Reading time: 5 minutes

In New South Wales (NSW), If you are owed a sum of money, you have options to enforce the payment. These may include issuing a letter of demand or withholding particular services or products (depending on circumstances surrounding your payment). However, if those options are unsuccessful, you may be able to commence legal proceedings against the party who owes you money. This article will explore how to enforce a payment in NSW through the courts.

What Should I Consider Before Commencing Legal Proceedings?

Commencing legal proceedings is a costly and time-consuming exercise. You should carefully consider whether going to court is the best option for getting your money back. Additionally, you should be conscious of:

  • whether the debtor is able to pay the amount back;
  • whether you have enough evidence to prove you are entitled to be paid;
  • what the costs are that you will incur if you run the proceedings; and
  • if you are prepared in the event that you might not be able to recover your costs in full.

There are other considerations you should make before deciding to go to court to recover a debt. You should obtain legal advice before taking any step towards legal proceedings. 

Which Court Should I Commence Legal Proceedings In?

Generally, the appropriate court to commence legal proceedings will depend on the size of your claim:

  • Local Court Small Claims Division – Claims up to $10,0000;
  • Local Court General Division – Claims over $10,000 but under $100,000;
  • District Court – Claims up to $750,000; and
  • Supreme Court – Claims over $750,000.

There are some exceptions to these rules, so it is important to obtain legal advice to make sure you are choosing the appropriate court.

What Are the Steps to Commence Legal Proceedings?

Generally, to commence legal proceedings, the following steps will be taken:

  1. you will file and serve your statement of claim;
  2. the person who owes the debt will file their notice of defence in response to your statement of claim within 28 days of being served; and
  3. the matter is set down for pre-trial review/conference, then listed for hearing.

If the defendant does not file a defence within 28 days, you can apply for default judgment. A default judgement is a court order confirming that the defendant owes the amount of money you have claimed, plus interest and legal costs.

1. Filing the Statement of Claim

You will need to lodge your claim with the court. You can do this by filing a document called the statement of claim. The statement of claim will include:

  • your name and address,
  • the debtor’s name and address; and
  • a summary of the facts supporting your claim, such as the amount owing to you and details of any agreement with the defendant.

You will also need to serve the statement of claim personally on the defendant. 

2. Defendant Responds to Your Statement of Claim

From the date that a party has been served with the statement of claim, they have 28 days to file a notice of defence to the court. If they do not file a notice of defence within 28 days, you can apply to the court for a default judgment to be made against the other party.

However, if the other person decides to defend the claim made against them and files a notice of defence, the matter will then be set down for pre-trial review.

3. Pre-Trial Review

At pre-trial review, parties will appear before the magistrate or registrar, depending on the court. This is an opportunity for parties to try to settle their matter before the main hearing. You should always try to attend the pre-trial review, as non-attendance may result in an order being made against you that could affect your case.

If the matter has not settled, and the magistrate or registrar deems it suitable, they will set a hearing date for the substantive hearing to take place.

What Orders Can Be Made if I Am Successful in My Claim?

If the judge or magistrate rules in your favour at the final hearing, they will give an order or judgment that the defendant pays the amount that you claimed, plus interest. The court will also generally include an order that the unsuccessful party pays your legal costs. The payment to be enforced is called a ‘judgment debt’. The person who is owed the money becomes the judgment creditor, and the person who must pay is known as the judgment debtor.

There are a variety of options available to you as a judgment creditor to enforce payment once you are owed a judgment debt, including:

  • writs (either against land, of execution or against goods);
  • garnishee orders;
  • charging orders (available in the District and Supreme Courts) that allow you to secure the debt against a specific asset of the judgment debtor, such as stocks/shares, bank deposits, or property;
  • liquidation (if the debtor is a company); or
  • bankruptcy (if the debtor is an individual).

Key Takeaways

Commencing legal proceedings is often a costly and time-consuming exercise. Therefore, if you are thinking of enforcing a payment in NSW through the courts, you must ensure you have carefully considered whether this is the best option. For advice on debt recovery, contact LegalVision’s dispute resolution lawyers on 1300 544 755 or fill out the form on this page. 

Frequently Asked Questions

How can I enforce a payment in NSW?

In NSW, there are various options to enforce a payment without going to court. For example, by issuing a letter of demand or withholding particular services or products. However, if those options are unsuccessful, you may be able to commence legal proceedings against the party who owes you money.

What orders can be made to enforce a judgement debt?

Options to enforce payment once you are owed a judgement debt may include writs, garnishee orders, charging orders (available in the District and Supreme Courts), liquidation (if the debtor is a company) or bankruptcy (if the debtor is an individual).

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

Our Awards

  • 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Winner – Australasian Lawyer
  • 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year - Australasian Law Awards
  • 2019 Most Innovative Firm - Australasian Lawyer