Commercial & Corporate
“A person A who resides in Eastwood lent the amount of $8,000 to his friend B. B promised that he would repay $1,000 per month for eight months and at the end of the last month, B would pay interest of $400. However, B has not repaid any money for five months, and ultimately, he started ignoring A’s contact at all. As such, A wishes to bring a court action against B for the debt recovery.” 1. Mediation through Community Justice CentreBefore commencing a legal proceeding, parties are recommended to resolve their issues through mediation service provided by the local Community Justice Centre. Disputes are sometimes resolved and settled in this stage, and these procedures are beneficial to the parties in disputes in order to ascertain each other’s positions. One of advantages for mediation in the Community Justice Centre is that it does not require any legal assistance by lawyers. Mediation procedures generally take two hours and are free of charge. If A and B execute a settlement document through the mediation and register it to the court, such a document will have legally binding effects. A settlement through mediation procedures is particularly efficient in the sense that parties do not need to spend time and costs for legal proceedings. It is generally known that around 80% of cases are settled in this stage. To get more information, please contact 1800-990-777. 2. Letter of demandIf parties are unable to reach an agreement in mediation, party A may send a letter of demand to party B. That letter may include an amount of debt and a due date, and that A would initiate a court action by submitting a complaint to the court unless B repays the debt by the due date. For instance, A can send the letter stating that “I hereby demand that you repay me $8,400 by 30 April 2018. Otherwise, I will commence legal proceedings against you to recover the debt without any further notice”. It would be good to include in the letter that both legal costs and an interest on the debt would be charged. Although sending a letter alone to B’s address by post is the best way, sending an email or a facsimile together with the letter is even more effective. 3. Court proceedingsIf B doesn’t repay the debt by the due date indicated in the letter of demand, A can initiate a court proceeding in the Small Claims Division of the Local Court given that the amount of debt is less than $10,000. One of the benefits of lodging a claim in the Small Claims Division is that the rules of evidence do not apply, and a trial is conducted faster and simpler than by a judicial panel. Hence, a claimant can be self-represented without appointing a lawyer if he or she has no difficulty speaking in English. If the amount of debt is more than $10,000, a claimant should bring an action in the General Division of the Local Court, and if it is more than $750,000, he or she should bring an action in the Supreme Court. In litigations that are not in the Small Claims Division, it is commonplace for claimants to appoint lawyers in trials due to the complexity of facts and numerous potential sources of disputes. On this occasion, claimants should be noted that a limitation period for a debt recovery is six years from the date of accrual of a debt. If more than six years has already elapsed, a claimant may be unable to bring a court action for a debt recovery against a debtor. 4. Statement of ClaimA has to attest an object of and a reason for a claim in a complaint called the Statement of Claim and submit the document to the Local Court Registry with a filing fee of $99, which begins an official court proceeding. In the Statement of Claim, a claimant can also demand the other administrative fees incurred for a proceeding including a filing fee as well as a legal interest (the average interest rate from January 2018 to June 2018 ranged from 5.50% to 7.50% and can vary before and after a trial). Also, if a lawyer represents a claimant in a court proceeding, A can also demand a legal fee in the Statement of Claim. Once A completes the Statement of Claim and submits both the original copy and two replicated copies (total three copies) to the Local Court Registry, A will be immediately granted a confirmation stamp and a case number. The original copy would be stored at the court, and the other two replicate copies would be returned to A. A has to serve one of the two replicate copies which have the court’s stamps to B within six months thereafter. The most recommended way of a service is either in person or via post by the court. When intending to use the court’s postal service, A can apply for it upon the submission of the Statement of Claim, and the application fee for the service is $42 as of now, the amount which can be also claimed from B by including the amount in the Statement of Claim. 5. Default JudgmentB has to submit a Defence to the court within 28 days of being served with the Statement of Claim. If B fails to do so, A can apply for a Default Judgment. A Default Judgment is when the court unilaterally makes a judgment against a defendant without a hearing, and this judgment concludes with final costs inclusive of an amount of debt, legal costs and interests. When applying for a Default Judgment, A has to submit to the court both an Affidavit of Service which proves that the Statement of Claim is properly served to B either in person or via post by the court and a Notice of Motion-Default Judgment for liquidated claim.