Australian developments

11.42 The possibility of introducing pre-action protocols, similar to those suggested by Lord Woolf, has attracted attention in reports:

• the Access to Justice Taskforce of the Australian Government Attorney-General’s Department in A Strategic Framework for Access to Justice in the Federal Civil Justice System (Strategic Framework);^[57]

• the National Alternative Dispute Resolution Council (NADRAC) in The Resolve to Resolve—Embracing ADR to Improve Access to Justice in the Federal Jurisdiction;^[58] and

• the VLRC in its Civil Justice Review.^[59]

11.43 These reports have informed the development of a less prescriptive approach in Australia—culminating in recent and proposed reforms—that has instead focused on general pre-litigation steps, rather than specific pre-action protocols. For example, the Civil Dispute Resolution Bill 2010 (Cth) proposes that parties should take ‘genuine steps’ to resolve disputes before commencing litigation.

Civil Dispute Resolution Act 2011 (Cth)

11.44 The Civil Dispute Resolution Act was enacted by Parliament on 24 March 2011. The overall aims of the Act are:

• to change the adversarial culture often associated with disputes;

• to have people turn their minds to resolution before becoming entrenched in a litigious position; and

• where a dispute cannot be resolved and the matter proceeds to court, to ensure that the issues are properly identified, thereby reducing the time required for a court to determine the matter.^[60]

11.45 The Act seeks to achieve these aims by requiring parties to file a ‘genuine steps statement’ at the time of filing the application to commence a civil proceeding.^[61] The statement must specify the steps the party has taken to resolve the issues or, if no steps were taken, an explanation as to why.^[62] Non-compliance with the requirement to file this statement is not a bar to commencing proceedings, but the court may, in the circumstance of non-compliance by any party, award costs in favour of the complying party.^[63]

11.46 The ‘genuine steps’ formulation implemented a recommendation made by NADRAC that:

The legislation governing federal courts and tribunals require genuine steps to be taken by prospective parties to resolve the dispute before court or tribunal proceedings are commenced.^[64]

11.47 The ‘genuine steps’ formulation was preferred over other formulations, such as ‘genuine effort’ or ‘good faith’ requirements. NADRAC considered that the reference to ‘effort’ was a subjective concept that may be misinterpreted as applying a standard of conduct to some ADR processes that was inappropriate.^[65] A further concern was that such formulations might ‘open the door for satellite litigation about the conduct of the parties in costs hearings’.^[66]

11.48 The Civil Dispute Resolution Act does not define ‘genuine steps’ in limited or exclusive terms. Section 4(1A) of the Act provides that:

For the purposes of this Act, a person takes genuine steps to resolve a disputeif the steps taken in relation to the dispute constitute a sincere and genuine attempt to resolve the dispute, having regard to the person’s circumstances and the nature and circumstances of the dispute.^[67]

11.49 This definition is intended to offer guidance to litigants on the nature of the actions that they take which they wish to include in a genuine steps statement, as well guidance to a court in considering whether a litigant took genuine steps.^[68] The non-prescriptive approach is intended to ‘ensure that the focus is on resolution and identifying the central issue without incurring unnecessary upfront costs, which has been a criticism of pre-action protocols’.^[69] As the Australian Government Attorney-General noted in his Second Reading Speech:

The Bill does not introduce a mandatory alternative dispute resolution or prescriptive or onerous pre-action protocols, nor does it prevent a party from commencing litigation. It is deliberately flexible in allowing parties to tailor the genuine steps they take in the circumstances of the dispute.^[70]

11.50 While the consideration of genuine steps is primarily left to the parties, a number of illustrative examples are given in cl 4, including:

• ‘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’;^[71]

• ‘responding appropriately to such notification’;^[72] and

• ‘providing relevant information and documents to other persons to enable the other person to understand the issues involved and how the dispute might be resolved’.^[73]

11.51 Under the Act, lawyers have an obligation to advise their clients about the requirements and assist them to comply.^[74] For failing to meet this obligation, a lawyer may be ordered to bear adverse costs orders personally.^[75]

11.52 The Act also provides that the rules of court under the Federal Court of Australia Act 1976 (Cth) or the Federal Magistrates Act 1999 (Cth) may make provisions for, or in relation to:

• the form of genuine steps statements;

• the matters to be specified in genuine steps statements; and

• the time limits relating to the provisions of copies of genuine steps statements.^[76]

11.53 The Senate Legal and Constitutional Affairs Legislation Committee’s inquiry into the Civil Dispute Resolution Bill 2010 (Cth) found general support for the Bill’s recognition of the importance of mechanisms that assist with the resolution of matters before they proceed to court, or that provide a means to clarify and narrow issues in dispute.^[77] However, concerns were raised in the course of the Senate Committee’s inquiry, particularly in relation to the mandatory nature of the ‘genuine steps’ obligation.^[78] For example, the Committee noted that the Law Council of Australia (Law Council) had submitted that:

while it supported early resolution of disputes without recourse to the courts if ‘used effectively in the right cases’, it had reservations about mandatory pre-action protocols for the federal jurisdiction.^[79]

11.54 In relation to concerns about pre-action protocols, the Australian Government Attorney-General’s Department submitted that the Bill ‘is not a pre-action protocol, nor does it mandate ADR, or indeed, any particular steps’.^[80]

11.55 The Senate Committee agreed that the Bill does not introduce a mandatory pre-action protocol, stating:

while it is obligatory to provide a genuine steps statement, the Bill provides flexibility to the parties to determine the steps that they wish to take to resolve their dispute and allows for circumstances when genuine steps cannot be undertaken.^[81]

11.56 However, the Committee recommended that the Bill be amended to provide an inclusive definition of the word ‘genuine’ to better reflect the intention of the NADRAC report.^[82] Two Senators, on the other hand, recommended that the phrase ‘genuine steps’ should be replaced with ‘reasonable steps’ to be consistent with the then Civil Procedure Act 2010 (Vic) and proposed amendments to the Civil Procedure Act 2005 (NSW).^[83]

Amendments to the Civil Procedure Act 2005 (NSW)

11.57 In May 2009, the NSW Attorney General released ADR Blueprint: Discussion Paper raising the introduction of pre-action protocols in the ADR context.^[84] Three alternative options were discussed:

• a general pre-action protocol;

• specific protocols in relation to particular cases; and

• the incorporation of the main elements of pre-action protocols into guidelines that a court could take into account when asked to adjudicate a civil dispute,^[85] and providing that serious failure to comply with the guidelines could result in an adverse costs order.^[86]

11.58 For consideration by stakeholders the ADR Blueprint: Discussion Paper proposed amendments to the Civil Procedure Act to include the final option. As an alternative. It proposed ‘practice directions … mandating specific steps that must be taken before certain types of cases commence.’^[87]

11.59 In August 2009, a draft recommendations report was released,^[88] including a recommendation to extend the overriding purpose clause in s 56 of the Civil Procedure Act in two respects. This recommendation provided that, first, people in a civil dispute should take all reasonable steps (such as negotiation, mediation and other ADR processes) to resolve the dispute without litigation; and, secondly, if litigation is necessary, before proceedings are commenced the parties should take all reasonable steps to agree to the real issues required to be determined by a court.^[89] The report recommended that courts be empowered to make adverse costs orders in clear or obvious cases of non-compliance.^[90]

11.60 The draft recommendations report also acknowledged that in NSW there were four types of matter that currently require participation in ADR before proceedings in a court or tribunal can be commenced—retail tenancy disputes, farm debt mediations, strata disputes, and common law work injury claims.^[91] The report concluded that ‘[t]here are clearly other types of civil disputes in NSW where it would be appropriate to develop pre-action procedures requiring ADR’.^[92]

11.61 In December 2010, the NSW Parliament enacted the Courts and Crimes Legislation Further Amendment Act 2010 (NSW) which, amongst other things, inserts a new pt 2A—providing the steps to be taken before the commencement of civil proceedings—in the Civil Procedure Act.^[93] Most civil proceedings in NSW courts are subject to the Civil Procedure Act.^[94]

11.62 In the Second Reading Speech, the NSW Attorney General explained that:

The reforms will require parties to identify the issues, exchange relevant information and, most importantly, to start talking to one another before they set foot in the courthouse. That not only will increase the chances of early settlement but also should assist the parties to keep the costs of resolution proportionate to the subject matter of the dispute.^[95]

11.63 New pt 2A will apply to civil disputes and civil proceedings, other than those expressly excluded.^[96] New pt 2A, which will come into force on 1 April 2011, will do two things.

11.64 First, it will introduce a general requirement—by way of new div 2—to take reasonable pre-litigation steps. This is essentially the specific draft recommendation outlined earlier. As is the case in the proposed Commonwealth statute, reasonable pre-litigation steps are not defined exhaustively. Rather, new s 18E(2) provides possible illustrative examples such as:

• ‘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’;^[97]

• ‘responding appropriately to any such notification …’;^[98]

• ‘exchanging appropriate pre-litigation correspondence, information and documents critical to the resolution of the dispute’;^[99]

• ‘considering, and where appropriate proposing, options for resolving the dispute without the need for civil proceedings in a court’;^[100] and

• ‘taking part in [ADR] processes’.^[101]

11.65 The second notable feature of new pt 2A is that it will establish the framework for the development of specific pre-action protocols. It provides for rules of court (including the uniform rules) to set out a pre-action protocol,^[102] as well empowering the Governor to make regulations setting out a pre-action protocol.^[103] The Attorney General’s Second Reading Speech suggests that it will be the courts that will be driving the development of ‘appropriate tailored pre-action protocols in specific matter types’.^[104] He also observed that, ‘[w]hen a bespoke pre-action protocol has been developed, compliance with it will meet the pre-litigation requirements … to take reasonable steps’.^[105]

11.66 New s 18J(1) provides that legal practitioners will have a duty to inform their clients about the applicability of the pre-litigation requirements to the dispute and to advise them about alternatives to the commencement of civil proceedings, including ADR. Section 99 of the Civil Procedure Act relevantly provides that where it appears to the court that costs have been incurred improperly, or without reasonable cause, in circumstances for which a legal practitioner is responsible, the court may order the legal practitioner to pay the whole or any part of any costs that their client, and/or in the case of a barrister, their instructing solicitor, has been ordered to pay. New s 18J(2) provides that, in determining whether a costs order should be made against a legal practitioner under s 99, the court may take into account the legal practitioner’s failure to comply with s 18J(1).

11.67 Similar to the pre-action protocols in the UK, new s 18F provides that documents exchanged pursuant to pre-litigation requirements are subject to protection and their use is limited to resolution of the civil dispute, unless the parties agree otherwise in writing or the court provides leave. The Attorney General explained that:

it is not intended that the parties be disadvantaged by disclosing relevant information and documents in accordance with the pre-litigation requirements. To this end, these reforms extend the existing protection for documents exchanged in the course of litigation to those disclosed in the pre-litigation process. These measures will ensure that parties to a dispute can engage in frank and constructive negotiations that maximise the likelihood of settlement.^[106]

11.68 New s 18K(1)(a) provides that failure to comply with the pre-litigation requirements does not prevent or preclude a person from commencing civil proceedings—unless the court otherwise orders or the uniform rules otherwise provide.

11.69 Further, the Attorney General explained:

[The reforms make] it clear that parties are not required to take pre-litigation steps that are unreasonable or disproportionate in terms of costs or time. It also stipulates that a person’s situation, which may include, for example, social or economic disadvantage … can be considered when determining what is reasonable.^[107]

11.70 If civil proceedings are commenced, new s 18G(1) provides that the plaintiff should file a ‘dispute resolution statement’—similar to the ‘genuine steps statement’ proposed in the Commonwealth statute—at the time of filing the originating process for the proceedings. The statement must specify the steps they have taken to resolve or narrow the issues, or if no steps were taken, an explanation for that.^[108] The relevant defendant must be served with a copy and must also file, when filing the defence, a dispute resolution statement—either stating their agreement with the plaintiff’s dispute resolution statement or stating and specifying their disagreement.^[109] Non-compliance with the requirement to file this statement does not invalidate the originating process, or the response to that process.^[110]

11.71 New s 18L provides that, subject to div 5, or any court rules that provide to the contrary, the costs of compliance with pre-litigation requirements are borne by each party. This is notably different from the costs of discovery, which are typically borne by the party producing the documents (at least, at first instance) and not the requesting party.

11.72 However, new s 18M of the Civil Procedure Act relevantly provides that a court may order—on its own motion or on the application of a party to the civil proceedings—that a party pay all or a specific part of another party’s costs of compliance with the pre-litigation requirements if it is satisfied that it is reasonable to do so.

Proposed repeal of pre-litigation requirements in Victoria

11.73 The Civil Procedure Act 2010 (Vic) commenced on 1 January 2011 and adopted recommendations in the VLRC’s Civil Justice Review that a general pre-action protocol should be implemented in Victoria.^[111] The Act requires that: ‘each person involved in a civil dispute must comply with the pre-litigation requirements prior to the commencement of any civil proceeding in a court in relation to that dispute’.^[112] The requirements are to take ‘reasonable steps’ to resolve the dispute by agreement or to clarify or narrow the issues in dispute.^[113] The Act is less prescriptive than the VLRC’s recommendations, in that it provides no guidance in relation to the content of letters of claims, responses and timeframes for response for the purposes of reasonable steps.^[114]

11.74 The provisions of the Act relating to pre-litigation requirements were to apply to civil proceedings commenced in the Victorian Supreme, County and Magistrates Courts on and after 1 July 2011.^[115] However, in early February 2011 the then recently-elected Victorian Government introduced the Civil Procedure and Legal Profession Amendment Bill 2011 (Vic) that, amongst other things, seeks to repeal the pre-litigation requirements.

11.75 In the Attorney General’s Second Reading Speech he explained the Government’s rationale:

The [pre-litigation requirements (PLRs)] require parties to a dispute, save in the case of specified and limited exceptions, to take what the act describes as ‘reasonable steps’ to resolve their dispute without resorting to litigation. The act is open-ended and unclear as to what parties are required to do to fulfil this requirement.

… If parties fail to comply with the PLRs, they are liable to be subject to costs penalties.

… [T]he government’s view, and the view of many practitioners, is that to seek to compel parties to [attempt to resolve disputes without resorting to litigation] through these heavy-handed provisions will simply add to the complexity, expense and delay of bringing legal proceedings, because of the need to comply with these mandatory requirements, whether or not they are likely to be useful in any particular case.

In many instances, the PLRs will allow dishonest parties to postpone and frustrate proceedings.

These problems arise because the PLRs apply to all proceedings unless a specified exception is applicable …

… Since the election, most parties with whom the government has consulted are of the view that, rather than adding to the complexity of the pre-litigation requirements by including yet more exceptions, it is better to remove the mandatory pre-litigation requirements altogether.

… [Section 9(2) will be retained and] will give the court discretionary power to take action against parties who act unreasonably in not seeking to resolve their dispute, without burdening all parties with unnecessary procedural requirements.^[116]

11.76 The Explanatory Memorandum explained further that:

the Bill will allow rules of court to be made for or with respect to any mandatory or voluntary pre-litigation processes in relation to specified civil proceedings or specified classes of civil proceeding.^[117]

Queensland—personal injury claims

11.77 In Queensland, the majority of personal injury claims are now governed by
pre-action procedures after the Personal Injuries Proceedings Act 2002 (Qld) amended other legislation to provide a framework for pre-action protocols. The legislation is aimed at providing a speedy procedure for the resolution of claims and promoting settlement.^[118] Parties are required—within a certain timeframe—to disclose information and documents,^[119] join any contributors^[120] and provide formal notification of claims.^[121] A compulsory conference must be held on completion of the pre-action requirements,^[122] and parties are to exchange final offers at the conclusion of the conference.^[123]

11.78 In 2003, the Queensland Attorney-General appointed a stakeholder reference group to consider the possibility of common pre-action procedures for personal injury claims. The group proposed a revised general pre-action protocol that would apply to all cases of personal injury other than dust-related diseases, medical negligence and claims from minors.^[124] The ALRC is not aware whether these recommendations in relation to a general pre-action protocol have been implemented.

11.79 Some have suggested that, as a result of the specific pre-action procedure being introduced, ‘most personal injury litigation has disappeared’ in Queensland.^[125] Statistical data confirms a drop in proceedings initiated, however it is difficult to confirm that this is attributable to pre-action protocols.^[126]