Resolving Disputes without Courts. Measuring the Impact of Civil Pre-action Obligations

Transcription

1 AUSTRALIAN CENTRE FOR COURT AND JUSTICE SYSTEM INNOVATION (ACCJSI) MONASH UNIVERSITY PROFESSOR TANIA SOUR DIN Resolving Disputes without Courts Measuring the Impact of Civil Pre-action Obligations Background Paper, March 2012

2 2 RESOLVING DISPUTES WITHOUT COURTS

3 Contents Executive Summary Introduction... 9 Overarching Aim and Objectives of the Research Project The Research Team Background What Are Pre-action Obligations? Obligations and Scheme Arrangements Recent Changes and Additional Obligations Pre-litigation Approaches Analysis of Literature Introduction Recent Australian Reports Requirements in the Family Dispute Resolution Area System Design Work United Kingdom Approaches: The Jackson Report Conclusions Case Study Information Application of Pre-action Obligations Case Study Approach Introduction Retail Tenancy Unit in NSW Retail Tenancy Scheme within the VSBC Research Approach Concerns, Issues and Next Steps Introduction Contents 3

4 Lawyer and Judicial perspectives Evaluations of Non-Court Dispute Resolution Processes Literature Concerning Evaluation of Mediation Next Steps Contents

5 Figures Figure 1.1: The relationship between the number of disputes and method of resolution Contents 5

6 Abbreviations AAT ABS ADR ADT ALRC ASIC Cth DOJ DSCV FICS ICJ NADRAC NMAS NSWCA NSWLR SPSS SCVCA VCAT VLRC VSBC Administrative Appeals Tribunal Australian Bureau of Statistics Alternative Dispute Resolution Administrative Decisions Tribunal NSW Australian Law Reform Commission Australian Securities and Investments Commission Commonwealth Department of Justice, Victoria Dispute Settlement Centre of Victoria Financial Institute Complaints Service Institute for Civil Justice National Alternative Dispute Resolution Advisory Committee National Mediation Accreditation Standards New South Wales Court of Appeal New South Wales Law Reports Statistical Package for the Social Sciences Supreme Court of Victoria Court of Appeal Victorian Civil and Administrative Tribunal Victorian Law Reform Commission Victorian Small Business Commissioner 6 Contents

7 Executive Summary The aim of the Pre-action Obligations Research Project (this Project) is to assess the use and effectiveness of pre-action schemes and obligations that encourage people to resolve their disputes before filing proceedings with a court or tribunal. This Background Paper provides information about the Research Project and about the common pre-action obligation approaches used in Australia. A Research Report will be published in September 2012 that explores issues relating to pre-action obligations and approaches in more detail and will include some more statistical analysis. There are many different ways in which people can be encouraged or required to attempt to resolve their disputes before entering the litigation system, and this Research Project explores the most common approaches in use within Australia. It also considers issues that have been raised about these types of obligations. Some concerns about pre-action or pre-litigation obligations are that they may increase costs or provide a hurdle and prevent people from accessing the court and tribunal system. On the other hand, pre-action requirements may reduce costs by supporting early and more effective dispute resolution. To examine the use and effectiveness of pre-action obligations, the Research Project explores pre-action protocols and obligations in the context of a literature review, an examination of available statistics, stakeholder input as well as qualitative and quantitative work in two selected schemes where Alternative Dispute Resolution (ADR) processes are used to support earlier pre-filing obligations. The key research questions are whether or not pre-filing processes can be: effective and efficient and produce lasting outcomes? accessible and timely? considered by the parties to be just or fair? efficient in terms of the resources used? improved, extended or supported more effectively? This Background Paper contains Six Chapters: Chapter One: Outlines the research objectives and methodology. Chapter Two: Considers the background to the introduction of pre-litigation or pre-action requirements Chapter Three: Discusses Australian and UK reports regarding issues and approaches relating to pre-action requirements Chapter Four: Explores available statistics and commentary about the two case study areas Chapter Five: Examines evaluations in the ADR area and the primary concerns that have been expressed about these types of requirements. Executive Summary 7

8 The Research Report to be produced in September 2012 will contain specific suggestions and recommendations about pre-action obligations and will draw upon this work. A range of research methodologies is being used to conduct the research. These include: a detailed literature review of issues and past work that has been focused on pre-action obligations and protocols (this Background Paper contains some of the literature review material); a review of available statistics from schemes that exist in the family and business sectors; a quantitative and qualitative analysis of disputes finalised in a NSW scheme and a Victorian scheme directed at Retail Lease Disputes in the pre-action area ( case study analysis ); and direct interviews and focus groups held with stakeholders who include disputants, representatives and those involved in schemes or arrangements that exist outside the case study areas. Your comments about this Research Project and any aspect of this Background Paper are welcome. Making Comments The closing date for comments is 14 June Comments and enquiries may be ed to: Professor Tania Sourdin Tania.Sourdin@Monash.edu ACCJSI may draw upon, quote from or refer to comments in publications. ACCJSI also accepts submissions and comments made in confidence; please accompany such comments with a clear indication that the contents are intended to be confidential. 8 Executive Summary

9 1 1. Introduction 1.1 The Resolving Disputes without Courts Measuring the Impact of Civil Pre-action Obligations Research Project (the Research Project) explores the application and effectiveness of pre-action obligations that encourage disputants to resolve their disputes before commencing court or tribunal proceedings. This is a Background Paper setting out the research approach, methodology and results of the literature review that has been undertaken so far. A Research Report will be published in September 2012 and will contain a more detailed analysis of issues involved in the use of different types of pre-action obligations. 1.2 This Research Project is being undertaken to assist policy-makers, the courts, service providers, disputants and others to evaluate existing pre-action obligations and processes and to make informed decisions regarding the future implementation of dispute resolution obligations and options. To date, only a limited amount of research into the effectiveness of pre-action protocols and obligations has previously been conducted within Australia and internationally. The Australasian Institute of Judicial Administration (AIJA) has commissioned the Australian Centre for Court and Justice System Innovation (ACCJSI) at Monash University to undertake this project to assist in supporting discussion regarding this important topic and in planning Alternative Dispute Resolution (ADR) 1 and court-related strategies into the future. 1.3 Pre-action obligations have been introduced in a range of jurisdictions within and outside Australia in recent years. These obligations, which arise outside court and tribunal settings, are imposed as a result of agreements to enter into ADR processes, legislative arrangements, regulatory schemes as well as through court or non-court protocols and guidelines. Some pre-action protocols require disputants to engage in ADR or consider using ADR as a precondition to commencing legal proceedings. Others require that would-be litigants take steps or file a statement about what they have done to resolve their dispute if they are 1 Alternative Dispute Resolution is used to describe the processes that may be used within or outside courts and tribunals to resolve or determine disputes where the processes do not involve traditional trial or hearing processes. The term ADR is used also to describe processes that may include conferencing, mediation, evaluation, case appraisal and arbitration. Introduction 9

10 unable to resolve it and then commence court or tribunal proceedings. Most preaction requirements have opt out provisions. For example, certain categories of litigants are not required to comply with some types of pre-action obligations and requirements if there is urgency or violence or the category of cases is exempt for some other reason. 1.4 The reasons for introducing pre-action protocols and obligations include that, by focusing on earlier dispute resolution, time and cost can be saved and a better outcome may be achieved. In this regard, there is a concern that commencing adversarial court proceedings can lead to the destruction of existing business and other relationships, and the polarising of disputant positions can limit the options available to resolve the dispute. 1.5 On the other hand, some commentators consider that pre-action protocols and obligations can limit access to justice, access to the courts and increase time and cost when matters do not resolve or when costs are front loaded. There is also a concern that people may reach a compromise without adequate legal advice or that, because commencing legal proceedings is too expensive or too difficult, they may be unable to exercise their legal rights. These concerns have been explored in Australia in a number of reports (including a Senate Subcommittee Report) and in the United Kingdom in the Jackson Review (discussed in more detail below) and will be considered further in the Research Report of this Project (to be published in September 2012). Overarching Aim and Objectives of the Research Project 1.6 The overarching aim of this Research Project is to assess the use and effectiveness of pre-action obligations by referring to specific examples and by drawing upon a review of available literature. Specific additional objectives of the Project are to: consider the effectiveness of some types of pre-action processes this involves reviewing selected current pre-action approaches and their impact upon the timeliness and cost of dispute resolution; explore how pre-action services that occur as part of a scheme can operate with those that simply impose an obligation (with no scheme of referral); discuss the timeliness of outcomes achieved within the pre-action environment with outcomes achieved through litigation processes (including matters that do not proceed to a hearing but are resolved once legal proceedings are commenced); and, consider the impact of pre-action approaches on matters that might otherwise progress into the litigation system in terms of cost, case activity and complexity. 1.7 These objectives are addressed by using a range of research methodologies that include a detailed literature review, an examination of obligations in a range of jurisdictions as well as a closer in-depth qualitative and quantitative analysis of 10 Introduction

11 matters mediated in two pre-litigation schemes, which enables a case study approach to be taken. The two schemes the subject of this in-depth analysis are the retail lease schemes operating in Victoria and NSW. Each scheme has been operating for a considerable period of time (the NSW scheme has been in place for well over a decade and the Victorian scheme has been operational for nine years). Each scheme also has slightly different operating arrangements (see Chapter 4). This case study work and associated surveying work has already commenced and has been the subject of a University ethics approval process. 1.8 The final Research Report will consider the broader obligations framework as well as information about the disputes mediated in the Victorian and NSW schemes and will explore issues relating to cost, delay and outcomes with direct interviews with stakeholders. As a result of this approach, this Background Paper provides information about the characteristics of different dispute arrangements and explores the issues and concerns about pre-action arrangements that have been raised in the context of recent Commonwealth legislation in this area as well as postponed NSW legislation. These more recent arrangements have not been the subject of a detailed case study analysis for a number of reasons (including the methodological difficulty involved in obtaining a survey sample given their recent introduction). However, views about these schemes will be the subject of stakeholder input through focus group processes and a submissions process. 1.9 The Research Project is intended to provide information about pre-action arrangements in a number of jurisdictions as well as the processes, outcomes and perceptions of those involved in the two selected pre-action schemes. The attitudes and perspectives of various stakeholders are explored in the Research, namely disputants, lawyers and others. In addition, the benefits and challenges associated with these external schemes are compared to the situation where a looser framework of obligations is used. The Research Team 1.10 The researchers involved in this Project are located at the Australian Centre for Court and Justice Innovation (ACCJSI) at Monash University. They include Prof Tania Sourdin, who is the Project Director and primary author 2 as well as researchers who are gathering and collating background material and qualitative and quantitative material Jen Hitchman (senior researcher) and Adrien March (project researcher), Alan Shanks (expert qualitative and quantitative analyst) and Sarah Russell (editor). 2 Parts of this Background Paper draw upon T Sourdin, Alternative Dispute Resolution (2012, 4 th ed, Thomson Reuters) with kind permission. Introduction 11

12 2 Background What Are Pre-action Obligations? 2.1 In this Project, the term pre-action obligations has been interpreted widely and can include requiring or even considering whether to take some action (including preparing a statement) that is directed at exploring dispute resolution or attending a form of Alternative Dispute Resolution (ADR) (whether or not as part of a scheme where the ADR process is arranged) before court or tribunal proceedings are commenced. Pre-action protocols and obligations can include: the need to disclose information or documents in relation to the cause of action; the need to correspond, and potentially meet, with the person or entity involved in the dispute; undertaking, in good faith, some form of alternative dispute resolution (ADR); and conducting genuine and reasonable negotiations with a view to settling without recourse to court proceedings Pre-action obligations exist in the social, community, health, family, business, personal injury and online consumer and business sectors. They have been in existence in Australia for many years. There are considerable differences in the way in which they operate and whether or not they are linked to any systemic arrangements, and if so, how they are so linked. They can incorporate requirements to arbitrate, mediate or use an ADR or EDR (External Dispute Resolution for example, in the Banking and Financial sector) scheme, and they 3 Australian Law Reform Commission, Discovery in Federal Courts (Consultation Paper No 2, November 2010), 160, citing Victorian Law Reform Commission, Civil Justice Review, Report 14 (2008), 109; and M Legg and D Boniface, Pre-action Protocols in Australia (2010) 20 Journal of Judicial Administration 39, Background

13 have recently been the subject of considerable discussion in the Australian legal environment as a result of legislation that has been proposed or enacted that extends the application of protocols and obligations to a broader category of disputes. Obligations and Scheme Arrangements 2.3 By far, the largest pre-litigation scheme that imposes mandatory attendance by disputants in a dispute resolution process in Australia operates in the family dispute area. 4 Initiatives that have been phased in since 2006 (under the Family Law Act 1975 (Cth)) represent a significant change in family law. 5 The explanatory memorandum to the Family Law Amendment (Shared Parental Responsibility) Act 2006 (Cth) notes that this is a key change to encourage a culture of agreement making and avoidance of an adversarial court system The 2006 amending Act requires compulsory dispute resolution, pursuant to Subdiv E of Div 1 of Pt VII of the Family Law Act. Section 60I provides for compulsory attendance at family dispute resolution in a range of circumstances prior to lodging an application with the court. The requirement for compulsory certificates in respect of family dispute resolution as a prerequisite to the filing of all new parenting matters (subject to certain exceptions, for example, where there is urgency, family violence or the abuse of a child and where delay could have a negative impact) came into force on 1 July Disputants are also advised that: When applying to the court, you will need to provide information to demonstrate that one of the exceptions applies to you In State jurisdictions, there are various ad hoc other requirements that encourage would-be litigants to use courts as a last resort. Many of these requirements have operated for more than a decade. For example, in South Australia, legislation can require parties in civil disputes to notify one another of a claim before the initiating process is filed. 8 Some other jurisdiction-specific State legislation requires mandatory attendance at some form of ADR session as a pre- 4 EDR Schemes deal with large numbers of disputants (it has been estimated that these exceed 250,000 disputes per year): see T Sourdin, Alternative Dispute Resolution 4 th ed, 2012 Thomson Reuters); however, these usually are not mandatory for consumers. 5 See the Family Law Amendment (Shared Parental Responsibility) Act 2006 (Cth), Revised Explanatory Memorandum (2006) p 1. 6 Family Law Amendment (Shared Parental Responsibility) Act 2006 (Cth), Revised Explanatory Memorandum (2006) p See Family Relationships Online, Family Dispute Resolution, available at < (accessed 21 September 2011). 8 See Supreme Court Civil Rules 2006 (SA) r 33, available at (accessed 22 February 2012). Under the rule, parties in most matters are required to serve an unfiled process on another party 90 days before filing in a court. Background 13

14 condition to litigation. 9 The legislation can require different pre-litigation reporting standards and notice periods. 2.6 In addition, many States have legislation in a number of different areas to prevent court proceedings being commenced without mediation or some other form of ADR occurring first. For example, the Farm Debt Mediation Act 1994 (NSW) provides that mediation must occur before a creditor can take possession of property or other action under a farm mortgage. Similarly, according to s 1, the purpose of the Farm Debt Mediation Act 2011 (Vic) is to require a creditor to provide a farmer with the option to mediate before taking possession of property or other enforcement action under a farm mortgage There are many examples of other schemes. The Legal Profession Act 2004 (NSW) specifically provides for disputes between clients and legal practitioners to be referred to mediation; participation by the parties in mediation is not voluntary in relation to some types of cost disputes. 11 The Strata Schemes Management Act 1996 (NSW) provides for the mandatory mediation of strata scheme disputes prior to any application being made to the registrar for an order concerning the dispute Apart from these schemes, an extensive array of dispute resolution schemes exist that are mandatory for members, but not consumers, and apply to disputes in the insurance, banking and other sectors. Membership of such schemes can form part of mandatory licensing requirements, and members are not permitted to litigate without first using the schemes. These dispute resolution schemes have been set up in various industries to provide low-cost (or free), effective and relatively quick means of resolving consumer complaints about products and services. These schemes are often funded by a cooperative of industry members (examples include the Telecommunications Industry Ombudsman (TIO), and the Financial Ombudsman Service (FOS)) and are intended to deal with disputes between business and consumers. 2.9 The Australian and New Zealand Ombudsman Association website lists seven Australian industry-based Ombudsman schemes (energy and water, telecommunications and public transport) and three New Zealand industry-based Ombudsman schemes plus the statutory South Australian WorkCover Scheme, which investigates complaints about the WorkCover Scheme. 13 All of these schemes and those noted above provide dispute resolution services, and 9 For example, Family Law Act 1975 (Cth), s 79(9); Retail Leases Act 1994 (NSW), Pt 8; Farm Debt Mediation Act 1994 (NSW) (accessed 22 February 2012), r See ABC News, Banks Forced to Offer Farm Mediation, available at < 30/banks-forced-to-offer-farm-mediation/ > (accessed 24 September 2011). 11 Legal Profession Act 2004 (NSW), Pt 4.3 (Mediation); and Pt 3.2, Div 8 (Mediation of Costs Disputes) (see s 336) (accessed 22 February 2012). 12 Strata Schemes Management Act 1996 (NSW), s (accessed 22 February 2012). 13 Australia and New Zealand Ombudsman Association Ombudsman Services in Australia & New Zealand 14 Background

15 engagement in the scheme processes can be a pre-condition to commencing litigation (in most cases) Generally, the scope of these pre-litigation schemes (in the insurance, banking, telecommunication and similar sectors) is limited in that they do not deal with internal disputes or disputes with contractors, suppliers or other business entities. In 2008, reforms were introduced that enabled many of these schemes to merge; for example, FICS, BFSO and IOS merged to become the Financial Ombudsman Service (FOS). On 1 January 2009, the Credit Union Dispute Resolution Centre (CUDRC) and the Insurance Brokers Disputes Ltd (IBD) also joined the FOS. The Credit Ombudsman Service Ltd (COSL) also handles complaints about credit unions, building societies, non-bank lenders, mortgage and finance brokers, financial planners, lenders and debt collectors, credit licensees and credit representatives. While there are already common help lines, these processes may mean that it is easier for consumers to access services Dispute resolution for domain name disputes in the e-commerce realm (pursuant to the.au Dispute Resolution Policy, the audrp) is undertaken by.au DomainAdministration Ltd (auda), which is an incorporated membership-based non-profit organisation from the Australian internet community. Complainants are not obliged to use the system and may instead choose to pursue other means of resolving their dispute, such as traditional litigation. The appeal of the audrp is, however, in the fulfilment of its stated aim of providing a cheaper, speedier alternative to litigation for the resolution of disputes between the registrant of a.au domain name and a party with competing rights in the domain name. 14 Matters will be referred to an independent arbitral panel of one or three panel members to determine the complaint. There is no appeals process. Nonetheless, if the unsuccessful party is not satisfied with a decision, they may decide to initiate legal proceedings. Some ADR industry-based schemes face criticism when decisions are made that are binding on industry members but not consumers The industry-based schemes for dispute resolution with specified service providers can change rapidly, and for small business this can be confusing. The schemes have, therefore, attempted in recent years to offer more standardised processes. In 2010, new dispute resolution processes were created by FOS, to better reflect a single standardised procedure (as the FOS now incorporates what were previously a number of agencies) and with a focus on early dispute resolution. 15 Organisations such as the FOS deal with a significant number of disputes each year. For example, 23,790 new disputes were initiated in the reporting period (an increase of 6 per cent on the previous year). 16 The overwhelming majority of the 21,543 disputes resolved in were 14 Australian Domain Name Administrator (auda), au.dispute Resolution Policy (August 2010), available at < (accessed 14 September 2011). 15 Financial Ombudsman Service, Dispute Handling Process in Detail, available at < (accessed 14 September 2011). 16 Financial Ombudsman Service, Annual Review, p 27. Background 15

16 resolved by consent 17 only 12 per cent of matters resulted in a determination by FOS Other schemes exist in the commercial area. Often, disputants can be contractually required to use a form of ADR before being permitted to access the courts. These contractual requirements can specify various forms of dispute resolution. For example, more formal models of dispute resolution may operate in different States and Territories under the Commercial Arbitration Acts 18 and become relevant as a result of contract requirements. Recent Changes and Additional Obligations 2.14 The subject of pre-litigation obligations has received greater interest in recent years as there have been attempts to extend additional obligations to federal and State disputes. Federally, the Civil Dispute Resolution Act 2011 (Cth) (CDRA) is a recent piece of legislation that increases the use of pre-litigation obligations. In terms of pre-litigation requirements, the Act requires that disputants file a genuine steps statement that sets out what attempts have been made to resolve their differences before commencing litigation in respect of a range of civil disputes This legislation was controversial and prompted a Senate Subcommittee Inquiry. 19 The Senate Subcommittee took submissions in 2010 and early 2011 and recommended amendments to the legislation. The content of the submissions made to the Senate Inquiry is discussed in Chapter 3 and Chapter 5 of this Background Paper. In essence, the Inquiry reported that: There was general support in evidence for the intent of the Bill with recognition of the importance of mechanisms, including alternative dispute resolution (ADR), which assist with the resolution of matters before they proceed to court or provide a means to clarify and narrow issues in dispute. Resolving disputes or clarifying issues reduces costs and delays for all parties Despite the legislation, there are concerns about the implementation of the genuine steps requirement. In the recently released Case Management Handbook, 21 the Federal Court of Australia sounds some warnings about the 17 Financial Ombudsman Service, Annual Review, p 70, available at < (accessed 21 February 2012). 18 For example, Commercial Arbitration Act 2010 (NSW) (accessed 22 February 2012). 19 See _dispute_resolution_43/index.htm (accessed 15 March 2012). 20 See _dispute_resolution_43/index.htm (accessed 15 March 2012). 21 The Federal Court of Australia Case Management Handbook [aims] First, to highlight the scope of the case management tools and techniques that are available to the Court and practitioners to assist in ensuring the quick, inexpensive and efficient resolution of proceedings before the Court; and 16 Background

17 proportionality of costs of genuine steps to resolve a dispute under Part 3 of the CDRA. While reiterating the court s broad discretion to order costs with regard to the genuine steps, the Handbook states that 5.19 A party who attempts to take genuine steps still faces the risk that those steps will fall upon deaf ears and/or that the cost of undertaking genuine steps will not be recoverable. This is because an order for costs is usually made on a party-party basis based upon the relevant scale of costs (Schedule 3 of the FCR). Schedule 3 does not contain any scale items for genuine steps undertaken before the commencement of proceedings The CDRA does not ameliorate this position. Some of the genuine steps identified by the CDRA have the potential to be very costly, depending on the nature of the dispute Recent case law at the Federal level dealing with the CDRA requirements suggest that the Federal Court may deal with some of these issues in other ways. One recent Federal Court case suggested that a failure to comply could lead to an adverse costs order and potentially could lead to action against legal representatives. In Superior IP v Ahearn Fox 22 no genuine steps statement was filed by Applicant or Respondent as required by s6 and s7 Civil Dispute Resolution Act 2011 (Cth) (CDRA) and Rules 5.03 and 8.02 of the Federal Court Rules The lawyers had made no efforts to resolve the dispute, no discussion had occurred between lawyers to resolve the dispute (prior to adjournment for that purpose), or to limit client and Court resources being wasted, in accordance with the objects of the CDRA, principles of proportionality and the ethical obligations of lawyers Justice Reeves held that the lawyers management of the dispute was:.the absolute antithesis of the overarching purpose of civil practice and procedure set out in s 37M of the FCA Act, viz the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible. It is not overstating the matter to observe that this is the sort of conduct that brings the legal profession into disrepute, that significantly undermines the efficient disposal of civil litigation and that has the potential to erode public confidence in the administration of justice in this country Under s 9 of the Civil Dispute Resolution Act, a lawyer acting for a person who is required to file a genuine steps statement has a duty to advise that person of that requirement and to assist that person to comply with that obligation. In Secondly, and more importantly, to gather and distill the experience of practitioners and judges alike as to the merits and perils of specific techniques in different contexts. : p 6 (13 October 2011), available at (accessed 10 February 2012). 22 Superior IP v Ahearn Fox [2012] FCA 282 (23 March 2012) available at (accessed 27 March 2012) p3 23 Superior IP v Ahearn Fox [2012] FCA 282 (23 March 2012) available at (accessed 27 March 2012) p3 Background 17

18 Superior IP v Ahearn Fox, the total legal and filing fees involved approached twice the amount of the statutory demand in dispute, with affidavit evidence in excess of 400 pages. A usual order for costs for the successful party in the matter was not made and the hearing on the issue of costs adjourned for submissions. Justice Reeves ordered that the lawyers be joined as parties and that the original parties to the proceedings obtain independent legal advice on the issue of costs. In addition, His Honour directed that copy of his reasons be released to the Queensland Law Society, the Bar Association of Queensland and the Legal Services Commission, to take such action as they consider appropriate in relation to the conduct of the two lawyers concerned In New South Wales, attempts have been made to introduce similar requirements to those introduced at the Commonwealth level. These attempts have also been somewhat controversial and have generated significant comment. Legislative amendments made in 2010 were postponed. In announcing this postponement in 2011, the New South Wales Attorney-General noted the following: Part 2A of the Civil Procedure Act 2005 requires parties to take reasonable steps to resolve their dispute by mutual agreement or to more narrowly define the contentious issues before commencing court action. The provisions were passed in late 2010, but would only have applied to matters filed from 1 October the reasonable steps provisions would be postponed by 18 months to enable NSW to monitor the success of similar provisions that commenced in Federal courts on August 1. The NSW Government will ultimately make informed decisions about the future of Part 2A, using all of the available evidence Compliance with pre-trial obligations should reduce, not add to, the cost of resolving disputes. The purpose of this postponement is to ensure this is the case In Victoria, there was also an attempt to introduce a reasonable steps obligation in 2010 as part of a broader scheme of overarching obligations that was intended to bind courts, lawyers and litigants to a more reasonable standard of behaviour. This scheme originally set out more extensive pre-litigation requirements that required prospective litigants to take steps, exchange material and documents, and consider dispute resolution options. Although enacted, the section of the Civil Procedure Act 2010 (Vic) dealing with pre-litigation requirements was repealed in 2011 following a change of government. However, the changes that were made mean that courts can still make rules relating to prelitigation requirements. 24 G. Smith (NSW Attorney-General), NSW Government to Postpone Pre-Litigation Reforms, Media Release (23 August 2011). 18 Background

19 Pre-litigation Approaches RESOLVING DISPUTES WITHOUT COURTS 2.22 This Research Project seeks to consider pre-action obligations and schemes and provide useful comment on the impact of these types of variations as well as the broader operation of these schemes. As noted above, these types of arrangements are not new (some of the arrangements have been in place for two decades or more), and the arrangements have generally not been introduced in Australia as a result of experimentation in overseas jurisdictions. For example, many of the reforms in this area within Australia predated the UK Woolf Reforms (for example, in the retail lease sector) and have become models of reform for overseas jurisdictions However, the newer arrangements under the CDRA or the NSW proposals to create pre action obligations are not coupled with and do not create an infrastructure or strict dispute resolution regime for example, to meet the CDRA requirements a disputant is not required to attend a mediation or ADR service or obtain any certification (this is more commonly the case under many existing prelitigation arrangements) The most recent reforms in the family and federal sector are, however, in response to the articulation at a policy and government level of a wider view of justice and are predicated on the notion that disputants can make their own dispute resolution arrangements to suit their own particular circumstances. This approach assumes that dispute resolution arrangements can exist outside courts, tribunal and schemes. For example, recently, the Commonwealth explored how this broader dispute resolution system (that includes pre-action schemes) works. 25 In deciding to adopt a broader view of justice, a number of theorists were cited and it was noted that: Just as health is not found primarily in hospitals or knowledge in schools, so justice is not primarily to be found in official justicedispensing institutions. Ultimately, access to justice is not just a matter of bringing cases to a font of official justice, but of enhancing the justice quality of the relations and transactions in which people are engaged In the 2009 report of the Access to Justice Taskforce, A Strategic Framework for Access to Justice in the Federal Civil Justice System, the Australian civil and family justice system was mapped as a complex and somewhat winding pathway with few matters progressing to court proceedings. This reality that most disputes are resolved away from the court and tribunal system has also informed recent approaches to pre-action protocols and obligations Figure 1.1 of that Report (below) shows the relationship between the number of disputes and method of resolution employed. Essentially, pre-action 25 See the reports published by the Access to Justice Taskforce, A Strategic Framework for Access to Justice in the Federal Civil Justice System (Attorney-General s Department, Commonwealth of Australia, Canberra, 2009), available at < (accessed 21 August 2011). 26 M Galanter, Justice in Many Rooms in M Cappelletti (ed), Access to Justice and the Welfare State (Sijthoff and Noordhoff, Alphen aan den Rijn, 1981), at Background 19

20 obligations are introduced to support the earlier resolution and management of disputes. Figure 1.1: The relationship between the number of disputes and method of resolution Source: Access to Justice Taskforce, A Strategic Framework for Access to Justice in the Federal Civil Justice System (2009), p The issues that relate to the systemic approach to dispute resolution have been considered in many government reports. However, a specific focus of this Research Project is to explore how effective dispute resolution arrangements can be supported in the pre-litigation area particularly where there may be few guidelines or protocols to support constructive negotiation and dispute resolution engagement in ADR processes. 20 Background

21 3 33 Analysis of Literature Introduction 3.1 Various reports and publications have been reviewed to gather information about the use and effectiveness of pre-action schemes and protocols and to inform the development of this Background Paper. In addition, information regarding ADR standards, criteria and past evaluations has also been reviewed. Relevant sources have included the relevant Retail Tenancy websites and reports (which are discussed further in Chapter 4), as well as international and Australian reports that are concerned more generally with pre-action requirements. 3.2 Much literature in this area is hidden as evaluations that may be useful are not always publicly available and overseas literature may not be readily located. In addition, professional groups that may have views about pre-action schemes may not publish submissions or other material that is relevant to this Research Project. The views that are available from the legal professional area are explored in Chapter 5. Given that this material may not fully represent the available literature, additional relevant material and information is sought and contributions are welcomed to inform the Research Report that is to be published in late September It should also be noted that, despite this Background Paper s focus on pre-action protocols and obligations, it has been necessary to consider, to a limited extent, a wider focus on civil justice reform. For example, many initiatives in the pre-action area have been coupled with civil litigation reform objectives. The reforms can expressly include the introduction of pre-action protocols and judicial case management to lower costs, encourage cooperation between disputants and avoid litigation wherever possible. In the United Kingdom, the impetus for change, as Lord Woolf identified, arises from a number of problems with the civil justice system namely that: [i]t is too expensive in that the costs often exceed the value of the claim; too slow in bringing cases to a conclusion and too unequal: there is a lack of equality between the powerful, wealthy litigant and the under resourced litigant. It is too uncertain: the difficulty of forecasting what litigation will cost and how long it will last induces the fear of the unknown; and it is incomprehensible to many litigants. Above all it is too fragmented in the way it is organised since there is no one with Analysis of Literature 21

22 clear overall responsibility for the administration of civil justice; and too adversarial as cases are run by the parties, not by the courts and the rules of court, all too often, are ignored by the parties and not enforced by the court These concerns are shared by a number of other common law jurisdictions, including Australia, as demonstrated by the substantial work undertaken by law reform bodies, legal think tanks, professional organisations, courts, tribunals, legislatures and governments across the common law legal world. 28 The reports, findings and recommendations that have resulted have given rise to a wealth of new legislation, court rules and standards aimed at ensuring that there is access to justice, as well as the cost-effective and efficient delivery of court administration and the civil justice system more broadly. 3.5 In Australia, significant efforts have been dedicated towards further refining access to justice core principles with a particular emphasis on reducing cost and delay in the legal system and have increasingly been focused on the pre litigation area. 29 These reports are explored further below. In addition there has been considerable discussion in the United Kingdom about whether or not would-be litigants should be required to attempt to resolve their disputes before commencing proceedings. One significant UK report that has considered the subject of pre-action protocols is the widely studied and comprehensive UK Report of Lord Justice Jackson, entitled the Review of Civil Litigation Costs (Jackson Report), 30 published in Recent Australian Reports 3.6 There are many Australian reports that have considered the use and introduction of pre-action obligations and protocols. This work has mostly been directly linked to the introduction of legislation dealing with these issues. For example, the Civil Dispute Resolution Act 2011 (Cth) that essentially requires disputants to file a 27 The Right Honourable the Lord Woolf, Master of the Rolls, Access to Justice: Final Report, para 2 p. 2 (July 1996) HMSO available at (Accessed 22 February 2012). 28 See, for example, pp of the ALRC Report Managing Justice: A Review of the Federal Civil Justice System (ALRC Report No. 89, February 2000), which notes a number of leading overseas reports, particularly in and across Canada and the United States, as well as the Woolf inquiry and subsequent reform papers. 29 See, for example, Commonwealth Attorney-General s Department, A Strategic Framework for Access to Justice in the Federal Civil Justice System: A guide for future action (Access to Justice Taskforce Report, September 2009); National Alternative Dispute Resolution Advisory Council (NADRAC), The Resolve to Resolve Embracing ADR to Improve Access to Justice in the Federal Jurisdiction (Report to the Commonwealth Attorney-General, September 2009); Commonwealth Parliament (The Senate), Legal and Constitutional Affairs References Committee, Access to Justice (December 2009); Victorian Law Reform Commission (VLRC), Civil Justice Review (Report No. 14, May 2008). 30 Lord Justice Jackson, Review of Civil Litigation Costs Final Report (December 2009), available at (accessed 21 September 2011). 22 Analysis of Literature

23 genuine steps statement that sets out what attempts have been made to resolve their differences before commencing litigation in respect of a range of civil disputes was preceded by a number of reports and inquiries. For example, this legislation was specifically considered by the Senate Subcommittee appointed to comment on the draft legislation 31 (see Chapter 2) and was the subject of a number of submissions. 32 The final conclusions of the Senate Subcommittee were that: 3.58 The committee notes that the Civil Dispute Resolution Bill 2010 is part of the government's moves to improve access to justice. It also reflects a cultural shift in how the position of the courts is perceived in the justice system. Through the 'genuine steps' obligation, the Bill aims to support the resolution of certain civil disputes in the Federal Court and the Federal Magistrates Court before litigation is commenced. The committee considers that the introduction of this obligation is an important initiative in ensuring that there is a focus on resolving a matter before costly and time consuming litigation is undertaken. Even when matters are not resolved, there will be a benefit to parties as the issues in dispute will be clarified and narrowed The committee has carefully considered arguments that the Bill introduces mandatory pre-action protocol. The committee is satisfied that this is not the case. Rather, 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. The Bill provides examples of genuine steps but does not mandate those that should be taken. This is the case with ADR: although witnesses focused on mandatory ADR, the Bill only provides ADR as an example of a genuine step, not a mandated step However, the committee believes that the Bill would benefit from the addition of an inclusive definition of 'genuine' to better reflect the intention of the NADRAC report and to provide guidance to the parties involved See _dispute_resolution_43/index.htm (accessed 15 March 2012). 32 See _dispute_resolution_43/index.htm (accessed 15 March 2012). Submissions were made by Prof Tania Sourdin, the Federal Court of Australia, the Human Rights Law Resource Centre and PILCH Homeless Persons' Legal Clinic, the Castan Centre for Human Rights Law, the National Legal Aid, the Law Council of Australia, the Federation of Community Legal Centres (Vic), the Insolvency Practitioners Association (IPA), the NSW Department of Justice and Attorney General, the National Alternative Dispute Resolution Advisory Council (NADRAC) and the Attorney-General's Department. 33 See _dispute_resolution_43/index.htm (accessed 15 March 2012). Analysis of Literature 23

24 3.7 The requirements in the genuine steps statement are modelled on the recommendations in the National Alternative Dispute Resolution Advisory Council (NADRAC) report, The Resolve to Resolve Embracing ADR to Improve Access to Justice in the Federal Jurisdiction The Commonwealth Act states in s 4: 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. 3.9 In New South Wales and Victoria, attempts that have been made to introduce similar requirements have been linked to law reform and review reports. The legislative attempts have also been somewhat controversial and have generated significant comment (see below). In New South Wales, legislative amendments made in 2010 were postponed. In announcing this postponement in 2011, the New South Wales Attorney-General noted the following: Part 2A of the Civil Procedure Act 2005 requires parties to take reasonable steps to resolve their dispute by mutual agreement or to more narrowly define the 34 National Alternative Dispute Resolution Advisory Council (NADRAC), The Resolve to Resolve Embracing ADR to Improve Access to Justice in the Federal Jurisdiction, Report (prepared for the Attorney-General of the Commonwealth of Australia, September 2009). 24 Analysis of Literature