What is mediation and how does it work in NSW?

Mediation in one sentence.

Mediation is assisted negotiation. A neutral mediator sits with the parties, helps them understand each other's position, tests the strengths and weaknesses of each case, and guides them towards a settlement they both accept. The mediator does not decide the dispute or impose an outcome. The parties keep control of the result, and there is only an agreement if both sides agree to it.

This is general information, not advice on your dispute. Whether to mediate, when, and how to prepare depends on the case. Mediation works best when both sides genuinely want to resolve the matter, and it can still be worthwhile even where that is in doubt, because it clarifies the real issues and the cost of fighting on.

How does a mediation actually work?

A mediation usually starts with everyone in the same room. The mediator explains the process and each side gives a short account of the dispute from their point of view. The parties then often split into separate rooms, and the mediator moves between them, carrying offers and questions back and forth. This shuttle stage is where most of the work happens, because people speak more freely to the mediator alone than across the table.

The mediator's job is to help each side see their case clearly, including its weak points, and to find the room for a deal. If an agreement is reached, it is written down and signed before everyone leaves, which turns it into a binding contract. If no agreement is reached, nothing said at the mediation can be used later in court, and the case proceeds as before. A mediation can run for a few hours or a full day.

Who is the mediator and what do they do?

The mediator is a neutral third party, often a lawyer, retired judge, or accredited mediator, chosen by the parties or appointed by the court. They do not act for either side and they do not give either side legal advice. Their role is to run the process fairly, keep the parties talking, and help them test and narrow their positions until a settlement is possible.

A good mediator adds value by reality-testing each side. They ask the plaintiff what happens if a witness is not believed, and the defendant what happens if the judge accepts the plaintiff's account. By making each side confront the risk of losing, the mediator moves both towards the middle. The mediator has no power to impose anything, which is the feature that separates mediation from arbitration, covered in our guide on mediation, arbitration and conciliation.

What can be mediated?

Almost any civil dispute can be mediated. Debt claims, contract disputes, building and trade disagreements, partnership and business break-ups, neighbour disputes, and family and estate matters all commonly go to mediation. The NSW courts can refer a civil case to mediation whether or not the parties consent, and in many divisions the parties are expected to have tried it before a hearing date is set.

Criminal charges are not mediated in the way civil disputes are, because guilt is a matter for the court and the prosecution, not something the parties bargain over. That said, negotiation with the prosecution about charges and facts plays a similar practical role in criminal matters. This guide is about civil and workplace disputes, where mediation is a standard and often required step.

What does mediation cost?

Cost depends on the mediator and the forum. A private mediator charges a fee, often shared between the parties, which for a full day can be a few thousand dollars split two ways. Community Justice Centres provide free mediation for many everyday disputes, especially between neighbours, which is covered in our guide on Community Justice Centres. Court-annexed mediation may be provided at little or no cost.

Whatever the fee, mediation is almost always cheaper than a contested hearing. A day of mediation that settles a case avoids the far larger cost of preparing and running a trial, and it avoids the costs risk of losing. That is why parties, and courts, treat mediation as the sensible first attempt at resolution rather than a last resort.

How does mediation compare to going to court?

Court hands the decision to a judge, in public, after a formal hearing, with a winner and a loser and a costs order. Mediation keeps the decision with the parties, in private, and lets them craft an outcome a court could not order, such as an apology, a payment plan, or an ongoing business arrangement. It is faster, cheaper and more flexible, and it preserves relationships that a fought case would destroy.

The trade-off is that mediation only works if both sides agree. If one side will not move, there is no outcome and the case goes on. Even then, a failed mediation is rarely wasted, because it shows each side the other's position and the cost of continuing. For most civil disputes, mediation is the first serious attempt to resolve the matter, and the majority settle there.

Primary sources: court-referred mediation is provided for in Part 4 of the Civil Procedure Act 2005 (NSW), which also protects the confidentiality of mediation sessions and limits the use of what is said in later proceedings. Free community mediation is provided under the Community Justice Centres Act 1983 (NSW). NSW mediation decisions are searchable on JADE.

Common questions

What is mediation?

Mediation is assisted negotiation. A neutral mediator sits with the parties, helps them understand each other's position, tests each case, and guides them towards a settlement they both accept. The mediator does not decide the dispute or impose an outcome; the parties keep control, and there is an agreement only if both sides agree.

How does a mediation work?

It usually starts with everyone in one room, where the mediator explains the process and each side gives a short account. The parties then often split into separate rooms and the mediator shuttles between them with offers and questions. If a deal is reached it is written down and signed on the day. If not, nothing said can be used later in court and the case proceeds.

Does the mediator decide who wins?

No. The mediator is neutral and has no power to impose a result. Their job is to run the process fairly, keep the parties talking, and help each side test and narrow its position until a settlement is possible. A mediator who could impose an outcome would be an arbitrator, which is a different process.

What does mediation cost in NSW?

It depends on the forum. A private mediator charges a fee, often shared between the parties, which for a full day can be a few thousand dollars split two ways. Community Justice Centres provide free mediation for many everyday disputes. Whatever the fee, mediation is almost always cheaper than a contested hearing.

Is mediation better than going to court?

For many disputes, yes. Mediation is faster, cheaper, private and flexible, and it lets the parties craft an outcome a court could not order, such as an apology or a payment plan. The trade-off is that it only works if both sides agree. Even a failed mediation usually helps by clarifying the issues and the cost of continuing.

To speak to a litigation lawyer, call Aaron Kernaghan on 0421 717 019.

This article is written by Aaron Kernaghan, Special Counsel at Good Legal Lawyers, as at 30 August 2026. It is general information and reflects the personal opinion of the author only. It is not legal advice, it is not a substitute for advice on your own matter, and it does not purport to be accurate or complete. The law changes and procedure varies from case to case. For advice on a specific matter, contact Aaron Kernaghan on 0421 717 019 or contact the firm.

More commentary by Aaron Kernaghan.

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