What we help with / Debts and disputes
Debts and disputes: recovering money and defending claims
Someone owes you money, or you have received a demand or court papers? Here are the steps and time limits in Victorian courts and for statutory demands.
In short
- If a debtor will not pay, the usual steps are a letter of demand, then a court claim. The Magistrates’ Court of Victoria deals with claims of up to $100,000 and generally sends those under $10,000 to arbitration.
- You generally have six years from when the claim arose to sue on a contract debt.
- Does a company owe you an undisputed debt of at least $4,000? You can serve a statutory demand. If it does not pay within 21 days, a court must presume it insolvent in a winding up application brought within three months.
- Served with a court claim? You usually have 21 days to file a notice of defence. A company served with a statutory demand must apply within 21 days to set it aside; it cannot apply later.
- Cost and next step: we give you a written quote before work starts. Phone 1800 776 529 or write to us; we reply within one business day.
Someone owes you money: the steps
Gather the contract, invoices, emails and records of any part payments. Then send a letter of demand with a clear deadline. We prepare letters of demand and advise whether a court claim is worth bringing.
If payment still does not come, the next step is a claim, called a complaint in the Magistrates’ Court. That court hears claims up to $100,000 (Magistrates’ Court Act 1989 (Vic) ss 3, 100). The County Court has no monetary limit (County Court Act 1958 (Vic) s 37).
We act in the Victorian courts; Radek appears in court himself and briefs a barrister where needed. The Magistrates’ Court generally refers claims under $10,000 to arbitration (s 102). This is a less formal hearing before a magistrate or registrar, who is not bound by the rules of evidence (s 103).
How long you have to sue
You generally have six years from when a contract claim arose to sue (Limitation of Actions Act 1958 (Vic) s 5(1)(a)). A signed written acknowledgment or a part payment by the debtor restarts the six years (ss 24(3), 25(1)). Do not wait until the last year, as documents go missing and memories fade.
A company will not pay: the statutory demand
Where a company owes you $4,000 or more that is due, you can serve a statutory demand (Corporations Act 2001 (Cth) s 459E). The $4,000 minimum comes from s 9 and the Corporations Regulations 2001 (Cth) reg 5.4.01AAA. The demand must be in the prescribed form, with an affidavit verifying the debt unless it is a judgment debt (s 459E(2), (3)).
After service, the company gets 21 days to pay or settle. If it does nothing, a court hearing a winding up application within three months must presume it insolvent (s 459C(2)(a)). A demand is the wrong tool for a disputed debt, as a genuine dispute will usually see it set aside (s 459H).
For a disputed debt, a court claim is the better path. Statutory demands come from federal law and work across Australia, so we can act on them anywhere in the country.
You have received a letter of demand or court papers
A letter of demand does not start a court case, but do not ignore it. Check whether you owe the money and how much, then reply in writing before the deadline. You can pay, offer a payment plan, or explain why you disagree.
A Magistrates’ Court complaint states the time to file a notice of defence. If you were served in Australia, it is at least 21 days (Magistrates’ Court General Civil Procedure Rules 2020 (Vic) r 8.01). If you do not respond, the plaintiff can apply for a default judgment after 21 days (r 21.01).
The court can set a default judgment aside (r 21.07), but that means another application, more time and more cost.
Your company has received a statutory demand
Within 21 days, the company must apply to set the demand aside, usually in the Federal Court or a Supreme Court (ss 58AA, 459G). A supporting affidavit must be filed, and copies served on the creditor, within the same 21 days (s 459G(3)). No application can be made after that (s 459G(2)).
The court must set the demand aside if, after deducting disputed amounts and offsetting claims, less than $4,000 remains (s 459H).
Consumer disputes
If the dispute is about goods or services you bought, raise it with the business in writing first. Consumer Affairs Victoria accepts complaints about businesses that may have broken the law, and in some cases helps resolve the dispute. VCAT can decide disputes between buyers and suppliers of goods or services (Australian Consumer Law and Fair Trading Act 2012 (Vic) ss 182, 184).
Questions
Have another question? Phone 1800 776 529 or send us a message.
No. A court case starts with a claim filed in court and served on you. Still, treat the letter seriously.
No. A statutory demand under the Corporations Act 2001 (Cth) is served on a company (s 459E).
Generally, a contract claim is out of time after six years. A written acknowledgment or part payment in the last six years can change that (ss 24(3), 25).
Yes. Radek advises clients in Poland by video, and the case runs in a Victorian court.
Law referred to
- County Court Act 1958 (Vic) s 37
- Magistrates’ Court Act 1989 (Vic) ss 3, 100, 102, 103
- Magistrates’ Court General Civil Procedure Rules 2020 (Vic) rr 8.01, 21.01, 21.07
- Limitation of Actions Act 1958 (Vic) ss 5(1)(a), 24(3), 25
- Corporations Act 2001 (Cth) ss 9, 58AA, 459C, 459E, 459G, 459H
- Corporations Regulations 2001 (Cth) reg 5.4.01AAA
- Australian Consumer Law and Fair Trading Act 2012 (Vic) ss 182, 184
Radek Dajer is an Australian lawyer and notary public who speaks Polish. He practises Australian law and does not advise on Polish law; for questions of Polish law, we bring in a lawyer or notary in Poland.
Someone will not pay, or you have been served?
Tell us what happened and what deadline you face; you will hear from us within one business day.
Phone: 1800 776 529
Email: info@polishlawyer.com.au
Hours: Monday to Friday, 9 am to 5:30 pm
Office: 435 Nepean Highway, Frankston VIC 3199