If you or your business needs to recover a debt, there are several steps to follow.
1. Letter of demand
Firstly, you need your legal representative to send a letter of demand to the debtor. This puts the debtor on notice that the debt is due and payable and may provide you with the opportunity to negotiate an informal payment scheme. Your legal representative will also find out whether there is going to be any dispute regarding the amount owed or the existence of the debt.
2. Court Process
If you do not receive a satisfactory response to the letter of demand, you have the option to commence legal proceedings in Court. Which court is used is determined by the amount of the outstanding debt. In NSW, the three relevant courts are:
– The Local Court:
(a) Small Claims Division: with jurisdiction up to $20,000 for debt claims; or
(b) General Division: with jurisdiction up to $100,000 for debt claims;
– The District Court with jurisdiction up to $750,000 for debt claims;
– The Supreme Court with no limit on its jurisdiction.
To proceed with court action, you need to file a Statement of Claim, which usually contains the following:
(1) Names and addresses of the parties and registered offices of the Defendant – which may be an individual, a company or a mixture of both;
(2) A statement of the reason for the legal proceedings being commenced, detailing the outstanding debt and the actions taken since the debt became due. This may include any prior informal correspondence you have had with the Defendant/s in an attempt to have the debt paid;
(3) Details of any relevant documents that prove the debt is owed to you and the date each document came into existence. These documents will prove there is an agreement between you and the Defendant for payment of the amount outstanding debt; and
(4) A calculation of the interest that may be due on the outstanding amount. Interest can be claimed under the Court’s rules or under an agreement between the parties. Under the Court rules, interest can be claimed pursuant to s 100 of the Civil Procedure Act 2005 (NSW). The actual interest rate is calculated at the time of filing the Statement of Claim.
3. Serving the Debtor
A company can be served a copy of the Statement of Claim by ordinary prepaid post to its registered office. An Affidavit of Service must set out how the Statement of Claim was served, and it is important to have proof of delivery (such as a tracking number through Australia Post).
A business name can be served by ordinary post to the business address as registered at the Department of Fair Trading. Similarly to serving a company, an Affidavit of Service must set out how the Statement of Claim was served.
An individual person can be served:
– By the Local Court, by post for a fee;
– By a Process Server personally or by leaving it at the usual place of residence or with a person over 16 years at the Defendant’s usual place of residence;
– Personally – this means the document was handed to the Defendant; or
– By substituted service orders.
Where you are seeking to serve someone by substituted service orders an additional court process must be undertaken.
In matters where there is more than one Defendant, and where service cannot be affected on all Defendants, you may be able to enforce the debt against only one Defendant. You will need to speak to your legal representative for further information if this situation arises.
Contact your specialist legal adviser at Streeterlaw on 02 8197 0105 or contact@streeterlaw.com.au to see how we can help you get your money back
