If you’re in dispute with another person and can’t resolve that dispute, there’s a chance that other person will start litigation to sue you in a tribunal or court.
This could happen even if you think the dispute is the other person’s fault, or the claim against you is exaggerated.
The worst thing you can do is ignore the claim. Whether you like it or not, you need to deal with the claim to avoid default judgment being ordered against you.
Here’s a run-down of what you should do.
Pay attention to the date of service
The date you were served with the claim is critical because that starts the clock running on the time in which you can file a defence to the claim. Most courts allow 28 days (all days with limited exceptions for Christmas and Easter, not just business days) from the date of service to file a defence, but some only allow 21 days.
If you’re an individual being served, you should have been handed the court documents directly, or they should have been given to your lawyer or some other person who agreed to accept documents for you.
If you’re a company, however, service can be made at your registered address as recorded with the Australian Securities and Investments Commission. In our experience, many companies have their registered address at their accountant’s office, which means the date of service is typically the date the claim arrived at the accountant’s office and not the date the accountant handed documents to the company director.
Also in our experience, the ASIC record can be wrong because the company has changed accountants or the accountant has moved and ASIC’s records have not been updated. If the ASIC-recorded registered address is wrong, that’s the defendant company’s fault and doesn’t stop the clock for the time in which a defence can be filed.
Get legal advice as quick as you can
If you’re going to defend the claim within time, you should get to a lawyer pronto for advice about the claim and a strategy for the litigation.
You should take to your lawyer whatever records you have in your possession about the claim, and be ready to spend time properly instructing your lawyer about the underlying dispute, the facts set out in the claim, your evidence for and against your position, and what you want to achieve (for example, defend the claim absolutely, negotiate a monetary settlement, sit down with the plaintiff at a mediation, or a combination of things).
A lawyer can’t properly prepare your defence, or generally advise you about how best to respond to the claim, without all the facts and an understanding of the evidence. For this reason we recommend you don’t scrimp on this step or outsource it to someone without knowledge of the facts or authority to make binding decisions (like a junior employee).
Avoid default judgment
Absent an agreed extension of time between the parties, if you don’t file a defence in time then the plaintiff can apply for the court to order default judgment against you.
An order for default judgment is made against a party in default, such as a defendant who hasn’t filed a defence within the stipulated timeframe. There’s no hearing in the court or tribunal before the order is made – it’s done on the papers in an application by the party seeking the order (for example, an application by the plaintiff against the defendant).
A default judgment order can be enforced like any other court order. The only way to have a default judgment order set aside is by a separate application to the court or tribunal. This application to set aside does involve a hearing and requires evidence by the person making the application (being the person against whom the default judgment order was made) about why the order shouldn’t have been made in the first place.
As should be evident, it’s best to avoid having a default judgment order made against you in the first place, so don’t ignore a court claim!
For more information contact the Commercial Dispute Resolution Team: