In practice

The "reasonable steps" to be taken before commencing proceedings include the parties:

  • notifying each other of the issues in dispute
  • exchanging information and documents "critical" to the resolution of the dispute
  • considering options for resolving the dispute, including negotiation and alternative dispute resolution (ADR).

The meaning of "reasonable steps" is to be understood as having regard to a person's "situation" and the nature of the dispute (including the value and/or complexity). This is aimed at having some proportionality in terms of cost and time.

Information and documents disclosed by a party are subject to the same protection as documents exchanged in the course of litigation.

Parties are to bear their own costs of complying with the pre-litigation requirements. The court has the discretion to take pre-litigation conduct into account when making cost orders (including against legal practitioners). However, as cost orders are not generally made/enforceable until the conclusion of proceedings, the costs of the pre-litigation requirements may effectively be irrecoverable.

Solicitors have a duty to inform their clients about the pre-litigation requirements and advise them about alternatives to the commencement of proceedings including ADR. Insurers and funders (or any person with a relevant interest in the proceedings) must not cause a party to be in breach of the requirements.

When commencing proceedings, the plaintiff is to file a dispute resolution statement specifying the steps taken to resolve or narrow the issues in dispute or the reasons why no such steps were taken. A defendant is to file a dispute resolution statement with their defence as to whether they agree or disagree with the plaintiff's statement.

Excluded disputes

Certain disputes/proceedings are excluded, for example appeals, motor accidents and workers compensation claims.

Watch this space

There is provision for the courts to develop "pre-litigation protocols" which will set out what constitutes "reasonable steps".

The commencement date of the amendments to the Civil Procedure Act 2005 has not yet been announced.

Comment

The new regime is likely to lead to more extensive pre-litigation communications between parties than is currently the case. While the aim of the measures is to enable the parties to maximise the likelihood of settlement, they will undoubtedly add another lay of costs to the litigation process.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.