On 12 April 2011, the Commonwealth Civil Dispute Resolution Act 2011 (the Act) received royal assent. The Act's substantive provisions will enter into force on a date to be fixed by proclamation which will be no later than 12 October 2011. The Act has important implications for litigants and legal practitioners bringing or responding to proceedings in the Federal Court of Australia and the Federal Magistrates Court of Australia.
The key effect of the legislation is set out below along with some important points to note for lawyers practising in the Federal Court and Federal Magistrates Court and a list of the proceedings excluded from the effects of the legislation.
Effect of the legislation
The legislation will encourage civil litigants in the Federal Court and Federal Magistrates Court to take "genuine steps" to resolve their disputes prior to filing proceedings in court unless those litigants have sufficient reasons for not doing so or the relevant proceedings are "excluded proceedings".
The legislation achieves this by requiring both parties to proceedings to file a "genuine steps statement". For applicants, the statement must be filed at the time of filing the application bringing the proceedings and must set out what steps were taken to resolve the dispute or, if no steps were taken, the reasons why (section 6). For respondents, the statement is to be filed prior to the hearing date specified in the application and will need to set out whether the respondent agrees or disagrees with the applicant's statement and, if he/she/it disagrees, their reasons for disagreeing.
The Act does not prescribe the "genuine steps" that a party may take prior to filing, however section 4 sets out a number of examples, including:
- notifying the other person of the issues that are, or may be, in dispute, and offering to discuss them, with a view to resolving the dispute
- responding appropriately to any such notification
- providing relevant information and documents to the other person to enable the other person 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
Under section 4(1A) of the Act, a person will have taken "genuine steps to resolve a dispute" if the steps taken constitute a sincere and genuine attempt to resolve the dispute, having regard to the person's circumstances and the nature and circumstances of the dispute.
While the Act does not oblige litigants to take genuine steps, requiring only that litigants file the genuine steps statement, it provides the court with a broad discretion to consider whether the parties in fact took genuine steps to resolve their dispute when its exercising powers and functions, including the discretion to award costs (section 11).
In addition the Act imposes a duty on lawyers acting for persons to whom the Act applies, to:
- advise their client of the genuine steps statement requirement, and
- assist them to comply with that requirement (section 9).
The Act empowers the court to have regard to "any failure by a lawyer to comply with the duty imposed by section 9" when exercising its discretion to award costs in a civil proceeding (section 12(2)). Such a failure may result in an order that the relevant lawyer bear costs personally. Section 12(3) states:
(3) If a lawyer is ordered to bear costs personally because of a failure to comply with section 9, the lawyer must not recover the costs from the lawyer's client.
The Act adopts the definition of 'lawyer' in the Federal Court of Australia Act 1976 (Cth), which is: "a person enrolled as a legal practitioner of a federal court or the Supreme Court of a State or Territory". On the basis of that definition it appears the section 9 duty could apply to in-house lawyers whether in government agencies or private sector organisations as well as their external lawyers. In-house lawyers should thus be mindful of this provision.
It is difficult to know at this point in time how the section 9 duty for lawyers will be interpreted by courts. However legal practitioners, including both private and public sector in-house lawyers, should be mindful of the Act, its implications for federal court litigation and the potential for adverse or even personal costs orders to be made where there is a failure to comply with the Act.
Part 4 of the Act excludes a number of proceedings from the genuine steps requirement. These are:
- proceedings for an order imposing a pecuniary penalty for a contravention of a civil penalty provision
- proceedings brought by or on behalf of the Commonwealth or a
Commonwealth authority for an order connected with:
- a criminal offence or the possible commission of a criminal offence, or
- a contravention or possible contravention of a civil penalty provision
- proceedings that relate to a decision of, or a decision that
has been subject to review by:
- the Administrative Appeals Tribunal
- the Australian Competition Tribunal
- the Copyright Tribunal of Australia
- the Migration Review Tribunal
- the Refugee Review Tribunal
- the Social Security Appeals Tribunal
- the Veterans' Review Board
- a body prescribed by the regulations;
- proceedings in the appellate jurisdiction of an eligible court
- proceedings arising from the exercise of a power to compel a person to answer questions, produce documents or appear before a person or body under a law of the Commonwealth
- proceedings in relation to the exercise of a power to issue a warrant, or the exercise of a power under a warrant
- proceedings that are, or relate to, proceedings in which the applicant or the respondent has been declared a vexatious litigant under a law relating to vexatious litigants (however described)
- ex parte proceedings
- proceedings to enforce an enforceable undertaking
- any other proceedings excluded under the Regulations, which are yet to be made, and
- any proceedings under the following legislation or their
- the Australian Citizenship Act 2007
- the Child Support (Registration and Collection) Act 1988
- the Fair Work Act 2009
- the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009
- the Family Law Act 1975
- the Migration Act 1958
- the National Security Information (Criminal and Civil Proceedings) Act 2004
- the Native Title Act 1993
- the Proceeds of Crime Act 1987
- the Proceeds of Crime Act 2002.
The Act has important implications for prospective litigants in the Federal Court of Australia and Federal Magistrates Court. While a failure to file a genuine steps statement will not prevent an applicant from initiating proceedings or a respondent responding to them, such a failure may influence the court's procedural decisions regarding the matter and its discretion to award costs.
The Act also has direct implications for legal practitioners, including the potential for personal costs orders if the section 9 duty is not complied with and practitioners will need to be mindful of that when advising their clients.
If you have any further queries in relation to the Civil Dispute Resolution Act 2011 please don't hesitate to contact Adrian D'Amico in the Canberra office.
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.