Client Update: Mandatory pre-litigation dispute resolution procedures in Federal and Victorian courts
30 March 2011
In brief: The Commonwealth and Victorian parliaments have recently enacted legislation concerning mandatory pre-litigation dispute resolution procedures. While the Commonwealth Parliament has mandated 'genuine steps' to resolve disputes, the Victorian Parliament has repealed the mandatory pre-litigation requirements prescribed by previous legislation (but it has given the courts the power to determine what pre-litigation requirements should be followed). Partner Andrew Maher and Senior Associate Eleanor Fletcher look at the differing approaches.
On 24 March 2011, the Commonwealth Parliament enacted the Civil Dispute Resolution Act 2011 (the CDR Act).
The object of the CDR Act is to ensure that, as far as possible, people take genuine steps to resolve disputes before certain civil proceedings are instituted in federal courts.
The CDR Act requires litigants to lodge a statement with the court detailing what 'genuine steps' they have taken to resolve the dispute, or the reasons why no such steps were taken. The CDR Act does not mandate particular action. Rather, it allows the parties involved to decide what steps are most appropriate in their circumstances. Some examples of 'genuine steps' that parties might decide to take include:
- notifying the other party of the issues in dispute and offering to discuss them with a view to resolving the dispute;
- providing relevant information and documents to the other party to enable them to understand the issues involved and how the dispute might be resolved;
- considering possible resolution through alternative dispute resolution processes; and
- attempting to negotiate with the other party with a view to resolving some or all of the issues in dispute.
The court may take into account the steps taken by a party in exercising the court's discretion and powers, including the discretion to award costs.
Certain proceedings and classes of proceedings are excluded from the requirement to lodge a genuine steps statement. The CDR Act contemplates that the federal courts will introduce rules dealing with the form, content and timing of genuine steps statements.
The relevant provisions of the CDR Act will commence on a day to be fixed by proclamation.
The Victorian Civil Procedure Act 2010, which commenced on 1 January 2011, imposed pre-litigation requirements on persons involved in a civil dispute to:
- take reasonable steps to resolve the dispute by agreement; or
- clarify and narrow the issues in dispute,
prior to commencing proceedings. Those reasonable steps were defined to include and, thereby, require the exchange of correspondence, information and documents relating to the dispute and the consideration of options for resolving the dispute without the need for proceedings.
The pre-litigation requirements were due to apply to proceedings commenced on or after 1 July 2011. The reforms introduced by the Civil Procedure Act were the subject of our July 2010 Focus article and our November 2010 Client Update.
The Civil Procedure and Legal Profession Amendment Act 2011 (Vic) (the Amendment Act), which was foreshadowed by our Client Update in February 2011, repeals the pre-litigation requirements of the Civil Procedure Act. It also repeals the requirement for parties and legal practitioners to certify whether the pre-litigation requirements have been complied with, and if not, then the reasons why.
The Amendment Act instead permits the Victorian courts to impose specific protocols relating to mandatory or voluntary pre-litigation processes for specified civil proceedings or specified classes of civil proceedings. The extent to which parties to litigation comply with any mandatory or voluntary pre-litigation requirements is a matter to which the court may have regard in making any order or giving any direction in furthering the overarching purpose of the Act, namely to facilitate the 'just, efficient, timely and cost-effective resolution of the real issues in dispute'.
The Amendment Act received Royal assent yesterday and took effect today.
Despite the differing approaches adopted by the Commonwealth and Victorian parliaments, these reforms tend to acknowledge that although there are clear benefits to the administration of justice where disputing parties seek to resolve their differences before litigation, precisely what steps should be taken in any particular dispute ought not be prescribed by legislation. Instead, determining what pre-litigation steps are appropriate is a task best undertaken by the parties and the courts, having regard to the relevant circumstances.
- Andrew MaherPartner,
Ph: +61 3 9613 8022
- Peter O'DonahooPartner,
Ph: +61 3 9613 8742
- Paul NicolsPartner, Sector Leader, Industrials,
Ph: +61 2 9230 4414
- Kim ReidPartner, Sector Leader, Banks & Financial Institutions,
Ph: +61 2 9230 4037
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