Most people see the commercial dispute resolution process in Court as mysterious, bewildering and complex.
So I’ve put together this Guide to assist you to understand the commercial dispute resolution process when you engage a commercial dispute lawyer to commence legal proceedings.
The First Step: Evidence Gathering
There is a saying that the law is “fact sensitive”. This means that the legal outcome depends primarily on what facts are proved in Court, based on the evidence.
For example, in a breach of contract case, you will need to prove facts which show that:
- a contract has been entered into between the parties in dispute
- the contract has been breached by the other party
- the breach has caused you loss which can be compensated.
In commercial disputes the facts will mainly be based on evidence of what the parties have said and written to each other.
So you need to write down and gather the following kinds of evidence:
- conversations (who said what to who and when)
- letters between the parties
- emails between the parties
- diary notes of events and conversations
- text messages, if relevant
- any other relevant communications eg Facebook
- photographs if relevant
When collating documents it is best to print them single-sided, and put them into lever arch folder(s) in reverse chronological order ie. the oldest document at the back of the folder, and the most recent document at the front of the folder.
Make sure that you make a copy for yourself as well as your commercial dispute lawyers.
You can save a lot on legal fees if you gather the evidence together as best you can, organise it and present it to your lawyer.
The Second Step: Initial Legal Advice
Depending on the quality of the evidence you provide, your commercial dispute resolution lawyers should be able to provide initial legal advice.
The aim of this advice is to give you an understanding of where you stand legally, including the strengths and weaknesses of your case, your prospects of success, and recommendations about resolving the dispute.
The advice is initial because your commercial dispute lawyers will usually not have the benefit of fully knowing the other party’s side of the story, or seeing any documents they may have (which you don’t have a copy of). That information may change the initial advice – it may strengthen your case, or weaken it.
However, based on the initial advice you should be able to make a decision about the next steps. For example whether to write a letter of demand, commence legal proceedings, or take some other action.
Writ and Statement of Claim
If a decision is made to commence legal proceedings to resolve your commercial dispute it will usually be necessary to prepare a “Statement of Claim”.
A Statement of Claim sets out the key facts which you rely on, to prove your case.
For example, if you claim that a contract has been breached, the Statement of Claim will need to set out details of the contract that was entered into, when and how it was breached, and claim damages for breach of contract.
The Statement of Claim will be attached to a “Writ” and filed in the Court registry, together with the relevant fee.
The Writ and Statement of Claim will then need to be “served” on the Defendant. There are rules regarding how Court documents must be served on other parties.
This procedure (and the procedure set out below) applies in the District Court and Supreme Court in Western Australia. Similar documents and procedures apply in other Courts.
Notice of Appearance
Once the Statement of Claim has been served on the Defendant, the Defendant must file a Notice of Appearance (or a document with a similar name) in the Court registry, and serve it on the Plaintiff.
The purpose of the Notice of Appearance is to indicate to the Court and the Plaintiff that the Defendant intends to defend the claim.
The Notice of Appearance must be filed within a strict time limit.
If a Notice of Appearance is not filed, the Plaintiff can obtain default judgment and recover damages from the Defendant, without the need for a trial in the Court.
Statement of Defence
The Defendant is required to file a response to the Statement of Claim, by filing and serving (on the Plaintiff) a “Statement of Defence”. The Statement of Defence needs to set out the key facts relied on by the Defendant, to defeat the Plaintiff’s claim.
If the Plaintiff needs to respond to any points raised in the Statement of Defence, this can be done by filing a “Reply” and serving it on the Defendant.
Further & Better Particulars
To better understand the other party’s case you may need to ask for what are called “Further & Better Particulars”. As the name implies, the other party is required to provide better details of their case.
Sometimes the Defendant will have a claim against the Plaintiff. If so the Defendant will file and serve a Counterclaim on the Plaintiff. The Plaintiff will then need to file and serve a Defence to Counterclaim, and the Defendant may in turn file and serve a Reply.
If the commercial dispute goes to trial the Court will determine the Plaintiff’s claim against the Defendant, and the Defendant’s counterclaim against the Plaintiff.
Matters in Dispute
The purpose of the Statement of Claim, Statement of Defence, and Reply (and Counterclaim, if any), is to flesh out the matters in dispute between the parties. It is only those matters that the Court has to decide.
For example, if the Defendant admits that a particular contract was entered into on 9 January 2016, the Court will not have to decide whether that contract was entered into on that date.
On the other hand, if the parties dispute whether one party was entitled to terminate the contract, and the losses suffered because of that termination, the Court will hear evidence from both parties on those subjects, and make a decision accordingly.
In commercial disputes the parties are required to engage in the Court process with their cards “face-up on the table”.
Discovery is a compulsory legal process where you and the other party are required to disclose to each other all of the documents in your possession or control that are relevant to the matters in dispute in the case.
By ‘document’ I mean all physical and electronic communications.
You have to disclose documents whether or not they are helpful to your case. It is a very serious matter to hide or destroy documents that are relevant for the Court to decide the case.
It is possible to lose your case if it comes to the attention of the Court that documents have been deliberately hidden or destroyed.
In commercial disputes involving many documents discovery can be a very expensive exercise. The Court can make orders which limit the scope of discovery, and require discovery in stages.
Your commercial dispute lawyer will give you guidance about the documents which need to be “discovered”.
Evidence is given by witnesses, about what the witness said, saw, heard and did. Witnesses speak about relevant events and refer to relevant documents.
Sometimes a witness will give an opinion (if qualified to give one, such as an expert – see below).
Most Courts (except the District Court) require witnesses to prepare a written witness statement. In the District Court evidence in civil cases is generally given orally by the witness in person from the witness box.
The purpose of a witness statement is to set out the evidence that each party relies on, to prove its case.
This is often a very time consuming step which requires the commercial dispute lawyer to draft a detailed witness statement by interviewing each witness (preferably in person). Witness statements also attach relevant documents.
Witness statements (cont’d)
Witness statements need to be drafted carefully, so that they can be admitted into evidence by the Court. For example hearsay is not allowed as evidence at trial (eg “I was told by Bill Smith that he heard Harry say that …”).
If you would like to learn more please refer to the Western Australian Bar Association’s Best Practice Guide: Preparing Witness Statements For Use in Civil Cases.
Early consideration needs to be given by your commercial disputes lawyer to which witnesses will be required to prove your case. Sometimes witnesses are not available, for example they don’t want to give evidence, they have left employment on bad terms, or they can’t be contacted. In other cases a proposed witness might not give credible testimony because, for example, they have lied in the past or tend to tell half-truths.
You may need to re-evaluate your strategy if you need a particular witness to prove your case, but the witness is unavailable or unsuitable to give evidence.
The choice of witness is often a strategic matter which involves weighing up the potential risk and benefits. Your commercial dispute lawyer must have extensive experience making judgment calls like this, because the wrong decision can ruin your case.
In some cases expert evidence will be required to prove particular facts. Experts are required when the Court does not have sufficient expertise to correctly decide a matter without the assistance of an expert witness.
Expert opinions may be given where the expert can demonstrate by specified training, study or experience that s/he has become an expert in a particular field of specialised knowledge.
For example in a case I was involved in, a hydraulic expert and a fire expert were required to prove certain facts regarding the cause and spread of a fire on a large mining excavator. In complex building and construction cases it is often necessary to obtain the opinion of industry experts.
The Court will require the parties to attend a series of hearings known as ‘directions hearings’, ‘status conferences’ or the like, to manage the progression of the case towards trial.
For example orders will be made regarding when each party must file and serve the Court documents referred to above, give discovery of their documents to the other party, and file and serve witness statements.
The Court process is designed to encourage the parties to resolve their commercial dispute without it going to trial.
To that end the Court will usually order the parties to attend a compulsory mediation.
If the commercial dispute is not settled by negotiation or mediation the Court will make orders which ‘programme’ a series of steps for it to be decided at trial.
Typically orders will be made for:
- Witness statements to be filed and served by each party
- Expert evidence (if any) to be filed and served by each party
- Any objections to witness statements and expert evidence to be filed and served by each party
- The preparation of a joint bundle of documents to be referred to at trial (known as the ‘trial bundle’)
- Written submissions to be filed and served by each party
The trial process usually involves the following steps:
- the Plaintiff will make opening oral submissions to the Court
- the Plaintiff will then call its witnesses and lead evidence from them (this is called ‘evidence-in-chief’)
- the Defendant may cross-examine any of the Plaintiff’s witnesses
- the Plaintiff may re-examine its witnesses, to clarify anything that has arisen in cross-examination. After re-examination the Plaintiff’s case is “closed”, and it cannot be re-opened unless there are special circumstances. For example you cannot change your mind, to lead evidence from another witness who you initially decided not to call as a witness.
- the Defendant will then make opening oral submissions to the Court
- the Defendant will call its witnesses and lead evidence from them
- the Plaintiff may cross-examine any of the Defendant’s witnesses
- the Defendant may re-examine its witnesses, to clarify anything that has arisen in cross-examination. After re-examination the Defendant’s case is “closed”
- the Plaintiff and Defendant will make closing oral submissions to the Court.
After closing submissions the Court will usually ‘reserve’ its decision, which means that a written decision will be made at a later date.
Sometimes the Court will make a decision on the spot, and give reasons for decision later.
Recovery of Legal Fees and Costs
Even if you win your commercial dispute, you will generally not be able to recover all of your legal fees and costs from the other party. As a rule of thumb you are only allowed to recover approximately half to two-thirds of your legal fees and costs from the other party. These are known as “party/ party costs”.
Similarly, if you lose you will generally be required to pay approximately half to two-thirds of the other party’s legal fees and costs, in addition to your own costs.
However, you can protect your position on costs by making a formal offer to settle the matter, under the Court rules.
These costs rules are designed to encourage matters to settle out of Court, and can be used strategically to put pressure on the other party to resolve the commercial dispute. For example, you could make an offer that is too good to refuse, or make an offer which you think the other party may be prepared to negotiate.
Here’s how it works if you’re a Defendant:
Let’s say you’re defending a claim of $100,000 for breach of contract, and you have a good defence. Now let’s assume you make a formal offer to settle for $10,000, which the Plaintiff does not accept.
If the Plaintiff (unexpectedly) wins but obtains judgment for less than $10,000, the Plaintiff will only be entitled to an order for its costs up until the day your offer was made, and will be required to pay half to two-thirds of YOUR costs after that date.
Further, if the Court considers that the Plaintiff’s refusal to accept your offer was unreasonable, the Plaintiff may be ordered to indemnify you for all, or almost all of your legal costs.
Here’s how it works if you’re a Plaintiff:
Let’s say you’ve made a claim of $100,000 for breach of contract, and you have a good case. Now let’s assume you make a formal offer to settle for $80,000, which the Defendant does not accept.
If you win but obtain judgment for more than $80,000, the Defendant will be required to pay half to two-thirds of your costs after the day your offer was made, in addition to half to two-thirds of your costs incurred prior to that day.
But if the Court considers that the Defendant’s refusal to accept your offer was unreasonable, the Defendant may be ordered to indemnify you for all, or almost all of your legal costs.
So whether you’re a Plaintiff or a Defendant, making a formal offer to settle can be a smart strategic move.
I hope this Guide has helped you to understand more about the resolution of commercial disputes in Court and why, given its complexity, you need an experienced commercial dispute lawyer who can help you to successfully navigate it.
“If you don’t understand the process you will be at a significant disadvantage”