Eastern Commercial Lawyers

Pre-Litigation Requirements (as at May 2011)

24-Jun-2011
Recent legislative amendments spell big changes for the way in which lawyers and clients must now approach civil litigation matters, both at the State and Federal level. This information focuses on the State legislative requirements under amendments to the Civil Procedure Act 2005 (NSW) (‘CPA’).

Lawyers and clients are required to approach new litigation with a view to resolving the matter or narrowing the issues in dispute with the opposing party (or their lawyers) prior to the matter going to Court.

New “pre-litigation requirements” impose a duty on lawyers and clients to take “reasonable steps”:

a) To resolve the dispute by agreement, or

b) To clarify and narrow the issues in dispute in the event that civil proceedings are commenced.

(CPA section 18E)

In other words, you must attempt to communicate with the opposing party to resolve or narrow the dispute prior to filing proceedings in Court.

These “reasonable steps” take into account the person’s situation, the nature of the dispute, the value of the claim and the complexity of issues. “Reasonable steps” might include:

a) 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,

b) Responding appropriately to any such notification by communicating about what issues are, or may be, in dispute, and offering to discuss them, with a view to resolving the dispute,

c) Exchanging appropriate pre-litigation correspondence, information and documents critical to the resolution of the dispute,

d) Considering, and where appropriate proposing, options for resolving the dispute without the need for civil proceedings in a court, including (but not limited to) resolution through genuine and reasonable negotiations and alternative dispute resolution processes,

e) Taking part in alternative dispute resolution processes.

(CPA section 18E)

The new laws reflect the changing climate of litigation in Australia, with a view to limit the matters which do proceed to litigation, or preventing those matters that do proceed from stalling within the Court system on the issue of pleadings amendments and discovery. It promotes focus on early dispute resolution, which is supported by the fact that many litigious cases these days are referred to compulsory mediation by the Courts during the course of proceedings.

Sometimes, disputes cannot be resolved or issues cannot be narrowed without proceeding to litigation. In that event, the litigation obliges the Plaintiff to file a “dispute resolution statement” to show they have complied with the pre-litigation requirements. That “dispute resolution statement” must be filed with the originating process (for example Statement of Claim), and must specify:

a) The steps that have been taken to try to resolve or narrow the issues in dispute between the Plaintiff and the Defendant in the proceedings, or

b) The reasons why no such steps were taken, which may relate to (but are not limited to) the following:

i) The urgency of the proceedings (including that the limitation period for the commencement of the proceedings is about to expire),

ii) Whether, and the extent to which, the safety or security of any person or property would have been compromised by taking such steps.

(CPA section 18G)

A Defendant must file a “dispute resolution statement” at the time of filing their Defence, and must specify:

a) That the Defendant agrees with the dispute resolution statement filed by the Plaintiff, or

b) If the Defendant disagrees in whole or part with the dispute resolution statement filed by the Plaintiff – specify the respect in which, and reasons why, the Defendant disagrees and specify other reasonable steps that the Defendant believes could usefully be undertaken to resolve the dispute.

(CPA section 18H)

Not all civil disputes fall under the umbrella of the “pre-litigation requirements”. “Excluded disputes and proceedings” include:

a) Dust Diseases Tribunal civil proceedings,

b) Industrial Relations Commission civil proceedings, including the Commission in Court Session (the Industrial Court),

c) Civil proceedings in relation to payment of workers compensation,

d) Civil proceedings regarding farm mortgage enforcement to which the Farm Debt Mediation Act 1994 applies,

e) Civil proceedings regarding claims to which the Motor Accidents Act 1988 or the Motor Accidents Compensation Act 1999 applies,

f) Civil proceedings in relation to a claim made under the Motor Accidents (Lifetime Care and Support) Act 2006,

g) Civil proceedings in which a civil penalty under a civil penalty provision or Act is sought,

h) Ex parte civil proceedings,

i) Civil appeals.

(CPA section 18B)

Further legislation currently excludes all Supreme Court proceedings, however this exclusion is liable to change in the near future.

Whilst non-compliance with the “pre-litigation requirements” does not invalidate proceedings, the Court has the power to make costs orders against the party which failed to comply (CPA section 18M). Generally however, if there is compliance, each party is to bear its own costs of compliance with the “pre-litigation requirements” (CPA section 18L).

These “pre-litigation requirements” are not to be confused with “pre-litigation protocols”. “Protocols”, although included in the legislation, are not operative provisions as yet.

The legislation allows for a transitional period whilst the provisions take effect. It also allows for individual Court Rules to further amend the provisions, and therefore it is anticipated the reach of the new legislation will change in the first few months of its operation.

The new State legislation, in its current form, came into effect on 1 April 2011. The pre-litigation requirements allow a transitional period which ends on 1 October 2011, meaning from that date onwards, all disputes will be subject to compliance with the legislation.

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