As of 1 August 2011, most Federal Court and Federal Magistrates’ Court litigants are required to file a “genuine steps statement” certifying that they have taken genuine steps to resolve their dispute, before instituting proceedings in the Federal Court and the Federal Magistrates Court of Australia.

These changes to civil procedure in the Australian federal judicial system have come about as the result of the implementation of the Civil Dispute Resolution Act (Cth) (“CDRA”) and reforms to the Federal Court and Federal Magistrates Court Rules. The reforms seek to:

  • encourage parties to explore alternative dispute resolution prior to instituting proceedings; and
  • place the courts in a better position to manage proceedings, by ensuring that the courts are fully informed of the history of the dispute prior to trial. An example of the intention behind of the requirement to file genuine steps statements is provided in the CDRA Explanatory memorandum:

“…if genuine steps have been taken and have resulted in issues being identified and positions clarified, a court may be in a better position to decide that court ordered mediation would impose unnecessary costs and delay. Early listing for hearing will be the best and most cost efficient and just outcome. Alternatively, if a court is not satisfied with the steps already taken, further case management directions may be appropriate to ensure parties explore options for resolving or narrowing the dispute.”  

What is a “genuine steps statement”?

A genuine steps statement must specify the steps that have been taken by the parties to try and resolve the issues in dispute in the proceedings, or, the reasons why no such steps were taken. These “genuine steps” may include:  

  • Sending a letter of demand which sets out the details of the Applicant’s claim (including all relevant information or documents) and the steps required to resolve the dispute;
  • Engaging in negotiation to identify and resolve the issues in dispute; or
  • Appointing a mediator or impartial third party to assist in resolution of the dispute.

If an Applicant has filed a genuine steps statement, a Respondent must file its own genuine steps statement:  

  • stating that the Respondent agrees with the Applicant’s genuine steps statement; or
  • detailing the aspects of the Applicant’s genuine steps statement with which the Respondent disagrees.

Importantly, parties are not required to disclose the contents of “without prejudice” communications in a genuine steps statement (although they may need to disclose that these communications occurred). A genuine steps statement is not a pleading, and, as such, will not prejudice a party’s case. Rather, as explained below, genuine steps statements are largely used as a case management tool.

What happens if a genuine steps statement is not filed?

A failure to file a genuine steps statement does not invalidate proceedings. However, the failure can be taken into account by the Federal Court in performing its functions or powers in civil proceedings, and may attract adverse legal cost consequences, especially in circumstances where a party cannot demonstrate that it acted reasonably prior to the institution of proceedings.

What do these changes mean for litigants?

Whilst it is already common for litigants and their lawyers to explore steps for resolving their disputes prior to the institution of legal proceedings in Australia, the new procedures seek to ensure that the parties have explored other avenues for resolution prior to bringing an action in the Federal Court. The requirement for a genuine steps statement complements other recent reforms to the Federal Court Act Federal Court Rules which are designed to assist parties to narrow the issues in dispute, reduce court backlogs and ultimately lead to faster and cheaper litigation.