Suing someone- regardless of how many movies you have seen, books you have read or stories you may have heard, actually taking legal action against someone is possibly very different to what you imagine. In this blog we will sort fact from fiction, and explain exactly what legal action is and how it can be an effective way to get paid.
Firstly, let’s clear up some common misconceptions:
- Suing someone is a guaranteed way to get paid- FALSE Whilst it can be helpful, taking legal action is never a guarantee and the risks involved should always be considered to ensure you are not throwing good money after bad.
- Suing someone means they have to go to court- FALSE The person will only attend a court if they defend the action. In most Australian states, they have 28 days in which to respond to your action, and even if they do lodge a defence within this timeframe, the court may simply order mediation first.
- All the fees it costs me to sue someone will get added to the debt- FALSE Whilst some of the fees are added, this depends on which state you are in and which Court you are suing them in.
- Legal action is quick and easy- FALSE Expecting an instant result is simply unrealistic and you should prepare for a wait of between 3-6 months to see some sort of outcome. Legal action takes time and there is a lot of paperwork to complete, forms to fill out, documents to lodge, fees to pay. Unless you are prepared for the long haul, then give it a miss.
Now, assuming you still want to go ahead and sue them, here is what you need to know.
Legal action in Australia is not a universal process- every state and territory has different rules and regulations, costs and fees. There are basically three courts you can sue someone in, depending on how much you are owed- the Small Claims Court, the Magistrates Court and the District Court. Small Claims will generally only allow for debts under $30,000. District Court is over $100,000 and Magistrates Court is under $100,000. Before you start though, always post the debtor a Letter of Demand giving them at least 7 days to pay. Our website and blog has Letter of Demand templates if you do not know what to write. For the sake of this blog, we will assume the Small Claims court is sufficient for anyone reading this, so here are the costs for each state:
Queensland (QCAT)
Website: www.qcat.qld.gov.au
Maximum debt amount: $25,000
Fees 100% recoverable? Yes
Debt amount: Application Fee:
$0-$500 $25.45
$500-$1000 $65.40
$1000-$10,000 $116.40
$10,000-$25,000 $326.80
Want to sue? Click here
Victoria (VCAT)
Website: www.vcat.vic.gov.au
Maximum debt amount: No limit
Fees 100% recoverable? No
Debt amount: Application fee:
$1-$3000 $62.70 for individuals, $89.60 for companies
$3000-$15,000 $209.00 for individuals, $298.60 for companies
$15,000-$100,000 $467.80 for individuals, $668.30 for companies
Want to sue? Click here
New South Wales (NCAT)
Website: www.ncat.nsw.gov.au
Maximum debt amount: $40,000
Fees 100% recoverable? No
Debt amount: Application fee:
$0-$10,000 $49.00 for individuals, $98.00 for companies
$10,000-$30,000 $101.00 for individuals, $202.00 for companies
$30,000-$40,000 $263.00 for individuals, $526.00 for companies
Want to sue? Click here
South Australia
Website: www.courts.sa.gov.au
Maximum debt amount: $12,000.00
Fees 100% recoverable? Yes
Debt amount: Application fee:
$0-$12,000 $143.00
Want to sue? Click here
Western Australia
Website: www.magistratescourt.wa.gov.au
Maximum debt amount: $10,000
Fees 100% recoverable? No
Debt amount: Application fee:
$0-$10,000 $191.50 for individuals, $304.50 for companies
Want to sue? Click here