Australia Litigation Guide IBA Litigation Committee

Transcription

1 The Process of a Typical Commercial Case Australia Litigation Guide IBA Litigation Committee Simon Johnson simon.johnson@nortonrose.com Norton Rose Australia GPO Box 3872 Level 18, Grosvenor Place 225 George Street Sydney NSW 2001 Australia

2 This guide provides an overview of the process of a typical commercial case in the Australian jurisdiction. We have assumed the typical commercial case of a non-payment for delivery of goods sold and delivered with an agreed price equivalent to US$100,000 (Typical Case). Australia is comprised of 7 different states and territories. As each state and territory has different Courts, rules and processes we have assumed for illustrative purposes that the Typical Case occurred in New South Wales (NSW). In the Typical Case, the District Court of NSW (District Court) would have jurisdiction to hear the dispute. Accordingly, we have focussed on the rules and processes of the District Court in this guide. The District Court is the intermediate Court in NSW and has a jurisdictional limit for civil claims up to AUD$750,000. There are equivalent intermediate Courts as well as Supreme Courts in each of the other Australian states. The Uniform Civil Procedure Rules 2005 (NSW) (UCPR) apply in the District Court as well as in the Supreme Court of NSW. 1. Limitation issues Under the Limitation Act 1969 (NSW) and other equivalent state acts, the time limit for bringing a claim for breach of contract is 6 years from the date the cause of action arises.1 For the Typical Case, the limitation period will ordinarily run from the date the debt became due. In NSW, for cases involving breach of contract, the limitation period cannot be extended by agreement. 2 A party may in certain cases of defamation, negligence and latent injury, apply to the Court for an order extending the limitation period. 2. Pre-litigation requirements The District Court rules direct that a Plaintiff s preparation for trial must be well advanced before they file an originating process. The Plaintiff must serve the originating process on the Defendant as well as proposed consent orders for the preparation of the case.3 Whilst not required under the rules, prior to the commencement of proceedings, a party will ordinarily issue a letter of demand to a debtor, setting out the amount outstanding 1 In the Northern Territory, the limitation period is 3 years from the date that the cause of action arises. 2 Note in the state of Western Australia, section 45 of the Limitation Act 2005 (WA) expressly provides that nothing in the Act prevents a person from agreeing to extend or shorten a limitation period provided for under the act. 3 In relation to the Supreme Court of NSW - Part 2A of the Civil Procedure Act 2005 (NSW) was passed which provides that parties should take reasonable steps to resolve their dispute by mutual agreement or to more narrowly define the contentious issues before commencing a Court action. However, the NSW Government has enacted legislation postponing the effect of the legislation. In the Federal Court of Australia, there are requirements under the Civil Dispute Resolution Act 2011 (NSW) for a party to take genuine steps to resolve a dispute and file a genuine steps statement when commencing proceedings.

3 and threatening Court action to recover the debt if it is not repaid within a specified time.4 3. Starting proceedings In the District Court, a party commences proceedings by filing a statement of claim or summons. For the Typical Case, a statement of claim is required because the Plaintiff s claim is for a debt. The statement of claim or summons sets out the parties, facts forming the basis of the claim and the relief sought. Preliminary matters are usually dealt with at directions hearings or status conferences - procedural hearings before a Judge or Registrar. Where possible, the Court encourages parties to reach agreement on such issues. 4. Timetable and Case management The procedure and timetable for the District Court or Supreme Court is set out below. For those stages marked *, the timeframe will depend on the complexity of the matter. Whilst the timeframe for proceedings varies, ordinarily the Typical Case (if defended) would take between 7 to 10 months in the District Court. Parties have a substantial amount of control over the procedure and timetable. 4 If the matter involves a company debtor, it may be possible to issue a statutory demand on the company under section 459E of the Corporations Act 2001 (Cth). If a company fails to comply with a statutory demand this may provide the party with a basis to apply to have the debtor company wound up.

4 1. Originating Process Plaintiff files statement of claim or summons 2. Defence Defendant to file defence within 28 days. If the defence is not filed within 28 days, Plaintiff can seek default judgment. 3. Discovery* For the Typical Case: discovery exchanged in approximately 4 to 6 weeks 4. Evidence* Parties usually agree to a timetable. For the Typical Case, Plaintiff would have approximately 2 to 4 weeks after discovery to serve affidavit evidence. Defendant would then have a corresponding period to serve its evidence. Parties may also agree to orders for evidence in reply 5. Hearing* Written submissions usually served beforehand. For the Typical Case, the hearing would be set down for half a day to a day. Judgment Judgments may be made ex-tempore - handed down on the day or reserved - handed down on a later date. 5. Disclosure of Evidence Parties usually agree to orders for discovery. This is the process whereby parties to litigation are required to discover to the other side, the existence of documents relevant to the dispute that are in their possession, custody or control, and provide the other side with inspection. Documents or matters are only discoverable if relevant to a fact in

5 issue. Discovery obligations extend to documents that are unfavorable to the disclosing party. Individuals and companies have strict obligations not to destroy, tamper with or conceal anything that may be required as evidence in any proceeding or potential proceeding. 6. Administration of Evidence Under rule 31.2 of the UCPR, the evidence in chief of any witness at a hearing must be given by affidavit unless the Court orders otherwise. An affidavit is a sworn statement of the witness recollection of events. The person swearing the affidavit is referred to as the deponent. Documentary evidence is usually annexed or exhibited to the affidavit or tendered in Court. In practice, affidavits are read at trial, where objections as to the admissibility of the affidavits are also taken. The Court then makes rulings on the objections. Once the affidavit has been read, the witness is called for examination and cross-examination by the other side. The evidence of the witness includes their affidavit as well as any additional oral evidence that is presented. The Judge s role is to make findings on the evidence presented to the Court. Expert evidence Rules to of the UCPR set out the rules and procedure in relation to expert evidence in the District Court and Supreme Court of NSW. Broadly, the rules set out: 1) That the parties must seek directions before calling an expert witness; 2) That the expert s evidence in chief should be given by way of an expert s report; 3) That the expert must comply with the Expert s Code of Conduct; The admissibility of the expert s report. 7. Remedies For the Typical Case, a party would ordinarily seek an order for damages under the contract and for their costs of the proceedings. Under section 134 of the District Court Act 1934 (NSW), where the proceedings concern an equitable claim for recovery of money or damages, whether liquidated or unliquidated, the District Court has the same jurisdiction as the Supreme Court and may exercise all the powers and authority of the Supreme Court. Consequently, for the Typical Case, the District Court would have the power to order specific performance and injunctive relief. The Court has the power to order interlocutory injunctions including interim preservation orders where appropriate. Other orders a party may seek in the District Court include specific performance, rectification, delivery up and cancellation of agreements for sale and lease.

6 8. Enforcement In order to enforce a judgment, the judgment needs to be formally entered (section 133 of the Civil Procedure Act 2005). In NSW, a money judgment may be enforced by: A writ for the levy of property; A garnishee or charging order; or Appointing a receiver of the income of the judgment debtor s property or sequestrating the judgment debtor s property. 9. Appeal A party who is dissatisfied with a judgment of the District Court may apply to the Supreme Court Court of Appeal on a point of law or on a question as to the admission or rejection of evidence. Leave from the Supreme Court is required to proceed in certain appeals. Special permission or leave must be granted to appeal a decision from the Court of Appeal to the High Court of Australia. 10. Costs The general rule is that costs follow the event, that is, unless the Court is of the view that some other order should be made, the unsuccessful party will be ordered to pay the successful party s legal costs. The settled practice is for the Court to order costs on a party and party basis. Ordinarily, this means that the successful party will recover approximately 60 to 80% of their actual costs, including disbursements such as barrister s fees and Court fees. The Court also has discretion to order a party to pay indemnity costs. Typically this means the successful party will recover approximately 80 to 90% of their actual costs and disbursements.