Can You Bring a Cross-Claim in Litigation?

If a party brings a claim against you in court, you typically have 28 days from the date they serve you with a statement of claim to respond to it by way of a defence. However, what if you also have a potential claim against the person that has brought the claim against you (i.e. the plaintiff)? Or, against another person that may or may not already be a party to the same proceeding and which claims relate to or who is otherwise connected with the claims set out in the statement of claim? In those circumstances, it may be open for you to file a cross-claim against those parties in the same proceeding. This article will discuss how a cross-claim fits into the litigation process. 

What Is a Cross-Claim?

A cross-claim is a claim or action that is brought by:

• the defendant in the proceeding against the plaintiff;
• a co-defendant; or
• a third person that is not already a party to the proceeding.

Cross-claims are made in the form of a ‘statement of cross-claim’, which is another type of pleading in litigation. A pleading is a formal document filed with the court that identifies the issues to be resolved by the court. Other pleadings in the context of litigation include the: 

• statement of claim;
• defence;
• reply; and 
• any subsequent pleading.

Your cross-claim must set out:

• all the material facts and the supporting information (i.e. particulars) your claim relies on to establish the legal grounds you are claiming. The purpose of this is to identify the issues that the court will determine and identify the claim that the cross-defendants will need to defend; and
• the relief you are asking the court to grant you against the cross-defendants, including any damages and compensation you are seeking.

Who Can You Bring a Cross-Claim Against?

You can bring a cross-claim against the plaintiff in relation to a related or separate action to the statement of claim. When serving a cross-claim against the plaintiff, you are generally arguing that you have also suffered some loss or damage as a result of the plaintiff’s actions. Further, you are arguing that you should be compensated accordingly. Alternatively, you may also be arguing that such amounts that you have suffered should be set-off by any claims that the plaintiff may be successful in prosecuting against you.

You can also bring a cross-claim against a third party that is not already a party to the proceeding. However, in those circumstances, your claim will be limited to those that are related to the claims made against you in the statement of claim. In filing a cross-claim against a third party, you would typically be joining that party to the proceeding. The purpose of making this claim would be to reduce or extinguish the plaintiff’s claims as made against you. 

When Can You Bring a Cross-Claim?

Typically, you will need to file and serve a cross-claim in the proceedings within the same timeframe of filing and serving your defence to the statement of claim. This is within 28 days of being served with the statement of claim. Alternatively, you may serve a cross-claim in accordance with any orders of the court.  

You will need to file and serve a defence even though you intend to file and serve a cross-claim. If you fail to file your defence to the statement of claim and simply serve your cross-claim, the plaintiff may file an application for a ‘default judgement’ against you. The court may thereafter make a decision against you because you have effectively failed to defend the claims. In those circumstances, the court may treat your cross-claim as a completely separate proceeding.

What Happens After You Serve a Cross-Claim?

After filing and serving your cross-claim on the cross-defendants, the cross-defendants will then have 28 days to file and serve their defence to the cross-claim. If your cross-claim is also made against third parties, then those parties will also be joined to the proceedings.  

Suppose any of the cross-defendants fail to file and serve a defence to your cross-claim. In that case, you may make an application to the court for default judgment against those parties. However, suppose the cross-defendants file and serve their defences to your cross-claim within the requisite time. In that case, the plaintiff’s statement of claim and your statement of cross-claim will be concurrently heard by the court. Typically, the court would then establish a timetable to deal with all the claims in the proceedings in the lead up to the final hearing of the proceeding, including:

• a timetable for evidence; 
• discovery; and
• possible mediation.

Security for Costs in a Cross-Claim?

If you are a defendant who is seeking to put on a cross-claim, you should be aware that this may have implications to any security for costs application you may wish to make against the plaintiff. Security for costs are orders a defendant can seek from the court, requiring the plaintiff to pay a certain sum of money into court. Alternatively, it could be some other form of security as agreed between the parties.

If you, as a defendant, file and serve a cross-claim in the proceedings, the court may consider you as the ‘proper plaintiff’ in the proceeding. This is particularly in circumstances that would require the plaintiff to defend a substantial claim you have made in your cross-claim. In those circumstances, your right, as a defendant, to seek security for costs against the plaintiff may be lost.    

Further, your cross-claim may add additional parties to the proceeding as cross-defendants. In those circumstances, those parties may also seek security for the costs that they will incur in the event that they are successful in defending the cross-claims you are bringing against them.  

Key Takeaways

You can bring a cross-claim against the plaintiff or a third party in the same proceeding that the plaintiff has commenced against you. In the event that you are bringing a claim against a third party, then your claim must be connected with the claims that are made against you under the statement of claim. You should also file your defence and cross-claim at the same time. Further, you should consider any implications such a cross-claim may have in respect of any security for costs application you may wish to seek against the plaintiff, or any of the cross-defendants may make against you. If you have any questions or need assistance drafting your defence or your statement of cross-claim, contact LegalVision’s dispute resolution lawyers on 1300 544 755 or fill out the form on this page.   

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