(02) 9233 7777
4/60 Park Street, Sydney NSW 2000, Australia
Contact Us


The process of recovering outstanding debt in NSW is composed of multiple stages. After a certain period of time passes with no/insufficient payments being made towards the debt owed, you can commence a court action by lodging an Ordinary Statement of Claim or a Statement of Liquidated Claim in the Local Court. A Statement of Liquidated Claim can be served on by personal service, e.g., the Claim is served on the debtor personally by someone over the age of sixteen. If the debtor refuses to accept the Claim, the person serving it can leave it with the debtor with an explanation that it is a Statement of Liquidated Claim from a court.

In terms of what options the debtor has after receiving the Claim, the individual/company has four options:

The debtor can do nothing,
The debtor can contact the Plaintiff and arrange to pay the debt (or a substantial part of it),
The debtor can confess to the debt,
The debtor can lodge a defence to the debt and/or a cross claim.
There are two divisions within the Local Court in which a Statement of Liquidated Claim can be commenced: the Small Claims Division and the General Division. The main differences between the two are:

Claims can only be commenced in the Small Claims Division if the claim is under $10,000 (whereas claims up to $40,000 can be heard in the General Division),
The Small Claims Division is more informal as it aims to provide a fast, cheap, informal and final resolution of disputes between the parties,
Solicitor’s costs are capped in the Small Claims Division to keep costs down,
Settlement is very actively encouraged in the Small Claims Division,
Requirements for formal evidence can be more relaxed in the Small Claims Division
In the Small Claims Division, the debtor will receive a letter from the Court giving a date for a Pre-Trial Review. An information sheet explaining what happens at a Pre-Trial Review will be enclosed with the notice. If the debtor does not attend the Pre-Trial Review, judgment may be entered against him/her. The Pre-Trial Review is used by the Court to determine: (a) if there are any matters or orders required before the case can go to hearing, (b) if the case can be settled, (c) and how the case should be heard. The Court typically encourages parties in the Small Claims Division to settle their disputes directly with each other.

Just like the small claims procedure in debt recovery, you file and serve a claim for the debt owed. However, the two paths split once a defence is filed. Upon the filing of a defence in either the Local or District Court (for debts over $60k), the Court will list a date for a call over. A call over is formal and is before a Registrar. Either party to the proceedings may appear. At the call over, either the claim is ready to proceed to hearing, or it is not. It may be that one of the parties hasn’t provided information that has been requested. The Court can make directions in this regard when requested to do so. At any time during the proceedings, either party may seek specific orders from the Court in regard to the provision of information by the other party, or for any other relevant order in regard to the proper conduct of the case. The application for such procedural and other orders is done by filing a Notice of Motion with a supporting affidavit detailing what has happened and providing evidence why the Court should make the order sought. There can be several call overs, but eventually, it is ready to proceed to hearing. Unless there is a very good reason not to, usually the hearing will be referred to arbitration. This is a hearing before a Court appointed Arbitrator.

Citilawyers assists individuals and businesses with all matters related to insolvency and bankruptcy by providing professional and tailored legal advice and support. Call us today on (02) 9233 7777 or send us a message.

Previous PostNext Post

Related Posts

Leave a Reply

zh_CNChinese en_USEnglish