If someone owes you money and is refusing to pay, there are a few things you can do to recover your funds. Civil enforcement is when the court enforces measures to help you, the creditor, collect your civil debt from the person who owes you money, the debtor. But first, to file for enforcement proceedings in the Magistrates Court, the creditor requires a judgement against the debtor. That is, the court must make a decision that the debtor does indeed owe the creditor a debt.
There are three possible avenues available to obtain this judgement: from the Magistrates court, the Victorian Civil and Administrative Tribunal (VCAT) or arbitration.
Magistrates Court Judgement
The Magistrates Court can hear civil dispute claims up to $100,000. For a dispute more than $100,000, the matter must be heard in a higher court.
To begin a claim, a complaint – Form 5A must be prepared and filed with the Magistrates Court. This will outline your claim against the debtor. Other necessary forms that must be filed along with this form include an overarching obligations certification – Form 4A and a proper basis certification – Form 4B. An affidavit of service – Form 6A must also be completed by the person who serves the complaint.
Once the forms have been filed and served, the debtor has 21 days to pay the claim or file a notice of defence to the Magistrates Court. If they fail to respond, you can then enter into a default judgement, which can be used in enforcement proceedings.
VCAT provides a low-cost and more accessible resolution of disputes. VCAT can resolve ‘Consumer and Trader Disputes’, which involves a dispute between a supplier and purchaser of goods and services.
You do not need legal representation to present your case to VCAT, but if you would prefer it you will need to get permission from VCAT and this is unlikely to be granted for matters that involve a debt of less than $15,000.
An order by a Tribunal Member is legally binding. If an order for payment of money is not complied with, you can ask the appropriate court to enforce the order.
Arbitration is a private proceeding in which a dispute is presented to an impartial arbitrator who makes a decision on the dispute, which is final and binding.
The Magistrates Court must refer matters under $10,000 to Arbitration, however, the court may choose not refer the case to arbitration if the complaint is not disputed or the parties agree that the complaint should not be referred to arbitration. If the court refers the matter to arbitration, the decision made by the arbitrator is treated as an order from the court.
Arbitration may be a faster process than awaiting a court judgement, however, the parties bear the arbitrators’ costs and any legal fees.
Person A lends $15,000 to their friend Person B. They verbally agree that Person B will pay back the loan over 10 months, with 10% interest. However, Person B only makes three monthly repayments of $1,650 to Person A. When Person A inquires about the remaining payments, Person B refuses to pay them.
In this case, as the matter involves a dispute under $100,000, Person A can take this claim to the Magistrates Court.
Person A can claim there was a partly written partly oral contract, alleging that both parties agreed to the conditions of the loan. The written portion of the contract can be evidenced by the part payment made by person B and evidence written evidence with respect to the loan such as SMS messages sent regarding the initial bank transfer of $15,000 as well as bank statements showing the three monthly payments Person B made.