MINOR CIVIL CLAIMS PROCEDURE - TASMANIA
Introduction – letter of demand
This Information Sheet assumes that the contracts under which money is owed are legally enforceable, and that the debts are not subject to the Consumer Credit Code and equivalents. If you are unsure, please contact Arts Law on (02) 9356 2566 or toll free on 1800 221 457.
When chasing payment for goods or services, the first step is generally to send a letter of demand to the other party telling them of the dispute and the money outstanding, and giving them a defined period within which to settle the matter or else face legal action.
When sending a letter of demand, you should be careful not to:
• harass the debtor – they have the right to complain about this behaviour to particular government agencies and the police; or
• send a letter which is designed to look like a court document because this is illegal.
For assistance with drafting a letter of demand see Arts Law's Information Sheet "Letter of Demand".
Response to letter of demand
In response to a letter of demand, a debtor may:
• pay the full amount owing;
• show that no money is owed;
• negotiate a compromise, for example, payment by installments or part payment. If a compromise is agreed to, make sure that it is, or is confirmed, in writing to avoid later disputes; or
• ignore the letter or respond to it in a way that is unsatisfactory to the creditor.
You may consider writing off the debt – either because the debtor’s response to your letter of demand is unsatisfactory, or because the debtor has asked you to do this and you have agreed.
If you decide to write the debt off, you may be able to claim a tax benefit to lessen the loss. If the debt is relatively small – say under $2,000 – many people decide to write off the debt because of the perception that it is too difficult and expensive to pursue, especially if lawyers are retained.
Minor Civil Claims debt recovery action
A "do it yourself" legal action is, however, available. All State and Territory courts in Australia offer a minor civil or small claims division of their local court or tribunal that provides a simple debt recovery procedure. Advantages are that the process is relatively informal, and that costs awarded against an unsuccessful party are limited.
So, what is a “minor civil claim”? In Tasmania, a minor civil claim is a claim:
• in respect of any dispute claiming $5000 or less, including a claim under the Consumer Credit Code,
• arising out of a Residential Tenancy or Lease Agreement, or
• to access neighboring land.
If the debt is over the limit provided for in the minor civil claims division, you can still bring an action against the debtor, but you will probably need legal representation or at least legal advice. The right to legal representation for a claimant and defendant in an action over the $5000 is automatic.
Debt recovery court action is actually a two-step process:
• after having commenced proceedings, you must either obtain a judgment in your favour or, if a defence is lodged to your claim, negotiate a settlement at a conciliation conference (which you can do at any time up to the hearing) and
• you must then actually recover the money owed to you. If the debtor does not pay up after judgement or settlement, you may need to take enforcement action against the debtor. Briefly, these measures include obtaining a writ of execution against the debtor's property or specific possessions, securing a garnishee order against the debtor's wages or bank account, or (but this is uncommon with small claims) forcing the debtor into bankruptcy.
To sue or not to sue…
Things to think about when deciding whether or not to commence a debt recovery action and when you should do this, include:
• whether the debtor can pay. If the debtor has a number of creditors seeking payment of debts and is basically insolvent (i.e. unable to pay their debts as they fall due) it may not be worth pursuing legal action. If, after a company search, you find that the company is in the hands of a receiver or liquidator, contact that person directly;
• whether there is a genuine dispute over the facts, and whether the evidence to support your claim is strong. If your claim is unsuccessful and the other party retains a solicitor to represent them (this is not common in small claims), the party will apply for a legal costs order against you;
• that it is generally worth the effort to settle a matter out of court as this is unquestionably preferable to spending time and money on court proceedings. Again, if you do reach agreement with a debtor, make sure that the agreement is in (or is at least confirmed in) writing, to avoid later disputes;
• wherever you start debt recovery court action, there is a time limit on bringing it, which is generally 6 years from the date the debt first arose. Limitation periods can start again, though, in certain circumstances, such as when a debt is confirmed by a debtor signing a contract that states the money owed to the creditor. You may need help from a lawyer to work out the relevant time limits, if they are an issue.
Who can I sue?
A minor civil claims action can be brought against a person (sole trader), a group of people (partnership) or a corporate entity (company, incorporated association). If the debtor is trading under a business name you need to do a business name search to identify the owner of the business. This can be done by carrying out a search at the Business and Consumer Affairs Office (or its equivalent) in your State or Territory or using the Australian Securities and Investments Commission's (ASIC) National Names Index which can be accessed free, via their website, at www.asic.gov.au.
The owner of the business has to be identified in the Defendant details of your claim form (often referred to as the Statement of Claim) as follows: Defendant – Glen X of 99 Surreal Crescent, Hobart, Tasmania trading as (or "t/a") Fantasy Dressers.
If the debtor is a company – for example, Fantasy Dressers Pty Ltd – any business documents (such as invoices and business letters) should have its nine digit Australian Company Number (ACN) after the company name. A company search, using this ACN, should be conducted through ASIC to identify the address of the registered office at which to serve the Statement of Claim and to ensure that the company is not in liquidation (you will have to pay a fee to ASIC to complete a registered office address search. See www.asic.gov.au for more information).
Minor civil claims procedure
When can I use the Court?
If you are in dispute over a debt of $5,000 or less, you should bring your claim in the Minor Civil Claims Division of the Magistrates Court (“Court”). The General Division of the Magistrates Court hears claims from $5,001 to $50,000, or, if the parties agree, an unlimited amount. The procedure discussed in this information sheet applies in the Minor Civil Claims Division.What should I do?
You will need to complete a claim form in which you give full and accurate details of the names and addresses of yourself ("Claimant"), and the other party ("Defendent"), and of your claim. Attach copies of quotes or estimates to substantiate the amount you are claiming. It is preferable to file (lodge) your claim at the Court Registry that is closest to the district in which your claim arose. The registry will allocate your claim a number. You must file 3 copies of your claim (and the original). The original is for the Court and the three ‘sealed’ or stamped copies are for the Defendant, another for you to keep and the last for you to return to the Court with an Affidavit of Service. You must then serve the claim on the Defendant, or arrange for a process server to do so. You have one year after filing your claim to have it served on the Defendant. If you require longer, you must seek the permission of the Court. An Affidavit of Service will then need to be filed at the Court, to prove the Defendant has received the claim.Copies of a claim form, Affidavit of Service and other relevant court forms can be obtained from the Court registry or online at http://www.magistratescourt.tas.gov.au/divisions/civil/forms.
What does the Respondent do?
Once the defendant is served, the Defendant has 21 days to:
• pay the amount claimed;
• agree with you to settle the matter; or
• file a defence and, if appropriate, a counter claim.
If the Defendant files a defence within that time, you will receive a copy and the Court will fix a date for a conciliation conference or directions hearing – depending on the division the claim is lodged. If the Defendant does nothing, you may apply to the Court for default judgment in your favour.
How much will it cost?
A small filing fee is payable when you lodge your claim ($87.50 as at February 2008 but check http://www.magistratescourt.tas.gov.au for current information). There is also a service fee payable for the delivery of the claim to the Defendant. Alternatively, you can arrange for the claim to be served.Can I settle before the hearing?
Yes. If you settle the dispute before the hearing, though, you should advise the Registrar in writing that you wish to withdraw your claim. It is also advisable to confirm any terms of settlement by making an application to the Court for a Consent Order. The Consent Order form and instructions on the preparation of it are available from the Court.What happens at the hearing?
Generally, neither party may be represented by a lawyer at the hearing unless both parties agree and permission is granted by the Magistrate. You will need to give copies of all relevant documents that you intend to rely on to the other party and to the Court.
At a directions hearing, the Magistrate will enquire into the progress of the action and explore ways of achieving a settlement. If settlement is not achieved, the Magistrate will set a date for mediation or set a date for the hearing.
At the hearing you will be able to tell the Magistrate what happened and what the basis of your claim is. You will be expected to make your statement under oath. You should show the Magistrate any evidence that supports your claim. After you have presented your case, the Magistrate will give the Defendant and their witnesses an opportunity to tell their side of the story. The Magistrate will encourage the parties to settle. If this is not possible, the Magistrate will decide the case. For more detailed information about the Court process, obtain the minor claims information brochure from the Court Registry or online at www.magistratescourt.tas.gov.au. See also http://www.magistratescourt.tas.gov.au/__data/assets/file/0019/53227/Minor_Civil_Claims.ppt .
The Magistrate's decision is final and binding, with limited provision for appeal. The costs of filing the claim may be awarded if you are successful but generally other preparation and legal costs are not. If both parties had legal representation, or the court thinks that there are special circumstances, the cost of legal fees may be awarded. .
Enforcement
If an order of the Magistrate for the payment of money is not complied with, the party in whose favour the order was made can enforce the judgment by returning to the Magistrates Court.
More information
Information on making a claim is available from the Court’s website at www.magistratescourt.tas.gov.au/divisions/civil, and more specifically for a small claim at www.magistratescourt.tas.gov.au/divisions/civil/minor_civil_claims.
To contact Legal Aid call 1300 366 611 or visit their website at www.legalaid.tas.gov.au.
Court staff can assist you with your claim, but are not permitted to give legal advice. Information can be obtained at the following Registries of the Magistrates Court:
Magistrates Court, Launceston
73 Charles St Launceston
PO Box 551
Launceston 7250
Tel: (03) 6336 2605
Magistrates Court, Burnie
38 Alexander St Burnie
PO Box 690
Burnie 7320
Tel: (03) 6434 6215
Magistrates Court, Devonport
8 Griffith Street
PO Box 208
Devonport 7210
Tel: (03) 6421 7892
Magistrates Court, Hobart
23-25 Liverpool Street
GPO Box 354
Hobart 7001
Tel: (03) 6233 3630
You can obtain a minor civil claims form from a Community Legal Centre, Legal Aid and Consumer Affairs Offices. Legal advice and the video “Help yourself to Justice” can be obtained from:
Hobart Community Legal Service
166 Macquarie Street
Hobart 7000
Tel: (03) 6223 2500
Hobart Community Legal Service
(Bridgewater Office)
Cove Hill Fair Shopping Centre
Bridgewater 7030
Tel: (03) 6263 4755
North West Community Legal Centre
62 Stewart Street
Devonport 7310
Tel: (03) 6424 8720
Launceston Community Legal Centre
4a George Street
Launceston TAS 7250
Tel: (03) 6334 1577
Consumer Affairs and Fair Trading
GPO Box 1244
Hobart 7001
Tel: 1300 654 499
© 2002, 2006, 2007 Arts Law Centre of Australia
You may photocopy this information sheet for a non-profit purpose, provided you copy all of it, and you do not alter it in any way. Check you have the most recent version by contacting us on (02) 9356 2566 or tollfree outside Sydney on 1800 221 457.