You’ve Been Served with a Statement of Claim. What Now?

What is a statement of claim?

A statement of claim is what is called an “originating process”. It’s essentially a document that starts a court case.

The person who files the statement of claim with the court and serves it on you is called the “plaintiff” and you become the “defendant”.

How is a statement of claim served?

There are strict rules for serving a statement of claim. If the claim has been filed against you personally, the plaintiff must serve the document in one of the following ways:

  1. Hand the claim to you;
  2. Leave the claim in your presence and explain to you what it is;
  3.  If you are a sole trader operating under a registered business name, the plaintiff may leave the claim with someone at your residential address, provided that person appears to be over the age of 16;
  4. Engage a private server;
  5. Ask the court to serve the claim by post.

If the claim has been filed against your company, the plaintiff may serve the document by either:

  1. Handing the claim to a director, or;
  2. Posting the claim to the company’s registered office.

It is very important that you notify ASIC online immediately if your company’s registered office changes. If you don’t, you risk not receiving a statement of claim, which could result in a default judgement against you.

What Happens Next?

If you agree with the plaintiff’s claim:

If the plaintiff’s claim is for an amount of money (called a liquidated claim), and you agree that you do owe the money, you have two options:

  1. You can pay the full amount of the claim directly to the plaintiff. Once you have paid, you will need to let the court know. This is done by filing a “notice of payment”.
  2. Write down the settlement terms and request that the court make orders consistent with the recorded terms.

If the plaintiff’s claim is for goods and you wish to return the goods, you can either:

  1. Return the goods and enter into a “release agreement” with the plaintiff. The plaintiff will then need to discontinue the case.
  2. State the settlement terms in a written document and request that the court make orders consistent with the agreement.

If you don’t agree with the plaintiff’s claim:

a. Negotiate

Litigation can be very expensive, stressful and time consuming for everyone involved. For parties with legal representation, the legal fees can add up quickly, even in the simplest matters. For unrepresented litigants, getting up in front of a registrar, magistrate or judge with little or no legal training can be extremely stressful.

With this in mind, it is often a good idea to put frustration and pride aside for a minute and seriously consider whether you can come to some kind of agreement with the plaintiff. Despite the fact that you might disagree with the plaintiff’s claim, you may be willing to offer a portion of the claimed amount in order to avoid having to go to court.

If you don’t have the means to meet the plaintiff’s claim, you may wish to suggest a creative solution to resolving the problem or request payment by installments.

Unfortunately, it’s often the case that parties have disparate resources and bargaining power. If the plaintiff is a prominent company with deep pockets, they may not have the same concerns about time and costs.

A good litigation lawyer will be able to assist you with negotiations. Litigation lawyers have a comprehensive understanding of the time, stress and costs involved in court matters and will be able to make a strong case to the plaintiff to settle the claim.

Often litigated matters are the result of business deals, relationships or transactions that have gone sour. As a result, there can be a great deal of negative emotions between the parties. The benefit of engaging a litigation lawyer is that they can approach the matter in a level headed and analytical matter. Often this results in the discovery of a solution that is mutually beneficial to the parties and avoids court. Further to this, extensive experience with negotiations means litigation lawyers are likely to cut you a better deal than you may have carved out on your own.

b. Ask for more information

If the statement of claim is incomplete or refers to events or matters you are unsure about, you can request “further and better particulars” from the plaintiff. This is done through a simple letter. In order to ensure you are clear about what you don’t understand, you should set out your request in numbered questions.

 c. File a defence

If you believe you don’t owe the plaintiff all or part of the claim, and either you aren’t willing to negotiate, or negotiations failed, then you must file a document called a defence.

A defence notifies the plaintiff and the court that you disagree with the claim and lays out your reasons for disagreeing. These reasons form the grounds for your defence.

You must file your defence with the court within 28 days of accepting service of the statement of claim. If you fail to do so, the plaintiff can apply for a default judgement and the court will likely find against you in your absence.

It is important that your defence responds to each of the plaintiff’s allegations in the statement of claim. If you fail to respond to any of the plaintiff’s allegations, the court can assume that you have admitted to that part of the claim.

It is also important that you ensure that you have put forward a reason for why you believe the plaintiff’s claim is incorrect. You may need to make out specific defences, such as contributory negligence or waiver.

A litigation lawyer can help you draft a strong defence to a statement of claim within the set time frame. If you are unsure of how to structure your defence, it is important that you seek legal advice, as a poorly drafted defence can have negative cost implications.

d. File a cross claim

If you believe the plaintiff owes you money or has goods that are yours, you can file a cross-claim against them. A cross-claim can make a matter very complicated and can lead to higher costs. If you are considering filing a cross-claim, it is highly recommended that you first seek legal advice.

Key takeaways:

  1. Whatever you do, do not ignore a statement of claim. Burying your head in the sand will not make the problem go away and the longer you leave your response, the less time you have to consider all your options.
  2. Examine your case and ask yourself honestly whether you think you might succeed at court. Remember, if you are unsuccessful, not only will you have to meet the claimed amount, you may also have to pay a portion of the plaintiff’s costs.
  3. It is better to get legal advice as soon as you receive a statement of claim rather than leaving it until later in the process. Your lawyer will be much more effective if they aren’t spending most of their time trying to patch up gaps and errors.

Looking for an experienced litigation lawyer in Newcastle, Sydney or the Hunter to assist you with your court matter? Call us on (02) 4929 7002, email us or complete an enquiry form.

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