Recovery of a Debt

Many business people are now aware that they can make a claim in the Small Disputes Division of the Local Court to recover monies owed to them. The process involved is not complicated and can result in the recovery of monies that may otherwise be written off as a bad debt.

WHAT IS A SMALL DISPUTE?
A small dispute is one involving amounts of up to $3000. Claims can be made in the small disputes division of the local court which can also hear claims relating to RESIDENTIAL tenancy matters involving amounts up to $6000.

Legal representation is not usually allowed and the court costs (which can be recovered from the debtor) are not excessive.

A list of Perth local courts can be found in White Pages under the heading COURTS.

PROCESSING THE CLAIMS
The claim officially comes into existence when the necessary form is completed (in triplicate - one for the court, one for you and one the defendant) and processed. The current cost for lodging the claim is $44.20 and this amount may be added to your claim.

You (the person commencing the claim) are known as the plaintiff and the person(s) against whom you have issued the claim, are referred to as the defendant(s).

Before you make a claim, you must know the following:

the amount you want to claim
the date on which the matter took place (eg. the date when services or goods were supplied)
the basis on which the defendant owes you the money (the "cause of action") and
the name and address of the person you want to make the claim against (see below)

IDENTIFYING THE DEFENDANT

Business Name
In Western Australia, you can sue in the name of the business. In doing so, you sue all the registered proprietors (ie. owners) of the business. However, it is better to identify the proprietor(s) if you are lodging a claim against a business and sue them in their own names.

Contact the Ministry of Fair Trading, Business Names section on (08) 9282 0777 to obtain the information necessary to conduct a business name search which will identify the owner(s) of the business name.

Company
If your claim is against a company, you will need to find out the address of its registered office. This information can be obtained from the Australian Securities and Investments Commission (ASIC) upon the payment of a small fee. The ASIC is located on Level 1 at 66 St George’s Terrace, Perth 6000, www.asic.gov.au

YOUR COPY OF THE CLAIM
When you have filed your claim with the Court and have paid the fee, you will be handed a copy of the claim. It is important that you retain your copy for reference to the Action Number (or "Plaint Number") whenever you make any inquiries in person, or via telephone. The Action Number is located at the top right hand corner of the claim.

SERVICE COPY OF THE CLAIM
You also receive a "service" copy which must be "served" on (ie. delivered to) the defendant.

HOW IS THE CLAIM SERVED?
Claims can often be settled out of court. It is advisable therefore to enclose a letter with the claim offering to discuss the matter with the other party.

You must arrange for service of the claim on the defendant in one of the following ways:

The Court can serve the claim for you by post (recommended). The fee is $15.00 for each defendant
It can be served by the Bailiff (currently $15.50 plus 80c per kilometre one way only) however, this can be a lengthy process.
You can serve it yourself (not recommended)
Get someone else to serve it for you, eg. a professional process server. This will cost approximately $35.00
Note: If you arrange for someone other than the court or the bailiff to serve the claim, you should obtain:-

(a) the serving person’s name, address, occupation; and
(b) the time, date and place at which it was served.

These details will be needed if you are required to prove that the claim was served.

WHAT DO I DO NEXT?

Once you have filed a claim, and arranged for service, you are in charge of the matter yourself. The Court will not begin any proceedings unless you request it to do so. The Court registry staff are not lawyers; they are not permitted to provide you with legal advice. Although they can inform you of available options, you must make the final decision on what action to take. If in doubt, contact your solicitor.

If you have asked the court or a bailiff to serve the claim, as the plaintiff, you should inquire on the progress of your claim either over the telephone, or by attending the Court in person (don’t forget to have your Action Number handy).

Once the claim has been served, the defendant has 10 days in which to do one of the following:—

pay the full amount of the claim (plus the costs associated with issuing the claim) to you, or come to some "out of court" arrangement with you to settle the matter (eg. agreed monthly payments, but don’t forget the extra costs you have incurred);
defend the claim; or
do nothing.

WHAT IF THE DEFENDANT PAYS OR YOU COME TO SOME OTHER ARRANGEMENT?
The matter is at an end. It is best to advise the court that you have settled the matter.

WHAT IF THE DEFENDANT DOES NOTHING?
If 10 days lapse since the claim was served and the other party has not responded, you should go to your Local Court and ask for a judgment to be entered in your favour.

DEFENDED CLAIMS
If the other party (the defendant) "defends" the claim, a copy of their defence will be sent to you. Later, you will receive a Notice of Trial advising you of the date on which the Court will hear the matter. This is the day of the trial. You must attend the Court on this date and bring the following with you:

any evidence (copy of invoice, parts used, contract etc)
any witnesses (expert, eg. qualified mechanic)
any other documents
Note: If the defendant has any documents that you require for the trial, you can write to them requesting to see them (keep a copy of your letter).

Do not be put off by having to go to Court. It is not a murder trial as seen on TV.

Small disputes are heard in an informal manner. At the trial, neither the plaintiff nor the defendant is usually allowed to have a lawyer present to represent them. A Stipendiary Magistrate will listen to the facts from both parties, attempt to get them to resolve the matter themselves (sent out of the Court to try to resolve the matter—90% are resolved in this way) or will conduct the trial and decide the outcome and make a judgment accordingly.

You will probably be nervous about having to give evidence in Court.

This is quite normal as everyone, including experienced police officers, often feel nervous prior to giving evidence.

Note: You should contact the Court via telephone prior to the trial date to confirm that the matter has been listed at the time and date stated.

ENFORCING A JUDGEMENT
Whether you obtain judgment because the defendant does not respond to the claim or whether it is obtained after going to trial, you need to get the money, plus your costs (court fees, etc.)

First, write to the defendant enclosing a copy of the judgment (keep the original). Ask for payment within 7 days.

If no money is forthcoming, you can issue a Warrant of Execution at the Court. This instructs the Bailiff to seize goods of the defendant to sell to meet the judgment sum and the enforcement expenses. The Court can help you issue the Warrant of Execution.

Despite obtaining judgement in your favour, recovering the debt can in some instances be a long and frustrating process.

The use of a debt collection agency may be a better alternative especially if the business is one which has a high incidence of bad debt.

However it is recommended that the costs likely to be incurred are compared with the amount of the debt before going ahead.

Reproduced by kind permission of Motor Trade Association of Western Australia and Michael Pateson & Associates, Barristers & Solicitors, Perth WA.