The Civil Dispute Resolution Act 2011 (Cth) requires parties to take genuine steps to resolve a dispute before proceedings are commenced in the Australian Federal Court or Federal Magistrates Court. Both the parties to disputes and the lawyers acting for them have obligations under the Act.
The object of the Civil Dispute Resolution Act 2011 (Cth) (Act), recently enacted by Parliament, is "to ensure that, as far as possible, people lake genuine steps to resolve disputes before certain civil proceedings are instituted".
Requirements of the Act
The Act imposes three requirements:
- when a party commences proceedings in the Federal Court or Federal Magistrates Court they must file with the court a genuine steps statement setting out either genuine steps that have been taken to seek to resolve the dispute, or the reasons why no such steps have been taken;
- if a respondent to proceedings is given a genuine steps statement, the respondent must file their own genuine steps statement in response, either staling that they agree with the other party's genuine steps statement, or explaining in what respects they disagree with it; and
- lawyers acting for a party who is required to file a genuine steps statement under the Act must advise their client of the requirement and assist ihem to comply with it.
Determining what constitutes genuine steps
Genuine steps are defined in the Act by the following statement contained in subs 4(1 A):
In accordance with this definition, the Acl does not prescribe the slops that will constitute genuine steps to resolve a dispute in each particular case.
Parliament's Explanatory Memorandum for the leg¬islation explains that the definition of genuine steps has been kept flexible deliberately, to enable parties to take steps that are tailored to the particular circumstances of a dispute.
Sub-section 4(1) of the Act lists the following seven examples of actions that might be seen as part of taking 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, includ¬ing 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; and
- 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.
Steps that do not fall within the above examples may also constitute genuine steps under the Act.
Consequences of non-compliance
A failure to file a genuine steps statement will not invalidate the proceedings, any application instituting proceedings, or any response to an application institut¬ing proceedings.
Instead the potential consequences of not filing a genuine steps statement and not taking genuine steps to resolve a dispute are that a court may take such actions into account in:
- performing any function or exercising any powers in relation to a proceeding; and
- exercising its discretion to award costs.
The Explanatory Memorandum refers to courts being in a better position to manage disputes using their case management powers as a result of knowing what steps the parties have taken before proceedings are com¬menced. It gives the following examples of orders a court may make where it is not satisfied that genuine steps have been taken:
- referring the dispute or parts of it to mediation, arbitration or other alternative dispute resolution processes not already undertaken by the parties;
- nominating an alternative dispute resolution prac¬titioner where parties cannot agree on one;
- setting time limits for particular things to be done, or for completion of any part of the proceeding;
- dismissing the proceeding in whole or in part;
- striking out, amending or limiting any part of a claim or defence;
- disallowing or rejecting evidence; and
- ordering a party to produce to the court a docu¬ment in the party's possession, custody or control.
When exercising its discretion to award costs a court may take into account any failure by a lawyer to comply with their obligation to advise and assist their client in relation to the requirements of the Act. If a lawyer is ordered to bear costs of proceedings personally, the Act prohibits the lawyer from recovering those costs from their client.
When a genuine steps statement may say no steps have been taken
If steps have not been taken to seek to resolve a dispute before proceedings are commenced, a genuine steps statement must specify the reasons for that approach being taken.
As stated in subs 6(2) of the Act, such reasons are not limited to, but may relate to, the urgency of proceedings and the extent to which steps to seek to resolve the dispute would have compromised the safety or security of a person or property.
Whether a court is likely to consider there to be sufficient reason for not taking genuine steps to seek to resolve a dispute, will be something that parties and their lawyers will need to assess on a case by case basis.
Part 4 of the Act lists certain proceedings which are excluded from the requirements of the Act.
Some of the excluded proceedings are proceedings under specific Acts like the Native Title Act 1993 and Family Law Act 1975 which already include significant dispute resolution processes. Other excluded proceed¬ings are those where steps to seek to resolve the dispute would be inappropriate, such as civil penalty provision and appeal proceedings.
The Act received Royal Assent on 12 April 2011. The operative provisions commence six months after the date of Royal Assent or on any earlier date fixed by Proclamation.
The Act focuses the attention of courts on the specific steps parties have taken, or have failed to take, before proceedings have been commenced by or against them. Where a party does not properly comply with the requirement to file a genuine steps statement, a court may look at whether lawyers acting for that party have properly advised and assisted their client in relation to the requirements of the Act. What a court sees when it looks at these matters will be relevant to the decisions it makes about the proceedings and the costs incurred by the parties in relation to them.
For more information on litigation and dispute resolution, please see the website of Swaab Attorneys or email Georgina King at firstname.lastname@example.org.
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.