Taking Steps to Resolve a Dispute before Commencing Litigation

Benefits of resolving legal disputes before commencing littigation

Early resolution of legal disputes offers many benefits including reduced costs, a decreased burden on the Courts and less stress for those involved in litigation.

There have been various legislative steps taken to try and encourage parties to engage in early negotiation and settlement of legal disputes. In this article, we examine the pre-litigation requirements introduced by the Commonwealth and the status of similar requirements at a state level.

Commonwealth pre-litigation requirements

Since August 2011, there has been a requirement on parties to take genuine steps to resolve a dispute before certain civil proceedings are commenced in the Federal Court and Federal Magistrates Court. The requirements are found in the Civil Dispute Resolution Act 2011 (Cth) (the Act).

The aim of the amendments was said to include changing the adversarial nature associated with disputes, encouraging parties to turn their minds to resolution before becoming entrenched in litigation and ensuring that the issues in dispute are properly defined before proceedings are commenced.

The requirements of the Act impose the following obligations and duties:

• an obligation on a litigant commencing proceedings to file with the Court a Genuine Steps Statement (GSS) setting out the genuine steps which have been taken to resolve the dispute or the reasons why such steps were not taken. If a respondent is given a GSS, the respondent must file their own GSS; and
• there is a duty on lawyers to inform their clients about the requirements to file a GSS and assist them to comply with the requirements.

The Act does not mandate particular action, but gives examples of what “genuine steps” the parties might decide to take. These 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 (ADR) processes; and
• attempting to negotiate with the other party with a view to resolving some or all of the issues in dispute.

There are certain proceedings which are excluded from the Act, including:

• proceedings imposing a pecuniary penalty for contravention of a civil penalty provision;
• Commonwealth criminal proceedings;
• ex-parte proceedings;
• proceedings relating to vexatious litigants;
• proceedings to enforce an enforceable undertaking;
• proceedings for review of Administrative Appeals Tribunal and other Tribunal decisions; and
• appellate proceedings and matters under various specified Acts.

A failure to comply with the requirements does not invalidate the proceedings. Rather, a Court may take into account any failure to file a GSS when exercising its powers as to the future conduct of the matter and also in exercising its discretion as to costs.

Requirements in other jurisdictions

Similar pre-litigation requirements were contained in provisions enacted in Victoria and New South Wales. The provisions in Victoria were repealed before coming into effect upon a change of government in 2011. In New South Wales, the pre-litigation protocols were also repealed in 2013.

The repeal of the pre-action legislation in both Victoria and New South Wales suggests an unease around the use of ADR processes in the adversarial judicial system in Australia. Lawyer groups certainly challenged the changes as being likely to “front-load” case preparation and as being inappropriate in relation to complex commercial disputes.

Pre-litigation protocols remain in some other specialist jurisdictions across Australia, for example, personal injury claims in Queensland.

Conclusion

Before commencing proceedings in a Federal Court or Federal Magistrates Court a party is required to take genuine steps to resolve their dispute before filing proceedings. At this stage, similar pre-litigation protocols are only mandatory in certain specialist jurisdictions across the states.

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