Articles

The Impact of Court Fees on Mediation

Published in Lawtalk for LEADR NZ

The court fees and charges introduced in 2001, especially those that apply in the High Court and Court of Appeal, involve dramatic increases for litigants using our courts. These increases will see the parties (primarily the plaintiff) paying over $6,000/7,000 in court fees for a civil two-day High Court hearing involving say, a summary judgment application and one interlocutory argument en route to trial.

The price will climb steeply if injunctive relief and or other involved interlocutory applications are involved.

The filing of the statement of claim and the subsequent setting down of the matter alone will now cost a plaintiff $3,000 -- add to that a hearing fee of $2,200 after the first day (on both the hearing itself and on any interlocutories).

On one view, these increased court charges make mediation a more viable option for litigants and their advisers in High Court proceedings, after all the principles agreed to by Cabinet on which the increases were to be set required “operational efficiency” whereby any “…fee structure should provide incentives for cost effective use of court services”. Consistent with this is the incentive for litigants to help themselves before turning to the State to do it for them.

Until now, a common reason for declining the mediation option has been not so much that the parties necessarily object to exploring resolution at mediation, but more that the cost of the mediation process with no absolute certainty of agreement is not a risk they were comfortable with.

As to certainty, New Zealand mediators are reporting success rates of 80%.

As to cost, the mediation cost/benefit equation might now look better to parties when they are faced with the prospect of having to pay court fees (even ignoring legal fees) substantially in excess of what a mediation would cost them, just to initiate their proceeding and thereafter keep them going on the journey to trial. And that, it seems, is the important point.

Whilst there are a variety of mediators and charges, if we take the average cost of a one-day mediation (anecdotal evidence suggests that by far the majority of mediations are concluded within one-day) of somewhere between $1000 -- $1500 per plaintiff /defendant (less if there are more parties), financial logic would suggest a mediation at some stage of the proceeding prior to setting down.

A mediation at the setting down stage also happens to be, again from anecdotal experience, the stage that many litigants are comfortable mediating at, given that the pleadings and discovery have been completed and each party is probably in receipt of enough information to come to the table.

There is no doubt that litigants’ motivations for mediation, especially amongst the more sophisticated users of the process, vary and often do not include cost considerations.