Australia: Genuine steps before going to court

Increased importance of attempts to resolve a dispute

On 24 March 2011 the Australian Parliament passed the Civil Dispute Resolution Bill 2011, which will require prospective litigants to take genuine steps to resolve a dispute before proceedings are commenced in the Federal Court or Federal Magistrates Court. Once the Bill receives Royal Assent, it will become the Civil Dispute Resolution Act 2011 (Cth).

Purpose of the Civil Dispute Resolution Act

The new legislation seeks to ensure that wherever possible, disputes between parties are completely resolved before court proceedings have commenced. Parliament's Explanatory Memorandum states that the Bill "encourages the resolution of civil disputes outside of the courts and seeks to improve access to justice by focusing parties and their lawyers on the early resolution of disputes."

Genuine steps statement

The key requirement of the Act is that at the time when court proceedings are commenced, a statement outlining genuine steps that have already been taken to resolve the dispute must be filed with the court by the party commencing proceedings. This statement, which is called a genuine steps statement, must specify either the steps that have been taken to try to resolve the issues in dispute, or the reasons why no such steps have been taken.

Any respondent to the proceedings must then file their own genuine steps statement, either confirming that they agree with the contents of the other party's genuine steps statement, or identifying in what respects they disagree with it.

The Act defines genuine steps simply as steps that constitute a "sincere and genuine attempt to resolve the dispute" and it leaves the parties with broad discretion to decide upon the types of steps they should take to resolve the matter, having regard to the particular circumstances of the dispute.

What are genuine steps?

Rather than prescribing the steps that must be taken in a particular case, the Act lists seven examples of what might be seen as genuine steps to resolve a dispute:

  • Notifying the other party or parties of the issues that are, or may be, in dispute and offering to discuss and seek to resolve those issues with them
  • Providing an appropriate response to any notification of the type referred to in the point above
  • Providing relevant information and documents to the other party or parties to enable the other parties to understand the issues involved and how the dispute might be resolved
  • Considering whether the dispute could be resolved by a process facilitated by another person, including an alternative dispute resolution process
  • If such a process is agreed to, agreeing on a particular person to facilitate the process and attending the process
  • If such a process is conducted but does not result in resolution of the dispute, considering a different process
  • Attempting to negotiate with the other person, with a view to resolving some or all the issues in dispute, or authorising a representative to do so

The Act also states that parties are free to take further steps not falling within these examples.

Exceptions to the need to take genuine steps

The Act acknowledges that in some cases, communicating with the other party or parties to a dispute before proceedings are commenced could give rise to serious consequences. According to the Act, reasons that could possibly be given in a genuine steps statement for genuine steps not having been taken before a proceeding is commenced include:

  • Urgency of proceedings
  • Potential compromise of the safety or security of any person or property

Proceedings excluded from the Act

The Act excludes certain kinds of proceedings from its operation. This includes proceedings under certain Acts like the Native Title Act 1993 and the Family Law Act 1975, which already include significant dispute resolution methods. The Act also excludes other proceedings where alternative dispute resolution is not appropriate, such as proceedings involving civil penalties provisions and appeals.

Consequences of not complying with the Act

The Act provides that in exercising a discretion to award costs, performing any functions or exercising any powers in relation to proceedings, the court may take into account whether the requirement to file a genuine steps statement has been complied with and whether a party has taken genuine steps to resolve the dispute. The failure of any lawyer to advise and assist their client in complying with requirements of the Act may also be taken into account and could result in a lawyer being ordered to bear costs of the proceedings personally.

What the Civil Dispute Resolution Act means for parties and their lawyers

The date of commencement of the Act is yet to be announced. Once it comes into effect, it will be important for anyone involved in a dispute that could potentially be heard by the Federal Court or Federal Magistrates Court to pay close attention to the requirements of the Act. Anyone in this position (and their lawyers) will need to ascertain quickly whether the genuine steps requirements of the Act apply to the dispute.

If the requirements do apply, it will be necessary to determine what steps should be taken to seek to resolve the matter and ensure that any steps to resolve the matter are taken appropriately and in the party's best interests, having regarding to all of the relevant circumstances.

The importance of alternative methods of resolving disputes and attempting early resolution of disputes has long been recognised by Australian courts. Given the requirements of the Act, these matters are going to be seen as vital and mandatory from the earliest stages of a dispute. Parties and their lawyers will need to be willing to engage in dispute resolution activities from the outset and be genuine in their approach to those activities.

Similar changes in New South Wales

The requirements imposed by the commonwealth Act are similar to the requirements introduced by Part 2A of the Civil Procedure Act 2005 (NSW) which commenced on 1 April 2011, but under transitional provisions will only apply to proceedings commenced on or after 1 October 2011.

The full text of the final form of the Civil Dispute Resolution Act can be found at the website of Federal Parliament.

Swaab Attorneys was the highest ranking law firm and the 13th best place to work in Australia in the 2010 Business Review Weekly Best Places to Work Awards. The firm was a finalist in the 2010 BRW Client Choice Awards for client service and was named the winner in the 2009 Australasian Legal Business Employer of Choice Awards.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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