How to Enforce a Payment in WA
In this series of posts we look at the concept of ‘enforcing a payment’ within each respective State and Territory. Read below for a snapshot on Western Australia.
Find out how to enforce a payment within Western Australia.
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 to do 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 that 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?
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. For ‘Minor claims’ within Western Australia, the Magistrates Court is able to deal with claims up to $10 000.
How to do it:
This process has four sub-steps.
- As a preliminary stage, you need to lodge a form online, as available from the WA Courts Service. Then you must deliver this claim to the defendant. You will probably need legal advice in completing a ‘Statement of Claim’ (document used to initiate a court case about debt).
- You can attempt to negotiate for a settlement at any point before the hearing. If no agreement is reached and the hearing date has arrived, then you should proceed to court and obtain a favourable judgment.
- At trial, most of the time you will be self-represented unless both parties decide to utilise lawyers, or if the court grants permission for you to use one. Each party will put forward their side of the case under oath, and provide evidence (e.g. receipts, invoices, emails, correspondence, etc.), where the Magistrate will arrive at a binding decision.
- Once the favourable judgment is given to you, you will need to recover the money. There are two options to go about this:
a. Means inquiry: This requires the court to assess whether the other party has the ability to pay and how to structure payments.
b. Property seizure/sale: The court orders the other party to transfer ownership of satisfy the outstanding
Still unsure of how to recover your money in WA or need a lawyer to sign off on the 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.