How to Recover a Minor Debt in New South Wales


Minor debt recovery in NSW

If you have loaned money, provided a service, or involved in a motor vehicle accident and the other party has failed to pay you the monies owed, then you will want to recover that money as quickly and effectively as possible. Minor debt recovery matters of less than $10,000 are dealt with in the Small Claims Division of the Local Court, while recovery of money greater than $10,000 but less than $100,000 are dealt with by the General Division.

What are the differences in the Small Claims and the General Division?

Because the Small Claims Division handles disputes of less than $10,000 it is a much simpler and quicker process than the General Division. These disputes are generally less technical and therefore the rules of evidence don’t apply in the Small Claims Division. This means that witnesses aren’t called to testify, and instead file witness statements which the Magistrate reviews at the hearing. You will still be able to present arguments and make final submissions to the Magistrate. There will also be a pre trial review in which a registrar or magistrate will meet with the parties to determine if an agreement can be reached.

How do I commence proceedings in the Local Court?

Prior to you commencing proceedings you should try and contact the other party in the hope the matter can be settled. This should be done in writing. Another alternative is to contact the Community Justice Centre who provides access to free mediation to help you reach an agreement. Not all matters will be suitable for mediation or if an agreement cannot be reached then you will have to commence proceedings in the Local Court to recover the monies owed. This is done by completing and filing either a Form 3A – Statement of Claim (if legally represented) or a Form 3B – Statement of Claim (if self-represented), in your Local Court. You will then have six months in which to serve your statement of claim on the Defendant. This must be done by personal service. The defendant will then have 28 days to file their defence. If the Defendant fails to file a defence you can apply to the Court for default judgment. If a defence is filed, the matter will be listed for pre trial review within six weeks. If the matter is not resolved during the pre trial review, it will be listed for hearing.

Can I appeal a Local Court decision?

In the Small Claims Division you can appeal to the District Court but only on the grounds of lack of jurisdiction or denial of procedural fairness. In the General Division you can appeal to the Supreme Court on a question of law.

Are you the one being chased for money?

If you have received a letter of demand or been served with a statement of claim, it is important that you ascertain whether you owe the money or not. If you do owe the money then it is in your best interest to negotiate a settlement. If there are facts in dispute over the money owed then you should consider attending mediation to resolve the issues. You can also file a cross claim with your defence if you believe someone else owes you the money or that the Plaintiff also owes you money. Click here for more information on what to do if you are being chased for money to ensure that further costs are not incurred.