Debt Recovery - Small Claims Division

by Michelle Rockliff

In recent years the Small Claims Division of the Local Court has been established and has jurisdiction to hear and determine actions for the recovery of any debt, demand or damage (whether liquidated or unliquidated) up to an amount of $10,000. The object of the jurisdiction is to conduct legal proceedings on a “fast, cheap, and informal” basis where the rules of evidence do not apply.

Once a Statement of Claim is served on the Defendant and the Defendant files a Notice of Grounds of Defence, the matter is listed for Pre-Trial Review before a Registrar. At the Pre-Trial Review the parties are required to attempt to conciliate a settlement without the necessity of proceeding to the hearing of the proceeding. In the event the parties are unable to reach a settlement, the matter is listed for Small Claims Hearing. No oral evidence is given at Small Claims Hearings and any statement or documentation intended to be relied upon at a hearing must be filed and exchanged with the other party approximately one month prior to the hearing.

Initially the Small Claims Division was developed to enable parties to initiate proceedings without legal representation. In this regard the Court’s empower to award costs is limited to a scale depending on the amount of the parties claim.

Once a successful verdict is obtained against a party (s) the Court generally allows a period of 6 weeks for the amount of the Judgment to be paid. In the event the Judgment debt is not paid one of the following enforcement proceedings can be commenced against the Judgment Debtor(s):

1. Examination Summons – This method of enforcement is usually used when you have no or very little information about the debtor and his/her financial position. A Judgment Creditor may file an Examination Summons requiring the Judgment Debtor to be examined at the Court in the district specified in the Examination Summons, that being the district which the Judgment Debtor has his or her place of abode, business or employment. The Judgment Debtor is examined by the Judgment Creditor’s solicitors or their agents as to his or her property and other means of satisfying the Judgment debt and generally as to his or her circumstances.

The Judgment Debtor(s) may be required to bring to the Examination Hearing documents which show the Judgment Debtor’s true financial position. Examples of such documents are tax returns, bank statements, pay slips and letters from department of Social Security.

Where the Judgment Debtor is a company, a director (s) of the debtor company may be summoned in relation to any assets or any other means of satisfying the Judgment as well as documents evidencing the company’s financial circumstances.

2. Garnishee Orders: Garnishee is a procedure whereby the Judgment Creditor attaches debts to or accruing to the Judgment Debtor to the third party (the Garnishee) in order to satisfy the Judgment debt.

There are two basic kinds of Garnishee proceedings:

a)      An order for the attachment of debts due and under Section 47 (2) (A) of the Civil Claims Act 1972 (“the Act”). In these circumstances if you have details relating to the Judgment Debtor’s bank account(s), a Garnishee Order may be issued attaching the funds, if any, held in the said accounts pursuant to the section.

b)      A Garnishee Order for the Attachment of Wage or Salary under Section 48 of the Act. This Garnishee is said to operate for a period of four weeks after the Garnishee Order is served, however usually an appropriate instalment arrangement is entered into with the debtor, whereby the payments are deducted from his/her wage or salary and forwarded directly to our office.

3. Writ of Execution – Execution is the process whereby the Sheriff or Bailiff is empowered to levy upon (i.e. seize and when necessary, to sell) the debtor’s property in order to repay the Judgment debt. The Sheriff or Bailiff may cause to be sold all the goods, chattels and other personal property other than chattels will of the Judgment Debtor.  In certain circumstances the land of the Judgment Debtor can be seized and sold. Once the goods and chattels of the debtor are seized they are sold at a public auction.

4. Bankruptcy – Under the Bankruptcy Act 1966, “the Bankruptcy Act” the Federal Court and the Federal Magistrates Court of Australia have the power to hear and decide bankruptcy cases. The Bankruptcy Act sets up a structure, within which, the money received from the sale of bankruptcy property is distributed by a trustee to creditors on a pro-rata basis. A creditor may make a debtor bankrupt only if the amount owed, to the creditor exceeds $5,000.00, or a combination of creditors to whom debts totalling $5,000.00 are owed may join together to make the debtor bankrupt.  To make a debtor bankrupt, a creditor usually applies to the Registrar of Bankruptcy, who issues a bankruptcy notice requiring the debtor to pay the debt within a set time, usually 21 days. The debtor who is not able to pay the debt within that time commits an act of Bankruptcy, which gives the creditor the right to petition to the Court to declare the debtor bankrupt. The idea of bankruptcy, and especially the Bankruptcy notice can often be a successful device used to persuade the debtor into paying a debt.

For further information or assistance please contact Rockliffs on 02 9299 4912 or email us at


We welcome your feedback

Hi there! We want to make this site as good as it can for you, the user. Please tell us what you would like to do differently and we will do our best to accommodate!

Protected by FormShield

We've updated our Privacy Statement, before you continue. please read our new Privacy Statement and familiarise yourself with the terms.