What happens if I receive a Statement of Claim?

A Statement of Claim is an official court document completed by someone who thinks they are owed some money.  They take the document to the local court to get it filed and stamped and this starts the court process. They must then give a copy of the Statement of Claim to the person who they say owes them the money, called the defendant in the Statement of Claim.  This is called service. There are very specific rules when it comes to the service of Court documents.

Sometimes when you are being pursued for debt, you get a document that looks like a Statement of Claim when it is not. This is against the law, because it is misrepresenting the situation and is being used to intimidate you. If you are not sure if this is a genuine Statement of Claim issued by the court, get legal advice immediately.

If you receive a Statement of Claim you must act quickly if you want to defend the claim made by the other party, who is called the Plaintiff. You only have twenty eight (28) days to lodge a defence from when you received it or you risk having the matter decided against you in your absence. If this happens, the person who brought the Statement of Claim can seek a default judgement against you. This means that the case will be heard in Court without you being there and the Court will order that you owe the money that the other party (the Plaintiff) is claiming.  You should never ignore a Statement of Claim and should always make sure you get legal advice straight away.  A lawyer or a Chamber Magistrate of a local court may be able to help you write your defence. 

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Can I Be 'Served' Without Even Knowing About It?

Yes, the person wanting to serve the document has to try their best to get the document to you. If they cannot it is sufficient that they serve it on someone else in your household who is at least 16 years of age or they can apply to the court for ‘substituted service’.  This means they might be allowed to try to bring the document to your attention in some other way.  For example, they might be allowed to deliver it to someone who you have regular contact with, such as other family members and rely on them to pass it on. 

However, if a default judgement is made and you did not receive a Statement of Claim, you should make sure you find out whether there was one really served.  Sometimes, the first time you are made aware that a matter has gone to court, is when you receive some other notices. For example, the Sheriff may arrive at your door with a rit for Levy of Property, or some money from your bank account or wages is missing (which has been deducted in accordance with a Garnishee Order). These documents would state which court dealt with this matter. You can then ring this court to obtain information and a copy of the relevant documents, such as the Statement of Claim. In some situations, you may be able to apply to the Court to have the default judgement set aside. This means that the Court can make an order cancelling the earlier order (the default judgement) stating you owe the money. You would need to show the court for example, that you were not served properly with the Statement of Claim and that you have a good defence to the claim made by the Plaintiff.

 

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How Do I Defend The Claim?

There is a form that you can get from the local court called a “Defence”.  On this form you need to answer the claims (called the pleadings) made by the Plaintiff. Therefore, you state whether you agree or do not agree with the Plaintiff’s claims. You can do this by stating why you believe you do not owe the money or about any part of the claim you do not agree with like the actual amount of money being claimed. You then submit your defence to the court for filing and stamping.  You will also have to arrange for a copy of your defence to be served on the person bringing the claim (called the Plaintiff). If there is more than one plaintiff you will have to serve a copy of the stamped Court document on each party involved. The chamber magistrate or a solicitor can help you with your defence if you are unsure how to go about it. You should always keep your original stamped Defence. 

What Happens If I Don't Defend The Claim?

This means that the Plaintiff can make an application to the court after twenty eight (28) days for a default judgment. A default judgment is an order made by the court where the matter has not been defended, that is where the defendant has not shown up to court or filed a defence. This means that the Plaintiff would be successful in their case against you, as the court would make an order (default judgment) in your absence stating that you owe the money claimed by the Plaintiff.  Most of the time you will then have to pay the money that the court has ordered you to pay.  The money can be claimed from you anytime within twelve (12) years from the date of the judgement (Court order).

It is possible to apply to the court to have it set aside. However if there is no good reason why you did not submit a defence when you had the chance or you do not have a reasonable defence against the claim, you might have more costs to pay as well as the amount of the judgement if you are unsuccessful. 

If you defend the claim but you are still ordered to pay the money, you can apply to pay by instalments.  You can do this by asking the Magistrate at Court on the day to make an order that you pay by instalments.  You will have to show the Court why you are unable to pay the amount in full.  The Magistrate can make this order even if the plaintiff does not agree, if the Magistrate considers it is acceptable in the circumstances.

 

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The Person Who Is Claiming The Money From Me Also Owes Me Money; What Should I Do?

You should claim the money from them as part of your defence.  This is called a Cross-Claim and you would need to have filled in the proper form and submitted it to the court for filing and stamping within 28 days from when the Statement of Claim is served on you. This is usually done at the same time as your Defence is filed. You will then need to arrange for a copy of the cross-claim to be served on the person claiming against you.  You can get this form from the registry of the Local Court, and a Chamber Magistrate or a solicitor may be able to help you with it.

This form can also be downloaded from the Lawlink website at: www.lawlink.nsw.gov.au

 

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I Agree I Owe The Money. Do I Need To Do Anything?

Yes.  If you can sort the matter out with the person making the claim before it goes to court, it will be cheaper and easier.  If the matter goes to court and you lose, you risk having to pay the other side’s legal and court costs as well as their claim. Also, by negotiating the matter before it goes to court, you might also be able to work out a payment system that is easier for you, such as payment by instalments.  Even if you agree that you owe the money but don’t agree on the amount, you can try to negotiate the matter before it goes to court. If you make an agreement with the person making the claim (Plaintiff), you will need to submit a “consent to judgement” form with the court, which tells the court that there is no need to have the matter heard by a magistrate as the parties have come to an agreement. Both of you need to sign this.

 

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I Agree That I Owe Only Some Of The Money Being Claimed. What Can I Do?

You would need to file a Statement of Defence.  You should deny the part of the debt that you do not owe and admit to the part that you do owe.  Make sure you make it very clear and it is helpful to use the terms ‘admit’ and ‘deny’ to avoid confusion. Remember, that if you admit to part of the debt, you will have to arrange payment (such as by instalments at the end of the court process). If you are unsure about any of this, you should always get legal advice before filing in the form with the Court.

 

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I Have Decided To Defend The Matter And We Are Going To Court. What Happens In Court And How Can I Prepare?

It is best if you can get a solicitor to represent you. Sometimes community legal centres or Legal Aid can provide a solicitor for you (if you are eligible under their guidelines).  If you don’t want, or cannot afford a solicitor, you can defend the matter yourself. Community legal centres can also offer you information and advice about defending yourself and the Chamber Magistrate may be able to give you information about the process you will go through on the day.  Refer also to our Fact Sheet 6 following, called “Recovery of Debts: How do I defend myself in the Local Court?”.

 

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There Is A Judgment Against Me. What Happens Now?

A judgment debt, means that the Court has ordered that you owe the money to the Plaintiff (the person who sued you). There are a number of ways a judgment debt can be enforced.  You might have to pay it in full, or by instalments, or the money could be taken from your bank account or wages (a Garnishee Order). Sometimes your furniture or other goods can be taken and sold under an order called a ‘Writ For Levy of Property’.  For more information, see Fact Sheet 7 called: “Recovery of Debts: What happens when I have a Judgement Debt to pay?” A judgment creditor (the person who the Court states is owed the money, previously called the Plaintiff) can also apply to have you made bankrupt, where the debt owed is more than $2,000.

As mentioned, if you believe you do not owe the money and did not defend the claim in Court for a good reason, you may be able to make an application to the Court called a ‘Notice of Motion’ to have the default judgment set aside. This means that the Court can make another order cancelling the earlier order (the default judgement) stating you owe the money. You also need to file a defence with the ‘Notice of Motion’ explaining why you believe you do not owe the money either wholly or in part. In addition you would also need to state your reason for not filing your defence within the 28 days allowed.

 

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Produced by Redfern Legal Centre.
This factsheet is no substitute for legal advice. If you have a problem please seek legal advice from your local community legal centre