09 Dec 2010

New South Wales introduces pre-litigation procedures – but what will they change?

New South Wales has introduced new pre-litigation requirements, but whether they go substantially beyond litigation best practice, or how they will operate, is still unclear.

What's changed for parties contemplating litigation?

The major changes introduced to the Civil Procedure Act 2005 by the Courts and Crimes Legislation Further Amendment Act 2010, which was assented to on Tuesday, are:

  • parties in a civil dispute must take reasonable steps, having regard to the person’s situation, the nature of the dispute (including the value of any claim and complexity of the issues) and any applicable pre-litigation protocol, to resolve the dispute, or narrow the issues;
  • "reasonable steps" include notification to the other party of the issues, exchanging information and documents critical to the resolution of the dispute, and considering negotiation or alternative dispute resolution (ADR);
  • pre-litigation protocols can be made either by regulation or by the courts as rules of court;
  • parties cannot unreasonably refuse to participate in genuine and reasonable negotiations or ADR;
  • if proceedings are then commenced the plaintiff must file a dispute resolution statement identifying what steps have been taken to avoid litigation;
  • lawyers must inform their clients about the new laws and advise on alternatives to litigation;
  • funders, or anyone directly or indirectly controlling litigation (such as insurers) must not cause a party to be in breach of these requirements; and
  • failure to comply can have implications for costs in any subsequent proceedings.

What will this mean in practice?

It's clear that, as they stand now, the new requirements to some degree codify best practice for responsible litigators, and so do not introduce much novelty.

The Act however does lead to a great deal of flexibility, and thus uncertainty, because pre-litigation protocols have not yet been developed, and "reasonable steps" are not defined exhaustively, and a party's need to comply will depend in part upon their situation and resources and the nature of the dispute, so there is some scope for further explanation by the courts.

 

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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.