Frequently Asked Questions

A letter of demand specifies a date for payment, often 14 days.

If payment has not been received within the allotted timeframe, or any settlement negotiations are unsuccessful, you need to decide whether to instruct us to commence proceedings on your behalf.

If you decide to commence proceedings, we will draft a statement of claim for filing with the Court and service on your debtor.

In NSW, a defendant to legal proceedings generally has 28 days from service of the statement of claim to file a defence. If they fail to do so, a plaintiff is able to apply for default judgment.

If a defendant, before the entry of a default judgment, files a defence, then the Court manages the matter towards a final hearing and determination of the matter.

Parties are able to, and very often do, settle proceedings without the need for a final Court hearing.

In broad terms, the parties would need to prepare and service their affidavit evidence, seek relevant documents from each other and third-parties and prepare the matter for argument before the Court.

If you decide to commence proceedings, we will draft a statement of claim for filing with the Court and service on your debtor.

You can include a claim for interest on an outstanding debt unless you have an agreement with the debtor that no interest will be payable.

If you have a contract with the debtor that specifies a rate of interest, you should include that as part of your claim, and you have a contractual right to that money.

If your contract or arrangement with the debtor does not prescribe a rate of interest, you can still claim interest, but this is limited to standard Court rates. This is generally 4% above the Reserve Bank Cash Rate (for any time before judgment) and 6% above the Reserve Bank Cash Rate (for any time after judgment).

Although a monetary judgment is a Court order that a debtor pays the judgment sum, this does not necessarily move all debtors to promptly pay.

This is the reason for the availability of various enforcement processes including:

• Garnishing amounts owed by third-parties to the debtor (such as a bank for amounts in a savings account or an employer for wages);
• Having the Court issue a writ for the levy of property, under which the Court will order the Sheriff to attend the debtor’s premises with a view to identifying and seizing property that could be sold to satisfy an outstanding judgment; and
• Examination processes, which are used to find out details of the debtor’s financial position and bank accounts.

Although not strictly-speaking an enforcement process, a judgment creditor can also pursue personal bankruptcy proceedings (against an individual) or winding up proceedings (against a corporation).

Legal costs before litigation and after litigation?

The standard way a secured creditor protects unregistered (equitable) interests in land is by lodging a caveat over the land. Broadly:

1. Caveats prevent the registration of dealings in land (such as transfers of the land by sale or the registration of new mortgages): one example of why this would be important is because without a caveat, the land-owner (debtor) could just sell the land without the secured creditor knowing about it, take the sale price on settlement and ‘run’, leaving the secured creditor without security anymore.
2. Caveats give notice to other prospective secured creditors that the caveator (secured creditor) already has an interest in the property. This is important, because another (later) secured creditor might say that it should be paid from any sale of the property ahead of the earlier one, because the earlier one allowed the later one (by not publicising the interest by a caveat) to assume it did not have this ‘unpublicised competition’, an assumption that it relied on in deciding to lend to the land-owing, or supply goods or services.

It is commonplace for regular suppliers of goods on credit to require buyers to provide an equitable charge or mortgage to the supplier to secure payment of the account balance. A classic example would be where, in an application for commercial credit from a building materials supplier, the director of a purchaser company agrees that the purchaser’s liability to the supplier is secured against his or her land.

Unlike the situation with registered mortgages, a secured creditor having an unregistered interest in land (such as a charge) cannot itself sell the land without the Court’s assistance. Where the land is owned by one person, the typical Court application is for judicial sale of the land, where the Court appoints the secured creditor as its agent (on certain terms) for the purposes of undertaking the sale. Where the land is owned by more than one person, the typical Court application (in NSW) is under section 66G of the Conveyancing Act 1919, whereby the Court appoints (usually) two independent professionals (such as a solicitor and real estate agent) to sell the property.