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Preventing a Service Fail – A Tale of Email v. Snail Mail?

 

In one of our recent matters, a client instructed us to bring winding up proceedings against four companies with the same sole director. The total debt across the four companies was over $300,000.00. Whilst there were four applications before the Court, one common issue was whether the companies had been properly served with the statutory demands relating to the debt owed.

On 11 April 2019, statutory demands were sent to all four companies, with the demands posted to the registered offices of the defendants according to the records of ASIC. Unbeknownst to the creditor, the director had vacated the registered premises of two of the companies over a year earlier, but had failed to update ASIC’s records in respect of this change, and had not put in place a mail-forwarding system. The demands addressed to the other two companies were sent to the office of the director’s solicitor.

No application to set aside the statutory demands was filed by any of the 4 companies. Therefore winding up proceedings were filed against the companies on 28 May 2019. The Originating Processes in respect of the winding up applications were served at the same addresses that the statutory demands had been sent.
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How to Enforce a Judgment in Debt Recovery – Garnishee Orders

By Chloe Howard,  a Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group

Whilst there are many options for enforcing a judgment debt, in the right matter a Garnishee Order can be an extremely effective debt recovery tool. They are inexpensive to issue and all you need is the debtor’s name to get the process started. So, what is a Garnishee Order and how can a Garnishee Order help in recovering a debt owed to you?

What is a Garnishee Order?

A Garnishee Order is an order of the Court which allows a judgment creditor to recover or ‘garnish’ a debt from a judgment debtor by essentially ‘seizing’ monies from the judgment debtor without their permission by going directly to a third party for payment.

How can a Garnishee Order help recover the debt owed to me?

A Garnishee Order can be enforced in any of the following ways:

Wages

If the judgment debtor is employed and earns an income, a Garnishee Order can be issued to the debtor’s employer. In this situation, the employer will deduct funds from the debtor’s pay cheque and pay that amount directly to you by way of instalments.
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No Special Treatment for Lawyers – Debt Recovery for ‘Fools’

By Chloe Howard, a Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group

They say a person who represents himself has a fool for a client. However if the person is lawyer, at least the ‘fool’ could recover his or her own professional costs in debt recovery proceedings. Or at least that was until a High Court’s decision this week abolished this special treatment for lawyers.

Normally, it is not possible for a self-represented litigant to recover any costs of litigation, including debt recovery. Until recently, however, there was a  benefit of lawyers keeping their own debt recovery in-house: The Chorley exception.  This exception, adopted from the Court of Appeal of England and Wales case of Scottish Benefit Society v Chorley (1884) 13 QBD 872, meant that lawyers who represented themselves in litigation, including debt recovery for their own fees, were entitled to recover the costs associated with litigating that claim.
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One year bankruptcy – debt collection is about to get even harder!

By Jeff Brown a Principal of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group.

Proposed amendments to the Bankruptcy Act 1966 which would reduce the duration of a typical bankruptcy from three years to one year have been drafted, and it is a matter of when – not if – the amendments will become law throughout Australia.

The reduction is partly to ensure that bankruptcy does not act as too much of a handbrake on the entrepreneurial spirit.  Business owners should be able to fail once, twice or even more, before succeeding.

That is all well and good, unless of course you are one of the unpaid creditors left in the wake of a failed business venture.

As all of us in business (including me) know, debt collection is difficult enough at present.  When a customer goes bad, one of the few methods to get yourself at the front of the creditors queue is to show that you would be willing to make the debtor bankrupt  if they will not pay.  In future, bankruptcy will be less of a practical burden on debtors, and there will probably be less stigma attached to having been a bankrupt person.
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The Clock is Ticking….

By Renee Smith a Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group.

The time that is available to recover a debt from a debtor is not infinite. Each State and Territory in Australia has set limitation periods that restrict the time available to a creditor to recover a debt.

In relation to simple contract debts (which can include unsecured personal loans, personal guarantee claims, and credit card debts) all States and Territories (except the Northern Territory, where the period is 3 years), have a limitation period of 6 years from the date on which the ‘right of action’ accrued.  For Court judgments, all States and Territories (except Victoria, where the period is 15 years), have a limitation period of 12 years from the date of judgment to enforce that judgment.

After the limitation period expires, the debts are known as ‘statute-barred debts’. In all States and Territories, except New South Wales, ‘statute-barred debts’ will still be owing to the creditor, however legislation limits the enforcement options that are available. In New South Wales, once the limitation period has expired, the legislation (s63 of the Limitation Act 1969 (NSW)) specifically extinguishes the cause of action, in a sense erasing the debt, therefore giving no further options to creditors of enforcement.
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Paper, who needs paper?

By Renee Smith a Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group.

In today’s society of evolving technology, contracts between parties can be whipped up in no time. However, what happens when an agreement between two parties is not formalised in writing and a debt is claimed by one party to another. Can the creditor still enforce the payment of the debt? If so, on what terms?

In the recent decision of Saravinovski v Duncombe [2017] NSWSC 1521, the Supreme Court was asked to overturn the decision of a local court magistrate who granted Mr Duncombe, a private investigator, judgment in respect of a debt for unpaid surveillance fees owed to him by Mr Saravinovski. While there was no formal contract signed, the parties had had many discussions regarding particular aspects of the services Mr Duncombe was to provide and which he subsequently delivered.

In particular, the Court was asked to find that it was a term of the contract that the costs would be capped at $10,000 (and not $20,000 as the creditor alleged) and that the results of the surveillance would be completed by 6 March 2015. The creditor argued there was no deadline on providing his results, although it was understood that his work was required to obtain evidence for a hearing commencing on 16 March 2015.
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Can you serve legal documents by Facebook?

By Andrew Behman, an Associate of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group

Yes, it is possible to serve documents via Facebook. In an earlier blog “Serving debtors that don’t want to be found“, we discussed how legal documents can be served by substituted service. Service via Facebook, LinkedIn and Instagram are some of the many methods legal documents can be served by substituted service.

In possibly a world first in 2008, the ACT Supreme Court granted orders for substituted service for the police to serve legal documents via a private message on Facebook. Since then, there have been many occasions in which the courts have allowed legal documents to be served via Facebook. You might even remember that in 2012, the District Court of NSW allowed for legal documents to be served on the rapper Flo Rida via his official Facebook page. Those orders for service via Facebook were ultimately overturned on appeal because, among other reasons, the evidence did not show that Facebook page through which the documents were served was actually the Facebook page of Flo Rida.
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Serving debtors who don’t want to be found

By Andrew Behman, an Associate of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group

In an earlier blog “When is an old debt too old to collect“, we discussed how some of the more difficult to collect debts are often placed in the ‘too hard basket’. An all too common reason that these debts are in the ‘too hard basket’ is because you can’t find the debtor. They’ve moved address and you can’t find them to be able to serve them with legal documents. However, this is not the end!

Yes, the law usually requires that legal documents be served personally. This is to make sure the defendant actually receives the legal documents and knows about the legal proceedings against them.

However, the court rules allow for you to serve legal documents in other ways. This is known as “substituted service”. Legal documents served by substituted service are deemed to be served and will allow you to continue proceedings to recover your debt. Some examples include serving legal documents by email, or even by leaving them at the last known address of the debtor and sending them a text to let them know where the documents have been left. In the social media era the courts are also becoming more prepared to make substituted service orders involving use of social media such as Facebook.

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