A new requirement for both parties to file a "Genuine
Steps" statement should further streamline dispute resolution
in the franchise sector. The Civil Dispute Resolution Act
2011 (Cth) (Act) and new Federal Court Rules
commence from Monday 1 August 2011. The key object of the
legislation is to ensure that parties take "genuine
steps" to resolve their disputes before commencing proceedings
in the Australian Federal Court or Federal Magistrates Court. The
policy objective underpinning the introduction of the pre-action
process is to encourage the early resolution of disputes without
resort to the Courts.
The new rules will apply to all proceedings commenced after 1
August 2011 as well as to any new steps taken in existing
proceedings (unless the Court determines otherwise).
Requirements of the Act
The object of the legislation is sought to be achieved by
requiring both parties to file a "Genuine Steps
Statement". For the Applicant, this must be done at the time
of filing the originating application and must:
specify the steps taken to resolve the issues in dispute;
the reasons why no such steps were taken. For example because
of the urgency of the proceedings or because the safety or security
of the person or property would have been compromised by taking the
The Respondent's Genuine Steps Statement in reply must be
filed and served before the first hearing date specified in the
The Act does not prescribe the types of steps which must be
taken but does state that the steps must 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. The Act provides examples of what would constitute
genuine steps such as the following:
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
responding appropriately to any such notification;
providing relevant information and documents to the other
person to enable the other person to understand the issues
considering whether the dispute could be resolved by a process
facilitated by another person including an alternative dispute
if such a process is agreed to, agree on a particular person to
facilitate the process, and attend the process;
if such a process is conducted but does not result in a
resolution of the dispute, consider a different process;
attempt to negotiate with the other person, with a view to
resolving some or all the issues in dispute or authorise a
representative to do so.
The Act does not apply to certain proceedings such as appeals,
proceedings to enforce an enforceable undertakings, ex parte
proceedings ie. injunctions where orders are sought in Court
without the other party present, and administrative law proceedings
The new Genuine Steps requirements will complement the existing
provisions of the Franchising Code of Conduct under the
Competition and Consumer Act 2010 (Code)
which sets out the dispute resolution procedure which parties may
start prior to commencing proceedings. The obligations under the
Act will not differ in a material way from the obligations already
available to franchisors or franchisees under the Code.
However, the Act will now make taking genuine pre-litigation
steps mandatory for franchisors and franchisees in the Federal
Court and Federal Magistrates Court (except in relation to the
Excluded Proceedings). Therefore franchisors and franchisees will
now effectively be required to utilise either the dispute
resolution procedure under the Code (or a similar such process)
before commencing proceedings in the Federal Court of Australia in
order to comply with the Genuine Steps requirements under the
The Act is also likely to discourage premature and hasty
That is because:
although failure to file a Genuine Steps Statement will not
invalidate the proceedings, the Court will take into account any
failure when exercising its powers as to the future conduct of the
matter, as well as its discretion to award costs; and
lawyers will also now have a duty to advise clients of the
Genuine Steps requirement. Failure to do so may result in a
personal costs order being made against that lawyer.
These are obviously powerful incentives to ensure that
appropriate and sincere steps are taken by parties and by the
lawyers advising them before any litigation is commenced.
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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This was an interlocutory decision about the appointment of a tutor for the child appellant, to carry on his proceedings.
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