Author: Mark Fatharly
In resolving litigation, most disputes are the subject of mediation. Supreme Court statistics show that approximately 97% of matters are resolved before trial and that the mediation process is the central contributor to such a high success rate.
The recent Supreme Court decision of C v M [2011] WASC 175 is a useful reminder of seriousness of the obligations of confidentiality and the without prejudice nature of documents prepared in relation to mediation and discussed at mediation.
Usually mediation orders spell out the obligations on the parties, as do the mediators at the commencement of mediation. Section 71 of the Supreme Court Act provides that anything said or done, any communication or any admission made during an attempt to settle a matter by mediation is taken to be in confidence and is not admissible in any proceedings before any court, tribunal or body. It further provides that any document, copy or evidence of such a document prepared in that context is also subject to the duty of confidence and is therefore not admissible in any proceedings before any court, tribunal or body.
In C v M an action in the Supreme Court was referred to mediation. The parties were accompanied by their lawyers but it failed to produce a settlement of the claims. Following mediation, M's solicitor properly sent his client a report on the mediation by email later that same day marked "Private and Confidential". Instead of maintaining confidence, M forwarded the email to at least 5 other people with investment interests in the business. The email itself "was heavily slanted towards the defendant's position, as one might expect." A copy eventually ended up in the hands of C, the other party.
M admitted forwarding the email to others. C complained that the confidentiality provisions surrounding the mediation had been violated and sought permission to contact the unauthorised recipients of the email 'to set the record straight'.
Justice Kenneth Martin stated that the statutory obligation of confidentiality attaching to mediations "is intended to promote an open, protected environment for parties to frankly and freely attempt to reach the resolution of their civil disputes" and that the protection of confidentiality remains unless the parties agree or the court so orders. A wider obligation of overarching confidentiality, applicable to all proposed participants in the mediation is imposed such that disclosure to third parties is prohibited. The unilateral disclosure of the email was "a violation of an indispensible protective component of the court's processes" and might also amount to a contempt of court.
M was required to provide an affidavit identifying who else may have received the information in the email but the court was not prepared to make an order unilaterally permitting C to respond by communicating with those recipients, asserting that "one confidentiality violation... is more than enough." It was, however, prepared to allow a tailored communication prepared by C's solicitors and approved by the court, essentially explaining C's concerns over the content of the email.
Justice Martin stated that "It is essential that the parameters of the regime of statutory confidentiality applicable to a mediation by direction be well understood by legal advisers. They must then clearly and carefully communicate and explain to their clients what obligation this carries when a mediation is conducted. Where communications are proposed to be made about what has occurred or been said at a mediation, particularly by an email communication, the modern day potential for the on-forwarding of email communications to become 'viral' in seconds must be recognised. Appropriate care must be taken to preserve the regime of confidentiality which is permanently attached to mediation communications."
If in doubt about these obligations, clients should seek clarification from their legal advisor.
For more information about this legal update or any other commercial litigation matters please contact Mark Fatharly on (08) 9321 3755.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
