Case Note: Wardman v Macquarie Bank Limited [2019] FCCA 939

MEDIATION

Case Note: Wardman v Macquarie Bank Limited [2019] FCCA 939

Dr Shane Monks
Barrister, Level 27 Chambers, Brisbane, Australia
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A very recent decision (10 April 2019) of Judge Dowdy in the Federal Circuit Court of Australia in Sydney considered (for apparently the first time) both the constitutionality and propriety of the Federal Circuit Court ordering that a proceeding brought in the Fair Work Division of the Federal Circuit Court be mediated before a judge.

 

I. BACKGROUND

Section 34(1) of the Federal Circuit Court of Australia Act 1999 (Cth) provides that ‘The Federal Circuit Court of Australia may, by order, refer proceedings in the Federal Circuit Court of Australia, or any part of them or any matter arising out of them, to a mediator for mediation in accordance with the Rules of Court’. 

Referrals are then usually made pursuant to rule 27.01, in Part 27, Division 27.1 of the Federal Circuit Court Rules 2001 (Cth) (the Rules).  Rule 27.04 deals with the identity of the mediator, providing that if the parties cannot reach agreement within 14 days of a mediation order being made, then a Registrar must nominate ‘a person’ (a term not contained in the Dictionary) as the mediator.  Rule 27.04 makes no provision as to who that mediator must be; in particular it says nothing about the mediator’s identify, qualifications, experience or current employment. 

However, rule 27.01(1A) provides that ‘this Part’ (i.e. Part 27 of the Rules) does not apply if the court relies upon rule 45.13B to refer a proceeding to a mediator.  Rule 45.13B is contained in Chapter 7, Part 45 of the Rules, which deals with proceedings in the Fair Work Division of the Federal Circuit Court.  Rule 45.03 provides that Part 45 applies to a proceeding in which one or more of the Building and Construction Industry (Improving Productivity) Act 2016 (Cth), the Fair Work Act 2009 (Cth), the Fair Work (Registered Organisations) Act 2009 (Cth), or the Workplace Relations Act 1996 (Cth) applies.  Rule 45.13B(2) provides that where Fair Work Division proceedings are referred for mediation, the mediator ‘must be’ either (a) ‘a Judge’, (b) a registrar, (c) another person appointed by the court, or (d) a Fair Work Commission member.

In Wardman v Macquarie Bank Limited  [2019] FCCA 939, the parties made a joint proposal (see [7]) that Dowdy FCCJ refer the proceeding (which was in respect of alleged underpayment of wages) to a mediation, and that his Honour direct pursuant to rule 45.13B that it be conducted by a judge of the Federal Circuit Court. 

At [9], Dowdy FCCJ refused to make the order sought, and instead ordered that the mediation be conducted by a registrar.  His Honour did so because he was of the view that it would be unconstitutional for a judge to be so appointed, and that in any event, it would be an inappropriate exercise of his discretion to, in the circumstances, appoint a judge as the mediator.

 

II. IT WOULD BE UNCONSTITUTIONAL

Dowdy FCCJ held at [26] that in his view it was incompatible with Chapter III of the Constitution for a federal judge to act as a mediator.  His Honour gave five reasons for this. 

The first[1] was that judicial power is to be exercised in accordance with a judicial process that almost always involved open, public hearings that in accordance with the rules of natural justice, sought to determine the facts, and then apply the relevant law to them.  Mediation by way of contrast was ‘fundamentally different’, involving a mediator who acted in private, often without all parties present at the same time, who did not quell controversies by delivering a public, binding and enforceable decision but rather sought to assist the parties to resolve their dispute themselves.

The second[2] would only have applied had his Honour appointed himself personally to be the mediator in question, in a curial version of a ‘Med-Arb’. It would have involved him performing a function incompatible with his discharge of judicial power, as although rule 45.13B does not prohibit it, it would be ‘inconceivable’ that a Chapter III judge could preside at a mediation and then, if that mediation was unsuccessful, proceed to hear and decide the case. 

The third[3] was that acting as a mediator almost inevitably involved conveying an opinion as to the parties’ prospects of success, and the reasonableness of the settlement terms, yet a Chapter III judge is prohibited from giving advisory opinions. 

The fourth[4] was that mediation could not be argued to be one of those examples of the exercise of judicial power that did not involve the adjudication of rights, yet had traditionally been one of the range of powers exercised by courts (such as administering trust assets, acting as the guardian of infants) and so could permissibly be exercised by a Chapter III judge.

The fifth[5] was that the decision in the Boilermakers’ Case[6] made it clear that the power to conciliate falls outside the concept of judicial power.  Nor is the power to mediate incidental to the judicial power of the Commonwealth.

 

III. IT WOULD BE INAPPROPRIATE

Dowdy FCCJ then went on to find that even if it was not unconstitutional for a federal judge to act as the mediator, it was inappropriate for a federal judge to do so.  Again, his Honour gave five reasons.  Some of the reasons were more closely tied to whether he personally should be appointed (as opposed to another federal circuit judge), whereas others were equally applicable to any member of the federal circuit court bench. 

The first was that it would be ‘inappropriate and unseemly’ for him to act as mediator, as he was not an accredited mediator, whereas the registrars who were available to conduct the mediation had been trained and accredited as mediators.[7] 

The second was that neither he nor any other judge should be sacrificing valuable time in which they would have been available to hear cases, and furthermore there would have been an element of unfairness (not conducive to collegiality between judges of the court) if he chose to act as mediator, knowing that if it did not settle, another judge would inherit the more difficult and time-consuming task of hearing the trial and writing the judgment.[8] 

The third was that in acting as mediator, a judge exposed themselves to the risk of being accused, unjustifiably, in having pressured or coerced one or both of the parties into settling.[9]

The fourth was that he would have been unwilling to provide the parties with an evaluation of their prospects of success, because of the risk that if the proceeding had to be tried by another judge, that judge would have reached a very different decision, and that this would have diminished the standing of the court.  That unwillingness would have deprived the parties of ‘a characteristic function expected of mediators’, which a registrar or private mediator could provide. 

The fifth was that the exercise in pragmatism that mediation requires, along with the exercise of a mediator’s functions in private, behind closed doors, was undesirable activity for a judge. 

 

IV. DISCUSSION

Rules 45.13B was inserted in the Rules by paragraph 42 of Schedule 2 of the Federal Magistrates Court Amendment Rules 2011 (No 1),[10] at a time when the Federal Circuit Court of Australia was known as the Federal Magistrates Court.  As rules of court, they were made by the federal magistrates themselves, pursuant to the Federal Magistrates Court Act 1999 (as then in force).  Thus there is no parliamentary document (such as explanatory notes or a minister’s speech) that explains why the amendment was made, and in particular why it included an express reference to the appointment of a judge. 

Judicial mediation is not unknown in Australia.  Dowdy FCCJ himself referred at [56] to a paper delivered in 2010 by the then Chief Justice of Victoria, the Hon. Marilyn Warren AC, which in addition to discussing the merits of sitting judges mediating disputes, also referred to the Supreme Court of Victoria’s use of masters, and then of associate judges, to conduct mediations.[11]  It is standard practice in other state courts, as well as in federal courts, for registrars or judicial registrars to conduct mediations, and in some tribunals, for tribunal members to conduct mediations or settlement conferences.  However, it is not the practice for judges to do so.  Whilst rule 27.04 or any other rule or statute that empowers a court to appoint ‘a person’ as a mediator would necessarily permit a court to appoint a judge to act as mediator, I am not aware of any occasion on which an Australian court has done so.

In hindsight, it is difficult to see why rule 45.13B(2) expressly included judges in its list of people who could be appointed as mediators.  Unless the decision in Wardman is appealed and overturned, it seems reasonable to expect it to be the first and last time that the Federal Circuit Court even considers appointing one of its own judges to act as a mediator, and rule 45.13B(2)(a) will languish in the rules of court as one of those rules that seemed like a good idea at the time.

 

Shane Monks, Barrister

Level Twenty Seven Chambers, Brisbane

 

 

[1]              [2019] FCCA 939 at [27]-[28], and also at [13]-[25]. 

[2]              [2019] FCCA 939 at [29]-[31].

[3]              [2019] FCCA 939 at [32]-[33].

[4]              [2019] FCCA 939 at [34]. 

[5]              [2019] FCCA 939 at [35]-[46].

[6]              The Queen v Kirby; Ex parte Boilermakers’ Society of Australia  (1956) 94 CLR 254; [1956] HCA 10

[7]              [2019] FCCA 939 at [48]-[51].

[8]              [2019] FCCA 939 at [52]. 

[9]              [2019] FCCA 939 at [53]-[54].

[10]             Select Legislative Instrument 2011 No. 133, dated 4 July 2011 (F2011L01456).

[11]             ‘Should Judges Be Mediators’, paper delivered to The Supreme and Federal Court Judges’ Conference, 27 January 2010, at pages 3-4, available at http://www.austlii.edu.au/au/journals/VicJSchol/2010/1.pdf