North Sydney Commercial Lawyers

The Genuine Steps requirements in statutory demand proceedingsPrint This Post

The Genuine Steps requirements in statutory demand proceedings

The Civil Dispute Resolution Act 2011 (CDRA) was discussed by Reeves J in Superior IP International Pty Ltd v Ahearn Fox Patent and Trade Mark Attorneys (No 2) [2012] FCA 977.

The CDRA places obligations on litigants and their legal advisers to take active steps to resolve, or at least narrow, the issues in dispute prior to commencing proceedings in the Federal Court and the Federal Magistrate’s Court.

Any steps taken (known as “genuine steps”) to resolve the dispute must be detailed in a formal document – the genuine steps statement (GSS) – that an applicant is to file at the same time as filing the documents that commence proceedings in court. Where this is not observed, there are potential consequences that include strict case management directions such as adjournment or even a stay of proceedings and costs sanctions against the parties (and/or their legal advisers) said to be in default.

The CDRA imposes an obligation to file a genuine steps statement before serving a statutory demand under s459E of the Corporations Act. Similarly, the obligation exists for the company on which a demand is served before it applies under s459G to have the demand set aside. However, proceedings to wind up a company under s459A are not subject to a requirement to file a GSS.

Short time frames may be problematic to parties if the CDRA applies and there is a requirement to file a GSS at the same time proceedings are filed in court. The CDRA provides for an exception in urgent proceedings.

The GSS must document the reason for not pursuing genuine steps in such circumstances and the CRDA does not provide an exemption from the need to file one. Under the CDRA, if no steps have been taken, the GSS should document that, along with an explanation of why no steps were taken.