Alternative Dispute Resolution Can it work for Administrative Law?

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1 Alternative Dispute Resolution Can it work for Administrative Law? The Honourable Justice Garde AO RFD, President of VCAT Paper delivered on 26 February 2014 to a seminar hosted by the Australian Institute of Administrative Law 1. INTRODUCTION Alternative Dispute Resolution ( ADR ) has the capacity to be of great benefit to the justice system throughout Australia. Where successful, ADR can reduce the duration of legal proceedings, therefore reducing the cost of dispute resolution to the parties and the public in the administration of justice. Parties ordinarily prefer resolution of a dispute by ADR over a contested hearing, removing their desire to appeal or otherwise complain about the decision, and again saving resources of Australian courts and tribunals for disputes that require judicial decision-making. Even where a dispute is not settled, the ADR process may narrow the issues in dispute and lessen the duration of the final hearing. As a result, there has been legislative encouragement of the increased use of ADR in both the Commonwealth and in Victoria. This has been coupled with the introduction of various new methods of ADR, in an attempt to encourage more parties to achieve a resolution of their dispute by consent. While ADR has proven to be very effective in relation to civil disputes, it has not been utilised as readily in relation to administrative law. Administrative decision-makers exercise powers that are strictly prescribed by legislation, and cannot readily engage in negotiation or mediation with those subject to their decisions. Similarly, in administrative review proceedings, officers attending ADR on behalf of original decision-makers often, understandably, feel bound by the decision that has been made, and are generally not empowered to consent on behalf of the decision-maker to any negotiated outcome that may be reached through ADR. Another problem with the use of ADR in administrative review proceedings is the multi-party nature of many administrative decisions. It may be difficult to assemble the parties to the dispute, or impossible to achieve agreement given the number of parties who must agree. There have been a number of legislative changes that have the potential to achieve significant progress in this area. 2. ADR IN THE FEDERAL CIVIL JURISDICTION ADR in the Federal Court and Federal Circuit Court is governed by the Civil Dispute Resolution Act 2011 (Cth) ( the CDRA ), which requires parties to a civil dispute to take genuine steps to resolve their dispute prior to instituting proceedings in either court. Genuine steps are described in s 4 of the CDRA as steps that constitute a sincere and genuine attempt to resolve the dispute, having regard to the person s circumstances and the nature of the dispute. President s Chambers Level 1, 55 King Street Melbourne VIC 3000 Page 1 of 6

2 Section 6 of the CDRA requires applicants to file a genuine steps statement along with their application in either court, while respondents are required to file such a statement prior to the hearing of the proceeding. A genuine steps statement must set out either the steps that were taken in an attempt to resolve the dispute, or the reasons why no such steps were taken. The Federal Court and the Federal Circuit Court may take account of the genuine steps statement, or the failure to file such a statement, in performing functions or exercising powers in relation to proceedings, as well as in exercising the discretion to award costs. 3. ADR UNDER THE CIVIL PROCEDURE ACT 2010 (VIC) Section 47 of the Civil Procedure Act 2010 (Vic) ( the CPA ) empowers Victorian courts to give any direction or make any order considered appropriate in relation to a civil proceeding in order to ensure that it is conducted in accordance with the overarching purpose. The overarching purpose is stated in s 7 to be facilitation of the just, efficient, timely and cost-effective resolution of the real issues in dispute. Section 47(3)(d) goes on to state that directions given under that section may include directions encouraging the parties to co-operate with each other in the conduct of the civil proceedings, to settle the whole or part of the civil proceedings, or to use appropriate dispute resolution. Appropriate dispute resolution is defined in s 3 of the CPA to mean a process attended or participated in by a party for the purposes of negotiating a settlement of the civil proceeding or resolving or narrowing the issues in dispute. Under s 3, the term includes, but is not limited to: mediation, early neutral evaluation, judicial resolution conferences, settlement conferences, referral of a question to a special referee, expert determination, conciliation and arbitration. 4. ADR IN THE COMMONWEALTH ADMINISTRATIVE APPEALS TRIBUNAL In 2005, the Administrative Appeals Tribunal Act 1975 (Cth) ( the AAT Act ) was amended to expand the scope of ADR within the Administrative Appeals Tribunal ( the AAT ). The amendments gave the AAT wide powers to conduct various types of ADR. In addition, the President was empowered to direct that proceedings be referred to a particular form of ADR, and to make directions about the procedure for ADR, the person to conduct the ADR, and the steps to be taken following the conclusion of ADR. It is worthy of note that some 68% of proceedings within the AAT are disposed of prior to final hearing. While a total 3.5% of matters are dismissed by operation of law before determination, 37% of matters are dealt with by ADR or consent of the parties and 27% are withdrawn by the applicant. Although it is understood that not all of these matters will have been resolved as a direct result of ADR processes, the wide scope of ADR available, the duty to act in good faith in ADR and the active case management of all proceedings through conferences (as outlined below) has had a significant impact on the statistics listed above. a. Types of ADR The AAT Act, as amended, gives the AAT power to utilise a wide range of ADR processes, including conferencing, mediation, neutral evaluation, case appraisal and conciliation. In addition, there is the potential to expand the types of ADR available to the AAT through regulations, although this has not yet been done. President s Chambers Page 2 of 6

3 On receipt of an application by the AAT, the proceeding will typically be referred to a conference for preliminary dispute resolution. From there, consideration will be given to a number of factors when deciding whether to refer the matter to further ADR and, if so, what type of ADR would be appropriate in the circumstances of the case. These considerations include the attitude of the parties; the benefits of involving additional persons in the ADR process; the stage of preparation of the application; the nature of the dispute; impediments to settlement; previous attempts to resolve the dispute; and the availability of participants with authority to settle. Conferencing is conducted by an AAT member or officer along with the parties and/or their representatives. The four main stages of conferencing are: preparation and explanation of the process, identification of the issues in dispute, case management and exploration of options for resolution. This ensures that parties have a clear understanding of the dispute and allows the AAT member or officer conducting the conference to determine the most efficient and effective method for resolving the dispute. Mediation is a process by which the parties to a dispute attempt to identify issues, develop options, consider alternatives and ultimately endeavour to reach an agreement with the assistance of an AAT member or officer. A matter is more likely to be referred to mediation where it is lengthy or complex, where it involves more than two parties, where there is a desire for confidentiality, or where some kind of non-monetary interests are important. For example, one party may desire an apology, or there may be a need to foster an ongoing relationship between the parties where they will need to interact in the future. Conciliation operates in a very similar manner to mediation, with the exception that the conciliator is empowered to advise the parties by suggesting terms of settlement, and may actively encourage participants to reach an agreement that accords with the requirements of the statute. As such, parties are more likely to benefit from referral to conciliation where a more hands-on approach is required in order to reach agreement. Neutral evaluation involves the objective assessment of the proceedings and provision of a non-binding opinion on the likely outcome by an independent person. The neutral evaluation can be conducted by an AAT member or officer, or a third person appointed for this purpose on the basis of their knowledge of the subjectmatter. A proceeding is more likely to be referred for neutral evaluation where there is one particular legal issue that will be decisive of the dispute, and where most of the evidence has already been gathered for the purposes of the proceeding. The final type of ADR utilised by the AAT is the process of case appraisal, which is a very similar process to neutral evaluation; however, it is used primarily where the dispute between the parties is factual, rather than legal. Thus, where the parties agree on the applicable law, but the application of the law turns on a version of events that is disputed, an independent person may provide a non-binding opinion as to the likely conclusion of the AAT on the factual circumstances of the case. b. Obligation to Act in Good Faith As a result of the amendments made in 2005, the AAT Act now contains a requirement that parties to a proceeding that is directed to be referred to ADR act in good faith. The AAT considers that this requirement imposes an obligation to ensure that the person attending an ADR process on behalf of a party has the necessary authority to settle the matter, which overcomes one of the major impediments to the efficacy of ADR within the context of administrative law, as mentioned above. President s Chambers Page 3 of 6

4 In particular, original decision-makers are subject to a number of additional obligations to ensure that the ADR process is as effective as possible. For example, s 33(1AA) of the AAT Act requires that government agencies use their best endeavours to assist the AAT in making decisions relating to the proceedings. Decision-makers are also required to act as model litigants under the Legal Services Directions 2005 (Cth), which oblige them to explore methods of dispute resolution prior to instituting proceedings and to participate fully and effectively in ADR through agents who have the authority to settle proceedings. 5. ADR IN THE VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL In the Victorian Civil and Administrative Tribunal ( VCAT ), ADR is similarly seen as a key factor in achieving VCAT s goal of providing fair, efficient justice for all Victorians. Under the Victorian Civil and Administrative Tribunal Act 1998 (Vic) ( the VCAT Act ), VCAT may refer matters to either mediation or a compulsory conference in order to resolve the dispute prior to hearing and determination by a VCAT Member. While the scope of ADR within VCAT is more limited and while there are no equivalent statutory obligations on parties to ADR, a significant emphasis is placed on early resolution of disputes, and VCAT has been working to improve the efficacy of ADR throughout both its civil and administrative jurisdictions. a. Types of ADR VCAT may refer a matter to mediation under s 88 of the VCAT Act. The process of mediation within VCAT is very similar to that in the AAT, in that it involves an attempt to identify issues, develop options, consider alternatives and ultimately endeavour to reach an agreement between the parties to a dispute. The mediator does not give advice as to any party s prospects of success if the matter were to go be determined by a VCAT Member, and does not put forward any options for settlement of the proceeding. Compulsory conferences are governed by s 83 of the VCAT Act and serve the purpose of identifying and clarifying the nature of the issues in dispute, promoting settlement of the proceeding and identifying questions of fact and law to be determined by VCAT. Compulsory conferences are also used to make directions as to the future conduct of the proceeding, should a settlement not be reached. In promoting the efficacy of ADR within the Civil Division, VCAT has developed a program known as SMAH, which stands for Short Mediation and Hearing. The SMAH program involves the listing of small and non-complex civil claims matters every Thursday morning. Matters are first listed for a mediation, and if the matter does not settle within one hour it will be heard and determined by VCAT on the same day. This ensures that the dispute is mediated and heard in a timely manner. In VCAT s experience, the knowledge that the dispute will go to hearing immediately if it is not resolved has led to parties being more amenable to the mediation process. While VCAT Practice Note PNVCAT4 Alternative Dispute Resolution makes it clear that, in order for mediations and compulsory conferences to be successful, parties must attend with a commitment to negotiate in good faith to resolve the case, no such requirement is enshrined in the legislation. Similarly, while a number of enabling enactments require parties to engage in particular forms of ADR prior to commencing proceedings in VCAT, there is no general requirement that parties attempt to resolve a dispute before lodging an application. President s Chambers Page 4 of 6

5 b. Administrative Review Proceedings It is the VCAT experience that there are significant impediments to the efficacy of ADR in administrative proceedings. A key example of this is within the Planning and Environment List ( the PEL ) in VCAT s Administrative Division. Currently, many officers representing original decision-makers who attend ADR within the PEL understandably consider themselves to be bound by the original decision, and advise that they have no power to consent to any negotiated settlement that may be reached through the process of mediation or compulsory conference. As a result, during the financial year, a total of 6.7% of matters within the PEL were resolved through ADR. c. Victorian Civil and Administrative Tribunal Amendment Bill 2014 (Vic) In order to overcome these issues and encourage participation in, and resolution of disputes through, ADR in administrative proceedings, the Victorian Civil and Administrative Tribunal Amendment Bill 2014 (Vic) ( the VCAT Bill ) proposes to expand the powers of VCAT to bring the original decision-maker back into the process, even at the review stage. Under the VCAT Bill, Members will be given the power to invite a decision-maker to reconsider their decision at any point during proceedings, including following the conclusion of an ADR process. This will be done with a view to encouraging the decision-maker to amend their decision to accord with any negotiated outcome reached through ADR. As part of this reform, decision-makers will be given the power to affirm, vary or substitute their original decision, with the proceeding in VCAT continuing towards final hearing while this process is undertaken. If the decision under review is varied or substituted, then the review proceedings are taken to be proceedings for the review of the decision as varied or substituted. If the applicant for review is content with the varied or substituted decision, they are able to withdraw their application without such a withdrawal on its own leading to an adverse order for costs under s 74(2)(b) of the VCAT Act. The new power is likely to facilitate resolution of administrative review proceedings as: the power to reconsider is conferred by legislation on the original decisionmaker; the original decision-maker is no longer considered to be functus officio; it is not necessary for all parties to agree to the outcome or even attend the mediation or compulsory conference; power is given to VCAT mediators, after input from the parties, to assist in designing the solution without the need for a final hearing; and the independence of VCAT is maintained. In addition, it is proposed to give VCAT Members a power to order that a party to proceedings reimburse an applicant for fees paid in relation to the proceedings. This power is to be separate from the power to award costs. In deciding whether to make such an order, VCAT Members are to take into account, inter alia, the conduct of the parties either before or during the proceeding, which can include conduct during the course of ADR. Parties who fail to act in good faith in relation to ADR may therefore be subject to orders that they reimburse the applicant for the payment of fees in the event that the applicant is ultimately successful. Parties may also be encouraged to settle a matter in the knowledge that they may be ordered to pay fees if they are ultimately unsuccessful. President s Chambers Page 5 of 6

6 Finally, power has been given to VCAT mediators to determine part of a dispute following an unsuccessful mediation or compulsory conference so that, even where the ADR is unsuccessful, the scope of the dispute will be reduced, saving the parties and the public time and money in determining the proceedings. d. ADR IN DISCIPLINARY PROCEEDINGS ADR has typically been more successful in disciplinary proceedings at VCAT than in the PEL. However, the process of ADR in such proceedings is likely to be affected by the recent High Court decision in Barbaro v The Queen; Zirilli v The Queen [2014] HCA 2 ( Barbaro and Zirilli ). In this case, it was held that the established practice in criminal proceedings in Victoria, whereby the prosecution makes a submission as to the range of sentences that would be appropriate in the circumstances, is inappropriate and should cease immediately. Although made in the context of criminal proceedings, this judgment is likely to impact on VCAT s disciplinary proceedings due to the analogy drawn between disciplinary proceedings and criminal proceedings by the Court of Appeal in Towie v Medical Practitioners Board of Victoria [2008] VSCA 157. In that case, the Court of Appeal found that a respondent to disciplinary proceedings has the same right as a criminal defendant to stand mute until the completion of the case being made against him or her. In Stirling v Legal Services Commissioner [2013] VSCA 374, the Court noted that the analogy between criminal and disciplinary proceedings was imperfect, but nevertheless went on to apply principles relating to criminal sentencing to the imposition of a penalty in the disciplinary proceedings under consideration. Ultimately, the Court found it appropriate to expand principles applicable to global and suspended sentences into the context of disciplinary proceedings. As a result, the High Court decision in Barbaro and Zirilli is likely to require that VCAT no longer accept submissions in relation to appropriate penalties. This will impact upon the parties ability to participate in ADR in such proceedings, as negotiations in these cases typically centre around the submissions that will be made as to the appropriate penalty in the event that particular admissions are made. 6. CONCLUSION In both the federal and Victorian jurisdictions, a significant move is being made towards encouraging parties to resolve their disputes outside the context of legal proceedings, and to co-operate in reaching an outcome that is satisfactory to all involved. Recent changes to the AAT Act have expanded the scope of ADR processes available in that jurisdiction and imposed a statutory obligation on participants in ADR. While such steps have not yet been taken in Victoria, amending legislation is currently in progress to reform the ADR process in administrative review proceedings and expand VCAT s powers to encourage parties to settle disputes through adverse fee orders. While the impact of ADR has historically been limited in relation to administrative proceedings, the current trend within the courts and tribunals is to emphasise and facilitate resolution of disputes through these processes. While the High Court decision in Barbaro and Zirilli may ultimately hinder negotiation through ADR in administrative proceedings, its efficacy in administrative law generally is on the rise. President s Chambers Page 6 of 6

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