Litigation and enforcement in Australia: overview
A Q&A guide to dispute resolution law in Australia.
The country-specific Q&A gives a structured overview of the key practical issues concerning dispute resolution in this jurisdiction, including court procedures; fees and funding; interim remedies (including attachment orders); disclosure; expert evidence; appeals; class actions; enforcement; cross-border issues; the use of ADR; and any reform proposals.
To compare answers across multiple jurisdictions visit the Litigation and enforcement Country Q&A tool.
This Q&A is part of the multi-jurisdictional guide to dispute resolution. For a full list of jurisdictional Q&As visit www.practicallaw.com/dispute-guide.
Main dispute resolution methods
Litigation is the main method for managing and resolving large commercial disputes in Australia. This is due, in part, to the streamlined procedures adopted for commercial matters in most superior courts and the rigorous enforcement of "just quick and efficient" principles in procedure.
Many state superior courts have special divisions designed to manage commercial disputes with streamlined interlocutory procedures. An increasing number of courts also have representative (class) actions with docket judges to manage multi-claimant cases. Class actions are on the increase in Australia.
The litigation system is broadly adversarial and the relevant standard of proof in civil actions is the balance of probabilities. In some commercial disputes, the parties will agree (or be directed by the court) to refer some aspects of the dispute for expert determination. The independent expert is appointed by the parties to investigate and deliver a binding opinion on the issues in dispute. This is common where the dispute involves a highly technical subject matter, such as, for example, construction.
Arbitration is also widely used in commercial disputes. Typically, parties select their arbitrator(s) and are bound by that person's or the panel's decision, either by agreement or by statute.
Most court procedures actively promote alternative dispute resolution (for example mediation, in which a neutral third party (the mediator) assists the parties to agree on a solution to their dispute).
Limitation periods are governed by state and territory legislation and are treated as substantive rather than procedural.
In New South Wales, the Limitation Act 1969 (NSW) outlines the periods of limitation relating to specific causes of action. For example, a cause of action founded on contract or tort will expire if not brought within six years from the date the cause of action accrued (section 14, Limitation Act).
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.
The High Court of Australia is the highest court and exercises both original and appellate jurisdiction. The majority of the High Court's matters are appeals from the appellate divisions of the state and territory Supreme Courts and the Federal Court of Australia after special leave to appeal is granted. Matters heard by the High Court in its original jurisdiction include challenges to the constitutional validity of laws. High Court decisions 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 the High Court). Each has unlimited civil jurisdiction. The Supreme Court hears, at first instance, monetary claims above a certain threshold based on the amount claimed in the proceedings, or claims for equitable relief. In most state 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 efficient resolution of matters.
Monetary claims below that threshold are heard by a lower court in the state court hierarchy. The appellate division of state courts 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 Court of Appeal has both appellate and supervisory jurisdiction in respect of all other courts in the state system.
Most states have two further levels of inferior courts. The District Court (in some states called County Court) is the "middle court" and has jurisdiction over most civil matters within a monetary threshold. Some district courts have commercial lists. There is then the Local Court (in some states called the Magistrates' Court) which handles smaller, summary matters.
In keeping with the hierarchy of courts established under the laws of each state, there is also a hierarchy of courts which deal with disputes relating to federal law.
The Federal Court of Australia (Federal Court) has jurisdiction covering almost all civil matters arising under Australian federal law. Most notably, the Federal Court has jurisdiction to hear disputes on issues including competition and consumer protection laws, bankruptcy, corporations, industrial relations, intellectual property, native title and taxation.
The Family Court of Australia has jurisdiction to resolve most complex family law disputes.
The Federal Circuit Court hears less complex disputes relating to child support, administrative law, bankruptcy, industrial relations, migration and consumer laws.
Rights of audience
A person with a current practising certificate has a right to appear in an Australian court. To obtain an unrestricted practising certificate requires a degree from a recognised university, practical legal training and a period of supervision. A lawyer must be formally admitted to practice in state courts.
Foreign lawyers do not have a right to appear unless they have been admitted to practice or have applied for and received special orders from the particular court.
Fees and funding
The costs of conducting civil proceedings differ depending on the size and complexity of the case. Generally, the cost of proceedings increases with the superiority of the court in which it is heard. The successful party in litigation is entitled to claim costs from his opponent. There are two main classes of costs:
Those that arise by virtue of the retainer with the client and are governed by contract (solicitor/client) costs.
Those that arise by order of the court, which can either be on an ordinary basis (party/party costs) or an indemnity basis (solicitor/client costs). Indemnity costs are usually awarded against a party where that party has engaged in unreasonable behaviour in connection with the conduct of the proceedings.
Following the conclusion of proceedings, costs are assessed by the courts. It is unusual that a party will ever recover all of their costs because a discount is often applied by the assessor to ensure that they are "proportional". Costs are closely prescribed in some jurisdictions. Special and particular costs orders are not unusual where there have been formal (without prejudice) offers of compromise.
While hourly rates are still common, most commercial law firms in Australia will offer their clients alternative fee arrangements. Lawyers in Australia are not permitted to charge contingency fees. Australia has an active litigation funding environment particularly in insolvency matters and in class actions.
While initially a matter of some debate, the validity of litigation funding was established by the High Court in 2006 and subsequently reaffirmed in 2012, when it unanimously held that litigation funders were not required to hold an Australian financial services licence.
In 2012, the federal government passed legislation exempting a person providing financial services for litigation and proof of debt schemes from certain requirements under the corporations' law if that person meets particular conditions.
The flourishing litigation funding industry that has emerged as a result of the light-touch legislative scheme in Australia has been active particularly in class actions and insolvency. Insolvency funding agreements require approval from a court, which requires that the commission paid to a litigation funder be "reasonable".
Many class action plaintiff firms offer a "no win, no fee" retainer for group members who otherwise could not afford to fund the litigation. 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.
Where a respondent does not expect to be able recover costs from a plaintiff, it has the option to make an application for security for costs. The court has the power to award this to restore balance, as having to put money up front to cover the respondent's costs forces an applicant to consider whether there is merit in pursuing the action and avoids frivolous litigation.
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 the courts considering 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 process entails.
Most corporate entities are insured for public liability, professional indemnity and directors' and officers' liability. Litigation insurance is not common in Australia.
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.
Arbitrations are invariably conducted in private.
In the federal and several state jurisdictions, legislation imposes pre-litigation requirements on parties involved in civil disputes before commencing proceedings. Generally, a failure to comply with pre-litigation requirements will not invalidate the proceedings, but the court can take it into consideration when awarding costs.
In the Federal Court, 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.
Proceedings are commenced by filing an originating process and paying the applicable filing fee with the registry of the court in which the claim is sought to be heard.
The plaintiff's primary pleading is the statement of claim. The relevant court rules for each jurisdiction outline the required format and generally require the statement of claim to contain the following elements:
A summary of all the material facts on which the party relies. This should not include evidence proving the facts.
Adequate particulars of the claim so the defendant knows the case they have to meet.
The relief or remedy sought.
A statement by a legal practitioner certifying that there are reasonable prospects of success.
Often, an affidavit verifying that the allegations in the pleadings are true.
Pleadings can be amended, however any amendments must be made in accordance with the civil procedure rules in the relevant jurisdiction. In some instances, there will be cost sanctions associated with a late amendment to the pleadings.
Notice to the defendant and defence
Rules relating to the service of an originating process are contained 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. However, for most other documents, service can be effected by ordinary service which includes sending documents by post, facsimile and e-mail (where the other party consents).
Where a document is personally served by being left with a person or put down in his or her presence, service is generally effected at that time.
For service of an originating process outside Australia, the relevant court rules will generally provide a power to serve where there is a connection between the jurisdiction and the person's acts or the consequences of those acts.
Australia is a signatory to the HCCH Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters 1965 (Hague Service Convention).
The Hague Service Convention is designed to simplify the process for serving court documents on international litigants 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.
The defence must address the following:
The allegations pleaded in the statement of claim that the defendant admits, does not admit, or denies.
Any alternative versions of the facts underlying the dispute.
The form of the defence must be in accordance with the court rules and format of the relevant jurisdiction.
A defendant can counterclaim against the plaintiff. The plaintiff's claim and the counterclaim will generally be heard together unless the court orders otherwise.
Where the defendant has a claim against the plaintiff for money, the defendant can set it off against the plaintiff's claim for money by way of a defence.
The time limit within which the defence must be served is set out in the civil procedure rules of the relevant jurisdiction. In New South Wales, the statement of defence must be filed within 28 days after service of the statement of claim, unless otherwise ordered by the court. This timeframe 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 in order to better it.
In commercial disputes, subsequent procedural steps are usually the subject of bespoke case management directions adopting the just, quick and efficient principles. Traditional interlocutory orders are not made unless the court is otherwise persuaded to do so.
A claimant can apply for default judgment, summary judgment, summary dismissal or a strike out application.
Default judgment will be available against a defendant if there has been a failure to comply with a procedural step or make a court order.
Summary judgment applications are available but are not often successful. Summary judgment will be available if a claimant can satisfy the court that:
There are no issues or facts or law that require determination by the court.
A claim (or a defence) has no reasonable prospect of success.
A proceeding is an abuse of process.
A defendant can apply to have a proceeding dismissed for inexcusable delay. A party can also apply to have the pleadings (either in whole or in part) struck out for disclosing no reasonable cause of action or defence, or if a pleading is frivolous or vexatious.
It is relatively rare for the whole of the pleading to be struck out and a court will often grant leave to amend a pleading subject to cost orders.
Security for costs orders can be sought where the defendant alleges that the plaintiff will not hold enough funds to satisfy a costs order. The defendant asks the court to order the plaintiff to provide security to protect the defendant from this occurrence. The usual forms of security include:
Money paid into court.
Payment into an interest-earning bank account under the control of a third party or solicitor for the plaintiff, who has given an undertaking about the circumstances when the money will be released.
A bank guarantee in favour of the court to be held by the court until further order.
A deed of guarantee under which another entity agrees to guarantee payment of the amount to satisfy the costs order.
Making or refusing an order for security for costs is discretionary. The court must consider and weigh the totality of the circumstances.
Where an applicant or plaintiff fails to pay security in accordance with a court order, the court will order that the proceedings be stayed until the security is given.Security for costs applications have had a chequered history in class action litigation but they are not prohibited in representative proceedings (Madgwick v Kelly  FCAFC 61).
Availability and grounds
Courts have a wide discretion to determine whether to grant injunctive relief to a party. An injunction is a court order that restrains a person from performing a particular act (prohibitory injunction) or requires a person to perform a specified act (mandatory injunction). Injunctions can have an effect for a limited time, or permanently, and can be granted before proceedings are commenced, during a proceeding, or as final relief.
When seeking an interlocutory injunction, an applicant must prove that there is a serious question of law to be tried and that the balance of convenience favours granting the injunction. The court will consider factors including whether damages would otherwise be an adequate remedy and whether granting the injunction would preserve the status quo. Typically, such applications are made ex parte and without notice to the other party.
Australian courts can also grant other interim orders including freezing orders (Mareva orders) and search orders (Anton Piller orders).
Another pre-action interim remedy that can be granted is preliminary (documentary) discovery. Orders for preliminary discovery are generally made where the applicant:
Has made reasonable enquiries but still has insufficient information on a prospective defendant's liability or whereabouts for the purpose of commencing proceedings.
Is deciding whether or not to commence proceedings against the prospective defendant.
Interlocutory injunctions can be granted on the same day following an ex parte hearing if sufficient urgency is established. In most cases a court will require notice to be given to the relevant party before the application for injunctive relief is considered. Different considerations apply where a freezing or search order is sought.
Mandatory injunctions requiring a specific action are technically available but very rarely ordered in practice. The scope of any order will be strictly prescribed.
Rights of appeal
Generally, an appeal from any interlocutory order requires a court to give leave to appeal.
Availability and grounds
Courts have a wide discretion to determine whether to grant interim relief to a party in order 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.
Possession orders to allow a claimant to take possession of property that a defendant has retained in breach of a proven prima facie right to possession.
Mareva injunctions, possession and Anton Piller orders are usually sought and made on a without notice basis on the same day as the hearing of the application, provided the basis for urgency has been established.
Superior Courts in Australia 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 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. These reflect "Dadourian guidelines", which have been laid down by the English Court of Appeal.
Orders that apply to Australian assets in aid 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).
Preferential right or lien
Attachment-style orders generally do not create preferential rights if a defendant becomes insolvent. However, they can preserve assets that would otherwise have been dissipated before or during insolvency.
Damages as a result
Applicants seeking a freezing order will be required to give an undertaking for damages. This means that if the action eventually fails, the applicant is liable for the damage suffered as a consequence of the order.
Security for costs will be ordered against an applicant if the respondent can show that the applicant may not have sufficient assets to satisfy the damages undertaking.
For the main types of interim remedies, see Question 12: Availability and grounds.
A judgment is a formal order by a court which 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.
Generally, damages are awarded by 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 the costs of the successful party on a party/party basis.
Courts are empowered to order interest on awards of damages and costs.
In Australia, the disclosure process is referred to as "discovery". Discovery is an interlocutory procedure whereby a party can obtain from an opponent the disclosure and 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 his 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. 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, a party must not apply for an order for discovery unless it will facilitate the resolution of the proceedings as quickly, inexpensively and efficiently as possible (Federal Court Rules 2011 (Cth)).
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.
At common law, legal privilege is known as "legal professional privilege".
The uniform Evidence Acts applicable in the federal jurisdiction and some states, renamed privilege "client legal privilege". This created a situation where two sets of laws operate in the area of privilege in Evidence Act jurisdictions.
In broad terms, the uniform Evidence Acts govern privilege on occasions when evidence is adduced at trial, while the common law governs questions concerning privilege that arises pre-trial, except to the extent otherwise provided by statute or rules of the court.
The uniform Evidence Acts create privilege over confidential communications made and/or prepared for the dominant purpose of a lawyer providing legal advice or legal services relating to actual or anticipated litigation.
At common law, there are three elements necessary to establish legal professional privilege over communications 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.
The communication must be confidential.
A third stream of privilege exists called "without prejudice" privilege. This involves communications between parties that are generally aimed at settlement. These communications cannot be put into evidence without the parties' consent in the event that negotiations are unsuccessful.
Other non-disclosure situations
Courts make orders for discovery to direct a party to produce or deliver up requested information. The courts are sometimes required to determine the scope of discovery.
Documents obtained on discovery cannot be used for any purpose other than the proceedings in which they were disclosed. The "Harman Undertaking" is the implied undertaking given to the court by any party obtaining documents on discovery (or by virtue of some other compulsory process) that it will not use such documents (or any other information gained from them) for any collateral purpose.
The Harman Undertaking is a common law doctrine enshrined or referred to in the rules of the courts of various jurisdictions (although varied in the breadth of its application).
Examination of witnesses
As a general rule, witnesses of fact give oral evidence although some courts can order service of a witness statement in advance.
Right to cross-examine
The Evidence Act 1995 (Cth) applies to all proceedings in federal courts. Rules of evidence in state or territory courts are established by legislation enacted by the relevant state or territory. The Evidence Acts are based largely on the common law, but also expand upon it and represent the most comprehensive codification of the law to date. The Acts include rules of evidence in areas including:
Proof and burden.
In some speciality tribunals, such as the Administrative Appeals Tribunal at the federal level, or the independent commission against corruption in New South Wales, judge equivalents are generally guided by considerations of probity and prejudice. Given the general "fact finding" mission of such tribunals, they are not bound by the strict rules of evidence that otherwise apply to the courts.
If a witness is called to give evidence, the other party is entitled to cross-examine that witness. Cross-examination will often be broad reaching and extensive, but subject always to direction from the court.
It is not common for witnesses to be cross-examined before the final hearing.
Third party experts
While superior courts have the power to appoint their own independent experts, it is more common for each party to appoint their own experts to give evidence.
If a party intends to call expert evidence, the rules of most courts require both:
Notice of that intention.
An expert witness report to be served in advance of the hearing.
The timing of service is usually prescribed by the court rules or an order from the court.
There are two possible expert reports that can be admitted in proceedings, a joint report (arising out of a conference of experts) and an individual expert's report. While specific requirements differ between jurisdictions, generally an expert's report must include:
The expert's qualifications.
The facts and assumptions of fact on which the opinions in the report are based (a letter of instruction can be annexed).
The expert's reasons for each opinion expressed.
Any literature or materials in support of the opinions.
Any examinations, tests or investigations on which the expert has relied.
The qualifications of any persons who conducted such examinations/tests/investigations.
Unless otherwise ordered, an expert's evidence in-chief must be given through one or more expert's reports.
Role of experts
The expert's paramount duty is to the court, not the engaging party. An expert is not an advocate for a party, but has an overriding duty to provide impartial assistance to the court on matters within the expert's area of expertise. Generally, unless the court orders otherwise, an expert will not be permitted to give oral evidence unless the court is satisfied that the expert has acknowledged that they have read the appropriate guidelines or code of conduct which pertains to experts and agree to be bound by it.
Right of reply
A party can serve expert evidence in response to the evidence filed by the other party. Each party will also have the opportunity to cross-examine the other party's expert during the trial. Some courts will order the concurrent service of expert reports and expert evidence at trial (that is, "hot-tubbing"). However, concurrent expert evidence is becoming less common.
A party who retains an expert will be responsible for paying that expert's fees. Those fees may be recovered in whole or in part from the opposing party under a cost order.
Judgments of a civil court in Australia can be appealed to a superior court. Leave will be required in order to appeal. The relevant court legislation or procedural provisions set out the relevant rules of appeal.
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.
The High Court of Australia is Australia's highest court and exercises both original and appellate jurisdiction. The majority of the High Court's matters are appeals from the appellate divisions of the state and territory Supreme Courts and the Federal Court of Australia after special leave to appeal is granted. Matters heard by the High Court in its original jurisdiction include challenges to the constitutional validity of laws. High Court decisions are binding on all lower courts in Australia.
The appellate division of state courts 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 Court of Appeal has both appellate and supervisory jurisdiction in respect of all other courts in the state system.
Grounds for appeal
Grounds for appeal must identify a significant and relevant error of fact or law in the first instance judgment.
The time limits for lodging an appeal are prescribed by the court rules. They vary between different courts but are generally between 21 to 28 days. While extensions of time limits are possible they are not easy to obtain.
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 and Victoria. 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 predominate over 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.
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.
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 govern 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. The onus is on the unsuccessful party to show the presence of "special circumstances" sufficient for the court to depart from the rule that costs follow the event.
There are two main classes of costs:
Those that arise by virtue of the retainer with the client and are governed by contract (solicitor/client costs).
Those that arise by order of the court, which can either be on an ordinary basis (party/party costs) or an indemnity basis (solicitor/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.
Class action proceedings are unique in many ways. One of the characteristics peculiar to class actions is that a successful respondent can only recover costs against the lead applicant, as group members are immune from having costs orders awarded against them. This immunity is underpinned by important policy considerations, including affordable access to justice. However, it means that respondents will often be forced to defend an action at considerable costs with no ability to recover them if they are successful. That dynamic can impact many aspects of the proceedings, including settlement negotiations. It shifts the balance of power in favour of the applicants.
An offer of settlement can entitle the party making the offer to obtain costs on an indemnity basis. The offer will not be the only issue that determines the court's decision on this issue, but it is certainly a key factor.
There are two types of settlement offers, namely:
Calderbank offers, which are informal offers of compromise made on a without prejudice basis between the parties, in accordance with the principles set out in Calderbank v Calderbank  WLR 586. Although such letters are without prejudice, the courts can have regard to them on the question of costs and can order a party who rejected the offer of settlement to pay the successful party's legal costs:
on an ordinary basis, up to the time the offer was made; and
on an indemnity basis, from the date the Calderbank offer was made (unless the party who rejected the offer can establish that it was reasonable to reject it).
Offers of compromise. The provisions on these formal offers are found in the court rules. Although the court retains discretion to decide whether or not to award costs, the rules provide that, subject to this discretion, the rejection of a more favourable offer made in compliance with the rules will entitle the offeror to a higher proportion of costs from the day the offer was made.
Enforcement of a local judgment
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 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.
The proper law of the contract will be either expressly stated or implied from relevant circumstances and it will determine the substance of the contractual obligations and any dispute that arises.
If a matter properly falls within the jurisdiction of an Australian court then the court will usually respect the parties' choice of law, be it express or implied. Where the proper law is implied, the court considers:
Issues of connection (including the place where the contract was concluded).
Where performance of the contract took place.
The place(s) where the parties are located.
The subject matter of the contract.
See Question 25.
While courts will have regard to jurisdiction clauses in contracts it will not be the sole determining factor in disputes concerning jurisdiction. There are also a number of statutes that need to be considered.
The primary method for taking evidence in Australia for a foreign proceeding is through the HCCH Convention on the Taking of Evidence Abroad in Civil or Commercial Matters 1970.
Australian courts will not accept any letter of request requiring 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 court believed to be in their possession. The strict statutory regime regarding pre-trial discovery in Australia means that any veiled request for pre-trial discovery that circumvents this process is likely to be rejected.
Enforcement of a foreign judgment
The enforcement of foreign judgments is governed by a statutory regime and common law principles. Enforcing a foreign judgment in Australia depends on where the judgment was issued and the type of judgment that was issued.
Australia is not party to the HCCH Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters 1971.
Australia has a statutory scheme in the Foreign Judgments Act 1991 (Cth) for the recognition and enforcement of judgments entered into in foreign countries with which Australia has reciprocal arrangements. The Foreign Judgments Regulations 1992 (Cth) list the countries to which the scheme applies.
Judgments of the courts of those countries to which the statutory scheme does not apply can only be enforced according to common law principles.
The Foreign Judgments Act applies to enforceable money judgments obtained either on a final or interlocutory basis. Non-monetary judgments must be enforced at common law.
Where no international treaty or statutory arrangement operates, a foreign judgment can be enforced under common law principles. A judgment can be enforced at common law provided the Australian court is satisfied the foreign court exercised jurisdiction in the international sense, which includes in circumstances where:
The defendant voluntarily submitted to the foreign court's jurisdiction.
The defendant was ordinarily resident in the foreign jurisdiction, or present in the foreign jurisdiction at the time that the defendant was served with the originating process.
Provided that the relevant Australian court is satisfied that the jurisdiction of the foreign court to make the order can be shown, the judgment will be entitled to recognition at common law. Generally, the only objections that the defendant can raise against enforcement of the judgment are that:
The judgment was obtained by fraud.
The foreign court acted contrary to natural justice.
The foreign judgment is contrary to Australian public policy.
Alternative dispute resolution
Alternative dispute resolution (ADR) mechanisms, including arbitration and mediation, are increasingly popular in commercial matters in Australia. Indeed, some Australian courts are now directing parties to use specific ADR mechanisms to attempt to resolve or narrow issues in dispute. In addition, there are a number of tribunals in each jurisdiction established to deal with disputes in a specific area and provide affordable ADR mechanisms.
There has been an increasing focus by the judiciary on the costs of litigation, which in turn has promoted a greater use of ADR in Australia. In the Federal Court, the parties to a dispute are required to file a "genuine steps" statement which outlines the steps taken to constitute a sincere and genuine attempt to resolve the dispute. In the Commercial List of the Supreme Court of New South Wales it is common for the court to order that the parties mediate before the matter is set down for hearing.
Many contractual agreements now contain ADR clauses that require parties to attempt to resolve the dispute in a specific way before commencing proceedings. A court can order that the proceedings be stayed until such time as the process referred to in the dispute resolution clause is completed. A dispute resolution clause can be deemed to be unenforceable where it is so vague as to be uncertain in terms of setting out the method that should be used to resolve the dispute.
An arbitration award is binding and will be enforced by Australian courts. An application for enforcement can be made to the courts.
Before 2010, domestic commercial arbitration was governed by state legislation based on the English Arbitration Act 1979. Following concerns that domestic commercial arbitration in Australia was not providing the advantages that had originally been intended by the Uniform Acts, a new domestic arbitration regime was introduced, which is modelled on the UNCITRAL Model Law on International Commercial Arbitration 1985. The new scheme was adopted to minimise court intervention and promote finality in arbitral awards, while simultaneously endeavouring to enhance the arbitration process. In particular, the right of appeal to a court against an arbitral award has been significantly narrowed. The new scheme allows an appeal only where the parties have chosen to opt-in and only in limited circumstances on a question of law arising out of the award.
In practice, the arbitrators of choice for major commercial arbitrations are usually retired judges of the High, Federal or Supreme Courts. One consequence of this is that the conduct of the arbitration can sometimes involve many of the formalities of a legal proceeding.
There are no laws or rules that govern the conduct of ADR mechanisms such as mediation or expert determination. Settlement agreements reached at mediation do not require court sanction and will be binding and enforceable upon the parties if a valid contract has been formed. Whether an expert determination is binding and enforceable will depend on the process adopted by the parties and the terms of the particular clause.
The major ADR institutions in Australia are the Australian Centre for International Commercial Arbitration (ACICA) and the Australian Commercial Disputes Centre (ACDC), which provide a range of training, professional development, case management and consultancy services in relation to ADR.
ADR is increasingly popular in Australia. Indeed, some Australian courts are now directing parties to use specific ADR mechanisms to attempt to resolve or narrow issues in dispute.
In the Federal Court, parties to a dispute are required to file a "genuine steps" statement which outlines the steps taken to constitute genuine attempts to resolve the dispute. The Federal Court Rules also empower it to direct the parties to mediate.
In the commercial lists of the state Supreme Courts, it is common for the court to order that the parties mediate before a matter is set down for hearing.
International arbitration has become a common way of resolving cross-border disputes. Commercial arbitration is also widely used in managing large commercial disputes.
Evidence is not ordinarily adduced in ADR. The rules concerning evidence, the nature of the ADR process, privilege and confidentiality will depend on the particular form of ADR being applied.
While mediation generally adopts a bespoke process applied by particular mediators, there are rules promulgated by the Institute of Arbitrators and Mediators Australia.
Arbitration is generally not restricted by traditional rules of evidence. Generally arbitrations are conducted on a confidential basis.
Bodies providing ADR services include:
Lawyers Engaged in ADR (LEADR).
The Australian International Disputes Centre (AIDC).
The Institute of Arbitrators and Mediators Australia (IAMA).
The Australian Centre for International Commercial Arbitration (ACICA), which is Australia's international dispute resolution body and is active in international and domestic arbitration and mediation.
The Australian Commercial Disputes Centre (ACDC).
The Chartered Institute of Arbitrators (Australia) Limited (CIArb).
Other bodies include the Australian Mediation Association (AMA). See Online resources.
Proposals for reform
There are always proposals for dispute resolution reform. However, the timetable for when such reforms are likely to come into force is less clear.
In early 2015, the Productivity Commission published a range of recommendations concerning access to justice, including funding of Australian civil litigation by third parties and lawyers. Among the Commission’s recommendations were proposals to lift the present ban on contingency fees and to subject third party litigation funders to modified financial services licences and associated prudential regulation. This dual approach is notionally intended to create a playing field for managed competition to provide litigants with access to monetary awards in return for a contingent share of their potential success.
These recommendations have been directly influenced by the rising tide of representative proceedings in federal and state courts. Litigation funding is now a key driver in securities class actions. To date, such cases are likely to settle and, if approved by the court, will deliver a relatively quick return to third party funders. In response, a small number of Australian plaintiff law firms have moved to set up their own captive funding companies. Other firms have devised different approaches.
As a result of increasingly novel approaches in this area, the relevant courts are being asked to assess the appropriateness of class action funding models at the beginning of proceedings rather than waiting for trial or any application to approve a settlement. It remains to be seen whether the Federal Government will alter its view as to minimal regulation of funders, either in the form recommended by the Productivity Commission or otherwise.
Administrative Appeals Tribunal (AAT)
Description.. The AAT falls within the portfolio of the attorney-general. It conducts independent merits reviews of administrative decisions made under federal laws, reviews decisions made by government ministers, departments and agencies and, in limited circumstances, decisions made by state government and non-government bodies. The AAT also reviews decisions made under Norfolk Island laws.
Australian Centre for International Commercial Arbitration (ACICA)
Description.. ACICA is Australia's international dispute resolution body and is active in international and domestic arbitration and mediation. It has developed its own arbitration rules aimed at international commercial arbitrations. The body has also developed a set of rules for mediation.
Australian Commercial Disputes Centre (ACDC)
Description.. ACDC promotes ADR through training and professional development, also providing case management and consultancy services.
Chartered Institute of Arbitrators (Australia) Limited ( CIArb)
Description.. CIArb is a non-profit organisation aimed at promoting ADR. The Australian branch provides training and works with the University of New South Wales to provide the Diploma of International Commercial Arbitration Course. The body has a private membership of around 12,000 individuals who have professional training in private dispute resolution.
Australian International Disputes Centre (AIDC)
Description.. AIDC houses ADR providers, which include ACICA, CIArb, AMTAC and ACDC.
Australian Mediation Association (AMA)
Description.. AMA is a group of mediators and conflict resolution practitioners who provide private mediation services, consulting services, and education in mediation, communication and negotiation.
District Court of New South Wales
Description.. The District Court of New South Wales is the intermediate court in the state's judicial hierarchy. It is the largest trial court in Australia and has an appellate jurisdiction. It hears serious criminal offences, appeals from lower courts and civil proceedings.
Federal Circuit Court
Description.. The Federal Circuit Court is an independent federal court under the Australian Constitution. It is a federal court of record and a court of law and equity, and it deals with shorter and simpler matters in federal jurisdictions.
Federal Court of Australia
Description.. The Federal Court is a superior court of record and a court of law and equity. The court, among other things, decides disputes according to law, provides an effective registry service and manages the resources allotted by parliament.
High Court of Australia
Description.. The High Court is the highest court in the Australian judicial system. The functions of the High Court are to interpret and apply the law of Australia, to decide cases of special federal significance including challenges to the constitutional validity of laws and to hear appeals, by special leave, from federal, state and territory courts.
Independent Commission Against Corruption New South Wales
Description.. The ICAC's principal functions are to investigate and expose corrupt conduct, to actively prevent corruption through advice and assistance in the New South Wales public sector and to educate the New South Wales community and public sector about corruption and its effects. ICAC's jurisdiction extends to all New South Wales public sector agencies (except the police force) and employees, including government departments, local councils, members of parliament, ministers, the judiciary and the governor. The ICAC's jurisdiction also extends to those performing public official functions.
Institute of Arbitrators and Mediators Australia (lAMA)
Description.. IAMA is Australia's largest non-profit ADR organisation. It provides services and training in all areas of dispute resolution including arbitration, mediation, conciliation, adjudication, expert determination, probity and procurement. IAMA has developed its own set of arbitration rules, which are used widely in domestic arbitrations.
Lawyers Engaged in ADR Association of Dispute (LEADR)
Description.. LEADR is a community of mediators and other ADR practitioners. It is a non-profit organisation with more than 2,700 members in Australia, New Zealand and the Asia Pacific region.
Local Court New South Wales
Description.. The Local Court hears the majority of criminal and summary prosecutions in New South Wales and civil cases up to A$100,000. It also determines other applications such as apprehended violence orders and appeals relating to driver's licences and has limited jurisdiction under the Family Law Act 1975 to hear and determine family law matters. The Local Court can deal with applications such as property settlements and residence orders. In some regional areas, the Local Court is also the government access centre and provides services on behalf of other government agencies.
New South Wales Court of Appeal
Description. New South Wales Court of Appeal is the highest civil state court for the Australian state of New South Wales. It forms part of the Supreme Court of New South Wales and hears appeals from civil proceedings before the Supreme Court, the district court, the land and environment court, and some tribunals.
Supreme Court of New South Wales
Description.. The Supreme Court of New South Wales is the superior court of record in the state of New South Wales and it is the state's main appeal court. It is responsible for both criminal and civil matters, of which the trial work is divided between two divisions: the common law division and the equity division.
Colin Loveday, Partner
Professional qualifications. Macquarie University, Bachelor of Arts, 1979; Macquarie University, Bachelor of Laws (Hons), 1979
Areas of practice. Litigation and dispute resolution; class actions; product liability; pharmaceutical and medical devices; toxic tort litigation; healthcare and life sciences.
Professional associations/memberships. National Product Liability Association; The DRI; Former Chair of the Product Law and Advertising Committee of the International Bar Association; International Association of Defence Counsel.
Nicholas Mavrakis, Partner
Professional qualifications. University of Sydney, Bachelor of Economics, 1990; University of Technology, Sydney, Bachelor of Laws (Hons), 1994; University of Sydney, Master of Laws, 1999
Areas of practice. Litigation and dispute resolution; commercial litigation; class actions; taxation; taxation disputes; competition; enforcement and cartels; governance and compliance, investigations and crisis management.
Professional associations. Law Council of Australia; Taxation Institute of Australia.