FAQ's - Commercial Litigation
Litigation
1. What is litigation?
When parties cannot reach an agreement by negotiation, mediation or any other form of alternative dispute resolution, such as conciliation and arbitration, litigation is the last avenue for parties to resolve their dispute.
2. How do I decide when to commence litigation?
We will conduct an initial consultation with you where we will collect all the information and determine the strength of your case. Often, we will require additional investigation into your matter to determine whether it is worthwhile and commercially viable to commence litigation.
3. How much is litigation going to cost me?
Costs of litigation will depend on the complexity of your matter. Our lawyers will assess the complexity of the matter and will provide you with an estimate of the costs upon engagement. Costs will depend on:
-
The complexity of your matter; and
- The Court in which proceedings are to be commenced (ie, Magistrates, District, Supreme, Federal Magistrates or Federal Court).
4. How long does litigation last?
It could take anywhere between a few months to a few years for you to obtain a final decision. The length of litigation will also depend on the complexity of your matter which includes the number of witnesses, the number of issues involved, the extent of evidence, etc.
Debt Recovery
1. What is debt recovery?
Debt recovery is the process of recovering monies owing to a company, business, former partnership or person.
2. How is the money recovered?
To recover a sum owing, you will have to litigate the matter. Litigation commences by one of the following:
-
Claim and Statement of Claim in the Magistrate, District or Supreme Court (for unlimited amounts);
-
Small Claim in the Small Claims Tribunal (for amounts up to $7,500);
-
Minor Debt Claim in the
-
Statutory Demand (for debts over $2,500.00).
3. What is the debt is owing to me for three (3) years and I have not done anything about it?
You have six (6) years from the time the debt was incurred to file any of the above documents in the Court or Small Claims Tribunal.
4. Can I claim interest on the amount owing?
Yes. The interest that you can claim will either be in accordance with the Agreement that you had with the debtor in relation to the debt. If there was no such Agreement, the interest will be calculated at a prescribed rate, which is currently 10% per annum.
5. What is I am the debtor and I owe money to someone?
Your creditor will have six (6) years from the date the debt was incurred to commence proceedings against you to recover the debt. If the debt is the one that is accumulating all the time, every time you make a payment, the time limit starts from the date you make the payment which is the confirmation of the amount owing.
6. How do I defend a claim?
You defend a claim by filing a Defence in any of the above Courts or the Small Claims Tribunal. The form of the defence will vary depending on the Court in which you are filing the defence.
7. What happens if I don’t defend a claim?
The plaintiff usually obtains a Default Judgment against a debtor who does not file a Defence. This means that the Court had found that you owe a debt to the creditor.
8. How can the Judgment be enforced?
Judgment can be enforced in various ways, for example:
-
by seizure and sale of your property, if any;
-
by bankrupting you;
- by redirecting the debt owing to you;
- by redirecting your earnings.
9. What is the time limit for enforcing a Judgment?
It is six (6) years from the date the Judgment was obtained.
10. Do I need to seek a legal advice when commencing proceedings?
You do not have to seek legal advice. However, it is strongly recommended that you do.
Insolvencyand Bankruptcy
1. What is “insolvency”?
Insolvency is when a company is unable to pay its debts as and when they fall due.
2. What is “bankruptcy”?
Bankruptcy is a process where an application is made to the Federal Court to obtain an Order that the debtor be declared bankrupt. A debtor can also declare himself/herself bankrupt by filing a Debtor’s Petition with the Insolvency Trustee Services of Australia.
3. How can insolvency be proved?
The Court takes into account the company’s entire financial position rather than just evidence of a temporary liquidities problem. Therefore, proving insolvency at the relevant time can be quite difficult for a creditor. However, if a creditor issues a Statutory Demand and the company does not respond to the Statutory Demand within the prescribed time (21 days), the company is deemed to be insolvent.
4. What if I as a director knew or suspected that the company was unable to pay its debts when due and payable?
As a director you have duties and responsibilities to the company. There are both Civil and Criminal penalties as a result of the breach of those duties.
5. What happens when a person is declared bankrupt?
When a person is declared bankrupt, creditors are no longer allowed to deal with a debtor personally. A Trustee in Bankruptcy is appointed and the property of the bankrupt will vest in the Trustee. The Trustee will organise sale of the bankrupt’s property to allow creditors to recover some of the money from the bankrupt. The Trustee will also investigate the bankrupt’s conduct prior to bankruptcy to determine whether there have been any transactions that can be set aside.
6. How long does bankruptcy last?
Bankruptcy lasts for three (3) years but can be extended to five (5) or eight (8) years if the bankrupt has been unhelpful and has been in breach of the Bankruptcy Act 1966.
7. Can I avoid bankruptcy?
Bankruptcy can be avoided by reaching an understanding with creditors for the satisfaction of their claims by:
-
by signing all divisible property to a Trustee for the benefit of creditors;
-
by offering, in the form of money or other property, whether by instalments or otherwise, less than the full amount due to creditors in full satisfaction of their claim;
-
by coming to some other mutually acceptable arrangement.
If you would like to find out how Quinn & Scattini can help you, please call us on 1800 999 529, or email us at mail@quinnscattini.com.au
