How to enforce a payment in VIC

Oct 13, 2015
Reading Time: 3 minutes
Written by Anthony Fong

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:

  1. VCAT (Victorian Civil and Administrative Tribunal), alternatively through,
  2. Local Magistrate’s Court


How to do it: VCAT

This process has four sub-steps.

  1. 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.
  2. 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.
  3. 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.
  4. 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
    other party)
  • 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

Preliminary steps:

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.

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