In Tasmania, debt recovery claims can be commenced in the Minor Civil Division or Civil Division of the Magistrates Court or in the Supreme Court depending on the amount owed. The rules that govern this are found in the Magistrates Court (Civil Division) Act, the Magistrates Court (Civil Division) Rules and the Supreme Court Civil Procedure Act and the Supreme Court Rules The person making the claim is called the Claimant and the person who the claim is against is called the Defendant. There are also alternatives outside of the court system to resolve disputed debts. Usually, legal action to recover a debt has to be taken within 6 years of the time when the debt arose. That time may be counted from when the debt was repayable, or from the date of a payment or of a default in repayments. The law that governs the time limits is the Limitation Act.
Before starting any kind of legal action the parties should try to negotiate a settlement. This may save time and money. If negotiation does not resolve the matter, the first step in debt recovery is usually to send a letter of demand to the person who owes the money. The letter of demand should set out the details of the debt and advise the defendant of the time limit to settle the matter or else face legal action. A letter of demand must not be designed to look like it is an official court document, neither may it harass or threaten the debtor.
The Civil Division of the Magistrates Court deals with claims up to $50,000.00. If the amount being claimed is more than $50,000.00 it can still be dealt with in the Civil Division if both parties agree. After a claim is served the defendant has 21 days to file a defence if they dispute the debt. If the parties reach an agreement about the debt they can sign a Consent Judgment. The Consent Judgment can be enforced if a party doesn’t comply with the agreement. If a defence is filed, the matter will be set down for a Directions Hearing before a Magistrate, or a Conciliation Conference with a mediator. The Magistrate or the mediator will see if the matter can be settled, and if not they will make directions for a hearing. At the hearing, the Magistrate will make a final judgment. If either party is unhappy with the judgment they can appeal to the Supreme Court.
If a defence is not filed, the claimant may ask the court for a default judgment. After either a court order or a default judgment the claimant can take enforcement action. Enforcement action is usually taken by issuing a Garnishee Order or a Warrant to Sell Property. A garnishee can be issued against wages or sums of money owed to the defendant. If a Warrant is issued, the bailiff can seize any property of the defendant other than clothes, bedding and the tools they use in their work.
The purpose of this court is to deal with cases as cheaply and simply as possible. The maximum amount that can be sued for is $5,000.00. The parties can’t be represented by a lawyer unless both parties agree or the magistrate approves it. The magistrate cannot give approval unless they are satisfied that the other party will not be disadvantaged. The same types of documents as in the Civil Division are filed. Legal procedures are simpler and all cases go through compulsory mediation. If the matter goes to a hearing, the normal rules of procedure and evidence do not apply. The hearing will be in the style of an inquiry with the Magistrate asking questions of each party and any witnesses. The Magistrate will decide the case and there is no appeal from that decision.
The Supreme Court deals with claims over $50,000.00. The procedure in the Supreme Court is similar to the Civil Division of the Magistrates Court but the documents have different names and different time limits may apply. The creditor files and serves a Writ and unless an Appearance is lodged by the debtor within 7 days, the creditor may ask for a default judgment and commence execution proceedings against the debtor.
Alternative dispute resolution is an alternative to court proceedings in some types of disputed matters. The parties appear before a neutral third person or persons, who will try to work out an agreement. If an agreement can’t be reached they will make a decision. In mediation, if the parties don’t like the decision the court system can still be used. In arbitration, after the arbitrator has heard both sides of the argument they make a decision. That decision is enforceable in the courts. Arbitration may be used for the speedy resolution of smaller less complex matters. It can also be used to resolve matters involving specialist technical knowledge that a judge might not have.