On 24 March 2011, the Commonwealth Parliament enacted the Civil Dispute Resolution Act 2011 (Cth) (“the Act”), which commenced on 1 August 2011.

The object of the Act is to ensure encourage parties to take genuine steps to resolve their dispute before commencing civil proceedings in the Federal Court of Australia or in the Federal Magistrates Court of Australia.

How this effects you

The Act requires the party to lodge a statement with the court detailing what ‘genuine steps’ they have taken to resolve the dispute, or the reasons why no such steps were taken.

The Act does not set out what particular is a “genuine step” taken to resolve a dispute, but allows the parties involved to decide what steps are most appropriate in their circumstances. Some examples of “genuine steps” that parties might decide to take include:

• notifying the other party of the issues in dispute and offering to discuss them with a view to resolving the dispute;
• providing information and documents to the other party to enable them to understand the issues involved and how the dispute might be resolved;
• attempting resolution of the dispute through alternative dispute resolution processes; and
• negotiating with the other party with a view to resolving the dispute.

The Act envisages that the Court will have regard to the genuine steps taken by the parties, which would include the Courts discretion to award costs.

Certain proceedings and classes of proceedings are excluded from the requirements of the Act, including proceedings that relate to a decision of or a decision that has been subject to the review of the Administrative Appeals Tribunal or the Migration Review Tribunal.

At this point, it is not clear whether “genuine steps” need to be taken by a party filing a creditor’s petition (an application seeking an order of the Court that a person become bankrupt) in the Federal Magistrates Court of Australia.

The Act contemplates that the Courts will introduce rules dealing with the form, content and timing of genuine steps statements.

With the introduction of similar provisions in the Civil Procedure Act 2010 (Vic) in Victoria, Queensland may shortly follow with amendments to the Uniform Civil Procedure Rules 1999 (Qld).