"Genuine steps" in Federal Court matters
Mediation to satisfy the genuine steps obligation
The Federal Court of Australia and Federal Circuit Court of Australia have jurisdiction (not necessarily exclusive) in those cases involving admiralty and maritime matters, administrative law, corporations, competition, trade practices, consumer affairs, human rights, privacy, migration, native title, bankruptcy, intellectual property, taxation, insurance, and industrial law. The jurisdiction of the Federal Circuit Court of Australia also includes family law and child support.
In Federal claims parties and their lawyers are strong encouraged by the Civil Dispute Resolution Act 2011 to take "genuine steps" to resolve a dispute before suing unless the claim is a type exempted from these provisions1. Both parties must file genuine steps statements with the court2, and whether or not they have taken genuine steps can be taken into account by the court in deciding how to exercise its powers and functions3 or in the award of costs4.
Lawyer's duties
It must be remembered that there is no obligation in the Act itself to take genuine steps. Instead the obligation is to file a genuine steps statement, although failing to do so will not invalidate the proceedings5.
Lawyers have a duty to advise their clients of the requirement to file the genuine steps statement and to assist them to comply6, and may face a personal costs order if they fail to comply with this7. In addition to a personal costs order lawyers may face disciplinary action against them8.
It should also be remembered that under section 24 of the Federal Circuit Court of Australia Act 1999 lawyers have a duty before suing in the Federal Circuit Court of Australia to consider whether to advise the client about the alternative dispute resolution processes which are available.
And there would appear to be a duty to take genuine steps in so far as it required to achieve the overarching purpose of civil practice and procedure as set out in s 37M of the Federal Courts of Australia Act 1976. The purpose is the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible, with the objective of resolving disputes at a cost that is proportionate to the importance and complexity of the matters in dispute. By section 37N(1) and (2) of that Act, parties and their lawyers must conduct proceedings (including settlement negotiations) in a way that is consistent with that purpose. By s37N(4), when considering costs the court must take account of any failure to comply with those provisions.
Meaning of "genuine steps"
Genuine steps are defined in section 4 of the Civil Dispute Resolution Act as follows:-
4 Genuine steps to resolve a dispute
(1A) For the purposes of this Act, a person takes genuine steps to resolve a dispute if the steps taken by the person 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.
(1) Examples of steps that could be taken by a person as part of taking genuine steps to resolve a dispute with another person, include the following:
(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;
(c) 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;
(d) considering whether the dispute could be resolved by a process facilitated by another person, including an alternative dispute resolution process;
(e) if such a process is agreed to:
(i) agreeing on a particular person to facilitate the process; and
(ii) attending the process;
(f) if such a process is conducted but does not result in resolution of the dispute—considering a different process;
(g) 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.
(2) Subsection (1) does not limit the steps that may constitute taking genuine steps to resolve a dispute.
It remains to be seen in the long term how the provisions will be interpreted, but the wording of this section suggests that genuine steps would entail at least considering whether to try alternative dispute resolution. In practice, the obligation is widely understood to include a need to suggest alternative dispute resolution in pre-action correspondence, since this demonstrates a sincere and genuine attempt to resolve the dispute because alternative dispute resolution is understood as being an effective way to achieve this.
If the parties agree to seek to resolve the dispute by alternative dispute resolution, then the next step is to agree on an appropriate facilitator. If mediation or some form of conciliation is agreed to, then a mediator can assist. They are trained and experienced in helping the parties to find a solution to the dispute. As independent third parties, skilled mediators can break through negotiation deadlock which often happens when there is no facilitator. And mediators offer a relaxed process with sufficient time to deal with all issues, however complex.
| 1 | The main exemptions are in cases under the Family Law Act 1975, the Migration Act 1958, the Native Title Act 1993 and the Fair Work Act 2009. |
| 2 | Sections 6 and 7. |
| 3 | Section 11. |
| 4 | Section 12. |
| 5 | Section 10(2). |
| 6 | Section 9. |
| 7 | Section 12(2) and (3). |
| 8 | In Superior IP v Ahearn [2012] FCA 282 and 977, there was an application to set aside a statutory demand. Despite the amount involved being only $11,000, the lawyers had generated some 400 pages of affidavit material most of which was irrelevant. They had made no effort to resolve any of the issues and had not filed the genuine steps statement either. This was said by Reeves J to be "the sort of conduct that brings the legal profession into disrepute". Although in the end no personal costs order was made in the circumstances of the case, it was contemplated by the judge who also directed that the lawyers' submissions should be provided to the Queensland Law Society, the Bar Association of Queensland and the Legal Services Commission so that they could consider what action should be taken. |