Facilitating the Early Resolution of Disputes without Litigation

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Chapter 2Facilitating the Early Resolution ofDisputes without Litigation(f)(g)accepted, identifying which of the claimant’s contentions are accepted and whichare disputed and the reasons why they are disputed(iii) enclose a copy of documents requested by the claimant or explain why they arenot enclosed(iv) identify and ask for a copy of any further essential documents, not in therespondent’s possession, which the respondent wishes to see(v)state whether the respondent is prepared to make an offer to resolve the matterand if so the terms of such offer(vi) state whether the respondent is prepared to enter into mediation or other form ofdispute resolution.In the event that the claim is not resolved or withdrawn, the parties should conductgenuine and reasonable negotiations with a view to resolving the claim economically andwithout court proceedings.Where a person in dispute makes an offer of compromise before any legal proceedingsare commenced the court may, after the determination of the court proceedings, takethat into consideration on the question of costs in any proceedings. 3976. Specific pre-action protocols applicable to particular types of dispute should be developed by theproposed Civil Justice Council in conjunction with representatives of stakeholder groups in eachrelevant area (eg, commercial disputes, building disputes, medical negligence, general personalinjury, etc.).7. Where a specific pre-action protocol is developed for a particular type of dispute it wouldbe referred to the Rules Committee for approval and implementation by way of a practicenote in each of the Magistrates’ Court, the County Court and the Supreme Court, with suchmodifications as may be appropriate in each of the three jurisdictions.8. Except in (defined) exceptional circumstances, compliance with the requirements of the practicenotes would be an expected condition precedent to the commencement of proceedings ineach of the three courts. The obligation to comply with the requirements of applicable practicenotes would be statutory. A person seeking to formally commence a legal proceeding should berequired to certify whether the pre-action protocol requirements have been complied with, andwhere they have not to set out the reasons for such non compliance.9. Because it would not be practicable for court registry staff to determine whether there hadbeen compliance with the pre-action protocol requirements or to evaluate the adequacy of thereasons for noncompliance, the court would not have power to decline to allow proceedingsto be commenced because of noncompliance. 398 However, where the pre-action protocolrequirements have not been complied with the court could, in appropriate cases, order a stay ofproceedings pending compliance with such requirements.10. The ‘exceptional’ circumstances where compliance with any pre-action protocol requirementswould not be mandatory would include situations where:• a limitation period may be about to expire and a cause of action would be statute barred iflegal proceedings are not commenced immediately• an important test case or public interest issue requires judicial determination• there is a significant risk that a party to a dispute will suffer prejudice if legal proceedings arenot commenced, in circumstances where advance notification of proceedings may result inconduct such as the dissipation of assets or destruction of evidence• there is a reasonable basis for a person in dispute to conclude that the dispute is intractable• the legal proceeding does not arise out of a dispute• the parties have agreed to dispense with compliance with the requirements of the protocol.11. Unreasonable failure to comply with an applicable protocol or the general standards of pre-actionconduct should be taken into account by the court, for example in determining costs, in makingorders about the procedural obligations of parties to litigation, and in the awarding of interest144Victorian Law Reform Commission - Civil Justice Review: Report
on damages. Unless the court orders otherwise, a person in dispute who unreasonably fails tocomply with the pre-action requirements:• would not be entitled to recover any costs at the conclusion of litigation, even if the personis successful• would be ordered to pay the costs of the other party on an indemnity basis if unsuccessful.12. The operation of the protocols and general standard of pre-action conduct should be monitoredby the Civil Justice Council, in consultation with representatives of relevant stakeholder groups,and modified as necessary in the light of practical experience.13. There should be an entitlement to recover costs for work done in compliance with the pre-actionprotocol requirements in cases which proceed to litigation. Specific pre-action protocols shouldattempt to specify the amount of costs recoverable, on a party–party basis, for carrying outthe work covered by the protocols. As with the current Transport Accident Commission (TAC)protocols in Victoria, such costs should be either fixed (with allowance for inflation) or calculatedin a determinate manner (eg, like the fixed costs payable in certain types of simple cases inEngland and Wales, where costs are calculated on a fixed base amount plus an additionalpercentage of the amount claimed). Consideration should be given to whether specific pre-actionprotocols should include a procedure for mandatory pre-trial offers which would be taken intoaccount by the court when determining costs at the conclusion of any legal proceeding.14. Where the parties to a dispute have agreed to settle the dispute before starting proceedings buthave not agreed on who is to pay the costs of and incidental to the dispute or the amount tobe paid 399 , and there is no pre-action protocol which provides for such costs, any party to thedispute may apply to the court for an order:(i)(ii)(iii)for the costs of and incidental to the dispute to be taxed or assessed, orawarding costs to or against any party to the dispute, orawarding costs against a person who is not a party to the dispute, if the court is satisfiedthat it is in the interests of justice to do so.15. Where, taking into account the nature of the dispute and the likely means of the parties, thecosts of and incidental to the dispute are relatively modest, there should be a presumption thateach party to the dispute will bear its own costs. The court should have power to determine theapplication on the basis of written submissions from the parties, without a hearing and withouthaving to give reasons, or refer the matter to mediation or other form of alternative disputeresolution.Pre-action protocols: additional matters1. Where a defendant only agrees to settle a case, prior to commencement of proceedings, withoutpayment of any costs and on condition that the other party not seek an order for costs, the otherparty will have to elect to either settle the case on the terms proposed or proceed with litigationof the claim, notwithstanding the settlement offer. Where the matter proceeds to litigation, thereasonableness of the conduct of each party, including in relation to costs, could be later taken intoaccount by the court.2. A statutory provision is required to protect the information and documents provided in accordancewith the protocol, to ensure they are not used for a purpose other than in connection withthe resolution of the dispute between the parties. This could be an implied undertaking as fordocuments produced on discovery in litigation, or an express statutory prohibition on use otherthan in connection with the dispute and any litigation arising out of the dispute.3. Where a party to a dispute is particularly vulnerable, under a disability or otherwise not reasonablycapable of complying with the pre-action protocol requirements, this may be taken into accountby the court as an acceptable ground for noncompliance if the dispute proceeds to litigation. Thisshould provide some protection for some self-represented persons.397 These draft guidelines are basedsubstantially on the Protocols PracticeDirection, October 2006, adoptedin England and Wales. See thediscussion below, and the Departmentfor Constitutional Affairs, PracticeDirection: Protocols (2006) at 3 December 2007.398 Accordingly, unlike in Queenslandunder the Personal Injuries ProceedingsAct 2002 (Qld), it will not be necessaryto consider the question of whetherproceedings can be validly commencedwhen the pre-action requirementshave not been complied with. It is alsopresumably unnecessary to specifywhether or not the requirements are‘procedural’ or ‘substantive’. See theconsideration of the Personal InjuriesProceedings Act 2002 (Qld) in thedecision of the NSW Court of Appealin Hamilton v Merck and Co Inc [2006]NSWCA 55 (Spigelman CJ, HandleyJA and Tobias JA). Any proceedingscommenced would not be a nullitymerely because of noncompliance withthe pre-action requirements, but thecourt would be empowered to stayproceedings pending compliance, inappropriate cases.399 In Hong Kong, the Civil Justice(Miscellaneous Amendments) Bill2007 (HK) makes provision for ‘costsonly proceedings’, including where adispute is settled before proceedingsare commenced and where the partieshave agreed on who is to pay the costsof and incidental to the proceedingsbut have not agreed on the amount ofsuch costs (s 52B(1)): above n 103.145
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Facilitating the Early Resolution of Disputes without Litigation

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