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Client Update: Pre-litigation requirements in Victoria's new Civil Procedure Act to be repealed

15 February 2011

In brief: Potential litigants in Victoria should be aware that the Victorian Government is taking steps to repeal the 'pre-litigation requirements' of the State's new Civil Procedure Act. Partner Andrew Maher (view CV) and Senior Associate Matthew McCarthy report.

The pre-litigation requirements

The Victorian Civil Procedure Act 2010 (the Act) commenced on 1 January 2011. The reforms introduced by the Act were the subject of our July 2010 Focus article and our November 2010 Client Update. Last week, the new Victorian Government introduced the Civil Procedure and Legal Profession Amendment Bill 2011 into Parliament, primarily, to repeal the mandatory 'pre-litigation requirements' in Chapter 3 of the Act.

The pre-litigation requirements provide that parties involved in a civil dispute must, before commencing proceedings, take reasonable steps to resolve the dispute by agreement, or to clarify and narrow the issues in dispute. 'Reasonable steps' include:

  • the exchange of correspondence, information and documents that are critical to the resolution of the dispute; and
  • the consideration of options for resolving the dispute outside of court.

The pre-litigation requirements were to apply to civil proceedings commenced in Victoria on or after 1 July 2011 (subject to certain exceptions).

Amendment to the Act

Following a change of government in November 2010, Victoria's new Attorney-General, Robert Clark, announced plans to end the pre-litigation requirements for debt recovery proceedings and other disputes where compliance with the requirements would be inappropriate or unfair to a disadvantaged litigant. Mr Clark expressed concern that the pre-litigation requirements may add complexity, expense and delay to civil proceedings, particularly for small businesses seeking to recover debts through the courts. The Government was also concerned that parties may take advantage of the pre-litigation requirements to delay and frustrate legitimate claims against them.

Rather than seek to carve-out those civil proceedings for which the pre-litigation requirements would be inappropriate, the Government has elected to repeal the pre-litigation requirements entirely. The amending legislation does, however, provide for the court to introduce rules relating to mandatory or voluntary pre-litigation processes for specified civil proceedings (or classes of civil proceedings). Further, the courts may still have regard to the extent to which parties have complied with any mandatory or voluntary pre-litigation processes, when making orders or giving directions in civil proceedings.

The Victorian Government's proposed repeal of the pre-litigation requirements is a significant move, as mandatory pre-litigation requirements now form part of the litigation landscape in New South Wales and are also set to become a feature of federal litigation if the Civil Dispute Resolution Bill 2010 (Cth), which is currently before the Senate, is enacted.

This reform reflects a common criticism that 'one size fits all' pre-litigation dispute resolution models will, in many cases, do little more than prolong disputes and make them more costly. It remains to be seen what, if any, pre-litigation dispute resolution protocols Victorian courts will establish following the enactment of this Bill. In the meantime, even absent any legal requirement to do so, it is important for all potential litigants to, at least, consider the merits of attempting to settle disputes before litigation having regard to the significant inherent risks of that process.

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