Key Points: Parties will be required to take "genuine steps" to resolve disputes before commencing certain proceedings in federal courts.

The new Civil Dispute Resolution Bill 2010 aims to ensure that, as far as possible, people take "genuine steps" to resolve disputes before commencing certain proceedings in the Federal Court of Australia or the Federal Magistrates Court.

What does the Bill try to achieve?

The Bill draws on the recommendations of the National Alternative Dispute Resolution Advisory Council in its 2009 report The Resolve to Resolve.

In general terms, the Bill aims to:

  • change the adversarial culture often associated with disputes;
  • have parties consider ADR mechanisms before becoming entrenched in a litigious position; and
  • clarify the real issues in a dispute with a view to minimising the time required for the court to determine the matter (likely to lead also to minimisation of costs).

What's covered - and what's not covered - by the Bill?

While the Bill is generally applicable, it prescribes numerous "excluded proceedings" that are exempt from its application.

These include:

  • ex parte proceedings, appeals, and matters involving pecuniary penalties for contraventions of civil penalty provisions;
  • proceedings which relate to decisions made by certain statutory bodies (including the Administrative Appeals Tribunal, the Australian Competition Tribunal and the Copyright Tribunal of Australia); and
  • proceedings commenced under certain Acts and regulations, such as the Native Title Act 1993 (Cth) and the Fair Work Act 2009 (Cth).

What does the Bill require parties to do?

The Bill seeks to promote the resolution of disputes before proceedings in court are commenced.

Accordingly, if you are an applicant commencing proceedings, you will be required to file a "genuine steps statement" which outlines the steps that have been taken to try to resolve the dispute (or alternatively, the reasons no such steps were taken).

A respondent party will be obliged to submit a "genuine steps statement" of its own, either agreeing or disagreeing with your statement.

The Bill refers expressly (but not exhaustively) to factors which an applicant may reply upon as the reasons why no genuine steps to resolve the issues in dispute were taken, such as:

  • the urgency of the proceedings; and
  • whether, and the extent to which, the safety or security of any person or property would have been compromised by taking such steps.

The concept of "genuine steps" in the Bill is intended to be flexible and to include any action taken by a party which seeks to resolve the matter and/or to narrow the issues in dispute. Its focus is on actions, not intentions, which is an objective test.

According to the Second Reading Speech, these may include:

  • writing to the other side outlining the issues in dispute and how you think they should be resolved;
  • exchanging relevant documents and information between the parties in a timely and cost-effective manner;
  • the parties participating in a discussion; or
  • the parties undertaking conciliation, mediation or arbitration.

Notably, the filing of a "genuine steps statement" will not require or authorise parties to disclose confidential or without prejudice information which may already have been exchanged in pre-litigation settlement attempts.

It is clear that the intended effect of a genuine steps statement is to narrow the real issues in dispute, with a view to achieving non-adversarial resolution or, at least, court proceedings which are more confined.

How will the Bill affect litigation?

If the Bill becomes law:

  • by encouraging genuine attempts to resolve a dispute, the Bill will enable the court to more expeditiously grant orders and provide direction if litigation is ultimately commenced;
  • the court will have the discretion to take non-compliance with its requirements into account when awarding costs (including awarding costs personally against lawyers who fail to advise their clients of the genuine steps requirement and/or to assist their clients in this respect);
  • the court will not be able to require settlement of a dispute or compel a party to abandon a legal right to pursue court determination. As is typically the case with participants in ADR mechanisms, parties will have the right to terminate ADR if that process proves unsuccessful and instigating proceedings is the only viable step.