Litigation

Court system

What is the structure of the civil court system?

The High Court of Australia is the highest court and exercises both original and appellate jurisdiction. The majority of the High Court matters are appeals from the appellate divisions of the state and territory Supreme Courts and the Federal Court of Australia. Leave to appeal to the High Court of Australia is not as of right, but requires the granting of special leave to appeal. Matters heard by the High Court of Australia in its original jurisdiction include challenges to the constitutional validity of laws. Significant matters including constitutional matters are heard by a full court of seven justices, assuming all justices are able to sit. Most other matters are heard by at least two justices, although some applications for special leave are not afforded an oral hearing. Decisions of the High Court of Australia are binding on all lower courts.

Each of Australia’s six states and two territories has a Supreme Court, which is the highest court in that state’s court system (subject only to appeal to the High Court of Australia). Those state and territory Supreme Courts have unlimited civil jurisdiction, but ordinarily only hear claims over a certain monetary threshold (with smaller claims being determined by lower courts). In most state and territory Supreme Courts, there are commercial lists that are expressly designed to manage large commercial disputes. Such lists provide intensive case management and a streamlined procedure to promote the just, quick and inexpensive resolution of matters.

The appellate division of state Supreme Courts is either the Court of Appeal or the Full Court of the relevant Supreme Court. Typically, three judges will hear appeals from single judges of the Supreme Court and from certain other state courts and tribunals, although a five-judge bench may be convened for certain cases. The Court of Appeal has both appellate and judicial review jurisdiction in respect of all other courts and tribunals in the state and territory system.

Most states and territories have two further levels of inferior courts, these are courts of limited jurisdiction granted by statute, which are confined to hearing matters generally below the threshold limits for the relevant Supreme Court and subject to certain subject matter limitations. The District Court (in some states called County Court) is the intermediate court in this hierarchy and has jurisdiction over most civil matters within a monetary threshold. It has both trial jurisdiction and appellate jurisdiction. Some district courts have commercial lists. A local court (in some states called the Magistrates’ Court) handles smaller, summary matters.

In keeping with the hierarchy of courts established under the laws of each state, there is also a parallel hierarchy of courts that deal with disputes relating to federal law. The Federal Court of Australia has jurisdiction covering almost all civil matters arising under Australian federal law. Most notably, the Federal Court of Australia has jurisdiction to hear disputes on issues including competition and consumer protection laws, bankruptcy, corporations, industrial relations, intellectual property, native title and taxation. Certain discrete, high volume areas of law are managed by a discrete court established for this purpose. For example, the Family Court of Australia has jurisdiction to resolve most complex family law disputes. Less complex disputes relating to child support, administrative law, bankruptcy, industrial relations, migration and consumer laws are heard at first instance by the Federal Circuit Court of Australia (formally the Federal Magistrates Court) and are then appealable (generally as of right) to the Federal Court of Australia.

There are also various tribunals designed to hear specific categories of disputes. These tribunals are ordinarily less formal than the court system. There are often no rules of evidence, and it is expected that parties will be self-represented. The decisions of these tribunals are subject to either appeal or judicial review by the relevant state, territory or federal court.

Judges and juries

What is the role of the judge and the jury in civil proceedings?

The judicial system in Australia is independent from the other arms of government. This principle is enshrined in the Constitution of Australia. As such, judges must act to apply or determine the law independently and without interference from the parliament or the executive.

Most civil actions are heard by a judge alone. By way of example, in New South Wales the Supreme Court Act 1970 (NSW) stipulates that all civil proceedings are to be tried without a jury unless the court otherwise orders, but the court may make an order for trial by jury on application of a party if the court is satisfied that ‘the interests of justice require a trial by jury in the proceedings’. Similarly, the Federal Court of Australia Act 1976 (Cth) provides that, unless the court otherwise orders, civil trials are to be determined by a judge without a jury.

Limitation issues

What are the time limits for bringing civil claims?

Limitation periods are governed by the relevant state, territory or federal legislation. Importantly, they are a matter of substantive law rather than a matter of procedural matter. Limitation periods vary in terms of length and how they are calculated depending upon the underlying cause of action.

In tort, the cause of action generally accrues from the time the damage was suffered. In contract, the cause of action accrues from the time of the breach.

Parties may agree to suspend (or toll) limitation periods. A party may also be estopped from relying on the expiry of a limitation period, if for example they have made previous representations that they would not rely on the limitation period.

Pre-action behaviour

Are there any pre-action considerations the parties should take into account?

In both federal and state jurisdictions, legislation imposes pre-­litigation requirements on parties involved in civil disputes. A failure to comply with pre-litigation requirements does not have jurisdictional consequences for an applicant, but may be taken it into consideration when awarding costs, and may have personal consequences for the relevant practitioner.

In the Federal Court of Australia, the parties to a dispute must file a ‘genuine steps statement’, which outlines the steps taken to constitute a sincere and genuine attempt to resolve the dispute.

Starting proceedings

How are civil proceedings commenced? How and when are the parties to the proceedings notified of their commencement? Do the courts have the capacity to handle their caseload?

Proceedings are commenced by filing an originating process and payment of the applicable filing fee with the registry of the court in which the claim is sought to be heard. Defendants to an action are typically first made aware of a filed claim when it is served on them in accordance with the relevant court rules. In many jurisdictions filing is through an online system, and it is possible to conduct a search of the court files to determine whether claims have been filed but not served.

For service of an originating process outside Australia, the relevant court rules will generally provide a power to serve an originating process outside Australia where there is a connection between the jurisdiction and the matters the subject of litigation. Australia is a signatory to the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (commonly called the Hague Convention). The Hague Convention is designed to simplify the process of serving court documents internationally and receiving court documents relating to foreign litigation. It applies in all civil or commercial matters where there is occasion to transmit a judicial or extrajudicial document for service abroad.

Australia is a highly litigious jurisdiction and many courts have a heavy caseload. A variety of means are implemented to manage this caseload including specialist lists, docket judge management, streamlined interlocutory processes and case management conferences. In addition, courts often refer parties to mediation and other alternative dispute resolution options, to minimise the litigation of disputes that could be otherwise resolved.

Timetable

What is the typical procedure and timetable for a civil claim?

Rules relating to the service of an originating process can be located in the civil procedure rules of the relevant jurisdiction. For example, in New South Wales, an originating process must be personally served on each defendant. For most other documents, service can be effected by ordinary service, which includes sending documents by post, facsimile and email (where the other party consents). A claim in the Supreme Court, once filed, is valid if served within six months. A statement of defence must be filed within 28 days after service of the statement of claim, unless otherwise ordered by the court. This time frame does not take into account the fact that in some circumstances it will be necessary to seek further and better particulars of the matters pleaded in the statement of claim to better understand it.

Timelines for civil claims vary considerably depending upon the complexity of the claim, the volume of evidence to be addressed and the court hearing the dispute. Commercial disputes in specialist lists can be heard and determined within one year. Representative (class action) proceedings may take more than five years. Courts provide guidelines as to the approximate time period for the delivery of judgment, but these are indicative only.

Case management

Can the parties control the procedure and the timetable?

Australian courts have broad case management powers. These powers are also the subject of comprehensive court rules, which provide parties with guidance as to how those powers will be exercised and what is expected on them. Each court has its own allocation system to determine which judge is assigned to a determine particular case. Parties can challenge the allocation of a judge to hear a matter in very restricted circumstances. Judges have a wide discretion to manage cases as they see fit to ensure that the real issues in dispute are identified and the matter is progressed to trial as soon as possible. Courts also issue standard directions or practice notes that set timetables and practices with which parties are expected to comply with absent special circumstances.

Australian court systems have, over time, introduced methods of court-instigated ‘management’ of litigation. The reforms have involved shifting control of aspects of the conduct of litigation from lawyers to the courts. Australian courts have a wide discretion to impose sanctions (which may include adverse costs orders) on a party that has not complied with court orders or directions.

Evidence – documents

Is there a duty to preserve documents and other evidence pending trial? Must parties share relevant documents (including those unhelpful to their case)?

There are both common law and statutory requirements to preserve evidence pending trial. Severe sanctions may apply for the destruction of evidence. The compulsory disclosure process once litigation is on foot is referred to as ‘discovery’. Discovery is an interlocutory procedure whereby a party can obtain disclosure and the subsequent production of documents that are relevant to a fact in issue in the proceedings. Disclosure must be made of all existing documents that the party has in their possession, custody or power. Failure to comply will trigger court sanctions.

While in many jurisdictions an application can be made for pre-action or preliminary discovery, documentary discovery usually occurs once pleadings have closed but before witness statements or affidavits are served.

In most jurisdictions, discovery will be ordered by the court or obtained by filing a notice to produce for inspection of documents contained in pleadings, affidavits and witness statements filed or served by the other party. General discovery involves discovery of all documents relevant to a fact in issue, which includes documents that are unhelpful to a party’s case. While most jurisdictions permit an order for general discovery to be made, courts and the parties will usually avoid general discovery by limiting the documents to be discovered to those falling within a particular category or class. In the Federal Court of Australia, discovery is not ordinarily ordered unless it will facilitate the resolution of the proceedings as quickly, inexpensively and efficiently as possible.

In most jurisdictions, where an order for discovery is made by the court, the parties must compile and exchange lists of discoverable documents in the appropriate form prescribed by the relevant court rules. Documents that are not relevant to a fact in issue do not need to be disclosed. After lists have been exchanged, documents will be produced for inspection by the other party.

Evidence – privilege

Are any documents privileged? Would advice from an in-house lawyer (whether local or foreign) also be privileged?

At common law, there are three elements necessary to establish legal professional privilege over communications passing between a legal adviser and client:

  • the communication must pass between the client and the client’s legal adviser;
  • the communication must be made for the dominant purpose of enabling the client to obtain legal advice, or for the purpose of actual or contemplated litigation; and
  • the communication must be confidential.

Australia has a system of broadly consistent evidence acts across all jurisdictions. These create a privilege for confidential communications made, or prepared, for the dominant purpose of a lawyer providing:

  • legal advice; or
  • professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is, or may be, or was, or might have been, a party.

‘Dominant’ in this context means the ruling or prevailing purpose. The purpose or intended use for which a document is brought into existence will be a question of fact. Legal professional privilege may be waived or lost where there is conduct inconsistent with the maintenance of the privilege. Advice from lawyers, including in-house lawyers, must pass these tests to be privileged.

Other types of privilege also exist including, for example, ‘without prejudice privilege’. This involves communications between parties that are generally aimed at settlement. These communications cannot be put into evidence without the consent of parties in the event that negotiations are unsuccessful or later in relation to an application for costs following the determination of liability and damages.

Evidence – pretrial

Do parties exchange written evidence from witnesses and experts prior to trial?

Generally, in Australia, witnesses provide written statements of their evidence, in the form of affidavits, statutory declarations, witness statements or expert reports before hearing. These documents are usually signed under oath or affirmed.

For expert evidence, if a party intends to call expert evidence, the rules of most courts require notice of that intention and an expert witness report to be served in advance of the hearing. There are two possible expert reports that can be admitted in proceedings, a joint report (arising out of a conference of experts) or an individual expert’s report. Unless otherwise ordered, an expert’s evidence in-chief must be given through one or more expert’s reports.

Evidence – trial

How is evidence presented at trial? Do witnesses and experts give oral evidence?

As a general rule, witnesses of fact give oral evidence, although some courts may order service of a witness statement in advance. Written statements exchanged before trial may form the basis for evidence-in-chief of a witness at trial. Such documents are ‘read’ onto the record in court, and serve as evidence-in-chief for that witness. Witnesses are then usually cross-examined and re-examined orally in court by counsel. A witness will have access to their original written statement throughout this process.

With the leave of the court, a hostile or unfavourable witness may be questioned by the party that called the witness as though the party were cross-examining the witness with the leave of the court. Ordinarily, in re-examination the witness may only be questioned about matters arising out of the cross-examination, and it is not permissible to ask the witness leading questions.

Interim remedies

What interim remedies are available?

Courts have a wide discretion to determine whether to grant interim relief to a party to prevent the court process from being frustrated. In general terms these involve:

  • Mareva injunctions to prevent a defendant from disposing of assets to deprive a claimant of the benefit of a judgment; and
  • possession orders to allow a claimant to take possession of property that a defendant has retained in breach of a prima facie right to possession.

Superior courts have the power to grant relief such as a Mareva injunction to support foreign proceedings. There are two kinds of transnational freezing orders:

  • orders that apply to foreign assets in aid of Australian judicial proceedings (worldwide orders). These are freezing and ancillary orders made against a person over whom the Court has jurisdiction even if they reside overseas and the order is sought in relation to overseas assets. To prevent harassment of a respondent in multiple actions around the world, the Australian example form of freezing order contains undertakings that must be given by the claimant to the Court; and
  • orders that apply to Australian assets in the context of foreign judicial proceedings.

The primary elements for obtaining such an order from an Australian court are:

  • a foreign judgment or ‘good arguable case’ in a foreign court;
  • a sufficient prospect of registration or enforcement of the foreign judgment or prospective judgment in the Australian court;
  • a danger that the foreign judgment will go unsatisfied; and
  • satisfaction of discretionary matters (such as the effects on the respondent and third parties and the diligence and expedience of the applicant in bringing the application).
Remedies

What substantive remedies are available?

Should a matter in Australia run through to trial, the relevant judge will publish a judgment regarding the matter. A judgment is a formal order by a court that concludes the proceedings before it.

The judgment can relate to the substantive question in the proceedings, or to a question in an interlocutory application such as an application for an injunction or a notice of motion seeking orders for discovery. Courts are also empowered to make consent, summary and default judgments. Courts will publish written reasons for judgment in all but the most minor of interlocutory applications. Parties can also request written reasons for judgment. In some circumstances a judge will give ex tempore judgments (orally, at the time of the application), but will still publish written reasons at a later date.

Generally, damages are awarded to compensate the plaintiff for loss suffered as a result of the defendant’s wrongdoing. In some circumstances, the court can make orders for other types of damages including exemplary damages, restitutionary damages, nominal damages and liquidated damages.

While costs orders are generally discretionary, courts will usually make orders in accordance with the principle that ‘costs follow the event’, whereby the unsuccessful party in the litigation pays some portion of the successful party’s costs.

Courts are empowered to order interest on awards of damages and costs.

Enforcement

What means of enforcement are available?

Domestic judgments can be enforced by writ of execution, garnishee order or charging order.

The registration and enforcement of foreign judgments in Australia is governed by both statute and common law principles. Within the statutory regime, the Foreign Judgments Act 1991 (Cth) governs the procedure and scope of judgments that are enforceable. Registering a judgment under this Act is a straightforward and cost-­effective procedure.

Where Australia does not have an international agreement or the circumstances are not caught by the statute, the foreign judgment can be enforced at common law.

Public access

Are court hearings held in public? Are court documents available to the public?

The default position is that court proceedings are conducted in an open court. In commercial disputes, a court can order a confidential hearing or make confidentiality orders to protect intellectual property, trade secrets or commercially sensitive information. Certain court documents such as court orders are now available to the public via online portals in some jurisdictions. In most cases, however, the public must apply for access to documents on the court file. Subject to special circumstances and confidentiality orders, access will normally be granted in respect of materials that been tendered into evidence or otherwise disclosed in open court.

Costs

Does the court have power to order costs?

Courts have broad discretion over the costs of all proceedings. In effect, a court can make whatever order as to costs is justified in the circumstances, but there are generally court rules that guide the exercise of that power.

Ordinarily, costs follow the event, which means a successful litigant receives costs in the absence of special circumstances justifying some other order. A party is usually entitled to costs of any issue on which it succeeds assessed on an ordinary basis.

There are two main classes of costs:

  • those that arise by virtue of the retainer with the client and are governed by contract (solicitor or client costs); and
  • those that arise by order of the court, which can either be on an ordinary basis (party or party costs) or an indemnity basis (solicitor or client costs). Indemnity costs are usually awarded against a party in circumstances where that party has engaged in unreasonable behaviour in connection with the conduct of the proceedings. An offer of settlement that is rejected can entitle the party making the offer to obtain costs on an indemnity basis at the conclusion of trial. However, the mere making of an offer is not sufficient to entitle a party to indemnity costs. Other discretionary factors will also be considered
Funding arrangements

Are ‘no win, no fee’ agreements, or other types of contingency or conditional fee arrangements between lawyers and their clients, available to parties? May parties bring proceedings using third-party funding? If so, may the third party take a share of any proceeds of the claim? May a party to litigation share its risk with a third party?

‘No win, no fee’ agreements are often offered by plaintiff law firms in certain cases. Many class action plaintiff firms offer a ‘no win, no fee’ retainer for group members who otherwise could not afford to pay legal fees. In the case of a win, the retainer agreement often contains a provision for payment of an ‘uplift’ fee, in addition to professional costs. This arrangement is permissible subject to the court supervision inherent in Australian class actions.

Third-party funding of claims is permitted in Australia and is becoming increasingly prevalent in class actions. However, the involvement of third-party funders with no pre-existing interest in the proceedings, but who stand to benefit substantially from any recovery from the proceedings, is a material consideration in a court’s consideration of whether to grant security for costs. The courts proceed on the basis that funders who seek to benefit from litigation should bear the risks and burdens that the litigious process entails. Courts have recognised the option to make a ‘common fund’ order in class actions where third-party litigation funders are recompensed from the common fund of proceeds obtained by the class as a whole in any settlement or judgment (and not just from class members who have signed a funding agreement).

Insurance

Is insurance available to cover all or part of a party’s legal costs?

Most corporate entities are insured for public liability, professional indemnity and directors’ and officers’ liability.

Litigation insurance is not common in Australia, but it is possible for parties to obtain coverage, for example, by way of ‘adverse costs insurance’.

Class action

May litigants with similar claims bring a form of collective redress? In what circumstances is this permitted?

The Australian representative proceeding (class action) regime is a key feature in the litigation landscape. Outside of North America, Australia is the place where a corporation is most likely to find itself defending a class action.

The Australian representative proceeding regime comprises essentially identical rules in the federal court system and the courts of New South Wales, Victoria and Queensland. It has the following important features:

  • There is no certification requirement, meaning that there is no threshold requirement that the proceedings be judicially certified as appropriate to be brought as a class action. Once a class action is commenced, it continues until finally resolved by judgment or settlement, unless the defendant can convince the court to terminate the proceedings on certain limited grounds.
  • There is no requirement that common issues outweigh individual issues.
  • The rules expressly allow for the determination of ‘sub-groups’ or even individual issues as part of a class action.
  • A representative plaintiff can define the class members by description. This means that a person who meets the criteria set out in the class definition will be a class member unless they opt out of the proceedings. If a class member fails to opt out by the specified date, they are included in the proceedings. Therefore, a person can be a class member and bound by the outcome of the proceedings without their knowledge or consent, simply on the basis that they fall within the definition.

To commence representative proceedings, claims must satisfy three threshold requirements:

  • at least seven persons must have claims against the same person or persons;
  • the claims of all these persons must rise out of the same, similar or related circumstances; and
  • the claims of all of these persons must give rise to at least one substantial common issue of law or fact.

While public funding via legal aid services is technically available, vigorous means and merit tests are applied to determine eligibility for aid.

As a general rule, public funds will not be available in commercial disputes.

However, third-party funding of claims is permitted in Australia and is becoming increasingly prevalent in class actions.

Appeal

On what grounds and in what circumstances can the parties appeal? Is there a right of further appeal?

Grounds for appeal must identify a significant and relevant error of fact or law in the first instance judgment.

Judgments of a civil court in Australia can be appealed to a superior court.

The relevant court legislation or procedural provisions set out the relevant rules of appeal, and whether appeal is as of right or leave to appeal is required.

The appellate division of most states is the Court of Appeal or Full Court, which hears appeals from single judges of the Supreme Court and from certain other state courts and tribunals.

The High Court of Australia is the ultimate court of appeal.

Foreign judgments

What procedures exist for recognition and enforcement of foreign judgments?

The registration and enforcement of foreign judgments in Australia is governed by both statute and common law principles. Within the statutory regime, the Foreign Judgments Act 1991 (Cth) governs the procedure and scope of judgments that are enforceable. Registering a judgment under the Act is a straightforward and cost-effective procedure. Where Australia does not have an international agreement or the circumstances are not caught by the statute, the foreign judgment can be enforced at common law.

Foreign proceedings

Are there any procedures for obtaining oral or documentary evidence for use in civil proceedings in other jurisdictions?

Australia is a party to the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (the Hague Convention), which governs the international service of process on a defendant who resides in Australia. The primary method for taking evidence in Australia for a foreign proceeding is through the Convention on the Taking of Evidence Abroad in Civil or Commercial Matters (the Hague Evidence Convention).

Australian authorities will not accept any letters of request that require a person to state which documents relevant to the proceedings are or have been in their possession, or produce any documents, other than particular documents specified in the letter of request that the requested court believes to be in their possession. Given the strict statutory regime regarding pre-trial discovery in Australia, any veiled request for pre-trial discovery that circumvents that process is likely to be rejected.