I. INTRODUCTION
5.1 An extension of the issue of accreditation of mediators is the accountability of mediators and the mediation process. This chapter briefly examines various bases of legal liability and also considers the question of whether there should be any special immunity for mediators. We are interested in your comments on the appropriateness of regulating mediators by means of civil liability and on the various bases of liability considered below.
5.2 As far as the Commission is aware no claim has been made in Australian courts against mediators, nor has there been any successful action against a mediator in the United States.1 This situation is understandable given the philosophy of mediation which eschews adjudication in favour of consensual dispute resolution. Further, as use of mediation procedures is a recent occurrence, it will take time for the incidence of problem mediations to produce cases before the courts and for a standard by which to assess liability to be established. The matter which has already surfaced is confidentiality, that is whether a mediator should be compelled to give evidence in court proceedings as to anything said or done in the course of a mediation between the parties.2
5.3 The relevance of this discussion of mediator liability to the issue of accreditation lies in the dual objectives of enhanced professional behaviour and protection of the public who use the services of mediators. These goals justify the formal regulation of a profession as discussed in Chapter 4. It is these goals which are cited in support of imposing legal liability on mediators for their professional conduct. It is argued that the existence of a liability can have a salutary effect on the quality of performance, as well as providing clients with a means of redress.
5.4 Certain difficulties can be anticipated if civil liability is imposed on mediators. The diversity in mediation practice already identified in previous chapters will make it hard to determine guidelines and standards for civil liability. The source and specific terms of appointment of a mediator will affect the legal status of the parties and the basis on which liability may rest.3
II. LIABILITY IN CONTRACT
5.5 Disputants dissatisfied with a mediator’s conduct may be able to rely on a contract regulating the provision of mediation services. Where the mediator is privately employed, there would usually be a contract of service, or terms of engagement. In the case of an agency or mediation service supplying mediators, a standard form of contract would be more likely.
5.6 A person seeking compensation for any damage caused by a mediator would rely on the terms of such a contract in order to establish the mediator’s duties and liabilities. These may be found in the express terms of the agreement, terms incorporated from other documents, or in terms implied into the contract.
5.7 A typical contract would outline the mediation process, and indicate the duties, responsibilities and rights of the mediator, and to a lesser extent, of the disputants. A contract may incorporate the Code of Conduct or standards of professional behaviour of an institution or professional association. These typically provide extensive analysis of the mediator’s duties.
5.8 Certain terms may also be implied into a mediation contract, for example an obligation of confidentiality, a duty to facilitate performance, and a duty to perform with reasonable skill and care, (that is to the standard of care expected of persons in the industry). A client establishing breach of the terms of a contract by the mediator which causes loss or damage has a right to compensation.
5.9 Relying on contract law to make mediators accountable does present some difficulties. A client may have difficulty establishing that the particular loss or damage was actual and not merely potential or uncertain, that it was caused by the mediator’s conduct, and that the damages claimed are not too remote. A contract provided by a mediator may contain a clause limiting the mediator’s liability, but that would be construed narrowly against the mediator. A mediator could exclude liability for negligence but would need to state clearly the intention not to be held liable. Although a contract may incorporate standards of professional behaviour, there may be difficulties in establishing what constitutes a reasonable standard of performance.
III. LIABILITY FOR NEGLIGENCE
5.10 Perhaps the most obvious method of making a mediator accountable for the conduct in relation to mediation is found in the principles of negligence. Given the extensive use of negligence actions to compensate those injured by others’ actions, especially those in a professional - client relationship, a disputant or third person who suffers damage arising out of a mediator’s behaviour is likely to seek compensation by this means. One predictable situation giving rise to a claim for damages is for economic loss caused by a disputant’s reliance on a mediator’s negligent misstatement. Any successful claim would need to establish each of the basic elements of negligence, and satisfy the policy considerations raised by any argument for mediator immunity. (See below paragraphs 5.26-5.28.)
5.11 As a duty of care owed by a mediator is not already recognised at law, the courts would look in the particular situation to the nature of the relationship between the parties. A finding that there was such proximity or neighbourhood on which to base a duty of care to avoid foreseeable injury would depend on the closeness of the relationship and on considerations of policy to limit liability.4 A likely analogy is with the duty of care arising in the relationship a client has who relies on the skill and advice of a professional. Reliance has been an important feature in finding a duty of care, especially where economic loss is sustained as a result of negligent misstatement.5 It is easy to envisage an element of reliance in a mediator-client relationship.
5.12 There is less certainty about the standard of care required of a mediator. Clearly a mediator must exercise reasonable care, and also measure up to the standard of skill and competence expected of a mediator. Determining that standard is difficult because of mediation’s novelty and diversity. As yet, practitioners are not able to agree on exactly what a mediator should do and be responsible for in every situation although this may occur in time. Even if mediation matures as a profession and acquires a recognised standard of behaviour, there will still be many discretionary aspects of the role. It relies heavily on personal style, already encompasses various recognisably distinct models with differing procedures, and operates in numerous institutional and social contexts. The basis of an objective standard can be found in the codes of conduct or standards of practice promoted by agencies or professional associations, but even they show considerable variety and give rise to much debate among practitioners.6 One important area of debate is whether a mediator has substantive as well as procedural responsibilities.7 In addition there are the evidentiary problems faced in demonstrating that in the given situation a mediator’s conduct has been negligent, that is breached the duty of care by failing to conform to that standard.
5.13 Equally difficult in many mediation situations would be proving elements of damage and causation. The loss or injury suffered must be actual and not merely anticipated, and ascertainable. The result which might otherwise have been achieved had the dispute been adjudicated would not be actionable. Further, there must be a reasonably proximate connection between the damage suffered and the mediator’s conduct. The philosophical emphasis in mediation on empowerment and self-determination, coupled with typically non-coercive procedures of voluntary mediation tend to distance a mediator from responsibility for what happens to a disputant. Where a party has access to, or is directed by the mediator to seek advice from another source, the mediator’s liability may be much harder to establish.
IV. OTHER BASES OF MEDIATOR LIABILITY
A. Fiduciary Duty
5.14 It is possible that the law of fiduciary duties provides an appropriate means of defining the obligations owed by mediators to their clients, and making them accountable for misconduct.8 It could be flexible enough to apply without the need for a contract or the definable legal standards of negligence.
5.15 Application of the duties of a fiduciary to a mediator is based on the argument that by virtue of the position of trust, confidence, or influence in which a mediator stands with the disputants, a mediator is a fiduciary to them. Being bound by the duties of good faith, a mediator must not abuse that trust or confidence either to the detriment of those relying on the mediator’s skill or for his or her own benefit.
5.16 In a general sense the fiduciary duties of a mediator may include those of being evenhanded, unbiased, trustworthy and diligent. A breach of these duties may be actionable if it leads to injury to either or both disputants and the mediator would be liable to make restitution of losses suffered as a result of the mediator’s actions. Nor should an other party in the mediation process knowingly benefit from the mediator’s breach of duty.
5.17 Application of a fiduciary duty to mediators is not without difficulties. The courts may be reluctant to apply the fiduciary relationship in such an unusual way. Although each situation would be assessed on the merits, holding that all mediators, regardless of compensatory arrangements, institutions, settings, and expertise are fiduciaries may deter people from being mediators.
B. Business and Other Liabilities
5.18 Other actions may be taken against a mediator for behaviour which breaches acceptable business practice. Liability in this area derives from the business relationship established between a service provider and client, not from the process of mediation which is the service in the transaction. This basis of liability is likely to be relevant only to privately employed mediators rather than to those employed in community agencies or court-annexed programs. It is possible, however, that some liability may attach to the program or agency as a whole. Primarily the mediator would need to ensure that any consumer protection legislation applicable to the provision of services is complied with. The most obvious areas of concern are the making of misleading statements about the services provided, and false statements of qualifications.
5.19 Other bases for mediator liability flow from the mediator-client relationship and the mediator’s conduct of the process of mediation. It is possible, although improbable given the conciliatory emphasis of mediation, that claims for personal injury or defamation could arise from dealings amongst parties in the mediation process. Action may be taken against disputants as well as mediators. Such actions would be brought in the usual way, with no special consideration for the circumstances in which they may have arisen.
V. CONFIDENTIALITY
5.20 The issue of confidentiality has already emerged as contentious in the practice of mediation in New South Wales.9 Problems of confidentiality arise in mediation in two ways. First there is the breach of confidence which occurs when any participant in the mediation, the mediator included, discloses or uses information confidentially acquired during a mediation. Secondly there is the question of whether evidence from a mediator (or any participant in a mediation) should be admissible in any judicial proceedings. There seems no reason not to apply the usual breach of confidence principles to the former situation. It is the latter which presents special difficulties.
5.21 The need to protect the confidentiality of private dispute resolution forums is recognised widely among ADR practitioners. Most codes of conduct and institutional rules of mediation programs impose some obligation to maintain the confidentiality of mediation proceedings. Confidentiality is usual for proceedings in court-annexed ADR programs.10 Some other mediators are protected by statute, notably Community Justice Centre mediators and neighbourhood mediators in Victoria.11 These statutory provisions are specific in their application, no general protection exists. It is usual for private agreements with mediators to contain a term imposing confidentiality on proceedings. The validity of such a term has yet to be judicially decided, but will not necessarily be upheld.12
5.22 Arguments in favour of confidentiality rest on the dual bases of ensuring the integrity of the process of mediation and protecting the interests of all participants. For the parties this means their privacy, for mediators it concerns their status as a neutral party and the ability they have to provide effective professional services without being drawn into any future conflict between the parties.13
5.23 Where mediation is voluntary, a mediator’s promise of confidentiality encourages its use. It reassures disputants of the neutrality of the mediator, and fosters an atmosphere of trust in which all parties are willing to fully explore issues openly and honestly so that the potential for agreement is maximised. It is argued that the disputants’ choice of a private forum should be respected. The integrity of the private process of mediation should be recognised by conferring on it a privilege which separates it and protects it from public adjudication.
5.24 The call for legislative protection is not a straightforward matter. Mediation has flourished without it. There are alternative means of achieving the same end: reliance on existing court rules and rules of evidence covering settlement negotiations;14 by analogy with the privileged relationships such as lawyer-client;15 or by an agreement for privacy between participants to the mediation. Then there are questions of exactly what is meant by confidentiality, the extent of the material and parties subject to protection, and whether it is conditional or absolute.16 Members of some professional groups such as police and lawyers who act as mediators may confront conflicting ethical and legal demands on the question of confidentiality.17 Legislative protection is conferred only rarely.18 Ultimately it is a matter for public policy in which the desire for confidentiality in mediation is balanced with important principles of full disclosure in the adjudicatory system.
5.25 The concern about confidentiality in the context of our inquiries is which mediators will benefit from any privilege, whatever its source or form. Existing statutory protection in Australia extends only to those mediators affiliated with nominated agencies or institutions, which are responsible for accrediting the mediators they employ.19 This model excludes mediators not in an institution or program on which confidentiality is specifically conferred. Alternatively, protection could depend on a general professional accreditation, or be determined in ad hoc judicial decisions. The issue of accreditation therefore is of vital concern because of the legal position it can confer on mediators.
Should the confidentiality of mediation be protected? If so what should be the scope of the protection?
How should it be achieved? In particular, is statutory protection necessary?
VI. IMMUNITY
5.26 A method of protecting mediators from the liabilities presented in this Chapter is to confer on them an immunity, such as already exists for others. Persons exercising judicial functions in a court are exempt from all civil liability whatsoever for anything done or said by them in their judicial capacity.20 This protection is given so that they may administer the law independently, without fear. Immunity also exists for arbitrators when acting quasi-judicially, however the Uniform Commercial Arbitration Acts specifically restrict immunity to acts of negligence and exclude fraud.21
5.27 The possibility of a statute providing immunity on the grounds of public policy to the class of persons who mediate disputes is already being discussed in the ADR community.22 Indeed some limited statutory protection does exist, for example for Community Justice Centre mediators in New South Wales and neighbourhood mediators in Victoria.23
5.28 Any grant of immunity to a person or class of persons is never made lightly, and is rarely absolute. Whether, and to what extent mediators should be entitled to immunity raises important issues of policy. There is also the difficulty of determining which mediators should qualify for any privilege. Should it be generally granted, depend on formal accreditation, or be restricted to those mediators linked to the administration of justice in statutorily controlled schemes? The diversity of contexts in which mediation occurs which has been highlighted frequently in this Paper is no less relevant in this matter. So, too, is the essentially private nature of much of the alternative dispute resolution processes under consideration. It may be that there is contradiction in granting the protection associated with the public administration of justice to a system which is removed from public accountability.
Should immunity from liability be conferred on mediators?
If so, what should be the scope of the protection?
FOOTNOTES
1. See Gracine Hufnagle “Mediator Malpractice Liability” (1989) 23 Mediation Quarterly 33.
2. Advice to the Commission from a practising mediator, September, 1988.
3. See “The Sultans of Swap: Defining the Duties and Liabilities of American Mediators” (1986) 99 Harvard Law Review 1876. In a case which may have some relevance to mediators accredited by an agency or professional association, it has been held that by allowing his name to be on a professional association’s panel, an arbitrator thereby held himself out as skilled and responsible for the arbitration, see Pratt v Swanmore Builders Ltd and Baker (1981) 15 Building Law Reports 44.
4. Jaenesch v Coffey (1984) 155 CLR 549 per Deane J.
5. See MLC v Evatt (1970) 122 CLR 556 per Barwick J; Sutherland Shire Council v Heyman (1985) 157 CLR 424 per Mason J.
6. See Jay Folberg and Alison Taylor Mediation at 250-260; Carl D Schneider “A Commentary on the Activity of Writing Codes of Ethics” (1985) 8 Mediation Quarterly 83.
7. See Lawrence Susskind “Environmental Mediation and the Accountability Problem” (1981) 6 Vermont Law Review 1; Joseph B Stulberg “The Theory and Practice of Mediation: A Reply to Professor Susskind” (1981) 6 Vermont Law Review; “The Sultans of Swap” note 3.
8. See Arthur A Chaykin “Mediator Liability: A New Role For Fiduciary Duties?” (1984) 53 University of Cincinnati Law Review 731 at 732; Arthur A Chaykin “The Liabilities and Immunities of Mediators - A Hostile Environment for Model Legislation” (1986) 2 Ohio State Journal on Dispute Resolution 47 at 70.
9. Australian Construction Law Newsletter, No 2 at 9; advice to the Commission, September 1988.
10. See, for example, Retail Shop Leases Act 1984 (Qld) s22.
11. Community Justice Centres Act 1983, ss28(4),(5),(6), 29, and Evidence Act 1958 (Vic) ss 21J, 21L, 21M.
12. This may be so despite confidentiality in the initial disclosure, see Garner v Garner (1920) TLR 196. See also second reading speech, Evidence (Religious Confessions) Amendment Bill, the Hon J R A Dowd, Attorney General, New South Wales Legislative Assembly, 13 September 1989. The mere promise of confidentiality is not sufficient to attract a public interest immunity, see D v National Society for the Prevention of Cruelty to Children [1978] AC 171.
13. See Note “Protecting Confidentiality in Mediation” (1984) 98 Harvard Law Review 441; Hugh Mc Isaac “Confidentiality: An Exploration of Issues” (1985) 8 Mediation Quarterly 57; Lawrence R Freedman and Michael L Prigoff “Confidentialiaty in Mediation: The Need for Protection” (1986) 2 Ohio State Journal on Dispute Resolution 37; Eileen P Friedman “Protection of Confidentiality in the Mediation of Minor Disputes” (1982) 11 Capital University Law Review 305; Eric D Green “A Heretical View of the Mediation Privilege” (1986) 2 Ohio State Journal on Dispute Resolution 1 at 5.
14. For example: the New South Wales Supreme Court Rules Part 22 Offer of Compromise; the general protection for “without prejudice” statements made in an attempt to settle a dispute, see Field v Commissioner for Railways for NSW (1957) 99 CLR 285; or the public interest immunity, D v NSPCC [1978] AC 171. Negotiation in family law matters can be protected by the Family Law Act 1975 (Cth) s18(2) referring to marriage counsellors and other specified persons; see also In the marriage of Lace (1981) 7 Family LR 631.
15. For the basis of the privilege see Grant v Downs (1976) 135 CLR 674 at 685 per Stephen, Mason and Murphy JJ.
16. CJC Act s29(2) allows for several exceptions including disclosure necessary to prevent injury to person or property. Evidence Act 1958 (Vic) ss21J and 21L refer only to inadmissibility in court and legal proceedings, and 21M has various exceptions to confidentiality for neighbourhood mediators and staff of neighbourhood mediation centres.
17. CJC Act 1983 s27(2).
18 The secrecy of the confessional is only now being given legislative protection in New South Wales, Evidence (Religious Confessions) Amendment Bill, note 11.
19. See note 11 supra.
20. Rajski v Powell (1987) 11 NSWLR 522.
21. See for example Commercial Arbitration Act 1984 (NSW) s51; see also John J A Sharkey and John B Dorter Commercial Arbitration (Law Book Company, Sydney, 1986) at 210.
22. Chaykin (1986) note 6 at 78; Joseph B Stulberg “Mediator Immunity” (1986) 2 Ohio State Journal on Dispute Resolution 85.
23. CJC Act 1983, s27, Exoneration from liability; Family Law Act 1975 (Cth) s19; Evidence Act 1958 (Vic) s21N.
