Many people think that litigation simply means handing the matter to a lawyer and waiting for the court’s judgment.
In fact, civil litigation in Australia is often a contest over both evidence and costs. Once a matter reaches court, the time involved, legal fees and litigation costs continue to increase. Understanding the basic procedure and assessing the risks are therefore often more important than commencing proceedings blindly.
What disputes proceed to civil litigation?
Common civil disputes in Australia mainly fall into the following categories.
First, contract disputes. Examples include concealing problems when selling a home, breaching a cooperation agreement, failing to repay a loan, or accepting payment for renovations but not carrying out the work. In essence, each involves one party failing to perform its contractual obligations.
Second, property disputes. These include rental arrears, disputes over the return of a bond, fence-boundary disputes and responsibility for repairing water leaks.
Third, debt recovery. Unpaid company debts and commercial invoices that remain unpaid for a long time are among the most common types of litigation for small and medium-sized businesses.
Fourth, claims in tort. These include disputes involving traffic accidents, personal injury, property loss and defamation.
Fifth, commercial disputes. Examples include disputes between shareholders or partners, or disputes arising from non-compete agreements. These matters generally involve larger sums and more complex legal relationships.
How does civil litigation generally begin?
Many people assume that the first step after a dispute arises is to commence court proceedings.
In fact, in most matters a lawyer will first send a Letter of Demand, formally requiring the other party to perform its obligations within a specified period—for example, by paying a debt, performing a contract or compensating a loss.
In practice, many matters settle through negotiation at this stage and therefore may not need to proceed to court.
If negotiation still does not resolve the dispute, the plaintiff will then formally commence court proceedings. Depending on the amount in dispute and the nature of the case, it may be heard in the Local Court, District Court or Supreme Court.
After receiving the originating documents, the defendant will generally need to respond within the prescribed period. Time limits may differ between states and courts. In NSW, a defence generally must be filed within the prescribed period, failing which the plaintiff may apply for Default Judgment.
The parties then proceed to Discovery. They will generally need to disclose evidence relevant to the case, such as contracts, emails, text messages, chat records, bank statements and invoices.
Australian courts place considerable importance on the disclosure of evidence. In principle, both parties should provide relevant materials honestly rather than waiting until the hearing to produce new evidence without warning.
Mediation is the real turning point in many cases
After completing Discovery, most cases proceed to Mediation.
Mediation is a very important part of Australian civil litigation and is the stage at which many cases are ultimately resolved.
Once a matter proceeds to a formal trial, both the time and expense increase significantly. Many parties therefore choose to reach a settlement at Mediation, saving substantial time and costs.
Only where Mediation does not resolve the dispute will the case proceed to a formal trial, at which a judge determines the matter on the evidence presented by both parties.
How long does civil litigation take, and how much does it cost?
The time required depends on the complexity of the case.
In general, a straightforward debt-recovery matter may take 6 to 12 months; an ordinary contract dispute usually takes about one year; and a case involving a complex commercial dispute, multiple parties or extensive evidence may continue for more than two years.
Lawyers generally charge by the hour.
In the Sydney area, for example, civil lawyers generally charge about AUD 400 to AUD 700 per hour. The actual rate varies with the lawyer’s experience, the complexity of the case and the law firm.
Overall, legal fees for a straightforward case may range from AUD 10,000 to AUD 30,000; a moderately complex case may cost about AUD 30,000 to AUD 80,000; and complex commercial litigation may exceed AUD 100,000.
There is also another issue that many people readily overlook.
If a party ultimately loses, the court will generally order that party to pay part of the successful party’s legal costs. Although this is not full reimbursement, in many cases the unsuccessful party must pay about 60% of the other side’s reasonable litigation costs. Before deciding whether to continue proceedings, it is therefore important to assess fully the prospects of success and the overall cost of litigation.
Before litigating, the more important question is whether it is worthwhile
Many people believe that if they are in the right, they should commence court proceedings.
In Australian civil litigation, however, the decision whether a case is worth pursuing often turns not on emotion, but on the sufficiency of the evidence, the prospects of success and whether the litigation costs are reasonable.
If many disputes are handled appropriately after a Letter of Demand, through negotiation or at Mediation, the parties can save substantial time and expense and avoid lengthy court proceedings.
When a contract dispute, debt-recovery matter or commercial dispute arises, seeking professional legal advice early and assessing the legal risks and available solutions are therefore often more important than commencing proceedings immediately.