This paper was originally presented to the Commercial Law Association of Australia, in Brisbane, on 24 October 2024.

Introduction

Sir Laurence Street (1926-2018), after his retirement as Chief Justice of New South Wales, became one of Australia’s most renowned mediators. In his opening remarks at mediations, he would commonly use a simple analogy to set the mood. Having seated the opposing parties on opposite sides of a boardroom table, he would place a 50 cent coin between them. The coin would be balanced on its edge, with each side facing only one of the opposing groups. This coin, he explained, represented the problem which the parties were facing. Whilst each party was looking at the same problem, their views were limited by their perspective. One party was apt to view the problem as if it were simply a “heads”, whilst their opponent may only be viewing it as a “tails”. Whilst as mediator, he had a glimpse of both sides of the coin, his viewpoint was also constrained. So the purpose of the mediation, he said, was to give all parties an opportunity, metaphorically speaking, to pick up the coin and examine it from all angles. Having then obtained a similar understanding of the problem, the parties should be in a much better position to work out how it could fairly be resolved.

These remarks are instructive for two reasons.

First, they provide a neat illustration of the style of advocacy which works well in a mediation. These remarks, of course, came from the mediator. But their purpose was to find a way to persuade all parties to be open and constructive. They achieved this purpose not by lecturing the parties about the need for co-operation, nor by threats or bluster. Rather, the mediator used a simple, charming and effective analogy, the good sense of which could be understood by everyone in the room, whether lawyer or lay person.

Secondly, these remarks help to explain one of the key purposes of advocacy in a mediation.

In many mediations, the dispute will arise from a set of circumstances which are known to both parties. There may be a common set of pleadings, primary documents, filed witness statements, and expert reports. Similarly, the legal issues will be governed by a common set of statutes, caselaw and commentary. These materials, taken together, may not point to a single correct analysis of the issues. However, in theory at least, they should lead all parties to identify a similar range of possible outcomes and form a similar view of the risks involved. Once that point is reached, it should be a relatively short step to negotiate a reasonable settlement sum, which reflects the risk-weighted value of the claims.

Accordingly, in cases of this kind, it is sometimes said that there is no point in having position papers, opening statements or other forms of advocacy at the mediation. It is said that these steps are costly; that they are apt to drive the parties further apart; and that they are unnecessary, because the parties already understand the issues and already have their own views about prospects. It is said that the parties should simply start the process of making offers and counteroffers, with a view to finding terms which are acceptable to both.

In some cases, particularly where the issues are not complex, such an advocacy-free approach to mediation can work well.

In practice, however, complex mediations which are conducted on this basis commonly fail. The parties may be looking at the same materials and have the benefit of legal advice. However, they often discover, from the substantial gulf between their offers and counter-offers, that they have each analysed these materials in a fundamentally different way. In short, each has convinced themselves that they have the better case. The difficulty then becomes that, in an advocacy-free mediation, there is no appropriate framework in place to allow these fundamental differences to be identified and explored. So an impasse tends to arise.

There are many reasons why differences of this kind arise. They may arise from information asymmetry, because there are critical aspects of the matter which are only known or appreciated by one party (eg a flaw in the credibility of a key witness). They may arise from differences in preparation, because one party has made a more thorough or more reliable study of the factual and legal issues than the other. They may arise from perspective bias, because the materials are not being considered objectively, but only through the lens of one party’s viewpoint. They may arise because the parties have a fundamentally different risk tolerance, which leads one party to be more attracted to a litigated outcome than the other.

All of these differences are capable of being overcome, if the mediation has a structure in place to allow these differences to be identified, analysed and discussed.

A key purpose of advocacy, in mediations, is to create such a structure. Good advocacy involves each party providing to the other cogent reasons why they would both be better off settling the matter on particular terms, rather than proceeding to a judicial determination. Advocacy of this kind helps to create a framework of analysis, which allows each party to identify and understand why they are viewing any relevant factor in the matter differently. It thus creates a path towards finding common ground. When presented in a measured and constructive way, advocacy of this kind is apt to promote a constructive approach in which each party sees the mutual value of compromise.

As with all advocacy, there is no single approach to mediations which represents good practice. That is because mediations can be so very different.

Some mediations, for example, are designed to be quick, informal and inexpensive. Others are only convened after all other attempts at settlement have failed – and are designed to allow the parties to work methodically through their differences.

Some mediations are focussed entirely on the legal merits of a claim. They seek to identify the range of realistic outcomes of the matter, the probability of those outcomes, and a reasonable basis upon which these claims could be resolved. Other mediations are more focussed on collateral issues, including the future commercial relationship of the parties.

In some mediations, the parties are content to seek a fair and reasonable resolution of the dispute. In others, one or more of the parties are prepared to act brutally, with a view to maximising the commercial leverage they hold over their opponent.

Advocacy, in these very different contexts, necessarily involves different approaches.

However, they are some core principles which can be applied in most contexts, with variations as the circumstances require.

To explain these principles and their rationale, it is helpful to focus on a mediation base case – a simple category of mediation, which is relatively free from complication. For present purposes, the base case may be described as having six main characteristics. First, it is a matter which only involves two parties who are in a dispute of a monetary kind. Secondly, it is a matter in which the mediating parties are faced with a binary choice, between having their dispute resolved judicially or being resolved by some agreed compromise. Thirdly, it is a matter in which each of the parties has a reasonably arguable basis to contend for different outcomes. Fourthly, it is a matter in which each party would prefer to reach a reasonable compromise, if that were possible. Fifthly, it is a matter in which prior attempts to reach a quick and low-cost compromise have failed. Sixthly, it is a matter in which each party is prepared to engage in a constructive discussion, with each other and their preferred mediator, with a view to resolving these differences.

Decisions to Compromise and the Influence of Advocacy

To understand the principles to be applied in the conduct of a mediation of this kind, it is critical to understand the process by which decisions to compromise are typically made – and the influence which advocacy can have on this process.

Decisions to compromise are personal decisions. They are decisions which are made by one or more specific individuals, for reasons which reflect the factors and values which are subjectively important to them. Whether the party to proceedings is a natural person, a corporation, or an arm of government, the key point is that there will always be one or more specific individuals who will actually make the decision – and their approach may vary significantly.

For some decision-makers, the decision-making process will be reasonably rigid and based upon parameters which are rational and economic. A paradigm of this kind of decision-making is in situations where an insurer has the conduct of a case being brought against insured defendants. The practice, in many cases of this kind, is for the insurer to seek formal legal advice about the likely outcome of the litigation. This advice is critical, because it is used by the insurer to set an appropriate reserve for its contingent liability. A designated officer of the insurer may then have formal authority to settle the matter, up to the amount of that reserve. However, the officer will be expected to use their discretion, to seek to settle the matter for the lowest feasible amount. In the exercise of this discretion, key factors may be: (a) an assessment that, unless compromised, the plaintiff is likely to take the matter to trial; (b) an assessment that a particular offer made by the plaintiff is the lowest amount they are ever likely to accept; and (c) an assessment that the legal advice, which underpinned the reserve, remains valid and reliable. However, this decision- making process is unlikely to be affected by matters which are personal to the insured defendant (eg any damage to their reputation which might arise if the matter proceeds to trial). Indeed, if allegations of fraud or deliberate wrongdoing are made against the defendant, they may provide a basis for insurance cover to be declined.

For other decision-makers, the decision-making process may be very much more intuitive and subjective. A paradigm of this kind of decision-making is the position of a very wealthy individual, who is involved in litigation of a personal character. By reason of their wealth, the cost of either contesting or compromising a matter may be immaterial. Indeed, their decision-making may not be particularly influenced by legal advice about prospects. However, they may be very concerned to pursue issues of principle or perceived slights. For such individuals, a feeling of personal vindication (eg by receiving a genuine apology) may be more important than any other factor, when considering a settlement proposal.

Even in cases where the decision-making process is quite intuitive and subjective, it commonly involves the following key steps:

1. developing some understanding of what is likely to happen if the matter proceeds to a judicial determination, including the range of possible outcomes, the likelihood of those outcomes, and the net financial benefit or cost of those different outcomes.
2. considering the key terms of any proposal to compromise the dispute, including the feasibility of that proposal, and net financial benefit or cost involved.
3. considering the likelihood of a better compromise proposal emerging in future.
4. considering the likelihood of the litigation otherwise failing to proceed in future.
5. undertaking some comparison of the merits, costs and risks of all these alternatives, having regard to all factors and values which are subjectively important to the decision- maker, and any advice or guidance which is considered material.

In considering these issues, the key factors generally include the following.

First, there is the intrinsic legal merit and value of the claims being advanced. This is commonly analysed by considering matters such as: (a) whether the claim falls within an established category of case or has novel features; (b) whether the claimant has witnesses or other evidence available to prove their case; (c) the inherent credibility of that evidence, having regard to any available evidence to the contrary; (d) the merits of any defence (eg limitation periods); (e) the likely quantum of recovery if the claim is successful, including interest and costs; (f) the potential for appeal proceedings in the matter; and (g) any risks of actually recovering the amount of any judgment, when the proceedings are finally concluded. Drawing upon these considerations, it is usually possible to identify the most probable potential outcomes of the matter, after allowing for unrecoverable costs. By way of example, in an evenly balanced matter, the analysis may suggest that for the claimant there is: (a) a 50% probability of recovering a net amount (after allowing for unrecoverable costs) of $1 million; and (b) a 50% probability of losing the matter and incurring a costs liability (for both parties) of $200,000. On this analysis, a risk-weighted value of the claim, to the claimant, may be in the order of $400,000 ($1,000,000 x 50% less $200,000 x 50%).

Secondly, there is usually consideration of any other benefits or costs of proceeding with the litigation. The benefits may include obtaining certainty about an issue of wider importance. The costs commonly include the opportunity costs of diverting time and resources to the litigation, rather than to other pursuits. They may also include the personal or financial stress of the litigation, the risk to personal or commercial reputation, and the risk to valuable commercial relationships.

Thirdly, there is the intrinsic value and feasibility of the compromise being proposed – and the extent to which it reflects the intrinsic legal merit and value of the claim being advanced.

Fourthly, there is usually consideration of any other benefits or costs of the compromise being proposed and their value. Some of these benefits may simply involve neutralising the risks of the litigation (eg avoiding reputation risk). However, there may be benefits obtained through negotiation which could not otherwise be obtained (eg a more certain contractual basis for dealing with the other side in future). Similarly, there may be collateral costs of the proposed compromise to be considered which arise only through the proposed compromise (eg an agreement not to engage in particular conduct in future).

Fifthly, there is a commonly a proportionality issue involved. The conduct of litigation can be viewed as an investment of funds, with a view to obtaining a sufficient benefit to justify the outlay.

So an issue which commonly arises is whether an investment of further time and costs in the litigation is sensible and proportionate, having regard to the potential benefits and risks involved. This issue becomes particularly acute when the parties are close to compromise, and the real question then becomes whether the further investment is justified to obtain a marginal benefit.

Sixthly, there is commonly an assessment required of the competence, financial standing and resolve of the opponent. The competence issue relates to the likelihood that the litigation will be conducted quickly and successfully. The financial standing issue relates to the likelihood that the opponent will be in a position to continue with the litigation. The resolve issue concerns the issue of whether the opponent has truly provided their best offer and has otherwise resolved to proceed to trial.

Seventhly, there is commonly an assessment required of the competence and reliability of a party’s own professional advisers and witnesses. In the context of a mediation, parties typically take account of the guidance and advice given by their legal advisers and experts – including advice about prospects. Their confidence in the reliability of that advice – and the capability of the entire group of lawyers and witnesses to take the matter to a successful conclusion – is often a key factor in the decision-making.

Eighthly, there are commonly a range of personal factors involved. These factors include the extent to which a party is risk-adverse or prepared to embrace risk. They include issues of personal pride – or the need to maintain family harmony. They include any personal animosity toward their opponent or their opponent’s lawyers.

Having outlined the way that decisions to compromise are made, the next question to consider is how advocacy in a mediation can influence that decision-making.

Advocacy may be broadly defined as anything said or done (or not said or done) which seeks to promote a decision, by the opposing decision-maker, to accept a compromise proposal.

So there is scope for advocacy to provide cogent inputs in relation to every relevant factor in an opponent’s decision-making process.

The key challenge, in a mediation, is that the opposing decision-maker may well be distrustful or even hostile to any presentation or proposal advanced by their opponent.

For this reason, advocacy in a mediation is usually more effective if it takes a respectful, constructive and understated tone. In general, it is unproductive to seek to lecture, threaten, or demean an opponent or their case. It is usually more productive to: (a) demonstrate a shared interest in solving a common problem; (b) demonstrate a willingness to work together to find a reasonable solution to the problem; (c) provide new information and perspectives which may lead this particular opponent (and their lawyers) to reconsider their position; (d) provide the mediator with the information required to allow him or her to privately test the merits of an opponent’s grounds for resistance to the proposed compromise; (e) provide an opponent (and their lawyers) with a dignified way to step back from any previous position; and (f) thereby enable the opponent to reach its own conclusion that the best option for them is to accept the proposed compromise.

In broad terms, the aim is to first create an environment which is conducive to a constructive and co-operative approach to resolving the dispute. It is then to take steps to introduce, into the opponent’s decision-making process, the key points which are likely, in the case of these particular decision-makers, to lead them to conclude that they would be better served to accept the proposed compromise than continue with the litigation.

The next issue to consider is how to convert these aspirations into a workable strategy in a base case mediation.

Developing a Mediation Strategy

A common mistake in mediation is to proceed without any apparent strategy. It is surprisingly common for mediations to be convened: (a) without a party having undertaken any detailed analysis of the competing merits of the claim; (b) without any thought being given to the full range of possible models for settlement; (c) with only perfunctory position papers and opening statements being prepared; (d) with no apparent bidding strategy to try to reach an acceptable outcome; and (e) with no strategy to deal with impasses which arise in the negotiations. In effect, there is only a Micawber plan – to start the process and hope that “something will then turn up”.

Mediations are more likely to be successful if the parties are well prepared and seek to proceed pursuant to a thoughtful, but flexible, strategy.

As a first step, it is necessary to devote some time to analysing the intrinsic legal merit and value of the claims in dispute. The most obvious reason for doing so is to allow a reasonable settlement range to be estimated. In most cases, it will not be possible to identify a single probable outcome of the matter. There will usually be a range of possible outcomes, both favourable and unfavourable. There is also a need for flexibility, because new information about the matter is likely to emerge, including during the mediation. However, the task is simply to use all available information to identify a range of probable outcomes and place a risk-weighted value on the claim as a whole. The value is usually expressed as a range, and in most matters, this range provides the bottom-line figure for negotiations. This is a figure which is not ordinarily disclosed (even to the mediator), unless there is a strategic reason for doing so.

In analysing the merits, there is a second important purpose involved. This is to seek to predict the key issues upon which an opponent, at the mediation, may take a strongly divergent view. A simple example of this is a limitation defence. It is common for mediations to fail, because parties take fundamentally different views about the viability of such a defence. Points of this kind require additional preparation, with a view to finding a persuasive reasons to advance at the mediation to cause an opponent to reconsider their views. In the example of a limitation defence, the obvious work to be undertaken is to look for a closely analogous authority. If there is such an authority, which an opponent has not found, it could change their perception of the case. The task involves focusing upon identifying matters which an opponent may not know, or may have misunderstood, and which may have led them to a different analysis of the matter.

Secondly, it is necessary to consider the full range of possible models for the settlement of the matter. In many matters, there will be no real options available. The only possible model will involve a payment of money, in exchange for an appropriate release, and the discontinuance of the proceedings. In other cases, however, the dispute may arise in the context of a wider relationship between the parties. For example, the dispute may concern a single supply of goods in the course of a longer-term commercial relationship between the parties. In this case, the supplier may not be attracted to paying a large lump-sum to settle the dispute, but will be happy to renegotiate a new long-term agreement on more favourable terms. The task involves considering whether either party would be more attracted to a model of this kind, because the provision of benefits collaterally is more attractive than simply paying money.

Thirdly, it is necessary to seek to identify the decision-maker on the other side and consider the interests, values and factors which are likely to be material to their approach. The task is to consider the dispute from their perspective and the kind of approach they will be taking to evaluate any settlement proposal. The question then becomes what information, perspectives or proposals can be provided, which are likely to favourably influence their consideration of the matter. A related question is whether it is important that the decision-maker actually be present at the mediation, to maximise the chances of a successful outcome.

Fourthly, these factors are all relevant to the arrangements to be made for the mediation. Given the expected points of difference, the questions to be considered are: (a) whether the matter is ripe for mediation, or whether it is more likely to be productive only after further steps are taken (eg disclosure); (b) which individuals, from either side, are likely to have sufficient rapport and credibility to work through these differences and will need to be present (eg client representatives, solicitors, barristers, or experts); (c) what kind of mediator is most appropriate to assist the parties in working through these differences (eg an interventionist mediator, a mediator with specialised subject matter skills etc); and (d) what process is required to work through these points of difference (eg use of position papers, extended openings etc).

Fifthly, it is important to settle in advance the broader strategy for the conduct of the mediation. The strategy usually begins by identifying the general form of compromise which is proposed. The task is then to consider what logical steps should be taken, in the mediation, to persuade an opponent that this form of compromise is reasonable and appropriate. Ideally, these steps would convey a consistent message. The message begins in a structured way in the position paper. It can then be developed in the opening session. The logic of the approach should then follow into an opening offer. Then subsequent offers can consistently signal the viable settlement range. Potential points of impasse should be considered, with thought given to how they may be overcome.

This strategy requires a measure of flexibility, to deal with new information which comes to light during the course of the mediation and to allow for the possibility that further compromise will be required to reach middle ground.

Carrying the Strategy into Effect

In carrying out a mediation strategy, a number of key issues commonly arise.

The first issue concerns the timing of the mediation, and the related question of how the topic of mediation can be raised by a party, without appearing overly anxious to try to settle the matter.

Plainly, mediations should be held at the earliest time when they have a real chance of success. In early mediations, the focus can be on funding a compromise of the claim – without the available funds being diverted to reimburse a claimant for substantial legal costs. Further, the prospect of saving future costs becomes a powerful incentive for both parties to compromise. The difficulty is that, in some cases, decision-makers feel unable to make hard decisions until further steps have been taken in the proceedings (eg disclosure, expert reports etc). The role of advocacy, in relation to procedural issues of this kind, is to persuade such decision-maker that there is a fast-track way of providing them with sufficient information to engage in an early mediation.

The related issue, of how to propose mediation, also involves an element of advocacy. Rather than one party simply proposing mediation to the other, many parties raise the issue as part of a wider discussion of court directions. Mediation tends to mentioned as just another routine step to be taken – with an opponent being asked to suggest when it would best fit into the proposed directions. On this approach, neither party signals to the other that they are overly anxious to settle.

The second issue concerns the choice of mediators. The choice of mediators is particularly significant, if there is a concern that the parties are viewing the matter very differently. In cases of this kind, a mediator with expertise in the relevant area, may be in a position to help the parties understand why this difference has arisen and suggest factors which may lead them to reconsider their position. Paradoxically, in a situation of this kind, the most effective mediator may be the person who is the preferred choice of an opponent. That is because there is a greater level of trust of the mediator, in the opponent’s camp, which may give the mediator’s interventions greater force.

The third issue concerns the role of position papers and mediation briefs.

At the very least, the purpose of a position paper is to efficiently inform the mediator about the main issues and contentions in the matter. This has the potential to give a party’s advocacy greater impact, as it equips the mediator to privately ensure that the force of the point is appreciated by an opposing party.

However, the main purpose of a position paper is to give an opponent cogent reasons to think about the issues in dispute in the way advocated – and rethink their previous approach. As the position paper is given in advance of the mediation, it also gives an opponent time to think seriously about the matters raised – investigate them further if necessary – and update any legal advice which has been given. For the reasons outlined above, the points made in a position paper should focus on points that are likely to be material to the particular decision-maker involved in the matter. They should also focus on points which may not be already known or appreciated by the decision-maker – and which may thus be a cause of differences between the parties. For example, if the dispute turns on a legal point, then the position paper should point to the authorities which support the contention made. If the dispute turns on a factual point, then the position paper should analyse the known evidence which corroborates – or tends to undermine – the relevant facts. In some cases, it may also be appropriate to disclose new evidence to seek to change an opponent’s perception of the matter. To maintain credibility, the position paper should seek to downplay claims which have little intrinsic merit (eg quantum claims for lost opportunities which are overly optimistic). The position paper should not be lengthy. It should be structured and pointed. The position paper should not contain threats or bluster. It should be respectful and understated in tone. It should give an opponent the information needed to come to a similar view of the matter. It should also leave an opponent with the impression that they are facing a competent, well-prepared and formidable adversary.

Mediation briefs should include any document which either side wishes to have included. But their purpose, as an advocacy tool, is to draw attention to key documents which tend to support or explain a party’ case. For example, in a dispute which turns on the proper construction of a contract, the contract should be included. In a matter which turns on a disputed fact, the documents which tend to corroborate – or tend to undermine – the point should be included.

The fourth issue concerns confidential, pre-mediation meetings with the mediator. In general, these meetings are useful. Their purpose is to assist the mediator in understanding the issues in dispute – and possible models of settlement. Ideally, in discussing the issues, the mediator will be left with an understanding of the force of the main points made by that party – and that the party is taking a reasonable approach.

The fifth issue concerns the joint opening session. As a general rule, this is an important opportunity to explain in more detail the force of the points made in the position paper. For example, documents which are adverse to a party can have a more damning effect when examined in detail in a joint opening session. In some cases, points which cannot be effectively dealt with in a position paper, can be conveyed more persuasively by a video or physical demonstration. For example, where a case concerns the effects of flooding, the events of the day – as gathered from numerous cameras, flood gauges and data sources – can be very effectively gathered together in a PowerPoint presentation which clearly explains the course of relevant events. As with the position paper, the general tone of such presentations should be reasonable and respectful. Such an approach is more likely to result in the opposing decision- maker listening carefully to the points made and taking account of their force.

The sixth issue concerns the transition from opening session to offers. To maintain a party’s credibility, it is desirable that an opening offer flow naturally from the joint opening session. Accordingly, unless a party contends that there are no reasonably arguable contentions to the contrary, it is difficult to make an opening offer which makes no allowance for the risk that those views might be accepted.

The seventh issue concerns the bidding strategy. Ideally, the bidding strategy is one which reflects and corroborates the contentions advocated in the mediation. A bidding strategy which fails to do so, tends to flag a lack of confidence in the position advanced or an undisclosed need to settle the matter. Accordingly, a measured and reasonable opening allows a party greater flexibility to find common ground. By contrast, a more strident opening, makes it difficult to make subsequent offers which fall outside this range, without losing credibility and conveying some level of anxiety.

The eighth issue concerns the question of deadlocks. In many mediations, the exchange of offers and counteroffers will come to an end at a point when a substantial gulf still exists between the position of the parties. This is the point at which the earlier advocacy of the parties may assist in bridging the gulf. With the assistance of the mediator, the lawyers should be in a position to rationally explain why they are assessing the risks of the matter so differently. This may result in one party being persuaded to moderate their views. Alternatively, it may result in both parties understanding the force of the other’s viewpoint, and become open to a gap-filling approach. This may involve a solution as crude as simply splitting the difference between their positions. Alternatively, it may result in a mediator’s offer, which suggests another number which he or she regards as an acceptable compromise. Whilst measures of this kind may not be accepted on the day of the mediation, they commonly lead to a later resolution of the matter.

Finally, there is the settlement agreement itself. Having persuaded the parties to accept a compromise proposal in principle, it is highly desirable to move quickly to a binding agreement. It is good practice for parties to attend a mediation with a draft settlement agreement, which can be quickly adapted to the circumstances.

Some Pitfalls

Whilst advocacy in a mediation involves many matters of judgment and personal style, there are some things which should be avoided.

First, it is critical that mediations are conducted lawfully and ethically. Apart from the adverse consequences for the individuals who depart from this standard, any acts of apparent misconduct is apt to put any settlement agreement at risk of further litigation. In short, advocacy does not provide a licence to misstate or mislead.

Secondly, whilst a mediation is a confidential process which is conducted on a without prejudice basis, an opposing party will not forget what they learn at a mediation. Indeed, they may well be able to use damaging information to direct the further conduct of the matter. Accordingly, it is important to maintain control of the information which is disclosed in the process. Ordinarily, it is undesirable to permit a witness to be questioned by an opponent.

Thirdly, it is very damaging to a party’s prospects of settlement if their opponent comes to the view (even wrongly) that the party: (a) cannot afford to take the matter to trial; (b) is not prepared to take the matter to trial; or (c) has lawyers who are insufficiently capable to take the matter to trial in a potent and effective way. The mediation should be conducted in a way which avoids any such judgment being made.

Fourthly, if a defendant is insured, it is important to avoid advancing a case against the defendant which might cause the insurer to decline indemnity. Typically, defendants are not insured against their own fraud or deliberate wrongdoing. Allegations of this kind should be avoided.

Fifthly, for some parties, aggressive or disrespectful conduct by an opponent is not forgiven and brings to an end any prospect of settlement. It is an approach which must only be adopted with caution.

On 8 February 2023, the High Court delivered judgment in Metal Manufactures Pty Ltd v Morton (as Liquidator of MJ Woodman Electrical Contractors Pty Ltd (In Liq)) deciding that set-off under s 553C of the Corporations Act was not available to a defendant to a liquidator’s unfair preference claim. This ended decades of uncertainty about this issue.

On 23 July 2024, John McKenna KC and Paul O’Brien who appeared for the liquidator, presented at the Bar Association of Queensland, on the issues in this case and more generally on the approach involved in matters before the High Court.

Read the paper here.

Since 2013, there have been Practice Directions in the Supreme, District and Magistrates Courts of Queensland outlining practices for the citation of caselaw. The stated purpose of these Practice Directions was to “ensure that the Court is provided with the most authoritative and functional versions of the relevant authorities” and “to encourage parties to limit their citation of authority to those judgments which are apt to assist the Court materially in resolving the real issues in dispute”.

From 29 January 2024, an updated version of these Practice Directions has come into effect in the Supreme Court.

The Court has confirmed that the purpose of the updated Practice Direction is not to significantly change current practices relating to the citation of authority.  Rather, its purpose is to accommodate the difficulties which some parties (eg self-represented litigants) face in obtaining ready access to all sets of authorised law reports.

Accordingly, under the new Practice Direction:

• the position remains that “unreported judgments should not be cited unless they contain a material statement of legal principle, or a material application of principle, which is not found in reported authority” (para 4(d)).

• where a judgment is reported in the authorised reports (eg  Queensland Reports or Commonwealth Law Reports), it remains the general position that the authorised reports citation should be used – but this requirement now applies only “as far as possible” (para 3).

• for all judgments it is “acceptable to use an available official medium neutral citation for the citing of any authorities” (para 2).

• for all judgments “it is sufficient and appropriate to refer to medium neutral citation paragraph numbers of the judgment rather than page numbers in authorised reports” (para 4(b)).

• for all judgments “reference should also be made to any subsequent judgment which has doubted, or not followed, the cited judgment in a relevant respect” (para 4(c)).

It is important to understand the underlying reasons for these citation practices.  These reasons stem, to a large extent, from the long-standing approach to law reporting in Australia.   Judgments are only selected for inclusion in the Queensland Reports, and other authorised reports, when they contain significant statements of legal principle.   If selected for reporting, the full text of the judgment is then carefully checked, in consultation with the Court, to ensure that it is free from any inadvertent errors.  During this process, changes to the text of a judgment are regularly made – but these changes usually only appear in the authorised reports.   For this reason, it is prudent to rely upon the authorised report of a judgment where it is available.   As the cover pages of all unreported judgments of the High Court of Australia warn: “This copy of the Court’s Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports”.

A ready guide to the best practices in citing caselaw is to be found in the Court’s own judgments.   In judgments of the Supreme Court, where reference is made to a judgment which appears in the authorised reports, the practice is to refer to the judgment: (a) first, by its reported case name (which is often in a shortened form); (b) secondly, by its authorised report citation; and then (c) finally, by its medium neutral citation (eg Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256; [2006] HCA 27).

A link to Practice Direction No 1 of 2024 is here.

The Consultative Council of Australasian Law Reporting (CCALR) has issued the following note concerning the publication – and importantly for advocacy purposes the citation of and use – authorised and other reports in Australian Courts. The chair of CCALR – also chair of the Incorporated Council of Law Reporting for the State of Queensland – is John McKenna KC of the Queensland Bar.

The background of the note is that:

• The note was issued because of a concern that some confusion is developing within the profession about the distinctions between different kinds of law reports – and why these distinctions matter. 

• This confusion is having practical consequences for the efficient workings of the courts.  Indeed, it seems to be quite common to find that bundle of authorities, which were intended to include cases from the CLRs or the UK Appeal Cases, are in fact prepared with AustLII or BAILII printouts of the unreported version of the judgments.

• Thus, the note was prepared with a view to summarising the key points that explain this area of practice.

• This note was tabled in late October 2022 at a meeting of the Council of Australian Law Deans, with a view to its contents being worked into the curriculum of Australian law schools.

• The CCALR seeks it be brought to the attention to the legal profession as a whole.

Background

1. (Purpose of this Note) The purpose of this note is to mention some key features and practices of our system of law reporting. These practices are fundamental to the efficient operation of the courts. However, the recent experience of courts, across Australia and New Zealand, has given rise to concern that these practices are not sufficiently understood or observed.  It is hoped that this trend can be reversed, with the assistance of the Law Schools and the professional associations.
2. (CCALR) This note has been prepared by the Consultative Council of Australasian Law Reporting (CCALR). The CCALR is the peak body which seeks to maintain standards of law reporting in Australia and New Zealand. It is constituted by 16 nominees of the courts, the legal profession, and the various Councils of Law Reporting of Australia and New Zealand.

Court Judgments – Preparation, Delivery, Publication and Revision

3. (Core Workload of the Courts)     The workload of the courts is immense. On any given working day, many thousands of civil and criminal matters are resolved by the courts of Australia and New Zealand. The vast majority of these matters do not turn upon questions of law and are resolved immediately (ex tempore). To deal with this core workload, it is critical for the courts to be able to identify, quickly and reliably, the governing legal principles to be applied. Applying these principles, the court’s reasons for judgment can then be delivered to the parties orally. A transcript of these oral reasons is usually available to the parties, but ordinarily is not published more widely. The formal outcome of the hearing is then embodied in a written judgment or order, which is entered in the records of the court.
4. (Reserved Judgments) In a relatively small proportion of matters, mostly in the higher courts, judgment is reserved to allow time for the court to give the matter further consideration (curia advisari vult). Again, most of these matters do not turn upon questions of law, but still require the courts to identify the governing principles quickly and reliably. Where a judgment is reserved, the reasons of the court are most commonly prepared in a written form. Then, when the court reconvenes for the delivery of judgment, these written reasons are delivered to the parties, with a formal written judgment or order then being entered in the records of the court.
5. (Publishing Unreported Judgments) Since about 2000, each of the courts has developed practices for the online publication of reasons for judgment (unreported judgments).  To facilitate their citation, unreported judgments are assigned a medium neutral citation (eg [2021] HCA 1). These judgments are published, almost immediately after delivery to the parties, on the relevant court website. They are then distributed by the court to other online publishers. In practice, most reserved judgments are published in this way, unless there is some particular reason for non-publication (eg a pending criminal trial). Some transcripts of ex tempore judgments are also published online, depending upon the practices of the relevant court.
6. (Revision of Reasons) Whilst there are narrow limits upon a court’s power to amend a formal judgment or order, different principles apply to the revision of reasons for judgment. In broad terms, courts are free to revise the text of their reasons for judgment, provided that the substance of the reasons is not changed1. Significant revisions are most common where the judgment has been delivered ex tempore2. However, even reserved judgments are commonly subject to some revision3. Revisions of this kind are inevitable, given the complexity of many judgments, the time pressure on the courts to deliver judgments promptly, and the limited resources available within the court system.  As a consequence, even judgments delivered by the High Court of Australia are marked: “Notice: This copy of the Court’s Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports”.  When changes in an unreported judgment are initiated by the court (or at the request of the parties), the practice is for the court to issue a replacement version of the unreported judgment to all online publishers. In some jurisdictions, the practice is for the revisions to be explicitly noted on the revised judgment4. In other jurisdictions, the judgments do not record whether they are in a revised form.
7. (Problems Arising from a Multiplicity of Judgments) As a result of the sheer volume of the courts’ workload, the number of unreported judgments published in Australia and New Zealand in any given year usually exceeds 10,0005. The vast majority of these judgments are of little practical utility as legal precedents. On the whole, it is estimated that only about 10-15% of unreported judgments materially change, refine or explain the law. However, these key judgments are not easy to locate within the vast body of published judgments. In any given area of the law, there are usually many judgments dealing with the same issues and referring to the same leading authorities. However, most of these judgments do little more than cite earlier authorities, provide an imperfect paraphrase of earlier authorities6, or record the absence of any relevant dispute about the issue7.  Some are of doubtful reliability8. Most are difficult to quickly analyse, because of the absence of a headnote summary9. As a result, any excessive reference to these judgments can be time-consuming and unproductive10. The practical problem this causes for the courts has been fairly summarised in the following terms11:

“[In collections of unreported judgments] there is no preselection. Large numbers of decisions, good and bad, reserved and unreserved, can be accessed. Lawyers frequently feel that they have an obligation to search this material. Anything which supports their clients’ case must be drawn to the attention of the court. This is so even when it is likely that the court which gave the judgment probably never intended it to be taken as creating a new legal principle. A number of consequences flow from this. First, of course, it is the client who eventually has to pay for all this searching. This growing costs burden runs counter to the environment being promoted by the Woolf reforms. Further, it is a fact of life that sometimes courts go wrong, or at least not conspicuously right. That is why we have a system of appeals. A poor decision of, say, a court of first instance used to be buried silently by omission from the reports. Now it may be dug up and used to support a cause of action or defence which, without its encouragement, might have been allowed to die a quiet death. Thirdly, it is a common experience that the courts are presented with ever larger files of copied law reports, thereby extending the duration and cost of trials, to the disadvantage of the legal system as a whole. It seems to me that the common law system, which places such reliance on judicial authority, stands the risk of being swamped by a torrent of material, not just from this country but from other jurisdictions, particularly common law ones.”

Authorised Law Reports – Role, Preparation and Use

8. (Role of Law Reports) The role of the law reports is to assist the legal system in coping with this “unorganised, unfiltered, unedited” volume of caselaw12.  The system of law reporting seeks to: (a) expertly identify, from amongst the vast body of published judgments, the key group of authorities which materially change, refine or explain the law; and (b) publish them in a permanent form which is authoritative, reliable, and easy to use as a reference source.  This approach has been described by Lord Neuberger as “scholarly” law reporting – rather than mere “judgment dissemination”13.  Law reports are produced by a range of different publishers, to serve a range of different needs.  Some are designed to meet the needs of specialist practice areas (eg Australian Trade Practices Reports). Some are designed for prompt publication (eg Australian Law Reports). However, the core sets of law reports are the “authorised” reports for each jurisdiction.
9. (Authorised Law Reports) The “authorised” law reports for a jurisdiction are those which are recognised by the courts of that jurisdiction as containing the most authoritative version of the court’s judgments. This recognition usually arises because these reports are prepared in consultation with the court, in a scholarly way, with the draft text being submitted for consideration and revision by the Judges14. As a result of this practice, the courts prefer the use of an authorised report of a judgment over any other version15. In most jurisdictions, this preference has now been formalised in Rules or Practice Directions16.  This practice is also adopted in academic legal writing17.  It is a practice which is not based upon pedantry, but upon inherent utility18.
10. (Process of Authorised Law Reporting) To appreciate why the courts adopt these citation practices, it is important to understand what is involved in authorised law reporting19. In most jurisdictions, the authorised law reports are produced under the supervision of an independent Council of Law Reporting. These Councils are usually constituted by senior practitioners, who are the nominees of the court or the legal profession. Under their supervision, or the supervision of experienced publishers, a small group of lawyers are selected and trained to serve as specialist editors and reporters.  Their role typically involves the following steps.  First, the editors examine all newly published judgments of the court to select those which are likely to be of precedential value. Secondly, the text of the judgment is checked by a reporter for typographical errors or other slips. This typically involves checking: (a) the accuracy of all citations; (b) the accuracy of all quotes from other judgments, articles or texts; and the balance of the text for typographical or other unintended errors. Thirdly, an accurate headnote summary of the judgment, usually with cross-references to the text, is prepared by the reporter and checked by the editors – with the judgment being classified under an established taxonomy. Fourthly, for the most significant authorised reports20, a summary of the argument before the court is prepared. Fifthly, these components are compiled into a draft law report, which accords with the standard typographical style for that set of reports.  Finally, the draft law report is submitted to the relevant Judge or Judges for consideration and for any further revision which they may wish to make. These revisions may be extensive21.  The object of these efforts is to produce an authoritative version of the judgment which is ideally suited to provide a reference source for future courts and researchers. It is important to note that the revisions which are incorporated into the authorised report do not usually result in any revision of the unreported version of the judgment. Upon publication, the authorised report supersedes the unreported judgment as the most authoritative version of the court’s reasons for judgment.
11. (Rationale for Use of Authorised Reports) The practice of favouring the use of authorised reports is based upon seven main considerations. First, it ensures that the version of the caselaw being considered by the courts is authoritative and readily available to all parties22. Secondly, it tends to focus attention upon the key authorities which establish or clarify the governing legal principles23. Thirdly, it assists the court in quickly assessing the effect of unfamiliar caselaw, by providing an accurate headnote summary with cross-references to the key passages of the judgment24. Fourthly, it facilitates debate about the effect of the key authorities, as all parties are addressing the same version of the text (eg with the same headnote and pagination). Fifthly, over time, it tends to familiarise the courts with a core set of key judgments, which can be applied repeatedly and efficiently to resolve future matters. Sixthly, it tends to allow the law to develop more consistently, as the expressions of principle in a core set of readily-accessible judgments are applied and developed over time25. Finally, it promotes efficiency, by identifying the key authorities and their correct citation for inclusion in the judgment under preparation.
12. (Appropriate Use of Unreported Judgments) Consistently with these principles, unreported judgments still have an important role to play in the legal system. This largely arises in circumstances where: (a) a new judgment of significance is too recent to have been reported; (b) the judgment is of assistance in analysing a quite specific issue which has arisen in a particular case (eg the interpretation of a particular expression); (c) the judgment contains a convenient summary of the governing principles in an area of the law; or (d) recent judgments have considered whether an older line of authority continues to have governing force. In all these circumstances, the reference to an unreported judgment is apt to assist the courts in efficiently resolving the matter under consideration26.
13. (Inappropriate Use of Unreported Judgments) However, the work of the courts is materially hampered when parties cite unreported judgments excessively or inappropriately. This largely arises in circumstances where: (a) the judgment cited is also reported in the authorised reports;(b) the judgment cited does not establish or clarify the relevant legal principle, but merely quotes or paraphrases earlier judgments; (c) the judgment cited merely illustrates the application of established principle, in a way which does not materially assist the court in resolving the matter; or (d) the judgment is cited merely to demonstrate that the lawyer is “up to speed” with the most recent cases. Where unreported judgments are used in this way, it adds to the burden on the courts by requiring the Judges to read and analyse judgments which:(i) are not likely to be familiar;(ii) are not easy to digest because of the absence of headnotes; and(iii) are not likely to be of real assistance in resolving the matter. This practice is also likely to require the court to undertake tasks which should properly have been the responsibility of the parties, in locating the relevant, governing judgments from the authorised reports for inclusion in the judgment.
14. (Ready Access to Authorised Reports) The authorised reports are readily accessible online or in printed sets, under subscription-based arrangements. It is true that unreported judgments are even more accessible, as they are published on free websites. However, the key points to note are that: (a) these free websites are only able to function because of the courts’ assistance in supplying their content; (b) these same websites usually provide case citators, which allow the correct authorised report citation to be readily identified27; and (c) full copies of the relevant authorised report can be obtained, free of charge or at low cost, from public law libraries or from the websites of the Councils of Law Reporting (including on a “pay per view” basis). For these reasons, the practices relating to citation are easily complied with.
15. (List of Authorised Reports) The authorised reports of the superior courts of Australia and New Zealand, as currently published, are as follows:

• Australian Capital Territory Law Reports (Supreme Court of the ACT)
• Commonwealth Law Reports (High Court of Australia)
• Federal Court Reports (Federal Court of Australia)
• New South Wales Law Reports (Supreme Court of NSW)
• New Zealand Law Reports (Supreme Court, Court of Appeal and High Court of NZ).
• Northern Territory Law Reports (Supreme Court of NT)
• Queensland Reports (Supreme Court of Queensland)
• South Australian State Reports (Supreme Court of SA)
• Tasmanian Reports (Supreme Court of Tasmania)
• Victorian Reports (Supreme Court of Victoria)
• Western Australian Reports (Supreme Court of WA).

1 Fletcher Construction Australia Ltd v Lines Macfarlane & Marshall Pty Ltd (2001) 4 VR 28; [2001] VSCA 167 at [49]-[60].

2 R v Jones (2010) 79 NSWLR 143; [2010] NSWCCA 195 at [8]; AL Powell Holdings Pty Ltd v Dick [2012] QCA 254 at [46]-[55], [92].

3 Fletcher Construction Australia Ltd v Lines Macfarlane & Marshall Pty Ltd (2001) 4 VR 28; [2001] VSCA 167 at [51].

4 See, for example, the revised decision of the Federal Court of Australia in re Cornerstone Investment Aust Pty Ltd (in liq) [2022] FCA 1008, where a “Table of Corrections” appears on the cover sheet of the judgment.

5 The unreported judgments from the Supreme Court of one Australian State (New South Wales) can comprise over 2500 judgments annually.

6 Lambert v Lewis [1982] AC 225 at 274; Roberts Petroleum Ltd v Bernard Kenny Ltd [1983] 2 AC 192 at 201.

7 Roberts Petroleum Ltd v Bernard Kenny Ltd [1983] 2 AC 192 at 201.

8 Michaels v Taylor Woodrow Developments Ltd [2001] Ch 493 at [78]-[79].

9 Hobbs v Fairall [2016] NSWDC 116 at [171].

10  Roberts Petroleum Ltd v Bernard Kenny Ltd [1983] 2 AC 192 at 200-202.

11 Michaels v Taylor Woodrow Developments Ltd [2001] Ch 493 at [79].  And see S Gageler “What is Information Technology Doing to the Common Law?” (2014) 39 Aust Bar Rev 146 at 154.

12 Lord Bingham quoted in R v Erskine [2010] 1 WLR 183 at [73].

13 Lord Neuberger “No Judgment – No Justice”, First Annual BAILII Lecture, 20 Nov 2012, at [33].

14 Fairman v Perpetual Investment Building Society [1923] AC 74 at 78; Lord Neuberger “No Judgment – No Justice”, First Annual BAILII Lecture, 20 Nov 2012, at [41].

15 Reed International Ltd v Inland Revenue Commissioners [1974] Ch 351 at 360.

16 eg High Court of Australia Practice Direction No 1 of 2017; Federal Court of Australia Lists of Authorities and Citations Practice Note (GPN-AUTH); Supreme Court of Australian Capital Territory Practice Direction No 2 of 2022 (Citation of Authority); Supreme Court of New South Wales Practice Note SC Gen 20 (Citation of Authority); Supreme Court Rules 2004 (NZ) at r 34; Court of Appeal (Civil) Rules 2005 (NZ) at r 42; Supreme Court of Northern Territory Practice Direction No 2 of 2007; Supreme Court of Queensland Practice Direction No 16 of 2013 (Citation of Authority); Uniform Civil Procedure Rules 2020 (SA) rr 101, 217-218; Supreme Court of Tasmania Practice Direction No 3 of 2014 (Citation of Judgments); Supreme Court of Victoria Practice Note SC Gen 3 (Citation of Authorities and Legislation); and Supreme Court of Western Australia: Consolidated Practice Direction PD 2.1.

17 eg Australian Guide to Legal Citation (MULRA, 4th  Ed, 2018) at [2.2.2].

18 Murphy v Nationwide News Pty Ltd Ltd (No 2) [2021] FCA 432 at [9]-[10]; Palmer v McGowan (No 6) [2022] FCA 927 at [43].

19 See NJ Haxton “Law Reporting and Risk Management Citing Unreported Judgments” (1998) 17 Aust Bar Rev 84 at 87-89.

20 eg Commonwealth Law Reports (High Court of Australia) and the New Zealand Law Reports (Supreme Court of New Zealand).

21 See, for example, the changes to James v Thomas H Kent [1950] 2 All ER 1099 at 1103-1104 which were made at [1950] 1 KB 551 at 556, and which were the subject of discussion in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 258-259.

22 Murphy v Nationwide News Pty Ltd Ltd (No 2) [2021] FCA 432 at [10].

23 S Gageler “What is Information Technology Doing to the Common Law?” (2014) 39 Aust Bar Rev 146 at 152; P Devlin The Judge (OUP, 1981) at 180.

24 Hobbs v Fairall [2016] NSWDC 116 at [171]; S Gageler “What is Information Technology Doing to the Common Law?” (2014) 39 Aust Bar Rev 146 at 153.

25 Lord Neuberger “No Judgment – No Justice”, First Annual BAILII Lecture, 20 Nov 2012, at [39].

26 See, eg, the principles set out in Supreme Court of Queensland Practice Direction No 16 of 2013 (Citation of Authorities) at [4]-[5].

27 eg LawCite (lawcite.org) which is associated with AustLII and NZLII.

Late last year, the Incorporated Council of Law Reporting Queensland (ICLRQ) launched the ICLRQ Model Law Library, which can be accessed online on ICLRQ’s Queensland Judgments website. The aim of this project was to compile a list of legal texts, across all practice areas, which are regarded as standard works in their field. In effect, the list seeks to produce a model law library for the assistance of legal practitioners. The list of texts comprising ICLRQ Model Law Library was assembled by John McKenna QC (Level 16 Quay Central), Sarah Holland (Higgins Chambers) and Sarah Spottiswood (Level 27 Chambers), with the assistance of members of the judiciary and members of the profession. Samuel Walpole (Level 16 Quay Central) spoke with John, Sarah and Sarah about the project.