Federal Government re-introduces “Pre-action” Requirements

The CDR Bill, if passed into law, will require parties using the Federal Court or Federal Magistrates Court to take genuine steps to resolve disputes before commencing civil proceedings.

A list of examples of “genuine steps” that parties might take before commencing proceedings is provided in the CDR Bill. They are:

1. notifying the other person of the issues that are, or may be, in dispute, and offering to discuss them, with a view to resolving the dispute;
2.  responding appropriately to any such notification;
3. providing relevant information and documents to the other person to enable the other person to understand the issues involved and how the dispute might be resolved;
4. considering whether the dispute could be resolved by a process facilitated by another person, including an alternative dispute resolution process (such as mediation);
5. if such a process is agreed to, agreeing on a particular person to facilitate the process and attending the process;
6. if such a process is conducted but does not result in resolution of the dispute—considering a different process;
7. attempting to negotiate with the other person, with a view to resolving some or all the issues in dispute, or authorising a representative to do so.

The CDR Bill will require both the applicant and respondent to file a “genuine steps statement” at an early stage of any civil proceedings (see more on the “genuine steps statements” below).

Exemptions from the pre-action requirements

Despite the Attorney-General’s comments, the CDR Bill contains a long list of exemptions. The exemptions include proceedings under:

1. the Fair Work Act 2009;
2. the Family Law Act 1975;
3. the Migration Act 1958; or
4. the Native Title Act 1993.

The exemptions also include appeals to the Federal or Federal Magistrates Courts, reviews of decisions from a number of Tribunals (including the Administrative Appeals Tribunals) and criminal or pecuniary penalty-type cases.

Genuine steps statements

An applicant must file a “genuine steps statement” at the time of filing civil proceedings in the Federal Court or Federal Magistrates Court.

The applicant’s genuine steps statement must set out what steps were taken by the parties to attempt to resolve the dispute before commencement of the proceeding or, if no steps were taken, explain the reasons why. Examples given in the bill of reasons why pre-action steps might not be taken are due to the urgency of the matter (presumably for interim or interlocutory injunction applications) or concerns about personal safety.

The respondent must then file a genuine steps statement before the first hearing date. The respondent’s statement must state whether the respondent agrees with the matters contained in the applicant’s genuine steps statement and, if not, the reasons why the respondent does not agree.

Consequences of failure to comply with the “genuine steps” requirement

The bill provides that a failure to lodge a genuine steps statement does not invalidate the proceedings, but it may result in adverse costs consequences for a party who fails to comply.

The CDR Bill also places an obligation on lawyers to advise their clients of the need to file a genuine steps statement and to assist the client with the requirements and the statement. The court may take into account any failure by the solicitor to advise and assist his or her client and may award costs against the solicitor personally (which cannot be recovered by the solicitor from the client).

Ultimately, the judges will still have discretion whether to make adverse costs orders against a party who does not comply in any particular case. There are a number of judges in Australia who do not subscribe to the view that alternative dispute resolution is appropriate in most cases. Whether those judges will make costs penalties for failing to comply with the requirements is yet to be seen.

Author

Toby Boys
Partner

Key Contacts

Melbourne

Howard Rapke Partner
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Sydney

Harold Werksman
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