Letter of Demand [Step 1 ➲ First Attempt to Recover a Debt]

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If you're having problems getting an IOU, wages, loan or an invoice paid, as your first attempt to recover the debt we recommend you start by considering sending this document to the business or person (the Debtor).

What is a Letter of Demand?

A Letter of Demand is a legal letter which states:

✅ How much the Debtor owes you;

✅ What for; and

✅ When the Debtor needs to pay the IOU, loan or invoice in order to avoid the potential of legal action being taken against them.

⚖️ The title 'Letter of Demand' at the top of the page lets the debtor know you’re serious about recovering your money.

A Letter of Demand provides the Debtor with a chance to dispute the debt, pay the amount owed, or contact you to discuss payment arrangements.

Before you commence preparing the Letter of Demand

✅ Make sure you have already sent reminders + followed up with phone calls attempting to resolve the matter.

✅ The reminders should include a copy of your IOU, loan agreement or invoice [double-checked to ensure your calculations are error-free]; and

✅ A clear indication of when you expect the debt to be paid.

What are the consequences of sending a Letter of Demand?

It is important to understand + consider the fact that sending the Letter of Demand might ignite a dispute with the Debtor and place future business in doubt, but may still be necessary to recover the debt.

Ask yourself whether there might be an alternative informal means to reach out to the Debtor to try and resolve the matter amicably.

Preparing the Letter of Demand yourself

If you decide to prepare the Letter of Demand yourself, you may wish to download + adapt the free sample letter provided by the Australian Government for your situation*.

Watch this space:

We are currently in the process of creating a free [Self-Service] Letter of Demand + a paid [Self-Service] Final Letter of Demand with Optional Affidavit of Debt / Court Judgment which will include Embedded Lawyer-Logic™ to help step you through the process, consider your options + generate a customised Letter of Demand & email it to you anytime 24/7.

Should you engage a lawyer to assist?

A lawyer can write + send a Letter of Demand on their law firm's letterhead for you based on your instructions.

This approach often encourages the Debtor to pay the debt more promptly.

Blue Ocean Law Group℠ charge a fixed fee of $220 (incl. GST) to write + post a Letter of Demand on your behalf.

This can be a relatively inexpensive + effective way of increasing the chances of recovering your debt quickly and efficiently.

If you would like to engage us to assist, please complete the details below, and we will be in contact to discuss further.

Is this an employment matter? does it involve unpaid superannuation?

If the debt involves unpaid superannuation by an employer we recommend you contact the ATO who will act of your behalf at no charge to chase up payment from your employer.

Is this a building/construction matter?

If the debt involves a progress claim under a building contract or sub-contract for the supply of goods or services in the building industry, then you have an option to invoke the relevant state/territories Security of Payment Statutory Scheme.

Please read our FAQ: How can Security of Payment Legislation assist debt collection under a building contract or sub-contract?

Who is the Debtor? Where does the Letter of Demand need to be emailed/posted?

Please read our FAQ: How do I ensure I get the pre-litigation steps right? Who is the Debtor/Defendant? Where does the Letter of Demand/Statutory Demand/Concerns Notice need to be emailed/posted?

What if the Debtor is not registered with ASIC, nor located or based in Australia?

If the Debtor has no address for Service within Australia registered or otherwise, you can still proceed to send a Letter of Demand internationally.

In the event the Debtor does not respond, or disputes the debt:

➲ Due to the complexity of international debt collection, we strongly recommend you contact our legal team before taking any further steps.

Before you send the Letter of Demand

When preparing your Letter of Demand, we recommend you check the following:

✅ Have you made further attempts via friendlier means to recover the debt, such as a polite phone call or a final late payment reminder letter?

✅ Does the Letter of Demand include accurate information?

❌ Could anyone say that something in the Letter of Demand is false or misleading?

✅ Does the Letter of Demand include a late payment interest rate?

Only include this if it was specified in the agreement/contract.

✅ Does the Letter of Demand inform the Debtor of any action you’re not willing to take?

You should only mention action that you’re prepared to take.

✅ Is the Letter of Demand polite and respectful?

✅ Have you signed and dated the Letter of Demand?

✅ Have you attached copies of all relevant supporting documentation?

For example: A contract, invoice, first and second late payment reminder letters and any relevant emails, faxes or letters.

✅ Have you made a copy of the original documents and the signed Letter of Demand to keep for your records?

✅ Does your agreement specify any additional steps that need to be taken in the event of default?

For example: Do you need to notify personal guarantors of the non-payment?

Tips to Collect Evidence of Postage + Delivery

💡 Make sure you send the letter by express post and note the tracking number;

💡 Take photos of the front + back of the addressed envelope before it is posted;

💡 Log the post office tracking number in your records, and take a screen capture or photo of the delivery confirmation, or otherwise save a copy;

💡 Keep these records in case you need these as evidence of proof of delivery in a Court or Tribunal later.

In the event of a dispute

If the Debtor responds to your reminders, polite calls or Letter of Demand claiming a dispute regarding the amount of the debt +/or the quality or otherwise of the service or product provided, then your next step is to consider whether the Debtor's claims have any merit and if so whether to attempt to commence Settlement Negotiation.

Settlement Negotiation

Please refer to our article: How to cast a magic legal spell? The protection afforded by Without Prejudice Settlement Negotiations.

Why has it come to this? Root Cause Analysis

Please read our FAQ: Why has it come to this? Root Cause Analysis: Letters of Demand/Statutory Demand for non-payment of debt

*Reference: Free guidance provided by the Australian Government regarding drafting a Letter of Demand.

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Social Media Share Image courtesy of Florencia Viadana on Unsplash

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The majority of online Australian Legal Document providers are not law firms!

Whilst it is acknowledged that the legal document templates provided by the majority of [non law-firm] Australian legal document providers will generally have been prepared by lawyers and that the templates they sell are updated from time to time as required by legislative changes.

This does not change the fact that you are not dealing directly with a law firm.

In order to understand what this means from a practical perspective you need to ask the following questions …

What happens?

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🧩 If the legal document does not meet all of the requirements of your specific facts and circumstances?

🧩 If there is a mistake in the legal document?

Lastly, what happens if you are not directly involved in the creation of the legal document?

🧩 What if your accountant, tax agent or financial advisor uses a [non-law firm] online legal document service on your behalf?

To help you answer this question, please read our FAQ: If I create a legal document for my client on your law firm’s website am I giving legal advice or am I a "mere scribe"?

General Answer

A general answer is that online [non-law firm] Australian Legal Document providers are unable to assist clients directly, as they are unable to provide legal advice.

Certain [non-law firm] providers have adopted a business model whereby they earn a substantial ongoing 12 months+ plus referral fee for directing a client to a large directory of law firms who can assist.

This referral fee is charged to the law firm, who may decide to expense it as a marketing cost.

We submit that one way or another, it is ultimately the client who pays for the cost of the referral fee as it increases the cost of doing business for the law firm providing the service to them.

Feedback obtained directly from businesses who have used certain [non-law firm] online services

The valuable feedback we have  obtained is that:

❌ The quality of the online legal documents are basic, non-adaptive templates; such that

❌ The client is more often than not, required to seek assistance from a law firm in order to ensure their legal requirements are met.

As lawyers are required to undertake client interviews and make manual amendments to the legal documents, the final cost ends up much higher than the client could have anticipated, especially when the original online legal document was given away for free or at a nominal cost.

These kinds of business models may not rise to the level of bait & switch, however they may be found to constitute misleading and deceptive conduct.

In our submission, clients appear to be lead to believe that in the majority of cases they will be able to use the standard online documents without the need to engage a law firm to assist, when in actual fact this is not the case.

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When you purchase online legal documents directly from us, we have every incentive to ensure the quality of the online legal documents provided are as high as possible, and that you have all your questions answered.

List of Benefits:

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✅ Blue Ocean Law Group are the only Australian law firm providing you with the option to create Legal Documents online using ⚖️ [Self-Service] and/or [Lawyer-Assisted].

Credits:

This FAQ was created by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.

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Credits:

This FAQ was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

More than 1000+ Australian Lawyers use Embedded Lawyer-Logic. How does it work?

More than 1000+ Australian lawyers use this industry leading automated legal document generation solution. It uses Embedded Lawyer-Logic™ designed by leading lawyers in their respective fields.

Step 1️⃣: Information Gathering

Our intelligent online questionnaire adapts to your answers and only asks relevant questions.

Simply follow the guidance and enter the requested information about your matter.

Step 2️⃣: Document Assembly

The information is then sent to our back-end legal document generation engine, which follows a matrix of algorithms to make decisions about what should be in your legal document, just as an expert human lawyer would do.

The engine then draws from an enormous body of content to assemble a top-tier quality legal document that’s tailored to your situation + requirements.

Our Embedded Lawyer-Logic™ technology includes numerous quality control checks + automatic error-correction, massively reducing the risk of human error.

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Your answers to the online questionnaire and a copy of the finished document in both Word + PDF formats are automatically forwarded to our legal team.

If we notice anything out of-the-ordinary we will contact you to discuss.

If you are a subscribed member or opt for paid Lawyer-Assistance, we will use the allocated time to assist to clarify and resolve any questions you may have.

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If your matter is complex, high risk or you have never been involved in legal matters before, we highly recommend you opt for our Full Service.

Our legal team will contact you and assist you throughout the entire process.

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Credits:

This FAQ was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

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Our [Self-Service] legal documents are designed to be completed "without the intervention of a lawyer".

This approach will be appropriate for the majority of routine legal matters, where you are experienced and have learnt what needs to be considered and have gained experience in using our 24/7 online document portal to generate your legal documents instantly.

Some routine matters maybe totally new to you (meaning that you will have questions and we recommend you select our [Lawyer-Assisted] service).

Other matters maybe unusually complex, or of such high-value or risk that involving our legal team is the prudent course to take.

For these matters we recommend you select our [Full Service] option.

Credits:

This FAQ was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

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Our website + back-end system use the best possible web-based security available.

It was once said:

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In a more general context (outside of encrypted secure website traffic/data) it has also been said:

Data with 4096-bit encryption (only protected by a password) could still be compromised within seconds.
How? Human error.
Easy pass-phrase, written down password, re-used password... etc. basically, always be on the lookout for the weakest link.
Trust the technology, but never trust the weak link - the user!

Credits:

This FAQ was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

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Plus [+] Where Appropriate (at no additional charge)

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* More Information about Professional Fee Funding:

Our firm has partnered with QuickFee and Splitit to provide you with an interest free payment option. While we remain your service provider, the payment method is provided by QuickFee, a specialist payments provider for professional firms.

Credits:

This FAQ was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Why does Blue Ocean Law Group℠ use a *.law website domain?

What is a *.law web domain?

⚖️ *.law is a top-level-domain (TLD) that aims to:

Promote trust in the professional legal community by creating a:

✅ Verified;

✅ Exclusive; and

✅ Reserved online space in which only accredited lawyers and law firms can establish a comprehensive digital brand.

✅ Website users can have confidence they are dealing with an authorised and licensed lawyer/law firm.

✅ *.law offers effective branding to those in the legal community, with the ability to secure a domain name that clearly communicates who you are + the legal resources you provide.

All about *.law domain names

Source: join.law - Why *.law?

If I create a legal document for my client on your law firm’s website am I giving legal advice or am I a "mere scribe"?

Is your role that of a mere scribe?

If your role is merely that of a "scribe or scrivener" as outlined below it is unlikely you would be deemed to be providing legal advice or engaging in the practice of law.

Caution: Some Online Legal Documents have evolved!

Unfortunately this is not as easy as it once was … when online legal document templates were all static "fill in the blanks" one-size-fits-all templates.

Increasingly, the capabilities + complexities of legal document automation have evolved to cater to an ever widening range of facts and conditions.

Using the complex design + incorporation of what we call Embedded-Lawyer Logic it is no longer possible to avoid the automated tailoring of the online legal document to suit the client's circumstances + legal needs.

They are designed to produce a quality bespoke legal document just like a lawyer does.

The use of Embedded-Lawyer-Logic™ in the online process:

✅ Is now very similar to a client being interviewed by a lawyer;

✅ It drills down to ask the same questions and provide the same options a highly experienced + competent lawyer is required to do.

As a result the draft legal document created now has the potential to vary significantly based on the responses provided by the client.

We have now progressed to the point that the new normal online process is designed to cause your role to fall outside of the role of a "scribe or scrivener" alluded to below.

In the leading case on this issue Legal Practice Board v Computer Accounting and Tax Pty Ltd [2007] WASC 184; 35 WAR 59 (Simmonds J) noted at para. [152] that Brinsden J in Barristers Board v Palm Management Pty Ltd [1984] WAR 101 referred to Re Matthews (1938) 79 P 2d 535, apparently with approval, as follows at para. [108]*:

The court went on to say that where an instrument is to be shaped from a mass of facts and conditions, the legal effect of which must be carefully determined by a mind trained in the existing law in order to ensure a specific result and to guard against others, more than the knowledge of the layman is required and a charge for such services brings it definitely within the term 'practice of the law' [emphasis added].

How to limit your role to that of a "scribe or scrivener"?

Therefore, we strongly recommend that you advise your client to either:

✅ Create the draft legal document themselves + ensure independent legal advice is sought from our legal team prior to negotiation and execution; or

✅ Instruct you to create the legal documents using our Lawyer-Assisted option.

Doing this ensures your role is clearly limited to that of a "scribe or scrivener".

Our legal team will then take the responsibility for reviewing your client's individual circumstances together with the draft legal document in order to provide your client with the relevant legal advice, ensure your client understands their legal position and options, and to propose and make any required amendments to the legal document based on your client's instructions.

What is a "mere scribe or scrivener"?

In Legal Practice Board v Computer Accounting and Tax Pty Ltd [supra]*:

… the court held that work of the mere clerical kind, such as filling out of skeletal blanks or drawing instruments of generally recognised and stereotype forms effectuating the conveyance or encumbrance of property, such as a simple deed or mortgage not involving the determination of the legal effect of special facts and conditions, should be generally regarded as the legitimate right of any layman because it involves nothing more or less than the clerical operations of the now almost obsolete scrivener (emphasis added).
(The scrivener was eliminated in England by the 1804 Act.).

The view of the Institute of Chartered Accountants in Australia ... ^

Timely reminder

The 2007 case of the Legal Practice Board v. Computer Accounting and Tax Pty Ltd* serves as a timely reminder to members that there are legislative provisions in each state and territory which prohibit a person who is not a legal practitioner from engaging in legal practice.
This prohibition is mirrored in the Institute’s regulations relating to public practice (regulation 1207).
However, there are differences between the jurisdictions as to how the prohibition is framed.  

Even so, members who use the services of document providers are urged, as a minimum, to:
✅ Use only reputable document providers whose services are backed by competent legal practitioners;
✅ Ensure that they abide by the terms and conditions of the document providers as to the use of the documents and their supply to clients; and
✅ Avoid redrafting of documents to suit the circumstances of individual clients, unless appropriate legal advice is obtained by the relevant parties.

Seek legal advice

The Institute believes that the recent WA case does not require any change to a member's legitimate use of this type of service in accordance with their terms and conditions.
However, if you have any concerns or queries about the use of document providers, you should seek legal advice.

Sources:

* Legal Practice Board v Computer Accounting and Tax Pty Ltd [2007] WASC 184;

^ Extracted from the article: Court case raises issues about preparation of legal documents.

Credits:

This FAQ was created by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.

How do I Verify the Authenticity of a TraxPrint Protected Legal Document?

You can use any of the following TraxPrint Document Verification Methods

1️⃣ Double-Click to Verify the Details of the Document

Note: You can find the TraxPrint QR Code on the bottom of the first, last or every page, depending upon the preference set by the author of the document.

✅ By way of example, Double-Click on the below sample TraxPrint QR Code within the PDF document:

➲ You will be taken to the TraxPrint.com website and a message similar to the following will appear:

2️⃣ Email to Verify the Contents of the Document

✅ Send an email with the PDF document attached to check@traxprint.com

❌ If there is no response the PDF document is not authentic.

➲ If the PDF document is authentic, you will receive (within approx. 2 minutes or less) a reply email with a Certificate of Authenticity and the Original PDF both attached.

3️⃣ Scan to Verify the Contents of the Document

✅ Download the free TraxPrint App from the iOS AppStore or Android GooglePlay

➲ Register + Sign-in to the App then ✅ Scan the TraxPrint QR Code to Verify.

4️⃣ Drag n' Drop to Verify the Contents of the Document

✅ Drag n' Drop the PDF Document File into the designated area.

➲ You will receive an instant response regarding the authenticity of the document.

💡 This feature is coming soon and will be available on a dedicated page on our website.

Credits:

This FAQ was created by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.

When you say I can create a Legal Document anywhere, do you mean even from my mobile phone, if necessary?

Yes, we have designed our Legal Documents Portal so that you can create a Legal Document from my mobile phone (if necessary)!

The below iPhone 12 screen shoots demonstrate what we mean by "^anywhere (even from your mobile phone, if necessary)".

iPhone 12: Portrait Mode
iPhone 12: Landscape Mode

Credits:

This FAQ was created by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.

What legal obligations do creditors need to be aware of in taking steps to recover money owed by a consumer or debtor?

Debt Collection Guidelines

The Australian Competition & Consumer Commission (ACCC) & the Australian Securities & Investments Commission (ASIC) have published:

➲ Joint Debt Collection Guidelines.

Both the ACCC and ASIC enforce Commonwealth consumer protection laws, including laws relevant to debt collection.
The ACCC and ASIC have jointly produced this guideline which aims to assist creditors, collectors and debtors understand their rights and obligations, and ensure that debt collection activity is undertaken in a way that is consistent with consumer protection laws.
The guide was originally published in 2005 and has been updated to reflect significant changes to the law, such as the introduction of the Australian Consumer Law in 2011, the National Consumer Credit Protection Act 2009, and privacy laws and principles.

Source: ACCC Debt collection guideline for collectors & creditors

How can Security of Payment Legislation assist debt collection under a building contract or sub-contract?

Is this a building/construction matter?

If the debt involves a progress claim under a building contract or sub-contract for the supply of goods or services in the building industry, then you will have the option to invoke the relevant state/territories Security of Payment Statutory Scheme.

Security of Payment refers to any system designed to ensure that contractors + sub-contractors in the building industry are paid even in case of dispute.

This can involve a system of progress payments, interim arbitration decisions, or a system which legally requires a company to pay an invoice within a set number of days, regardless of whether the company believes they are accurate.

Background to the Security of Payment Legislation

Security of Payment legislation has been introduced by each Australian State and Territory to allow for the rapid determination of progress claims under building contracts or sub-contracts and contracts for the supply of goods or services in the building industry.

This process, which establishes adjudication as the primary dispute resolution mechanism, was designed to ensure cash flow to businesses in the construction industry, without the parties getting tied up in lengthy and expensive litigation or arbitration.

In addition to quick payment, the scheme also allows for Security of Payment to be provided in stages or payment schedule.

Common method used to invoke the operation of the Security of Payment Statutory Scheme

The relevant State/Territory Security of Payment Statutory Scheme can be invoked by including the following words of your invoice.

"This is a payment claim made pursuant to the Building and Construction Industry (Security of Payment) Act 2009 (ACT)”; or
"This is a payment claim made under the Building and Construction Industry Security of Payment Act 1999 NSW".
These Statements may vary depending in which State/Territory the Claim is made......".

These statements have not been a requirement in NSW since legislative amendments made in 2013.

Advantages

✅ Secures Rapid Payment;

✅ Adjudication is Quicker + Less Expensive than Court;

Disadvantages

❌ Potential for Power Imbalance;

❌ Confusion + Poor Understanding;

❌ Costliness of Dispute Resolution.

Credits:

This FAQ was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.

How do I ensure I get the pre-litigation steps right? Who is the Debtor/Defendant? Where does the Letter of Demand/Statutory Demand/Concerns Notice need to be emailed/posted?

How do I ensure I get the pre-litigation steps right?

If you have a written agreement with the Debtor/standard terms of trade

The identity of the Debtor and their address for service (incl. email +/or fax) should already be clearly specified in the agreement, or provided by the Debtor as part of your standard business processes.

We also assume that the terms of your agreement will provide permission to serve notices via email or fax (if required).

If there is no written agreement

You will need to consider whether you already know the actual identity of the Debtor/Defendant and their address for notices/Service.

The Debtor/Defendant may not be the person with whom you made the original agreement, or the person who actually published the defamatory statement.

The person you might consider is the Debtor/Defendant may have been acting/dealing as an agent or employee of another person, the actual owner/s of the business, a sole trader, partnership, unincorporated association, company, etc.

If you only have the name of the business, you can start by conducting a free ASIC business names index + business names holder organisation/person searches to determine the owner of the business name, followed by a paid ASIC search to determine a valid + current address for Service.

connectonline.asic.gov.au

If the Debtor/Defendant is a Company

Before sending a Letter of Demand/Statutory Demand/Concerns Notice to a Debtor company, we strongly recommend you conduct a paid current ASIC Company Search (min. cost $9) to confirm that:

✅ The Debtor/Defendant company is not currently under administration/in liquidation; and to

✅ Ascertain the companies current registered office address for service.

Legal Assistance

If you have any questions regarding the above please contact our legal team to discuss.

Credits:

This FAQ was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.

How do I attempt to settle my civil dispute whilst protecting myself from the other side using what I say against me?

You have the right to remain silent … in your civil legal dispute

By the time you approach a lawyer to assist with your civil legal dispute you may have already discussed the matter in detail or sent text messages/emails to the other party, their agent, insurance company or lawyers.

Whilst you might think you are progressing the matter:

➲ This is generally a mistake!

Most people [unless they are experienced in litigation or legal dispute resolution] will unknowingly proceed to make these communications with the other side on an "open” basis.

This means that everything that is said or written might be capable of being used by the other parties in any subsequent legal proceedings.

We recommend you don't say or write anything until you have spoken to your lawyer

It is generally known that in any criminal matter, you have the “right to remain silent …” as this is well-covered territory on TV/Movie Legal Dramas and in the media.

When it comes to civil disputes we recommend you adopt the same position.

Our advice may be spot on when it comes to large $$ civil disputes.

Proceeding without your lawyer

When the matter is only a minor one, you may not want to go to the time and/or expense of engaging legal advice specific to your situation.

Q: How then can you proceed?

A: Very carefully, and with the assistance of some very specific legal phraseology which you may or may not have seen before.

Please refer to our blog article “How to cast a magic legal spell? The protection afforded by Without Prejudice Settlement Negotiations." for more information.

Credits:

This FAQ was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.

What do I need to consider prior to deciding whether to commence legal proceedings?

Prior to deciding whether to commence Legal Proceedings

Laches + Limitation Periods

Please read our FAQ: What are the downsides to delaying 1️⃣ Informing the other side of my claim against them; or 2️⃣ Filing my claim with the Court?

Litigation Risk

We strongly recommend you obtain legal advice + assistance regarding:

✅ Determining whether the Debtor has the potential financial means to ultimately pay the debt + interest + legal costs should you be successful in your claim;

✅ If the Debtor is an individual, conducting a Bankruptcy Search;

✅ If the Debtor is a company, conducting a Bankruptcy Search;

✅ Determining whether the Debtor has been or is currently involved in other legal proceedings;

✅ The legal merits of your claim; and

✅ Ensuring you understand that it is extremely rare to recover your legal costs in litigation; and

✅ The inherent Litigation Risk of potential liability for the Debtor's legal costs in commencing legal proceedings in a Court, as opposed to a Tribunal;

✅ The cost + availability of litigation funding, +/or litigation insurance.

Valid + Effective Service

The requirements for valid + effective Service of a Filed Application or Statement of Claim vary depending on the relevant Court or Tribunal.

We strongly recommend you obtain legal advice + assistance regarding:

✅ The selection of the appropriate Court or Tribunal to bring suit; as well as

✅ The drafting of the required Application/Statement of Claim; and

✅ The compliant Service of same on the Debtor once legal proceedings have been filed.

Credits:

This FAQ was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.

Is it possible to obtain insurance against loss at trial in Australia?

AUSTRALIANS CAN NOW INSURE THEMSELVES AGAINST LOSS AT TRIAL

Australian claimants looking to protect themselves against a loss at trial can now insure themselves locally instead of sourcing cover from overseas

Aon has placed the first Australian “After the Event” (ATE) policy through underwriter Ironshore Australia Pty Ltd.

ATE insurance protects claimants, whether a client or a law firm, by partially deferring payment of the premium, and payment is contingent on the success of the claim.

Eden Fletcher, National Financial Lines Placement Manager, Aon Risk Solutions Australia said this was a significant step for the Australian legal system.

“ATE insurance has been established in the UK for some time and Australian clients have been able to access the cover by going abroad. However, the overseas policies are not made with the Australian market and legislative system in mind. By being able to now access the product here, it will give clients comfort the product is fit for purpose, and is commissioned by local lawyers,” he said.
“Australia has become the most likely jurisdiction outside of the USA in which a corporation will face significant class action litigation. The risks and costs of fighting these cases are high, most are settled before they reach the courts. With a local solution now available, this provides solicitors with an opportunity to take on more cases as their client’s representative, given the client will have the protection of this insurance,” Mr Fletcher said.

The intention of this policy is not to encourage litigation, since premiums provide an incentive to settle early rather than progress deeper into trial, with the rate varying according to the stage at which the litigation is settled.

“We believe ATE insurance will be eagerly explored by law firms acting for the claimant, as it will make a higher percentage of potential class actions even more viable than present, subject to the merits of the case. When there is ATE insurance behind the case, it validates the case has a reasonable chance of success given Ironshore’s due diligence and underwriting methodology,” Mr Fletcher said.

To find out more about ATE litigation insurance:

➲ Contact Us.

Credits:

This FAQ was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Why has it come to this? Root Cause Analysis: Letters of Demand/Statutory Demand for non-payment of debt

Root Cause Analysis

In order to reduce the need to send Letters of Demand/Statutory Demands in the future, it is worthwhile to conduct a root cause analysis which might include the following questions:

✅ Did you perform reference checks on the Debtor?

✅ Did you perform a credit check before extending credit?

✅ If you are dealing with a company, did you obtain a personal guarantee from the company directors to support the account?

✅ Does your written agreement include a term granting you the right to secure a charge against the Debtor's current +/or future real and/or personal property?

✅ Do you have a written agreement with the Debtor, which includes payment terms, address for service, and the capability to serve notices via email/fax?

✅ Did you engage a lawyer to prepare your written agreement with the debtor or your standard terms of trade?

Credits:

This FAQ was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.

What are the downsides to delaying 1️⃣ Informing the other side of my claim against them; or 2️⃣ Filing my claim with the Court?

Generally speaking, to help ensure you obtain the best possible outcome, it is recommended that as soon as practical you:

1️⃣ Proceed to obtain legal advice;

2️⃣ Instruct your lawyer to inform the other side that you have a claim against them, and attempt to settle the matter; and if this is not successful

3️⃣ Proceed to take steps to enforce your legal rights without any further delay.

Apart from the risk of the lapse of any Statute of Limitations Period, if your claim seeks equitable relief, failure to provide notice to the defendant that you have a claim and intend to enforce it, may open the door to allow the defendant to seek reliance on the equitable defence of laches, or more generally estoppel with the circumstances of the case unfolding in support of these defences the longer the defendant is able to show inaction on your part.

What is the equitable defence of laches?

Laches is a defence only available to a defendant in equity, where a plaintiff's lack of diligence and activity in making a legal claim, or moving forward with legal enforcement of a right, is viewed as conduct which allows the defendant to develop a belief that the plaintiff will not be seeking to make any claim and to continue about their life dealing with their affairs in reliance on this belief. Wikipedia

In Streeter v Western Areas Exploration Pty Ltd (No 2) (2011) 278 ALR 291 at para. [635] per McLure P considered:

"Whether the conduct of the plaintiff amounted to an acquiescence or caused the defendant to alter their position in reliance on the plaintiff’s acceptance of their actions”.

Consequently, a defendant may be able to argue the equitable defence of laches on a much shorter time frame than the relevant statutory limitation period.

In Hourigan v Trustees Executors and Agency Co Ltd (1934) 51 CLR 619 per Rich J:

The Court will not “disregard the election of the party not to institute his claim and treat as unimportant the length of time during which he has slept upon his rights and induced the common assumption that he does not possess any”.

In Gillespie & Ors v Gillespie [2013] QCA 99 MARGARET WILSON J (with whom MARGARET McMURDO P & WHITE JA agreed) at para. [79] of her judgment provided a summary of the applicable law regarding the equitable defence of Laches:

"Laches is an equitable doctrine, under which delay can bar a claim to equitable relief."
Deane J (with whom Mason CJ agreed) observed in Orr v Ford that the ultimate test is that enunciated by the Privy Council in Lindsay Petroleum Co v Hurd
“… whether the plaintiff has, by his inaction and standing by, placed the defendant or a third party in a situation in which it would be inequitable and unreasonable ‘to place him if the remedy were afterwards to be asserted’: see Erlanger v New Sombrero Phosphate Co, and also, per Rich J, Hourigan.”
The learned authors of Meagher, Gummow and Lehane’s Equity Doctrines and Remedies posit that there are two types of laches –
(i)         delay with acquiescence, where prejudice to others need not be shown; and
(ii)        more commonly, delay with prejudice to others.
However, in Fisher v Brooker Lord Neuberger said –
“Although I would not suggest that it is an immutable requirement, some sort of detrimental reliance is usually an essential ingredient of laches, in my opinion. In Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221, 239-240, Lord Selborne LC, giving the opinion of the Board, said that laches applied where ‘it would be practically unjust to give a remedy’, and that, in every case where a defence ‘is founded upon mere delay… the validity of that defence must be tried upon principles substantially equitable’.
He went on to state that what had to be considered were ‘the length of the delay and the nature of the acts done during the interval, which might affect either party, and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy’.”
Trying the validity of the defence on equitable principles involves the balancing of equities.  
In Erlanger v New Sombrero Phosphate Co Lord Blackburn said –
“…it must always be a question of more or less, depending on the degree of diligence which might reasonably be required, and the degree of change which has occurred, whether the balance of justice or injustice is in favour of granting the remedy or withholding it.
The determination of such a question must largely depend on the turn of mind of those who have to decide, and must therefore be subject to uncertainty; but that, I think, is inherent in the nature of the inquiry.”
And in Fysh v Page Dixon CJ, Webb and Kitto JJ said –
“If a plaintiff establishes prima-facie grounds for relief the question whether he is defeated by delay must itself be governed by the kind of considerations upon which the principles of equity proceed.
If the delay means that to grant relief would place the party whose title might otherwise be voidable on equitable grounds in an unreasonable situation, or if, because of change of circumstances, it would give the party claiming relief an unjust advantage or would impose an unfair prejudice on the opposite party, these are matters which may suffice to answer the prima-facie grounds for relief.”

Credits:

This FAQ was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.

What constitutes "Hardship Notice" under the National Credit Code?

Hardship Notice

72 Changes on Ground of Hardship
(1) If a debtor considers that he or she is or will be unable to meet his or her obligations under a credit contract, the debtor may give the credit provider notice (a hardship notice), orally or in writing, of the debtor’s inability to meet the obligations.

As per s 72 (above) of the National Credit Code 2009 (Cth), a debtor who thinks they will be unable to meet their obligations under a credit contract can give notice to the creditor of their inability.

This notice can be given either orally or in writing.

When giving notice, the debtor is not obliged to frame the notice in a certain way, or to make use of a certain form, though it remains up for debate as to whether the words "hardship" or "hardship notice" have to be used for a debtor to properly give s 72 notice of hardship (see RHG Mortgage Corp Ltd v Saunders [2016] below).

The bar for giving notice has reduced somewhat since 16 May 2013, prior to which the debtor seeking to notice had to specify one of three ways in which they sought to have the credit contract changed.

Since the 2013 amendments, the debtor is no longer obliged to first propose how the credit contract should be changed.

It would now appear that a debtor need only give notice to the creditor, at which point it is now the creditor's duty to either:

1️⃣ Request further information from the debtor (including how the credit contract should be changed); or

2️⃣ If the debtor requested specific changes when putting the creditor on notice in the first place, to return to the debtor with a verdict as to whether the creditor has or has not agreed to the changes proposed.

The creditor must take do one of the above actions within 21 days of receiving the initial hardship notice from the debtor.

Failure to do so attracts a civil penalty for the creditor.

RHG Mortgage Corp Ltd v Saunders [2016] NSWSC 1037

Had the substantive issues in this matter been heard, perhaps it would have provided some precedent as to whether a debtor needs to use the word "hardship" to put a creditor on notice of hardship, or whether other words to the equivalent are sufficient.

Unfortunately, it would appear as though the matter settled after a couple of interlocutory hearings.

Nonetheless, Garling J. suggested here that the latter position (words equivalent hardship are sufficient) may well be an arguable position, though he went no further as to the merits of this argument, as it did not fall for determination.

Perhaps this suggestion could provide the basis for a future legal challenge?

Implied Hardship Notice?

What happens if I haven't given notice? Is there such a thing as an implied hardship notice?

The legislation mentions nothing of circumstances in which a creditor might be impliedly put on notice as to a debtor's hardship. As such, it would appear difficult to imagine a situation where a creditor might be impliedly put on notice of hardship.

The 2013 amendments to the National Credit Code 2009 (Cth) appears to have had the effect of reducing the task of the debtor to expressly put a creditor on hardship notice.

Even if the debtor offers no further information as to the circumstances of hardship or how they would like the credit contract amended, the onus is on the credit provider to request that information from the debtor once the debtor has given effective notice under s 72(1).

Whilst it is dangerous to make assumptions about the operation of the law, it seems unlikely that any court would read into the National Credit Code 2009 (Cth) the existence of an implied hardship notice.

The matter has not been brought before the courts, and as such, there is no guidance from case law.

Besides, the importance of time is well established in s 72.

It constitutes a breach of the law, amounting to 5000 civil penalty units, for a creditor to fail to return to the debtor with a verdict within the relevant time frame.

Given time is of the essence, an implied hardship notice is unlikely to sit well with the law here, as it is difficult to place a time regarding when notice may be said to have been given, where it may be given tacitly.

Is it too late for me to make / give Notice of Hardship?

Enforcement Proceedings and s 89A of the National Credit Code

From s 89A of the National Credit Code 2009 (Cth), it is evident that a debtor may make give notice of hardship even after a creditor has given the debtor a default notice.

89A Effect of hardship notices on enforcement
(1) This section applies if ...
(b) before or after the credit provider gives the default notice, the debtor gives the credit provider a hardship notice (the current hardship notice) under section 72; and

The effect of s 89A is to prevent creditors from initiating enforcement proceedings until 14 days after the creditor has responded to the hardship notice. Besides this, it affords a debtor the opportunity to give hardship notice to a creditor even after default.

Best case scenario, a creditor, upon examination of the debtor's circumstances, may consider that changing the credit contract as favourable over enforcement proceedings.

RHG Mortgage Corporation Ltd v Sava [2011] QSC 372

It would appear possible to give notice of hardship even subsequent to the commencement of enforcement proceedings. Atkinson J here notes that a judge hearing the matter previously adjourned the matter to allow the defendant to give a hardship notice to the creditor:

"Because there has not been any complying application, the obligations which inhere in the credit provider under s 72 (3) have not arisen.
This matter came to court on a previous occasion and it appears that the Judge hearing it adjourned it to allow Mr Sava, the defendant, to obtain legal advice with regard to making a complying application for hardship to the mortgagee/plaintiff or to the court under s 74" per Atkinson J.

Outside Options?

For a debtor unable to rely on the provisions relating to hardship notices, a debtor may consider making a claim on s 76, should it be possible to construe the terms of the credit contract as unfair in some way:

76 Court may reopen unjust transactions
(1) The court may, if satisfied on the application of a debtor, mortgagor or guarantor that, in the circumstances relating to the relevant credit contract, mortgage or guarantee at the time it was entered into or changed (whether or not by agreement), the contract, mortgage or guarantee or change was unjust, reopen the transaction that gave rise to the contract, mortgage or guarantee or change.

Credits:

The above overview of the law pertaining to Hardship Notices under the National Credit Code was prepared by Suk Jae Chung | Practical Legal Training (PLT) Placement, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.