What to do when someone owes you money

Does a tenant owe you rent? Does your boss owe you wages? You loaned money to someone and he/she did not pay you back? Pursuing people for money that belongs to you can be irritating and time-consuming. One way to recover your money is to sue the person or company owing you money (also known as a debtor), but this is generally the most expensive way of resolving a dispute. Before going to court, it is worth considering alternatives such as issuing a ‘letter of demand’ to the debtor, and mediation. In this article, we will explain to you the initial steps in your journey to recovering your debt.

Letter of demand

A letter of demand is exactly what it sounds like. This document is addressed to the debtor and contains your demand for money which belongs to you. The most effective letters are succinct and can include the following:

  • The amount owed to you in dollar value;
  • A copy of the invoice which has not been paid or a copy of the contract that has been breached;
  • The deadline for repaying the debt (usually within 7 days of the date of the letter);
  • The method of repayment (e.g. electronic funds transfer, cheque or cash); and
  • Your intention to sue the debtor if the debt is not repaid.

Take the time to ensure that you have correctly identified the debtor or debtors including address and email. You also want to make inquiries about the debtor’s assets and ascertain whether or not the debtor can satisfy your debt. If you would like an effective letter of demand to be drawn up, feel free to contact our team.

Mediation

Another affordable way to resolve a monetary dispute is through mediation. It involves the parties, usually with their lawyers, attending a meeting with a mediator trained in settling disputes. At first, the mediator meets the parties and their lawyers altogether, at which each side makes an opening statement of their position, followed by some negotiation. At this stage, you want to find out why the debtor has refused to return your money. Next, the parties and their lawyers are placed in separate rooms, while the mediator moves between each room, presenting offers of settlement, and trying to bring each closer to the other’s position.

Attempting mediation is generally expected by judges before court proceedings begin.

The NSW Community Justice Centres and NSW Small Business Commissioner offer cheap mediation services.

Statement of claim

If the two options above are unsuccessful, then you can consider filing and serving the statement of claim to the debtor. The statement of claim is a written declaration by you, the creditor, containing the facts that are to be relied upon to a support a claim against the debtor, and the relief claimed. It can be an effective way of bringing the debtor to the negotiating table. However, this pathway is costly and can take many months before a trial takes place. If you do go to trial and obtain a judgment in your favour, you can legally force the debtor to repay you.

For debt up to $100,000.00, the statement of claim would be filed in the Local Court.

For debt between $750,000.00 and $100,000.00, the statement of claim would be filed in the District Court.

For debt greater than $750,000.00, the statement of claim would be filed in the Supreme Court.

Conclusion

Therefore, there are various options available to recover your money, and we recommend that you try resolving the dispute outside of court first. Issuing a letter of demand and attending mediation are not only cost-efficient, but they are also short in duration and have a relatively high success rate. If you need any assistance with drafting an effective letter of demand or need legal representation, please contact our team.

Disclaimer: This publication is general information only and does not purport to provide legal advice. We do not accept responsibility for any losses for reliance upon this publication.

Default judgments and how to enforce them in debt recovery matters

What is a default judgment?

A default judgment is a sanction of the court which effectively disposes court proceedings without a trial. You will often hear about this after the plaintiff has served a statement of claim or summons on the defendant, and the defendant failed to respond in time. A default judgment is available in the civil jurisdiction of the Local Court, District Court and Supreme Court.

In the context of debt recovery, obtaining a default judgment would order that the defendant must pay you money or return your goods. However, a default judgment is not the end of the story; it is merely the precondition for a range of court remedies. According to s 17 of the Limitation Act 1969 (NSW), you have 12 years, from the date the default judgment is entered, to enforce it. This article will briefly explore the three most popular remedies, namely bankruptcy, garnishee order and writ for levy of property.

Bankruptcy

This is a term that appears in the media quite often. Particularly in 2020, we have heard a number of companies crumble under crippling debt including Virgin Australia. The purpose of bankruptcy is to liquidate most of the assets of the defendant and obtain some of the earnings of the defendant for up to 3 years after the date of bankruptcy. Bankruptcy proceedings can be started in the Federal Courts soon after default judgment is handed down, provided the total judgment debt amounts to at least $10,000.00. However, the method of bankruptcy can be costly, lengthy and very technical. Another disadvantage is that there may be other secured creditors, who rank ahead of you in priority, and thus full payment of the debt may not be received.

Garnishee order

As for the garnishee order, the third party (known as the “Garnishee”) will be compelled to pay their debt to you instead of the defendant. Examples of Garnishees include banks, employers, real estate agents, debtors and other financial institutions.  The debts have to be existing debts which are due at the time of serving the garnishee order. The debtor’s cheque accounts, term deposits in banks, saving accounts in banks, money held on fixed deposit are subject to a garnishee order. If the defendant’s bank account balance is too low, the bank does not have to comply with the order.

Writ for levy of property

To successfully execute the writ for the levy of property, you must know that the defendant has the relevant property which can be seized by the sheriff to satisfy the debt. The relevant properties may include any goods in which the judgment debtor has a beneficial interest, money belonging to the judgment debtor, cheques, bills of exchange, promissory notes, bonds or other securities.

Order for Examination

If you do not have enough information about the defendant’s income or assets, you could issue an order for examination which compels the defendant to appear in Court and present answers.

Take action now before it is too late. Contact Legal Point Lawyers today for a consultation. With over 15 years in the legal field, we can help you significantly boost your chances of recovering your debt quickly and smoothly.

Disclaimer: This publication is general information only and does not purport to provide legal advice. We do not accept responsibility for any losses for reliance upon this publication.

Recognition and Enforcement of Foreign Judgements at Common Law Precedents in Victoria

The year of 2019 has seen two significant cases concerning Australian Courts recognising and enforcing Chinese civil judgements. In Suzhou Hainshun Investment Management Co Ltd v Yue’e Zhao & Ors [2019] VSC 110 and Xu v Wang [2019] VSC 269, Cameron J of the Victoria Supreme Court handed down two decisions which treated two Chinese civil judgements differently. In Suzhou Haishun, her Honour granted summary judgement for the plaintiff though the defendant argued that the Chinese judgement was of a penal nature and denied the defendant’s access to natural justice. On the contrary, in Xu v Wang, her Honour refused to recognise and thus to enforce a Chinese civil judgement on the ground of abuse of process on the part of the applicant.

The General Rule and Exceptions

As we talked about in the previous article, four conditions must be satisfied before a foreign judgement is recognised by common law. Nonetheless, there are several exceptions that might hamper a foreign judgement’s recognition and enforcement in Australia. These exceptions are briefly summarised by Cameron J in Suzhou Haishun [2019] VSC 110 at [93]. Namely:

(a) granting enforcement of the foreign judgment would be contrary to Australian public policy;

(b) the foreign judgment is obtained by fraud (including equitable fraud) by the parties or by the foreign court;

(c) the foreign judgment is penal or a judgment for a revenue debt; and

(d) the enforcement of the decision would amount to a denial of natural justice.

What you should know as a respondent in a case of a foreign judgement’s recognition and enforcement?

First, it is difficult for you to argue that enforcing the foreign judgement would be contrary to Australia’s public policy. In fact, the public policy argument is the least favourable approach.

Second, the argument that the foreign judgement is obtained by fraud is not as easy as it seems to be. In Doe v Howard [2015] VSC 75, J Forrest J citing the New South Wales decision Wentworth v Rogers (No 5) (1986) 6 NSWLR 534 said that although there might be exceptional cases, ordinarily perjury is not enough to set aside the judgment (at [107]).

Third, in case of monetary judgement concerning debt recovery, it is hard to argue that the foreign judgement is penal in nature even though the damages or interest granted may be punitive. Cameron J in Suzhou Haishun confirmed that for a foreign judgement to be penal in nature, there must be some public element (at [97]). Whether there are sufficient public elements to generate a penal nature depends on the facts of each case, regards are to be had to the attitudes of the foreign courts, the category of the cause of cation of that foreign judgement and the purposes of relevant foreign laws (United States of America v Inkley [1989] 1 QB 255, 265).

Following Bleby J’s statement in Benefit Strategies Group Inc v Prider (2005) 91 SASR 544, 565-6 Cameron J held that if an Australian court finds that part of a foreign judgment is penal in nature, or relates to a law that is penal in nature, this does not necessarily render the judgment unenforceable in its entirety (at [101]). In fact, her Honour said that if part or all of the interest ordered to be paid by the Chinese court is held to be penal in nature, it will be entirely possible to sever those remedies from the Chinese judgments, and to enforce the remainder. As to the particular facts of Suzhou Hainshun the defendant argued that the interest rate granted by the Chinese court (quadruple the benchmark interest rate released by the People’s Bank of China for loans of the same type at the same period) was penal in nature, and Cameron J held that even though such interest rate was penal in nature, the judgement of repayment of debt was not affected and is enforceable by an Australian court.

Fourth, denial of nature justice may be the best approach to challenge the recognition and enforcement of a foreign judgement, but it will not be the case if you deliberately evade the foreign court’s lawful jurisdiction and service. In Xu v Wang, the essential reason why the Court refused to recognise the foreign judgement was that with the knowledge of the respondent’s Australian residence and contact information, the applicant instituted a proceeding in China against the respondent by substituted service, i.e., public announcement which was allowed by Chinese law. Therefore, the respondent’s right to fair trial was sacrificed.

Nevertheless, the public announcement was considered to be fair and reasonable in Suzhou Hainshun because the applicant did not know the respondent’s whereabout when the Chinese proceeding started. The respondent evaded the Chinese court’s jurisdiction, and the applicant had reasonably attempted to service the notice.

What you should know if you are the applicant?

Do not waste Australian courts’ time and judicial resources. International legal shopping is loathed by Australian courts. In Xu v Wang, after the case was listed by the Victoria Supreme Court, the applicant went to China and instituted proceedings despite the fact the respondent resided in Australia and the disputed issues took place in Australia as well. The Chinese judgement was made quickly in favour of the applicant. Cameron J noted that the applicant could have informed the Court of the Chinese judgement. This fact contributed to the finding of abuse of process.

You must reasonably fulfil your procedural obligations under the foreign law to guarantee the respondent’s right of natural justice. Reasonableness depends upon the facts of each case, and regardless of the lawfulness of the foreign legal procedures. The applicant must genuinely and reasonably ensure that the respondent’s right of natural justice is not violated.

 

Please contact our firm for advice specific to your circumstances.

Disclaimer: This publication is general information only and does not purport to provide legal advice. We do not accept responsibility for any losses for reliance upon this publication.

Recognition of Foreign Judgments in Australia

Persons or organisations seeking to recognise and enforce a Judgment made by a Court within the People’s Republic of China into an Australian state jurisdiction may be able to do so in certain circumstances. Our team, acting on behalf of Judgment Creditor, was recently successful in attaining Court Orders granting recognition of two Judgments made by a Chinese District Court, including the Judgment of the proceedings at First Instance and ‘the Enforcement Verdict’ into the State of Victoria jurisdiction. This recognition has now enabled our clients to enforce the outstanding Judgment Debt in Victoria through subsequent enforcement procedures, such as obtaining a Warrant of the Seizure and Sale of Land, which otherwise would not have been permissible.

In addition to attaining status of the foreign judgment, our clients were also able to recover reasonable legal costs incurred in commencing such Court proceedings as well as interest accrued up to the date of registration. Notably, the Court calculated the accrued interest in accordance with the higher interest rate stipulated by the foreign judgment at First Instance, rather than the interest rates stipulated by Victorian legislation.

Relevant Law

Recognition and enforcement of foreign judgments in Australia are usually possible pursuant to the Foreign Judgments Act 1991 (Cth). However, this statutory regime does not apply to judgments of all foreign jurisdictions. For example, as China is currently not within the scope of the Foreign Judgments Act 1991 (Cth), a person or organisation seeking to recongise and enforce a Chinese judgment in Australia may rely upon common law principles.

Four Conditions

For an Australian court to make orders for the recognition and enforcement of a foreign judgment under common law principles, the party seeking to rely upon the foreign judgment must establish the following four conditions:

1. The foreign court must have exercised jurisdiction that Australian courts recognise.
The foreign court must have had jurisdiction over the defendant at the time when the jurisdiction of the foreign court was invoked. The defendant (a natural person), therefore, must have been domiciled or ordinarily a resident in the foreign jurisdiction, have voluntarily submitted to the jurisdiction of the foreign court or needed to have been physically present in the foreign jurisdiction when served with the originating process for the foreign proceedings. Similarly, a defendant corporation, at the time of service, must have carried on business within the jurisdiction of the foreign court.

2. The foreign judgment must be ‘final and conclusive’.
The matters within the foreign proceedings must be concluded prior to commencing court proceedings in Australia. The key test of finality is whether the foreign court treats its judgment as res judicate, meaning there has already been a final judgment of the issues in dispute as between the parties. This condition is not negated by the fact that the Judgment Debtor may appeal the decision of the foreign court or that appellate proceedings are pending. However, the status of foreign judgment proceedings are likely to be stayed until the outcome of such an Appeal is made by the foreign court.

3. The identity of the parties to the foreign judgment must be the same as the parties to the Australian enforcement proceedings.

4. The foreign judgment must be for a debt or definite sum of money. The debt must, however, not be for a Revenue Debt.

Defence

In circumstances where a party is able to establish the four conditions, the other party may challenge the recognition of the foreign judgment only on limited grounds. A defence may be raised on such grounds, including, but not limited to:

  • The foreign judgment is contrary to Australian public policy
  • The foreign court acted contrary to natural justice
  • The foreign judgment was obtained by fraud
  • The foreign judgment is penal

The formal requirements and procedure applicable to commence court proceeding in status of foreign judgment matters pursuant to common law principles does vary between state jurisdictions within Australia. Generally, the originating process must be accompanied by a supporting Affidavit which must annex the following documents:

  • A copy of the foreign judgment certified by the proper officer of the foreign court and authenticated by its seal; and
  • If the foreign judgment is not in English, a translation of the judgment certified by a Notary Public.

Please contact our firm for advice specific to your circumstances.

Disclaimer: This publication is general information only and does not purport to provide legal advice. We do not accept responsibility for any losses for reliance upon this publication.