Litigants in Federal courts will need to think twice before deciding to commence proceedings to resolve a dispute after 1 August 2011.
It is hard to imagine that commencing legal proceedings against someone is the first thing that anyone would do to resolve a dispute. However from today, parties who decide to litigate a matter will be asked to demonstrate that they have taken “genuine steps” before taking a matter to court. Failing to do so can potentially cost you; not just in the sense that you will be paying your own legal fees, but you may also end up paying your opponents costs.
The Civil Dispute Resolution Act 2011 and Civil Dispute Regulations 2011 (CDR Legislation) have been a hot topic of conversation in legal circles since amendments were enacted on 1 December 2010. Together, the CDR legislations are said to reflect the Federal Government’s adoption of the National Alternative Dispute Resolution Advisory Council’s recommendations in their 2009 report. The latter was titled: The Resolve to Resolve – Embracing ADR to Improve Access to Justice in the Federal Jurisdiction.
So what does the CDR Legislation mean for litigation?
Firstly, it requires a party initiating litigation in a Federal Court to file a 'genuine steps statement' at the time proceedings are commenced. This statement must set out what steps have been taken to resolve the dispute prior to commencing proceedings. If no such steps have been taken, then the latter statement must explain the reasons why not. A respondent must file a similar statement before the final hearing containing a statement as to whether they agree with the applicant’s statement and, if not, the reasons why. There is no set formula for what will be considered a 'genuine step' to resolve a dispute, but examples include:
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notifying the other person of the issues that are, or may be, in dispute and offering to discuss with them, with a view to resolving the dispute
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responding “appropriately” to any such notification
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providing relevant information and documents to the other person to enable them to understand the issues involved and how the dispute might be resolved
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considering whether the dispute could be resolved by a process facilitated by another person, including an alternative dispute resolution process, and
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attempting to negotiate with the other person, with a view to resolving some or all of the issues in dispute.
Failing to file a 'genuine steps statement' will not prevent proceedings being commenced, but such failure, as well as the contents of any 'genuine steps statement' filed, may be “taken account of” by the court when exercising its discretion to award costs in a proceeding. The requirement potentially doesn’t just carry consequences for a litigant, but also for their lawyer who is required to advise them and assist in compliance.
Upshot
The upshot is that from 1 August 2011 there is now a formal incentive on parties considering litigation in the Federal Court and Federal Magistrates Court to first turn their minds to alternative ways of resolving a dispute(other legislative amendments are also in process to introduce similar incentives in the NSW District and Local Courts).
The Disputes and Litigation group at DibbsBarker has extensive experience and resources dedicated to alternate dispute resolution and litigation. This means we are well placed to advise and assist you on compliance with the new CDR Legislation including:
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negotiating with another party to reach a commercial resolution
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participation in alternate dispute resolution processes, such as mediation or informal settlement discussions, and
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if a dispute can not be resolved by other means, taking a matter to court.
If you would like to know more, please contact the leader of the DibbsBarker Disputes & Litigation team:
Emma Hodgman | Partner
T +61 2 8233 9650
F +61 2 8233 9555
E emma.hodgman@dibbsbarker.com
