It has often been said that protracted and expensive litigation
makes access to justice difficult, stressful and often
unattainable. With the hope of moving the focus from the expensive
adversarial culture of litigation, on 16 June 2010, Attorney
General Robert McClelland introduced the Civil Dispute Resolution
Bill (Bill) into parliament.
The driver behind the focus of the Bill is the requirement that
litigants take genuine steps to resolve their dispute prior to
initiating any application in the Federal Courts.
Background
The objective of the Bill is to
encourage parties to litigation to attempt to resolve their
disputes outside of the courts. By doing this, the Bill seeks to
improve access to justice by focusing parties and their lawyers on
the early resolution of disputes.
What does the Bill require parties to do?
The Bill requires parties to, as far as possible, take genuine
steps to resolve a civil dispute before proceedings are commenced
in the Federal Court or the Federal Magistrates Court. The Bill
does not set out what specific procedures would constitute genuine
steps. It is deliberately flexible.
Clause 4 of the Bill provides examples of things a person may do
as part of taking genuine steps to resolve a dispute. These
include:
- notifying a person of the issues in dispute, or issues that may
be in dispute, and offering to discuss them with a view to
resolving the matter;
- responding appropriately to any notification given by a
person;
- providing relevant information and documents to the other
person to enable them to understand the issues and how the dispute
could be resolved;
- considering whether the dispute can be resolved by a process
facilitated by another person, such as alternative dispute
resolution (more below);
- if a resolution process is agreed to between the parties:
- agreeing on a particular person to facilitate the process and
attending the process;
- if a resolution process does not result in the resolution of
the dispute, considering a different process; and
- attempting to negotiate with the other person with a view to
resolving some or all of the issues in dispute, or authorising a
representative to do so.
Alternative Dispute Resolution
(ADR)
What constitutes a genuine step will vary depending on the
circumstances of the case. In some cases, different forms of ADR
may be an appropriate genuine step for parties to consider.
Some forms of ADR involve an impartial person assisting those in
a dispute to resolve the issues between them or narrow the issues
in dispute. Forms of ADR include mediation, conciliation and
arbitration.
The Bill requires parties to inform the court of the genuine
steps they have taken to try to resolve the dispute. With this
information, the court will be able to use its existing case
management tools when directing how the matter should proceed. If a
court is not satisfied with the steps already taken, then the court
will be in a position to make directions appropriate to compel the
parties to explore alterntive options for resolving (or at least
narrowing) the dispute.
Importantly, the confidentiality of discussions, negotiations or
any ADR undertaken by the parties remains intact.
Who does the Bill apply to?
Parties to the dispute
An applicant initiating civil proceedings in the original
jurisdiction of the Federal Court or Federal Magistrates Court will
be required to file a genuine steps statement at the time of filing
their application. The genuine steps statement must detail what
steps the parties have taken to resolve their dispute or, if they
have not taken any steps, the reasons why.
Parties will not be required to take any specific
procedure; rather, what is appropriate will turn on the
circumstances of the particular matter.
Upon receipt by a respondent of an applicant's genuine steps
statement, they too must file one with the court before the
hearing.
Examples of the types of orders a court may make if it not
satisfied that genuine steps have been taken by the parties,
include:
- referring the dispute or parts of the dispute to ADR;
- nominating an ADR practitioner where parties cannot agree on an
ADR practitioner;
- setting time limits for the doing of anything, or the
completion of any part of the proceeding;
- dismissing the proceeding in whole or in part;
- striking out, amending or limiting any part of a party's claim
or defence;
- disallowing or rejecting any evidence; and
- ordering a party to produce to it a document in the possession,
custody or control of the party.
After taking into account the genuine steps (or lack of)
undertaken by the person to resolve the dispute, the court can
exercise its discretion to award costs against a party under the
Bill if it is not satisfied the party has taken genuine steps in
the circumstances.
Duties of Lawyers
Under the proposed Bill, lawyers will also be under an
obligation to advise their clients of the requirements under the
Bill and assist them in complying with those requirements.
As such, lawyers have the responsibility of explaining to their
client the importance of taking genuine steps prior to commencing
any legal action and what genuine steps may be deemed appropriate
in the circumstances, as well as advising on compliance
requirements under the Bill.
The court also has the power under the Bill to consider whether
or not a lawyer has complied with their duties when exercising its
discretion to award costs.
Where a lawyer is in breach of their obligations under the Bill
by failing to advise their client of the genuine steps requirement
or does not help them to comply, the court can order costs against
a lawyer and the lawyer will not be able to recover those costs
from their client.
Exceptions
The Bill will apply to all civil proceedings initiated in the
Federal Courts, other than certain matters excluded; for example,
where the subject matter is inappropriate (ie civil penalty
proceedings and proceedings brought by the Commonwealth in
connection with a criminal offence), or if there are already
specific mandatory pre-action steps that would make further steps
inappropriate (such as under the Family Law Act 1975).
There are also specific Acts of parliament which are excluded on
the basis that they already establish a dispute resolution process
and where taking genuine steps is not appropriate. These include
the:
Impact
Should the proposed Bill become law, parties will need to turn
their mind to making genuine attempts at settling the dispute prior
to any civil proceeding being initiated in the Federal Courts. The
benefits of doing so for parties will mean that disputes might be
resolved earlier and without the burdensome expense of taking a
dispute through the court.
ADR processes offer parties the opportunity to, at the very
least, identify the issues in dispute and take some 'ownership' in
the ultimate outcome by reaching a negotiated settlement, rather
than leaving their fate in the hands of the court.
Given the deliberately flexible nature of the Bill, what
constitutes appropriate genuine steps will turn on the
circumstances of the case and parties should seek the advice of
their legal practitioners early on to avoid costs orders being made
against them or having the claim thrown out or dismissed by the
court.
All legal practitioners will need to be acquainted with the
requirements under the Bill to help clients comply with their
obligations.
Whether from the viewpoint of parties, their lawyers or judicial
officers, the Bill will have a significant impact on the way
disputes are handled. The proposed laws will shift the focus of
disputes (at least at first instance) away from the courtroom and
towards pre-issue settlement negotiations and dispute resolution
processes.
Whether the Bill is ultimately passed will not be known until
after the outcome of the federal election.
(Authored by Natalie Ayoub, Cornwall Stodart)