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How to serve a statutory demand

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

In earlier articles, we highlighted the problems that arise when serving a Creditor’s Statutory Demand by post: see You’ve been served! and It Serves You Right?.

This issue reared its head again two weeks ago in winding up proceedings in the Supreme Court of NSW in which we acted for the creditor. The Court was satisfied with all but one element of the evidence required to make the winding up order. The Court did not accept that the statutory demand had been properly posted (even though there was evidence of postage).

The statutory demand had been ‘posted’ by an Australia Post employee attending and collecting it from the office premises rather than the statutory demand being placed into a post box. The Court was not prepared to accept that the statutory demand had been posted because it was unfamiliar with this practice. The Court was more familiar with posting a statutory demand by placing the document into a post box or directly with an Australia Post outlet.
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Collecting debts is a legislative minefield

As if running your business isn’t complex enough – the process of chasing and collecting debts can be like wandering through a maze, and that’s even before you make contact with the debtor!

Debt collection is a heavily regulated activity in Australia. State and Federal legislation sets restraints on collection activities and are easy to fall foul of if you are not across the detail. Here is a (non-exhaustive) list of some of the legislation that affects how you can go about chasing debts:

  • Corporations Act 2001 (Cth)
  • Personal Property Securities Act 2009 (Cth)
  • The Australian Consumer Law, which is a schedule to the Competition & Consumer Act 2010 (Cth)
  • Part 2, Division 2 of the Australian Securities & Investments Commission Act 2001 (Cth)
  • National Consumer Credit Protection Act 2009 (Cth) which includes the National Credit Code as Schedule 1
  • Bankruptcy Act 1966 (Cth)
  • Fair Trading Act 1987 (NSW)
  • Commercial Agents & Private Enquiry Agents Act 2004 (NSW)
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“New fees for the Personal Property Securities Register (PPSR) to commence 1 August

The Australian Financial Security Authority (AFSA) has just announced that the fees for lodgement of securities on the PPSR will increase on 1 August.  The mechanisms for lodging securities will remain otherwise unchanged.  Businesses that regularly use the PPSR will need to factor in these increases, particularly if passing on that cost to customers is  a part of their terms and conditions.  Details of the amounts of the increases are expected shortly.  In the meantime, if you have any questions concerning how the PPSR might affect your business , get in touch with us.”

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“Holding” Deed of Company Arrangement found to be valid by High Court

 

The High Court has dismissed an attempt to invalidate a Deed of Company Arrangement (DoCA) on the grounds that it failed to specify the property which comprised the Deed fund, and was otherwise contrary to the purposes of Part 5.3 of the Corporations Act.

The legal representatives of Mighty River International Limited asserted that the DoCA relating to Mesa Minerals Limited (Subject to Deed of Company Arrangement) was in fact not really a DoCA at all.  It’s stated purpose was to allow time for the Administrators to further investigate the property and  affairs of the company, with a view to considering whether a restructure was possible.  This was said to run contrary to the express purposes the DoCA scheme, and was instead an attempt by the Administrators to buy more time to conduct investigations that normally take place during the convening period.

Without publishing their reasons the High Court indicated that at least a majority of them agreed that the application should be dismissed.  We expect the High Court will publish it’s reasons soon.
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When its better to get something than nothing, the use of Payment Arrangements in recovering your debt.

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

When looking to recover funds from a Debtor there are numerous ways in which it can be recovered. All of those options should be canvassed and considered carefully. One of those options is an agreed payment arrangement.

Benefits of entering into a payment arrangement include the ability to receive regular periodic payments of funds from the Debtor as well as the ability to monitor the Debtor for any changes in their financial situation. In setting a frequent payment schedule such as weekly or fortnightly, any sudden changes in the Debtor’s financial situation such as the Debtor going into Bankruptcy or the Debtor Company going into external administration can be found out and acted upon quickly. An obvious disadvantage of entering into a payment arrangement is that depending on the amount of the debt owing, it can take some time for the outstanding debt to be paid in full.
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Credit Repair Schemes – A Magic Wand?

The Australian Securities & Investments Commission (ASIC) has just issued a press release warning consumers about the aggressive and misleading sales techniques of companies promising to wipe clean bad credit reports.

As the press release makes clear, many of these companies are making promises they cannot keep and at the same time are seeking large upfront payments. See a copy of the press release here.

Despite what you might hear in certain advertisements, there is no “magic wand” for a debtor to improve their credit rating. The only ways that a credit report can be amended or updated is if the default listing is incorrect or the debt is paid.

The popularity of these credit repair schemes serves as a reminder that reporting a payment default remains an effective way to manage delinquent debt.

At Matthews Folbigg Lawyers we utilise default listing with reporting agencies as part of our multi-faceted approach to debt collection.

If you would like to discuss how Matthews Folbigg Lawyers can improve your credit collection performance, we would love to speak with you.

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Calderbank Offers – What You Need to Know

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

 

In our earlier post about settlement negotiations “Agreement in principle” – is it binding?“, we discussed the an offer that was agreed to “in principle” and what that means.  The offer that we talked about was a Calderbank offer.

What is it?

Calderbank offer is a type of settlement offer designed to put the offeror in a position to ask the court to make an indemnity costs order, if the offerer succeeds in the litigation beyond the amount offered. An indemnity costs order is an order that the less successful party pay a larger portion of the other party’s costs. Normally ‘costs follow the event’ – which means that an unsuccessful party  will be ordered to pay the successful party’s costs of litigation. However normally, because of the way the costs assessment process works, only a portion of the successful party’s actual costs will be recoverable. However by making a Calderbank offer, a party to litigation can improve the chances of recovering a significantly higher proportion of those costs. These offers are based on the principles outlined in the English case of Calderbank v Calderbank [1975] 3 All ER 333.
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“Agreement in principle” – is it binding?

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

When you’re negotiating the terms of a contract, settlement or payment arrangement, you might hear the term “agreement in principle”.  The obvious questions are:

  1. What does it mean?
  2. If you agree “in principle” to a person’s offer, or that person agrees “in principle” to your offer, can the agreement be enforced?

These are questions that are considered in numerous cases and various situations. The Courts have historically considered such cases in the context of different categories of agreement based on the decision in Masters v. Cameron. Recently the Supreme Court of New South Wales looked at these questions again in the matter of P J Leahy & Ors v A R Hill & Anor [2018] NSWSC 6. In this matter, Mr Leahy (and his related parties) commenced proceedings against Mr and Mrs Hill to recover an amount he claimed was due for repairs to a shed and arrears under a licence agreement.
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