I think with your comment that someone got marked down for having a lengthy paragraph is half-okay. Teachers are normal people like us, and whatever they read should have some sort of readability. A 20-line paragraph is going to have less readability, as you can imagine.
Agree mostly with Lex, and disagree with this. Plenty of people I know wrote 300+ word body paragraphs and got high 40s/50s. Hell, in some of my SACs, I had paragraphs which were entire pages (or longer). There's no way 20 lines can be counted as too long...=/
Yes, EZ is 100% correct. There is no such thing as a paragraph length limit. This is pure BS.
What you need to do is be consistent however.
i.e. It doesn't look organised and well planned to have paragraphs which are vastly defferent sizes.
You would probably get marked down if you had body paragraphs which were 500, 350 and 200 words each for example, becasue it just doesn't seem like you have put in the effort and explored all of the elements of your essay equally.
Also, what m@tty said is a big +1.
Just do what your teacher says for SACs. Don't argue and just do it.
Then make sure you follow VCAA recommendations and guidelines for your exam pieces.
English is about conforming. Do this, and you should come out with a decent mark.