What Is Litigation?

The stages

1. Pre-action steps. Letters of demand, contractual dispute resolution steps, and in some courts a requirement to take genuine steps to resolve the dispute before filing.
2. Pleadings. The statement of claim, defence and any cross-claim define the issues. Poorly framed pleadings cause most early cost blowouts.
3. Interlocutory applications. Injunctions, security for costs, strike-out applications and freezing orders, where urgency or a threshold issue arises.
4. Discovery. Exchange of relevant documents. In document-heavy commercial matters this is usually the most expensive phase.
5. Evidence. Lay witness statements or affidavits and expert reports, often with a court-ordered expert conclave.
6. Mediation. Almost always ordered or agreed. This is where most matters resolve.
7. Hearing and judgment, then enforcement — a judgment is not money until it is enforced.

Which forum

The forum depends on the amount, the subject matter and any contractual clause. Small commercial claims may go to a local or magistrates court or a tribunal such as NCAT in New South Wales or VCAT in Victoria. Larger commercial matters go to the District/County Court or the Supreme Court of the relevant state, which have specialist commercial lists. Federal jurisdiction — the Federal Court — covers matters such as competition and consumer law, intellectual property, corporations matters and insolvency.

Some disputes have their own statutory pathway. Payment disputes on construction projects run through security of payment adjudication, which is fast and interim. Consumer and small business complaints against financial firms go to AFCA. Employment claims go to the Fair Work Commission.

Cost, risk and the costs rule

The general rule in Australian courts is that costs follow the event — the unsuccessful party is usually ordered to pay a portion of the successful party's costs, assessed on a party/party basis rather than in full. That cuts both ways: winning rarely makes you whole, and losing costs you twice. Add management time, disruption and the risk that a commercial relationship ends permanently, and litigation is almost always the most expensive way to be right.

Time limits matter from day one. Most contractual and tort claims in Australia are subject to a six-year limitation period, with shorter periods in specific regimes and often shorter contractual notification deadlines in the agreement itself.

Alternatives

• Negotiation on a without prejudice basis, often after a well-drafted letter that sets out the legal position and the commercial offer.
• Mediation with an accredited mediator — confidential, quick, and effective where both parties want an outcome.
• Expert determination for technical or valuation disputes, if the contract provides for it.
• Arbitration where the contract contains an arbitration agreement — private, confidential and enforceable, but not automatically cheaper.