Murphy v State of NSW  NSWSC 927 (on Caselaw) required the Court to consider whether a defendant’s alleged failure to forewarn the plaintiff’s legal representatives of its position in mediation would, if proven, contravene s 27 of Civil Procedure Act 2005 (NSW) and justify an order that the defendant pay the costs of meditation.
The applicant /plaintiff claimed damages from the State of New South Wales for wrongful arrest, false imprisonment and malicious prosecution. He had been arrested, detained and prosecuted upon the basis of a series of complaints of sexual assault made against him. The Court made an order that the parties participate in mediation.
In accordance with that order, a mediation took place on 15 July 2021. The mediation commenced at 10.07am and concluded ten minutes later at 10.17am. It was unsuccessful.
Although there was a debate as to the admissibility of evidence as to what happened at the mediation, it appears from the judgment that the defendant notified the plaintiff on the day of the mediation that no financial offers would be made.
In relation to the ‘good faith‘ issue (section 27), the Court said at :
As a matter of generality, it could not in my opinion be a breach of the duty of good faith for a party to attend at a mediation and refuse to make or to consider any offer of settlement other than that the opposing party capitulate entirely and pay costs. For example, if the opposing party’s case, objectively assessed, were entirely without merit and hopeless, it could hardly be a requirement of the good faith provision that a party must agree to pay money, or to make some other contribution to a meritless compromise, if it were not justified on any basis, even allowing for the vicissitudes of litigation. It cannot without more amount to an absence of good faith for a party to seek an adjudicated vindication of its position in litigation where it believes or has been advised on reasonable grounds that it should do so.
The Court stated at  that (by reason of rejection of evidence as the majority of the affidavit evidence as to what occurred at the mediation by reason of section 30 of the Civil Procedure Act 2005 (NSW)), the Court was left to operate upon unestablished facts or upon unproven assumptions about what took place in the mediation session. It was not possible in that constrained situation to express a view, let alone find, that the State of New South Wales failed to participate in the mediation in good faith.
However Harrison J went on to say the following at  – , refering to model litigant obligations but perhaps not limited to that context:
It would not in my view be controversial to expect that one party to litigation should not be permitted to allow the other to incur costs on the basis of an assumed set of facts that the first party knew to be unfounded. For example, if it were hypothetically the position in the present case that the State of New South Wales, as a model litigant, had formed the view that it would never pay money to Mr Murphy unless ordered by a court to do so, and that this view was formed well in advance of a scheduled mediation, it would in my opinion be inappropriate to say the least, and probably misleading, for the State not to make that position clear to Mr Murphy or his solicitor in a timely way, without undue delay, so that unnecessary costs in preparation for it could be avoided. I would not expect that any such view was held by the State when I ordered the parties to mediate. Mr Murphy asks me to infer that it must have been formed shortly thereafter.
Having regard to the terms of s 30(4) of the Act, the State’s objection to those parts of the affidavits upon which Mr Murphy relies should be upheld. As a result, there is currently no satisfactory evidence before me of what transpired in the mediation session. Moreover, there is yet no evidence of when the State formed any concluded view about the approach it would take at the mediation: the limited material does not permit me to make a finding about why the mediation lasted for only ten minutes or why it was unsuccessful.
In the normal course of events, that would lead to a dismissal of the present application. However, in anticipation that Mr Murphy may wish to adduce additional evidence touching the question of whether the State could have communicated with his solicitor at an earlier stage concerning the likely utility of the mediation, I will stand over the motion to the hearing of the principal proceedings, with the costs of the motion to be reserved to the trial judge.