Understanding Litigation 

ALTERNATIVES TO LITIGATION

Litigation is not the only means available for settling disputes. Four alternative dispute resoltuion processes are as follows:

1. Negotiation
   In simple terms, negotiation is informal discussion between the parties to see whether a settlement can be achieved. Negotiation can occur before litigation is commenced or up until a final determination by a Court and it is in this way that many disputes are settled without a decision by a Court.
    
2. Mediation
   Mediation is a structured process of negotiation whereby an independent person helps the parties to arrive at a solution to a dispute. There is no rigid procedure but mediation will usually involve a preliminary conference at which the mediator will arrange for any preliminary steps to be taken which may assist in bringing the parties to a solution such as arrangements for exchange of information or reports.
   
   Mediation will usually begin by the mediator making an opening statement followed by statements by each party. Joint or private sessions may then be held to suggest possible strategies for resolving the dispute.
   
   A mediation agreement is often signed by the parties prior to conducting the mediation in which the parties agree among other things that:
   
   -  Discussions at mediation are without prejudice;
   -  To split the costs of the mediation equally; and
   -  The impartiality of the mediator and frank and open communication with the mediator cannot
       be disclosed to the other party without your consent.
    
3. Conciliation
   A conciliator usually works by attempting to negotiate between the parties without necessarily bringing the parties together. In some jurisdictions, such as Workers Compensation, it is compulsory for the parties to attempt conciliation before commencing litigation.
    
4. Arbitration
   Arbitration is similar to a Court hearing in that an independent person, called an arbitrator, hears the evidence and makes a decision. It is possible for the parties to agree to submit to the decisions of an arbitrator and in some jurisdictions the Court will have its own arbitration scheme to which it may refer matters.

FACTORS INFLUENCING YOUR CHOICE OF PROCESS

The strength of your case

Usually your lawyer will start assessing the strength of your case by conducting an intial interview with you. At this initial interview your lawyer should be in a position to give you some preliminary advice about the strength of your case. Often, additional investigations are required. Your lawyer will analyse the information you provide and the results of any investigations in terms of the law which might apply and whether there is sufficient evidence to prove all of the elements necessary to be successful in Court. Your lawyer may well advise you at this point that you have no case or that your chances of success would not justify the expense of litigation. In alaysing the evidence available to prove your case there may be other factors which would adversely affect the presentation of your case in Court. For example, if an important witness would not be convincing when giving evidence this might influence your lawyer to advise an alternative method of dispute resolution.

Future relationships

In some cases where there will be an ongoing personal or business relationship between the parties it may be preferable to attempt a more informal method of dispute resolution in order to preserve the ongoing relationship. It may also be the case that because the parties will have an ongoing relationship that they are more likely to settle a dispute outside the Court system.

Costs

Litigation is an expensive exercise. Your lawyer should be able to give you detailed information about how much your case will cost and the risks involved if you lose. The high cost of litigation will be an important factor in your decision as to whether to proceed and if so by what method. At the same time, the expense of litigation is a deterring factor for both sides of the conflict and is an incentive for the four (4) alternative dispute resolution methods as described above.

Time

Although the time taken to reach a hearing has reduced considerably over recent years, many people are surprised by the time it takes to resolve many matters in the Court system. It could take years to obtain a final decision. Your lawyer will be able to give you an estimate of the time it will take to complete the various steps required in your case but ultimately the time it takes to complete various steps in litigation will depend on the reaction and action taken by the other party. This may mean that the costs you incur increase due to your opponent's chosen course of action. Whilst a Plaintiff has more control over a proceeding than a Defendant, the Plaintiff cannot properly chart the course of the proceeding as it will depend on the Defendant's conduct.

Enforceability

This refers to the fact that the outcome of some less formal methods of dispute resolution are difficult to enforce against the other party, that is, it may be difficult to get them to do what has been negotiated. In some circumstances it is possible to have the Court approve negotiated settlements so that those settlements have the force of a Court Order.

Privacy

Most Court proceedings are public. There may be reasons why you may wish to have privacy maintained through the use of alternative dispute resolution.

Precedent

This refers to the principle in our Court system that when a decision is made by a higher Court it will be binding on lower Courts. Sometimes a party will want to set a precedent and this can only be done through litigation. In other circumstances a party may wish to avoid setting a precedent and so will seek to use alternative dispute resolution methods.

It is often the case that a combination of methods is used. For example, litigation is commenced as a threat of setting a precedent but settled by the parties by negotiation prior to hearing in order to avoid a precedent being set.

Urgency

Sometimes your case will involve something that needs the urgent intervention of a Court and there is no option but to proceed to litigation. For example, you need to prevent something being done or enforce someone to do something.

 

COMMENCING LITIGATION

Preparation of the case

Once your lawyer has conducted an initial interview with you he or she should be in a position to give you preliminary advice about your case.

There are three main factors which your lawyer will consider at this stage.

• Cause of Action. This refers to whether the information you have given your lawyer, or which can be gathered later will give you a case under existing law;
• What further information or documents need to be gathered; and
• The appropriate jurisdiction. The jurisdiction of a Court or Tribunal refers to the authority of the Court to hear and determine a matter. Different Courts can hear different causes of action and there are different monetary limits in different Courts. The choices will be advised by your lawyer.

 Commencing the proceedings

The rules of each Court prescribe different methods for commencing different types of proceedings. In most cases the document required is known as a statement of claim. The statement of claim and the defence (the defendant's answer in reply to the statement of claim) together with other documents such as a reply or counterclaim are known as pleadings.

What happens next?

Once a proceeding has been commenced, the Court rules prescribe a time for certain steps to be taken by the Defendant. In most Courts, failure by the Defendant to carry out the prescribed steps will entitle the Plaintiff to have default judgment entered in their favour.

 

DURING LITIGATION (PRE-TRIAL PROCEDURES)

Settlement / Offers of Compromise

It is always open to the parties to settle their dispute by negotiation up until a final determination is handed down. Courts have developed rules and procedures concerning offers of compromise. The purpose of these rules is to facilitate the early compromise of proceedings by permitting the parties to make formal offers of compromise which if more favourable to the offence than a final determination, will be taken into consideration in ordering costs against the offeree. The making of this formal offer will not be held against the offeror.

Interlocutory Applications

Interlocutory applications are applications to the Court before the hearing. Interlocutory applications are usually made by filing what is known as an application or summons, usually accompanied by affidavits setting out a person's evidence on oath in support of the application, which is then served on all the affected parties and the presenting of an oral argument in Court.

Some common Interlocutory Applications are as follows:

Particulars

If a person wishes to obtain some more specific information about what appears in a statement of claim or a defence or other pleading document and these cannot be obtained from the other party's lawyer by consent, it is possible to apply to the Court for an order that these be supplied.

Discovery

Discovery refers to a process whereby each party can examine documents held by another party which are relevant to a matter in issue. In some jurisdictions a party can issue a notice to another party requiring inspection of certain documents or application can be made to the Court for access to a class of documents. Some documents are protected from examination by another party such as documents which are protected by legal profession privilege, that is, documents which have been brought into existence for use in getting legal advice or for use in litigation.

Interrogatories

Interrogatories involve serving on another party a list of questions to obtain sworn answers. Such evidence may then be used at the hearing. There are strict rules which apply to the kinds of questions which may be asked in interrogatories. It is possible to object to interrogatories on the grounds that they lack relevance, are vexatious or oppressive or are privileged. A Court can order that further answers be supplied. Failure to comply could result in a party's case being struck off.

Expert evidence

The subject of the dispute may require both parties to tender evidence from an expert in the relevant area/industry. The expert will provide a report which will need to be filed and served on the other side if that party intends to use it at the trial/hearing.

Where a person's medical status is in issue it will often be the case that both sides will require that the person be examined by their nominated specialist. Usually medical examinations are organised informally between the parties but the Court rules also permit a notice to be served requiring medical examination. The party serving the notice must meet the reasonable travel and other expenses of the party undergoing examination. The Court can also intervene to order that a person undergo medical examination.

 Withdrawal and discontinuance

It is possible for a Plaintiff to withdraw and discontinue proceedings at any time before trial with or without the Court's approval. This may however, involve a costs penalty.

Setting aside default judgment

One of the most common types of interlocutory applications is an application to have default judgment set aside. A default judgment is one which has been entered where a Defendant has failed to take an essential step within the time prescribed by the Court rules, such as failing to file a defence. To have default judgment set aside, a Defendant applies to the Court and provides affidavit evidence which sets out the reason for the default and shows that they have an arguable defence. While it is relatively easy to have a default judgment set aside, the Court will usually order that the defaulting party pay the other side's costs of defending the application and the costs thrown away in having default judgment entered.

 Subpoenas

A subpoena is a Court issued document requiring a party to attend the Court to produce documents, give evidence or both. A prescribed fee is paid to have the Court issue a subpoena and it is also required that conduct money is paid to cover travel and other reasonable expenses which will be incurred in complying with a subpoena. Subpoenas must be served within a reasonable time of the date for compliance and the Court rules prescribe specific time limits in some circumstances.

Case management

In an attempt to reduce the time involved in litigation some Courts have introduced systems of case management. Some of the features of these systems are:

• Actions must not be commenced until they are ready to meet the requirements of the Court's standard timetable as to preparation and hearing. Directions hearing are held by Court to monitor the parties' preparation of case for hearing.
• Some documents and information have to be made available to the other side at the commencement of the action. For example, in a personal injury action in the District Court the Plaintiff must serve with the statement of claim any medical reports available to him and which he intends to rely at hearing.
• Adjournments and extensions of deadlines are granted by application to the Court or at a directions hearing.
• As many matters as possible are finalised through alternative dispute resolution mechanisms where available. The Court may require the parties to partake in conciliation, mediation or arbitration.

ENFORCEMENT OF JUDGMENTS

 Winning in Court is only half the battle. Unfortunately, it is not always the case that a successful plaintiff is automatically paid any money due to them without a Court order. It may be that the defendant does not have any assets to satisfy the judgment or the defendant disappears.

Negotiation

It is always posible, even after judgment has been obtained, to negotiate payment. Whether you are a judgment debtor (the person liable to pay the money) or a judgment creditor (the person owed the money) it may be that payment of some money up front or over the time is an acceptable solution.

Bankruptcy

While not strictly a method for enforcing judgments, bankruptcy (or in the case of companies, winding up) may be an option if the amount of the debt is greater than the threshold required. You should be aware that this is a costly and highly technical legal area and carries the risk that you open the door to all other creditors, some of whom may have priority over you by reason that they have some security over some of the assets of the bankrupt person.

Examination of the Judgment Debtor

This is a procedure whereby the Court issue a summons requiring the judgment debtor to attend Court to answer questions about their financial situation and to bring specified documents such as tax returns. If the debtor fails to attend the Court may issue a warrant for the person's arrest. The procedure does not in itself provide a means of enforcing judgment but it may provide important details which may help determine which steps to take next.

Attachment of debts and garnishment of wages

This refers to a procedure whereby the judgment creditor can obtain a Court order requiring that a third party who is liable to pay money to the judgment debtor pay it instead to the judgment creditor. The order is known as a garnishee order. It can apply to wages and salary.

Saizure and sale of personal property

Where a judgment creditor knows that the judgment debtor has assets, it is possible to obtain what is known as a writ of execution. This enables the baliff to seize and sell personal property such as vehicles, furniture and equipment in satisfaction of a jdugment debt. There is a similar procedure available in respect of land although it is not often used.

Application to pay by instalments

As suggested earlier the parties can agree to pay by instalments. In the Magistrates' Court, it is also possible for a judgment debtor to apply to the Court to pay by instalments. This application is in writing and supported by an affidavit as to the judgment debtor's property and means.

 

COSTS OF LITIGATION

Lawyer/Client Costs

Lawyer/client costs are those paid to a lawyer for work done on the instructions of a client. You will be liable to pay these costs to your lawyer whether you are successful or not, unless your lawyer has agreed to do the work on the basis of a conditional costs agreement (costs plus a premium only if your case is successful). It is compulsory for lawyers to disclose certain things about their costs to you.

In disclosing costs, your lawyer should also give you information about money to be paid out on your behalf such as for barrister's fees, searches, expert reports and the like. If there is a significant increase in the estimated costs your lawyer is obliged to advise you of this immediately.

Party/party costs

Party/party costs are those costs which may be paid to a party to proceedings by another party as a result of an order of the Court. The distinction between the two is important because there will usually be a gap between the lawyer/client costs which a party is liable to pay and the costs which may be recovered from the other party if successful. This gap is usually 35-40%.

Your lawyer will require payment of all of its costs from you, not the unsuccessful defendant.

Courts have the discretion to award costs in proceeding that is to order that one party pay the other party's costs. Costs are usually awarded to the successful party although there are some exceptions.

 

TIME LIMITS

It is an important feature of litigation that there are strict limitations on the time within which litigation can be commenced.

Limitation periods are prescribed by legislation which includes the Limitation Act and other statutes dealing with specific types of actions.

It is possible in some limited circumstances to appy to the Court for an extension of time for commencing proceedings.

 

WHAT YOU SHOULD DO AS A CLIENT

1. Pay your legal fees as and when they fall due. A lawyer is entitled to charge interest on unpaid legal fees after 30 days and withdraw as lawyer on the record for you if fees are not paid by you.
2. Open your own file for the litigation and maintain all correspondence and documents your lawyer sends you.
3. Always take a copy of any document you sign at the time you sign it.

WHAT YOU SHOULD KNOW AS A CLIENT

• Whilst we will try to keep your costs to a minimum by providing efficient work, we do not have ultimate control over the extent of costs as we cannot properly chart the course of your opponents' conduct during the course of litigation and work required to respond to such conduct could mean additional costs.
• One way which we contain your costs is to have more junior solicitors handle your file from time to time and those solicitors are acting in accordance with instructions from the more senior solicitors of McKean Park.
• Due to the large size of litigation files, the policy at McKean Park is to destroy files after six years unless you are prepared to take the file with you at the conclusion of the proceedings.
• The proceeds of any judgment which we are able to recover on your behalf can be retained by us as against any costs which are outstanding at the conclusion of a matter and our retainer agreement permits us to deduct our costs before remitting the balance to you.
• We reserve our rights to decline to act for you at any stage of a proceeding for reasons such as:
  
  - Realisation of a conflict of interest
  - Conflict of personalities
  - Loss of confidence by you in the solicitor who is handling the matter
  - Any other circumstance which may make an ongoing relationship impossible to ensure your
     interests are being protected or adequately represented at any stage.

Should you have any questions in relation to any of the information contained here, please do not hesitate to contact the Litigation Department at McKean Park on (03) 8621 2888.