The Civil Procedure Act 2010 will come into effect on 1 January 2011 in Victoria.
The Act is a major reform of the way in which civil disputes will be handled in the courts in Victoria.
The legislation seeks to provide a mechanism for the time effective and efficient resolution of civil disputes in the Courts, and to lay out certain steps which must be taken before a party may commence any litigation.
The Act imposes obligations upon clients, expert witnesses, lawyers and the judiciary in the way civil disputes are to be conducted. The emphasis is on litigation as a last resort. Put simply, the Act intends to change the litigation culture.
Under Section 34 of the Act, each person involved in a civil dispute must take “reasonable steps” to resolve the dispute by agreement, or to clarify and narrow the issues in dispute the before proceedings are commenced. “Reasonable steps” in this context include:
- the exchange of appropriate pre-litigation correspondence, information and documents critical to the resolution of the dispute; and
- the consideration of options for resolving the dispute without the need for civil proceedings in a court.
Parties are obliged to consider alternate dispute resolutions and make genuine efforts to negotiate a settlement.
The consequences for failure to comply with these pre-litigation requirements is that in any subsequent proceeding, the Court may take that failure into account and, for instance order each party to bear their own legal costs, regardless of the outcome of the proceeding.
The Act binds the State. It applies to every Court in Victoria namely the Magistrates’ Court, the County Court and the Supreme Court. It applies to every dispute in those Courts other than criminal or quasi-criminal proceedings.
Under Section 7 of the Act the “overarching purpose” of the Act and sny Rules of Court made under the Act “is to facilitate the just, efficient timely and cost effective resolution of the real issues in dispute.” As much as possible the Act sees the timely termination of a dispute as essential and seeks to ensure that the parties to that dispute are put on as equal a footing as possible.
The Act imposes obligations on a lawyer having the conduct of proceedings, the lawyer’s law firm, the parties to the proceedings, any party having a financial interest in the proceedings, (such as a litigation funder), and some expert witnesses (but not lay witnesses).
These obligations override any contractual obligations as between for instance a litigation funder and a client, or a client and the client’s lawyer. They can override instructions from a client to a lawyer, but not legal professional privilege. Both the legal practitioner and the client have a duty to the Court which is paramount in both pre-litigation procedures and the conduct of litigation. Under Section 21 of the Act, neither the client nor the lawyer can engage in conduct which is misleading or deceptive. This section will no doubt be tested, but the obligations it imposes appear similar to the correspondence provisions about misleading or deceptive conduct under Trade Practices legislation.
The Sanction under the Act for contravention of these paramount duties is not just that a Court can make orders for costs (or decline to do so). The consequences may extend to compensating others who are adversely effected as a result of that offending conduct. This may involve the Court making orders in the nature of damages against a party.
There is thus the potential for orders to be made in these circumstances against individual lawyers, the law firm concerned, and the client they represent. This is a significant change. Any lawyer taking instructions about a civil dispute will thus have to comprehensively advise their clients about these matters.
There will be a six months “holiday” from the pre-litigation requirements when the Act comes into force on 1 January 2011. It is important to note that the Act will apply to all civil disputes from that date, including those already in the Court system.
In practical terms, if civil process is issued after 1 July 2011, it will be necessary to also file certificates signed by both the client and the client’s lawyer confirming that the pre-litigation requirements have been met.
One important feature of the Act is that it imposes a new obligation on clients to disclose what are called “critical documents”. This may be taken as a narrowing of the scope of discovery in civil proceedings, where the parties have had a general duty to disclose all documents which may be relevant to the issues in dispute. Here the obligation is recast to positively require parties to disclose critical documents when they are aware those documents that is documents that are important and are highly relevant to the issues in dispute.
The application of the Act will no doubt be an evolving thing, but as noted by the Chief Justice of the Supreme Court at a recent seminar on the Act, the changes it seeks to impose are fundamental.
Please contact Andrew Pickles for further information.