Re: Serial non-payers

The Levy Recovery Process

This is the path which the levy recovery process generally takes.

Letter of Demand

The first stage of the process is generally commenced by your solicitor issuing the recalcitrant lot owner with a letter demanding payment of the outstanding fees and giving the debtor a fixed deadline by which they should pay the debt, such as payment within 7days. This stage will often be supplemented with telephone calls to the lot owner if their contact number is known.

Statement of Claim

In the event that the letter of demand does not bring about the desired results the first stage in commencing legal proceedings is for the solicitor to file a statement of claim with court.

The court in which the statement of claim will need to be filed will vary according to the size of the debt and the location.

The statement of claim will set out the details of the levies and interest which are owed by the lot owner.

Service of Claim on Lot Owner

Once the statement of claim has been filed it will have to be served on the lot owner. Generally this service will need to be personal service, which will be done by a process server who will attend the residence of the lot owner, ascertain their true identity and hand the statement of claim to him/her.

Service can take time to effect where the location of a lot owner is not known and in some situations your solicitor may have to apply to court for substituted service which means that service is effected by another method such as service on a relative of the lot owner.

28 Day period for Lot Owner to Respond

Once the statement of claim has been served the lot owner will have 28 days in which to respond. He/she may do this by disputing the debt (which is not common in strata levy recoveries), by paying the debt, or by acknowledging the debt and asking for further time to pay.

On receiving an application for further time to pay, it will be up to the court to decide on the evidence before it whether to grant such extension of time. 

Obtaining Judgment

If the 28 day period elapses with no response by the lot owner your solicitor can apply for default judgment against the lot owner.

Alternatively if the lot owner were to acknowledge the debt then judgment would be entered without the need for a default judgment application.

In the event that the lot owner were to defend the claim then a trial of the evidence before the court would be required before any judgment is made.

Recovering Money Awarded by the Court

The judgment obtained from the court will set out the amount owed by the lot owner under the judgment. If following the judgment being awarded the lot owner still does not pay the following options are available to assist in recovering the debt;

• Examination Summons
• Garnishee order
• Writ of execution
• Bankruptcy Proceedings

Examination Summons

This is not so much a mechanism for the actual recovery of the debt, but rather a means of finding out the financial situation of the judgment debtor.

The first step is to fill out a request form, which is sent to the lot owner requesting financial information of his/her income and assets including bank statements, credit card statements and income tax assessments.

In the event that the lot owner were to fail to properly respond to the request for information within 28 days of  receiving the form, your solicitor could apply to the Court for orders requiring the lot owner’s attendance at Court to be orally examined about his/her financial affairs.

The main purpose of this examination is to identify assets or sources of income, which could be pursued in order to recover the debt.

Garnishee Order

A Garnishee order is a document that would be served on the lot owner’s employer or bank. It requires the employer to deduct funds from the debtor’s wages, or the bank to deduct funds from the debtor’s account, and forward these amounts to the Court. (This can also be done against rent if the lot owner is receiving rent from a tenant).

This method of recovery is generally only effective where the lot owner has a steady source of income.

Writ of Execution

A writ of execution is a court order that directs the court sheriff/bailiff to seize and sell the lot owner’s personal assets to pay off the debt.

The usual procedure in enforcing a writ of execution is for the sheriff/bailiff to attend the lot owner’s address or place where their goods may be found. A demand is made on the lot owner to pay the debt and if the debt is paid the matter is finalised.

If the debt is not paid the sheriff/bailiff will usually take an inventory of the lot owner’s goods. This is called a “seizure”. The sheriff/bailiff will then either appoint a person as custodian of the goods or remove the goods.

The goods will then be sold at public auction if the debtor fails to make payment before this event.

In some cases where there are not sufficient personal assets to cover the debt the Court will also allow a Writ of execution to be enforced against the Land owned by the debtor, however certain criteria must be satisfied.

Bankruptcy Proceedings

Where a judgment has been made, if the judgment is for $5,000.00 or greater, you can use the judgment to apply to ITSA for a Bankruptcy Notice to be issued against the lot owner.

Following a Bankruptcy Notice being issued and served on the lot owner, he/she would have 21days in which to pay the debt.

The next step would be to file a Creditors Petition with either the Federal Court or the Federal Magistrates Court to Bankrupt the lot owner. This would lead to a hearing in that court where the court would decide whether the lot owner should be made bankrupt.

On bankruptcy the debt would be recovered by the Trustee in Bankruptcy realising the funds which are currently locked up in the lot owner’s assets (including his/her land) and paying the debts from these funds.

Because bankruptcy has a major effect on the bankrupt individual, these proceedings are stringently overseen by the Courts and consequently the costs of making an application and the evidence required by the court can both be substantial.

 

Daniel

Teys Lawyers