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In brief
- Under proposed Commonwealth legislation, alternative dispute resolution (ADR) and associated steps are set to play a more significant role as parties to certain federal civil proceedings may soon be required to explain what they did or did not do in an attempt to resolve their dispute and why.
- Parties and their lawyers will need to give due consideration to appropriate ADR steps that can be taken before commencing proceedings, or risk the courts exercising their discretion adversely when it comes to awarding costs.
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The Civil Dispute Resolution Bill
The Civil Dispute Resolution Bill 2010 (Bill) was recently introduced into Federal Parliament by the Attorney-General, Robert McCelland.1
The Bill implements recommendations made by the National Alternative Dispute Resolution Advisory Council following its recent inquiry into the use of ADR in the federal civil justice system and the publication of its subsequent report in November 2009 entitled The Resolve to Resolve: Embracing ADR to improve access to justice in the federal jurisdiction.
The Bill aims to improve access to justice by encouraging parties to take ‘genuine steps’ to resolve their disputes before commencing formal legal proceedings in the Federal Court or the Federal Magistrates Court.
The Explanatory Memorandum2 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.
What will parties be required to do?
At the time of commencing federal civil proceedings, an applicant will be required to file a statement with the court which sets out the ‘genuine steps’ that have been taken in an attempt to resolve the dispute. If an applicant did not take any steps, it must explain why. The statement is called a ‘genuine steps statement’.
A respondent must also file a ‘genuine steps statement’ which responds to the statement filed by the applicant. The respondent must state whether it agrees or disagrees with the statement filed by the applicant, and if it does not agree, it must explain the reasons why.
The Bill specifically contemplates that reasons for a party not taking steps to resolve a dispute may include urgency or where security of property or assets might be compromised if the other party is notified of the dispute prior to proceedings being instituted.
Parties will also not be obliged or authorised to disclose confidential or without prejudice information exchanged in any pre-litigation attempts to settle their dispute.
Without intending to be exhaustive, the Bill sets out a number of examples of steps that a party might choose to take prior to commencing litigation. The examples are unsurprising and include:
- notifying the other side about the claim
- providing information and documents to the other side to enable them to understand the issues in dispute and how they might be resolved
- negotiating with the other side, or
- attempting to resolve the dispute by an ADR process, which might, for example, include conciliation, mediation or expert appraisal.
What will a ‘genuine steps statement’ be used for?
By providing the court with information about the steps the parties have taken or not taken (as the case may be), it is intended that the court will be better informed to make orders and directions for steps moving forward.
For example, if parties to a proceeding have not engaged in dialogue in an attempt to resolve the issues in dispute, the court might order a compulsory mediation at an early time. Conversely, if the parties have engaged in negotiations or exchanged position papers and disclosed documents, a court-ordered mediation may be unnecessary and a fast tracked timetable might be more appropriate.
What proceedings will be excluded?
The new ‘genuine steps’ requirements will not apply to all federal civil proceedings and the Bill sets out a number of ‘excluded proceedings’. These include ex parte proceedings, appeals, proceedings for pecuniary penalties for contravention of civil penalty provisions, proceedings brought by the Commonwealth for orders in connection with criminal offences, and proceedings that relate to decisions made by statutory bodies such as merits review tribunals (for example, the Administrative Appeals Tribunal or the Australian Competition Tribunal).
Excluded proceedings also include proceedings commenced under certain Acts and regulations, such as the Fair Work Act 2009 (Cth) and the Native Title Act 1993 (Cth).
Sanctions for non-compliance
The court cannot prevent the commencement of civil proceedings because of non-compliance with the requirement to take ‘genuine steps’ or to file a ‘genuine steps statement’. However, the court will have discretion to take non-compliance into account in performing its functions (such as case management functions) and in awarding costs.
The Bill also requires lawyers to advise their clients about the ‘genuine steps’ requirements and to assist their clients to comply with them. The court will have discretion to take non-compliance by lawyers into account when awarding costs, including awarding costs personally against lawyers who fail to advise their clients of the requirements and fail to assist their clients to comply with them.
We will continue to monitor the progress of the Bill and keep clients updated.
This article was written by Stephanie Eastwood, Solicitor, Melbourne.
Endnotes
- The Bill is available from the Parliament of Australia website
- The Explanatory Memorandum is available from the Parliament of Australia website
More information
For information regarding possible implications for your business, contact a member of the Litigation & Dispute Resolution team.