Debt Recovery in South Australia

The laws that govern the procedure for making debt recovery claims are the Magistrates Court (Civil) Rules 2013 , Magistrates Court Act 1991, District Court Act 1991, and the District Court Civil Rules 2006. The person seeking to recover the debt is the plaintiff, and the person who owes the money is the defendant. There is usually a time limit of 6 years to file a claim. The Limitation of Actions Act 1936 sets out how that time is counted. It is usually in the plaintiff’s best interest to settle a matter out of court as this may save time and money on court proceedings

For matters in the Magistrates Court a Final Notice of Claim or Letter of Demand should be sent to the defendant before filing a claim. This sets out the details of the claim and gives the defendant 21 days to settle the claim or legal action will be commenced. For Minor Claims, the Magistrates Court offers a free mediation service to help to settle the claim. In the District Court, the plaintiff must send the defendant a detailed notice containing an offer to settle the claim at least 21 days before filing a claim. If these notices are not sent, or 21 days not waited, the plaintiff will not be able to recover the costs of filing their claim.

South Australia’s minor claims division requires less legal formality in the content of the court documents and the conduct of the proceedings, than in the general division of the Court. The parties cannot be represented by a lawyer unless the Court agrees. This may happen if both parties have a lawyer or if one of them would be disadvantaged by not having a lawyer. When the claim is served the defendant has 21 days to either settle or defend the claim. If the defendant does nothing, default judgment can be signed without a court hearing.

If the defendant files a defence to the claim there will be a directions hearing to see how the matter might be resolved. If it can’t be, it will be set down for either mediation or trial. If the debt is not disputed, or an agreement is reached before trial the parties may sign an Enforceable Payment Agreement (EPA). If the defendant defaults, the EPA can be used to enter judgment.

Costs are not usually awarded in the Minor Cases Division, unless all parties were represented by a lawyer or the Magistrate considers it is justified.

The procedure and forms are basically the same as for the Minor Division, however the formalities are not relaxed. Each party is entitled to be represented by a lawyer. The court will hold a conciliation conference as well as the directions hearing to try to resolve the claim without the need for a trial and may refer the matter for mediation. There are potentially significant cost implications for parties who do not accept realistic offers to settle.

To commence proceedings, a plaintiff files then serves a summons on the defendant. If the defendant does not respond, the plaintiff may seek judgment in default of the defendant’s appearance. If the claim is defended, the defendant will file both an appearance and defence to the claim. The parties attend a status hearing and prepare a Litigation Plan which sets out how the parties want to matter to proceed. A conference may be held to try to settle the claim. If the claim is not settled, the court will periodically hold directions hearings and listing conferences to oversee the progress of the matter to trial. Once a judgment is entered, either after trial or by default, the procedure for enforcing the debt is the same.

After judgment, the successful party is known as the judgment creditor and the person who owes the money is the judgment debtor. Enforcement in South Australia is governed by the Enforcement of Judgments Act 1991.

If the judgment debt is less than $10,000.00, there may have to be an investigation hearing before any other enforcement action. This can follow straight after the trial, or a summons can be filed later. The court can make an order for payment according to what the debtor can afford to pay. If 2 payments are missed, an examination summons can be issued. The judgment debtor will come back to court and explain why payment was not made and the court may adjust the payment order.

There are three other ways to recover the debt. For all debts over $10,000.00 – and with the court’s approval for those debts less than $10,000 – a Warrant of Sale can be requested. Goods belonging to the debtor can be seized and sold. The bailiff cannot seize certain household goods, clothes or vehicles worth less than $2,500.00. Secondly, the creditor can request a charging order. This can be registered with the Land Titles Office. It prevents the debtor selling or transferring their land until the debt is paid. Thirdly, a garnishee order can be issued if the judgment debtor has money due to them from someone else, such as money in a bank account or, in some circumstances, wages.