How can I get my clients to pay my bills on time? Part 4 – Court proceedings
25 Nov 2019
- Business Law
When you are running your own business, the last thing you need is to have clients who aren’t paying their bills. But what can you do about it? In this article – the fourth and final in a series about debt recovery for small business – Emily Shoemark and Gene Schirripa discuss court proceedings.
There are several options if you are looking at going to Court in the ACT to recover your debt:
- ACT Civil and Administrative Tribunal
- Magistrates Court.
ACT Civil and Administrative Tribunal (ACAT)
ACAT is the tribunal you must use to recover debts of $25,000 or less. In the ACT, ACAT is the small claims court.
In this jurisdiction all parties must pay their own legal costs, and so this is often an option where people do not use lawyers, as the cost can outweigh the debt. The application form is simple and the filing fee low, and so for a straight-forward matter you can easily make the application yourself, even if you get assistance to make sure that you include the right information. The debtor then has 28 days to file a defence.
ACAT encourages parties to try to resolve the matter without the need for a hearing and so once the application and defence are filed, the parties are required to attend a conference to see if the dispute can be resolved.
If the debtor does not file a defence, then you can apply for default judgment. This means that the debtor does not get a chance to put their side of things, and you get a court order that the debt must be paid.
ACAT applies slightly different processes depending on the amount of the debt:
- Up to $3000: conference and immediate determination
- $3000–$15,000: conference and then directions for hearing if not settled
- Over $15,000: start to present case at conference and registrar will discuss strengths and weaknesses of the case.
If you get an order from ACAT that the debtor must pay the debt, they must do so within a set period. If it is not paid, then you can register that order in the Magistrates Court and start enforcement proceedings. This is where the Court will obtain financial information from the debtor about their circumstances and can make a range of orders to ensure you are paid.
Common examples are a payment plan or an order that the debtor’s wages or bank account are redirected into your bank account (also called a garnishee order).
The Magistrates Court has capped costs and is used for debts between $25,000 and $250,000.
The first step in the process is for the creditor to file a statement of claim to serve on the debtor (defendant), who then has 28 days to file a defence of a Notice of Intention to Respond.
The case will then be listed for mandatory pre-trial conference, and if they can not settle the matter, it will be set down for a hearing.
Enforcing a debt
It’s one thing to obtain a judgement, but another to be paid.
Once judgment is obtained, you have recourse to the enforcement jurisdiction of the ACT Magistrates Court. The Court can make a number of orders:
- Enforcement hearing
- Seizure and sale of assets
- Debt re-direction
- Earnings re-direction.
How can we help?
If you’d like to find out more about ways to ensure that your clients pay your invoices on time – and when they don’t, how to go about debt recovery – contact our Business Law team on 02 6285 8000 or by email.
To read earlier articles in this series, please click on the links below: