Commencing proceedings in the Local Court

Posted 05-07-2016
Written by admin 101

The Statement of Claim is a pleading containing the allegations made by the Plaintiff against the Defendant and the relief sought.  The court requires you to file the Statement of Claim with the Local Court and serve a stamped copy of the Statement of Claim on the Defendant within six months of filing.  The Statement of Claim should be served as soon as reasonably practicable.

The court has different rules for service depending on whom it is being served.   The Statement of Claim can be served on an individual, business or company.  Court rules allow a Statement of Claim to be served on an individual by personal service.  This may include handing it to the Defendant; leaving it in the presence of the Defendant and explaining the document; or leaving it with an individual at the Defendant's home or work address with a person over 16 years of age who lives or works at that address.  Alternatively, the Local Court can post it to the Defendant for a $40.00 fee.

Service on a company may be complete by handing the Statement of Claim to the director or posting it via registered post to the company office.  Similarly, service on a business is complete by leaving it with a person who appears to be over 16 years of age and working at the business, or by registered post.

Note that if the Statement of Claim is to be served outside New South Wales an additional section must be included in the form, that being, 'Service in Australia but outside New South Wales'. A notice at the end of the Statement of Claim must also be included. 

When the Defendant fails to file a Defence an Affidavit of Service must be completed.  This must be completed by the person who served the document and must be witnessed by a solicitor or Justice of the Peace.  The Affidavit of Service must describe how and when service was complete and is not required if Local Court posted the Statement of Claim.

The Affidavit of Service should be filed along with your Default Judgement.  A Default Judgement is made against a party who has failed to file a Defence or failed to pay the amount in the Statement of Claim within 28 days of service. 

However, if the Defendant files a Defence after the 28 days and prior to you filing a Default Judgement, the order will not be made.   You should apply for a Default Judgement within nine (9) months of commencing proceedings otherwise the court will dismiss any proceedings.

The next step is dependent upon the Defendant's actions. 

The Defendant should file a Defence within 28 days of service.  Alternatively, the Defendant may file a cross claim, pay part of the sum, or file and pay nothing. A Defence is a form filed by the court that states the Defendant does not agree with the Statement of Claim.

The Court will send the Plaintiff a copy of the Defence and notify you of court dates including the Pre trial Review.    

If the matter is not settled at the Pre trial Review the matter will be listed for Hearing.  A magistrate or assessor will conduct the hearing.  To prepare for the hearing you will need to prepare witness statements and other relevant evidence.  Copies of the evidence will need to be provided to the Defence and the Court.

At the conclusion of the hearing the magistrate or assessor will determine what the Defendant owes you.

Settlement of the case means that the case is ceased when the two parties reach an agreement, rather than proceeding to hearing and allowing the magistrate or assessor to decide. The parties can agree at any time to settle the case.  During settlement discussions it is important to ensure that all correspondence contains the words "Without Prejudice".  This means, any settlement discussions cannot be used against you in court. 

The finalisation of the settlement is by Consent Judgement.  The Consent Judgement will contain the terms of the settlement and give the agreement effect as if the court had made the order.  The consent judgement can be made by either giving a signed copy to the assessor or magistrate at the Pre trial Review; or filing a Consent Judgement form.   

The Consent Judgement should contain when payments are to be made, how legal costs will be paid and what will happen if the agreed amount is not paid. The Consent Judgement must be signed by the Plaintiff and the Defendant.

If you decide to discontinue your claim you may do so by filing a Notice of Discontinuance. This must be signed by the Plaintiff and Defendant and filed with the court. 

When you are successful in court, the magistrate will make an order that the Defendant pay the sum owed also referred to as the judgement sum.  The Defendant then becomes the debtor and must pay any amount ordered plus interest and costs. The Debtor may offer to pay the sum by instalments or in full. 

If you lose in court the magistrate may order you to pay part or all of the Defendant's legal costs.  Legal costs include lawyer's fees and expenses involved in running the case.  If there is no legal representation you may still be ordered to pay 'party/party costs'.

You should understand the most common costs orders.  When the magistrate makes 'no order as to costs' each party is to pay their own costs.  The Magistrate may order 'costs in the cause' meaning the party who lost the cause must pay the other party's costs.  If 'costs are reserved' this means the costs for an interlocutory hearing will be reserved until a final decision is made.  'Costs of the day' means the losing party is required to pay costs within a short period of time. When 'costs are thrown away' this means that a party who failed to attend the hearing or were not prepared and therefore requested an adjournment is ordered to pay the other parties costs.

You may appeal the decision within 28 days if you lost and disagree with the magistrate or assessor's decision.  An appeal for the Small Claims Division should be filed in the District Court.  The two grounds for an appeal to the District Court are either denial of procedural fairness or lack of jurisdiction.  An appeal claiming the magistrate or assessor simply made the wrong decision will not be accepted. 

If you need advice about winding up a company, contact us today.