When dealing with a legal dispute, any letters or claims should always be brought to your attention immediately. However, legal disputes are not always as simple in practice. If you do not regularly check your company mailbox, or a letter is not brought to your attention by your staff, legal correspondence can sit unnoticed for days. This could leave you with a very short timeframe to respond to it. This article will explain what you should do if you find yourself in this situation.

Firstly – Do Not Panic

While almost all legal correspondence carries an air of extreme urgency, not all of the legal correspondence you may receive has the same implications. In most circumstances, you will be able to buy yourself some time while figuring out how you want to deal with the legal demand.

Consider the Implications of the Deadline

Depending on what kind of document you have received, there will be differing deadlines. Some are more flexible than others.

Legal Letters

If you receive a legal letter in the mail, you may have received a:

As a rule of thumb, the deadline for response imposed in a threatening legal letter is somewhat arbitrary. Lawyers drafting the letter will choose a deadline to instil a sense of urgency and to pressure you into responding. 

If you do not respond by the deadline set by the other party, nothing will happen automatically. Rather, the other party will need to decide whether they want to proceed with suing you. If they choose to sue you, their lawyer will need to file a statement of claim in the relevant court and then serve the claim on you. They may do this immediately, or they may not decide to follow up at all. Their actions will depend on the circumstances of your case.

Statement of Claim

A statement of claim has a stricter deadline than a stand-alone letter. If you are served with a statement of claim, you will have 21-28 days to prepare and submit a defence or cross-claim. If you do not prepare a defence within the deadline, or negotiate with the other party to discontinue the proceedings, you risk the court issuing a default judgement. This means that they can then take enforcement action against you, such as:

  • seizing money from your bank accounts (garnishing);
  • instructing the Sheriff’s Office to seize your property; or
  • commencing insolvency or bankruptcy proceedings against you.

Other Legal Documents

There are certain legal documents which are not court documents, but still impose strict and legally significant deadlines in some circumstances. 

A common example is a creditor’s statutory demand for payment of a debt. If your company is served with this statutory demand, you will have 21 days to either: 

  • pay the outstanding debt;
  • negotiate the demand’s withdrawal; or 
  • apply to the court to have it set aside on the basis that you dispute the debt.

Buy Yourself Some Time With a Holding Message

In most circumstances, you should be able to buy some time by sending a holding email to the other party’s solicitor requesting a short extension of time. This will ensure that you and your lawyer have adequate time to consider the situation before responding formally. This approach is much more preferable than rushing out an inadequate response. Requesting extra time is generally low-risk because if the other side ignores your request, the court is likely to see their conduct as unreasonable. 

Responding to Legal Letter

When responding to a legal letter, you should: 

  • notify the other side that you only discovered the letter recently;
  • request an extension of time to prepare a response; and
  • indicate when you will be able to provide the full response.

This approach is low risk. The worst-case scenario is that the other party ignores your extension request and files a claim. In this case, you will have a further 21-28 days to file a defence or to negotiate with the other party.

Responding to Statement of Claim

When responding to a statement of claim, you should: 

  • notify the other side that you only recently discovered the statement of claim;
  • clarify that, at this point, you intend to defend the claim;
  • request that, in the interim, they do not file for default judgement; and
  • clarify that if you apply for default judgement, you will seek to have it set aside, and will rely on this email on any questions of costs.

This approach is also low risk. Judges and magistrates are frequently lenient if a defendant asks them for an extension. If a lawyer represents the other side, have a duty to facilitate the administration of justice. They may be in breach of that duty if they apply for a default judgment knowing that you intend to file a defence.

Responding to Creditor’s Statutory Demand

When responding to a creditor’s statutory demand, you should:

  • notify the other side that the demand has only recently been brought to your attention; and
  • clarify whether you intend to dispute the debt or whether you are open to negotiating a financial settlement.

Relying on a holding email in the context of statutory demands is high risk as the 21 days for compliance is strict. If you do not persuade the creditor to withdraw the demand or apply to the court to set it aside within this timeframe, your company is presumed to be insolvent.

If the creditor subsequently applies to the court to wind-up your company, you can still defend their application by proving solvency in court. However, this may be much more expensive than if you’d negotiated the demand prior to the 21 days expiring. 

Statutory demands are an excellent example to show that a holding email is not necessarily effective in all circumstances. A holding email may persuade the creditor not to commence wind-up proceedings, but it will not stop the presumption of insolvency.

If a statutory demand is brought to your attention late, and the window for compliance is about to close, it is best to seek out a lawyer who has the availability to help you immediately.

You Cannot Delay Forever

You should keep in mind that all of the strategies listed above are no more than delaying tactics. Delaying is often appropriate because it gives you more time to review the situation and prepare a strategic response. 

However, at the end of the day, you do need to respond. Keep in mind that prior correspondence will almost certainly be used as evidence in court. If you delay or withhold information unreasonably, it may ultimately weigh against you in the long run.

Key Takeaways

Receiving legal correspondence can be stressful, particularly if it is brought to your attention late, and you only have a few days to respond. However, there is usually a way to buy time. The key is to speak to a solicitor as soon as possible. Then, they should communicate with the other side and ask for a reasonable extension of time. If you have received a legal letter and you would like assisting responding to it, contact LegalVision’s dispute resolution lawyers on 1300 544 755 or fill out the form on this page.

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