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Debt Recovery by Garnishee Notice

When a Court makes a judgment in your favour for the recovery of a debt, there is a mechanism available to recover the judgment debt through a third party. This mechanism is a garnishee order.

What is a Garnishee Order?

A garnishee order is an order of the court which enforces a third party who either owes money to a debtor, or is holding money for a debtor, to make payment to the creditor of any funds held by that third party for the benefit of the debtor.

This order essentially permits a judgment creditor to ‘seize’ monies from the judgment debtor via a third party. [...]  READ MORE →

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AICM releases an industry first report into consumer overdue credit trends and practices

The Australian Institute of Credit Management (“AICM”) released an industry first Overdue Credit Index Report 2023 (“the Report”) which analyses levels of overdue credit across a range of financial products in the Australian market.

The Report presents a measure of overdue credit, called the ‘Overdue Credit Index’, based on aggregate data of reported repayment history for credit accounts across mortgages, credit cards and unsecured personal loans using data provided by Equifax and Illion for the period from 1 July 2019 to 1 August 2022. This index provides transparency around patterns of overdue credit and hardship requests in the Australian market and allows credit managers to express their performance and resourcing relative to a benchmark. [...]  READ MORE →

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Reform to Unfair Contract Terms – What’s New?

Reform to Unfair Contract Terms – What’s New?

Commencing on 9 November 2023, significant reforms were made to the Australian Consumer Law (“ACL”) concerning unfair contract terms (“UCT”) within standard form contracts. These changes will attract substantial penalties under the Competition and Consumer Act 2010, as well as the ASIC Act 2001 for both businesses and individuals. It is therefore vital that you are made aware of the reforms to the ACL and how they may affect you.

In 2010, a term in a standard form contract was deemed to be unfair if it: [...]  READ MORE →

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Security for Costs Order

Security for Costs: How to not get dragged down by the impecunious Plaintiff

A successful defendant can often be left with a significant legal bill despite a court ordering the plaintiff to pay their costs of the proceeding – winning the battle but losing the war.

Imagine you find yourself as a defendant in proceedings that you never saw coming and  which should ultimately never have happened. The plaintiff’s claims may lack merit and have very low prospects of success, but they commenced proceedings against you anyway in a desperate attempt to recover money that they lost as a consequence of their own actions. After all of the hours of stress, sleepless nights, phone calls, meetings, and thousands of dollars of legal fees, you and your legal team emerge from litigation victorious, with the plaintiff to pay your costs of the proceeding – only to find out, the plaintiff has no money, no assets and is unable to pay your legal fees. [...]  READ MORE →

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AICM Risk Report 2023

Australian Institute of Credit Management – Risk Report 2023

Credit professionals play a crucial role in any business, ensuring that both the risks of
defaulting on contractual obligations are managed, and that payment of goods or services
are received in a timely manner.

The Australian Institute of Credit Management (AICM) is a member body for commercial and
consumer management professionals formed with the goal of helping their members,
partners, government, other related bodies and the business community to succeed in
credit-related matters.

The AICM has released their Risk Report 2023 (Report) which provides a succinct and
useful insight on how recent and future economic conditions are impacting credit
professional’s abilities to manage risk and ensure a business is paid promptly for their
services. The Report draws on survey results collected from AICM members and Certified
Credit Executives. [...]  READ MORE →

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Security for Costs: How to not get dragged down by the impecunious Plaintiff

By Eleanor Campbell-Rogers, a Law Clerk of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group

‘A successful litigant is entitled to the fruits of their litigation’.

Whilst this might be true, a successful defendant can often be left with a significant legal bill despite a court ordering the plaintiff to pay their costs of the proceeding – winning the battle but losing the war.

Imagine you find yourself as a defendant in proceedings that you never saw coming and which should ultimately never have happened. The plaintiff’s claims may lack merit and have very low prospects of success, but they commenced proceedings against you anyway in a desperate attempt to recover money that they lost as a consequence of their own actions. After all of the hours of stress, sleepless nights, phone calls, meetings, and thousands of dollars of legal fees, you and your legal team emerge from litigation victorious, with the plaintiff to pay your costs of the proceeding – only to find out, the plaintiff has no money, no assets and is unable to pay your legal fees. [...]  READ MORE →

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The Judgment: Is it the end of the Debt Recovery Process?

In DW Fox Tucker Pty Ltd v Morgan [2023] SASCA 11, the Supreme Court of South Australia Court of Appeal allowed an appeal by DW Fox Tucker Pty Ltd (‘the Creditor’) regarding the decision that there was no costs agreement between the Creditor and the director (‘Mr Morgan’) of TS Morgan Developments Pty Ltd (‘the Company’).

Background

The Creditor obtained judgment against Mr Morgan in relation to unpaid legal fees incurred whilst the Creditor was acting for the Company. The Company had gone into voluntary administration in March 2017. However, the judgment was set aside in February 2020. Mr Morgan then sought a declaration that there was no costs agreement between him and the Creditor, and the Court ruled in his favour. However, the Creditor challenged this decision to the Court of Appeal. [...]  READ MORE →

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Australian Institute of Credit Management – Risk Report 2023

By Dylann Brew, Solicitor at Matthews Folbigg Lawyers in our Insolvency, Restructuring and Debt Recovery Group

Credit professionals play a crucial role in any business, ensuring that both the risks of defaulting on contractual obligations are managed, and that payment of goods or services are received in a timely manner. To achieve this, they need to consider the following relevant factors:

  • consumer behaviour and monitoring any changes;
  • changes to relevant legislation and regulations;
  • economic trends and monitoring any changes;
  • anticipated and forecasting future performance of the business.

These factors should be considered by every business to allow informed decisions to be made to mitigate risks. [...]  READ MORE →

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Fighting the Rearguard Action – s 459S and Winding Up Applications

By Jacob Reardon a Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group

In an application to wind up a company for failure to comply with a statutory demand, section 459S of the Corporations Act 2001 (Cth) (“the Act”) operates to exclude grounds that a defendant either did rely on, or could have relied on, in an earlier application to set aside a statutory demand.

In the Explanatory Memorandum to the Corporate Law Reform Bill 1992, the stated policy goal of section 459S is to: [...]  READ MORE →

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Dangers of Division 7A Loans In Liquidation

By Ashley Muscat, Law Clerk at Matthews Folbigg Lawyers in our Insolvency, Restructuring and Debt Recovery Group

It is common for associates and shareholders of companies in Australia to withdraw company funds through a loan account. There are lots of tax reasons why this is a popular way to access profits from a corporate vehicle. Of course, the ATO knows this, and so if the loan is not properly documented and does not satisfy the criteria to be a Division 7A loan, the amount will be deemed to have been paid out as a dividend, and taxed in the hands of the shareholder, usually unfranked. [...]  READ MORE →

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Challenging Demands

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

Section 459G(1) of the Corporations Act 2001 (Cth) (“the Act”) allows a debtor company served with a statutory demand to apply to the Court to have it set aside. Under s 459G(2) any such application must be filed within the 21 day statutory limitation period. This is a strict 21 days and generally cannot be extended.

The operation of s 459G and the strict 21 days limit has led to some controversy in situations where a debtor company has been served with a statutory demand, but does not become aware of the service until after the expiry of the 21 day period. How could it file an application to set aside a demand it did not know about? [...]  READ MORE →

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Making Debt Collection Successful – The Key: Information!

By Jamieson Naylor, Law Clerk at Matthews Folbigg Lawyers in our Insolvency, Restructuring and Debt Recovery Group

If you are providing goods and services on credit, at times you may be required to engage in the process of debt collection. So, how can you make the debt collection process as streamlined and successful as possible? As you may have guessed, the key is information!

There are steps that can be taken and searches that can be conducted to obtain information surrounding a debt or debtor, and in our experience, the prospects of successfully recovering a debt greatly improve when a creditor has an abundance of information. The debt collection process will also generally be much cheaper and require less investigative measures. [...]  READ MORE →