simply to provide some level of not rubber stamping … but some level of trust these matters have been canvassed, or say you don’t believe they have, and ask for some evidence they have”. The parties to the proceedings and the mediation put it to the tribunal that Westpac had made concessions in the process of mediation to which the tribunal has become privy and which it would not make if there were to be a full hearing. Thus, if the tribunal decided that the matter had to be disposed of by a hearing in the usual way, the parties were of the view that the tribunal would have to disqualify itself on the grounds that it could no longer bring an open mind to any hearing that became necessary. Ultimately, after a nervous wait by the parties, the mediated outcome was accepted by the tribunal. However, I would venture the suggestion that tribunals which are required to consider and approve parties’ mediated solutions may have to take a more positive stance and participate in the dispute resolution process by sending an observer to the mediation. In particular, if the parties come before a tribunal in a long and costly dispute and advise it that they wish to mediate, the tribunal would appear to have only two choices. It can choose not to approve of the proposed mediation and inform the parties it will not accept any settlement they may reach. But, if it agrees or acknowledges that the parties should mediate, then it seems most appropriate for it to reserve the right to say at a later stage that it will not accept the solution that the parties have agreed. In these circumstances, the tribunal should itself participate in the mediation through some form of representative or observer, and protect the public interest by informing the parties of those matters which it believes relate to the public interest and need to be addressed in the context of any mediated or negotiated resolution. (I would add that in the mediation and proceedings under discussion, a government entity was a party to both the mediation and the proceedings and, no doubt, its representatives considered that they had the public interest in mind throughout the mediation.) One other possible means of circumventing the problem of a tribunal which is reluctant to accept the parties’ mediated resolution is to consider whether any such reluctance might arise because the opportunity to test the facts is abandoned and, if this is thought likely or even possible, to incorporate into any settlement documentation a detailed “agreed” statement of facts. I cannot resist the opportunity to make one last comment, from the corporate perspective, to this audience about a difficulty which large corporations routinely face if they are unable to settle disputes. It relates to the extent of discovery. All too often, in my view, wide-ranging discovery is permitted and unnecessary disputes arise in relation to the adequacy of discovery. The electronic information age has exacerbated this problem, not reduced it, for organisations whose operations or networks are spread and whose historical records are extensive. I would argue that production of documents should be limited to the precise issues in dispute and not be allowed to become a wide-ranging review of the corporate activities of the targetted litigant. Because of the breadth of discovery sometimes allowed, it can provide litigation fodder for unworthy plaintiffs to attempt to create and publicise the basis of a claim which, in reality, does not exist, while causing corporations to incur quite significant costs. I do apologise for not being able to attend the conference this weekend. I currently work for an organisation which is fully occupied in trying to extract the harbour of the Oilympic city from underneath a coating of crude oil. Barbara Filipowski 6 August 1999 PAGE  PAGE 8 G:BFil/Misc/Paper – Disputes, Litigation and the Corporation 2. This and the following four quotations are taken from the transcript of the proceedings which were heard in open court. 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