Pre-litigation reforms under Part 2A of the Civil Procedure Act postponed

In brief – Proposed amendments postponed for 18 months

The proposed amendments to Part 2A of the Civil Procedure Act 2005 (NSW), requiring parties to take reasonable steps to resolve their disputes before they commence court proceedings, have been postponed for 18 months.

NSW to monitor results of parallel federal regime

These amendments were scheduled to commence from 1 October 2011, with the exception of the Supreme Court of NSW, which was exempt from these laws. The amendments have been postponed in order to enable NSW to monitor the success of similar provisions that commenced in the federal courts on 1 August 2011.

Requirement to take reasonable steps to resolve a dispute

The amendments to the Civil Procedure Act 2005 required parties to engage with one another in order to narrow or resolve a dispute before either party would commence court proceedings.

The new laws contained examples of "reasonable steps" that could be taken by the parties before commencing proceedings. However, there was not a single specific step that must be taken prescribed by these laws, such as a requirement of mediation.

Concerns about unintended consequences of legislation

Since the amendments were introduced, there have been many concerns raised about the examples of reasonable steps and the unintended consequences of the new provisions.

While the spirit of the policy received general support from the legal community and other stakeholders, many concerns were raised about the increased cost of litigation if the laws were to be implemented.

Clearly, the overall intention of the proposed legislation was that the obligation to try to resolve a dispute before commencement of legal proceedings should reduce the cost of resolving disputes, rather than add to them.

Given the uncertainty around this central imperative, the NSW government has been prudent to delay commencement of the legislation for 18 months in anticipation of measurable results from the federal counterpart.

Pre-litigation steps postponed, not shelved

What is known is that the NSW Government does not propose to repeal the amendments, which is what happened in Victoria after a change of government some months after the laws were introduced.

Rather, it is proposed that the application of the laws be postponed until the equivalent provisions now operational in the federal courts are assessed.

This story is far from over. Litigators, advocates and parties involved in disputes and alternative dispute resolution are encouraged to be on the lookout for new developments.

While these and other new laws continue to develop, what has remained unchanged for centuries is the fundamental principle of best practice in dispute resolution: try to resolve any dispute which has arisen before commencing legal action.