Chapter 2


Chapter 2

Overview of the Bill

2.1        This chapter provides a brief overview of the purpose and key provisions of the Bill. The key provisions of the Bill include:

  • examples of steps that could be taken by a person as part of 'genuine steps' to resolve a dispute with another person;
  • the obligation to take 'genuine steps' to resolve certain civil disputes before proceedings are instituted in the Federal Court or the Federal Magistrates Court;
  • the powers of the court;
  • categories of proceedings excluded from the Bill's operation; and
  • rules of court under the Federal Court of Australia Act 1976 and the Federal Magistrates Act 1999.

Meaning of 'genuine steps'

2.2        A key component of the Bill is the concept of 'genuine steps': parties are, as far as possible, to take 'genuine steps' to resolve a civil dispute before proceedings are commenced in the Federal Court or the Federal Magistrates Court. The formulation 'genuine steps' was recommended by National Alternative Dispute Resolution Advisory Council (NADRAC) in preference to formulations of 'genuine effort' and 'good faith'. The Explanatory Memorandum (EM) states that the latter concepts were seen as more subjective and 'may undermine the confidentiality of ADR processes, and, in situations where there is a power or financial imbalance, could lead to injustice by causing some parties to feel they have to make concessions'.[1]

2.3        The Bill does not prescribe specific steps which must be undertaken. The aim is to provide flexibility so that parties may 'turn their minds to what they can do to attempt to resolve the dispute'.[2]

2.4        Clause 4 provides a loose definition of 'genuine steps' by way of some examples of what could constitute a 'genuine step' which include:

  • 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;
  • responding appropriately to any such notification;
  • providing relevant information and documents to the other person to enable the other person to understand the issues involved and how the dispute could be resolved;
  • considering whether the dispute could be resolved by a process facilitated by another person, including an alternative dispute resolution (ADR) process;
  • if such a process is agreed to:
  • agreeing on a particular person to facilitate the process; and
  • attending the process;
  • if such a process is conducted but does not result in resolution of the dispute, considering a different process; and
  • 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.[3]

2.5        The non-exclusive list allows for other steps to be undertaken as 'genuine steps' and does not prescribe when or how 'genuine steps' must be taken (other than before proceedings are instituted). However, the EM (and clause 4) specifically identifies ADR as a 'genuine step', leading to the conclusion that ADR is a key component of the proposed legislation. The EM states that:

The benefits of ADR include a less adversarial process, early resolution of disputes and identification of issues, ownership of the outcomes for parties, flexible remedies and proportional cost where early resolution is achieved.[4]

2.6        ADR is an umbrella term for processes, other than judicial determination, in which an impartial person assists those in a dispute to resolve the issues between them or to narrow the issues in dispute. The EM provides an explanation of several ADR processes available to persons in dispute, including:

Mediation: the participants identify the issues in dispute, develop options, consider alternatives, and endeavour to reach an agreement with the assistance of a mediator. The mediator has no determinative role, but may advise on the process of mediation.

Conciliation: the participants identify the issues in dispute, develop options, consider alternatives, and endeavour to reach an agreement with the assistance of a conciliator (who may have professional expertise in the subject matter). A conciliator advises on the matters in dispute and options for resolution, but does not make a determination.

Expert appraisal: an appraiser, chosen on the basis of their expert knowledge, investigates the dispute and provides advice on the facts, desirable outcomes, and the means by which these may be achieved.

Early neutral evaluation: the participants present arguments and evidence to a dispute resolution practitioner who makes a determination on the key issues in dispute and most effective means of resolving the dispute, without determining the facts of the dispute.

Arbitration: arbitration is used where parties have agreed on that method to resolve their dispute. The participants, together with the arbitrator, agree upon the procedures to be used. These are usually more flexible than court proceedings. Participants present arguments and evidence to an arbitrator who makes a determination.[5]

2.7        According to the EM, the Bill's flexible approach to the definition of 'genuine steps' enables parties to focus their attention on resolution of the dispute and identification of the central issues without incurring 'unnecessary upfront costs'.[6]

Obligation to take 'genuine steps'

2.8        Clause 6 will require an applicant who institutes civil proceedings in the Federal Court or the Federal Magistrates Court to concurrently file a genuine steps statement, specifying:

  • the steps that have been taken to try to resolve the issues in dispute; or
  • the reasons why no such steps have been taken.

2.9        Subclause 6(2) also provides some reasons why genuine steps may not have been taken, for example urgency of the proceedings or because the safety or security of any person or property would have been compromised.

2.10      Clause 7 will require a respondent, who is given a copy of the applicant's genuine steps statement, to file a genuine steps statement in response before the hearing date specified in the application:

  • stating whether the respondent agrees with the genuine steps statement filed by the applicant; or
  • specifying which parts of the applicant's genuine steps statement the respondent does not agree with and the reasons why that is the case.

2.11      Under clause 9, a lawyer must advise his or her client of the requirement to file a 'genuine steps' statement and to 'assist the client to comply with the requirement'. The EM states that this duty is important to ensure that parties and their lawyers focus on the real issues in dispute and attempt to resolve them as quickly and efficiently as possible.[7]

2.12      The EM notes that similar provisions in relation to the duties of lawyers to advise clients are currently provided in the Federal Court of Australia Act 1976 (Federal Court Act) (subsection 37N(2)) and the Federal Magistrates Act 1999 (Federal Magistrates Act) (section 24).

2.13      Subclause 10(1) notes that the requirements in Part 2 of the Bill (the obligation to take genuine steps) are in addition to requirements imposed by any other Act, and not instead of those requirements. In addition, subclause 10(2) provides that proceedings are not invalidated by the failure of a person to file a genuine steps statement. It is noted in the EM that this provision ensures that Part 2 operates to enhance prospects for an early resolution of a matter outside of court without imposing a barrier to justice which would disproportionately affect people without access to legal advice or resources. The EM further states that:

If a party fails to provide a genuine steps statement, the court can consider this in the context of its case management of the matter. This is appropriate and avoids satellite litigation about the validity of the proceeding on the basis of whether genuine steps were or were not taken or the sufficiency of those steps. These matters will not become substantial disputes in their own right.[8]

2.14      The EM states that the obligation to take genuine steps is intended to promote resolution and encourage a move away from an adversarial approach to litigation:

Prospective parties will know that steps they took or did not take will be put before the court if action is ultimately commenced. Importantly, the court will be in a better position to manage the matter using existing case management powers.[9]

2.15      According to both the EM and the Attorney-General, the Bill does not force parties to abandon legal claims or settle a dispute. Further, the conduct of pre-action steps and the confidentiality of discussions, negotiations or ADR would not be an issue since the requirement to provide a 'genuine steps' statement does not require or authorise parties to seek to adduce evidence of confidential negotiations. In this context it should be noted that the confidentiality of ADR processes and admissibility of communications was of particular concern to NADRAC in its report.[10]

Powers of the court

2.16      Clause 11 provides that the court may, in performing functions or exercising powers in relation to civil proceedings, take into account:

  • whether a person who was required to file a 'genuine steps' statement filed such a statement; and
  • whether such a person took 'genuine steps' to resolve the dispute.

2.17      The EM notes that the genuine steps statement provides the court with more information about the steps which have been taken by the parties. This allows the court to utilise its existing case management powers where appropriate and its powers of summary dismissal.[11]

2.18      Where the court is not satisfied that 'genuine steps' have been taken, the court may make orders including:

  • referring the dispute or parts of the dispute to mediation, arbitration, or other ADR processes that have not already been undertaken by the parties (with consent where required);
  • nominating an ADR practitioner where parties cannot agree on an ADR practitioner;
  • setting time limits for the doing of anything or the completion of any part of the proceeding;
  • dismissing the proceeding in whole or in part;
  • striking out, amending or limiting any part of a party's claim or defence;
  • disallowing or rejecting any evidence; and
  • ordering a party to produce to it a document in the possession, custody or control of the party.[12]

2.19      Clause 12 provides that the court, judge, federal magistrate or any other person exercising discretion to award costs in a civil proceeding in the Federal Court or the Federal Magistrates Court may take into account any failure to comply with the obligation to take genuine steps.

2.20      In making an adverse costs order, a lawyer's failure to comply with the obligation under clause 9 may be taken into account (subclause 12(2)), including the imposition of a personal costs order which is not recoverable from the lawyer's client through, for example, contracts about the payment of their fees (subclause 12(3)). According to the EM, the intention of clause 12 is to bring about a cultural change in the conduct of litigation so that parties are focused on resolving disputes as early as possible.[13]

2.21      Clause 13 of the Bill makes it clear that the powers given to the court proposed in the Bill are in addition to, and not instead of, its existing powers. Further, the power of the court to consider such matters allows the court to be informed of what steps parties have undertaken. Clause 14 provides that confidential settlement negotiations under section 131 of the Evidence Act 1995 are not permitted to be disclosed and the settlement privilege continues to apply.

Categories of proceedings excluded from the Bill's operation

2.22      The Bill applies to all civil law matters in the Federal Court or the Federal Magistrates Court but allows for particular exclusions, which are contained in Part 4 of the Bill.

2.23      Clause 15 excludes certain kinds of proceedings from the operation of the Bill in cases where undertaking 'genuine steps' is either not practicable or appropriate. This includes:

  • proceedings brought by or on behalf of the Commonwealth or a Commonwealth authority for an order connected with a criminal offence or the possible commission of a criminal offence; or a contravention or possible contravention of a civil penalty provision;
  • proceedings that relate to a decision of, or a decision that has been subject to review by certain bodies including the Administrative Appeals Tribunal, Migration Review Tribunal and Veterans' Review Board;
  • ex parte proceedings; and
  • proceedings to enforce an enforceable undertaking.

2.24      Clause 16 excludes proceedings under certain Acts, for example, the Family Law Act 1975; Fair Work Act 2009; Native Title Act 1993 (which have existing dispute resolution methods); Australian Citizenship Act 2007; and Migration Act 1958 (in which the requirement to file a 'genuine steps' statement is not appropriate because it is not possible to negotiate to give an applicant a visa if they do not meet certain prescribed criteria).

Rules of Court and Regulations

2.25      Clause 18 enables rules of court made under the Federal Court Act or the Federal Magistrates Act to make provision for:

  • the form of 'genuine steps' statements;
  • the matters that are to be specified in 'genuine steps' statements; and
  • time limits relating to the provision of copies of 'genuine steps' statements.

2.26      Clause 19 enables regulations to be made in relation to the Bill.


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