A step by step guide to the litigation process

If you are considering commencing a legal action, it is important to understand the basic procedures involved - here is our essential guide.

If you are a small business owner, there is a good chance that at some point you will consider suing someone to recover a debt, seek damages for a breach of contract or even have an employment dispute.

If you are considering commencing a legal action, it is important to understand the basic procedures involved. We set out below a step by step guide to commencing legal action and provide some insight into the litigation process.

Initial Considerations

It is not enough to believe you have been wronged in order to commence a legal action. You must have a legal basis known as a ‘cause of action’ or a right to seek legal redress against another party. A cause of action can arise from either a law passed by parliament or the common law.

Even if you have a valid cause of action, you have to be able to prove your case with evidence. Consideration should be given as to what documents or witness statements you can provide to support your claim and whether that evidence is likely to be believed.

Legal proceedings have to be commenced within a certain period of time (known as a limitation period) otherwise there is a risk that your right to bring a claim might become barred. Consideration should be given to the particular limitation period which applies to your claim.

Parties

The party who commences the proceedings is known as the plaintiff. The person against whom the action is brought is known as the defendant.

There can be more than one plaintiff or one defendant to a legal action. If so, those additional parties are referred to as the second plaintiff or second defendant and so on.

The stages of legal proceedings commenced in a Court

A legal action will generally proceed along the lines set out below.

Making a claim

Civil claims are usually separated into different venues based on the amount of money being sought by the plaintiff. For NSW courts, these are briefly set out as follows:

1. Local Court Small Claims matters – any amount less than $20,000
2. Local Court General Division matters – any amount between $20,000.01 and $100,000.
3. NCAT consumer claims – any amount up to $100,000
4. District Court matters – any amount over $100,000 and below $1,250,000.
5. Supreme Court matters – any amount over $1,250,000.

Legal proceedings are commenced by a plaintiff against a defendant by a plaintiff filing a claim in Court. The document commencing legal proceedings is known as an originating process (such as a Statement of Claim or Summons). These documents contain the allegations made by the plaintiff against the defendant and outline the cause of action, losses and damages that a plaintiff may have suffered. A filing fee is payable on filing an originating process. The fee varies depending on the court and whether the plaintiff is an individual or corporation.

Service of the claim on the defendant

Once the originating process is filed, a plaintiff must serve the document on the defendant. This ensures the defendant is aware of the claim.

Defence

A defendant is required to file a defence to the plaintiff’s claim (usually within 28 days of service of the originating process). In its defence, a defendant is entitled to set out the reasons why the plaintiff’s claim should not succeed.

Should the defendant fail to file a defence or appear in court within 28 days, the plaintiff is usually entitled to apply for judgment in default of the proceedings. This would grant the plaintiff a judgment against the defendant for the full amount claimed including interest and an allowance for costs.

Preparing the claim for hearing

Following the service of the defence, the matter will generally be listed in Court to allow orders to be made setting out the steps that need to be taken by the parties to prepare the matter for hearing. The orders made by the Court might include directions as to the disclosure of documents relevant to the claim by the parties, preparation and service of evidence and setting a date for the final hearing.

Trial/hearing

If a case proceeds to hearing, the parties are given the opportunity to present their case and their supporting evidence. At the conclusion of the hearing, a judge or magistrate may make a decision and provide their judgment on the spot. Otherwise, judgment might be reserved and a written decision handed down at a later time.

Costs

In ordinary circumstances, the Court will award costs to the successful parties. It is important to note that in NSW, the costs for Court claims less than $50,000 will be heavily capped at regulated percentages prescribed by the relevant court practice notes. In NCAT, costs generally will not awarded unless the claim exceeds $30,000.

Conclusion

Starting a legal action is a serious step and can have significant financial consequences. This article contains general comments about the litigation process. If you intend to commence a legal action you should first get legal advice and assistance from an experienced lawyer.

For more information, please email us on enquiries@somervillelegal.com.au or contact our managing director, Ben Hemsworth, who heads up our litigation team bhemsworth@somervillelegal.com.au or telephone 9923 2321.