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06 Aug 2010

Civil Dispute Resolution Bill brings new obligations to all litigants

by Caroline Bush

Australian Government agencies (and their external lawyers) will need to carefully implement an additional process in order to ensure that methods other than litigation have been fully considered before commencing proceedings.

The current Attorney-General has keenly advocated the advantages of alternative dispute resolution as a means of quickly and effectively resolving disputes. The introduction of the Civil Dispute Resolution Bill 2010 into Parliament on 16 July 2010 marks the next step in encouraging parties to a dispute to consider using alternative dispute resolution mechanisms to resolve a dispute before resorting to litigation.

The Bill implements recommendations by the National Alternative Dispute Resolution Advisory Council following its recent inquiry into the use of alternative dispute resolution in the civil justice system administered federally. Those recommendations seek to address a number of perceived inefficiencies in the civil justice system with a view to improving access to justice and reducing the cost of justice.

The explanatory memorandum states that the bill aims to:

  • change the adversarial culture often associated with disputes;
  • have people turn their minds to resolution before becoming entrenched in a litigious position, and
  • where a dispute cannot be resolved, ensure that issues are properly identified, reducing the time required for a court to determine the matter.

Implications for Australian Government agencies

Australian Government agencies have been accustomed for some time now to the need to give serious consideration to the use of alternative dispute resolution processes to seek to resolve dispute quickly and in a cost-efficient manner. The Legal Service Directions contain a number of obligations that seek to ensure that full consideration is given to the use of alternative dispute resolution processes before litigation is commenced.

If the Bill is passed, Australian Government agencies (and their external lawyers) will need to carefully implement an additional process in order to ensure that methods other than litigation have been fully considered before commencing proceedings.

What proceedings does the Bill apply to?

The Bill applies to proceedings commenced in the Federal Court or the Federal Magistrates Court. There are however a number of exceptions which are listed at clauses 15 and 16 of the Bill, the main ones being:

  • proceedings that relate to a decision of, or a decision that has been subject to review by various statutory bodies such as the Administrative Appeals Tribunal, the Migration Review Tribunal, the Veterans Review Board, etc;
  • proceedings for an order imposing a pecuniary penalty for a contravention of a civil penalty provision or to enforce an enforceable undertaking;
  • appeals;
  • ex parte proceedings;
  • proceedings brought by the Commonwealth for orders in connection with criminal offences; and
  • proceedings under the Family Law Act, the Migration Act, the Native Title Act (and a number of other Commonwealth Acts listed at section 16 of the bill).

What does the Bill require the parties to do?

At the time of commencing proceedings in the Federal Court or Federal Magistrates Court, an applicant is required to file a statement with the Court which sets out the "genuine steps" that the applicant has taken in an attempt to resolve the dispute (called a "genuine steps statement") or, if no such steps have been taken, the reasons why.

The respondent must also file a "genuine steps statement" in response to the applicant's statement. The respondent's statement must state whether it agrees or disagrees with the statement filed by the applicant and, if it does not agree, the reasons why it does not agree.

The Bill recognises that there may be valid reasons for a party to have taken no steps to resolve a dispute prior to commencing proceedings and in fact suggests that valid reasons may be the urgency of the proceedings, and where the safety or security of persons or property would have been compromised by taking such steps.

The Bill imposes duties on lawyers acting for a party to advise their client of the requirement to file a "genuine steps statement" and to assist them to prepare it. However, the Bill stipulates that a failure to file a "genuine steps statement" does not invalidate an application, a response or the proceedings generally. The registry will therefore accept an application and response if they are not accompanied by one.

Without intending to be exhaustive, the Bill identifies a number of steps that the court would regard as genuine steps to resolve a dispute, amongst them being:

  • notifying the opposing parties of the issues and offering to discuss and negotiate;
  • providing relevant information and documents to the other parties to assist the understanding of issues; and
  • proposing alternative dispute resolution processes.

How can the court use the "genuine steps statement"?

The Bill provides that the court may have regard to the fact of filing or not filing a "genuine steps statement" and to whether the parties took genuine steps to resolve the dispute in performing its functions or exercising its powers in relation to the proceedings.

This may well have the effect that if the parties have not engaged in any serious steps to resolve a dispute before litigation, the court might be more inclined to order a compulsory mediation at an early stage. Alternatively, if the parties have engaged in genuine and fully informed negotiations, a fast track timetable towards hearing may be considered more appropriate.

Clearly part of the rationale for requiring the filing of a "genuine steps statement" is to enable the court to be better informed about the preparation and knowledge of the parties so as to enable it to make orders and directions going forward which will assist with the efficient management of the proceedings.

Consequences of non-compliance

The Bill does not allow the Court to prevent commencement of the proceedings because of non-compliance with the requirement to file a "genuine steps statement." However, it does give the court the right to take the failure to file one into account in making costs orders.

For instance, if an applicant did not file a notice of genuine steps and the court found it had in fact not taken genuine steps, but it succeeded in the proceedings in any case, the court might be persuaded to award the applicant only a proportion of its costs on the basis that the costs incurred by the Respondent would have been reduced if genuine steps had been taken by the applicant.

Further, the Bill contemplates that failure by a lawyer to fulfil the duty of the lawyer to advise their client of the requirement to file a "genuine steps statement" and to assist that client in doing so, can give rise to a personal costs order being made against the lawyer. That should encourage lawyers to actively pursue resolution before commencement of proceedings rather than merely paying lip service to the bill.

Similar changes to civil procedure in Victoria

Interestingly, the Bill is not unique in its efforts to reform the civil litigation process. Similar kinds of case management reform are being considered by other jurisdictions around Australia. Significantly, on 24 June 2010, the Victorian Attorney-General introduced the Civil Procedure Bill 2010 (Vic) which, if passed, will bring about a variety of new requirements for the conduct of civil litigation including a regime similar to that proposed in the Commonwealth Bill.

Conclusion

The Bill is an indication of the Government's commitment to encouraging the use of alternative dispute resolution mechanisms ahead of the commencement of proceedings in a court, and marks the introduction of an important new step for lawyers and parties to a dispute in the commencement of legal proceedings.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.