Say what you like - but only in mediation

Matt McGoldrick, Solicitor | Tuesday 29 January 2008

What you can say on TV, on the radio, in newspapers and even on the sports field is, more often than not, restricted. There are also restrictions preventing the reporting of matters which are the subject of court proceedings.

Sometimes, what you are allowed to say and how you are allowed to say it depends on the forum. In the employment law context, the most unrestricted forum is mediation. Mediation is the primary problem-solving mechanism for resolving issues between employers and employees. It was set up in this way for parties to air their differences privately, safe in the knowledge that what they say is confidential.

However, in a case last year, Jesudhass v Just Hotel Ltd., the Employment Court suggested that some things occurring at mediation were not necessarily cloaked in confidentiality.

The decision of the Employment Court has since been overturned by the Court of Appeal, which decided that statements made at mediation must be kept confidential and cannot be used by participants as evidence to support a later personal grievance action.

The mediation process

Anyone who has participated in the mediation process operated by a mediator from the Department of Labour will be familiar with the usual opening speech given by the mediator. This usually involves the mediator telling the participants that the mediation is governed by certain legal terms, such as being confidential and "without prejudice", while explaining more informally that what is said in mediation, stays in mediation.

These opening remarks are given because the Employment Relations Act requires that a party to a mediation "must keep confidential any statement made for the purposes of the mediation", including statements disclosed orally during the course of mediation. Further, any such statement which is required to be kept confidential is not admissible in any later proceedings whether to support a claim about what occurred at mediation or otherwise.

On the face of it, this requirement to keep statements confidential appears absolute. However, the earlier Employment Court decision appeared to water down this requirement so that evidence of conduct and statements which occurred at mediation could, in certain circumstances, be referred to in later proceedings. This conclusion had a natural impact on what could be said during mediation - with a fear that participants might "bite their tongues" to avoid the prospect that their statements would later be used against them.

Jesudhass v Just Hotel Ltd.

Mr Jesudhass was employed by Just Hotel as its General Manager. During the course of his employment, a series of problems arose culminating in Mr Jesudhass being suspended from his employment. Mr Jesudhass then raised a personal grievance with Just Hotel based on his suspension and sought mediation assistance from the Mediation Service. Mr Jesudhass alleged that, during the course of the mediation, Just Hotel informed him that he would be dismissed from his employment immediately after the end of the mediation. Two days later, Mr Jesudhass was sent a fax informing him of his dismissal. Mr Jesudhass then raised a second personal grievance - that of unjustified dismissal based on the threat to dismiss him, and he sought to bring evidence of those statements that he alleged had been made during the course of mediation.

Such statements were required to remain confidential, however, and a full bench of the Employment Court was convened to resolve the issue. The court held that, where conduct at mediation was not "in an attempt to resolve an employment relationship problem", it could be used in evidence in later proceedings and that the statements made by Just Hotel could not be considered attempts to resolve the problem that had arisen.

Just Hotel successfully appealed the decision. The Court of Appeal held that there was no ambiguity in the requirement of confidentiality, and that the purpose of this provision was the "desirability of encouraging the parties to a mediation to speak freely and frankly, safe in the knowledge that their words cannot be used against them in subsequent litigation if the dispute does not prove capable of resolution at mediation". The court said that the parties should "lay bare their souls" for the purpose of resolving disputes. This could only occur if statements made at mediation were protected. The court did raise a note of caution: that evidence of criminal conduct at mediation might create an exception to the rule.

Implications of this decision

This decision is an assurance for those engaged in the mediation process that they can speak freely. The court also appears to allow parties to a mediation to speak robustly, including threats of the type that may have been used in Mr Jesudhass' mediation. However, this cannot be taken too far, as indicated by the court's comments about criminal conduct - although this bar is likely to be set high. The decision also confirms that evidence of what occurred at mediation (subject to the possible exception of criminal conduct) cannot later be referred to.

The judgment does not address without prejudice discussions that occur outside mediation. This includes statements or correspondence between the parties in an attempt to resolve the dispute following mediation, but that implicitly relate to matters which were discussed at mediation.

The ordinary rule that without prejudice correspondence cannot be brought in support of a claim, where such correspondence contains an offer to settle the dispute, is not affected by this decision. Such communications made outside mediation, especially where there is a question about whether a dispute exists or whether the correspondence contains an offer to settle, do not have the same guarantee of the "cloak" provided by this decision. So, at mediation, but only at mediation, feel free to say what's on your mind.

 

For further information, please contact your usual Bell Gully advisor or:

Auckland Office

Rob Towner
Partner

Wellington Office

Andrew Scott-Howman
Partner

Maria Berryman
Senior Associate

Matt McGoldrick
Solicitor