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Commencing legal proceedings through the Court

In our last blog we discussed the pre-action steps required to be undertaken before you may commence litigation (Court proceedings) against someone who owes you money.

If you have carried out the pre-action steps and are still unable to recover your monies, you may issue a claim against them in the relevant Court. In this blog, we will discuss what happens in the litigation process.

  • Issuing your Claim

Prior to commencing Court proceedings, you should always carry out searches of your debtor with the relevant government bodies to ensure that they are not bankrupt or, if your debtor is a company, in liquidation.  This is a critical step because if your debtor is either bankrupt or in liquidation, you cannot sue them.

Provided the searches do not identify your debtor as bankrupt or in liquidation, you may then commence your Court proceedings against them. To commence a Court action against your debtor, you first need to file a Claim in the Form prescribed by the Court. The Claim must:

  • state the party details (including correct entity names and addresses for service);
  •  identify the cause of the action, namely the debt;
  • set out the details of your Claim (also known as ‘particulars’);
  • assert the amount/s claimed; and
  • be accompanied by the required Court fee (which varies pending on the amount of the Claim and jurisdiction in which your Claim is filed).

Once the Claim Form is filed, it needs to be served on the debtor (who is now named a ‘Respondent’). In some circumstances you may elect the Court Registry to serve the Claim on the Respondent. Alternatively, you may do it yourself or have your solicitor do it for you. If you serve the Claim yourself, it is important to serve it in accordance with the Uniform Civil Rules 2020 (Court Rules). If it is not served in accordance with the Court Rules, service will not be deemed to have been effected on the debtor which could affect your ability to continue with the Claim. For more information about methods of service under the Court Rules, please contact our office on the details provided below.

  1. What happens next?

Once the debtor has been served with the Claim, it has 28 days to respond to it and may do so in the following ways:

a. Admit liability of the debt (or part thereof) and / or agree to make payment of the amounts owed (or part thereof)

If your debtor admits liability to the debt and agrees to pay the full amount owing, then this is the best possible outcome for you. Once the payment has been received by you (or your solicitor), in cleared funds, you may then take steps to discontinue the Claim against them.

If your debtor agrees to make payment of the full amount owed but wishes to make payment by way of a payment scheme and you agree to the payment scheme, you need to ensure that this agreement is recorded in writing. The payment agreement should be signed by both parties and set out the terms of payment inclusive of the consequences of default in payment. We do not recommend discontinuing the Claim until such time as all payments have been received.

Alternatively, your debtor may only admit liability to a portion of the amounts which you allege it owes. In this circumstance, you may choose to negotiate a settlement with them. If you agree on a settlement, this must also be recorded in writing and in particular, a document called a Deed of Settlement of Release.

b. Deny liability and defend the Claim

If your debtor denies that the amount is owed to you, it may file and serve a Defence to the Claim and must do so within 28 days of being served your Claim. The Defence must identify parts of the Claim that are admitted and denied. Once the Defence has been lodged, the matter will be listed before the Court for a Directions Hearing. At the First Directions Hearing, the Court will normally make orders in respect to procedural matters required to be carried out under the Court Rules, such as discovery of evidence, and may also refer the matter to Mediation or Conciliation.

If the matter cannot be resolved in Mediation, Conciliation or other negotiation between the parties, then the matter will be listed for Trial. At the Trial, both parties will have an opportunity to present their case (including cross examining any witnesses) and then the Court will make a decision as to whether the money is owed to you. If Judgment is awarded in your favour, you may then take steps to enforce the Judgment (if necessary).

c. No response  – Default Judgment

If your debtor fails to make payment or respond to your Claim within 28 days, you may apply for Default Judgment. This means a judgment will be awarded in your favour without a Trial.  Once you have obtained Default Judgment, you may then take steps to enforce the Judgment (if necessary). 

  • Enforcement of judgment

If you have obtained Judgment in your favour, it does not mean your debtor will voluntarily pay the money owed to you. If you obtain Judgement but the debtor does not pay you, you may take steps to enforce the Judgment against them. In our next blog, we will discuss different ways of enforcing a judgment in order to recover monies owed to you.

Litigation is a complicated process and we always recommend seeking legal advice prior to filing your Claim. Clarke Hemmerling Lawyers have a team with significant experience in litigation who can assist you through the process. Contact Clarke Hemmerling Lawyers on 08 8333 2130 today and let us help you.

This Blog was written by Renee Hii, Solicitor at Clarke Hemmerling Lawyers.

This blog post does not constitute legal advice and should not be relied upon as such. It is a general commentary on matters that may be of interest to you.  Formal legal or other professional advice should be sought before acting or relying on any matter arising from this communication.