How To Sue a Company in Queensland: A Step-by-Step Legal Guide

You can sue a company in Queensland for any amount. However, legal action should often only be your last resort. You need to think over your options carefully since courts aren't always the best forum to resolve disputes.

Queensland's legal system divides debt recovery across different courts based on the amount claimed and some other criteria. The Magistrates Court takes claims up to $150,000.00. Cases between $150,000.00 and $750,000.00 go to the District Court. The Supreme Court handles anything above $750,000.00. There are some exceptions.

In Queensland, "costs follow the event", which means the losing side usually pays the winner's legal fees. Quick resolution of business disputes helps everyone, even though court action becomes unavoidable sometimes.

This piece walks you through everything you need to sue a company in Queensland - from valid legal grounds to judgment enforcement. It also shows you ways to settle disputes without going to court. These alternatives are a great way to get results while avoiding pricey and lengthy court battles.

Understanding the Legal Grounds to Sue

You need to know that companies are separate legal entities with their own rights and responsibilities. This separation from owners and directors forms the basis for taking legal action against a business in Queensland.

What is a company under Queensland law?

Queensland law treats a company as an independent legal entity that directors establish and shareholders own. The company stands alone legally and has most of the same rights as a person in business. It trades, takes on debt, sues others, and others can sue it.

Most Australian businesses run as proprietary limited companies (PTY LTD). This means:

• Private individuals own the company ("proprietary")

• Shareholders only risk their share capital (i.e. the amount they paid, or are liable to pay, for their shares) ("limited")

The Corporations Act 2001 sets rules for companies in Queensland and Australia-wide. A company becomes a separate legal entity once it registers with the Australian Securities and Investments Commission (ASIC) and pays the relevant fees.

Common reasons to sue a company

Queensland businesses face lawsuits for several reasons:

1. Debt recovery - Companies that don't pay their bills for goods or services top the list of lawsuit targets. Creditors often take legal action to get their money back.

2. Breach of contract - Companies that break their promises in agreements might face legal action. This happens when they fail to deliver on deals about goods, services, or other business matters.

3. Negligence claims - Companies must take care in everything they do. People can ask for compensation when companies breach their duties and cause harm. Queensland workers can sue employers if their negligence leads to workplace injuries.

4. Consumer rights violations - Companies breaking consumer protection rules or misleading people might face legal consequences.

When suing a company, is it legally valid

You can sue a company if certain conditions exist:

The company must be registered under Australian corporations law. That's why checking ASIC registration comes first. You can’t, for example, sue a deregistered or wound up company, without some costly additional steps.

You need a valid "cause of action" - a legal reason to sue. This means proving:

• The company owed you a legal duty (based in contract or otherwise)

• They breached this duty

• Their breach caused you loss

The practical side matters too. Even with solid legal grounds, suing a company without money or assets might waste your time. You should check the company's finances first. Searches can be done for this purpose.

Also, time limits apply to different types of cases. Your right to sue might expire if you wait too long.

Check Before You Sue: Registration, Assets, and Guarantees

You can save time and money by doing your homework before taking a company to court in Queensland. A full picture of the target company will tell you if legal action is worth pursuing.

Is the company still registered with ASIC?

The first step is checking if the company is registered with the Australian Securities and Investments Commission (ASIC). ASIC's registers give you access to:

1. Simple low-cost information like company name, type, ABN/ACN, registration date, review date, registered office address, and a list of documents lodged with ASIC

2. You can buy more detailed information, including certified copies of documents that courts will accept as evidence

The ASIC Connect website is a great place to start. A current company extract costs a small fee but gives you the full picture of the company's status, directors, registered office, principal place of business, and some other information.

It's worth mentioning that you can ask ASIC to stop a company's deregistration if you plan to take legal action. Companies that are already deregistered often need a court order to come back.

Does the company have assets or money?

A legal win means nothing if the company can't pay up. Here are the key searches that show a company's financial health:

• PPSR Search (Personal Property Securities Register) shows who has claims on particular company assets

• Land Titles Search reveals real property ownership

• Look at the company financial records, where you can get them

Plaintiffs usually look at assets they can quickly turn into cash when they check if a company can pay its debts or a prospective judgment. Assets that need more money or work to sell for full value are less desirable. 

Do you have personal guarantees from directors?

Personal guarantees from directors give you another way to get paid if the company defaults. These binding agreements let creditors go after directors' personal assets. Here's what you need to know:

• Credit applications, leases, or key supply contracts often include personal guarantees

• These guarantees might cover the main debt plus interest, debt recovery fees, and legal costs

• Many guarantees stay valid even after directors leave or the company closes

• "Joint and several" guarantees let you chase any director for the whole debt

• Not every guarantee is enforceable. If the execution of the guarantee was procured by fraud, illegitimate pressure, or other unlawful or unfair conduct, it may not be enforceable.

Keep those signed copies safe. Valid guarantees are your direct line to directors if things go wrong.

Do you have security over company or personal assets?

Your chances of getting paid improve a lot when you have security over company or personal assets. Look at these options:

• Register security interests on the Personal Property Securities Register for equipment or goods sold on credit

• Add charging clauses in contracts so you can put caveats on directors' property, or retain title and ownership of the goods you sell on credit

• Bank guarantees can work better than personal guarantees in some cases

Keep detailed records of all your security arrangements and check them regularly to stay protected.

Choosing the Right Legal Path

You need to pick the best legal route after deciding to sue a company. Queensland's legal system gives you several options based on your case and the disputed amount.

Statutory demand vs. court proceedings

A statutory demand works as a formal notice that requires companies to pay undisputed debts within 21 days. Companies that don't pay are presumed insolvent. The requirements to issue this demand are straightforward:

1. The debt must be more than AUD 4,000

2. Payment must be due when you issue the demand

3. Substantial compliance with Form 509H is required

Companies that fail to respond within the timeframe become presumed insolvent by law. This allows you to at least start winding up proceedings.

Court proceedings work differently. You file claims based on these amounts:

• Magistrates Court – up to AUD 150,000

• District Court – between AUD 150,000 and AUD 750,000

• Supreme Court – AUD 750,000 and above

There are some exceptions, however, where even low-value claims must still be brought in the District or Supreme Courts because of the type of claim involved.

Key difference: Statutory demands create quick pressure, but courts can dismiss them if there's a genuine dispute. Court proceedings take more time but allow adjudication of disputed amounts and lead to binding judgments.

Speak to our litigation experts. It doesn't cost you anything to know where you stand.

When to use QCAT for small claims

QCAT (Queensland Civil and Administrative Tribunal) is available for minor debt claims up to AUD 25,000 for minor civil disputes and up to $100,000 for motor vehicle disputes. This tribunal’s purpose is to resolve disputes quickly and cheaply.

QCAT handles these types of cases (among others):

• Minor debt disputes with fixed amounts

• Consumer and trader disputes from supply contracts

• Residential tenancy disagreements

Understanding dispute resolution in Queensland

Queensland offers several ways to resolve issues without going to court. These alternatives can save time and money.

The Justice Department's Dispute Resolution Branch provides free mediation across Queensland for particular types of disputes. Their trained mediators help parties talk and find solutions that work for everyone.

You can still reach an agreement after filing a formal case. This saves both sides time, money, and stress.

Common dispute resolution methods include:

• Facilitative mediation with an impartial person guiding the discussion

• Evaluative mediation that looks at case strengths and weaknesses

• Conciliation where experts advise without making decisions

Queensland courts and tribunals use these methods regularly. Many make them mandatory steps before final hearings.

How to Sue a Company in Court

You need to pay close attention to procedural details when taking a company to court. The right process will help your claim move quickly through Queensland's legal system.

Filing a claim and a statement of claim

Two essential documents start the court process:

1. A Claim (UCPR Form 2) that shows the amount claimed and specific orders you want

2. A Statement of Claim (UCPR Form 16) that lists facts supporting your case

The disputed amount usually (but not always) determines which court handles your case:

• Magistrates Court – up to AUD 150,000

• District Court – between AUD 150,000 and AUD 750,000

• Supreme Court – above AUD 750,000

The appropriate court registry needs the original documents and two copies - one for you and one for the defendant. You'll also need to pay a filing fee.

Serving the company correctly

You must serve a sealed copy of the documents to the defendant company within 12 months after filing. Companies must receive documents through:

• Their registered office is by post or personal delivery, or

• Personal delivery to a company director who lives in Australia

You can serve the documents yourself or hire a professional process server or, less commonly, the court bailiff.

What happens if the company defends or defaults

The company has 28 days to file a defence after receiving the documents. Your next steps depend on the company's response:

A company filing a defence means you'll need to submit a reply and answer any counterclaims. The case then moves to disclosure.

You can request a default judgment using Form 25 if no defence is served within 28 days. You'll need:

• An Affidavit of service (Form 46)

• An Affidavit verifying the claimed amount remains outstanding

• Aof the proposed judgment

The precise details of what is required when requesting a default judgment depend on the type of relief claimed in the proceedings. 

Disclosure and pre-trial steps

Both parties must share all directly relevant documents within 28 days after pleadings close. This rule applies throughout the case - you must share new relevant documents within seven days of receiving them.

The next step often involves a settlement conference where both parties try to resolve the dispute before trial.

Going to trial and possible outcomes

The matter goes to trial if settlement talks fail. Each party presents its case to a Judge or Magistrate who decides based on evidence and arguments.

You might see these outcomes:

• A judgment in your favor with orders for payment, plus interest and costs

• Your claim gets dismissed

• A partial judgment where you win some claims but lose others

A successful outcome means you'll need to take steps to enforce the judgment, which we cover in the next section.

Enforcing a Judgment and What Comes After

A favorable judgment is just the beginning. The real challenge lies in turning that paper victory into actual money.

How to enforce a court or QCAT decision

You need to register your judgment with the right court first. QCAT decisions require you to file both a decision copy and an affidavit about the outstanding amount with the Magistrates' Court before enforcement.

Money recovery happens through enforcement warrants that allow:

• Seizure and sale of property

• Redirection of debt (from those who owe the company money)

• Regular redirections from financial institutions

• Redirection of earnings

You can ask for a statement of financial position from the debtor and request an enforcement hearing where they must answer questions under oath to get detailed financial information.

Remember that enforcement warrants last only a year unless renewed. You must start enforcement action within twelve years of the judgment date - Limitation of Actions Act 1974 (Qld) section 10(4).

What if the company has no money?

Companies facing insolvency give you these options:

Debts above AUD 4,000 allow you to serve a statutory demand with a 21-day payment deadline. The company's failure to pay creates a presumption of insolvency, which opens the door to winding-up proceedings.But be careful, a company is entitled to try to prove they are solvent notwithstanding the presumption.

Can directors be held personally liable?

The "corporate veil" protects directors, but they become personally liable in specific cases:

• Signing personal guarantees for company obligations

• Allowing the company to take on debts while insolvent

• Failing to discharge directors’ duties 

• Personal involvement in legal breaches through accessorial liability provisions

Directors who breach their duties can face disqualification from managing companies. They might also need to pay compensation to those who lost money because of their actions.

Conclusion

Taking legal action against a company in Queensland needs proper preparation and a full picture of the legal process. The first step is to verify legal grounds for the claim and check the company's registration status through ASIC. A review of the company's assets and available guarantees will substantially boost your chances of recovery if you are ultimately successful in your claim.

Legal proceedings should often be your last option after you try other ways to resolve disputes. All the same, litigation might become necessary. Your success depends on picking the right forum - QCAT for smaller claims or specific courts based on the disputed amount. In particular industries, such as the building and construction industry, there are also other dispute resolution forums, like adjudication

The process in litigation or using statutory demands often requires strict or substantial compliance with complex procedure. You must file claims properly, serve documents correctly, and take part in disclosure and pre-trial steps diligently. Getting a favorable judgment is just the start - enforcement brings its own challenges that need strategic solutions.

Every stage of the process has time limits. Missing these deadlines could permanently block valid claims. If you have legal concerns, getting early legal advice helps you understand your options and possible outcomes.

The corporate veil shields directors from personal liability. But directors can face personal responsibility if they provide guarantees, involve themselves in insolvent trading, or breach their statutory duties, among other things. So going after directors personally could be another way to recover losses in some cases.

Smart litigants weigh the costs of litigation, time demands, and emotional strain against recovery chances. While court action might be inevitable sometimes, a negotiated settlement often leads to affordable solutions for everyone involved.

If you are facing a dispute with a company or need expert guidance on pursuing recovery, contact Roberts Litigation today to discuss your options and develop a strategy tailored to your case. 

FAQs

What are the initial steps to sue a company in Queensland? 

First, verify the company's registration with ASIC and assess its financial status. Then, determine the appropriate legal avenue based on the claim amount - QCAT for small claims, or Magistrates, District, or Supreme Court for larger amounts. File a claim and statement of claim with the relevant court, ensuring proper service of documents to the company.

What evidence is required to sue a company successfully? 

You'll need documentation supporting your claim, such as contracts, invoices, correspondence, and records of any attempts to resolve the dispute. Additionally, gather evidence of the company's breach of duty or obligation, and proof of the resulting damages or losses you've incurred. Sometimes you also need evidence from an expert.

Can I sue a company without hiring a lawyer? 

Yes, you can represent yourself in court proceedings, especially for smaller claims in QCAT. However, given the complexity of legal procedures and potential financial implications, it's often advisable to seek legal advice and representation, particularly for larger claims or when dealing with complex legal issues. You should not assume that because you are not a lawyer, the rules of civil procedure and evidence will not apply to you. The rules apply equally to all parties, whether represented or not.

What are the alternatives to court proceedings when taking action against a company?

Before resorting to court action, consider alternative dispute resolution methods such as mediation or conciliation. For unpaid debts exceeding $4,000, you might issue a statutory demand. These options can be quicker and less expensive than full court proceedings. They are, however, attended by some additional risk.

How can I enforce a judgment if the company doesn't pay?

If you win your case but the company doesn't pay, you can apply for an enforcement warrant. This may involve seizure and sale of property, redirection of debts owed to the company, or redirection of the company's earnings. For insolvent companies, you might consider initiating winding-up proceedings.

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