A dispute before the Court (generally referred to as litigation) is an expensive, time-consuming and uncertain process. Despite legal professionals recommending their client(s) to consider an early resolution of any dispute and avoid any court proceedings, it is not always possible and it may result in a dispute in court.
Pleadings mean how you (as a Claimant or Defendant to a civil claim) write or state your story or case to a judge. There is no “right” or “wrong” way to plead your case and no simple formula to ensure that your pleading is perfect. It is important that the pleadings set out an unambiguous and unequivocal story of what occurred. The pleadings must conform to rules of the relevant court as failure to do so may lead to significant legal costs and an unsatisfactory outcome.
This article narrates details of a recent matter in which my timely vigilance in ensuring that my client puts forth his unambiguous story before the court resulted in my client saving significant legal costs and achieving satisfactory outcomes.
The “Story” or ”Pleadings”
The claim involved a dispute between liquidators of an insolvent company and two previous officers of the insolvent company with my client being one of the previous officers. The liquidators claimed that both defendants failed to comply with their respective statutory and fiduciary obligations resulting in the company’s funds being diverted to bank accounts of unrelated entities. The liquidators claimed that both defendants must repay the monies paid from the insolvent company’s bank accounts to unrelated entities.
The Corporations Act 2001 (Commonwealth) sets out specific obligations on officers employed in a company, however small or large the company may be. Any officer of a company must be vigilant in performing his/her role, however at times he or she may be faced with difficult circumstances wherein other officers may have inappropriately dealt with the funds held by the company.
In circumstances where officers (like my client) become subject of future court proceedings, they must plead their case or narrate their story of what occurred at the relevant point in time based on evidence to substantiate their story.
The co-defendant in this case, also a previous employee of the company, put forth a defence that my client transferred the funds and was responsible to repay the monies to the liquidators.
My client’s unequivocally pleaded in his defence that:
he was an officer of the insolvent company and was never an authorised signatory of the insolvent company’s bank accounts;
due to lack of access to insolvent company’s bank accounts he could not transfer monies to any unrelated entities and never participated in transferring monies to unrelated entities; and
specific persons, who were office-bearers of the insolvent company, had access to and controlled the insolvent company’s bank accounts transferred the insolvent company’s funds to unrelated entities.
On being served with a copy of my client’s pleadings, the co-defendant amended his defence. The co-defendant stated that he agrees with my client’s defence as to specific persons, excluding both defendants, transferred the funds to unrelated entities.
The effect of “Proper” Pleadings
The parties to the claim subsequently attended a mediation in court. The liquidators conceded that my client’s pleadings compelled them in making a decision to settle the dispute on reasonable terms and conditions rather than to proceed to trial given the difficulties they may have in proving their story / pleadings.
Getting your client’s pleadings right the first time is a more efficient and cost effective. The court procedures generally allow parties to amend their pleadings; however, it is important to ensure that all available information is taken into account the first time when preparing any pleadings for your client.
At the very least, it will reduce the legal costs in unnecessarily amending pleadings and could ultimately avoid the dismissal of a meritorious claim. Giving adequate time and consideration to prepare your client’s pleadings correctly from the beginning positively impacts the cost, efficiency and outcome of any court proceedings.
Please note that any information included in this article is general information only and does not constitute legal advice. Please contact us to discuss your particular circumstances.
Related Posts
