Debtors should be made aware of the debt and the lapsed payment terms and be advised of any imminent legal action.
The first step in a typical debt recovery process is the creditor issuing a letter of demand before commencing proceedings.
The letter of demand may:
- be all that is required to prompt the debtor to make payment; or
- encourage a negotiation process whereby Court action can be avoided.
If the letter of demand does not achieve the desired result, the creditor can then commence proceedings. We note that the creditor may consider other avenues for debt recovery such as the statutory demand process, but that is not the focus of this article. Please refer to https://fletcherlaw.com.au/2016/03/recovery-debts-and-statutory-demands/ for further information on statutory demands.
For commencing proceedings, the appropriate jurisdiction and court must be selected. For example, the Magistrate’s Court of Western Australia has jurisdiction to hear claims for debt or damages up to $75,000 and is governed by its own rules. The District Court of Western Australia has jurisdiction to hear civil actions up to $750,000. Other courts have different jurisdictional limits.
For this article, we focus on commencing proceedings in the Magistrates Court. The particular circumstances of your case will dictate what type of claim you should commence.
Minor case claims
In Western Australia, the minor case jurisdiction is governed by Part 4 of the Magistrates Court (Civil Proceedings) Act 2004 and the Magistrates Court (Minor Cases Procedure) Rules 2005.
A claim can be commenced as a minor case if the value of the claim or the remedy sought does not exceed $10,000 and the claimant has elected to have the dispute heard as a minor case. Minor case claims are of an informal nature.
Unless the Magistrate and the parties agree, legal representation is not permitted.
General procedure claims
In Western Australia, the general procedure jurisdiction is governed by Part 3 of the Magistrates Court (Civil Proceedings) Act 2004 and the Magistrates Court (Civil Proceedings) Rules 2005.
A general procedure claim deals with a dispute for between $10,000 and $75,000.
Legal representation is permitted and a portion of these costs are generally recoverable by the successful party.
A minor case claim and a general procedure claim which has been lodged at the Court must be served on the defendant. The defendant has (from the date of service):
- 14 days if service is within Western Australia; or
- 21 days if service is within another State or Territory of Australia,
to enter a response to the claimant’s claim.
The claimant cannot do anything until the defendant’s time to respond has expired.
The defendant may do any of the following:
- lodge a notice of intention to defend;
- admit the full claim and agree to pay the amount claimed;
- admit part of the claim and defend the remaining amount; or
- ignore the claim.
If the defendant chooses to ignore the claim, the claimant may apply for default judgment.
If the defendant lodges a notice of intention to defend, the claimant must request that the registrar list the case for a pre-trial conference. At the pre-trial conference, the court will attempt to bring the parties to a settlement.
Consumer/trader claims
The Magistrates Court also deals with consumer/trader claims. These types of claims arise out of a contract between a consumer and a trader for the supply of goods or the provision of services not exceeding $75,000.
Section 7 of the Magistrates Court (Civil Proceedings) Act 2004 defines:
- a consumer as a natural person who:
- has bought or hired goods for private use, or
- has had services supplied for private use; and
- a trader as a person who provides goods or services as part of a business (not a private seller).
Either a consumer or trader may lodge a claim at the Court. The claim may be commenced as a:
- minor case claim (the claim must not exceed $10,000); or
- general procedure claim.
Please contact Fletcher Law if you require assistance with preparing a letter of demand and/or commencing proceedings to recover a debt that is due and owing.