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Court Proceedings: The Requirements Prior To Commencement Of Commercial Action

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By Benjamin Caddaye, Georgie Cape and Krisha Reddy, Law Clerks and Alicia Hill, Principal, MST Lawyers

Disputes and disagreements are a common occurrence in business. Generally, these can be resolved between the parties without the need to seek the advice of a lawyer. However, if the dispute cannot be resolved amicably, seeking legal advice and commencing proceedings against the other party may be your next step.

Before a party considers commencing proceedings for commercial disputes, there are some things you must do and obligations you must comply with. These can be quite confusing and differ depending on which State or Court you are starting proceedings. This article provides a general overview of the requirements and obligations upon those who issue commercial proceedings.

Requirements In Victoria

Whether you start proceedings in the Magistrates Court, County Court or the Supreme Court of Victoria will be determined by various factors such as the type and amount of the claim.

When you start proceedings in any of these three Courts, you are required to comply with various obligations and requirements imposed by the Civil Procedure Act 2010 (Vic).

Overarching Obligations

Under the Civil Procedure Act, all parties to a proceeding are subject to the overarching obligations. These are important legislative standards and prevail over any contractual or legal obligations. They are contained in Part 2.3 of the Civil Procedure Act and include the obligation to further the administration of justice, to act honestly, to not make frivolous or vexatious claims, to cooperate and to not engage in conduct that might mislead or deceive. It is extremely important that if you are subject to the overarching obligations, you read Part 2.3 of the Act as each party to a proceeding is required to personally certify to the Court when starting proceedings that they have read and understood them. This is known as the ‘Overarching Obligations Certification’.

Proper Basis

In addition to signing the ‘Overarching Obligations Certification’, you or your legal representative is required to sign and file with the Court a ‘Proper Basis Certification’. This is a document stating that each allegation or denial of an allegation in the Court document has a proper basis on the legal and factual material available.

There are other provisions of the Act enabling a party faced with a claim which does not possess a legal or factual basis to strike it out.

Attempts to Resolve

One of the most important obligations on a party under the Civil Procedure Act is the obligation to use reasonable endeavours to resolve the dispute.

This requirement encompasses the need to makes attempts to narrow the issues in dispute between the parties and to exchange documents relevant to the dispute. It is therefore important that before you decide to start proceedings, you first attempt to resolve the matter through agreement.

Consequences

The Court has wide powers in the Civil Procedure Act to apply penalties to any party that does not comply with their overarching obligations. The Court can force a party to pay the other party’s legal costs or even award them a sum for any financial loss occurring as a result of the breach of the obligations.

Requirements In The Federal Court

Overarching Purpose

Under the Federal Court Act 1976 (Cth), parties to a proceeding must act consistently at all times (including during negotiations for settlement) with the Overarching Purpose contained in s 37M of the Act. This is similar to the requirement under the Victorian Act, but relates specifically to furthering the just resolution of disputes, according to law as quickly, inexpensively and efficiently as possible.

Genuine Steps Statement

Under the Federal Court Rules 2011, an Applicant instituting proceedings in the Federal Court may also be required to file a genuine steps statement. This statement must specify the steps taken to resolve the dispute between the parties.

If no genuine steps were taken, you would be required to provide a statement explaining why no such steps were taken, which may relate to the urgency of issuing proceedings, or the safety or security of any person or property.

Requirements In The Rest Of Australia

The requirements for the rest of Australia when starting proceedings in relation to commercial matters are far less onerous than those in Victoria and the Federal Court.

State/Territory

Requirements

New South Wales There are no pre-commencement requirements comparable to Victoria or the Commonwealth. Proceedings can be commenced by filing either a statement of claim or a summons in the relevant Court or Tribunal.
Queensland There are no pre-commencement requirements comparable to Victoria or the Commonwealth. Proceedings can be commenced by generally filing a claim in the relevant Court or Tribunal. However, other originating procedures may be required to be filed depending on the type of claim.
Western Australia There are no pre-commencement requirements comparable to Victoria or the Commonwealth. Proceedings in the Supreme Court of Western Australia must be commenced by filing a writ. Proceedings in other Courts or Tribunals may require different originating processes depending on the type of claim.
South Australia There are no pre-commencement requirements comparable to Victoria or the Commonwealth. Proceedings in the Supreme Court of South Australia are primarily commenced by filing an originating process. Proceedings in other Courts or Tribunals may require different originating processes depending on the type of claim.
Tasmania There are no pre-commencement requirements comparable to Victoria or the Commonwealth. Proceedings in the Supreme Court of Tasmania are commenced generally by filing a writ. However, the Court has the power to refuse to accept an originating process if it appears to be vexatious, frivolous or an abuse of process. Proceedings in other Courts or Tribunals may require different originating processes depending on the type of claim.
Northern Territory There are no pre-commencement requirements comparable to Victoria or the Commonwealth. Proceedings in the Supreme Court of the Northern Territory by filing either a writ or originating motion. Proceedings in other Courts or Tribunals may require different originating processes depending on the type of claim.
Australian Capital Territory There are no pre-commencement requirements comparable to Victoria or the Commonwealth. Proceedings in the Supreme Court of the Australian Capital Territory by filing either an originating claim or application, depending on the type of claim. Proceedings in other Courts or Tribunals may require different originating processes depending on the type of claim.

 

Requirements For Non-Commercial Claims

For claims that are not commercial, there may exist special requirements that must be met before commencing proceedings.

For example, before initiating a personal injury claim in Queensland, the applicant must comply with pre-court procedures outlined in the Personal Injuries Proceedings Act 2002 (Qld) and the Civil Liability Act 2003 (Qld). These include:

  • notifying the person who caused the injury of the applicant’s intention to make a claim
  • providing information regarding the incident which led to the injury and details of the subsequent medical treatment received
  • the respondent must then let the applicant know whether they are the proper respondent to the claim for personal injury.

Where you have a non-commercial claim, we strongly recommend that you seek legal advice on the process for bringing your claim.

In Short

Although the processes to commence court proceedings may seem complicated, they exist to ensure that any matters brought before the court involve a genuine dispute that cannot be resolved through other avenues of dispute resolution.

As a general rule of thumb, it is best to make an attempt to resolve any commercial dispute by direct negotiation, mediation or other amicable means if possible before commencing proceedings. If you cannot resolve the dispute, then you need to identify where you are going to start proceedings and for what exactly as these are the two main factors for identifying the process you need to start proceedings.

This is general information only. We recommend that you speak to a legal representative for specific advice in regards to your claim.

For more information, please do not hesitate to email Alicia Hill from our Dispute Resolution and Litigation team or call +613 8540 0200.