Civil & Commercial Litigation FAQs

Q. Why is litigation so expensive?

A. Principally because much of what used to be done by the court system has been referred to practitioners to deal with, making the process more expensive for participants.

Q. I slipped and fell on an unmarked step leading into a shopping mall suffering a broken toe.  Can I claim for damages although the toe has mended and I have incurred approximately $2,000 of medical bills?

A. Anyone can make a claim but a claim for general damages will not be successful unless the statutory threshold is exceeded. 

Q. What sort of civil disputes are heard in Australian Courts?

A. Commonly, Australian Courts will hear cases involving allegations of negligence, claims against professionals such as accountants, auditors, architects, bankers, insurance brokers and lawyers, claims for economic loss, claims for injury to reputation and for breach of privacy amongst others.

Q. What is the basis for the cause of action in negligence?

A. There is no cause of action in negligence unless and until a plaintiff has suffered an injury.  There are three basic elements of liability:  the existence of a common law duty of care, a breach of that duty of care, and a causal relationship between that breach and the plaintiff's injury.  Liability for any consequential injury is governed by the principle of remoteness.  The existence of a contractual relationship between the plaintiff and a defendant may be relevant to proximity or foreseeability in determining whether a common law duty of care arises.  However, a duty which is both concurrent and co-extensive with a common law duty of care which arises under the law of negligence, will not be required to be incorporated into a contract unless that contract contains an express condition.

Q. What is the modern law of nuisance and how does it differ from  negligence ?

A. Nuisance is a substantial and unreasonable interference with another's use and  enjoyment of land.  This is a question of degree and takes into account  considerations such as the nature of the interference, its intensity and duration  or frequency, and its cause.  While the person creating a nuisance will be  strictly liable for it, in the sense that the taking of reasonable care is no  defence, the liability of a person, usually an occupier, for a nuisance he did not  create depends on proving assent to or knowledge of, the nuisance.  Whereas  negligence is established by the unreasonableness of the defendant's conduct  before the event, nuisance is established by the unreasonableness of the  interference, from the plaintiffs point of view, after the event.

Q. Who can sue or be sued in nuisance?

A. Only those with the right to exclusive possession of land can sue in nuisance.
A person with exclusive possession of land may sue even though unable to  prove title to land.  Legal cases have distinguished between someone who is  present on the land and someone engaged in occupancy in a substantial nature.   Only the later land owners have the right to sue in nuisance.  The person who  actually creates the nuisance may be sued in respect of it.  Occupiers may be  liable for nuisances created on their property by third parties in some  circumstances, either directly through their own control or vicariously.   Landlords may even be liable for nuisances created by tenants, if the terms of  the lease are considered to authorise the nuisance. 

Q. What sort of nuisances will be restrained by courts ?

A. Noxious dust and emissions, usually emanating from commercial undertakings are not tolerated by the law.  Businesses have been restrained by legal action taken by private individuals even where the business is large and employs many people.  Cricket and golf clubs have also been restrained from allowing their balls to stray onto neighbouring properties.  Many loud general noises, from church bells on Sunday morning to a drunk standing outside singing and shouting, have also been retrained in nuisance.  If a commercial undertaking makes an unreasonable  amount of noise, it does not matter that it is reasonably necessary for the business to be conducted in the premises or the area concerned.  Smells are also actionable in nuisance.  There is no need that an injury or danger to health be present.  Smoke and fumes may also amount to a nuisance.  Consequential damage may also be recoverable, for example where smoke obscures a public road and causes an accident.  Nuisances may also have financial consequences.  Examples are the diminution value of premises or the loss of business profits.

Q. What duties are owed by Australian accountants and auditors to their  clients ?

A. In Australia, accountants and auditors owe concurrent duties to their clients in contract and in negligence, and to third parties in negligence.  Generally, reliance is essential before a duty will be found towards a client, although the accountant or auditor need not have actual knowledge of the reliance placed upon the action or advise by the client.  In relation to third parties, it may be sufficient under current Australian law that reliance by a third party was reasonably foreseeable by the accountant or auditor.

Q. What is the standard of care required of an accountant and auditor ?

A. The standard of care required of an accountant or auditor is to exercise reasonable care and skill in the circumstances.  This will vary depending upon whether the work being performed is that of an accountant, tax agent, consultant or auditor.  Liability may also be subject to provisions of the tax and companies legislation.  A higher standard of care may be expected of an accountant or auditor if they have held themselves out as possessing specialist or greater skill and care than the average accountant or auditor when attracting business.

Q. What sort of duties do Architects and builders owe to their clients ?

A. Architects and builders owe concurrent duties to their clients in contract and in negligence.  As with accountants and auditors, architects and builders also owe a duty of care to third parties in negligence provided those third parties could reasonably be expected to have been injured through negligence of the architects and builders.  The standard of care required of architects and builders is the skill, care and diligence of a reasonable professional performing similar duties.

Q. What duties of care do legal practitioners owe their clients ?

A. Legal practitioners may owe duties of care to their clients in both tort and contract, and a higher duty may arise during the course of a professional retainer.  Legal practitioners may also owe a duty of care to non-clients.  At present both barristers and solicitors are immune from liability in relation to advocacy work before courts or tribunals.  The extent of this immunity remains unclear and is likely to be changed by statute in the foreseeable future by Australian State and Territory Attorney-General.  The standard of care expected of legal practitioners is that of reasonable care.  No liability will attach to a mere error of judgment, but a legal practitioner will not avoid liability merely because he or she followed a standard professional practise.

Q. What duty of care do medical practitioners owe?

A. Medical practitioners owe a duty to exercise reasonable care and skill in the provision of professional advice and treatment.  That duty is a single comprehensive duty covering all the ways in which a doctor is called upon to exercise skill and judgement.  The duty extends to examination, diagnosis and treatment of patients along with the provision of information in appropriate cases.  Hospitals owe patients a non-delegable duty of care in respect of the services they provide.

Q. What is the standard of care required of a medical practitioner under  Australian law ?

A. The standard of care of a medical practitioner is that of the ordinary skilled doctor exercising and professing to have that special skill.  A doctor need not possess the highest expert skill to avoid the risk of being found negligent.  Australian case law accepts  that it will be a sufficient defence for a medical practitioner if he or she exercises the ordinary skill of the ordinary competent person in the practise of medicine.  However, as with other professionals like accountants, auditors and lawyers, any doctor who professes higher qualifications or specialists skills will be required to attain a higher standard appropriate with the enhanced skills represented to patients.

Q. What is pure economic loss ? 

A Pure economic loss describes a financial injury which, for the purposes of a  negligence action, is to be regarded as the original injury suffered by a  plaintiff.

Q. Does the tort of negligence extend to claims for pure economic loss?

A. The High Court in the decision called Caltex Oil (Australia)  Pty Ltd v. The Dredge Willemsted ruled that the tort of negligence did extend to claims for pure economic  loss and that, although policy was an essential aspect, it was undesirable that such claims be determined exclusively by reference to policy considerations.  The policy considerations referred to are:

1. Whether a recognition of a duty may give rise to indeterminate liability both in terms of the class of persons at risk and the type of economic loss in question; or
2. Whether it may be inconsistent with contract or statute law; or
3. Whether it would be inconsistent with the legitimate pursuit of economic advantage.

Q. What types of per economic loss are recognised by Australian courts?

A. One type of pure economic loss is the defective quality of property which has reduced its value or utility.  The High Court of Australia has held that a defect in the construction of a house may properly be the subject of a duty of care, as the economic injury in question is relevantly indistinguishable from property damage.  There also appears to be no reason why manufacturing or design defects in goods could not also give rise to a common law duty of care in negligence.  Another form of pure economic loss may be the loss of use of another's property usually associated with damage to that property.  The loss of another's services may well be a type of pure economic loss recognised by Australian courts.  If the right to another services derives from that other person, there is no reason or policy why a duty of care would not be recognised under Australian law. However, the relationship between the plaintiff and the third person must be an economic one, and not merely a personal or family relationship. Where the only injuries suffered by the plaintiff is the incurring of a legal liability to a third person, the policy consideration identified in answer 17 above suggests that a duty of care on the part of the defendant would not exist and that such a duty would not be recognised by Australian courts.

Q.  What are the uniform national defamation laws ?

A. Prior to the 1st January 2006, there was little consistency in the legislative enactments relating to defamation in the Australian States and Territories.  With the exception of Western Australia, each jurisdiction had enacted legislation which specifically related to civil defamation actions.  These enactments were often confusingly different.  These differences became complex where a plaintiff was defamed in more than one State or Territory - for example, where a radio or television programme was broadcast nationally or a newspaper was distributed nationally.  On 1st January 2006, the uniform national defamation laws came into effect across Australia.  The common law of defamation continues to apply, except to the extent that it has been altered by statute.

Q. What are the objects of the uniform national defamation laws?

A. The stated object of the uniform national defamation laws is the promotion of uniformity, ensuring that unreasonable limits are not imposed on freedom of expression, the provision of fair and effective remedies to defamed persons and the speedy, non-litigious  resolution of disputes wherever possible. 

Q. Of what do defamatory matters consist?

A. Defamatory matter may take the form of spoken or written words, pictures, gestures, signs and other visible, non-item verbal representations.  A plaintiff must establish a defamatory meaning and that this meaning was published "concerning him or her".

Q. What is a defamatory publication or utterance?

A. To be defamatory, a matter must disparage a plaintiff's personal reputation.  Courts have adopted a number of interpretations of what is meant by "defamatory" such as:

• Laying the plaintiff open to hatred, contempt or ridicule;
• Causing other persons to shun and avoid the plaintiff; and
• Lowering the plaintiff in the estimation of right-thinking members of society.

Q. What is the difference between libel and slander

A. At common law slanders are oral defamation whilst libel are written defamations.  At common law, where defamation takes the form of a libel, it is actionable as such without proof of damage.  In cases of slander, however, a plaintiff will not generally establish his or her case unless able to prove the suffering of actual damage.  The traditional distinction between libel and slander, to the effect that libel was written defamation and slander was spoken defamation, is being broken down by the advent of radio, television and recording devices which all add permanence to the spoken word.  The uniform national defamation laws have abolished the practical distinction between libel and slander throughout Australia.  The distinction is much less important in modern actions for defamation.

Q. Who may bring a defamation action ?

A. At common law, defamation actions may be bought by individuals, companies, partnerships and registered trade unions.  Local government bodies and un-incorporated associations have no right or standing to sue for defamation of the body or the association as a whole although an individual member may be able to bring an individual action.  A company may sue in respect of defamatory matter which inpunes its business reputation but not in respect of matters which impute action of which it is incapable. An example would be murder or suffering as a result of a corporate activity.  At common law and now under the uniform national defamation laws, where a dead person is defamed, no action exists by his or her estate or at the suit of his friends or relatives who may have been distressed by the defamation.  If, however, the defamatory statement of the dead person also defamed a living person, that living person may bring an action in respect of the injury to his or her reputation.  However, where a living person is defamed, but dies before bringing proceedings, the action does not survive in Australia except in Tasmania.

Q. What are the limits of defamation law in Australia?

A. Blasphemous, seditious and obscene libels are crimes at common law.  All these crimes are embodied in legislation in most Australian jurisdictions.  Individuals may be able to bring private actions under the legislation.  Actions of slander of title or slander of goods and malicious falsehood are also not part of the law of defamation.  These legal wrongs amount to defamation not of persons but of goods and possessions.  If a person slanders a company, or a company's board of directors, that company or its board may bring a defamation action against the slander.  If the slanderer slanders the companies goods, the company or its board of directors may commence an action against the slanderer but not in defamation but in malicious falsehood.

Q. What interferences with liberty are recognised under the Australian  Law?

A. Interference with liberty most often arises where a person is drawn into legal proceedings or if physically restrained.  Three main rights of action provide redress where legal processes are abused:  malicious prosecution, abuse of process and maintenance.  These legal rights or torts are exceptions to the general immunity that protects participants in both civil and criminal legal proceedings from subsequent civil actions in respect of that participation.

Q. Some friends and I decided to rent a holiday cottage so that we could have a party over the weekend. Unfortunately a number of my friends became unruly and trashed the cottage. The holiday rental was in my name even though everyone shared the costs of the weekend equally. The real estate agent is holding me responsible for the damage and all my friends have deserted me. Can you help?