In Litigation, what is a Cross-Claim?
A defendant typically has 28 days to provide a defence to a statement of claim. In this time, they may also choose to file a cross-claim against a co-defendant or a third party. Cross-claims are usually filed because the defendant believes that the other party owes them money and/or is responsible for the damage caused. Like a statement of claim, a cross-claim must outline the pleadings to the proceeding and which remedy is sought. Cross-claims are especially common in car accidents that involve more than two vehicles or vehicles that were not driven by their owners.
Cross-claims also must be sufficiently connected to what is in dispute in the original statement of claim (i.e. a defendant could not claim for damages or injuries completely unrelated to the issue at hand).
How do cross-claims work?
For example: Anisha and Jack are travelling in the same car when they are involved in an accident with Harrison. Harrison (the plaintiff) issues a statement of claim against Anisha (the defendant) as the car was in her name. Anisha files a defence stating that she was not at fault. At the same time, she files a cross-claim against Jack, claiming that he caused the accident as he was driving at the time, and he should pay for the damage to both Anisha and Harrison’s cars and loss suffered.
In the above example, Anisha would become the cross-claimant while Jack would become the cross-defendant. If Jack did not agree that he owed the money that Anisha claimed, Jack would have 28 days to file a defence to the cross-claim. However, if Anisha only filed the cross-claim and not a defence or she did not submit her defence within 28 days, Harrison would be able to seek a default judgment against her. Also, if Anisha did not file the cross-claim within 28 days, she would need to seek permission (leave) from the court to file a cross-claim form (usually done at the pre-trial review).
In which other situations are cross-claims useful or appropriate?
Cross-claims can also be useful in claims for breach of contract.
For example: A homeowner (the plaintiff) files a statement of claim against an electrician and the electrician’s boss/manager (co-defendants) for not fulfilling their contractual obligations. The subcontractor believes that they satisfied the contract and that any problems claimed against them were actually caused by the manager. Therefore, the electrician could file a cross-claim against the manager for any damage or loss suffered by the plaintiff because of the breach of contract.
How are cross-claims different from counter-claims?
It is important to know the difference between a counterclaim and a cross-claim, especially for the defendant in a dispute.
The Federal Court of Australia has differentiated counterclaims as ones which are by one party against an opposing party (e.g. the defendant against the plaintiff). While they have the same purpose, counterclaims are filed in response to the party who has claims against you. In the above example, this would occur if Anisha claimed that Harrison caused the accident and should be responsible for the damages. Cross-claims, however, are mostly used for parties who are on the “same side” of the claim. That is, if Harrison elected to claim damages against both Anisha and Jack, Anisha and Jack would be co-defendants and could file cross-claims against each other.
Additionally, a defendant may counterclaim against the plaintiff for money owed. This differs from a cross-claim as the result will be a ‘set off’ rather than a potentially different set of legal proceedings. This means that if the court decides the plaintiff does owe the defendant money, this amount will reduce any money the court states is owed to the plaintiff by the defendant.
Cross-claims can be complicated and may result in legal proceedings that are far more complex than what they originally were. However, it can also ensure that you do not have to pay costs for damages that you are not responsible for.
If you would like to file a cross-claim or are unsure of how to respond to a cross-claim, you should seek legal advice. Qualified legal practitioners will be able to help you determine what your rights and obligations are in the event of a cross-claim, and how you can most effectively defend against one.
If you need any assistance with litigation, get in touch with our team.