Compulsory pre-litigation ADR

17 June 2010

On 16 June 2010, the Attorney-General Robert McClelland introduced legislation to improve access to justice by requiring people to take genuine steps to resolve their legal disputes before going to court. Partner Mark Madsen reviews the developments.

Civil Dispute Resolution Bill

The Civil Dispute Resolution Bill 2010 will require prospective litigants to lodge a statement with the court detailing what steps they have taken to resolve their dispute or, if they haven't, the reasons why.

The statement will also provide additional information that the court can consider when making orders and directions under its existing case management and costs powers.

Recommendations of NADRAC Report

The Bill implements key recommendations made by the National Alternative Dispute Resolution Advisory Council (NADRAC) in its November 2009 report, The Resolve to Resolve: Embracing ADR aimed at improving access to justice in the federal jurisdiction. It recognises that courts, parties and lawyers all have a role to play in achieving this fundamental objective and complements the active case management powers introduced in the Federal Court in 2009, which promote the timely, inexpensive, and efficient resolution of disputes.

In its report, NADRAC proposed a new legislative regime governing dispute resolution in federal courts and tribunals. This regime would impose an obligation on prospective litigants to take 'genuine steps' to resolve their disputes before litigation is commenced.

'Genuine steps' to resolve a legal dispute may include:

exchanging information between parties to more clearly identify the issues in dispute;
considering possible resolution through mediation or conciliation;
sending a notice of dispute outlining the issues and referencing relevant information; or
agreeing to participate in negotiations when initiating legal proceedings.

In his press release Attorney-General, Robert McClelland said "These requirements will promote a move away from the adversarial culture of litigation by encouraging parties and lawyers to consider early options for resolution outside of the courts, before significant costs are incurred."

Considerations

The Bill requires that the applicant's genuine steps statement must set out the steps that have been taken to try to resolve the dispute before commencing proceedings or why no such steps were taken. What will constitute 'genuine steps' in any particular case will depend on the particular circumstances of the case.

The EM states:

The Bill does not prescribe specific steps to be undertaken. Rather, it is intentionally flexible to enable parties to turn their minds to what they can do to attempt to resolve the dispute. This is to ensure that the focus is on resolution and identifying the central issues without incurring unnecessary upfront costs, which has been a criticism of compulsory pre-action protocols.

Factors including urgency, undue prejudice, safety, security, the subject matter of the dispute, public interest issues and whether the dispute is essentially the same as had been previously before the same court may be taken into account in deciding whether parties may be relieved of the requirement to take these genuine steps.

In exercising its powers in relation to the proceeding, the court may consider whether a genuine steps statement was filed (when required) and whether 'genuine steps' were taken. The court may refer the dispute to ADR or exercise its power by:

setting time limits for the doing of anything, or the completion of any part of the proceeding
dismissing the proceeding in whole or in part
striking out, amending or limiting any part of a party's claim or defence
disallowing or rejecting any evidence, and
ordering a party to produce to it a document in the possession, custody or control of the party.

Concerns have been raised about NADRAC's suggestion that a prospective party be able to apply to a court or tribunal for an order requiring that any necessary information be provided. The report states that this will help to ensure that prospective litigants get any information that is essential to resolve a dispute, without requiring or fostering the costly exchange of too much information. The report proposes that the statutory provisions dealing with 'preliminary discovery' could be amended to relax circumstances in which an order for limited discovery can be made. One disadvantage is that a prospective plaintiff may attempt to use this process to gain access to documents from which to mount a claim against the prospective defendant

Conclusion

There is general agreement that ADR provides a quicker, less expensive and more flexible approach to resolving disputes than the judicial process. The introduction of compulsory pre-litigation ADR marks a new phase in the management and resolution of disputes. Whether this initiative achieves the anticipated efficiencies and improves access to justice in federal courts and tribunals remains to be seen.

For further information, please contact:

Mark Madsen | Partner
Mullins Lawyers
t +61 7 3224 0241
f +61 7 3224 0333
mmadsen@mullinslaw.com.au