How to enforce a payment in VIC
In this series of posts we look at the concept of ‘enforcing a payment’ within each respective State and Territory. Read here to find out about Victoria.
Find out how to enforce a payment in Victoria. If you’re thinking about what entitlements you have to LSL and pro-rata, you’ve come to the right place.
For an overview on enforcing payments click here.
STEP 1: Informal Communication
What is this?
The more formal Steps 2 and 3 (Letter and potential Court action) could be intimidating to the other party, so you should try to salvage the existing relationship. As such, you should attempt to re-establish informal contact with them by perhaps phone or email. We recommend this because at times, the unpaid invoice could be a result of a simple oversight or misunderstanding, and a phone call here could be a solution. If you are unsuccessful with this step, proceed with Step 2.
STEP 2: Send a Letter of Demand
What is a letter of demand?
Your first call of action to chase up the money should be through a Letter of Demand. Essentially, this is a letter sent to the other party where you formally notify them in writing, about the financial matter.
This letter should include:
· An outline of the dispute
· The money outstanding
· The defined period to settle the matter. If the specified time period passes with no resolution, you will need to face legal action in court.
Things to Avoid:
You should be able to form this letter yourself, or you may also choose to seek advice from a legal professional. If you choose do to it yourself, you must NOT:
· Harass the other party, because they can report it to government agencies or the police
· Attempt to mimic a court document in an effort to raise the chances of payment. This intimidation tactic is illegal.
Potential Outcomes of a Letter of Demand
After sending the letter, there are a few outcomes which can result:
· They might pay the full amount owed.
· They could formally prove that no money is owed.
· You and the other party may be able to negotiate a compromise, this could be in the form of instalments or part payments.
· They could ignore it or respond unsatisfactorily, in which case you will need to progress to Step 2.
STEP 3: Small Claims debt recovery action
What is it?
Basically, this is a relatively informal local court action, which you can do yourself. It is applicable to money, goods purchased/delivered, labour or a combination of these. Within Victoria, this option will be available for amounts of money owing up to $10 000, and the only exception to this method is that the matter cannot be regarding life insurance. There are two options for small claims in Victoria:
- VCAT (Victorian Civil and Administrative Tribunal), alternatively through,
- Local Magistrate’s Court
How to do it: VCAT
This process has four sub-steps.
- First thing to do is to obtain the ‘Application to Civil Claims List’ form, this can be found through the VCAT Civil Claims List Registry.
- You can attempt to negotiate for a settlement at any point before the hearing. If no agreement is reached and the hearing date is reached, then you should proceed to court and obtain a favourable judgment.
- If the negotiation is unsuccessful, each party must bring evidence (contracts, receipts, bank statements etc). First you, the claimant will present the case to a Tribunal Member, then the other party, defendant, will present theirs. Evidence is given under oath. The Tribunal Member effectively acts as a judge, and their decision is binding delivering a decision and giving reasons for that.
- Once the favourable judgment is given to you, you will need to recover the money. There are two options to go about this:
- a. Obtain a writ of execution against the debtor’s property (i.e. a court order granted to obtain the funds from the
- b. Secure a garnishee order against their wages or bank account (i.e. a court order requiring the other party’s employer to withhold money from wages, then, the employer using those funds to repay you).
How to do it: Local Magistrates’ Court
You will need the ‘Claim Form’, and two copies of a ‘Notice of Defence’ form – you will likely be needing legal assistance for
these, some Court Registrars should be able to help.
Still unsure of how to recover your money in VIC or need a lawyer to sign off on your Letter of Demand? Contact a LawPath consultant on 1800LAWPATH to learn more.
Anthony is a Paralegal at Lawpath. Pursuing his interest for Insolvency and Commercial Law, he is currently completing his third year of a combined degree in a Bachelor of Laws/Bachelor of Commerce at University of New South Wales.