# https://stonegatelegal.com.au/ llms-full.txt

## Stonegate Legal Services
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# Stonegate Legal

## Trusted Legal Representation for Litigation Matters

At Stonegate Legal our lawyers assist, advise, and help people, businesses and companies with all civil & commercial litigation, debt disputes, and insolvency matters throughout Queensland.

[Litigation Services](https://stonegatelegal.com.au/services/)

[Speak To Our Trusted Lawyers Today](https://stonegatelegal.com.au/contact/)

## Committed To Your Cause

## Queensland Litigation & Dispute Lawyers

## Welcome to Stonegate Legal

Stonegate Legal is here to make sure you get a fair and commercially beneficial outcome for your dispute. Our approach to [commercial litigation](https://stonegatelegal.com.au/services/commercial-litigation/), debt law, and [insolvency law](https://stonegatelegal.com.au/services/insolvency/) is focused on getting just and commercial outcomes. We believe that transparency is key to success in this area, so you can rest assured that you are getting the best advice available.

[Meet The Team](https://stonegatelegal.com.au/about-stonegate-legal/)

## Get the Outcome You Deserve

With our team of commercial litigation and [debt recovery lawyers](https://stonegatelegal.com.au/services/debt-disputes/), you can be sure that your case will be handled with a focus on achieving a just and commercial outcome.

### [Debt Disputes](https://stonegatelegal.com.au/services/debt-disputes/)

### [Civil Litigation](https://stonegatelegal.com.au/services/civil-litigation/)

### [Insolvency](https://stonegatelegal.com.au/services/insolvency/)

### [Defamation Lawyers](https://stonegatelegal.com.au/services/defamation-lawyers/)

### [Commercial Litigation](https://stonegatelegal.com.au/services/commercial-litigation/)

[Contact us for a no-fee, no-obligation consult](https://stonegatelegal.com.au/contact/)

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### Litigation & Dispute Resolution

We approach your dispute with strategic thinking to achieve positive outcomes. Our honest process is designed to get you the best commercially sensible resolution

### Stonegate Legal - Helping People Resolve Disputes

[Our Expertise](https://stonegatelegal.com.au/services/)

[**Building & Construction**](https://stonegatelegal.com.au/services/building-and-construction-lawyers/)

Stonegate Legal is able to aid in addressing any issues related to construction and building, including payments, subcontractors' invoices and adjudications.

![unknown person using laptop](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/ydvdprpghv4.jpg)

[**Debt Recovery/Collection**](https://stonegatelegal.com.au/services/debt-disputes/)

Our speciality is dealing with matters relating to debt resolutions, debt retrieval, and enforcing court rulings, QCAT resolutions, and financial commands

![Our speciality is dealing with matters relating to debt resolutions, debt retrieval, and enforcing court rulings, QCAT resolutions, and financial commands](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/pexels-karolina-grabowska-7875867-2-1.jpg)

[**Commercial Litigation**](https://stonegatelegal.com.au/services/commercial-litigation/)

Our legal professionals have deep expertise in commercial disputes and offer unparalleled counsel to companies and individuals.

![Our legal professionals have deep expertise in commercial disputes and offer unparalleled counsel to companies and individuals.](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/IMAGE-Book-a-free-....jpg)

[**Corporations Disputes**](https://stonegatelegal.com.au/services/corporations-dispute-lawyer/)

Our experienced lawyers are dedicated to settling corporate disputes and offering proficient legal counsel to firms and companies.

![Our experienced lawyers are dedicated to settling corporate disputes and offering proficient legal counsel to firms and companies.](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/04/sgl.jpg)

[**Wills/Estate Litigation**](https://stonegatelegal.com.au/services/estate-litigation-lawyers/)

We can provide you with effective legal solutions and expert guidance to help you navigate complex wills and estate disputes, ensuring that your rights and interests are protected.

![woman signing on white printer paper beside woman about to touch the documents](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/hjckknwcxxq.jpg)

[**Insolvency**](https://stonegatelegal.com.au/services/insolvency/)

Our experiences lawyers provide comprehensive legal assistance for insolvency-related matters, such as bankruptcy, liquidation, and debt recovery.

![people sitting on chair in front of table while holding pens during daytime](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/kdeqa3atnby.jpg)

## Make Informed Decisions with Stonegate Legal

We approach your dispute with – strategic thinking and commercial solutions.

[Learn About Us](https://stonegatelegal.com.au/about-stonegate-legal/)

### High Quality & Personalised Service

Get the personalised legal service you need with Stonegate Legal’s Litigation Lawyers. With our high quality and experienced team, you can trust that you will get the advice and representation you need for your legal matters.

### Honest & Trusted Approach

When your legal situation requires sound advice and reliable guidance, you can count on Stonegate Legal. Our extensive knowledge of the law and extensive experience makes us the ideal choice for tackling your legal concerns with assurance.

### Concise Legal Advice

The Litigation Lawyers at Stonegate Legal are prepared to offer you thorough and precise legal counsel for your situation. Our expertise and awareness will guide you to the most advantageous resolution for your legal dispute.

### Extensive Experience & Legal Knowledge

Leverage Stonegate Legal's immense know-how and their years of industry know-how. Our team have the expertise and direction to make sure your legal requirements are taken care of.

### Stonegate Legal - Trusted Legal Representation for Litigation Matters

Trust us to be your fierce advocates and trusted advisors, navigating the complex legal landscape while keeping your best interests at the forefront. Make the smart choice and partner with us today.

[Discuss Your Case Today](https://stonegatelegal.com.au/#book)

[OR Call Now](tel:1300545133)

What Our Clients Say

Our client satisfaction is our top priority. We are proud to have served hundreds of clients who have had positive experiences working with us.

Designation

Stonegate Legal assisted my business from a strong legal perspective, while highlighting valuable strategy. They have the perfect sized firm to help with all matters either big or small. Wayne is a rare expert in Debt Recovery and his knowledge is extensive.

We had tried for 6mths to get payment from one of our debtors - Damon and the Stonegate Legal team were able to secure full payment within 30days. Sincerely appreciate the efficiency and professionalism.

Stonegate Legal provided good advice, and got us the outcome we were looking for. They were easy to deal with and kept me well informed through the process letting me know the options available as well as their advice.

The entire team at Stonegate Legal have been exceptional to deal with making a difficult situation so much easier to deal with, very pleasant and efficient, I highly recommend them.

### News & Articles

[![Statutory Demands in Construction - building and construction lawyers](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2025/07/Statutory-Demands-in-Construction-building-and-construction-lawyers-768x430.png)](https://stonegatelegal.com.au/statutory-demands-in-construction-complete-guide/)

Commercial Litigation

### [Statutory Demands in Construction – Complete Guide](https://stonegatelegal.com.au/statutory-demands-in-construction-complete-guide/)

Statutory Demands in Construction Statutory Demands in Construction – The risk of delayed or unpaid invoices is a persistent operational concern in the Australian construction

[Read Article](https://stonegatelegal.com.au/statutory-demands-in-construction-complete-guide/)

Wayne Davis 12/07/2025

[![Damages in Defamation Claims - Defamation lawyers in Australia](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2025/06/Damages-in-Defamation-Claims-Defamation-lawyers-in-Australia-768x430.webp)](https://stonegatelegal.com.au/damages-in-defamation-claims-complete-guide/)

Civil Litigation

### [Damages in Defamation Claims – Complete Guide](https://stonegatelegal.com.au/damages-in-defamation-claims-complete-guide/)

Damages in Defamation Claims Damages in defamation claims are monetary awards intended to compensate a plaintiff for harm to their reputation caused by a defamatory

[Read Article](https://stonegatelegal.com.au/damages-in-defamation-claims-complete-guide/)

Wayne Davis 22/06/2025

[![Extrinsic Evidence and the Parol Evidence Rule in Australia. Litigation lawyers](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2025/06/Extrinsic-Evidence-and-the-Parol-Evidence-Rule-in-Australia.-Litigation-lawyers-768x430.png)](https://stonegatelegal.com.au/extrinsic-evidence-and-the-parol-evidence-rule/)

Civil Litigation

### [Extrinsic Evidence and the Parol Evidence Rule](https://stonegatelegal.com.au/extrinsic-evidence-and-the-parol-evidence-rule/)

Extrinsic Evidence and the Parol Evidence Rule Extrinsic evidence and the parol evidence rule in contract interpretation are fundamental to Australian contract law. When parties

[Read Article](https://stonegatelegal.com.au/extrinsic-evidence-and-the-parol-evidence-rule/)

Wayne Davis 12/06/2025

## View Our Resources

[View All](https://stonegatelegal.com.au/news-articles/)

## Litigation & Dispute Resolution

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## Quick Links

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## Litigation Services

- [Commercial Litigation](https://stonegatelegal.com.au/services/commercial-litigation/)
- [Building & Construction Disputes](https://stonegatelegal.com.au/services/building-and-construction-lawyers/)
- [Debt Recovery Lawyers](https://stonegatelegal.com.au/services/debt-recovery-lawyers/)
- [Civil / PersonalLitigation](https://stonegatelegal.com.au/services/civil-litigation/)
- [Tax Debt Disputes](https://stonegatelegal.com.au/services/tax-debt-lawyers/)
- [Corporations Disputes](https://stonegatelegal.com.au/services/corporations-dispute-lawyer/)
- [Body Corporate Debt Recovery](https://stonegatelegal.com.au/services/body-corporate-debt-recovery/)
- [Commercial Lease Disputes](https://stonegatelegal.com.au/services/commercial-lease-disputes/)
- [Defamation Litigation](https://stonegatelegal.com.au/services/defamation-lawyers/)
- [Wills & Estates Litigation](https://stonegatelegal.com.au/services/estate-litigation-lawyers/)
- [Insolvency Lawyers](https://stonegatelegal.com.au/services/insolvency/)
- [Letters of Demand](https://stonegatelegal.com.au/letter-of-demand/)
- [Statutory Demands](https://stonegatelegal.com.au/statutory-demand/)
- [Bankruptcy Lawyers](https://stonegatelegal.com.au/bankruptcy/)
- [Drafting Credit Contracts](https://stonegatelegal.com.au/debt-contract-credit-application/)

- Office Hours

Monday – Friday

8:30 AM – 5:00 PM

- Brisbane City

[Level 10/ 95 North Quay,](https://maps.app.goo.gl/YdLbTuKmnziFrQDv5)

[Brisbane City, QLD 4000](https://maps.app.goo.gl/YdLbTuKmnziFrQDv5) – (appointment only)

- [07 3180 0143](tel:0731800143)

- Sunshine Coast - Main Office

[4/57-59 Mary Street,](https://maps.app.goo.gl/Suo6oYWeRohEDEBWA)

[Noosaville, QLD 4566](https://maps.app.goo.gl/Suo6oYWeRohEDEBWA)

- [07 5346 0366](tel:0753460366)

At Stonegate Legal, client satisfaction is our top priority. We are proud to have served hundreds of clients who have had positive experiences working with us.

Copyright © 2023 [**Stonegate Legal**](https://stonegatelegal.com.au/) Pty Ltd – All Rights Reserved – Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732) \| [Terms](https://stonegatelegal.com.au/terms-and-conditions/) \|  [Privacy](https://stonegatelegal.com.au/privacy-policy/) \| [Sitemaps](https://stonegatelegal.com.au/sitemap_index.xml) \| [\*Conditions Apply](https://stonegatelegal.com.au/terms-and-conditions/)

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## [Home](https://stonegatelegal.com.au/)

[About](https://stonegatelegal.com.au/#collapse-70ad7b9687f035f9ba77)

[About Stonegate Legal](https://stonegatelegal.com.au/about-stonegate-legal/)

[Our Team](https://stonegatelegal.com.au/the-stonegate-legal-team/)

[Frequently Asked Questions](https://stonegatelegal.com.au/stonegate-legal-faq/)

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[Debt Recovery / Collection](https://stonegatelegal.com.au/services/debt-disputes/)

[Corporations Disputes](https://stonegatelegal.com.au/services/corporations-dispute-lawyer/)

[Commercial Lease Disputes](https://stonegatelegal.com.au/services/commercial-lease-disputes/)

[Tax Debt Disputes](https://stonegatelegal.com.au/services/tax-debt-lawyers/)

[Civil / Personal Disputes](https://stonegatelegal.com.au/services/civil-litigation/)

[Defamation Litigations](https://stonegatelegal.com.au/services/defamation-lawyers/)

[Wills / Estate Litigation](https://stonegatelegal.com.au/services/estate-litigation-lawyers/)

[Insolvency Law](https://stonegatelegal.com.au/services/insolvency/)

[Statutory Demands](https://stonegatelegal.com.au/statutory-demand/)

## [News & Blogs](https://stonegatelegal.com.au/news-articles/)

## [Contact Us](https://stonegatelegal.com.au/contact/)

1300 545 133

No Fee, No Obligation Case Evaluation

## Stacey Harvey - Legal Expert
[Skip to content](https://stonegatelegal.com.au/team-member/stacey-harvey/#content)

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[1300 545 133](tel:1300%20545%20133)

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[Contact Us](https://stonegatelegal.com.au/contact/)

# Stacey Harvey

Stacey has been a part of the team at Stonegate Legal since 2022 but has worked in the industry for over 20 years, having extensive knowledge of the legal processes in Australia and specializing in debt recovery claims, default judgments, enforcement action, and bankruptcy.

Stacey spent a large portion of her career as a senior paralegal responsible for the performance and management of a team of paralegals and an administration department for many years.  During the first 18 years, she worked for one of Brisbane’s largest debt collection companies, where she managed large portfolios of debt for councils, schools, government departments, and insurance companies, along with debt purchased from various banks, utilities, and other credit providers.

Tagged [Commercial Lease Disputes](https://stonegatelegal.com.au/tag/commercial-lease-disputes/), [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/), [Debt Recovery/Collection](https://stonegatelegal.com.au/tag/debt-recovery-collection/), [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/), [Statutory Demands](https://stonegatelegal.com.au/tag/statutory-demands/), [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/)

[![Stonegate Legal - Litigation Lawyers](https://stonegatelegal.com.au/wp-content/uploads/2023/03/Logo_transparrent_Stonegatelegal-3.png)](https://stonegatelegal.com.au/)

## Quick Links

- [Home](https://stonegatelegal.com.au/)
- [About](https://stonegatelegal.com.au/about-stonegate-legal/)
- [Litigation Services](https://stonegatelegal.com.au/services/)
- [Frequently Asked Questions](https://stonegatelegal.com.au/stonegate-legal-faq/)
- [News & Blogs](https://stonegatelegal.com.au/news-articles/)
- [Free Case Evaluation](https://stonegatelegal.com.au/free-case-evaluation/)
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[![Member of the QLD Law Society](https://stonegatelegal.com.au/wp-content/uploads/2023/03/memberoftheQLDlawsociety.png)](https://www.qls.com.au/Home)

Individual liability limited by a scheme approved under professional standards legislation.

## Litigation Services

- [Commercial Litigation](https://stonegatelegal.com.au/services/commercial-litigation/)
- [Building & Construction Disputes](https://stonegatelegal.com.au/services/building-and-construction-lawyers/)
- [Debt Recovery Lawyers](https://stonegatelegal.com.au/services/debt-recovery-lawyers/)
- [Civil / PersonalLitigation](https://stonegatelegal.com.au/services/civil-litigation/)
- [Tax Debt Disputes](https://stonegatelegal.com.au/services/tax-debt-lawyers/)
- [Corporations Disputes](https://stonegatelegal.com.au/services/corporations-dispute-lawyer/)
- [Body Corporate Debt Recovery](https://stonegatelegal.com.au/services/body-corporate-debt-recovery/)
- [Commercial Lease Disputes](https://stonegatelegal.com.au/services/commercial-lease-disputes/)
- [Defamation Litigation](https://stonegatelegal.com.au/services/defamation-lawyers/)
- [Wills & Estates Litigation](https://stonegatelegal.com.au/services/estate-litigation-lawyers/)
- [Insolvency Lawyers](https://stonegatelegal.com.au/services/insolvency/)
- [Letters of Demand](https://stonegatelegal.com.au/letter-of-demand/)
- [Statutory Demands](https://stonegatelegal.com.au/statutory-demand/)
- [Bankruptcy Lawyers](https://stonegatelegal.com.au/bankruptcy/)
- [Drafting Credit Contracts](https://stonegatelegal.com.au/debt-contract-credit-application/)

- Office Hours

Monday – Friday

8:30 AM – 5:00 PM

- Brisbane City

[Level 10/ 95 North Quay,](https://maps.app.goo.gl/YdLbTuKmnziFrQDv5)

[Brisbane City, QLD 4000](https://maps.app.goo.gl/YdLbTuKmnziFrQDv5) – (appointment only)

- [07 3180 0143](tel:0731800143)

- Sunshine Coast - Main Office

[4/57-59 Mary Street,](https://maps.app.goo.gl/Suo6oYWeRohEDEBWA)

[Noosaville, QLD 4566](https://maps.app.goo.gl/Suo6oYWeRohEDEBWA)

- [07 5346 0366](tel:0753460366)

At Stonegate Legal, client satisfaction is our top priority. We are proud to have served hundreds of clients who have had positive experiences working with us.

Copyright © 2023 [**Stonegate Legal**](https://stonegatelegal.com.au/) Pty Ltd – All Rights Reserved – Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732) \| [Terms](https://stonegatelegal.com.au/terms-and-conditions/) \|  [Privacy](https://stonegatelegal.com.au/privacy-policy/) \| [Sitemaps](https://stonegatelegal.com.au/sitemap_index.xml) \| [\*Conditions Apply](https://stonegatelegal.com.au/terms-and-conditions/)

## Understanding Bankruptcy
[Skip to content](https://stonegatelegal.com.au/what-is-bankruptcy/#content)

[![Stonegate Legal Logo](https://stonegatelegal.com.au/wp-content/uploads/2023/03/Group-39.png)](https://stonegatelegal.com.au/)

[1300 545 133](tel:1300%20545%20133)

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[1300 545 133](tel:1300%20545%20133)

[Contact Us](https://stonegatelegal.com.au/contact/)

# Bankruptcy – What is it?

[Discuss Your Case Today](https://stonegatelegal.com.au/contact/)

## NEWS & ARTICLES

- [By \\
Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| December 18, 2015

Table of Contents

[Toggle](https://stonegatelegal.com.au/what-is-bankruptcy/#)

![Bankruptcy what is bankruptcy and how long does it last](https://stonegatelegal.com.au/wp-content/uploads/2015/12/Bankruptcy-what-is-bankruptcy-and-how-long-does-it-last.png)[Bankruptcy](https://stonegatelegal.com.au/bankruptcy/) happens when a person is unable to pay their debts when they become due and payable, and a trustee is appointed to administer the debtor’s insolvent estate.

You are considered insolvent if you can’t pay your debts when they’re due.

A debtor can become bankrupt by filing their own debtor’s petition with the Official Receiver, or a creditor can make a debtor bankrupt by presenting a creditor’s petition to the Federal Circuit Court.

This article will answer the most-asked bankruptcy questions and give you information on becoming bankrupt.

**Becoming bankrupt is not a punishment.  It is simply a way for debtors to manage their obligations to creditors, and for creditors to effectively recover debts from a debtor.**

**DEBTORS OR CREDITORS – FAST TURNAROUND – PROVEN RESULTS**

[GET A FREE FEE ESTIMATE TODAY](https://stonegatelegal.com.au/free-case-evaluation/)

## How long does Bankruptcy last?

Bankruptcy lasts for three (3) years.

An undischarged bankrupt’s estate will be managed for that time, and upon satisfactory compliance with the trustee, will be over at the end of that period and the bankrupt will be discharged from bankruptcy.

Non-compliance with the trustee may result in the trustee filing an objection to the discharge (pursuant to [149B of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s149b.html)) extending that time.

The [_Bankruptcy Amendment (Enterprise Incentives) Bill_ 2017](https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=s1097) seeks to reduce the minimum time for bankruptcy from three (3) years, down to one (1) year.  However, at the time of writing this article, this has not been passed into law.

A debtor should be mindful however, that although becoming bankrupt only lasts three (3) years, their name will be on the [National Personal Insolvency Index (NPII)](https://www.afsa.gov.au/online-services/bankruptcy-register-search/npii) permanently.  This means that their name will be searchable if a bank or investor chooses to conduct a search.

## Is Becoming Bankrupt the Right Option to Take?

For both creditors and debtors, debt problems can be solved by going bankrupt.

**For Debtors** – The debtor doesn’t have any more debts and is able to start again after the discharge of the bankruptcy.  Almost all unsecured debts will be wiped by the bankruptcy.

This includes personal bank loans, credit card debts, etc.  However, there are some debts and obligations which are not wiped by the bankruptcy, HECS debt and child support payments, for example.

**For Creditors** – The creditors get a benefit of an independent person (the bankruptcy trustee) who works for the creditor(s) to manage the debtor’s estate to attempt to meet the obligations of the debtor.

If there are funds and assets to realise, then there is likely to make some payment toward the creditors debts that have not been paid by the debtor.

A creditor may not get paid everything that they are owed by the debtor, but it may be better than receiving nothing from the debtor.

## How do you become bankrupt?

**For Debtors** – If a debtor wants to become bankrupt, they must file the statement of affairs and the debtor’s petition with the [Official Receiver (AFSA)](https://www.afsa.gov.au/).

If the debtor’s petition is accepted then the debtor has the option of appointing a [registered trustee](https://www.afsa.gov.au/practitioners/registered-trustee) for the administration of the estate, however creditors can change the trustee later if they do not agree with the debtor’s choice.

The [AFSA](https://www.afsa.gov.au/) can also not accept the debtor’s petition on a number of grounds, such as the debtor not actually indebted enough to warrant bankruptcy, and that the debtor could likely pay the debts.

**For Creditors** – If a creditor wants to enforce a judgment with bankruptcy, they will need to apply to [AFSA](https://www.afsa.gov.au/) for a bankruptcy notice.  Once they are given the bankruptcy notice, they must serve the debtor with the notice.

The debtor then has twenty one (21) days to comply with the bankruptcy notice, by either pay the judgment debt, or make arrangements with the creditor for repayment.

The bankruptcy notice says:

> _You are required, within 21 days after service on you of the Bankruptcy Notice, to either:_
>
> _(a) pay to the creditor the amount of the debt claimed; or_
>
> _(b) make arrangements to the creditor’s satisfaction for settlement of the debt._

Non-compliance with the bankruptcy notice means that the debtor has committed an act of bankruptcy, and it is that act of bankruptcy which allows the creditor to present a creditor’s petition to the [Federal Circuit Court](http://www.federalcircuitcourt.gov.au/wps/wcm/connect/fccweb/home).

Unless the debtor attempts to defeat the creditor’s petition, and ensuring that all of the special requirements of the _Bankruptcy Act_ have been complied with, then the Registrar will likely make the sequestration order.

The sequestration order is the order making the debtor bankrupt.

## What are the consequences of bankruptcy?

A bankrupt person has many obligations and restrictions which include:

1. The passport must be surrendered and permission must be given before there’s any overseas travel;
2. All the financial records of the bankrupt must be made available;
3. All of the divisible assets of the bankrupt must be available to the trustee;
4. The bankrupt isn’t able to act as a company officer (director or secretary);
5. The bankrupt isn’t able to trade with a registered business name without the disclosure that they are in fact bankrupt;
6. The bankrupt isn’t able to incur credit over a set amount with the disclosure to the lender that they in fact bankrupt.

The trustee will realise the bankrupt’s assets.  An asset that is able to be realised and can be divided among creditors and is called a divisible asset.  These divisible assets can include:

1. Property owned before the time the person becomes bankrupt or acquired during the proceedings;
2. Powers or rights over property that were in existence at the date of becoming bankrupt or doing the bankruptcy time;
3. The rights to exercise powers over any property.

Some examples of divisible assets may include:

1. Real estate – which includes the family home;
2. The contents of bank accounts; and
3. Items of personal property (vehicles for example).

The bankrupt’s assets which are not able to be realized may include:

1. Household items and necessary clothing;
2. Their tools of trade up to it indexed amount;
3. Any motor vehicles up to an indexed amount;
4. Property that has sentimental value;
5. Any superannuation payments;
6. Endowment policies or life insurance;
7. Compensation payments and certain damages; and
8. Any property that have sentimental value, being an award for cultural, sporting, academic achievement, or a military award.  This does not include any monetary awards.

A bankrupt person is still able to earn income up to a certain amount.  If there is an excess of this income, then a certain percentage must be paid into the estate.

If you want to end your bankruptcy, then you may be able to [annul your bankruptcy](https://stonegatelegal.com.au/bankruptcy-annulment-ending-your-bankruptcy-early/).

## How much can a Bankrupt Earn?

A bankrupt person is still allowed to work and earn money.  The amount that a bankrupt person can earn before making contributions is:

1. Number of Dependents – 0 – Income Allowable – $58,331.00
2. Number of Dependents – 1 – Income Allowable – $68,830.58

3. Number of Dependents – 2 – Income Allowable – $74,080.37

4. Number of Dependents – 3 – Income Allowable – $76,996.92

5. Number of Dependents – 4 – Income Allowable – $78,163.54

6. Number of Dependents – over 4 – Income Allowable – $79,330.16


So, this is a very reasonable amount of money.  If you are a working person with two (2) dependent children, then you can earn $74,080.37 before having to make any income contributions.

These amounts change, so you should always [look here](https://www.afsa.gov.au/insolvency/how-we-can-help/indexed-amounts-0).

As well as collecting any income contributions, the bankruptcy trustee has a number of other duties.

## What duties does the trustee have?

The trustee will:

1. Realise all of the assets of the bankrupt;
2. Investigate the financial affairs of the bankrupt;
3. Make any recovery of any assets necessary;
4. Report things to the creditors;
5. Report any offences;
6. Distribute any surplus funds to creditors.

The property and assets of the bankrupt will vest in the trustee once proceeding begins.  Vesting means that the trustee gains automatic rights and controls over assets and property without any special action being taken by the trustee.

## How are Creditors Impacted when someone becomes Bankrupt?

The unsecured and secured creditors of the bankrupt are impacted in different ways.

A secured creditor means that they have an interest over assets of the debtor.  One common example of this, is a bank that has a mortgage over real property.

If a creditor is unsecured they don’t hold a right or interest over a debtor’s asset.  An example of this, is a bank that is given a credit card to a customer.

A secured creditor can commence proceedings to enforce its security interest, to retake possession for example, or exercise the power of sale.

The unsecured creditors must lodge a proof of debt with the bankruptcy trustee and will be paid in the order of preference.

It is not just the current assets of the bankrupt which can be realised by the trustee, they can also void certain transactions to bring funds back into the bankrupt’s estate.

## What are Voidable Transactions?

We have an entire article about [voidable transactions in bankruptcy](https://stonegatelegal.com.au/voidable-transactions-bankruptcy/).

In the [_Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/index.html), there are four (4) transactions which can be voided by the bankruptcy trustee, these are:

1. Undervalued transactions – section [120 of the Bankruptcy Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s120.html); and/or
2. Transfers to defeat creditors – section [121 of the Bankruptcy Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s121.html); and/or
3. Transactions where consideration given to a third party – section [121A of the Bankruptcy Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s121a.html); and/or
4. Transactions giving preference to one creditor over other creditors – section [122 of the Bankruptcy Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s122.html).

The trustee is able to void the transactions above if he/she is able to do the following:

- Identify the transaction and identify the transaction as a voidable transaction in bankruptcy;
- Identify the other party to the transaction in order to get the property or money from them;
- Identify when the transaction occurred to prove it falls within the legislative time limits; and
- Ensure that the transaction was not protected property under the Bankruptcy Act.

As you can see, although bankruptcy is not a punishment, it can have very serious ongoing consequences for the bankrupt.

There are however some alternatives to bankruptcy.

## What are the Alternatives to Bankruptcy?

There are a few alternatives to bankruptcy.  They are:

1. Informal debt agreements; or
2. Formal Part IX (Part 9) Debt Agreements; or
3. Part X (Part 10) Personal Insolvency Agreements.

## Informal Debt Agreements

A [bankruptcy lawyer](https://stonegatelegal.com.au/bankruptcy/) can attempt to negotiate with the debtor or creditor in an attempt to resolve the dispute between the parties.

You must be mindful that accepting an “arrangements to the creditor’s satisfaction for settlement of the debt” is compliance with the bankruptcy notice.  This means that the debtor will not have committed an act of bankruptcy, and the creditor will be unable to present their petition to the Federal Circuit Court.

If you are going to attempt to negotiate an informal agreement, then it should be done before the issuance of, or after the twenty one (21) day period for compliance, with the Bankruptcy notice.

It should also be noted that it is the making of the arrangement, and not the adherence to the arrangement which complies with the bankruptcy notice.  See [_Deputy Commissioner of Taxation v Catanese_ \[1999\] FCA 564](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/1999/564.html).

## A Part IX Debt Agreement

A Part IX debt agreement is something more than an informal debt agreement, but something less than full bankruptcy.

We have a full article [here about Part IX Debt Agreements](https://stonegatelegal.com.au/bankruptcy-lawyers-101-complete-guide/).  But essentially:

1. Proposing a Part IX Debt Agreement is an act of bankruptcy;
2. A Part IX debt agreement is registered on the National Personal Insolvency Index, a search of which will show your name, which may affect your credit rating and your ability to borrow;
3. A Part IX Debt Agreement will only cover unsecured debts, a secured creditor can still attempt to realise their security interest; and
4. If you trade under a business name, being a name that is not your name, you have to disclose the Part IX Debt Agreement to all other people that you are in business with.

So, as you can see the Part IX is still serious and may have implications moving forward past the debt problems, however it is a lot better than becoming a bankrupt.

## A Part X Personal Insolvency Agreement

A [Part X Personal Insolvency Agreement](https://stonegatelegal.com.au/what-is-a-part-x-personal-insolvency-agreement/) is something more than a Part IX Debt Agreement, but something less than full bankruptcy.

We have a full article [here about Part X Personal Insolvency Agreements](https://stonegatelegal.com.au/bankruptcy-lawyers-101-complete-guide/).  But essentially:

1. Entering into a Part X Personal Insolvency Agreement is an act of bankruptcy. An act of bankruptcy, like non-compliance with a bankruptcy notice, allows the creditors to present a petition to the Federal Circuit Court.
2. A Part X Personal Insolvency Agreement is registered on the National Personal Insolvency Index forever, a search of which will show your name, which may affect your credit rating and your ability to borrow, and a default will appear on your credit file.
3. A Part X Personal Insolvency Agreement means that you will not be able to have any dealings with your assets (house or real property) without the consent of the trustee.
4. A Part X Personal Insolvency Agreement does not allow you to be the director of a company, and so if you are currently the director of a company (a trustee company of a self-managed-superannuation-fund, for example) then you will have to appoint another director.

## Moving Forward with Bankruptcy

If you are a debtor having difficulty paying your debts, or you are a creditor having difficulty getting paid from a debtor, then you should contact our debt recovery / bankruptcy lawyers.

**Becoming bankrupt is not a punishment.  It is simply a way for debtors to manage their obligations to creditors, and for creditors to effectively recover debts from a debtor.**

**DEBTORS OR CREDITORS – FAST TURNAROUND – PROVEN RESULTS**

[GET A FREE FEE ESTIMATE TODAY](https://stonegatelegal.com.au/free-case-evaluation/)

#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation.

With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice.

Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings.

Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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## Enforce QCAT Decisions
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# Enforce a QCAT Decision

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## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| June 23, 2018

## Article Summary

The article provides a comprehensive guide on how to enforce a decision made by the _Queensland Civil and Administrative Tribunal_ ( **QCAT**) in Australia. Here’s a detailed but succinct summary:

1. **Registering the QCAT Decision**: The first step in enforcing a QCAT decision involves registering it with the Magistrates Court. Once registered, the decision becomes an enforceable money order, treated as if it were an order of the Magistrates Court.
2. **Enforcement Options**: After registration, there are several options for enforcement:
1. **Enforcement Warrant**: You can apply for various types of enforcement warrants, such as for redirection of earnings, redirection of a debt, or regular redirections from a financial institution.
2. **Bankruptcy Notice**: If the debtor owes more than $10,000, you can serve a bankruptcy notice. Non-compliance by the debtor can lead to a bankruptcy declaration.
3. **Statutory Demand**: For company debtors, serving a statutory demand under the Corporations Act 2001 can be an option. Failure to comply can lead to a presumption of insolvency and potential liquidation of the debtor company.

An important part of the enforcement process is gathering information about the debtor’s financial position. This can be done by requiring the debtor to complete a statement of financial position or through an enforcement hearing summons order, where the debtor is cross-examined about their financial situation.

The article also details the process of issuing enforcement warrants, including the need for evidence of the debtor’s assets and financial status.

The [litigation lawyers at Stonegate Legal](https://stonegatelegal.com.au/services/commercial-litigation/) offers assistance in registering QCAT decisions and advising on the best enforcement options based on individual circumstances.

Table of Contents

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![Enforce a QCAT Decision queensland debt recovery](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2018/06/Enforce-a-QCAT-Decision-queensland-debt-recovery-296x300.png)How do you enforce a QCAT decision?

1. First, you must register the QCAT decision in the Magistrates Court; then
2. You can enforce it as though it were an order of that Court;
3. You can apply for an enforcement warrant, a bankruptcy notice, or serve a statutory demand – to enforce the registered QCAT decision over the property of the judgment debtor.

Stonegate Legal can advise you and assist you with:

1. How to register your decision from QCAT (making it an enforceable money order); and
2. Tell you about your options for enforcing that Judgment.

If you have been given a decision in QCAT or other tribunal, then you can Enforce a QCAT Decision in the Court with jurisdiction.

The first step in the process in to register your QCAT decision in the Magistrates Court.  Once registered it becomes an enforceable money order.

**You have done a great job in getting your QCAT Decision. Now let our experienced debt enforcement lawyers enforce that decision for you in the Court, or with a bankruptcy notice, or with a statutory demand**

[GET A FREE FEE ESTIMATE NOW](https://stonegatelegal.com.au/free-case-evaluation/)

**Call [1300 545 133](tel:1300545133) today and speak to a debt enforcement lawyer**

## How to Register a QCAT Decision in the Magistrates Court

[Section 131](http://classic.austlii.edu.au/au/legis/qld/consol_act/qcaata2009428/s131.html) “Monetary decisions” of the QCAT Act says:

> (1) This section applies to a final decision of the tribunal in a proceeding that is a monetary decision, to the extent the decision requires payment of an amount to a person.
>
> (2) A person may enforce the final decision by filing a copy of the decision in the registry of a court of competent jurisdiction.

To enforce a QCAT decision therefore, if you have a monetary decision from QCAT, in your favour, and the debtor is still not paying, then you can commence enforcement proceedings by registering the decision in the [Magistrates Court](http://www.courts.qld.gov.au/courts/magistrates-court).

Once you have a copy of the monetary decision, you will also need to provide the [Magistrates Court](http://www.courts.qld.gov.au/courts/magistrates-court) with an affidavit swearing or affirming that the amount in the monetary decision is still outstanding.

[Download Affidavit Template from the Court here](http://www.courts.qld.gov.au/about/forms) – look for [form 46 – Affidavit (UCPR)](http://www.courts.qld.gov.au/__data/assets/word_doc/0009/93078/Form-46-Affidavit-UCPR.doc)

Once you have your copy and your sworn or affirmed affidavit, you will need to make a couple of copies.  Take the original and the copies to the registry of the [Magistrates Court](http://www.courts.qld.gov.au/courts/magistrates-court) and they will stamp the copies with the Court’s seal.

[Section 131](http://www.austlii.edu.au/au/legis/qld/consol_act/qcaata2009428/s131.html) “Monetary decisions” of the QCAT Act then goes on to say:

> (3) On filing a copy of the final decision under subsection (2) , the decision is taken to be a money order of the court in which it is filed and may be enforced accordingly.

## Your Options to Enforce a QCAT Decision

1. Enforce the decision in the Magistrates Court;
2. Serve the debtor company with a statutory demand; or
3. Serve the debtor with a bankruptcy notice.

### Enforce a QCAT Decision as a Judgment in the Magistrates Court

Your main options for enforcing the Judgment in the Magistrates Court are:

1. Attempt to extract from the debtor information regarding its financial position; or
2. Apply to the Court for the issue of one of the various types of enforcement warrant.

### Attempting to extract information regarding the debtor’s financial position

This enforcement option is strictly an information gathering exercise. If the debtor provides documents showing any assets they own, the equity in those assets, and details of any debts owed to them, this method of enforcement has achieved its purpose.

Section [807 of the UCPR](http://www.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s807.html) states:

> _At any time after a money order is made, an enforcement creditor may, by written notice, require an enforcement debtor to complete and return to the enforcement creditor a statement of financial position of an enforcement debtor in the approved form._

The first step is to give the debtor a written notice requiring them to complete a sworn statement of financial position. They have fourteen (14) days from receiving the notice to complete and return it.

[CLICK FOR A FORM 71 STATEMENT OF FINANCIAL POSITION](https://www.courts.qld.gov.au/about/forms?root=84820)

If you are not satisfied with the contents of the completed statement of financial position, or the debtor does not return one at all, a creditor can then apply to the Court for an enforcement hearing summons order.

[Section 808 of the UCPR](http://www.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s808.html) says:

> _An enforcement creditor may, without notice to another party, apply to the court, including the court as constituted by a registrar, for an enforcement hearing._

An enforcement hearing summons order is a Court order requiring a debtor to complete a statement of financial position (if they have not done so), produce substantial documents regarding their financial position, and appear in Court for the purpose of being cross examined about their financial position.

The enforcement hearing can proceed no earlier than fourteen (14) days after the enforcement hearing summons order is served.

If a debtor is served with an enforcement hearing summons order at least fourteen (14) days before the date set for the enforcement hearing, but does not attend the hearing, the Court may issue a warrant for their arrest.

Your option to apply to the Court for the issue of one of the various types of enforcement warrant is explained below.

## Issuing an Enforcement Warrant

The three (3) main types of enforcement warrants that can be issued by the Magistrate Court to enforce the Judgment are:

1. [Enforcement warrant for redirection of earnings](http://www.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s855.html);
2. [Enforcement warrant for redirection of a debt](http://www.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s840.html); and
3. [Enforcement warrant for regular redirections from a financial institution](http://www.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s848.html).

### Enforcement Warrants for Seizure and Sale of Property

To issue a warrant for seizure and sale of property, the Court will need evidence showing what property is owned by this debtor and the equity in that property.

You should perform searches of the [online records of the Queensland land titles registry](https://www.qld.gov.au/housing/buying-owning-home/property-search/) reveal that the debtor owns real property in Queensland.

You can apply for an enforcement warrant requiring the enforcement officer to visit this debtor’s home to make enquiries about whether there are any assets owned by the debtor that can be seized and sold.

However, in our experience, debtors rarely voluntarily reveal to the Court’s enforcement officer what assets they own that can be seized.

### Enforcement Warrants for Redirection of Earnings

To issue a warrant for redirection of earnings the Court will need to be provided with evidence:

1. whether the enforcement debtor is employed and the enforcement debtor’s employer has been identified;
2. whether the enforcement debtor has sufficient means of satisfying the order after deducting;
3. the necessary living expenses of the enforcement debtor and the enforcement debtor’s dependants; and
4. any other known liabilities of the enforcement debtor.

For the reasons above, we do not recommend applying for an enforcement warrant unless you have sufficient evidence of the criteria mentioned above.

## Serving the Debtor with a Bankruptcy Notice

If a debtor owes a judgment debt of over $10,000.00 then a creditor can ask the [Federal Circuit Court](http://www.federalcircuitcourt.gov.au/wps/wcm/connect/fccweb/home) to declare the debtor bankrupt. To declare this debtor bankrupt the creditor must prove to the Court that [debtor has committed an act of bankruptcy](http://www.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s40.html).

The most common act of bankruptcy is failing to follow the instructions in a bankruptcy notice as outlined in [section 40(1)(g) of the _Bankruptcy Act_](http://www.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s40.html) which says:

> _A debtor commits an act of bankruptcy …_
>
> _(g) if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not:_
>
> _(i) where the notice was served in Australia–within the time specified in the notice; or_
>
> _(ii) where the notice was served elsewhere–within the time fixed for the purpose by the order giving leave to effect the service;_
>
> _comply with the requirements of the notice or satisfy the Court that he or she has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained._

This bankruptcy notice is issued by the [_Australian Financial Security Authority (the AFSA)_](https://www.afsa.gov.au/) and then served on the debtor. The main instruction is that the debtor pay the amount of a judgment debt within the time specified in the bankruptcy notice.

#### Creditor’s Petition in Bankruptcy

If the debtor fails to follow the instructions in a bankruptcy notice then you can serve a creditor’s petition.

## Serving the Debtor with a Post-Judgment Statutory Demand

If the debtor is a company, then you have the option to serve this debtor with a statutory demand for payment of the debt under [_section 459E of the Corporations Act 2001 (Cth)_](http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s459e.html). If the debtor is served with a statutory demand, it will have twenty one days to:

1. Comply with the demand; or
2. Apply to the Court for an order setting the judgment or the demand aside.

[Check out our article on setting aside a stat demand here](https://stonegatelegal.com.au/setting-aside-statutory-demand-complete-guide/)

If the statutory demand is not set aside and the debtor does not comply with it, then the debtor is presumed to be insolvent for three (3) months. While the debtor is presumed to be insolvent, you may apply to wind it up on the grounds of insolvency.

If the debtor is forced into liquidation, its liquidator(s) will sell all of its assets to raise money in an attempt to make a distribution to its creditors.

The costs of an application to wind up a debtor company on the grounds of insolvency are payable out of the pool of funds realised in the liquidation in priority to the liquidator’s fees.

## Conclusion on how to Enforce a QCAT Decision

If you want to enforce a QCAT decision, you first need to register your QCAT decision in the Magistrates Court.  Then you need to work out what the best enforcement option would be in your particular circumstances.

[CONTACT US FOR A FREE CONSULTATION](https://stonegatelegal.com.au/contact-stonegate-legal/)

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![Picture of Wayne Davis](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/desktop/optimized/rev-748d11d/secure.gravatar.com/avatar/5841d7da8b6c7d486226c9358f93fc5a.5b54ec283af918fb28f171190159c8892905cb00c7f8bf19a380e6224d11fa82)

#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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## Appealing QCAT Decisions
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# Appealing a QCAT Decision

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## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| December 30, 2016

## Article Summary

In this article, our **[litigation lawyers](https://stonegatelegal.com.au/services/civil-litigation/)** discuss appealing a decision made by the Queensland Civil and Administrative Tribunal (QCAT).

Depending on the grounds, appeals can address questions of fact, law, or a combination of both. Applications to reopen a proceeding are allowed in cases where a party missed a hearing due to a reasonable excuse or new evidence causing substantial injustice has arisen.

Appeals can either be internal within QCAT or, in cases involving judicial officers, directed to the Queensland Court of Appeal. Proper documentation, including Form 39 for appeals and adherence to time limits, is critical to ensure the appeal’s validity.

The appeal tribunal has broad discretion to confirm, amend, or set aside decisions or to return matters for reconsideration with specified directions.

Fees for appeals vary based on the type of matter and strict deadlines—28 days for filing appeals or applications for leave to appeal—apply.

Legal advice is strongly recommended due to the complexity of the appeal process, which includes presenting evidence of errors or injustice in the original decision.

Understanding procedural requirements and potential outcomes is essential for navigating appeals effectively.

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![Appealing a QCAT Decision Stonegate Legal](<Base64-Image-Removed>)Are you appealing a QCAT decision in a [litigation](https://stonegatelegal.com.au/services/civil-litigation/) matter?  This article will explain the steps involved with appealing a decision of the Queensland Civil and Administrative Tribunal (“ **QCAT**”), including:

1. Making an application to reopen a proceeding;
2. Making an application to set aside a default decision;
3. If your QCAT matter can even be heard on appeal;
4. If it can be heard, where to file your appeal;
5. Matters on appeal that are heard by judicial members;
6. Matters on appeal that are heard by non-judicial members; and
7. Appeal questions of law and appeal questions of fact.

## Reopen a proceeding – Appealing a QCAT Decision

If you are looking at Appealing a [QCAT Decision](https://stonegatelegal.com.au/non-publication-order-in-qcat/), sections 136 to 141 of the _[QCAT Act](http://www.austlii.edu.au/au/legis/qld/consol_act/qcaata2009428/)_ allows a person to reopen a proceeding after a final order has been made.  A reopening application may only be heard on the papers, meaning there is no attendance needed for a decision to be made to reopen a proceeding.

The case of [_Davana Timber Industries Pty Ltd v Cool_ \[2012\] QCAT 201](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCAT/2012/201.html) gives the legal reasoning from QCAT in relation to reopening a matter after a decision has been made.

They said that:

> _There are two reopening grounds set out in the QCAT Act:_
>
> _The party did not appear at the hearing of the proceeding and had a reasonable excuse for not attending the hearing; or_
>
> _The party would suffer a substantial injustice if the proceeding was not reopened because significant new evidence has arisen and that evidence was not reasonably available when the proceeding was first heard._

### The Party did not Appear and had Reasonable Excuse

The first point above is self-evident.  If you did not appear at the hearing but had a reasonable excuse for not attending, and your opponent was awarded the [decision in default](https://stonegatelegal.com.au/enforce-a-judgment-from-qcat/), then the Tribunal have grounds to re-open the proceeding.  But what is “ _reasonable excuse_”?

### Define Reasonable Excuse

The case law in Queensland in relation to Appealing a QCAT Decision have defined reasonable excuse to be:

1. Not being given the notice of hearing as required – _[N+S Newham Pty Ltd v Cost-U-Less Concreting Pty Ltd \[2015\] QCAT 36](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCAT/2015/36.html)_
2. The notice of hearing had not been received by the respondents – _[Rayner & Anor v Trabme Pty Ltd t/as Elders Redcliffe \[2013\] QCATA 212](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCATA/2013/212.html)_ and _[Hotrod Mobile Welding Services v Suncity Holdings Qld Pty Ltd \[2013\] QCATA 170](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCATA/2013/170.html)_.
3. The [QCAT application](https://stonegatelegal.com.au/qcat-applications/) was sent to the wrong address for the respondent – _[Stato Pty Ltd and Anor v Jenkins \[2011\] QCAT 391](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCAT/2011/391.html)_.

### Substantial Injustice because of New Evidence

The second point above means that new evidence has been made available after the decision that was not available before the decision; and that by not hearing that evidence, the party applying for the proceeding to be reopened would suffer substantial injustice.

But what does “ _substantial injustice_” mean in the context of Appealing a QCAT Decision?

### Substantial Injustice

The case law have defined substantial injustice to mean:

1. A mistake by the Tribunal – _[Tim Hook t/as Asset Tiling Services v North Brisbane Homes Pty Ltd (in liquidation) \[2013\] QCAT 240](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCAT/2013/240.html)_.
2. Not being given the notice of hearing as required – _[N+S Newham Pty Ltd v Cost-U-Less Concreting Pty Ltd \[2015\] QCAT 36](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCAT/2015/36.html)_.

However in [_Crawford v Commissioner of State Revenue \[2014\] QCAT 418_](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCAT/2014/418.html) the Tribunal said:

> _The Tribunal must act fairly and according to principles of natural justice with as little formality and as much speed as matters permit. Incorrect advice from the Registry, if given, is not a denial of procedural fairness._

This means that the level of discretion able to be given by the Tribunal is high.  Under _[section 61 of the QCAT Act](http://www.austlii.edu.au/au/legis/qld/consol_act/qcaata2009428/s61.html)_ the Tribunal may waive compliance with procedural requirements of the QCAT Act or its rules.  In the interests of dealing with the matter efficiently and without further delay the Tribunal may elect to treat an application as it sees fit.  This means that the level of discretion able to be given by the Tribunal is high, and it may waive requirements which may not be waived in Court.

**The [form 43 – Application for reopening, correction, renewal or amendment is here](http://www.qcat.qld.gov.au/__data/assets/pdf_file/0011/101090/form-43-app-reopening-correction-renewal-amendment.pdf).**

## Setting Aside a Default Decision of QCAT

If you have been served with an application in the first instance; and you have done nothing about it; or you missed or miscalculated the time to respond; then the applicant can apply for a decision in default.

You can apply to [set aside a default decision](https://stonegatelegal.com.au/setting-aside-default-decision-qcat/) pursuant to _[section 51 of the QCAT Act](http://www.austlii.edu.au/au/legis/qld/consol_act/qcaata2009428/s51.html)_.  Like setting aside a default judgment in the Courts, QCAT will only grant an application if the applicant can provide the following factors:

1. Do you have a prima facie defence on the merits;
2. Do you have a satisfactory explanation as to why you failed to file a response;
3. Did you delay the making of the application to set aside the QCAT decision;
4. the applicant’s good faith, including their conduct in the proceedings before and after the default decision was made; and
5. If the opposing party would be prejudiced if the decision to set aside was made.

The case of _[Garland and Anor v Bulter McDermott Lawyers \[2011\] QCATA 151](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCATA/2011/151.html)_ outlines the requirements in relation to setting aside a default decision in QCAT.  This case states:

> _Section 51 is in very similar terms to [rule 290 of the Uniform Civil Procedure Rules 1999](http://www.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s290.html).  Decisions on [Rule 290](http://www.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s290.html) show that, among the factors relevant to the discretion arising under it are whether or not there is a good reason for the respondent’s’ failure to file the response: any delay in bringing the application: the respondents’ conduct in the proceedings before and after judgment: the respondents’ good faith, whether the respondents have raised a defence on the merits, and whether the applicant would be severely prejudiced if the judgment was set aside._

See our article on [Setting Aside a Default Judgment of the Courts here](https://stonegatelegal.com.au/setting-aside-default-judgment/).

## Appealing a QCAT Decision

An appeal of a decision in QCAT can be made on a question of law and/or fact.

An appeal can be made by **[Form 39 – Application for leave to appeal or appeal](http://www.qcat.qld.gov.au/__data/assets/pdf_file/0016/101086/Form-39-application-for-leave-to-appeal.pdf)**.

### Questions of Fact for Appealing a QCAT Decision

A question of fact is where you believe that the member of the Tribunal was wrong on a factual question; for example, they misread/misinterpreted the evidence or misunderstood the technical aspects of the proceeding.

### Question of Law

If you think that QCAT made a decision which is legally wrong, then you would appeal on a question of law. An appeal on any of the following grounds is an appeal on a question of law:

1. the decision applies the wrong law to the facts of the case;
2. the decision misinterprets the meaning of legislation;
3. the decision fails to apply relevant law;
4. the decision makes a finding of fact where there is no evidence to support that finding;
5. the Tribunal did not have jurisdiction to make the decision;
6. the Tribunal breached the rules of natural justice in making the decision.

[_Commissioner for Children and Young People and Child Guardian v Lister_ \[2011\] QCATA 22](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCATA/2011/22.html) outlines:

> _It is an error of law to fail to consider a relevant factor in arriving at a decision.  It is also an error of law to fail to reveal the reasoning for a decision.  It is not necessarily an error of law to attach inadequate or inappropriate weight to a particular consideration.  The distinction between an error of law and one of fact or mixed fact and law can be elusive.  In this case the distinction is an important one to draw because the Commissioner has proceeded only on an error of law._

This case applied numerous cases to make its findings:

1. It is an error of law to fail to consider a relevant factor in arriving at a decision – _[House v R \[1936\] HCA 40](http://www.austlii.edu.au/au/cases/cth/HCA/1936/40.html)_;
2. It is also an error of law to fail to reveal the reasoning for a decision – _[Cypressvale P/L & anor v Retail Shop Leases Tribunal \[1995\] QCA 187](http://www.austlii.edu.au/au/cases/qld/QCA/1995/187.html)_;
3. It is not necessarily an error of law to attach inadequate or inappropriate weight to a particular consideration – _[Hill v Repatriation Commission \[2005\] FCAFC 23](http://www.austlii.edu.au/au/cases/cth/FCAFC/2005/23.html)_; and
4. The distinction between an error of law, one of fact, or a mix of fact and law can be elusive – [_Minister for Immigration and Multicultural Affairs v Hu (1997) 79 FCR 309_](http://www.austlii.edu.au/cgi-bin/LawCite?cit=%281997%29%2079%20FCR%20309?query=).

## What is the Process for Appealing a QCAT Decision

QCAT member may be judicial officers (such as the President or Deputy President of the Tribunal, or a judge of the Supreme Court or District Court).

QCAT members may also be non-judicial officers (all other QCAT members and adjudicators).

If the person who made the original decision was a judicial officer then you are not able to appeal internally and an appeal can only be made to the [Queensland Court of Appeal](http://www.courts.qld.gov.au/courts/court-of-appeal).

If the person who made the original decision was a non-judicial officer then you are able to appeal internally through the QCAT internal appeals process by using the **[Form 39 – Application for leave to appeal or appeal](http://www.qcat.qld.gov.au/__data/assets/pdf_file/0016/101086/Form-39-application-for-leave-to-appeal.pdf)** under section _[149 QCAT Act](http://www.austlii.edu.au/au/legis/qld/consol_act/qcaata2009428/s149.html)_.

The Case of [_Amundsen v Queensland College of Teachers_ \[2011\] QCATA 2](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCATA/2011/2.html) provides an example of the Appeal Tribunal’s consideration of the following factors.  The tribunal said:

> _The tribunal agrees with the submissions of the Respondent College that leave to appeal under those particular sections should be granted if the applicant can establish one of the following principles:_

1. > _Is there a reasonably arguable case of error in the primary decision?_

2. > _Is there a reasonable prospect that the applicant will obtain substantive relief?_

3. > _Is leave necessary to correct a substantial injustice caused by some error?_

4. > _Is there a question of general importance upon which further argument and a decision of the appellant court or tribunal would be to the public advantage?_


If you are able to make out the above in relation to your particular set of factual circumstances then leave to appeal should be given.

### QCAT Fees for **Appealing a QCAT Decision**

The fees for QCAT Appeals is between $345.80 and $2746.00 depending on matter type.  You [can click through to this page](http://www.qcat.qld.gov.au/applications/fees-and-allowances) to find out for sure.

### **Time Limits Apply to Appealing a QCAT Decision**

If you do not need leave to appeal, the appeal application must be filed within 28 days after receiving written reasons for the decision pursuant to _[section 143(4)(a) QCAT Act](http://www.austlii.edu.au/au/legis/qld/consol_act/qcaata2009428/s143a.html)_.

If you do need leave to appeal, the application for leave must be filed within 28 days after receiving your written reasons in the initial decision pursuant to _[section 143(3) QCAT Act](http://www.austlii.edu.au/au/legis/qld/consol_act/qcaata2009428/s143a.html)_. If you are granted leave, then the application to appeal must then be filed within 21 days after the day leave is given, as above.

Section 61(3) of the QCAT Act allows:

> _The tribunal to extend or shorten a time limit or waive compliance with another procedural requirement if to do so would cause prejudice or detriment, not able to be remedied by an appropriate order for costs or damages, to a party or potential party to a proceeding._

### **What will the QCAT Appeal Tribunal do?**

_[Section 146 of the QCAT Act](http://www.austlii.edu.au/au/legis/qld/consol_act/qcaata2009428/s146.html)_ says:

If the appeal is on a question of fact or mixed law and fact, the Appeal Tribunal may:

> _In deciding an appeal against a decision on a question of law only, the appeal tribunal may—_
>
> _(a) confirm or amend the decision; or_
>
> _(b) set aside the decision and substitute its own decision; or_
>
> _(c) set aside the decision and return the matter to the tribunal or other entity who made the decision for reconsideration—_
>
> _(i) with or without the hearing of additional evidence as directed by the appeal tribunal; and_
>
> _(ii) with the other directions the appeal tribunal considers appropriate; or_
>
> _(d) make any other order it considers appropriate, whether or not in combination with an order made under paragraph (a), (b) or (c)._

Applying for an appeal is complicated and it is advisable that you seek the right legal advice.

## Appealing a QCAT Decision FAQ with Answers

Appealing a QCAT decision can be a challenging process, requiring a clear understanding of legal requirements and procedural steps.

This FAQ section addresses common questions, providing concise and practical answers to help you navigate the appeal process with confidence.

### What are the main reasons for appealing a QCAT decision?

You can appeal a QCAT decision if there are grounds based on errors of law or fact, or a combination of both. Appeals may arise from misinterpretation of evidence, incorrect application of the law, or breaches of natural justice. Additionally, reopening a case is possible if a party did not attend due to a reasonable excuse or if significant new evidence has surfaced. It is essential to provide clear evidence supporting the grounds for appeal.

### Can I reopen a QCAT proceeding after a final decision?

Yes, the QCAT Act allows reopening under specific conditions. Reopening is possible if a party failed to attend due to a reasonable excuse or if substantial new evidence has emerged. The application to reopen can often be resolved “on the papers” without a formal hearing. Clear evidence is required to justify reopening the proceeding.

### What constitutes a reasonable excuse for missing a QCAT hearing?

A reasonable excuse includes not receiving notice of the hearing, the notice being sent to the wrong address, or other genuine reasons beyond the party’s control. Case law supports reopening decisions where proper notice was not provided. The Tribunal considers fairness and natural justice when assessing whether the excuse is valid. Each case is assessed on its unique facts and circumstances.

### What is substantial injustice in the context of reopening a QCAT case?

Substantial injustice refers to significant harm caused by the absence of crucial evidence that was not reasonably available during the original proceeding. Examples include errors by the Tribunal or procedural flaws that undermine the decision’s fairness. The Tribunal evaluates whether reopening the case is necessary to ensure a just outcome. Applicants must demonstrate how the new evidence would have changed the original decision.

### What is the process for setting aside a default QCAT decision?

A party can apply to set aside a default decision if they failed to respond to the initial claim. To succeed, the applicant must demonstrate a defence on the merits, a reasonable explanation for the failure, and timely action in filing the application. The Tribunal also considers the applicant’s good faith and potential prejudice to the opposing party. This process mirrors the requirements for setting aside default judgments in court.

### What is an appeal on a question of law?

An appeal on a question of law challenges legal errors in the original decision. This may include applying the wrong legal principles, misinterpreting legislation, or failing to consider relevant factors. The distinction between errors of law and fact is critical, as appeals on legal grounds often require judicial scrutiny. Clear reasoning and evidence of the legal error are essential for a successful appeal.

### What is an appeal on a question of fact?

An appeal on a question of fact challenges errors in interpreting or assessing the evidence presented. This could involve misreading evidence, misunderstanding technical aspects, or ignoring material facts. Appeals on factual grounds are usually heard by the QCAT internal Appeal Tribunal if the original decision-maker was not a judicial officer. Evidence supporting the error in fact is crucial for such appeals.

### Where do I file an appeal for a QCAT decision?

The appropriate forum depends on whether the original decision-maker was a judicial or non-judicial member. Appeals against judicial members must be filed with the Queensland Court of Appeal. Appeals against non-judicial members are handled internally by QCAT’s Appeal Tribunal. Proper forms and compliance with time limits are necessary for filing.

### What is the timeline for filing an appeal?

An appeal application must generally be filed within 28 days of receiving written reasons for the decision. If leave to appeal is required, the application for leave must also be filed within 28 days. Once leave is granted, the appeal itself must be lodged within 21 days. Extensions may be possible under section 61 of the QCAT Act, but these require compelling justification.

### What forms do I need to file an appeal?

For reopening a case, use Form 43—Application for reopening, correction, renewal, or amendment. For appeals, use Form 39—Application for leave to appeal or appeal. Ensure that the forms are completed accurately and submitted within the specified timeframes. Legal advice is recommended to ensure compliance with procedural requirements.

### What fees apply to QCAT appeals?

QCAT appeal fees range from $345.80 to $2,746.00, depending on the type and complexity of the matter. The exact fee can be determined by referring to QCAT’s official fee schedule. Fee waivers or reductions may be available under certain circumstances. Ensuring timely payment of fees is essential to avoid delays in the appeal process.

### What powers does the QCAT Appeal Tribunal have?

The QCAT Appeal Tribunal can confirm, amend, or set aside the original decision (including [a decision in small claims](https://stonegatelegal.com.au/small-claims-lawyers/)). It may also substitute its own decision or remit the matter for reconsideration with directions. The Tribunal can order additional evidence to be heard if necessary. These powers enable the Tribunal to address errors while ensuring fair outcomes.

### Can I appeal decisions made during the QCAT hearing process?

Interlocutory decisions, such as procedural rulings during the hearing, can sometimes be appealed. However, these appeals often require leave and must demonstrate significant legal or procedural errors. The Tribunal assesses whether addressing the issue immediately is necessary to avoid substantial injustice. It is essential to consult legal advice before pursuing such appeals.

### What happens if I am granted leave to appeal?

If leave to appeal is granted, the applicant has 21 days to file the substantive appeal. The appeal process then continues with submissions from both parties and, if necessary, a hearing before the Appeal Tribunal. Leave is typically granted only when there is a reasonably arguable error, substantial injustice, or a matter of public importance. Meeting these criteria is crucial for moving forward.

### Do I need legal representation for a QCAT appeal?

While legal representation is not mandatory, it is highly recommended due to the complexity of appeal processes. Lawyers can ensure proper filing, develop persuasive arguments, and identify procedural or substantive errors in the original decision. They can also provide advice on whether the grounds for appeal are strong. Engaging a legal professional increases the likelihood of a favourable outcome.

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#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

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# Debt Recovery Sunshine Coast

Stonegate Legal’s Sunshine Coast-based team specialising in debt recovery can effectively and affordably retrieve all of your delinquent business debts.

[Book A Consultation](https://stonegatelegal.com.au/services/debt-recovery-sunshine-coast/#book)

[Speak To Our Trusted Lawyers Today](https://stonegatelegal.com.au/contact/)

## Sunshine Coast Debt Recovery Specialists

## Debt Collection & Recovery Sunshine Coast

## Our Debt Recovery Process

[Stonegate Legal](https://stonegatelegal.com.au/) has a dedicated team of debt recovery experts who are based on the Sunshine Coast. Our team is experienced in all types of debt recovery and can provide tailored advice to suit your needs.

We understand that each debt situation is unique and we work with you to develop a strategy that will get the best possible outcome for you. Our process is designed to be cost-effective, efficient and ethical, with the end goal being the successful collection of your overdue accounts.

[Meet The Team](https://stonegatelegal.com.au/services/debt-recovery-sunshine-coast/#)

## Debt Recovery Sunshine Coast

### Our Legal Debt Recovery Services Include:

- [1\. Issuing formal letters of demand;](https://stonegatelegal.com.au/letter-of-demand/)
- 2\. Phone calls to debtors
- [3\. Serving statutory demands;](https://stonegatelegal.com.au/statutory-demand/)
- 4\. Negotiations, mediation, adjudication, and other dispute resolution;
- 5\. Advice and assistance with matters in QCAT;
- 6\. Magistrates, District, Supreme, or Federal Court proceedings;
- 7\. Enforcement of a judgment, money order or QCAT decision;
- 8\. Insolvency, winding-up, liquidation and/or bankruptcy;
- 9\. Realising security such as charges, caveats, PPSA and other charges;
- 10\. Conducting searches including ASIC Searches, PPSR searches, bankruptcy searches, and title searches

![sgl](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/04/sgl.jpg)

### Request a Free Consultation

Don't let unpaid debts impact your bottom line. Contact Stonegate Legal today for a free debt recovery consultation and let our experienced lawyers help you recover what's rightfully yours.

Contact Us Today

## Business Debt Recovery

### Make Informed Decisions with Stonegate Legal

### Extensive Experience & Legal Knowledge

Our debt recovery lawyers have extensive experience in the field of debt recovery and understand the legal system. We can provide you with comprehensive advice on the most effective methods to recover your debt.

### Respectful & Professional Service

We acknowledge that clients seeking our help with debt recovery may be experiencing tough and nerve-wracking times. Our team of lawyers prioritise delivering courteous and expert assistance to ensure a swift, streamlined, and impactful resolution of your case.

### Tailored Solutions

When dealing with debt recovery cases on the Sunshine Coast, our team understands that each situation is distinct and requires a personalised solution. As experienced lawyers and debt collectors, we will work with you to create an approach that is tailored to your specific needs. Our goal is to achieve the best possible outcome for you.

## Sunshine Coast Debt Recovery Experts

### Discuss You Case With A Trusted Lawyer

Our debt recovery attorneys comprehend the significance of prosperous debt collection and are dedicated to providing our clients with the most efficient and productive debt collection services. We provide a free initial consultation to examine your case, deliberate your opportunities, and present an outline of the debt collection services we can render.

[Discuss Your Case Today](https://stonegatelegal.com.au/services/debt-recovery-sunshine-coast/#book)

[OR Call Now](tel:1300545133)

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### Navigating Debt Recovery on the Sunshine Coast

On the Sunshine Coast, Queensland, the process of recovering the debt is complicated and requires careful attention to the applicable laws. The courts in Queensland have varying monetary jurisdictions depending on the type of debt and the debtor’s situation.

Therefore, before taking any action to recover debt, debtors need to familiarise themselves with the monetary limits of each court

Small Claims Up To $25,000

QCAT

Claims Up To $750,000

District Court

Claims Up To $150,000

[Magistrates Court](https://www.courts.qld.gov.au/courts/magistrates-court)

Claims Up To $750,000

Supreme Court

## Sunshine Coast Debt Collectors

### The Debt Collection Process

As experienced debt collectors on the Sunshine Coast, we have the knowledge and skills needed to handle your case with care and precision. Let us take the burden off your shoulders and guide you towards a successful resolution.

[Discuss Your Case Today](https://stonegatelegal.com.au/services/debt-recovery-sunshine-coast/#)

No Obligation Case Evaluation

[Filling and Serving A Claim Statement Of Claim](https://stonegatelegal.com.au/services/debt-recovery-sunshine-coast/#collapse-c70abef687f037002e47)

To begin the process of recovering a debt, the initial step is to submit a Statement Of Claim to the appropriate court. This statement contains all the particulars regarding the debt, such as the debtor's identity, the amount of debt, and the due date. The debtor must be served with this document to ensure that they are informed of their responsibilities and to initiate court proceedings.

[Getting Default Judgement](https://stonegatelegal.com.au/services/debt-recovery-sunshine-coast/#collapse-092b264687f037002e47)

In order to ask for a court decision, it is necessary to file a request for default judgment. This decision can force the defendant to pay the debt they owe. It is crucial to show evidence of proper communication and provide all necessary information in the affidavit that supports the request for default judgment.

[Enforcement Of Judgement](https://stonegatelegal.com.au/services/debt-recovery-sunshine-coast/#collapse-eba8349687f037002e47)

After you receive a ruling in your favour, you may then initiate enforcement proceedings, such as:

- Obtaining an enforcement warrant to seize assets
- Filing for [bankruptcy](https://stonegatelegal.com.au/bankruptcy/) in the case of an individual debtor
- Issuing a [Statutory Demand](https://stonegatelegal.com.au/statutory-demand/) if the debtor is a corporation
- Pursuing liquidation proceedings to wind up the company. Dealing with debt disputes in Queensland can be complex, so it is essential to get professional legal guidance.

[Enforcement Warrants – Debt Disputes](https://stonegatelegal.com.au/services/debt-recovery-sunshine-coast/#collapse-c70abef687f0370042f5)

If a debtor does not respond to a summons, a court-issued order known as an enforcement warrant permits a sheriff or bailiff to take hold of the debtor's assets to settle the debt.

[Bankruptcy](https://stonegatelegal.com.au/services/debt-recovery-sunshine-coast/#collapse-092b264687f0370042f5)

When a person who owes money has been given a court order but still fails to pay their debts, bankruptcy proceedings are started. The aim of this process is to sell off the debtor's assets in order to pay their creditors.

[Winding Up Application](https://stonegatelegal.com.au/services/debt-recovery-sunshine-coast/#collapse-eba8349687f0370042f5)

If you win a court case, you have the option to request the court to force the company into liquidation due to insolvency. This can be done by sending a demand and a copy of the judgement to the debtor, who will have 21 days to respond.

If they do not respond, they will be considered insolvent, and you can apply for the company to be liquidated by the court. The company's assets will be sold, and the proceeds will be used to pay off your debt and other creditors.

### Get Legal Help With Your Debt Disputes

### Why Use Stonegate Legal To Recover Your Debts?

Our litigation law firm focus on debt recovery, enforcement of money orders, and [insolvency](https://stonegatelegal.com.au/services/insolvency/) matters. Our team of debt recovery lawyers on the Sunshine Coast always maintain a professional and fair approach, but can be firm when necessary. They are capable of recovering debts ranging from $1,000 to millions and offer guidance to clients dealing with late payments, bad debts, write-offs, and debt dispute resolutions.

We ensure that our debt recovery methods are ethical and strive to set the standard for legal debt recovery services on the Sunshine Coast. Our services cater to businesses of all sizes and we have a track record of successfully recovering owed amounts, including legal costs and interest in some cases.

## Frequently Asked Questions

[How does debt recovery work?](https://stonegatelegal.com.au/services/debt-recovery-sunshine-coast/#collapse-b0d504b687f03700aaab)

Initially, our aim is to settle the debt disagreement through means other than legal proceedings.

However, if the debtor is unyielding, then legal action becomes necessary to recuperate the debt. The purpose of taking legal action for debt recovery is to obtain a money order that can be enforced and then used to seize the property of the debtor.

[How can I legally collect a debt?](https://stonegatelegal.com.au/services/debt-recovery-sunshine-coast/#collapse-4e10eba687f03700aaab)

To obtain a money order that can be enforced, one must file a claim in either the Court with jurisdiction or [QCAT](https://www.qcat.qld.gov.au/). Once the order is obtained, it can be enforced over the property owned by the judgment debtor. It is crucial to follow this process to ensure the enforceability of the money order.

[What is the difference between debt collection and debt recovery?](https://stonegatelegal.com.au/services/debt-recovery-sunshine-coast/#collapse-f591981687f03700aaab)

It is simply another way of expressing the same concept. Debt collection should not be done by unlicensed personnel and must be done by lawyers who are competent in legal debt recovery.

[What is a statutory demand?](https://stonegatelegal.com.au/services/debt-recovery-sunshine-coast/#collapse-de9d696687f03700aaab)

A [statutory demand](https://stonegatelegal.com.au/statutory-demand/) is a formal request for payment of a debt which must be served by the creditor on the debtor. The demand must be in writing and must specify the amount of debt, the date when it became due, and the name and address of the debtor. If the debtor fails to comply with a statutory demand within 21 days, they may be presumed to be insolvent and their assets may be seized.

[What is a letter of demand?](https://stonegatelegal.com.au/services/debt-recovery-sunshine-coast/#collapse-881e487687f03700aaab)

A [letter of demand](https://stonegatelegal.com.au/letter-of-demand/) is a formal document written by a creditor to a debtor, demanding payment of the debt within a specified period. The letter should include details such as the amount owed, the date when it became due, and any fees or penalties associated with the debt.

It should also specify any action that may be taken against the debtor if they fail to make payment within the specified period.

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## Evicting Non-Paying Tenants
[Skip to content](https://stonegatelegal.com.au/evicting-tenant-not-paying-rent/#content)

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# Evicting Commercial Tenant not Paying Rent

[Discuss Your Case Today](https://stonegatelegal.com.au/contact/)

## NEWS & ARTICLES

- [By \\
Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| June 17, 2017

## Article Summary

The article provides a comprehensive guide on evicting a tenant who is not paying rent in a commercial setting.

This article outlines the importance of following proper legal procedures to avoid complications, starting with identifying and particularising the breach of the lease.

There are a few steps in the eviction process:

1. Identifying the Breach: Correctly identify and particularise the breach of the lease.
2. Notice to Remedy the Breach: Serve the lessee with a written notice specifying the breach and the steps to remedy it.
3. Notice must identify the parties, the breach, and include the clause of the lease, and outline how the breach can be remedied and the amount of unpaid rent.
4. Stipulate a reasonable time frame for the lessee to remedy the breach.

If the breach is not remedied within the stipulated time, exercise the right of re-entry or forfeiture.

A lessor can then terminate the lease and commence debt recovery proceedings for incurred losses.

To have a better chance of debt recovery, a lessor should ensure that the lease includes essential clauses to protect the lessor’s interests:

- **Personal Guarantee**: Have at least one director of the lessee company as a guarantor.
- **Charging Clause**: Include a clause allowing an equitable charge over the guarantor’s real property.
- **PPSR Charge**: Register a charge over personal property in the Personal Property Securities Register.
- **Default Interest**: Include a clause to recover interest on overdue rent.
- **Legal Costs**: Include a clause making the lessee liable for reasonable legal costs incurred due to the breach.

In this article, our [lease dispute lawyers](https://stonegatelegal.com.au/services/commercial-lease-disputes/) provide information in more detail.

Table of Contents

[Toggle](https://stonegatelegal.com.au/evicting-tenant-not-paying-rent/#)

![Evicting Tenant not Paying Rent](https://stonegatelegal.com.au/wp-content/uploads/2017/06/Evicting-Tenant-not-Paying-Rent.png)Thinking about evicting tenant not paying rent?

It is a reasonably straightforward process, however the process must be followed or you could wind-up with some serious legal problems.

1. The non payment of rent or rent arrears is a very common problem in commercial tenancies.  A business downturn, or some other reason, and the lessee could not afford to continue making payments to the lessor.
2. In situations like this, having the correct provisions in your lease could mean the difference between being compensated for your losses, or losing a considerable amount of time and money.
3. Usually, a breach of this kind will entitle you to almost all of your reasonably incurred losses, payable to the lessor as a liquidated debt, upon termination of the lease.

## Evicting Tenant not Paying Rent

There are a number of procedures to follow if you are considering evicting tenant not paying rent.  They are:

1. Correctly identify and particularise the breach;
2. Serve the lessee with a notice to remedy the breach;
3. Considering the provisions of your lease, forfeiture and possession of the property;
4. Sue for liquidated debt to cover your costs of the breach.

This article will step you through each of the points above, and provide you with some top tips to ensure that you maximise the chances of success.

## Breach of the Commercial Lease

If you are considering evicting tenant not paying rent or has [rental arrears](https://stonegatelegal.com.au/unpaid-rent-arrears-queensland/) then you have to identify this as a breach of the lease and what clauses of the lease this conduct has breached.

A clause to pay rent is in almost all cases, an essential term of the lease.  It will usually be defined as an essential term of the lease.  Also, the common law has defined the payment of rent to be an essential term of a lease.

In [_Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd_ (1938) 61 CLR 286](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/1938/66.html) the High Court said that an essential term is:

> _a term of the contract which went so directly to the substance of the contract or was so “essential to its very nature that its non-performance may fairly be considered by the other party as a substantial failure to perform the contract at all”._

In [_Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd_ (2007) 233 CLR 115](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/2007/61.html) the court said that:

> _The test of essentiality is whether it appears from the general nature of the contract considered as a whole, or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict or a substantial performance of the promise._

The payment of “ **_rent_**” in this context will almost always be an essential term.  Breach of an [essential term of a contract](https://stonegatelegal.com.au/contract-negotiation/) will allow the innocent (non-breaching) party to do a number of things, one of which is to terminate the contract and claim damages from the breaching party.  See [_Shevill v Builders Licensing Board_ (1982) 149 CLR 620](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/1982/47.html).

Commercial leases are slightly different in that they are also governed by various pieces of legislation, such as the [_Property Law Act_ 1974](http://www.austlii.edu.au/au/legis/qld/consol_act/pla1974179/index.html) (QLD) and the [_Retail Shop Leases Act_ 1994](http://www.austlii.edu.au/au/legis/qld/consol_act/rsla1994189/) (QLD).  As such, there is a legislative provisions governing the process for terminating a lease.

### Serve the Lessee with a Notice to Remedy the Breach

(QLD) outlines the process required to serve the breaching lessee with a notice to remedy the breach.  If you want to exercise your right of re-entry or forfeiture under your lease and under [Section 124 of the Property Law Act 1974](http://www.austlii.edu.au/au/legis/qld/consol_act/pla1974179/s124.html) (QLD), then you will need to first give notice to the lessee.

[Section 124 of the Property Law Act 1974](http://www.austlii.edu.au/au/legis/qld/consol_act/pla1974179/s124.html) (QLD) says:

> _(1) A right of re-entry or forfeiture under any proviso or stipulation in a lease, for a breach of any covenant, obligation, condition or agreement (express or implied) in the lease, shall not be enforceable by action or otherwise unless and until the lessor serves on the lessee a notice—_
>
> _(a) specifying the particular breach complained of; and_
>
> _(b) if the breach is capable of remedy, requiring the lessee to remedy the breach; and_
>
> _(c) in case the lessor claims compensation in money for the breach, requiring the lessee to pay the same;_
>
> _and the lessee fails within a reasonable time after service of the notice to remedy the breach, if it is capable of remedy, and, where compensation in money is required, to pay reasonable compensation to the satisfaction of the lessor for the breach._

When evicting tenant not paying rent, you will need to do the following for the notice to be effective:

1. **The notice must be in writing; and**
2. **The notice must correctly identify the parties to the lease;**
3. **The notice must identify the particulars of the breach, including the clause of the lease which covenants that the lessee must pay an amount of rent at a certain time or date;**
4. **The notice must outline how the lessee can remedy the breach;**
5. **The notice must outline how much unpaid rent is required to be paid;**
6. **The notice must stipulate that the breach must be remedied within a reasonable time;and**
7. **The notice must be served on the lessee.**

If you are evicting tenant not paying rent – If you have correctly served a correct notice, and given the lessee a reasonable time to remedy the breach or breaches, then you may be able to exercise your right of re-entry or forfeiture under your lease.  Once you have terminated the lease you can then commence debt recovery proceedings to recover your reasonable expenses as a result of the breach.

### The Provisions of your Lease, Forfeiture and Possession of the Property

When evicting tenant not paying rent, it is vital that you have fully complied with law.  For example, if the notice is incorrect, you terminate the lease when you didn’t have the legal authority to do so, then your termination may be seen as a repudiation, allowing the lessee to accept the repudiation, terminate and [recover damages](https://stonegatelegal.com.au/liquidated-damages-penalties/) from you.  You absolutely must get legal advice before attempting to terminate a contract and/or [a commercial lease](https://stonegatelegal.com.au/services/commercial-lease-disputes/).

What you are able to do at this point in the proceeding depends on the provisions of your lease.

### Sue for Liquidated Debt to Cover your Costs of the Breach

The liquidated damages you are able to recover again depends on the lease.  A carefully drafted default clause or clauses in your lease may include all reasonable costs, including (but not limited to):

1. **The outstanding rent owed plus any future rent lost;**
2. **Default interest on the outstanding rent;**
3. **All reasonable costs incurred; and**
4. **Legal fees in relation to the breach.**

You need to ensure that you have the right clauses in your contract, and that those clauses do not constitute a penalty – [see our article here about penalty clauses](https://stonegatelegal.com.au/liquidated-damages-penalties/).

### Useful Lease Clauses for Evicting Tenant not Paying Rent

Evicting tenant not paying rent is a rare but necessary part of being a commercial lessor.  It doesn’t happen all that often, but when it does, you will need to be able to rely on your lease.  It is vital that you have carefully drafted clauses to ensure you are fully legally protected.  [Check out our page about contract clauses in debt recovery](https://stonegatelegal.com.au/debt-contract-credit-application/).

1. **Personal Guarantee** – In a lot of cases the lessor will be a company.  You should not enter into a lease unless you have at least one (1) of the directors of the company as a guarantor.
2. **Charging Clause** – It is also a great idea to have a charging clause as part of the guarantee.  A charging clause allows you to lodge an equitable charge (caveat) over the real property of the guarantor.
3. **PPSR Charge** – As well as a charge over real property, it is also worthwhile registering a charge over personal property in the Personal Property Securities Register (“PPSR”).
4. **Default Interest** – It is a great idea to have a default interest clause in the lease.  This way you can recover the interest rate you could have been able to recover, had you been paid the rent on time.
5. **Legal Costs** – It is good to have a clause in the lease that makes the lessor liable for all reasonable legal costs incurred as a result of the breach.

## Evicting Commercial Tenant not Paying Rent FAQ

Here is a frequently asked questions (FAQ) section based on the article about evicting tenants not paying rent.

This section aims to provide clear and concise answers to common questions landlords may have regarding the eviction process.

### What should I do first if my tenant stops paying rent?

First, you need to identify and particularise the breach of the lease, specifically the non-payment of rent. This involves reviewing the lease to confirm the clause that mandates rent payments. Once identified, you should prepare to serve a Notice to Remedy the Breach to the tenant. This notice must be detailed, specifying the amount owed and the timeframe for payment.

### What is a Notice to Remedy the Breach?

A Notice to Remedy the Breach is a formal document served to the tenant, indicating that they have breached their lease agreement. It specifies the nature of the breach, such as non-payment of rent, and provides a clear timeframe for the tenant to remedy the issue. The notice must include details like the breach, the amount of unpaid rent, and the steps the tenant must take to comply. This is a critical step before any eviction proceedings can commence.

### What are the essential elements of a Notice to Remedy the Breach?

The notice must be in writing and correctly identify the parties involved in the lease. It should clearly outline the breach, citing the specific clause of the lease that has been violated. Additionally, the notice must explain how the breach can be remedied, state the amount of unpaid rent, and give the tenant a reasonable time to rectify the breach. Proper service of the notice is essential to ensure it is legally binding.

### How long should I give my tenant to remedy the breach?

The timeframe given to remedy the breach should be reasonable, typically defined by the lease agreement or legislation. Generally, a period of 14 to 30 days is considered reasonable, allowing the tenant sufficient time to pay the outstanding rent or address the issue. This timeframe should be clearly stated in the Notice to Remedy the Breach. Providing a reasonable period is crucial for the notice to be legally enforceable.

### What happens if the tenant does not remedy the breach within the given timeframe?

If the tenant fails to remedy the breach within the specified timeframe, you may proceed with exercising your right of re-entry or forfeiture under the lease. This means you can terminate the lease and take possession of the property. Following this, you can begin debt recovery proceedings to reclaim any losses incurred due to the breach. It’s essential to follow all legal procedures to avoid complications.

### Can I immediately evict the tenant after the breach is identified?

No, immediate eviction is not allowed. You must first serve the tenant with a Notice to Remedy the Breach and provide them with a reasonable timeframe to address the issue. Only if the tenant fails to remedy the breach within this period can you proceed with eviction. Skipping these steps can lead to legal challenges and potential liabilities.

### What legal provisions govern the eviction process in Queensland?

In Queensland, the eviction process is governed by the Property Law Act 1974 (QLD) and, in some cases, the Retail Shop Leases Act 1994 (QLD). These laws outline the necessary steps and legal requirements for terminating a lease due to non-payment of rent or other breaches. It is important to comply with these provisions to ensure the eviction is lawful. Seeking legal advice is often recommended to navigate these regulations correctly.

### What is a liquidated debt in the context of lease breaches?

A liquidated debt refers to the compensation a landlord can claim from a tenant who has breached the lease, such as by not paying rent. This debt typically includes all reasonably incurred losses resulting from the breach. It can cover outstanding rent, future rent loss, default interest, and legal costs. Liquidated debts are enforceable once the lease is terminated and proper legal procedures are followed.

### How can having a personal guarantee in the lease help in case of non-payment of rent?

A personal guarantee requires at least one director of the tenant company to personally guarantee the lease obligations. This provides additional security to the landlord, ensuring that if the company fails to pay rent, the guarantor can be held personally liable. It increases the likelihood of recovering unpaid rent and associated costs. This clause should be clearly outlined in the lease agreement.

### What is a charging clause and how does it protect the landlord?

A charging clause allows the landlord to place an equitable charge (caveat) over the real property of the guarantor. This means that if the tenant defaults on rent payments, the landlord can lodge a caveat against the guarantor’s property, securing the debt. This clause provides a significant layer of protection, ensuring that the landlord has a tangible asset to claim against. It should be included in the lease agreement for added security.

### How does a PPSR charge benefit the landlord?

A PPSR (Personal Property Securities Register) charge allows the landlord to register a security interest over the tenant’s personal property. This means that in the event of default, the landlord has a legal claim over the tenant’s assets listed in the PPSR. It provides another avenue for recovering unpaid rent and other costs. Registering a PPSR charge should be part of a comprehensive lease agreement.

### Why is a default interest clause important in a lease agreement?

A default interest clause stipulates that if rent is not paid on time, the tenant must pay interest on the overdue amount. This interest compensates the landlord for the delay and serves as a deterrent against late payments. Including this clause in the lease agreement ensures that the landlord can recover additional costs incurred due to late rent. It is an effective tool for managing rental income flow.

### What steps should a landlord take before terminating a commercial lease?

Before terminating a commercial lease, a landlord must ensure all legal requirements are met. This includes serving a correct Notice to Remedy the Breach, providing a reasonable timeframe for the tenant to remedy the breach, and ensuring the lease provisions allow for termination. Legal advice should be sought to avoid potential legal pitfalls. Properly following these steps is crucial for a lawful and effective lease termination.

### What could happen if a landlord incorrectly terminates a lease?

If a landlord incorrectly terminates a lease, it can be considered a repudiation of the contract. This gives the tenant the right to accept the repudiation, terminate the lease, and potentially claim damages from the landlord. Such mistakes can lead to significant financial and legal consequences for the landlord. Therefore, it is vital to seek legal advice and ensure all termination procedures are correctly followed.

### How can a landlord recover unpaid rent after terminating the lease?

After terminating the lease, a landlord can commence debt recovery proceedings to claim unpaid rent and other associated costs. This may involve legal action to obtain a court order for the debt. The landlord can claim outstanding rent, future rent loss, default interest, and legal costs. Ensuring the lease includes robust clauses for debt recovery can facilitate this process.

![Picture of Wayne Davis](https://secure.gravatar.com/avatar/5b54ec283af918fb28f171190159c8892905cb00c7f8bf19a380e6224d11fa82?s=300&d=mm&r=g)

#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation.

With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice.

Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings.

Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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## Breach of Contract
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# Breach of Contract

[Discuss Your Case Today](https://stonegatelegal.com.au/contact/)

## NEWS & ARTICLES

- [By \\
Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| November 25, 2017

## Article Summary

Not all breaches of contract allow the non-breaching party to terminate. The types of breaches that may allow the non-breaching party to terminate a contract include:

1. A breach of an essential or fundamental term of the contract; and/or
2. Repudiation of the contract or a repudiatory breach; and/or
3. A serious breach of an intermediate term, or a number of different actions amounting to a serious breach which deprives the non-breaching party of substantially the whole benefit of the contract.

A breach of contract is the non-adherence to a term of that contract.  The breach of an essential term will allow you to terminate and recover damages.  A serious breach of a non-essential term may allow you to terminate and recover damages.

A contract breach depends on the facts of your particular case, and the terms of your particular contract.  To prove a breach of contract, you will need to provide evidence of the facts that give rise to the legal rights.

If a party to a contract breaches that contract, then the non-breaching party can sue for damages, liquidated claims, specific performance, injunctions, and in some cases equitable damages.

This article explains breach of contract in Australia in a lot more detail.

Table of Contents

[Toggle](https://stonegatelegal.com.au/breach-of-contract/#)

![Breach of Contract](https://stonegatelegal.com.au/wp-content/uploads/2017/11/Breach-of-Contract.png)**Before reading about breach of contract it is vital that you read the following:**

Termination for breach of contract is very complicated and should not be done without seeking legal advice.

Wrongful termination can itself be a breach or repudiation allowing the other party to terminate and commence [commercial litigation](https://stonegatelegal.com.au/services/commercial-litigation/) proceedings to recover damages against you.

Never attempt to terminate a contract before speaking to a qualified solicitor, as the consequences could be severe.

We offer advice and assistance to clients who need to terminate a contract – contact our lawyers today.

**DEDICATED CONTRACT LAWYERS – PROVEN RESULTS**

[GET A FREE FEE ESTIMATE TODAY](https://stonegatelegal.com.au/free-case-evaluation/)

**OR CALL: [1300 545 133](tel:1300545133) FOR A PHONE CONSULTATION**

## **What is a Breach of Contract?**

A breach of contract occurs when a party to a contract does not perform their obligations under the contract.

A breach may also occur when a party demonstrates that they are unwilling or unable to perform their obligations under the contract

Not all breaches of contract give rise to the right to [terminate the contract](https://stonegatelegal.com.au/terminating-a-residential-building-contract-in-queensland/) and so care should be taken, and advice should be sought before attempting to terminate a contract.

There are a number of different forms of breach of contract and legal remedies.

## **Different Forms of Breach?**

There are three (3) main forms of breach of contract:

1. Material breach of contract or breach of a fundamental or essential term of the contract; and
2. Anticipatory breach of contract or repudiation of the contract; and
3. Minor breach of contract or breach of a non-essential term of the contract (also known as an innominate term of the contract).

These different forms of breach allow for different rights at law and allow you to do different things upon satisfactorily proving the breach.

## **What is a Material Breach of Contract?**

In [_Forklift Engineering Australia Pty Ltd v Powerlift (Nissan) Pty Ltd_ \[2000\] VSC 443](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/vic/VSC/2000/443.html) Warren J said that:

> _A “material breach” of a contract does not appear to be a concept known to the law of contract. It is then a question of determining the parties’ intention of the use of the expression “material breach” in the agreement. In so doing I identify the ordinary sense of the word or words used unless such application leads to absurdity or inconsistency is a breach of a fundamental term of the contract._

So, in Australian law a material breach of a contract is known as a breach of an essential or fundamental term of the contract [or lease](https://stonegatelegal.com.au/services/commercial-lease-disputes/).

The Australian Courts have defined a fundamental term to mean:

[_Tramways Advertising Pty Ltd v Luna Park_ (NSW) Ltd (1938) 38 SR (NSW) 632](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/nsw/NSWStRp/1938/37.html)

> _A term of the contract which went so directly to the substance of the contract or was so essential to its very nature that its non-performance may fairly be considered by the other party as a substantial failure to perform the contract at all._

This case was also cited in [_Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited_ \[2007\] HCA 61](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/2007/61.html) where they said:

> _The test of essentiality is whether it appears from the general nature of the contract considered as a whole, or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict or a substantial performance of the promise_

This statement has been cited and followed in [Superior Queensland Courts](http://www.courts.qld.gov.au/courts/supreme-court) too.

In [_Fewstone Pty Ltd v Ross Nielson Properties Pty Ltd and George (No 171) Pty Ltd_ \[2003\] QSC 82](http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/qld/QSC/2003/82.html), Atkinson J said:

> _The test was succinctly stated by Jordan CJ in Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd. The decision was reversed on appeal, but his Honour’s statement of the law is not affected._

In his reasoning in [_Zonebar P/L v Surfers Paradise Inv P/L_ \[1997\] QSC 196](http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/qld/QSC/1997/196.html), Shepherdson J cited _Tramways_ by saying:

> _The absence of the certificate could not on any view be said to be a breach of a term which went so directly to the substance of the contract or was so essential to its very nature that its non-performance may fairly be considered by the plaintiff as a substantial failure to perform the contract at all._

To determine if a breach of contract constitutes a [material or fundamental breach](https://stonegatelegal.com.au/contract-negotiation/) will entirely depend on the contract and the surrounding facts and circumstances of each individual case.

However in relation to debt recovery, non-payment under a contract is usually considered to be a material breach, that being a breach of a fundamental term of the contract.

## **Repudiation and Anticipatory Breach**

In Australia an anticipatory breach of contract falls under the doctrine of [repudiation](https://stonegatelegal.com.au/repudiation-of-a-building-contract-addinos-pty-ltd-v-oj-pippin-homes/).  There are a number of other factors to consider in relation to the doctrine of repudiation other than anticipatory breach.

Anticipatory breach of contract occurs when a party to a contract repudiates their obligations under the contract before the time set for the performance on the obligations.  There are however, other ways to repudiate a contract which may not be classed as an anticipatory breach.

An example may be – If you have contracted to buy a shipping container of blue widgets to be delivered in 6 weeks:

- An anticipatory breach occurs if the party you contracted with tells you that they can’t be delivered in 6 weeks, but delivery will occur in 12 weeks instead.
- A repudiation occurs if the party you contracted with tells you that they have sent a shipping container of red widgets to be delivered in 6 weeks.

However this article will talk below more broadly about repudiation of a contract.

In [_Koompahtoo Local Aboriginal Land Council & Anor v Sanpine Pty Ltd & Anor_ (2007) 233 CLR 115](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/2007/61.html) the Court said that repudiatory conduct is:

> _Conduct which evinces an unwillingness or an inability to render substantial performance of the contract. This is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party’s obligations_

In [_Shevill v Builders Licensing Board_ (1982) 149 CLR 620](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/1982/47.html) the High Court of Australia said

> _Repudiation of a contract is a serious matter and is not to be lightly found or inferred … In considering it, one must look to all the circumstances of the case to see whether the conduct “amounts to a renunciation, to an absolute refusal to perform the contract”_

### **What to do After Repudiation Occurs**

If a [party to a contract](https://stonegatelegal.com.au/debt-contract-credit-application/) repudiated the contract, then the other party can elect to do one of three (3) things:

1. Accept the repudiation and terminate the contract;
2. Affirm the contract and so the contract continues until (or if) the breach occurs; or
3. Do nothing – This has the same effect as affirmation and so the contract continues on-foot.

### **Elect to Accept the Repudiation and Terminate the Contract**

If a party to a contract repudiates the contract, that is, shows an unwillingness or an inability to render substantial performance of the contract, then the other party may exercise their right to elect to accept the repudiation, and terminate the contract.

This election for termination must be unequivocal.

In [_Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW)_ (1993) 182 CLR 26](http://classic.austlii.edu.au/au/cases/cth/HCA/1993/27.html) the High Court said:

> _An act amounting to an election must be unequivocal_

In [_Sargent v. A.S.L. Developments Ltd. (13)_ (1974) 131 CLR 634](http://classic.austlii.edu.au/au/cases/cth/HCA/1974/40.html) the High Court said:

> _The words or conduct ordinarily required to constitute an election must be unequivocal in the sense that it is consistent only with the exercise of one of the two sets of rights and inconsistent with the exercise of the other._

In [_The Kanchenjunga_ \[1990\] 1 Lloyd’s Rep 391](http://classic.austlii.edu.au/cgi-bin/LawCite?cit=%281990%29%201%20Lloyds%20Rep%20391) the Court said that a party can only be held to have elected:

> _if he has so communicated his election to the other party in clear and unequivocal terms_

If a party elects to terminate the contract after repudiatory conduct then, as long as the conduct does amount to repudiation, the aggrieved party can [commence legal proceedings to recover damages](https://stonegatelegal.com.au/commence-proceedings-person-company/) for the repudiation after termination.

However, an aggrieved party does not have to elect to accept the repudiation and terminate the contract.  Instead, the aggrieved party can elect to affirm the contract.

### **Elect to Affirm the Contract**

If a party repudiates a contract, that is, shows an unwillingness or an inability to render substantial performance of the contract, then the other party may exercise their right to elect to affirm the contract.

An affirmation of a contract is an election by the aggrieved person to accept the repudiation and continue on with the contract, at least until the actual breach occurs (if at all).

Electing to affirm the contract, as stated above, must be clear unequivocal in nature.  However, an affirmation of a contract can also be elected by clear and unequivocal conduct.

However, for an election to have occurred, the aggrieved party must have knowledge of the repudiation to allow him or her to make the choice to elect, either by words or by conduct.

In [_Sargent v. A.S.L. Developments Ltd. (13)_ (1974) 131 CLR 634](http://classic.austlii.edu.au/au/cases/cth/HCA/1974/40.html) the High Court said:

> _… election may take place as a matter of conscious choice with knowledge of the existence of the alternative right and in other cases it may occur when the law attributes the character of an election to the conduct of a party_

## **Wrongful Termination after Repudiation**

As previously mentioned in [_Shevill v Builders Licensing Board_ (1982) 149 CLR 620](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/1982/47.html)  repudiation of a contract is a serious matter and is not to be lightly found or inferred.

If you think that conduct of the other party amounts to repudiation, and you elect to accept the repudiation and terminate the contract; but the conduct purported to be repudiatory did not amount to repudiation, then the act of terminating the contract can itself be repudiation, allowing the other party to terminate and recover damages.

**Extreme caution should be taken before terminating a contract, and specialist legal advice should be sought, as the risk of not doing so could be severe.  [Contact](https://stonegatelegal.com.au/contact-stonegate-legal/) our debt recovery solicitors today.**

## **Minor Breach of Contract**

In Australia a minor breach of a contract is the breach of a non-essential term of the contract, or an innominate term or intermediate term of the contract.

Usually, a breach of a non-essential term of the contract doesn’t give rise to a right of termination, but may give rise to an action to recover damages for the breach.

However, a serious breach of an intermediate term, or a number of different actions amounting to a serious breach, may give rise to a right to terminate.

In _[Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd \[1961\] EWCA Civ 7](http://www.bailii.org/cgi-bin/markup.cgi?doc=ew/cases/EWCA/Civ/1961/7.html)_ the Court said:

> _Does the occurrence of the event deprive the party who has further undertakings still to perform of substantially the whole benefit which it was the intention of the parties as expressed in the contract that he should obtain as the consideration for performing those undertakings?_

This is similar to the test for a fundamental term of a contract, however the distinction is that _Hong Kong Fir Shipping_ applies to the breach of the contract, and not the term of the contract.

**Once again, we reiterate that caution should be taken before terminating a contract, and specialist legal advice should be sought, as the risk of not doing so could be severe.  [Contact our debt recovery lawyers today](https://stonegatelegal.com.au/contact-stonegate-legal/).**

## Frequently Asked Questions

We answer a number of common questions in relation to breaches of contracts.

### **What is considered a breach of contract?**

A breach of contract is the non-adherence to a term of that contract.  The breach of an essential term will allow you to terminate and recover damages.  A serious breach of a non-essential term may allow you to terminate and recover damages.

### **What is discharge by breach of contract?**

A contract is discharged when the contract comes to an end.

A contract can be discharged in a number of different ways:

1. Discharge a contract by agreement;
2. Discharge a contract by frustration;
3. Discharge a contract by operation of law;
4. Discharge a contract by performance; and
5. Discharge a contract by subsequent agreement;

However a contract can also be discharged by an election to terminate after breach.

### **What happens if there is a breach of contract?**

If there is a breach of an essential term of the contract; or there is a serious breach of a non-essential (intermediate or innominate) term of the contract; or there is an election after repudiation; then the aggrieved party may elect to affirm the contract, or terminate the contract and recover damages.

### **How do you prove breach of contract?**

A contract breach depends on the facts of your particular case, and the terms of your particular contract.  To prove a breach of contract, you will need to provide evidence of the facts that give rise to the legal rights.

### **What are the remedies for breach of contract?**

Legal remedies available for contract breach are damages and liquidated claims.

The main equitable remedies available for breach of contract are [specific performance](https://stonegatelegal.com.au/contract-law-101-specific-performance/), injunctions, and in some cases equitable damages.

Most debt recovery claims are liquidated damages claims.  A contract will allow an amount of money (consideration) in exchange for a promise.

The non-payment of consideration can be quantified by unpaid invoices, for example, and are therefore [liquidated claims](https://stonegatelegal.com.au/builder-gone-bust-in-queensland-everything-you-need-to-know/).

### **What is a substantial breach of contract?**

In Australia a substantial breach of contract, or material breach of contract, is defined by the breach of an essential term of the contract.

### **Can you sue for breach of a contract?**

Yes.  You can sue for damages, liquidated claims, specific performance, injunctions, and in some cases equitable damages.

### **What is repudiation in law?**

In [_Koompahtoo Local Aboriginal Land Council & Anor v Sanpine Pty Ltd & Anor_ (2007) 233 CLR 115](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/2007/61.html) the Court said that repudiation is

1. Conduct which evinces an unwillingness or an inability to render substantial performance of the contract; or
2. Conduct which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party’s obligations.

### **Is repudiation a breach of contract?**

No.  Repudiation is where a party indicates an unwillingness or inability to substantially perform their obligations under the contract.  This will usually happen before the non-performance occurs.

It may be possible, after the indication of repudiation that the repudiating party could actually satisfy the term of the contract, therefore not breach.  However, this must occur before the election to accept the repudiation and terminate.

**DEDICATED CONTRACT LAWYERS – PROVEN RESULTS**

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#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation.

With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice.

Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings.

Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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## Enforcement Warrant Overview
[Skip to content](https://stonegatelegal.com.au/enforcement-warrant-for-redirection-of-earnings/#content)

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# Enforcement Warrant for Redirection of Earnings

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## NEWS & ARTICLES

- [By \\
Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| December 27, 2018

## Article Summary

A warrant for redirection of earnings **allows the creditor to enforce an enforceable money order over the wages or salary earned by the debtor**.

In this article our [debt recovery and enforcement lawyers](https://stonegatelegal.com.au/services/debt-recovery-lawyers/) discuss the process and requirements for obtaining an enforcement warrant for the redirection of earnings in Queensland, under the _Uniform Civil Procedure Rules 1999_ (UCPR).

This warrant is a legal tool used to enforce a judgment or a registered QCAT decision by redirecting a portion of a debtor’s earnings (like wages, salary, bonuses, etc.) directly from their employer to the creditor.

Key steps and requirements for obtaining this warrant include:

1. **An Enforceable Money Order** – A judgment from the Court or a QCAT decision registered in the Magistrates Court.
2. **The Application Process** – Involves submitting Form 9, which outlines the orders sought by the plaintiff, including the redirection of earnings from the debtor’s employer to satisfy the judgment amount.
3. **Definition of ‘Earnings’** – Broadly includes wages, salary, bonuses, pensions, benefits, annuities, leave payments, and retirement benefits.
4. **Drafting the Warrant**(Form 78) – Requires details like the creditor and debtor’s names, employer’s name, judgment amount, payments made, interest, and costs of the enforcement warrant.
5. **Notices to Employer**(Forms 79 and 80) – Form 79 instructs the employer on compliance, while Form 80 is used if the debtor is not an employee.
6. **Court’s Discretion** – The court considers factors like the debtor’s employment status, means of satisfying the order, and potential hardship on the debtor before issuing the warrant.
7. **Statement in Support of the Application** – Provides evidence and details necessary for the court to issue the warrant.
8. **Financial Position and Enforcement Hearing** – Involves gathering information about the debtor’s financial situation to support the warrant application.
9. **Service on Debtor and Employer** – The warrant and related notices must be served on both parties.

The article emphasises the complexity of this process and recommends engaging a legal professional for assistance.

We also address FAQs about the applicability to independent contractors, the duration of the warrant, the definition of an employer, debt recovery from the employer, and scenarios where the debtor leaves their employment.

Table of Contents

[Toggle](https://stonegatelegal.com.au/enforcement-warrant-for-redirection-of-earnings/#)

![Enforcement Warrant for Redirection of Earnings in Queensland](https://stonegatelegal.com.au/wp-content/uploads/2018/12/Enforcement-Warrant-for-Redirection-of-Earnings-in-Queensland.png)A warrant for redirection of earnings is an enforcement option pursuant to the _Uniform Civil Procedure Rules 1999_ (QLD) (“ _**UCPR**_”).

An enforcement warrant for redirection of earnings is a way of **enforcing a judgment** or **enforcing a registered QCAT decision**.

A warrant for redirection of earnings allows the creditor to enforce an enforceable money order over the wages or salary earned by the debtor.

A warrant for redirection of earnings is a warrant directed at both the debtor and the debtor’s employer, directing the debtor’s employer to pay part of the debtor’s wages or salary directly to the creditor.

Just like a the warrant for seizure and sale of property, a warrant for redirection of earnings is obtained by making an application to the Court.  The application consists of:

1. The application;
2. A statement in support of the application; and
3. A draft enforcement warrant.

When the Court issues the UCPR enforcement warrant for redirection of earnings, it then needs to be served on the debtor and the debtor’s employer.

This article will give you all the information needed to apply for an enforcement warrant for redirection of earnings, and give you hints and tips to avoid pitfalls.

**There are a number of difficult steps that need to happen before an employer must comply with an enforcement warrant for redirection of earnings. We strongly recommend engaging a legal professional**

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## Enforcement Warrant for Redirection of Earnings

[Rule 855(1)](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s855.html) of the UCPR says:

> _A court may issue an enforcement warrant authorising redirection to an enforcement creditor of particular earnings of an enforcement debtor from a third person._

For the Court to issue an enforcement warrant for redirection of earnings the creditor will need:

1. An enforceable money order;
2. An application – [Form 9](https://www.courts.qld.gov.au/__data/assets/word_doc/0009/92925/Form-9-Application-UCPR.doc);
3. A draft warrant – [Form 78](https://www.courts.qld.gov.au/__data/assets/word_doc/0003/88428/ucpr-f-78-070614.doc);
4. A statement in support of the application – [Form 74](https://www.courts.qld.gov.au/__data/assets/word_doc/0010/92926/Form-74-Statement-in-support-UCPR.doc);
5. A notice to employer for redirection of earnings – [Form 79](https://www.courts.qld.gov.au/__data/assets/word_doc/0016/93103/Form-79-Notice-to-employer-for-redirection-of-earnings-UCPR.doc);
6. A notice that debtor is not an employee – [Form 80](https://www.courts.qld.gov.au/__data/assets/word_doc/0017/93104/Form-80-Notice-that-debtor-is-not-an-employee-UCPR.doc); and
7. To serve the debtor and the debtor’s employer.

We will break each of these steps down in more detail below.

### An Enforceable Money Order

[Rule 793](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s793.html) of the UCPR says:

> _“ **enforceable money order**” of a court, means—_
>
> _(a) a money order of the court; or_
>
> _(b) a money order of another court or tribunal filed or registered under an Act in the court for enforcement._

[Schedule 3](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/sch3.html) of the UCPR defines an order to mean:

> _“ **order**” … includes a judgment, direction, decision or determination of a court whether final or otherwise._

An enforceable money order is a [money judgment](https://stonegatelegal.com.au/enforcing-a-judgment/) from the Court, or a decision in [QCAT](https://www.qcat.qld.gov.au/) registered in the Magistrates Court.  A [QCAT decision](https://stonegatelegal.com.au/enforce-qcat-decision/) which has not been registered in the Court is not an enforceable money order.

## The Application – Warrant for Redirection of Earnings

The application for an enforcement warrant for redirection of earnings – [Form 9](https://www.courts.qld.gov.au/__data/assets/word_doc/0009/92925/Form-9-Application-UCPR.doc) – outlines the order (or orders) that the plaintiff is asking the Court to make.

The application will say something like:

> _**TAKE NOTICE** that the plaintiff is applying to the Court for the following orders_
>
> _That pursuant to rules 855 and 856 of the UCPR an enforcement warrant for redirection to the plaintiff of earnings of the defendant from the defendant’s employer to satisfy the judgment amount._
>
> _That the defendant pay the costs of the plaintiff for issuing the enforcement warrant fixed in the sum of $XXX._

The costs of the warrant are fixed at [Schedule 2](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/sch2.html) of the UCPR depending on the amount of the claim – see item 15.

The application for an enforcement warrant for redirection of earnings also needs to state who the warrant needs to be served on – the debtor and the debtor’s employer.

### What are “Earnings”?

It is also necessary to understand how “ _**Earnings**_” have been defined.  This is in order to know what funds are available to the creditor from the debtor’s employer.

[Rule 793](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s793.html) of the UCPR says:

> _“ **earnings**” of an enforcement debtor, means any of the following that are owing or accruing to the enforcement debtor—_
>
> _(a) wages, salary, fees, bonuses, commission, overtime pay or other compensation for services or profit arising from office or employment;_
>
> _(b) pension, benefit or similar payment;_
>
> _(c) annuity;_
>
> _(d) an amount payable instead of leave;_
>
> _(e) retirement benefit._

As you can see, the types of earnings that can attach are quite broad.

## The Draft Warrant for Redirection of Earnings

The draft enforcement warrant for redirection of earnings has to be in the correct form – [Form 78](https://www.courts.qld.gov.au/__data/assets/word_doc/0003/88428/ucpr-f-78-070614.doc).  The draft [Form 78](https://www.courts.qld.gov.au/__data/assets/word_doc/0003/88428/ucpr-f-78-070614.doc) must contain the following information:

1. Name and address of the enforcement creditor;
2. Name and address of the enforcement debtor;
3. Name and address of the employer of enforcement debtor;
4. The judgment amount;
5. Less – any payments made;
6. Plus – interest; and
7. Plus – costs of the enforcement warrant.

[Rule 858](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s858.html) of the UCPR also says that the draft warrant will also need to specify the following:

> _The total amount the enforcement debtor’s employer must deduct from the earnings of the enforcement debtor; and_
>
> _The amount the enforcement debtor’s employer must deduct each pay day from the earnings of the enforcement debtor._

**The judgment amount** – is the amount on the judgment, default judgment, [summary judgment](https://stonegatelegal.com.au/summary-judgment-application-in-qld/) or registered [QCAT](https://www.qcat.qld.gov.au/) decision.

**Less any payments made** – means that any payments that have already been made as against the judgment debt are to be deducted on the date that payment was made.

**Plus interest** – means the amount prescribed in [section 59](http://classic.austlii.edu.au/au/legis/qld/consol_act/cpa2011175/s59.html) of the _Civil Proceedings Act 2011_ (QLD) and at paragraph 4 of the [Supreme Court of Queensland Practice Direction Number 7 of 2013](https://www.courts.qld.gov.au/__data/assets/pdf_file/0004/180553/sc-pd7of2013.pdf) – being 6% per annum above the cash rate at the Reserve Bank of Australia.

**Plus costs of the enforcement warrant** – means the amount fixed at [Schedule 2](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/sch2.html) of the UCPR depending on the amount of the claim – see item 15.

A notice in [Form 79](https://www.courts.qld.gov.au/__data/assets/word_doc/0016/93103/Form-79-Notice-to-employer-for-redirection-of-earnings-UCPR.doc) and a copy of [Form 80](https://www.courts.qld.gov.au/__data/assets/word_doc/0017/93104/Form-80-Notice-that-debtor-is-not-an-employee-UCPR.doc) must also be served on the enforcement debtor’s employer.

### Form 79 Notice to Employer

A [Form 79](https://www.courts.qld.gov.au/__data/assets/word_doc/0016/93103/Form-79-Notice-to-employer-for-redirection-of-earnings-UCPR.doc) notice is a notice to employer for redirection of earnings.  It is essentially a notice which gives the debtor’s employer detailed instructions on how to comply with the warrant, and what to do if the enforcement debtor ceases working for the employer.

The [Form 79](https://www.courts.qld.gov.au/__data/assets/word_doc/0016/93103/Form-79-Notice-to-employer-for-redirection-of-earnings-UCPR.doc) notice must be filed and a sealed copy served with the warrant to the debtor’s employer.

### Form 80 Notice that Debtor is not Employee

A [Form 80](https://www.courts.qld.gov.au/__data/assets/word_doc/0017/93104/Form-80-Notice-that-debtor-is-not-an-employee-UCPR.doc) notice is a notice that debtor is not an employee.  The [Form 80](https://www.courts.qld.gov.au/__data/assets/word_doc/0017/93104/Form-80-Notice-that-debtor-is-not-an-employee-UCPR.doc) is a draft form which the employer can use to tell the creditor that the enforcement has never worked for the employer.

The employer must also serve a [Form 81](https://www.courts.qld.gov.au/__data/assets/word_doc/0018/93105/Form-81-Notice-of-cessation-of-employment-UCPR.doc) if the debtor has ceased working for the employer at a certain date.  The [Form 81](https://www.courts.qld.gov.au/__data/assets/word_doc/0018/93105/Form-81-Notice-of-cessation-of-employment-UCPR.doc) is called a notice of cessation of employment.

The creditor must serve a draft copy with the rest of the warrant documents on the employer.

### The Court’s Discretion to Issue the Warrant

The issuance of the enforcement warrant for redirection of earnings is discretionary and in some instances the Court may not issue the warrant.

In [_ML Ubase Holdings Co Ltd v Trigem Computer Inc_ \[2007\] NSWSC 859](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/nsw/NSWSC/2007/859.html) Brereton J said:

> _The making of a garnishee order absolute is discretionary …_

The creditor must prove the particulars set out in [rule 856(3)](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s856.html) of the UCPR are satisfactorily met.

[Rule 856(3)](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s856.html) of the UCPR says that:

> _In deciding whether to issue an enforcement warrant authorising the redirection to the enforcement creditor of the enforcement debtor’s earnings, the court must have regard to the following—_
>
> _(a) whether the enforcement debtor is employed and the enforcement debtor’s employer has been identified;_
>
> _(b) whether the enforcement debtor has sufficient means of satisfying the order after deducting—_
>
> _(i) the necessary living expenses of the enforcement debtor and the enforcement debtor’s dependants; and_
>
> _(ii) any other known liabilities of the enforcement debtor;_
>
> _(c) whether the amount of earnings to be redirected would impose unreasonable hardship on the enforcement debtor_

Therefore, in the statement in support of the application, the creditor must show evidence of the above, and show that the debtor has sufficient means of satisfying the order.

A creditor will usually get this information at an [enforcement hearing and/or the completed statement of financial position](https://stonegatelegal.com.au/enforcement-hearing-statement-financial-position/) – as well as by independent enquiry.

**There are a number of difficult steps that need to happen before an employer must comply with an enforcement warrant for redirection of earnings. We strongly recommend engaging a legal professional**

[SPEAK TO A LAWYER FOR FREE TODAY](https://stonegatelegal.com.au/free-case-evaluation/)

**OR CALL: [1300 545 133](tel:1300545133) AND CHAT TO OUR LAWYERS**

## The Statement in Support of the Warrant for Redirection of Earnings

The statement in support of an application for an enforcement warrant for redirection of earnings will need to provide the Court with evidence of what is required for the Court to issue the enforcement warrant for redirection of earnings.

[Rule 817](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s817.html) of the UCPR outlines the other things that need to be included in the statement, being:

1. the date the money order was made;
2. the amount for which the order was made;
3. the date and amount of any payment made under the order;
4. the costs incurred in previous enforcement proceedings in relation to the order debt;
5. any interest due at the date the statement is sworn;
6. any other details necessary to calculate the amount payable under the order at the date the statement is sworn and how the amount is calculated;
7. the daily amount of any interest that, subject to any future payment under the order, will accrue after the date the statement is sworn; and
8. any other information necessary for the warrant being sought.

It is also a good idea to include the following:

1. The person making the statement and the authority they have (solicitor for the judgment creditor, judgment creditor, director of the judgment creditor);
2. Annex evidence of the judgment, decision, or enforceable money order;
3. Annex evidence of any payments made as against the judgment debt, or a statement that no payments have been made against the judgment debt;
4. Annex evidence and a statement supporting the calculation of costs and interest; and
5. Annex evidence and statements in support of the matters outlined in [rule 856(3)](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s856.html).

The evidence particularised at number 5 above will be gained by receiving the information needed in the statement of financial position, the enforcement hearing, and independent enquiry.

## Statement of Financial Position & Enforcement Hearing

The [enforcement hearing and the completed statement of financial position](https://stonegatelegal.com.au/enforcement-hearing-statement-financial-position/) are ways of gathering the information required to enable the Court to exercise its discretion and issue the enforcement warrant for redirection of earnings.

The debtor is required to complete a statement of financial position is [Form 71](https://www.courts.qld.gov.au/__data/assets/word_doc/0005/88421/form-071-statement-of-financial-position.doc) for a person; or [Form 71a](https://www.courts.qld.gov.au/__data/assets/word_doc/0004/88420/form-071A-statement-of-financial-position-v2.doc) for a company.  The statement of financial position is a document where the debtor has to provide detailed information about their assets and liabilities.

The debtor is supposed to provide the debtor with the completed statement of financial position within fourteen (14) days.  If they do not (and they usually do not) then this is the condition precedent for requesting that the Court summon them to an enforcement hearing.

The enforcement hearing is a hearing in open Court in which the debtor has to take the stand, under oath, and answer questions about the debtor’s financial position.  They are also required to provide the debtor with a completed statement of financial position.

The purpose of the [enforcement hearing and the completed statement of financial position](https://stonegatelegal.com.au/enforcement-hearing-statement-financial-position/) is to get information from the debtor, to provide to the Court, so that the Court will issue a warrant – in this case a warrant for redirection of earnings.  This information will often include payslips and bank account statements.

If the creditor is successful and has been issued with the enforcement warrant for redirection of earnings you then will need to serve the debtor and the debtor’s employer.

## Service on the Debtor and the Employer

[Rule 859](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s859.html) of the UCPR says that the enforcement warrant for redirection of earnings must be served on the enforcement debtor and the enforcement debtor’s employer.

The creditor must also serve on the enforcement debtor’s employer a notice in [Form 79](https://www.courts.qld.gov.au/__data/assets/word_doc/0016/93103/Form-79-Notice-to-employer-for-redirection-of-earnings-UCPR.doc) and a copy of [Form 80](https://www.courts.qld.gov.au/__data/assets/word_doc/0017/93104/Form-80-Notice-that-debtor-is-not-an-employee-UCPR.doc) as mentioned above.

An enforcement warrant for redirection of earnings is not an originating process and so personal service is not required.  [Rule 112](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s112.html) prescribes how ordinary service is performed.  Ordinary service is most commonly performed by posting it to the relevant address, faxing the document to the person; or emailing the document to the person (if applicable).

Of course, to be 100% sure then you can always personally serve the documents.

### Enforcement Warrant for Redirection of Earnings

If a creditor does everything correctly then the Court will issue the enforcement warrant for redirection of earnings.  Once properly served on the debtor and the debtor’s employer then the employer will start making payments from the first payday after seven (7) days of being served.

Once you have all of the information, you can get your [debt recovery solicitor](https://stonegatelegal.com.au/debt-recovery-solicitors/) to apply for this or another enforcement warrant, including:

1. [Enforcement warrant for the redirection of debts](https://stonegatelegal.com.au/enforcement-warrant-redirection-debts/).
2. [Enforcement warrant for seizure and sale of property](https://stonegatelegal.com.au/warrant-for-seizure-and-sale-of-property/).

## FAQ – Warrant for Redirection of Earnings

See below for some frequently asked questions regarding an enforcement warrant for redirection of earnings.

### What is an enforcement warrant for redirection of earnings?

An enforcement warrant for redirection of earnings is a legal document issued by a court in Queensland, Australia, under the Uniform Civil Procedure Rules 1999. This warrant allows a creditor to collect a debt by redirecting a portion of the debtor’s earnings from their employer directly to the creditor. It’s used to enforce a judgment or a registered QCAT decision. The process involves submitting specific forms, proving the debtor’s financial ability to pay, and considering the impact on the debtor’s living expenses and liabilities. The court exercises discretion in issuing these warrants, ensuring a balance between the creditor’s right to enforce the debt and the debtor’s financial circumstances.

### How does one apply for an enforcement warrant for redirection of earnings?

To apply for an enforcement warrant for redirection of earnings, the creditor must submit an application to the court, including several key documents. These include an enforceable money order (like a court judgment or registered QCAT decision), Form 9 (outlining the orders sought), a draft warrant (Form 78), and a statement in support of the application. The creditor must also define ‘earnings’ and provide notices to the employer (Forms 79 and 80). The application process is detailed and requires accurate completion of all forms, alongside evidence of the debtor’s financial position and the creditor’s claim.

### What are considered ‘earnings’ under this warrant?

Under an enforcement warrant for redirection of earnings, ‘earnings’ are broadly defined to include wages, salary, bonuses, pensions, benefits, annuities, leave payments, and retirement benefits. This definition is comprehensive, encompassing various forms of compensation that a debtor may receive from employment or other sources. The wide scope of this definition ensures that creditors have a better chance of [recovering debts](https://stonegatelegal.com.au/recovering-debts-or-money-owed/) by attaching to a range of financial resources available to the debtor.

### What role does the court play in issuing an enforcement warrant for redirection of earnings?

The court plays a crucial role in issuing an enforcement warrant for redirection of earnings. It exercises discretion by considering the debtor’s employment status, their ability to satisfy the debt, and the potential impact of the warrant on their necessary living expenses and other liabilities. The court aims to balance the creditor’s right to enforce the debt with the debtor’s financial situation, ensuring that the enforcement does not impose unreasonable hardship on the debtor.

### Is professional legal assistance necessary for obtaining an enforcement warrant for redirection of earnings?

While not legally mandatory, professional legal assistance is highly recommended when obtaining an enforcement warrant for redirection of earnings. The process involves complex [legal procedures](https://stonegatelegal.com.au/legal-proceedings-for-debt-recovery/), detailed form submissions, and a nuanced understanding of the Uniform Civil Procedure Rules. Legal professionals can provide expertise and guidance, ensuring that the application is correctly completed and increasing the likelihood of a successful outcome.

### Can a creditor enforce a debt against a debtor’s property instead of their earnings?

Yes, a creditor can choose to enforce a debt against a debtor’s property instead of their earnings. This alternative enforcement method involves a different legal process, such as obtaining a warrant for the seizure and sale of property. The choice between redirecting earnings and targeting property depends on various factors, including the debtor’s financial situation and the nature of the assets they possess. Creditors often assess which method is more likely to successfully recover the debt.

### What happens if a debtor’s financial circumstances change after the issuance of the warrant?

If a debtor’s financial circumstances change after the issuance of an enforcement warrant for redirection of earnings, the warrant may need to be adjusted or set aside. The creditor or debtor can approach the court to review the warrant in light of the new circumstances. This could involve modifying the amount being redirected from the debtor’s earnings or, in some cases, ceasing the redirection altogether. The court will reassess the situation to ensure that the enforcement remains fair and reasonable.

### How long does it take to obtain an enforcement warrant for redirection of earnings?

The time it takes to obtain an enforcement warrant for redirection of earnings can vary depending on several factors, including the complexity of the case, the court’s workload, and the completeness and accuracy of the application submitted by the creditor. Generally, the process involves several steps, such as submitting the application, the court reviewing the documents, and serving the warrant on the debtor and employer. This can take several weeks to months, highlighting the importance of accurate and timely submission of all required documents.

### What are the consequences for an employer who fails to comply with an enforcement warrant for redirection of earnings?

An employer who fails to comply with an enforcement warrant for redirection of earnings faces legal consequences. They are legally obligated to redirect the specified portion of the debtor’s earnings to the creditor. Non-compliance can result in legal action against the employer, potentially leading to fines or other penalties. Employers must therefore understand their responsibilities under the warrant and ensure they adhere to the terms set out in the court’s order.

### Can a debtor dispute an enforcement warrant for redirection of earnings?

A debtor can dispute an enforcement warrant for redirection of earnings if they believe it has been wrongly issued or imposes unreasonable hardship. The debtor can file an application with the court to set aside or modify the warrant. The court will then review the debtor’s financial situation, the creditor’s claim, and any other relevant factors to determine whether the warrant should be adjusted or set aside. This process ensures that debtors have the opportunity to contest enforcement actions that they believe are unjust or overly burdensome.

### Does this warrant apply to independent contractors?

This enforcement warrant probably does not apply to independent contractors.  It really depends if the way that the contractor is paid by the employer and whether that is caught by the definitions of “employer” and “earnings”.  Probably an enforcement warrant for redirection of debts might be a better option.

### How long does the enforcement warrant for redirection of earnings last?

[Rule 855(2)](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s855.html) says that an enforcement warrant for redirection of earnings continues in force until:

> _(a) the total amount specified in the warrant is paid; or_
>
> _(b) the warrant is set aside or expires according to its conditions._

### What is an employer?

An employer is defined in [rule 793](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s793.html) of the UCPR and says:

> _“ **employer**” of an enforcement debtor means a person (including the State) who, as principal, rather than as a servant or agent, pays, or is likely to pay, earnings to the enforcement debtor._

### Can I recover the debt from the employer?

There is a long line of authorities which say that there is no transfer of security from the debtor to the employer.

In [_Chatterton v Watney_ (1881) 17 Ch D 259](http://www.austlii.edu.au/cgi-bin/LawCite?cit=%281881%29%2017%20Ch%20D%20259?query=%221886%2d90%20All%20ER%201044%22%20or%20%2243%20Ch%20D%2099%22) Cotton LJ said:

> _The effect of a garnishee order is to bind the debt attached and to prevent the creditor from receiving it; and when it is made absolute it gives the judgment creditor a right to recover payment from the garnishee…\[i\]t has not the effect of transferring the security, nor does it give the person who obtained the garnishee order any right to the security or any claim against the land comprised in it._

Cotton LJ repeated this in [_Re Combined Weighing and Advertising Machine Company_ (1889) 43 Ch D 99](http://www.austlii.edu.au/cgi-bin/LawCite?cit=%281889%29%2043%20Ch%20D%2099).

### What happens if the debtor leaves his employment?

If the enforcement debtor leaves that place of employment then the warrant expires.

The employer is required to give notice to the registrar of the Court and to the creditor.  The creditor will then need to request another warrant by starting the process over.

[Rule 866(2)](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s866.html) says when the debtor ceases the employment:

> _The person must, immediately after ceasing to be the enforcement debtor’s employer, give notice in the approved form mentioned in rule 859 (2) (b) to the registrar and the enforcement creditor._

The employer must serve a [Form 81](https://www.courts.qld.gov.au/__data/assets/word_doc/0018/93105/Form-81-Notice-of-cessation-of-employment-UCPR.doc) – notice of cessation of employment – if the debtor has ceased working for the employer at a certain date.

## Moving Forward

We strongly suggest that you engage a suitable qualified legal practitioner who specialises in the enforcement of money orders.

If you have a [QCAT](https://www.qcat.qld.gov.au/) decision which needs to be registered in the Magistrates Court and enforced, or a judgment, direction, decision or determination of the Court to be enforced then contact our dedicated enforcement lawyers today.

**There are a number of difficult steps that need to happen before an employer must comply with an enforcement warrant for redirection of earnings. We strongly recommend engaging a legal professional**

[SPEAK TO A LAWYER FOR FREE TODAY](https://stonegatelegal.com.au/free-case-evaluation/)

**OR CALL: [1300 545 133](tel:1300545133) AND CHAT TO OUR LAWYERS**

#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation.

With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice.

Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings.

Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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## Social Media Defamation Guide
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# Social Media Defamation – Complete Guide

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## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| June 22, 2024

## Article Summary

This article provides an in-depth exploration of the increasing issue of social media defamation in Australia. The guide explains how traditional defamation laws, developed before the internet era, struggle to address the unique challenges posed by online communication. Social media platforms allow for the rapid and widespread dissemination of content, often published anonymously, leading to a rise in defamation cases.

The guide discusses various forms of social media defamation, including false text posts, manipulated images, defamatory videos, and fake reviews. It provides real-life examples to illustrate the impact of defamatory actions on individuals and businesses.

The increasing number of defamation cases related to social media has led to significant judicial interpretation and case law development. Courts have had to adapt traditional defamation laws to modern online contexts, addressing issues such as the role of third-party publishers, the implications of unmoderated comments, and the rapid spread of defamatory material.

This guide provides a comprehensive overview of social media defamation, highlighting the legal challenges, real-life cases, and preventive strategies. It underscores the importance of responsible online communication and the legal responsibilities of social media users in preventing and addressing defamatory content.

Our [defamation lawyers](https://stonegatelegal.com.au/services/defamation-lawyers/) explain this in more detail.

Table of Contents

[Toggle](https://stonegatelegal.com.au/social-media-defamation-complete-guide/#)

## Social Media Defamation

Social media defamation and online defamation are on the increase and becoming a real problem in Australia.

Justine Hanks from the Rule of Law Education Centre, [said in a paper](https://www.ruleoflaw.org.au/wp-content/uploads/LSA-Legal-Briefs-Article-2022-Defamation-Law-Reform.pdf):

> _To understand the scope of the issue, “Judge Gibson, Defamation List Judge in the District Court of NSW, reported that, in a 2018 study of 91 defamation judgements, 64 matters (70%) involved partial or entirely online publication, with 63.7% of all cases studied being brought against individuals rather than media corporations.”_

Social media defamation in Australia presents unique challenges due to the rapid dissemination and wide reach of online content.

Traditional defamation laws, largely developed before the advent of the internet, struggle to address the nuances of online communication.

Social media allows individuals to publish content easily and anonymously, leading to an increase in defamation cases. These cases often involve viral posts that spread quickly and widely, exacerbating the harm caused.

Courts have applied existing defamation laws to social media, resulting in [significant damages awarded](https://stonegatelegal.com.au/damages-in-defamation-claims-complete-guide/) in cases involving defamatory posts.

In this article, our [defamation lawyers](https://stonegatelegal.com.au/services/defamation-lawyers/) give you a complete guide to social media defamation in Australia.

## What is Defamation?

Defamation is the publication of a false factual statement which harms the reputation of a person or small business.  This statement is published with either negligence or malice.

To bring a defamation claim as a company, the company must have fewer than 10 employees, or a natural person must have been defamed.

To bring a claim in defamation, a plaintiff must satisfy four (4) requirements:

1. There was a publication; and
2. The publication named you personally (or strong implication); and
3. The publication was defamatory; and
4. The defamatory publication has caused (or likely to cause) serious harm.

The publication is defamatory if it:

1. Injures the reputation of the person/business by exposing it to hatred, contempt, ridicule, or being though less of; and/or
2. Lowers the person/businesses estimation in the eyes of right-thinking, or reasonable members of the society generally; and/or
3. Put’s the person/business in the position of being shunned and avoided.

An action for defamation is easily made out in most cases, but success is largely dependent on several available defences open to a defendant.

We have a very detailed article here – [Defamation in Queensland](https://stonegatelegal.com.au/defamation-in-queensland/).

## What is Social Media Defamation?

Social media defamation refers to the act of making false or malicious statements about a person or business on social media platforms, which can damage their reputation.

It involves the publication of defamatory content online, where it can be widely disseminated and potentially cause significant harm to the subject’s personal or professional standing.

The key elements that constitute social media defamation in general are:

1. False Statement of Fact: The social media statement made must be false. Truthful statements, no matter how damaging, are not considered defamatory.
2. Publication: The defamatory statement on social media must be communicated to at least one person other than the subject of the statement (Facebook page for example).
3. Identification: The social media statement must identify the person or business being defamed, either directly or indirectly.
4. Damage: The statement on social media must cause harm to the person’s reputation, leading to damage such as financial loss, emotional distress, or damage to their reputation.

Social media defamation can take various forms, including:

1. Text Posts: False statements made in posts or comments.
2. Images and Videos: Defamatory content can be conveyed through manipulated images or videos.
3. Reviews and Ratings: False negative reviews on platforms like Google, Yelp, or Facebook.
4. Shared Content: Sharing defamatory content created by others can also be considered defamation.

## Examples of Social Media Defamation

Understanding social media defamation through real-life examples can help illustrate how defamatory actions can manifest on online platforms.

Here are several examples highlighting different forms of social media defamation:

1. False Accusations
2. Fake Reviews
3. Blog Comments
4. Defamatory Memes
5. Defamatory Videos
6. Harassment and Cyberbullying
7. Manipulated Images
8. Slanderous Comments

We will explain these in more detail below.

### False Accusations

**Scenario**: A user on Facebook posts a status falsely accusing a person of being involved in illegal activities, such as drug dealing or theft; or have done something criminal, or unethical in their business.

**Impact**: These accusations, being untrue and harmful, damage the person’s reputation within the community and may lead to social ostracism, job loss, or other personal hardships.

### Fake Reviews

**Scenario**: An individual posts a negative review on Google or Yelp about a local restaurant, claiming that they found foreign objects in their food and experienced food poisoning, despite never having visited the restaurant.

**Impact**: The false review deters potential customers, causing significant financial loss and reputational damage to the restaurant.

### Manipulated Images

**Scenario**: A person shares a digitally altered image on Instagram, making it appear that a local person was engaging in inappropriate behaviour or was doing something criminal.

**Impact**: The manipulated image spreads quickly, causing outrage locally and damaging the person’s personal and professional reputation in the local area.

### Defamatory Comments

**Scenario**: In a heated Twitter or Facebook exchange, a user makes defamatory comments about a person, falsely claiming that they have engaged in unethical practices or criminal activities.

**Impact**: These comments, despite being false, are retweeted, shared, and liked by many, leading to widespread belief in the false information and harming the person’s career and reputation.

### Defamatory Videos

**Scenario**: A YouTuber creates a video falsely accusing a competitor of stealing content and violating copyright laws, presenting fabricated evidence to support their claims.

**Impact**: The video goes viral, leading to a backlash against the competitor, including loss of subscribers, business opportunities, and partnerships.

### Harassment and Cyberbullying

**Scenario**: A group of students creates a defamatory post on Snapchat about a classmate, falsely claiming that they engaged in inappropriate behaviour at a school event.

**Impact**: The post is widely shared among students, leading to the victim experiencing bullying, emotional distress, and damage to their reputation.

### Defamatory Memes

**Scenario**: A meme is created and circulated on Reddit that falsely portrays a local business owner as a racist based on a misrepresented quote taken out of context.

**Impact**: The meme quickly gains traction, resulting in public boycotts, protests, and significant financial loss for the business owner.

### Blog Comments

**Scenario**: On a popular blog, a commenter posts a defamatory statement about a celebrity, alleging without evidence that the celebrity engages in illegal drug use.

**Impact**: The comment spreads to other platforms, leading to widespread rumours and damage to the celebrity’s public image and career.

## Real-Life Social Media Defamation Cases

There is an increase in social media defamation.  Social media defamation involves damaging someone’s reputation through false statements made on platforms like Facebook, Twitter, Instagram, and others.

The rapid dissemination and broad reach of social media posts make defamatory content particularly harmful, as such statements can quickly go viral and reach a vast audience. The unique nature of social media, including the use of emojis and the casual tone of posts, can also complicate defamation cases, as these elements require careful interpretation to understand their defamatory impact.

The increasing prevalence of defamation cases related to social media interactions has highlighted several legal challenges. Courts have had to adapt traditional defamation laws to the modern context of online communication, often leading to significant judicial interpretation and case law development.

Key issues in these cases include determining who is considered the publisher of defamatory content, understanding the implications of unmoderated and anonymous comments, and addressing the rapid and wide spread of defamatory material.

The legal system has recognised the need for updated legislation to effectively manage these challenges and ensure fair outcomes in social media defamation disputes.

## Social Media Defamation on Facebook

Defamation on Facebook occurs when individuals post false and harmful statements that damage someone’s reputation. These statements can spread rapidly due to the platform’s wide reach and the ease of sharing content.

Defamatory posts on Facebook can include accusations of criminal behaviour, professional misconduct, or personal attacks. The nature of social media amplifies the impact of these statements, as they can be seen by a large audience almost instantly, leading to severe embarrassment, humiliation, and reputational harm for the targeted individuals.

Courts have addressed various instances of defamation on Facebook, emphasising the serious legal consequences of such actions. They have highlighted the “grapevine effect,” where defamatory content spreads quickly and widely, exacerbating the harm.

In some cases, defamation will [not yield significant damages](https://stonegatelegal.com.au/defamation-claim-and-mixed-martial-arts-case-note/).  However, in several cases, courts have awarded significant damages to plaintiffs, including aggravated damages when the defendants acted with malice or failed to retract their statements. The decisions also stress the responsibility of social media users to communicate responsibly and the potential for legal repercussions when spreading false and defamatory information online.

This underscores the importance of understanding the severe impact defamatory statements can have when made on platforms like Facebook.

### _Mickle v Farley_ \[2013\] NSWDC 295

In [_Mickle v Farley_ \[2013\] NSWDC 295](https://www.caselaw.nsw.gov.au/decision/54a63cd93004de94513db98f), a former high school student, Andrew Farley, was sued by his former music teacher, Christine Mickle, after posting defamatory statements about her on Twitter and Facebook. The court ultimately ruled in favour of the Plaintiff, awarding Mrs Mickle $105,000.00 in damages.

Discussing the case and defamation on social media in general, the court judge, Judge Elkaim, stated at \[21\]:

> _There is one matter that I omitted in relation to the compensatory damages and that is to stress that when defamatory publications are made on social media it is common knowledge that they spread. They are spread easily by the simple manipulation of mobile phones and computers. Their evil lies in the grapevine effect that stems from the use of this type of communication. I have taken that into account in the assessment of damages that I previously made._

### _Rodgers & Anor v Gooding_ \[2023\] QDC 115

In the case of [_Rodgers & Anor v Gooding_ \[2023\] QDC 115](https://classic.austlii.edu.au/au/cases/qld/QDC/2023/115.html), a Queensland woman named Zoe Gooding was ordered to pay $279,000 in damages to a de facto couple for defamatory statements she made about them on Facebook.

The defamatory publications in this case were made by the defendant, Zoe Anne Gooding, on the Bushland Beach Crime Alert Facebook group. The specific defamatory statements included:

> _Paedophile \[address redacted\]_.

In response to queries about the initial post, the defendant commented:

> _When it’s your kid being touched then you wouldn’t be saying it’s a wild accusation_.

In response to a question about how she knew, the defendant replied:

> _We know cos they tried getting our 6 year old to go with them multiple times_. (paragraph \[35\]).

These publications falsely accused the plaintiffs, Mianka Rodgers and Michael Usher, of being paedophiles and attempting to lure a child, which constituted highly defamatory imputations.

The defamatory posts were made in a Facebook group with nearly 5,000 members, allowing for widespread dissemination and significant impact on the plaintiffs’ lives and reputations. The posts triggered public comments and reactions, further amplifying the harm.

The court’s decision underscores the significant legal consequences of defamatory statements made on social media and the severe impact such actions can have on individuals’ lives and reputations.

### _Fairfax Media Publications Pty Ltd v Voller_ \[2021\] HCA 27

The High Court of Australia in [_Fairfax Media Publications Pty Ltd v Voller_ \[2021\] HCA 27](https://classic.austlii.edu.au/au/cases/cth/HCA/2021/27.html) addressed the issue of defamation on social media. The Court examined whether media companies that operate public Facebook pages can be held liable as publishers for defamatory comments made by third-party users on their posts.

The Court concluded that these media companies are indeed considered publishers of the third-party comments because they facilitated and encouraged the publication of those comments on their Facebook pages.  Kiefel CJ, Keane and Gleeson JJ said at \[55\]:

> _The Court of Appeal was correct to hold that the acts of the appellants in facilitating, encouraging and thereby assisting the posting of comments by the third-party Facebook users rendered them publishers of those comments._

The Court emphasised that publication in defamation law includes any act of participation in the process of making defamatory content available to a third party, regardless of the intent or knowledge of the defamatory nature of the content.

This decision underscores the significant responsibility of social media page operators in managing third-party content and highlights the broad scope of liability under defamation law in Australia.

### _Gan v Zadravic_ \[2021\] NSWDC 533

In the case [_Gan v Zadravic_ \[2021\] NSWDC 533](https://classic.austlii.edu.au/au/cases/nsw/NSWDC/2021/533.html), the plaintiff, Stuart Gan, sued the defendant, Anthony Zadravic, for defamation over a Facebook post.

The post accused Gan of not paying his employees’ superannuation entitlements. The court evaluated the defamatory nature of the publication, the likelihood of harm, and the defences of triviality and justification.

The defamatory content included the following statements made by Zadravic on his Facebook page:

> _Oh Stuart Gan!! Selling multi million $ homes in Pearl Beach but can’t pay his employees superannuation. Shame on you Stuart!!! 2 yrs and still waiting!!!_

This post was online for less than twelve hours but was visible to Zadravic’s Facebook friends, potentially including mutual acquaintances with Gan.

This case is an application for summary dismissal. This application was dismissed as the Court decided that:

- _Defendant’s application for summary dismissal of these proceedings pursuant to UCPR rr 13.4(1)(c) and 14.28 is dismissed._
- _Pursuant to UCPR r 28.2, imputations (i) – (iii) are reasonably capable of being conveyed._
- _Defendant’s challenges to the form of imputations (i) – (iii) dismissed._
- _Defendant pay plaintiff’s costs._

### _Iskander v Barcos_ \[2023\] VCC 2074

In [_Iskander v Barcos_ \[2023\] VCC 2074](https://classic.austlii.edu.au/au/cases/vic/VCC/2023/2074.html), the defendant Barcos, who owns a business called BNB Leather, posted on Facebook that accused the plaintiff Iskander of scamming customers by taking deposits and then blocking them. On 19 December 2022, Mr Barcos uploaded a post to the Facebook page. The post read:

> _Dear Customers and Followers_
>
> _This is an official Scam Alert from BNB Products Pty Ltd._
>
> _Trev is a customer of BNB, we have worked together on multiple cars in the past, as usual everything went well._
>
> _Earlier this year he tried to book another project in but we were already booked out for 2022, so he went looking elsewhere, unfortunately this is where things have gone south._
>
> _Trev placed a Deposit with an account by the name of Michael Iskander that is advertising on FB market place. Once the deposit was taken he was blocked and the deposit today still has not been returned._
>
> _Michael is claiming to have had training and worked full time for BNB, THIS IS NOT TRUE._
>
> _Michael worked for BNB as a factory hand, casual 2 days a week for a total of 7 weeks and was dismissed due to misconduct ‘he lied about damaging a car and was caught._

Iskander entered default judgment after Barcos didn’t respond the concerns notice to file a defence. The court found the Facebook post (you can read the post at 12), which had around 20,000 followers, was likely read by hundreds of people and contained defamatory imputations about Iskander scamming customers.

The court accepted the publication caused [serious harm to Iskander’s reputation](https://stonegatelegal.com.au/serious-harm-threshold-in-defamation/), including lost business opportunities and abusive messages.

The court noted several aggravating factors, including Barcos’s failure to file a defence or attend court, the fabrication of evidence, and the encouragement of others to share the defamatory post. These actions demonstrated a malicious intent to harm Iskander’s business and warranted an award of aggravated damages.

The court awarded Iskander $90,000 in damages, including aggravated damages.

### _Courtney v Maguire: Maguire v Courtney_ \[2023\] VCC 2280

In [_Courtney v Maguire: Maguire v Courtney_ \[2023\] VCC 2280](https://classic.austlii.edu.au/au/cases/vic/VCC/2023/2280.html), Thomas Joseph Courtney sued Philip Maguire for defamation concerning three Facebook posts, while Maguire countersued Courtney for defamation over four publications.

The jury returned the verdict that the comments made by Mr Maguire implied Mr Courtney was involved in organised crime, among other serious accusations. The court found that Mr. Maguire had no credible basis for making these claims against Mr. Courtney.  The Court said at \[76\] and \[78\]:

> _There was no basis at all for Mr Maguire’s allegations; he could not have reasonably believed that he could prove they were true. He should not have pleaded a truth defence, should have withdrawn it much sooner, and he should not have repeated his allegations in Court. He also repeated them before the Ringwood Magistrates’ Court in circumstances where they were of even less relevance. I am satisfied that this is aggravating conduct … Accordingly, I am satisfied that Mr Courtney is entitled to an amount of compensation for aggravated damages._

The court ruled in favour of Mr Courtney, stating that Mr Maguire’s actions were motivated by malice. As a result, Maguire’s defamation claims against Courtney were dismissed.

The court awarded damages to Mr Courtney, including aggravated damages, totalling $125,000.

### _Kelly v Levick_ \[2016\] QMC 11

In [_Kelly v Levick_ \[2016\] QMC 11](https://classic.austlii.edu.au/au/cases/qld/QMC/2016/11.html), Kelly sued Levick over allegedly defamatory statements made on Facebook. The post stated:

> _June turned out to be a thieving, lying, money-crazed bitch who screwed me out of nearly 3 million rand – may she rot in Hell._

The defendant later deleted the post upon finding out that it was generally accessible to the public. The defendant’s attempts at mitigation, including issuing a handwritten apology and a public Facebook apology, were acknowledged but did not significantly reduce the damages awarded.

The court awarded the Plaintiff $10,000.00 in damages, together with interest to the date of this judgment at the rate of 4%.

This case highlights the significant legal implications of defamatory statements made on social media, emphasising the importance of responsible online communication and the potential for widespread reputational harm through platforms like Facebook.

### _Bolton v Stoltenberg_ \[2018\] NSWSC 1518

In [_Bolton v Stoltenberg_ \[2018\] NSWSC 1518](https://classic.austlii.edu.au/au/cases/nsw/NSWSC/2018/1518.html), the plaintiff, Conrad Moran Bolton, former Mayor of the Narrabri Shire Council, sued the defendant, Stephen Stoltenberg, for defamation. Stoltenberg operated the public Facebook page “Narri Leaks,” where he posted defamatory content about Bolton. The publications were:

1. First Post (15 June 2015): Implied that Bolton made a “Captain’s Call” to hire a weak and inexperienced General Manager that he could control, thus breaching the Local Government Act.
2. Second Post (27 June 2015): Alleged that Bolton deliberately corrupted the selection process for the General Manager of the Council.
3. Third Post (27 June 2015): Comments on the second post further implying misconduct by Bolton.
4. Fourth Post (30 June 2015): Alleged deliberate lies, coercion, and intimidation by Bolton to suppress dissenting views on Council matters.
5. Fifth Post (18 July 2015): Accused Bolton of corrupt conduct by providing false information to the Independent Regulatory and Pricing Tribunal.
6. Sixth Post (7 January 2016): Implied that Bolton acquired millions of dollars through dishonest means.

The court found that the posts were widely viewed, with Facebook metrics showing significant reach and engagement, confirming the broad dissemination of the defamatory content.

The court held that the posts conveyed serious defamatory imputations, including allegations of corruption, dishonesty, and intimidation, which significantly harmed Bolton’s reputation, stating:

> _For the foregoing reasons the claims against Mr Stoltenberg should be upheld. The following orders are made:_
>
> _(1) Mr Stoltenberg to pay Mr Bolton damages of $100,000 comprising $80,000 in general damages and $20,000 in aggravated damages;_
>
> _(2) Mr Stoltenberg to pay Mr Bolton interest on the award in the amount of $10,000;_
>
> _(3) Mr Stoltenberg to pay Mr Bolton’s costs as agreed or assessed._

The court’s decision highlights the significant impact of defamatory statements on social media and the legal consequences for individuals who use online platforms to spread false and damaging information.

## Social Media Defamation on YouTube

Defamation on YouTube occurs when videos posted on the platform contain false and harmful statements about individuals, leading to significant reputational damage. This can include accusations of criminal conduct, professional misconduct, or fraudulent activities.

Such defamatory content can cause severe embarrassment, humiliation, and harm to the individuals targeted, especially when the videos are widely viewed and shared.

Courts addressing defamation on YouTube emphasise the importance of precise and detailed pleadings, considering the context and reach of the publications. They stress the need for platforms like YouTube to promptly remove defamatory content once notified and acknowledge the balance between protecting individuals’ reputations and upholding free speech.

Legal measures such as damages and [injunctions](https://stonegatelegal.com.au/injunctions-in-queensland-complete-guide/) are often used to mitigate the harm caused and to prevent further defamatory publications. The significant impact of defamatory statements on social media underscores the legal responsibilities of content creators and platforms in addressing and managing defamatory material.

### _Gair and Turland v Greenwood_ \[2020\] NSWDC 586

In [_Gair and Turland v Greenwood_ \[2020\] NSWDC 586](https://classic.austlii.edu.au/au/cases/nsw/NSWDC/2020/586.html), the plaintiffs, Thomas Duncan Gair and Garry Maurice Turland, sued the defendant, Adam Haig Greenwood, for defamation related to a YouTube video and other online posts. The defamatory publications included:

1. A YouTube video titled “ _The Strife and Crimes of Duncan Gair_” which falsely accused Gair and Turland of corruption and criminal conduct.
2. The video contained specific imputations that Gair, as the Mayor, misused his office, received bribes, and was a racketeer. Similarly, Turland, a councillor, was accused of being a crook, misusing his position, bribing the Mayor, and engaging in conflicts of interest.

The defamatory content was published on:

1. YouTube: The primary platform for the video.
2. Facebook: Additional defamatory statements were made and shared on various Facebook pages.
3. Other Websites: Including southernhighlandsnsw.org, and other online platforms.

The video had been viewed over 600 times within a day of being uploaded, causing severe embarrassment, humiliation, and reputational damage to the plaintiffs. The targeted nature of the publication was intended to harm their reputations within their community.

The court awarded aggravated damages due to the malicious intent behind the video and the continued defamatory campaign against the plaintiffs. Greenwood refused to apologise and persisted in his defamatory statements even during the court proceedings.

This case highlights the significant legal repercussions of defamatory statements made on YouTube and other social media platforms, emphasising the court’s role in addressing and mitigating reputational harm through damages and injunctions.

### _Mitchell v Jobst_ \[2023\] QDC 219

In [_Mitchell v Jobst_ \[2023\] QDC 219](https://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QDC/2023/219.html), the plaintiff, William James Mitchell, a competitive video gamer, sued the defendant, Karl Jobst, for defamation over a YouTube video titled “ _The Biggest Conmen in Video Game History Strike Again_.” The plaintiff alleged that the video contained defamatory statements that harmed his reputation.  The defamatory publications included:

The YouTube video titled “ _The Biggest Conmen in Video Game History Strike Again_” which alleged that the plaintiff was involved in deceptive and fraudulent activities related to video game records.

The court found that the pleadings needed to be more precise in defining the defamatory imputations and how they were conveyed through the video.

The court’s decision underscores the importance of precise and detailed pleadings in defamation cases involving social media platforms like YouTube, ensuring that the allegations are clearly defined and supported by evidence of publication and access.

### _El-Mouelhy v QSociety of Australia Inc (No 4)_ \[2015\] NSWSC 1816

In _[El-Mouelhy v QSociety of Australia Inc (No 4) \[2015\] NSWSC 1816](https://classic.austlii.edu.au/au/cases/nsw/NSWSC/2015/1816.html)_, the plaintiff, Mohamed El-Mouelhy, sued the defendants for defamation related to videos and a presentation that were published online, including on YouTube. The defamatory publications included:

1. First Publication: A video uploaded on YouTube titled “ _Understanding Halal Certification Schemes_”
2. Second Publication: A presentation given by one of the defendants at a symposium styled “The First International Symposium on Liberty and Islam in Australia.”
3. Third Publication: A videorecording of the symposium presentation also uploaded on YouTube.

The court’s decision highlights the complexities involved in defamation cases related to social media, especially regarding [the defence of contextual truth](https://stonegatelegal.com.au/the-defence-of-contextual-truth-in-defamation/) and the extent of publication on platforms like YouTube.

### _Barilaro v Google LLC_ \[2022\] FCA 650

In _[Barilaro v Google LLC \[2022\] FCA 650](https://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/2022/650.html)_, the plaintiff, John Barilaro, sued Google LLC for defamation related to several YouTube videos published by Jordan Shanks, known as “ _friendlyjordies_.” The defamatory publications included two main YouTube videos:

1. The “bruz” Video: Uploaded on 14 September 2020, containing imputations that Mr. Barilaro was a corrupt conman, committed perjury, should be jailed for perjury, corruptly gave $3.3 million to a beef company, and corruptly voted against a Royal Commission into water theft.
2. The “Secret Dictatorship” Video: Uploaded on 21 October 2020, alleging that Mr. Barilaro acted corruptly by blackmailing councillors and pocketing millions of dollars stolen from the Narrandera Shire Council.

The court made several key findings regarding defamation on YouTube:

The court found the videos to be part of a relentless, racist, vilificatory, abusive, and defamatory campaign against Mr. Barilaro, leading to significant reputational damage and emotional distress.

Google failed to remove the defamatory videos promptly despite knowing they contained offensive and defamatory attacks. The court criticised Google for its inaction and for maintaining hopeless defences until the commencement of the trial.

The court’s decision highlights the responsibilities of social media platforms like YouTube in addressing defamatory content and the legal consequences of failing to act on known defamatory material.

### _Agustin-Bunch v Smith_ \[2021\] VSC 158

In _[Agustin-Bunch v Smith \[2021\] VSC 158](https://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/vic/VSC/2021/158.html)_, the plaintiffs, Farrah Arsenia Agustin-Bunch and DRF LLC, sued the defendants, Adam Charles Smith and Doc Adam Pty Ltd, for defamation. The case revolved around a series of videos and posts published on YouTube and Facebook, in which Dr. Smith criticised Dr. Farrah’s natural medicine practices.  The defamatory publications included:

1. First Video: Titled “The worst doctor’s advice in the Philippines,” posted on YouTube and Facebook, which accused Dr. Farrah of promoting dangerous medical advice and fraudulent practices.
2. Second Video: Titled “Goodbye Facebook,” discussing the service of legal documents on Dr. Smith.
3. Third Video: Titled “Ang TOTOO tungkol kay Doctor Cabbage,” alleging various defamatory imputations against Dr. Farrah.
4. Fourth Video: Titled “Goodbye Dr Farrah,” claiming Dr. Farrah’s practices and products were illegal and harmful.
5. Fifth Video: Titled “Real Doctor debunks Dr Farrah medical advice,” which questioned Dr. Farrah’s medical credentials and advice.
6. Sixth Video: Titled “My Response to Miss Glenda,” comparing Dr. Farrah’s products to harmful substances.
7. Seventh Video: Titled “My response to Healing Galing,” making further defamatory claims about Dr. Farrah’s practices (Paragraphs \[24\]-\[55\]).

The court made several key findings:

The court considered the public interest in free speech and the importance of public health debate. However, it emphasised that defamatory statements causing significant harm could not be justified under the guise of public interest.

This case underscores the impact of defamatory statements on social media and the legal measures available to address such defamation, emphasising the balance between free speech and protecting individuals’ reputations.

## Social Media Defamation on Instagram

Defamation on Instagram can occur when individuals or entities publish false and harmful statements about someone, which can rapidly spread and cause significant reputational damage due to the platform’s wide reach and ease of sharing.

Posts may include serious accusations such as criminal behaviour, unethical practices, or personal attacks. The courts have recognised the extreme nature of such imputations and the serious harm they can cause, particularly when the defamatory content is highly sensational and widely disseminated.

In several instances, plaintiffs have been awarded substantial damages for the reputational harm and personal distress caused by defamatory Instagram posts.

The courts emphasise the importance of prompt action by social media platforms to remove defamatory content once reported, highlighting the responsibility of platforms like Instagram to enforce their community standards and terms of service to prevent the spread of defamatory material.

The courts also note the potential liability of platforms for failing to act against known defamatory content. Additionally, the courts consider the balance between protecting free speech and mitigating harm, often exercising caution in granting injunctions unless there is clear evidence of ongoing or repeated defamation.

This underscores the delicate balance in legal proceedings involving defamation on social media, particularly on platforms with broad user engagement like Instagram.

### _Martin v Najem_ \[2022\] NSWDC 479

In _Martin v Najem_ \[2022\] NSWDC 479, Isaac Martin, a prominent food blogger and social media influencer, took action against the defendant, Fouad Najem, also a food blogger and influencer, after he published videos on Instagram calling the plaintiff a “ _paedophile_” and a “ _racist_“.

The court found that the serious harm requirement was satisfied, based on factors such as the extreme nature of the imputations, the manner of publication, the extent of publication, and the ongoing impact on the plaintiff’s health and security.

The plaintiff was awarded $300,000 in damages, including aggravated damages, plus interest of $6,656.

### _BeautyFULL CMC Pty Ltd & Ors v Hayes_ \[2021\] QDC 111

In the case of [_BeautyFULL CMC Pty Ltd & Ors v Hayes_ \[2021\] QDC 111](https://classic.austlii.edu.au/au/cases/qld/QDC/2021/111.html), the plaintiffs sued the defendant for defamation over several posts made on Instagram.

The defamatory publications made false allegations about the plaintiffs’ professional and personal conduct, causing significant reputational damage.  The defamatory publications included:

1. A post on Instagram on 30 March 2020, where the defendant accused the first plaintiff of fabricating a photo of the fourth plaintiff working on the frontline during COVID-19, calling it “ _disgusting and disrespectful_“.
2. On 10 May 2020, the defendant posted a story on Instagram, implying that her ex-employer was involved in a physical assault that caused her hospitalisation.
3. On 11 May 2020, the defendant made phone and Facebook message communications alleging that the second and third plaintiffs had hacked her social media accounts and were involved in setting her up to be assaulted.

The defamatory publications were primarily made on Instagram, and then on Facebook.

The Court awarded damages and also made the following injunction:

> _The defendant, whether by herself, her servants or agents is prohibited from causing to be published whether orally or in writing or by email or electronic means, or by way of publication on any social media platform such as but not limited to Facebook, Instagram, Twitter, TikTok, Reddit, any publication which has the effect defaming the first, second, third or fourth plaintiffs._

### _Hoser v Harrison_ \[2024\] FedCFamC2G 436

In _[Hoser v Harrison \[2024\] FedCFamC2G 436](https://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FedCFamC2G/2024/436.html)_, the plaintiff, Raymond Hoser, sued the defendant, Anthony Harrison, for defamation related to material posted on Instagram. The defamatory conduct included posts made on Instagram that conveyed false and harmful statements about Mr. Hoser, damaging his reputation and business.

The Court acknowledged the challenges in managing and monitoring user-generated content on platforms like Instagram, given the volume of content and the automated systems in place.

The Court emphasised the responsibility of social media platforms, like Instagram, in enforcing their terms of service and community standards to prevent defamatory content.

The Court also highlighted the significance of prompt removal of defamatory posts once reported and the liability of the platform in cases of failure to act.

The Court’s ruling underscores the importance of stringent monitoring and swift action by social media platforms to mitigate the spread of defamatory content and uphold the legal standards of defamation law.

### _Molan v Dailymail.com Australia Pty Ltd_ \[2022\] FCA 1004

In _[Molan v Dailymail.com Australia Pty Ltd \[2022\] FCA 1004](https://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/2022/1004.html)_, the court addressed defamatory content involving a prominent sports and media personality, Erin Molan. While the case primarily involved articles and tweets published by Dailymail.com, there were also mentions of related defamatory content on Instagram.

The court examined the extent to which these publications defamed the plaintiff by conveying false and damaging imputations about her.  The defamatory publications included:

1. An online article published by Dailymail.com on 5 June 2020, which was the primary focus of the defamation claim.
2. Tweets published on 5 June 2020 and 6 June 2020, which reiterated the defamatory content from the article.
3. Instagram post by Erin Molan herself, referenced indirectly in the context of public reactions to her alleged comments (Paragraph \[56\]).

The court emphasised the wide reach and impact of social media platforms like Instagram, noting that defamatory statements made on such platforms can spread rapidly and cause significant harm.

The case underscored the importance of accurate and responsible reporting by media outlets and the potential liability they face for defamatory content published on social media. The court highlighted that even indirect references to defamatory content on platforms like Instagram contribute to the overall damage caused by such publications.

### _Russell v S3@Raw Pty Ltd_ \[2023\] FCA 305

In _[Russell v S3@Raw Pty Ltd \[2023\] FCA 305](https://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/2023/305.html)_, the plaintiff, Hayley Elizabeth Russell, sought an interlocutory injunction against the respondents for defamatory posts published on Instagram. The defamatory conduct involved posts accusing Russell of misconduct related to her business dealings, which led to significant reputational damage and personal distress.  The defamatory publications included:

1. Main Post: Published on the Instagram account “s3\_studio” in November 2022, which included statements accusing Russell of working behind the respondents’ back, providing false reasons to take clients, and signing a lease to frustrate a business sale.
2. January Posts: Published on 25, 26, and 27 January 2023 on the Instagram account “joshua.s3,” making further defamatory statements about Russell’s business practices and legal actions.

The Court highlighted the significant impact of defamatory statements on social media platforms like Instagram, noting their potential for rapid and widespread dissemination. The Court recognised the “grapevine effect,” where defamatory content can quickly spread and cause extensive harm.

Despite the serious nature of the allegations, the Court emphasised the importance of free speech and the need to exercise caution when granting interlocutory injunctions.

The Court ultimately denied the injunction, finding that the balance of convenience did not favour the plaintiff, as the posts had already caused significant damage and there was no clear indication of further harm if the injunction was not granted.

## Social Media Defamation Twitter (or X) & Emojis

Defamation on Twitter involves the publication of false and harmful statements that can quickly spread and cause significant reputational damage. Tweets can include explicit accusations, derogatory comments, and misleading implications about individuals’ professional conduct, personal behaviour, or character.

The rapid dissemination of such tweets is facilitated by Twitter’s platform features, such as retweets, likes, and replies, which amplify the reach and impact of defamatory content.

Additionally, the use of emojis and hyperlinks within tweets can convey defamatory meanings subtly yet effectively, making it essential to consider the full context and potential interpretations by the audience.

Courts have addressed the unique challenges of defamation on Twitter, emphasising the importance of context and the perspective of the ordinary reasonable reader. They recognise that tweets are often consumed in a casual and conversational medium, necessitating a holistic and impressionistic approach to interpretation.

Legal rulings have highlighted the need for plaintiffs to provide clear evidence that defamatory material was accessed and comprehended within the statutory limitation period.

The courts also stress the responsibilities of social media users to verify claims before publication and the potential for aggravated damages if defamatory content is published with malicious intent or persists despite attempts to resolve the issue.

### _Burrows v Houda_ \[2020\] NSWDC 485

In the case of [_Burrows v Houda_ \[2020\] NSWDC 485](https://classic.austlii.edu.au/au/cases/nsw/NSWDC/2020/485.html), the plaintiff, Zali Burrows, sued the defendant, Adam Houda, for defamation based on two Twitter posts:

1. First Post (28 July 2019): The defendant tweeted that the plaintiff was facing a potential legal battle after a judge made scathing remarks about her competency as a lawyer.
2. Second Post (27 May 2020): The defendant used the “zipper-mouth face” emoji in response to a query about the plaintiff, implying that she was involved in serious professional misconduct and possibly criminal activities.

The court addressed the capacity of certain imputations to convey defamatory meanings, particularly in the context of social media communication, which includes the use of emojis and the rapid dissemination of potentially harmful information.  The Court said:

> _One of the main changes to online writing style has been the introduction of two new-age hieroglyphic-style languages: emoticons and emoji. An “emoticon” is a portmanteau term (from “emotional icon”) for pictures made from punctuation marks, letters and numbers to create an image displaying a sentiment and predates the internet as signs (such as 🙂 or ʕ·ᴥ·ʔ) can be created with a keyboard … An “emoji” is a more recent invention, consisting of pictographs of faces, objects and symbols; as the name would suggest, the origin of these pictographs is from use in Japan (the jury is still out on whether “emoji” is a collective noun or whether in its plural form it should be anglicised with an “s”; I have taken the former approach)._

The court found that the words and emojis used in the tweets were capable of conveying defamatory meanings, including allegations of professional misconduct and criminal behaviour.

This case highlighted the court’s approach to interpreting emojis within the context of defamation. The court acknowledged that emojis could convey significant defamatory meanings, similar to words, and that their interpretation must consider the context of the entire post and the reasonable reader’s perspective.

The court’s decision underscores the significant impact of defamatory statements made on social media, including those conveyed through emojis, and the need for careful consideration of the context and potential harm when assessing such claims.

### _Asbog Veterinary Services Pty Ltd & Anor v Barlow_ \[2020\] QDC 112

In the case [_Asbog Veterinary Services Pty Ltd & Anor v Barlow_ \[2020\] QDC 112](https://classic.austlii.edu.au/au/cases/qld/QDC/2020/112.html), the plaintiffs, Asbog Veterinary Services Pty Ltd (trading as Albion Veterinary Surgery and Eatons Hill Veterinary Surgery) and Dr. Allen O’Grady, sued the defendant, Carrie Barlow, for defamation.

The court addressed defamatory comments made by the defendant on various social media platforms, which harmed the reputation of the plaintiffs, including:

1. First Publication (15 October 2014): A tweet alleging a 400% mark-up on pet drugs after a dog attack, tagging several other veterinary services.
2. Second Publication (15 October 2014): A review on True Local alleging gross overcharging and claiming the vet took advantage of a distressed pet owner.
3. Third Publication (24 October 2014): An amended review on True Local with similar allegations, adding that the mark-up was about 350%.
4. Fourth Publication (15 October 2014): A Facebook post on the defendant’s personal page, repeating the gross overcharging claim and displaying a letter from the vet.
5. Fifth Publication (24 October 2014): An amended Facebook post with similar allegations.
6. Sixth Publication (24 October 2014): Another Facebook review alleging overcharging and inflammatory, unprofessional conduct.
7. Seventh Publication (15 October 2014): A Facebook post on the Albion Vet’s page warning others to avoid the vet.

The court noted that the context of the social media posts and the audience’s perception were crucial in assessing the defamatory nature of the statements. The posts reached a significant audience, and the allegations were serious enough to harm the plaintiffs’ reputations.

The court awarded aggravated damages due to the malicious intent behind the posts and the continued publication of defamatory content despite the plaintiffs’ attempts to resolve the issue. The court found the defendant’s conduct aggravated the harm caused to the plaintiffs.

The court granted a permanent injunction restraining the defendant from publishing further defamatory statements about the plaintiffs.

The case highlights the serious impact of defamatory statements made on social media and the importance of verifying claims before publishing potentially harmful content.

### _Hockings v Lynch & Adams_ \[2022\] QDC 127

In the case [_Hockings v Lynch & Adams_ \[2022\] QDC 127](https://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QDC/2022/127.html), the plaintiff, Penny Hockings, sued the defendants, Michelle Lynch and Alison Adams, for defamation over multiple posts made on Facebook and on Twitter.  The defamatory publications included:

1. First Publication (28 October 2018): Comments on the “Relocate Kingscliffe Hospital from State Significant Farmland Incorporated Association” Facebook page, implying dishonesty and corruption involving Hockings and her association with the Tweed Valley Hospital site and the Goldsky investment scheme.
2. Subsequent Publications: Various posts and comments on Facebook between October 2018 and July 2019, including direct messages and posts on public and private pages, suggesting Hockings was involved in fraudulent activities and was dishonest.

The court found that the posts conveyed serious defamatory meanings, including allegations of corruption, dishonesty, and involvement in fraudulent activities, which were not substantiated by evidence.

The court recognised the casual and conversational nature of social media but emphasised that defamatory statements made in forums could still cause significant reputational damage.

The court’s decision highlights the significant impact of defamatory statements on social media and the importance of context, reach, and the nature of the platform in assessing defamation cases.

### _Bazzi v Dutton_ \[2022\] FCAFC 84

In [_Bazzi v Dutton_ \[2022\] FCAFC 84](https://classic.austlii.edu.au/au/cases/cth/FCAFC/2022/84.html), Shane Bazzi appealed against a defamation judgment where the primary judge found that his tweet conveyed the imputation that Peter Dutton excuses rape. The defamatory publication in question was a tweet by Shane Bazzi posted on 25 February 2021, stating:

> _Peter Dutton is a rape apologist_

… with a link to a Guardian article about Dutton’s comments on asylum seekers.

The court emphasised that tweets should be read as a whole and in the context of how social media users understand them. The primary judge’s approach of analysing the tweet in parts and focusing heavily on dictionary definitions was found to be inappropriate.

The court noted that social media is a casual medium, and an impressionistic approach is more fitting to determine what the ordinary reasonable reader would understand from the tweet. The context includes both the tweet and the linked material, which together influence the reader’s interpretation.  Finally finding:

> _It is not sufficient that the tweet was offensive and derogatory. Mr Dutton had the onus to establish, on the balance of probabilities, that the reader reasonably would have understood that the tweet conveyed the imputation that he asserted it conveyed. In our opinion, he failed to discharge that onus so that the appeal must be allowed, the judgment entered for Mr Dutton in the sum of $35,825 must be set aside and the proceeding dismissed._

The court’s decision underscores the importance of context in defamation cases involving social media and highlights the need for a holistic and realistic interpretation of online communications.

### _Hockey v Fairfax Media Publications Pty Limited_ \[2015\] FCA 652

In [_Hockey v Fairfax Media Publications Pty Limited_ \[2015\] FCA 652](https://classic.austlii.edu.au/au/cases/cth/FCA/2015/652.html), the plaintiff, Joseph Benedict Hockey, then Federal Treasurer, sued Fairfax Media over multiple publications that included both traditional print and digital formats. The defamation case revolved around articles, posters, and tweets suggesting that Hockey engaged in corrupt practices by offering privileged access in return for political donations.  The defamatory publications included:

1. Articles: Published in the Sydney Morning Herald, The Age, and The Canberra Times, which implied that Hockey was involved in corrupt practices through a fundraising body called the North Sydney Forum.
2. Headlines and Posters: Prominent headlines like “Treasurer for Sale” and posters used to promote the articles.
3. Tweets: Tweets from The Age’s Twitter account stating:

_Treasurer for Sale and Treasurer Hockey for Sale._

The Court finally deciding:

> _In summary, I uphold Mr Hockey’s claims only with respect to the publication of the SMH poster and the first two matters published on Twitter by The Age. I award damages of $120,000 and $80,000 respectively in relation to those claims._

The court’s decision highlights the significant impact of defamatory statements on social media and the importance of responsible journalism, especially in the context of digital platforms where sensational headlines can quickly spread and cause harm.

### _Hodgetts v Nine Network Australia Pty Ltd & Ors_ \[2020\] QSC 330

In [_Hodgetts v Nine Network Australia Pty Ltd & Ors_ \[2020\] QSC 330](https://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QSC/2020/330.html), the plaintiff, Kyle Hodgetts, sought damages for defamation related to an episode of “A Current Affair” and its subsequent online publications.

The case primarily addressed whether the defamatory material was accessed and downloaded by third parties within the [statutory limitation period](https://stonegatelegal.com.au/extending-the-limitation-period-for-defamation/), impacting the viability of Hodgetts’ claims. The defamatory publications included:

1. First Matter Complained Of: The episode titled “Kyle the Con” broadcast on “A Current Affair” and subsequently uploaded to the Nine website.
2. Second Matter Complained Of: Posts on the “A Current Affair” Twitter page and an alleged Facebook post promoting the broadcast.

The court reiterated that for defamation to be actionable, the defamatory material must be accessed and comprehended by a third party within the limitation period. Merely making content available online does not constitute publication unless it is actually viewed.

The court emphasised the importance of proving that the material was accessed and downloaded within one year prior to the filing of the claim or any amendments, as required by the _Limitation of Actions Act 1974_ (Qld).

The court’s decision highlights the critical role of evidence in proving publication within the statutory limitation period and underscores the challenges plaintiffs face in defamation cases involving online content.

## Social Media Defamation on Blog Posts

Defamation on blog posts occurs when false and damaging statements are published online, harming an individual’s reputation. These defamatory statements can include false accusations, misleading claims about someone’s personal or professional life, and any other content that can cause the subject to be ridiculed, shunned, or viewed with contempt.

Blog posts, being easily accessible and widely read, can significantly amplify the impact of defamatory content, leading to severe damage to the individual’s reputation. The harm is exacerbated when the defamatory content is published with malicious intent or reckless disregard for the truth, and when it is disseminated across multiple online platforms, reaching a large audience.

Courts have addressed the complexities of defamation in blog posts by focusing on where the content is accessed and understood. The place of publication is crucial in determining jurisdiction and the applicable law, as the reputational damage occurs where the material is read and comprehended.

Successful defamation claims against blog posts often result in substantial damages, including compensation for economic losses and aggravated damages if malice is proven. The legal outcomes emphasise the responsibility of bloggers to ensure the accuracy of their content and the potential legal repercussions of publishing defamatory material online.

### _Wilson v Bauer Media Pty Ltd_ \[2017\] VSC 521

The case [_Wilson v Bauer Media Pty Ltd_ \[2017\] VSC 521](https://classic.austlii.edu.au/au/cases/vic/VSC/2017/521.html) involved the plaintiff, Rebel Wilson, suing Bauer Media for defamation. The defamation claims were based on a series of articles published in Bauer Media’s print magazines and online platforms, alleging that Wilson was a serial liar who fabricated aspects of her personal and professional life to advance her career:

1. Wilson lied about her age, claiming to be younger than she was.
2. Wilson lied about her real name, background, upbringing, and personal experiences.
3. The articles suggested Wilson was untrustworthy, and her success was based on falsehoods.

The defamatory content was published on multiple online platforms, including:

1. Day print magazine
2. Woman’s Day website
3. Woman’s Weekly website
4. New Weekly website
5. OK Magazine website.

The jury found that each of the publications conveyed defamatory meanings, as alleged by Wilson, and rejected the defences of substantial truth, triviality, and qualified privilege.

The court emphasised the serious harm caused to Wilson’s reputation and awarded substantial damages. General damages were assessed at AU$650,000, and special damages for economic loss were valued at $3,917,472, recognising the significant impact on Wilson’s career opportunities.

The court awarded aggravated damages due to the malicious intent behind the publications and Bauer Media’s conduct in maintaining the defamatory stance even after the initial publication. The court found that Bauer Media acted to profit commercially by publishing sensational articles without regard for the truth.

### _Dow Jones & Company Inc v Gutnick_ \[2002\] HCA 56

In [_Dow Jones & Company Inc v Gutnick_ \[2002\] HCA 56](https://classic.austlii.edu.au/au/cases/cth/HCA/2002/56.html), the High Court of Australia addressed the issue of defamation on the internet. The case revolved around an article published by Dow Jones on its subscription website WSJ.com, which contained defamatory statements about Joseph Gutnick. The defamatory publications were:

> _An article titled “Unholy Gains” published in the October 2000 edition of Barron’s magazine and reproduced on WSJ.com._

The article implied that Gutnick was involved in money laundering and other unethical business practices. The court determined that the defamatory material was published in Victoria, Australia, where it was downloaded and read. This established that the place of publication for defamation cases involving the internet is where the material is comprehended by a third party, not where the server hosting the content is located.

The court emphasised that defamation is concerned with damage to reputation, which occurs where the defamatory material is read and understood. Therefore, Gutnick’s reputation in Victoria was harmed by the publication, making Victoria the appropriate jurisdiction for the case.

The decision in this case underscores the importance of where defamatory content is accessed and understood in determining jurisdiction and applicable law in defamation cases involving the internet.

## How Can I Avoid Being Sued for Defamation?

Avoiding a defamation claim being made against you requires careful consideration and responsible communication. Here are some guidelines to help you steer clear of defamation claims:

1. **Avoid Derogatory Comments on Race or Religion**: Never make derogatory remarks about someone’s race, religion, or any other protected characteristic. Such comments are not only defamatory but can also be considered hate speech, leading to severe legal consequences.
2. **Avoid Identifying Individuals Unintentionally**: Be cautious about identifying individuals in your statements, even unintentionally. If your comments could potentially harm someone’s reputation, it’s better to refrain from naming them or providing identifiable details.
3. **Consult a Lawyer When in Doubt**: If you’re unsure about whether a statement might be defamatory, seek legal advice before making, writing, tweeting, or posting it. A lawyer can help you understand the legal implications of your statements and guide you in communicating responsibly.
4. **Focus on the Issue, Not the Person**: When discussing a topic, focus on the issue at hand rather than making personal attacks or generalisations about individuals. Personal comments and sweeping statements can be perceived as defamatory and harm someone’s reputation.
5. **Follow the Golden Rule**: Adopt the principle, “If you can’t say something nice, don’t say anything at all.” This approach encourages positive interactions and reduces the risk of making potentially defamatory statements.
6. **Use Neutral and Non-Emotive Language**: Emotive language can escalate situations and lead to misinterpretations. Stick to neutral, factual language to convey your message without unnecessary emotional overtones.
7. **Verify Statements for Accuracy**: Always ensure that any statements you make are factually accurate. Avoid repeating information from others without verifying its truthfulness. Fact-checking is crucial, as repeating false information, even if it’s from a seemingly reliable source, can still result in defamation.

By adhering to these guidelines, you can communicate more responsibly and reduce the risk of defaming someone, thus protecting yourself from potential legal action.

## How Do I Make a Social Media Defamation Claim?

To make a defamation social media claim, you must follow specific legal steps to establish that defamatory content has harmed your reputation. Here are the key steps involved:

Establishing Defamation by:

1. Showing that the defamatory material was published on social media.
2. Showing that an ordinary person would consider the published material to be defamatory.
3. Showing that the publication of the material caused serious harm to your reputation.
4. Showing that you can be identified in the published material.
5. Issuing a “concerns notice” to the publisher. This notice must specify where the defamatory information can be accessed, the defamatory imputations, and the harm caused to your reputation. The publisher has 28 days to respond, and they may [request further particulars](https://stonegatelegal.com.au/further-particulars-notice-in-defamation/) if the notice lacks adequate details. You must provide these details within 14 days, and the publisher then has the remaining 14 days to respond.

The publisher can make an offer to make amends, which may include publishing a correction, apologising, removing the defamatory material, and compensating for any loss incurred. This offer must be made within 28 days of receiving the concerns notice and before lodging a defence to the defamation action.

If the issue is not resolved through the concerns notice and offer to make amends process, you can file a defamation claim in court. The limitation period to lodge a defamation claim is one year from the date of the first publication of the defamatory material.

By following these steps and seeking legal advice, you can effectively pursue a social media defamation claim and seek redress for the harm caused to your reputation.

## Injurious Falsehood or Social Media Defamation?

Injurious falsehood, also known as malicious falsehood, is a legal tort that is similar to defamation but focuses specifically on protecting a person’s business, goods, or services from false and malicious statements that cause economic loss. Unlike defamation, which primarily protects an individual’s personal reputation, injurious falsehood is concerned with statements that harm a person’s commercial interests.

To successfully claim injurious falsehood, a plaintiff must prove four key elements:

1. **False Statement**: The defendant made a false statement about the plaintiff’s goods, services, or business.
2. **Publication**: The false statement was published to a third party.
3. **Malice**: [The false statement was made with malice](https://stonegatelegal.com.au/malice-in-defamation-claims-a-comprehensive-guide/), meaning the defendant intended to cause harm or acted with reckless indifference to the truth.
4. **Actual Damage**: The plaintiff suffered actual economic loss as a direct result of the false statement.

Injurious falsehood requires proof of malice and actual damage, making it distinct from defamation. Malice involves the intention to harm another person without just cause, or knowledge of the falsity of the statement. Economic loss must be proven to have resulted directly from the false publication.

This tort provides legal recourse for traders and businesses to protect against harmful false statements that affect their commercial interests, and it allows for remedies such as damages and injunctive relief to prevent further harm.

## What are the Defences to Social Media Defamation Online?

To defend against a defamation claim on social media, there are several statutory and common law defences that can be used. Here are the primary defences:

1. **Justification (Truth)**: If the statements made are substantially true, this defence can be used. The defendant must prove that the defamatory imputations are true in substance or not materially different from the truth.
2. **Contextual Truth**: This defence applies when the publication contains multiple defamatory statements, some of which are true. If the truthful statements overshadow the false ones, causing no further harm to the plaintiff’s reputation, this defence can be used.
3. **Absolute Privilege**: Statements made during parliamentary proceedings, court proceedings, or tribunal hearings are protected by absolute privilege, meaning they cannot be the basis of a defamation claim.
4. **Publication of Public Documents**: If the defamatory statements are contained in public documents or fair copies of such documents, this defence can apply. Public documents include court judgments, parliamentary reports, and government publications.
5. **Fair Report of Proceedings of Public Concern**: This defence applies if the defamatory statements were part of a fair and accurate report of proceedings that are of public concern, such as court cases, parliamentary debates, or public meetings.
6. **Qualified Privilege**: If the defamatory statements were made in circumstances where the defendant had a duty to communicate the information and the recipient had an interest in receiving it, and if the defendant acted reasonably, this defence can apply.
7. **Honest Opinion**: If the defamatory statements were opinions rather than facts, related to a matter of public interest, and based on proper material, this defence can be used. The opinions must be clearly distinguishable from factual assertions.
8. **Innocent Dissemination**: This defence is available to subordinate distributors, such as newsagents or libraries, who published the defamatory material without knowing it was defamatory and without negligence.

The key to successfully defending a defamation claim is to carefully assess the facts and circumstances surrounding the publication and choose the most appropriate defence strategy.

We have a very detailed article here – [Defending a Defamation Claim in Queensland](https://stonegatelegal.com.au/defending-a-defamation-claim-in-queensland/)

## Difference Between Online Slander and Online Libel

[Section 7 of the _Defamation Act 2005_ (Qld)](https://classic.austlii.edu.au/au/legis/qld/consol_act/da200599/s7.html) states:

> _(1) The distinction at general law between slander and libel remains abolished._
>
> _(2) Accordingly, the publication of defamatory matter of any kind is actionable without proof of special damage._

This means that they both fall under the definition of defamation.  There is now no distinction between Facebook slander and Facebook libel, as it is all now defamation on Facebook.

This applies to all [online slander and online libel](https://stonegatelegal.com.au/libel-slander-and-defamation-understanding-the-difference/).

## Social Media Defamation FAQ with Answers

Defamation, particularly on social media, is a growing concern in Australia, affecting both individuals and businesses.

This FAQ section provides concise answers to common questions about defamation, including legal definitions, actions to take if defamed, and steps to avoid being sued for defamation.

### What is Defamation?

Defamation is the publication of a false factual statement that harms the reputation of a person or small business. This statement is published with either negligence or malice. To bring a defamation claim, the plaintiff must show that the publication named them personally, was defamatory, and caused or is likely to cause serious harm. The publication is defamatory if it injures the reputation by exposing the person or business to hatred, contempt, ridicule, or being thought less of by society.

### What is social media defamation?

Social media defamation refers to making false or malicious statements about a person or business on social media platforms, which can damage their reputation. This includes false statements communicated to at least one person other than the subject of the statement. The statement must identify the person or business being defamed and cause harm to their reputation, such as financial loss or emotional distress. Social media defamation can take various forms, including text posts, images, videos, and reviews.

### When can small businesses claim social media defamation?

Small businesses can claim defamation if they have fewer than ten employees or if a natural person associated with the business has been defamed. The defamatory statement must meet the same criteria as individual claims, involving false factual statements that harm the business’s reputation. The business must show that the publication identified it, was defamatory, and caused or is likely to cause serious harm. The harm can include financial loss and damage to the business’s reputation.

### Can you sue for defamation on social media?

Yes, you can sue for defamation on social media. The defamatory statement must be published, false, identify the person or business, and cause serious harm to their reputation. Social media platforms amplify the impact of defamatory statements due to their wide reach and ease of sharing content. Courts have awarded significant damages in cases involving defamatory social media posts, emphasising the serious legal consequences of such actions.

### I think I have been defamed. What should I do?

If you believe you have been defamed, it is important to act quickly. Document the defamatory statement by taking screenshots and noting the date and time it was published. Avoid responding or escalating the situation on social media. Consult a lawyer to discuss your options and consider issuing a concerns notice to the publisher, specifying the defamatory imputations and the harm caused to your reputation. The publisher has 28 days to respond and may offer to make amends, including correcting the statement, apologising, or compensating for the loss incurred.

### How do I prove defamation on social media?

To prove defamation on social media, you must show that the defamatory material was published, the material is considered defamatory by an ordinary person, it caused serious harm to your reputation, and you can be identified in the published material. This often involves gathering evidence such as screenshots and witness statements. Additionally, you may need to issue a concerns notice to the publisher and give them an opportunity to respond before taking legal action.

### Who is responsible for defamatory posts?

Responsibility for defamatory posts can lie with both the original poster and the platform that facilitates the publication of the content. Courts have held that social media companies can be considered publishers of defamatory comments if they facilitate, encourage, or assist in the publication of those comments. This includes acts like allowing the comments to be posted on their platforms without appropriate moderation.

### What should I do if I am accused of defamation on social media?

If you are accused of defamation on social media, take the accusation seriously and do not ignore it. Consider removing the defamatory content and issuing a public or private apology to the affected party. Consult a lawyer to understand the legal implications and your options. Depending on the severity of the defamation claim, you may also need to issue a correction or make an offer to settle the matter to avoid legal action.

### What are examples of social media defamation?

Examples of social media defamation include false accusations, fake reviews, defamatory memes, and manipulated images. For instance, falsely accusing someone of criminal behaviour in a Facebook post, writing a fake negative review about a business on Google, or sharing a digitally altered image that misrepresents a person’s actions can all be considered defamatory. These actions can significantly harm the targeted individual’s or business’s reputation, leading to social ostracism, financial loss, or personal distress.

### What happens if you publish something that is defamatory on social media?

Publishing defamatory content on social media can lead to severe legal consequences, including lawsuits and significant damages. The person or business defamed can sue for compensation for the harm caused to their reputation. Courts have awarded substantial damages in such cases, including general, special, and aggravated damages. Additionally, the person who posted the defamatory content may be required to issue a public apology and remove the defamatory material.

### Can Facebook posts amount to defamation?

Yes, Facebook posts can amount to defamation if they contain false statements that harm someone’s reputation. The wide reach and ease of sharing on Facebook amplify the potential damage caused by defamatory posts. Courts have dealt with numerous cases involving defamatory Facebook posts, emphasising the serious legal repercussions for individuals who publish false and harmful content on this platform. The impact can include significant reputational damage and legal liability for the poster.

### Can Facebook comments amount to social media defamation?

Yes, Facebook comments can also amount to defamation if they meet the criteria of containing false statements that damage someone’s reputation. The casual nature of comments does not exempt them from defamation laws. Comments can spread quickly through likes, shares, and replies, leading to widespread harm. Courts have recognised the significant impact of defamatory comments on social media and have held individuals accountable for such statements.

### What If I Ignore a Defamation Claim?

Ignoring a defamation claim can lead to serious legal consequences, including default judgments against you. If you do not respond to a concerns notice or legal proceedings, the court may rule in favour of the plaintiff by default, which can result in significant damages awarded against you. It is important to take defamation claims seriously, seek legal advice, and respond appropriately to avoid escalating the matter. Failure to address the claim can also lead to further reputational damage and legal costs.

### How can I protect myself from defamation on social media?

To protect yourself from defamation on social media, avoid making derogatory or harmful statements about others. Focus on discussing issues rather than attacking individuals, and use neutral, non-emotive language. Always verify the accuracy of your statements before posting and consider the potential impact of your words on others’ reputations. If in doubt, seek legal advice to understand the implications of your statements and avoid publishing anything that could be considered defamatory.

### How do I prove social media defamation?

Proving defamation on social media involves demonstrating that the defamatory material was published, was considered defamatory by an ordinary person, caused serious harm to your reputation, and you were identified in the material. Collect evidence such as screenshots and witness statements to support your claim. Additionally, issuing a concerns notice to the publisher and allowing them an opportunity to respond is a necessary step before taking legal action.

### Who is responsible for defamatory posts?

Both the individual who made the defamatory post and the platform that facilitated its publication can be held responsible. Courts have ruled that social media companies can be considered publishers if they facilitate or encourage the publication of defamatory comments. This means that both the content creator and the platform may face legal consequences if defamatory content is posted and not adequately managed.

### How can I avoid being sued for social media defamation?

To avoid being sued for defamation, communicate responsibly and avoid making false or harmful statements about others. Refrain from making derogatory comments about someone’s race, religion, or other protected characteristics. Verify the accuracy of your statements and focus on discussing issues rather than attacking individuals. Seek legal advice if you are unsure whether a statement might be defamatory and avoid identifying individuals unnecessarily.

### What is the limitation period for social media defamation?

The limitation period for defamation is one year from the date of the first publication of the defamatory material. This means that a defamation claim must be lodged within this timeframe to be valid. In some cases, the court may grant an extension if it is satisfied that it is reasonable to do so. It is important to act promptly if you believe you have been defamed to ensure that your claim is within the limitation period.

### What is injurious falsehood?

Injurious falsehood, also known as malicious falsehood, is a legal tort that protects a person’s business, goods, or services from false and malicious statements that cause economic loss. Unlike defamation, which primarily protects personal reputation, injurious falsehood focuses on statements that harm commercial interests. To successfully claim injurious falsehood, the plaintiff must prove that the statement was false, published with malice, and caused actual economic damage. This provides businesses with legal recourse to protect against harmful false statements affecting their commercial interests.

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# Frustration of Contract & Force Majeure Clauses

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- \| March 22, 2020

## Article Summary

Frustration of contract is a legal concept in common law where unforeseen events, beyond the fault of either party, render the performance of a contract impossible or fundamentally different from the original intent.

If a frustrating event occurs, the contract is automatically terminated, and parties are released from their obligations.

This concept is distinct from force majeure clauses, which are contractual provisions excusing non-performance due to specific events.

The criteria for frustration include:

1. Events must occur without fault by either party.
2. Impossibility of performance: Events can make the contract impossible to perform, whether due to physical destruction, legal changes, or other factors.
3. Radical difference: The frustrating event must alter the contract’s performance fundamentally, rendering it substantially different from what was initially intended.
4. While a frustrated contract generally prevents claims for damages, parties may recover pre-frustration rights or benefits. Force majeure clauses, on the other hand, are contractually defined and excuse non-performance based on specified events like natural disasters, wars, or pandemics.

Force majeure clauses are interpreted objectively based on what a reasonable person would have understood when the contract was formed.

If parties rely on a force majeure clause, they must show that they attempted to mitigate the impact of the event.

Though frustration can apply to leases, it is often more challenging to terminate leases due to frustration, particularly without a significant, unforeseeable event.

Jurisdictions like New South Wales, Victoria, and South Australia have legislation addressing frustrated contracts, but this summary primarily focuses on the common law doctrine.

This article explains this in a lot more detail.

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![frustration of contract in Queensland](<Base64-Image-Removed>)Frustration of contract occurs in common law when, without fault of either party to a contract, an unforeseen event (or unforeseen events) makes it impossible for the contract to be performed (this could include **COVID-19**).

Frustration of contract occurs if the unforeseen event renders the performance of the contract radically different from that which the parties intended the contract to be performed.

If a frustrating event occurs, then the contract is automatically terminated, and the parties are discharged from their obligations under the contract.

This common law doctrine of frustration is different (albeit similar) from a contractual ‘ _**force majeure**_’ clause which may also allow for termination of the contract.

A frustrating event may not allow for a party to claim damages.  This means that the other party may not seek to recover losses (with exceptions).

Frustration of contract is a very complicated area of law but can allow the contract to be terminated and the parties discharged from their obligations.  Each contract is different and will need to be assessed on its own merits.

In this article our [commercial litigation lawyers](https://stonegatelegal.com.au/services/commercial-litigation/) explain the frustration of contract & force majeure clauses.

## What is Frustration of Contract?

Contract frustration occurs where without default of either party a contractual obligation has become incapable of being performed.

In the House of Lords case of [_Davis Contractors Ltd v Fareham Urban District Council_ \[1956\] AC 696](https://www.bailii.org/cgi-bin/markup.cgi?doc=uk/cases/UKHL/1956/3.html), Lord Radcliffe said:

> _So perhaps it would be simpler to say at the outset that frustration occurs whenever the law recognises that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract. Non haec in foedera veni. It was not this that I promised to do._

This was adopted in Australia by [_Codelfa Construction Pty Ltd v State Rail Authority of New South Wales_ (1982) 149 CLR 337](http://classic.austlii.edu.au/au/cases/cth/HCA/1982/24.html), and others.

Breaking this statement down, a person must look at:

1. What does without default by either party mean?
2. What does impossibility of performance mean?
3. What does radically different mean?

These questions will be addressed in more detail below.

### What does Without Default by Either Party Mean?

A contract will not be frustrated if the frustrating event is because of an act or omission of one of the parties to the contract.

#### Breach of Contract

A contract will not be frustrated if the frustrating event is because of a breach of contract.  In [_Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd_ \[1962\] 2 QB 26](https://www.bailii.org/cgi-bin/markup.cgi?doc=ew/cases/EWCA/Civ/1961/7.html) Lord Justice Sellers said:

> _If a party by his breach induces delay, he cannot claim frustration which would have been self-induced_

See also – _Ocean Tramp Tankers Corporation v. V/OSovracht, The Eugenia_ [\[1964\] 2 Q.B. 226](https://www.austlii.edu.au/cgi-bin/LawCite?cit=%5B1964%5D+2+QB+226&party1=&party2=&court=&juris=&article=&author=&year1=&year2=&synonyms=on&filter=on&cases-cited=&legis-cited=&section=); and _Universal Cargo Carriers Corporation v Citati_ [\[1957\] 2 QB 401](https://www.austlii.edu.au/cgi-bin/LawCite?cit=%5B1957%5D+2+QB+401&party1=&party2=&court=&juris=&article=&author=&year1=&year2=&synonyms=on&filter=on&cases-cited=&legis-cited=&section=).

#### Self-Induced Frustration of Contract

There is distinction between a breach causing frustration and a deliberate self-induced frustration.  The distinction is that the deliberate act which caused frustration may not be a breach of the contract.

A party is not allowed to rely on deliberate self-induced frustration because of the ‘moral rule’ that a person should not be allowed to take advantage of his or her own wrong.

In [_Maritime National Fish Ltd v Ocean Trawlers Ltd_ \[1935\] UKPC 1](https://www.bailii.org/cgi-bin/markup.cgi?doc=uk/cases/UKPC/1935/1.html) the Privy Council said:

> _\[I\]t cannot in their Lordships’ judgment be predicated that what is here claimed to be a frustration, that is, by reason of the withholding of the licence, was a matter for which the appellants were not responsible or which happened without any default on their part. In truth, it happened in consequence of their election. If it be assumed that the performance of the contract was dependent on a licence being granted, it was that election which prevented performance, and on that assumption it was the appellants’ own default which frustrated the adventure: the appellants cannot rely on their own default to excuse them from liability under the contract … the appeal should be dismissed with costs_

So, without default means without fault of the parties to the contract.  This may be because, unless there is a breach or a deliberate self-induced frustrating event, it is impossible to perform the contract.

### What does Impossibility of Performance Mean?

The case of [_Taylor v Caldwell_ (1863) 122 ER 309](http://www.worldlii.org/int/cases/EngR/1863/526.pdf) is the start of the modern-day doctrine of frustration, which relied on the impossibility of performance.

The contract in this case was for the rental of a hall.  After the hall burned down, it was impossible for the renter to rent the hall.

Since _Taylor v Caldwell_ there has been a number of cases which have expanded the meaning of literal impossibility of performance to also mean commercial impossibility, or commercially impracticable.

The scope of impossibility of performance includes:

1. Where specific subject matter of the contract is destroyed;
2. Where specific subject matter is unavailable;
3. Where a party to the contract dies or is incapacitated;
4. Where the method of performance of the contract is not possible;
5. Where there is an increased in the burden of performance;
6. Where non-occurrence of a particular event renders the contract pointless;
7. Where a contract becomes illegal during the course of its performance;
8. Where a contract has been delayed for an unreasonably long period; and
9. Some other reasons.

It may not be enough that this frustration event makes parts of the contract impossible to perform.  The frustrating event must render performance of the contract ‘radically different’ from that which was promised.

### What does Radically Different Mean?

The [dictionary definition](https://dictionary.cambridge.org/dictionary/english/radically) of radically is:

> _completely or extremely_

So, to make a legal argument for frustration, the contract must be completely or extremely different than the agreement made.

In [_Alliance Concrete Singapore Pte Ltd v Sato Kogyo (S) Pte Ltd_ \[2014\] SGCA 35](http://www.commonlii.org/sg/cases/SGCA/2014/35.pdf) the Singapore Court of Appeal added a layer of understanding when it said frustration will occur when:

> _the contract can no longer justly be said to be the same as that which was originally entered into by the parties._

In [_National Carriers Ltd v Panalpina (Northern) Ltd_ \[1981\] AC 675](https://www.bailii.org/cgi-bin/markup.cgi?doc=uk/cases/UKHL/1980/8.html), the House of Lords said:

> _Frustration of a contract takes place when there supervenes an event … which so significantly changes the nature … of the outstanding contractual rights and/or obligations from what the parties could reasonably have contemplated at the time of its execution._

So, the contract must be completely or extremely changed, must no longer be the same, and must have significantly changed the nature of the agreement.

Whether performance of the contract is radically different from that which was promised is a question of contract construction.

The party will have to rely on the:

1. Specific terms of the contract; and
2. Frustrating event(s).

The combination of both the construction of the contract, and the frustrating event, is what is required to make a cogent legal argument for frustration of contract.

#### Construction of the Contract

Contract construction is an objective test rather than a subjective test.

To construct a contract is to interpret what a reasonable person in the position of the parties to the contract would have meant by the term of the contract, and the contract as a whole, at the time of entering into the contract.

See for example – [_Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd_ \[2004\] HCA 52](http://classic.austlii.edu.au/au/cases/cth/HCA/2004/52.html); and [_Byrnes v Kendle_ \[2011\] HCA 26](http://classic.austlii.edu.au/au/cases/cth/HCA/2011/26.html); and [_Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited_ \[2015\] HCA 37](http://classic.austlii.edu.au/au/cases/cth/HCA/2015/37.html).

The parties must construct the contract in conjunction with the frustrating event.

If the frustrating event does not reasonably stop the performance of the contract, then the contract may not be frustrated.

#### The Frustrating Event

Obviously, because this must be read in conjunction with the objective terms of the contract, there is no one definition as to what constitutes a frustrating event.

However, as mentioned above, the consequences of the frustrating event must render the contract completely or extremely changed, must no longer be the same, and must have significantly changed the nature of the agreement.

The frustrating event must not be foreseen by the parties.  In [_Codelfa Construction Pty Ltd v State Rail Authority of New South Wales_ (1982) 149 CLR 337](http://classic.austlii.edu.au/au/cases/cth/HCA/1982/24.html) the High Court followed _Krell v Henry_ \[1903\] 2 KB 740 and _Davis Contractors Ltd v Fareham Urban District Council_ \[1956\] AC 696 when it said:

> _No doubt it is more difficult in such a case to show that the grant of injunctive relief was not foreseen or could not reasonably have been foreseen, but if that can be shown then the doctrine of frustration should apply._

It is incumbent on the party making the allegation of frustration to bear the onus of proof.

If a party can provide evidence to support the elements mentioned above, then the contract may be frustrated.

What happens when a contract has been frustrated?

## Consequences of Frustration of Contract

If frustration of contract has occurred, then at the time of the frustration event, the contract is terminated, and the parties are discharged from their obligations.

However, the parties can always enter into a new (and different) agreement.

Frustration of contract discharges the parties’ obligations ‘in futuro’ (in the future), it does not rescind the contract ‘ab initio’ (from the beginning).

### Right to Recover Damages

After the frustration event, there is no right to recover damages, as there would be for [breach of contract or repudiation](https://stonegatelegal.com.au/breach-of-contract/).

However, if there is a right which accrued prior to the frustration event, then the injured party can seek to recover those damages.  For example, if a party paid money but did not receive the goods.

### Right to Restitution

Subject to the terms of the contract, and any legislative provisions, [restitution for unjust enrichment](https://stonegatelegal.com.au/recovering-money-paid-by-mistake/) may be available to an injured party if:

1. There is a total failure of consideration; or
2. The non-injured party was benefited; and accepted the benefit.

There may not be a right to restitution if the contract has been partially performed.  However, in these cases the injured party may be able to rely on a secondary contract to perform that obligation.

### Debt Recovery of Money Paid

Subject to the express and implied terms of the contract, the injured party may have the right to recover the debt unless they party is in default of the contract.

This would occur if there is a total failure of consideration.

However, if the contract says that the money can be retained by the payee, then it may not be recovered.  A typical example of this would be a non-refundable deposit.

Money is not able to be recovered if that money has been earned.  This would rely on the contractual provision which triggers the payment to be made.

## When does Frustration of Contract Apply

Frustration can apply to almost any contract, under the common law and various pieces of legislation.

In some jurisdictions, States have legislation which can deal with frustrated contracts.  They are:

1. New South Wales – [_Frustrated Contracts Act 1978_ (NSW)](http://classic.austlii.edu.au/au/legis/nsw/consol_act/fca1978247/);
2. Victoria – [_Australian Consumer Law and Fair Trading Act 2012_ (VIC)](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/legis/vic/num_act/aclafta201221o2012418/); and
3. South Australia – [_Frustrated Contracts Act 1988_ (SA)](http://classic.austlii.edu.au/au/legis/sa/consol_act/fca1988247/).

This article only relates to Queensland, so the common law of the doctrine of frustration of contract applies.

### Contracts which Frustration Applies

The Courts have found that frustration can apply to a number of different contracts, including:

1. Construction contracts;
2. Contracts between the members of an unincorporated association;
3. Contracts to promote a concert at a particular;
4. Contracts for the lease of goods;
5. Contracts for the sale of goods;
6. Contractual licences;
7. Employment contracts;
8. Trading agreements; and
9. Contracts for the settlement of legal proceedings.

Currently in Australia the doctrine of frustration may not apply to an executed lease in the same way as above.

### Does Frustration of Contract Apply to a Lease?

Short answer – yes!

The long answer is that it is a lot more difficult for a lease to be terminated for frustration.

In [_Willmott Growers Group Inc v Willmott Forests Limited (Receivers and Managers Appointed) (In Liquidation)_ \[2013\] HCA 51](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/2013/51.html), the High Court of Australia said:

> _\[i\]t may be difficult to envisage circumstances in which conduct of the tenant short of actual abandonment would properly be held to constitute repudiation or fundamental breach or in which anything less than a cataclysmic event such as the ‘vast convulsion’ … would warrant a finding of frustration._

A “ _cataclysmic event_” would warrant a finding of frustration.  The [definition of cataclysmic](https://dictionary.cambridge.org/dictionary/english/cataclysmic) is:

> _(of a natural event) large-scale and violent; or an event that changes a situation or society very greatly, especially in an unpleasant way_

As you can see, the bar is set quite high for frustration to apply to a lease.

The cases are still relatively undecided, but with **COVID-19** there could be scope for the law in Australia to change in regard to frustration of leases.

However, an alleged frustration of a lease must be looked at very carefully by a legal professional to provide advice as to the likelihood of successfully arguing frustration of a [commercial lease](https://stonegatelegal.com.au/services/commercial-lease-disputes/).

Alongside the common law, and legislation, a force majeure contract provision may apply to certain contracts, and allow a contract to be terminated.

## Force Majeure Clauses

Force majeure is a French phrase which means “ _superior force_“.

Force majeure is defined in Butterworths Legal Dictionary to mean:

> _A circumstance beyond the control of a party to a contract, which enables the party to escape liability for failing to perform the contract as a result of the circumstance._

This can include acts of God, war, strikes, storms, earthquakes, and of course pandemics (like **COVID-19**).

The common law does not recognise the doctrine of force majeure and so it is a creature of contract only.  If there is no force majeure clause in the contract, then the parties cannot rely on it and can only seek relief under the doctrine of frustration.

As stated above, because force majeure clauses are a contractual provision, they are constructed objectively, with what a reasonable person would have meant them to mean, at the time of contracting.

### Express Provisions

A force majeure clause may expressly state that the parties are excused from their duty to perform the contract in the event that the following makes the contract impossible to perform:

01. An act of God;
02. Act of terrorism;
03. Government action;
04. Inclement weather;
05. Floods and bushfires;
06. Prohibition of export/import;
07. Strikes or industrial action;
08. War or other conflicts;
09. Perils of the seas; and
10. Pandemics (such as **COVID-19**).

As well as an excuse to allow non-performance, a force majeure provision may also create a performance obligation, such as the obligation to make every effort to continue with the contract subject to a force majeure event, or only allowing termination upon the occurrence of certain events.

Force majeure clauses will be different in every contract, so it if vitally important to have an experienced contracts lawyer provide advice prior to alleging that the contract is terminated.

### Practical Points

As with frustration of contract, the onus is on the party alleging the force majeure event to prove that it meets the requisite standard of proof, as per the force majeure clause.

Also, to rely on a force majeure clause, the party will need to show that the party had taken reasonable steps to avoid the situation (if applicable) and tried to mitigate its impact (if applicable).

A badly drafted force majeure clause may be void if it is uncertain.  A contract clause must be certain, and so the clause will need to be correctly drafted.

## Frustration of Contract & Force Majeure **FAQ**

In this FAQ section, we’ll tackle the most commonly-asked questions relating to frustration of contract and force majeure clauses.

Whether you’re trying to wrap your head around how COVID-19 has frustrated your contracts or figuring out what force majeure actually means, these FAQ should give you a starting point to the answer.

### What is frustration of contract in common law?

Frustration of contract occurs when, due to unforeseen events beyond the fault of either party, the performance of a contract becomes impossible or radically different from what was intended at the time of contracting.

### Can COVID-19 be considered a frustrating event under a contract?

Yes, COVID-19 could potentially be considered a frustrating event if it renders the performance of a contract impossible or radically different.

### How does frustration of contract differ from a force majeure clause?

Frustration of contract is a common law doctrine, while a force majeure clause is a contractual provision that excuses non-performance due to specific events. Frustration is automatic, whereas force majeure relies on the contract’s terms.

### Can a party claim damages for a frustrated contract?

In most cases, a party cannot claim damages for a frustrated contract, except for any rights or benefits that accrued before the frustration event.

### What is meant by “without default by either party”?

Frustration requires that the unforeseen event causing contract impossibility is not due to a breach or deliberate act of one of the parties.

### What constitutes an “impossibility of performance”?

Impossibility of performance means that due to the frustrating event, the contract cannot be performed as intended. It may include physical destruction, unavailability of subject matter, method of performance, legal changes, and more.

### How is “radically different” performance defined?

Performance becomes “radically different” when it is fundamentally altered from what the parties initially agreed upon, making it significantly distinct from the original intent of the contract.

### Can a frustrated contract be terminated?

Yes, a frustrated contract is automatically terminated upon the occurrence of the frustrating event.

### Can parties recover damages for a frustrated contract?

Damages are generally not recoverable for a frustrated contract, except for pre-frustration rights or benefits.

### Can a contract be frustrated if it has been partially performed?

Frustration may still apply to a partially performed contract if the frustrating event renders the remaining performance radically different or impossible.

### What are force majeure clauses?

Force majeure clauses are contractual provisions that excuse non-performance due to specified events, such as acts of God, wars, pandemics, and more.

### Is force majeure recognised in common law?

No, force majeure is a contractual concept and not a part of common law.

### How is a force majeure clause interpreted?

A force majeure clause is interpreted objectively, based on what a reasonable person would have understood at the time of contracting.

### Can parties rely on a force majeure clause to terminate a contract?

Parties can rely on a force majeure clause to excuse non-performance, but the specific terms of the clause and the occurrence of the qualifying event are crucial.

### Can force majeure clauses be void if they are poorly drafted?

Yes, poorly drafted force majeure clauses might be considered void if they lack certainty.

### How does a party demonstrate that they took reasonable steps to avoid or mitigate a force majeure event?

To rely on a force majeure clause, a party may need to show that they attempted to prevent or mitigate the impact of the event, depending on the terms of the clause.

### Can frustration of contract apply to leases?

Yes, frustration can apply to leases, but the threshold for a lease to be terminated due to frustration is generally quite high.

### Can a lease be terminated due to COVID-19 under frustration of contract?

The applicability of frustration to leases, including those affected by COVID-19, requires careful legal consideration and analysis.

### Can parties still enter into a new agreement after a contract is frustrated?

Yes, parties are free to negotiate and enter into a new agreement after a contract is frustrated.

### Are there laws specific to frustration of contract in different jurisdictions?

Some jurisdictions, like New South Wales, Victoria, and South Australia, have legislation dealing with frustrated contracts, but this FAQ primarily focuses on the common law doctrine.

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# Can you Still Serve a Bankruptcy Notice by Email?

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- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| July 24, 2021

## Article Summary

There has been some confusion in relation to service of bankruptcy notices by email since the repeal of _Bankruptcy Regulations 1996_ (Cth) and the introduction of the _Bankruptcy Regulations 2021_ (Cth).

The 2021 Regulations removed reference to service “ _by electronic mail_“, and inserted a note which said “See also section 28A of the _Acts Interpretation Act 1901″,_ which in turn made reference to the _Electronic Transactions Act 1999_ (Cth).

The problem was, section 9 of the _Electronic Transactions Act 1999_ required that the bankruptcy notice could be sent by email only with the consent of the recipient. Anyone who has worked in this field knows that very few judgment debtors will actually consent to this.

Unfortunately, this is exactly what happened in _Pegios in his own capacity and as trustee for Pegios Superannuation Fund v Arambasic_ \[2022\] FedCFamC2G 17, where Judge Humphreys said “… _the Court is not satisfied that the respondent ever consented to the service of any Bankruptcy Notice via email_“.

The legislature then sought to correct this anomaly by amending the 2021 Regulations by way of the _Bankruptcy Amendment (Service of Documents) Regulations 2022_, which removed the need for consent from the recipient when serving a bankruptcy notice by email.

This has been confirmed in the recent case of _CSM Lawyers Pty Ltd v Manzo, in the matter of Manzo_ \[2023\] FCA 236, where the Court recognised the requirement for consent is no longer the case by reason of the 2022 amendment.

Can you still serve a bankruptcy notice by email? Yes, you can serve a bankruptcy notice by email.  It now looks like the _CSM Lawyers_ case and the _Bankruptcy Amendment (Service of Documents) Regulations 2022_ have changed the law after the previous amendment to the regulation and the _Pegios_ case.

This article explains this in more detail.

Table of Contents

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If a creditor has received a final judgment or final order the execution of which has not been stayed, and that judgment or order is more than the statutory minimum ($10,000.00), then the creditor can apply to the Australian Financial Security Authority for a bankruptcy notice.

Once the judgment creditor has the bankruptcy notice it needs to be served on the judgment debtor.

There are a number of different ways to serve a judgment debtor with the bankruptcy notice in the [_Bankruptcy Act 1966_ (CTH)](http://www8.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/ba1966142/) (“ **the Act**”) and the [_Bankruptcy Regulations 2021_ (CTH)](http://classic.austlii.edu.au/au/legis/cth/num_reg/br2021202100261267/) (“ **the Regs**”).

One question we get asked is “ _can you serve a bankruptcy notice by email?_”

In this article our [bankruptcy lawyers](https://stonegatelegal.com.au/bankruptcy/) will explain if a bankruptcy notice can be served by email.

**If you need to serve a bankruptcy notice then it is important to get it right and you should contact a lawyer**

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## What is a Bankruptcy Notice?

A [bankruptcy notice is a formal notice](https://stonegatelegal.com.au/what-is-a-bankruptcy-notice/) issued by the [Australian Financial Security Authority](https://www.afsa.gov.au/) (“ **AFSA**”).

It is a formal demand for payment:

1. From a human debtor (not a company);
2. Based upon a final judgment or final order of more than the statutory minimum ($10,000.00);
3. The final judgment or final order must not have been stayed; and
4. The final judgment or final order must not be more than 6 (six) years old.

A bankruptcy notice states that the [judgment debtor](https://stonegatelegal.com.au/30-tips-to-reduce-bad-business-debts/) must either pay, enter into an arrangement for payment, or [apply to set the bankruptcy notice aside](https://stonegatelegal.com.au/set-aside-a-bankruptcy-notice/) – all within 21 days after being served.

If they don’t do any of these things then they have committed an act of bankruptcy, allowing the judgment creditor to file creditor’s petition in the Federal Circuit Court.

Because the act of bankruptcy is calculated upon the date of service, it is important to get this date correct, and to be able to prove service.

## How to Serve a Bankruptcy Notice

The old regulations (the Bankruptcy Regulations 1996 (CTH) used to say:

Regulation 4.02A of the Regs – Service of bankruptcy notices – says:

> _A bankruptcy notice may be served by any of the methods mentioned in regulation 16.01._

Regulation 16.01(1) of the Regs says:

> _(1)  Unless the contrary intention appears, where a document is required or permitted by the Act or these Regulations to be given or sent to, or served on, a person (other than a person mentioned in regulation 16.02), the document may be:_
>
> _… (ii)  in such a manner (for example, by electronic mail) that the document should, in the ordinary course of events, be received by the person._

Regulation 16.01(1)(e)(ii) used to say that a bankruptcy notice can be served by another mode of electronic transmission in such a manner (for example, **by electronic mail**) that the document should, in the ordinary course of events, be received by the person.

However, in 2021, the bankruptcy regulations were repealed, and are now the [_Bankruptcy Regulations 2021_ (CTH)](http://classic.austlii.edu.au/au/legis/cth/num_reg/br2021202100261267/) (“ **the 2021 Regs**“).

In these new bankruptcy regulations, the section in relation to service by “ _by electronic mail_” was removed. This caused some inconsistencies with service of a bankruptcy notice, and so then the [_Bankruptcy Amendment (Service of Documents) Regulations 2022_ (Cth)](http://classic.austlii.edu.au/au/legis/cth/num_reg/baodr2022202200528545/) was introduced.

These amendments sought to amend the [_Bankruptcy Regulations 2021_ (CTH)](http://classic.austlii.edu.au/au/legis/cth/num_reg/br2021202100261267/) by adding a second note which says:

> _Note 2: The [Electronic Transactions Act 1999](http://classic.austlii.edu.au//au/legis/cth/consol_act/eta1999256/) deals with giving information in writing by means of an electronic communication._

So, with all this change and amendment, can we still serve a bankruptcy notice by email?

## The Problem with the Bankruptcy Regulations

In 2021, the Bankruptcy Regulations 1996 were repealed as part of the _Bankruptcy and Other Legislation Amendment (Repeal And Consequential Amendments) Regulations 2021_.

[Section 102](http://classic.austlii.edu.au/au/legis/cth/num_reg/br2021202100261267/s102.html) of the 2021 Regs relates to the service of documents, and all reference to the electronic service have been removed.  It says:

> _(1) Unless the contrary intention appears, if a document is required or permitted by the Act or this instrument to be given or sent to, or served on, a person (other than the Inspector-General, the Official Receiver or the Official Trustee), the document may be:_
>
> _(a) sent by a courier service to the person at the address of the person last known to the person serving the document; or_
>
> _(b) left, in an envelope or similar packaging marked with the person’s name and any relevant document exchange number, at a document exchange where the person maintains a document exchange facility._
>
> _Note: See also section 28A of the Acts Interpretation Act 1901._
>
> _(2) In the absence of proof to the contrary, the document is taken to have been received by, or served on, the person when the document would, in the due course of business practice, be delivered to that address or document exchange._

This legislation was silent on service by electronic means, except to mention 28A of the Acts Interpretation Act 1901 which says:

> _(1) For the purposes of any Act that requires or permits a document to be served on a person, whether the expression “serve”, “give” or “send” or any other expression is used, then the document may be served:_
>
> _(a) on a natural person:_
>
> _(i) by delivering it to the person personally; or_
>
> _(ii) by leaving it at, or by sending it by pre-paid post to, the address of the place of residence or business of the person last known to the person serving the document …_

[Section 28A](http://www.austlii.edu.au/au/legis/cth/consol_act/aia1901230/s28a.html) of the _[Acts Interpretation Act 1901](http://www.austlii.edu.au/au/legis/cth/consol_act/aia1901230/)_ also contains a note which says the [_Electronic Transactions Act 1999_](http://classic.austlii.edu.au//au/legis/cth/consol_act/eta1999256/) deals with giving information in writing by means of an electronic communication.

[Section 9 of the _Electronic Transactions Act 1999_](http://classic.austlii.edu.au/au/legis/cth/consol_act/eta1999256/s9.html) deals with the requirement to give information in writing.

[Section 9(1)(d)](http://classic.austlii.edu.au/au/legis/cth/consol_act/eta1999256/s9.html) says:

> _(1) If, under a law of the Commonwealth, a person is required to give information in writing, that requirement is taken to have been met if the person gives the information by means of an electronic communication, where:_
>
> _(d) if the information is required to be given to a person who is neither a Commonwealth entity nor a person acting on behalf of a Commonwealth entity–the person to whom the information is required to be given consents to the information being given by way of electronic communication._

[Section 9(2)(d)](http://classic.austlii.edu.au/au/legis/cth/consol_act/eta1999256/s9.html) says:

> (2) If, under a law of the Commonwealth, a person is permitted to give information in writing, the person may give the information by means of an electronic communication, where:
>
> (d) if the information is permitted to be given to a person who is neither a Commonwealth entity nor a person acting on behalf of a Commonwealth entity–the person to whom the information is permitted to be given consents to the information being given by way of electronic communication.

Under paragraphs 9(1)(d) and (2)(d) of the [_Electronic Transactions Act 1999_](http://www.austlii.edu.au/au/legis/cth/consol_act/eta1999256/), a party **was required to seek the consent** of the recipient to provide written information in an electronic form.  This is a move away from the _Bankruptcy Regulations 1996_ which did not have this requirement.

This caused confusion as to proper service of a bankruptcy notice, requiring the need for further amendment.

Therefore, pursuant to [Schedule 1](http://www5.austlii.edu.au/au/legis/cth/num_reg/baodr2022202200528545/sch1.html) of the _Bankruptcy Amendment (Service of Documents) Regulations 2022_ (Cth) inserts into section 102:

> _(3)  Paragraphs 9(1)(d) and (2)(d) of the [Electronic Transactions Act 1999](http://www.austlii.edu.au/au/legis/cth/consol_act/eta1999256/) do not apply to documents that are required or permitted by the Act or this instrument to be given or sent to, or served on, a person._
>
> _Note: Paragraphs 9(1)(d) and (2)(d) of the [Electronic Transactions Act 1999](http://www.austlii.edu.au/au/legis/cth/consol_act/eta1999256/) deal with the consent of the recipient of information to the information being given by way of electronic communication._

Subsection (3) is a new amendment from 2022. This subsection and its note provides some clarity in regard to electronic service, as the purpose of the [_Electronic Transactions Act 1999_](http://www.austlii.edu.au/au/legis/cth/consol_act/eta1999256/) in the 2021 Regs is to deal with the consent of the recipient to receive information electronically, not in regard to service requirements.

In the [Explanatory Statement](http://www5.austlii.edu.au/au/legis/cth/num_reg_es/baodr2022202200528545.html) of the _Bankruptcy Amendment (Service of Documents) Regulations 2022_ it says:

> On 1 April 2021, the _Bankruptcy Regulations 2021_ (the Bankruptcy Regulations) commenced to address the sunsetting of the _Bankruptcy Regulations 1996_ (the 1996 Regulations). The Bankruptcy Regulations 2021 remade the 1996 Regulations in substantially the same form with minor and technical amendments aimed at modernising references and ensuring alignment with the Act. Section 102 replaced regulation 16.01 in the 1996 Regulations regarding the service of documents, which did not contain a requirement to seek consent before serving documents electronically.
>
> Section 102 of the Regulations refers to section 28A of the _Acts Interpretation Act 1901_ (AIA) to specify additional methods of service. Section 28A of the AIA refers to the _Electronic Transactions Act 1999_(ETA) in relation to service by electronic communication. Under paragraphs 9(1)(d) and (2)(d) of the ETA, a party is required to seek the consent of the recipient to provide written information in an electronic form.
>
> A number of stakeholders including insolvency practitioners, creditors, and the Australian Financial and Security Authority (AFSA) have raised concerns that the requirement to seek consent before documents can be served electronically could be used to frustrate the administration and operation of the Bankruptcy Act, particularly if a person refuses to consent to receive documents electronically.
>
> The Regulations amend section 102 of the Bankruptcy Regulations so that paragraphs 9(1)(d) and 9(2)(d) of the ETA do not apply to the electronic service of documents required or permitted by the Act or the Regulations. This will ensure that valid service of documents in electronic form can occur without the need for a party to seek consent from the recipient.

Looking at the cases referring to section 9 of the [_Electronic Transactions Act 1999 (CTH)_](http://classic.austlii.edu.au//au/legis/cth/consol_act/eta1999256/s11.html), there is one case that was decided on the old 2021 legislation before the 2022 amendment.

### The Pegios Case

In the gap between [_Bankruptcy Regulations 2021_ (CTH)](http://classic.austlii.edu.au/au/legis/cth/num_reg/br2021202100261267/) and [_Bankruptcy Amendment (Service of Documents) Regulations 2022_ (Cth)](http://classic.austlii.edu.au/au/legis/cth/num_reg/baodr2022202200528545/) there was a case in relation to service of a bankruptcy notice by email.

In [_Pegios in his own capacity and as trustee for Pegios Superannuation Fund v Arambasic_ \[2022\] FedCFamC2G 17](http://classic.austlii.edu.au/au/cases/cth/FedCFamC2G/2022/17.html), Judge Humphreys heard an application to [set aside](https://stonegatelegal.com.au/winding-up-order-how-wind-up-company/) creditor’s petition and had to decide whether service of bankruptcy notice had been effected by sending it by email.  In this case he considered the 2021 version of:

1. Regulation 102 of the _Bankruptcy Regulations 2021_ (Cth);
2. Section 28A of the _Acts Interpretation Act 1901_ (Cth); and
3. Section 9 of the _Electronic Transactions Act 1999_ (Cth).

In this case, Judge Humphreys said at \[19\]:

> The Court is not satisfied that in the circumstances described above that valid service of the Bankruptcy Notice as required under Reg 102 of the _Bankruptcy Regulations 2021_ (Cth) was effected by service via email upon the respondent. First, the Court is not satisfied that the respondent ever consented to the service of any Bankruptcy Notice via email.

Since the [_Pegios_](http://classic.austlii.edu.au/au/cases/cth/FedCFamC2G/2022/17.html) case, there has been another case decided in 2023 – [_CSM Lawyers Pty Ltd v Manzo, in the matter of Manzo_ \[2023\] FCA 236](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/2023/236.html).

### The CSM Lawyers Case

In the case of [_CSM Lawyers Pty Ltd v Manzo, in the matter of Manzo_ \[2023\] FCA 236](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/2023/236.html), the Court looked at service by email and essentially confirmed that the decision in the Pegios case is no longer good law.  In this case, Downes J said at \[39\] and \[40\]:

> _Further, for the following reasons, the bankruptcy notice was also validly served by email._
>
> _Although the Bankruptcy Regulations did not make reference to service by other means, the note to s 28A(1) of the Acts Interpretation Act directed the reader to the Electronic Transactions Act 1999 (Cth). Section 9(1)(d) of that Act relevantly permitted electronic service under laws of the Commonwealth where a party consents to electronic service (although that is no longer the case by reason of amendments to the Bankruptcy Regulations which commenced on 6 April 2022)._

It would appear that there was an anomaly between [_Bankruptcy Regulations 2021_ (CTH)](http://classic.austlii.edu.au/au/legis/cth/num_reg/br2021202100261267/) and [_Bankruptcy Amendment (Service of Documents) Regulations 2022_ (Cth)](http://classic.austlii.edu.au/au/legis/cth/num_reg/baodr2022202200528545/) which amended it which required consent. Although that is no longer the case.

## Can you Serve a Bankruptcy Notice by Email?

Yes, you can serve a bankruptcy notice by email.  It now looks like the [_CSM Lawyers_](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/2023/236.html) case and the [_Bankruptcy Amendment (Service of Documents) Regulations 2022_](http://classic.austlii.edu.au/au/legis/cth/num_reg/baodr2022202200528545/) have changed the law after the previous amendment to the regulation and the [_Pegios_](http://classic.austlii.edu.au/au/cases/cth/FedCFamC2G/2022/17.html) case.  However, instead of simply relying on the bankruptcy regulations, we now have to rely on [_Bankruptcy Regulations 2021_ (CTH)](http://classic.austlii.edu.au/au/legis/cth/num_reg/br2021202100261267/) & [Section 28A](http://www.austlii.edu.au/au/legis/cth/consol_act/aia1901230/s28a.html) of the _[Acts Interpretation Act 1901](http://www.austlii.edu.au/au/legis/cth/consol_act/aia1901230/)_ section 9 of the [_Electronic Transactions Act 1999 (CTH)_](http://classic.austlii.edu.au//au/legis/cth/consol_act/eta1999256/s11.html).

An enforcement creditor could serve a bankruptcy notice by email pursuant to the 1996 _Regulations_, but this was removed from the 2021 _Regulations_ unless the enforcement debtor had given consent (which they never or rarely would), it was only until the further amendment again in 2022 when this requirement for consent was removed, but now we have to rely on three (3) pieces of legislation instead of just one.

However, if this argument is successful, then there are a number of issues to consider.

## When is an Email Received by a Judgment Debtor?

If allowable, service is effected when the document is delivered or transmitted.

Obviously, these words have different meanings, so how have the authorities decided what “received” means in the context of service of a bankruptcy notice?

The main case on this point is [_American Express Australia Limited v Michaels_ \[2010\] FMCA 103](http://classic.austlii.edu.au/au/cases/cth/FMCA/2010/103.html) where Smith FM provides commentary on the authorities and says at \[23\]:

> _The specific provisions in Bankruptcy Regulations regs.16.01(1)(e) and (2)(b) appear to be self-supporting, and appear intended to identify a deemed time of receipt of service which is simple to establish, and which is rebuttable by the recipient. In my opinion, these provisions implicitly exclude the application of ss.14(3) and (4) of the Electronic Transactions Act in relation to findings as to receipt and time of receipt._

Smith FM then went on to say at \[24\]:

> _This conclusion still leaves the possible ambiguity of the word ‘transmitted’ in reg.16.01(2)(b), which must be solved by a consideration of the context and objects of the provision. Clearly, it is intended to assist the making of findings as to receipt of an emailed document, and to dispense with proof of actual receipt of the email, “in the absence of proof to the contrary”. It takes its flavour from the language of reg.16.01(1)(e), which it is intended to assist. That provision refers to a document “sent by” electronic transmission, referring to a mode of dispatch by a sender. Regulation 16.01(2)(b) appears to make an understandable assumption that electronic transmissions will normally reach the intended destination almost instantaneously. Considering all these points, and the general context of the regulation, I accept the submission of counsel for AMEX that reg.16.01(2)(b) raises a rebuttable presumption of receipt and time of receipt occurring when the email is transmitted by its sender, being when it is irretrievably sent by the electronic mail facility used by the person serving the electronic document._

[_American Express Australia Limited v Michaels_ \[2010\] FMCA 103](http://classic.austlii.edu.au/au/cases/cth/FMCA/2010/103.html) therefore says that in relation to regulation 16.01 of the Regs, an email is presumed to be received by the judgment debtor when it is transmitted by the judgment creditor, being when it is irretrievably sent by the email facility used by the person sending the bankruptcy notice.

This was followed in [_Noonan v BMW Australia Finance Limited_ \[2013\] FCCA 2222](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCCA/2013/2222.html) when Judge Whelan said:

> _With respect to the provisions of Reg.16.01(1)(e) of the Regulations, Smith FM (as he then was) considered … that the provision was intended to identify a time of receipt which is simple to establish. It raises a rebuttable presumption that receipt, and time of receipt, occurred when the email is transmitted by its sender, being when it is irretrievably sent by the electronic mail facility used by the person serving the electronic document._

It was also followed in [_The Council Of The New South Wales Bar Association v Archer_ \[2012\] FMCA 81](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FMCA/2012/81.html) Lloyd-Jones FM said:

> _In American Express Australia v Michaels \[2010\] FMCA 103 … \[H\]is Honour says that the presumption arises when the notice is transmitted, not when it is received._

The legal presumption that the bankruptcy notice has been served by email when it is transmitted or sent by the person sending is rebuttable.  The judgment debtor will need to provide evidence that the bankruptcy notice was not delivered by email.

The judgment debtor will need to adduce evidence of non-delivery and not non-receipt.

## Proof of Non-Delivery or Non-Receipt

The authority case on this point is the Hight Court case of [_Fancourt v Mercantile Credits Ltd \[1983\] HCA 25_](http://www8.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/HCA/1983/25.html).  In Fancourt the High Court said:

> _Despite remarks in the judgments about non-receipt, it was non-delivery which was significant because the second limb of s. 26 of the Interpretation Act refers to proof of the contrary of delivery. As the present case shows, delivery may be different from receipt by the intended recipient and, provided that delivery is not disproved, the fact of non-receipt does not displace the result that delivery is deemed to have been effected at the time at which it would have taken place in the ordinary course of the post._

_Fancourt_ was followed in relation to a bankruptcy notice and regulation 16.01(2) in [_Skalkos v T & S Recoveries Pty Ltd_ \[2004\] FCAFC 321](http://www8.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCAFC/2004/321.html) where Sundberg, Finkelstein & Hely JJ said:

> _If, on the proper construction of reg 16.01(2), the words “proof to the contrary” permit proof that the document was not delivered, there is no such proof in the present case. It is clear from Fancourt that proof of non-receipt as opposed to non-delivery is not permitted … Thus on either view of reg 16.01(2), the primary judge correctly said there was no point in the appellant filing an affidavit of non-receipt._

Practically this makes a lot of sense.  Debtors always say things like “ _we didn’t get the email_” or “ _we didn’t get the invoice_” or “ _we didn’t get the letter_”.

So, to rebut the presumption that service was made, the judgment debtor will need to adduce evidence of non-delivery and not non-receipt of the bankruptcy notice.

## Can we Serve a Bankruptcy Notice by Email?

Yes, you can serve a bankruptcy notice by email.  It now looks like the [_CSM Lawyers_](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/2023/236.html) case and the [_Bankruptcy Amendment (Service of Documents) Regulations 2022_](http://classic.austlii.edu.au/au/legis/cth/num_reg/baodr2022202200528545/) have changed the law after the previous amendment to the regulation and the [_Pegios_](http://classic.austlii.edu.au/au/cases/cth/FedCFamC2G/2022/17.html) case.  However, instead of simply relying on the bankruptcy regulations, we now have to rely on [_Bankruptcy Regulations 2021_ (CTH)](http://classic.austlii.edu.au/au/legis/cth/num_reg/br2021202100261267/) & [Section 28A](http://www.austlii.edu.au/au/legis/cth/consol_act/aia1901230/s28a.html) of the _[Acts Interpretation Act 1901](http://www.austlii.edu.au/au/legis/cth/consol_act/aia1901230/)_ section 9 of the [_Electronic Transactions Act 1999 (CTH)_](http://classic.austlii.edu.au//au/legis/cth/consol_act/eta1999256/s11.html).

An enforcement creditor could serve a bankruptcy notice by email pursuant to the 1996 _Regulations_, but this was removed from the 2021 _Regulations_ unless the enforcement debtor had given consent (which they never or rarely would), it was only until the further amendment again in 2022 when this requirement for consent was removed, but now we have to rely on three (3) pieces of legislation instead of just one.

Best practice is to hire a process server to personally serve the bankruptcy notice.  However, it this option is unavailable, then ensure that you do everything possible to ensure that you can prove it was delivered by email and by post.

### Delivery and Read Receipts

To get a delivery receipt or a read receipt you need to go to options in your Outlook, then tick the “ _request a delivery receipt_” box and the “ _request a read receipt box_”.

![serve a bankruptcy notice by email in Queensland](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2019/10/serve-a-bankruptcy-notice-by-email-in-Queensland.png)

For a delivery Receipt you will either get a relayed response or a delivered response.

1. **Relayed** – Delivery to these recipients or groups is complete, but no delivery notification was sent by the destination server.
2. **Delivered** – Your message has been delivered to the following recipients.

Either way, you can annex these receipts to your affidavit as evidence of delivery.

You may not get a read receipt as it requires the judgment debtor to click to send the read receipt, but it does happen sometimes, so it is worth a go.

### Serving a Bankruptcy Notice by Email

This article explains how to serve a bankruptcy notice by email.

Don’t just serve by email if there are other avenues open to you.  If you can fax, then fax too.  If you can get the judgment debtor personally served, or you know where the judgment debtor lives, then serve him or her there too.  If you know the address, then post it to the enforcement debtor too.

An enforcement creditor could serve a bankruptcy notice by email pursuant to the 1996 _Regulations_, but this was removed from the 2021 _Regulations_ unless the enforcement debtor had given consent (which they never or rarely would), it was only until the further amendment again in 2022 when this requirement for consent was removed, but now we have to rely on three (3) pieces of legislation instead of just one.

**If you need to serve a bankruptcy notice then it is important to get it right and you should contact a lawyer**

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# How Long can a Debt be Chased in Australia?

[Discuss Your Case Today](https://stonegatelegal.com.au/contact/)

## NEWS & ARTICLES

- [By \\
Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| November 17, 2018

## Article Summary

In every State and Territory in Australia, the usual limitation time is six (6) years, except in the Northern Territory where it is three (3) years, which means that the debt becomes unable to be legally recovered after six (6) years (or 3 years) has elapsed.

The six (6) year limitation can restart if:

1. there has been a written acknowledgement of debt; or
2. there has been a payment made toward the debt by the debtor.

This means that upon that written acknowledgement of the debt, or payment made, the limitation period restarts on that date. This is true even if the limitation period has expired.

If you want to legally enforce your rights in the Courts then you must commence legal action before this time or you may lose your legal right of recovery.

We always recommend using a debt recovery lawyer to ensure that your legal rights are protected. This article explains this in more detail.

Table of Contents

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![how long can a debt be chased in Australia](https://stonegatelegal.com.au/wp-content/uploads/2018/11/how-long-can-a-debt-be-chased-in-Australia.png)Have you ever wondered how long can a debt be chased in Australia?

In most states (except NT) the limitation period for most debts is six (6) years.

This is contingent on a number of different factors and so it is vital that you get the calculations correct.

Failure to realise the limitation period could mean that you will be unable to successfully recover your debts and they will become statute barred.

This article will explain how long a debt can be chased in Australia and explain the six (6) year limitation period, and the concept of a debt being statute barred.

In this article our [**debt recovery lawyers**](https://stonegatelegal.com.au/services/debt-recovery-lawyers/) will use Queensland legislation and cases however the limitation of actions acts in every State and Territory have a lot of the same concepts.

Check the bottom of this article for the limitation period in your State or Territory to understand how long can a debt be chased in Australia.

**If you have ever asked yourself how long can a debt be chased in Australia, and the limitation date is approaching, then contact our debt recovery lawyers today**

## What is the statute of limitation for debts in Australia?

If you have ever asked how long can a debt be chased in Queensland, the limitation period for the recovery of a debt is six (6) years unless [legal action](https://stonegatelegal.com.au/how-to-sue-a-company-queensland/) has been commenced.

[Section 10 of the _Limitation of Actions Act 1974_ (QLD)](http://classic.austlii.edu.au/au/legis/qld/consol_act/loaa1974226/s10.html) says:

> _(1) The following actions shall not be brought after the expiration of 6 years from the date on which the cause of action arose—_
>
> _(a) … an action founded on simple contract or quasi-contract …_

So, the only question left to answer is when does a cause of action arise in a debt dispute?

## Cause of Action Accrual in Contract

[_Gibbs v Guild_ (1882) 9 QBD 59](https://www.austlii.edu.au/cgi-bin/LawCite?cit=%281882%29+9+QBD+59) is the authority that a cause of action in contract accrues at the time of the breach, not at the time the damage is sustained.

In the more recent matter of [_UGL Rail Pty Ltd v Wilkinson Murray Pty Ltd_ \[2014\] NSWSC 1959](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/nsw/NSWSC/2014/1959.html) the NSW Supreme Court upheld that saying:

> _A cause of action for breach of contract first accrues when the breach occurs: Gibbs v Guild (1881) 8 QBD 296 at 302 per Field J; Hawkins v Clayton \[1988\] HCA 15; (1988) 164 CLR 539 at 583 per Deane J; Nykredit Mortgage Bank Plc v Edward Erdman Group Ltd (No 2) \[1997\] UKHL 53; \[1998\] 1 All ER 305 at 308 per Nicholls LJ._

Usually, a breach of the contract will be defined in the contract.

If not, then it is likely to be the day after the last day for [payment of the invoice](https://stonegatelegal.com.au/client-not-paying-invoice/).  If your payment terms are fourteen (14) days, then breach occurs at the time of the breach.  This is when the clock starts ticking.

## Fresh Accrual of Action

It is possible for the six (6) year limitation period to start again, essentially restarting the clock.

[Section 35(3) of the _Limitation of Actions Act 1974_ (QLD)](http://classic.austlii.edu.au/au/legis/qld/consol_act/loaa1974226/s35.html) says:

> _Where a right of action has accrued to recover a debt or other liquidated pecuniary claim … and the person liable or accountable therefor acknowledges the claim or makes a payment in respect thereof, the right shall be deemed to have accrued on and not before the date of the acknowledgment or the last payment._

This means that upon the acknowledgement of the debt, or payment made the limitation period starts on that date.

The _Act_ then goes on to prescribe the formal requirements needed for an acknowledgement of debt and/or [part-payment](https://stonegatelegal.com.au/part-payment-of-a-debt-the-rule-in-pinnels-case/).

[Section 36 of the _Limitation of Actions Act 1974_ (QLD)](http://classic.austlii.edu.au/au/legis/qld/consol_act/loaa1974226/s36.html) says:

> _Every acknowledgment referred to in section 35 shall be in writing and signed by the person making the acknowledgment_

This means that a debtor may acknowledge the debt, but that acknowledgement must be in writing and must be signed by the debtor.

So, an acknowledgment of the debt must be “in writing” and “signed by the person” or the persons agent for it to be effective.  But what does this mean?

## Signed Acknowledgement of Debt

In [_Stage Club Ltd v Millers Hotels Pty Ltd_ \[1981\] HCA 71](http://classic.austlii.edu.au/au/cases/cth/HCA/1981/71.html) Gibbs CJ said:

> _Where the claim is for payment of a debt, an acknowledgment, to be sufficient, must recognize the present existence of the debt._

Gibbs CJ then agreed with Kerr J in [_Surrendra Overseas Ltd v Government of Sri Lanka_ \[1977\] 1 WLR 565](https://www.austlii.edu.au/cgi-bin/LawCite?cit=%5B1977%5D+1+WLR+565+&party1=&party2=&court=&juris=&article=&author=&year1=&year2=&synonyms=on&filter=on&cases-cited=&legis-cited=&section=) who said that:

> _To acknowledge a claim, as a matter of ordinary English, signifies an admission that it is due. There is no acknowledgment of a debt unless there is an admission that there is a debt . . . outstanding and unpaid._

For an acknowledgement of debt, the debt must be acknowledged:

1. In writing; and
2. Signed by the person making the acknowledgement; and
3. Recognise the present existence of the debt; and
4. Admits that the debt is outstanding and unpaid.

**Tip** – if the limitation period is coming close, ask the debtor to acknowledge the debt, or make a small payment.  This resets the clock on the six (6) year limitation period.

## When does the Limitation Period Start?

The limitation period starts at different times depending on the circumstances of your case.

If a [debt is loaned](https://stonegatelegal.com.au/debt-recovery-of-loans-between-family-members/) without any terms for repayment, then the [loan is repayable on demand](https://stonegatelegal.com.au/loan-repayable-on-demand/).  This means that the limitation period starts on the day that the actual money is loaned, or upon the date of the last repayment.

If the debt is based upon a breach of contract, then the limitation period starts on the date of the breach of the contract.

It is important that a creditor knows exactly when the limitation date started, otherwise they may lose out on the right to recover that debt.

## What About Debts Secured by Mortgage?

[Section 26(1) of the _Limitation Of Actions Act 1974_ (Qld)](http://classic.austlii.edu.au/au/legis/qld/consol_act/loaa1974226/s26.html) says:

> _An action shall not be brought to recover a principal sum of money secured by a mortgage or other charge on property whether real or personal nor to recover proceeds of the sale of land after the expiration of 12 years from the date on which the right to receive the money accrued._

This means that if the debt is secured by a mortgage or other charge on the property, the limitation period is twelve (12) years.

## What is a Statute-Barred Debt?

A statute-barred debt is a debt which is older than the limitation period in your State or Territory, to which no payments have been made, and there has been no acknowledgement.

For example, if a debtor owes a creditor and the debtor tries to disappear (interstate etc) in an attempt to escape paying for the debt, and successfully does so for six (6) years (in Queensland) then the creditor cannot recover the debt.

This is unless the creditor brings an action “ _founded on simple contract or quasi-contract_” as per the _Act_.  All a creditor has to do is correctly bring the action to preserve their rights.

## Can you collect Statute-Barred Debts?

A creditor has no legal right of recovery for statute-barred debts.

You can still attempt to [negotiate](https://stonegatelegal.com.au/settling-litigation-early-calderbank-offers/) with the debtor, but a creditor must not threaten any legal action, as they are not allowed to bring any.

If a debtor knows that the debt is unenforceable, then this could be a futile exercise, and there will be penalties if a creditor attempts to mislead or deceive the debtor.

## How do I know if a Debt is Statute Barred?

How long can a debt be chased in Australia if it has been six (6) years since a creditor has received a payment toward the debt, and there has been no written correspondence between the parties acknowledging the debt, then there is a good chance that the debt is now statute barred.

It is very important that this calculation is done correctly, or a creditor may lose their right to recover the debt.

For example, the debtor may have received a small payment which has been forgotten about, or the acknowledgement of debt is not a valid acknowledgement.

It is very important to seek qualified legal advice to ensure that your rights are protected.

## Preserving the rights of the Creditor

If you have ever asked yourself how long can a debt be chased in Australia, in Queensland [Section 10 of the _Limitation of Actions Act 1974_ (QLD)](http://classic.austlii.edu.au/au/legis/qld/consol_act/loaa1974226/s10.html) says that an action on simple contract or quasi-contract cannot be brought after the expiration of 6 years from the date on which the cause of action arose.

However, if a creditor brings the action, or [commences legal action](https://stonegatelegal.com.au/legal-proceedings-for-debt-recovery/), to recover the debt, then this preserves the creditor’s rights.

**For example** – a creditor can wait for five (5) years and fifty (50) weeks and receive no payments toward the debt, then file proceedings in the Court with jurisdiction, and it satisfies [section 10 of the _Act_](http://classic.austlii.edu.au/au/legis/qld/consol_act/loaa1974226/s10.html).

The creditor is also entitled to claim interest on the outstanding debt pursuant to [section 58 of the _Civil Proceedings Act 2011_ (QLD)](http://classic.austlii.edu.au/au/legis/qld/consol_act/cpa2011175/s58.html) which says:

> _The court may order that there be included in the amount for which judgment is given interest at the rate the court considers appropriate for all or part of the amount and for all or part of the period between the date when the cause of action arose and the date of judgment._

The [Supreme Court Practice Direction Number 7 of 2013](https://www.courts.qld.gov.au/__data/assets/pdf_file/0004/180553/sc-pd7of2013.pdf) says that interest is calculated at 4% above the cash rate at the [Reserve Bank of Australia](https://www.rba.gov.au/).

This may mean that a $15,000.00 unpaid debt, a little less than six (6) years from the date of this article, the [Court Interest Calculator](https://www.courts.qld.gov.au/courts-calculator/calculator) says that the interest amount is $5,698.50 bringing the total owing to $20,698.50.  This is a considerable amount to be added.

Once filed, the debtor needs to be served with the proceeding.  If the debtor continues to do nothing after being served, then a creditor can request that judgment be entered against them.

## What if Judgment has been Entered Against a Debtor?

How long can a debt be chased in Australia if judgment is entered against the debtor, then the creditor has a statutory limit of twelve (12) years to enforce the judgment debt.  This includes six (6) years without leave of the Court, and a further six (6) years with leave of the court.

[Section 10(4) of the _Limitation of Actions Act 1974_ (QLD)](http://classic.austlii.edu.au/au/legis/qld/consol_act/loaa1974226/s10.html) says:

> _An action shall not be brought upon a judgment after the expiration of 12 years from the date on which the judgment becomes enforceable._

The creditor is also entitled to post-judgment interest in the amount of 6% above the cash rate at the [Reserve Bank of Australia](https://www.rba.gov.au/).

## How Long can a Debt be Chased in Australia?

As outlined above, in Queensland a debt can only be chased for six (6) years after the cause of action arose.  Other States have similar legislation.

### How Long can a Debt be Chased in New South Wales

[Section 14 of the _Limitation Act 1969_ (NSW)](http://classic.austlii.edu.au/au/legis/nsw/consol_act/la1969133/s14.html) says:

> _An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims:_
>
> _(a) a cause of action founded on contract (including quasi contract)_

### How Long can a Debt be Chased in South Australia

[Section 35 of the _Limitation of Actions Act 1936_ (SA)](http://classic.austlii.edu.au/au/legis/sa/consol_act/loaa1936226/s35.html) says:

> _The following actions namely … actions founded upon any simple contract express or implied, or upon any award where the submission is not by specialty … shall, save as otherwise provided in this Act, be commenced within six years next after the cause of action accrued and not after._

### How Long can a Debt be Chased in Tasmania

[Section 4 of the _Limitation Act 1974_ (TAS)](http://classic.austlii.edu.au/au/legis/tas/consol_act/la1974133/s4.html) says:

> _Except as otherwise provided in this Division, the following actions shall not be brought after the expiration of 6 years from the date on which the cause of action accrued, that is to say:_
>
> _(a) actions founded on simple contract (including contract implied by law)_

### How Long can a Debt be Chased in Victoria

[Section 5 of the _Limitation of Actions Act 1958_ (VIC)](http://classic.austlii.edu.au/au/legis/vic/consol_act/loaa1958226/s5.html) says:

> _The following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued—_
>
> _(a)     Subject to subsections (1AAA), (1AA) and (1A), actions founded on simple contract (including contract implied in law)_

### How Long can a Debt be Chased in Western Australia

[Section 13 of the _Limitation Act 2005_ (WA)](http://classic.austlii.edu.au/au/legis/wa/consol_act/la2005133/s13.html) says:

> _An action on any cause of action cannot be commenced if 6 years have elapsed since the cause of action accrued._

### How Long can a Debt be Chased in Australian Capital Territory

[Section 11 of the _Limitation Act 1985_ (ACT)](http://classic.austlii.edu.au/au/legis/act/consol_act/la1985133/s11.html) says:

> _Subject to subsection (2), an action on any cause of action is not maintainable if brought after the end of a limitation period of 6 years running from the date when the cause of action first accrues to the plaintiff or to a person through whom he or she claims._

### How Long can a Debt be Chased in Northern Territory

[Section 12 of the _Limitation Act_ (NT)](http://classic.austlii.edu.au/au/legis/nt/consol_act/la133/s12.html) says:

> _Subject to subsection (2), the following actions are not maintainable after the expiration of a limitation period of 3 years from the date on which the cause of action first accrues to the plaintiff or to a person through whom he claims:_
>
> _(a)     an action founded on contract (including quasi-contract) not being a cause of action which is evidenced by a deed_

### How Long can a Debt be Chased in Australia?

In every State and Territory in Australia, the usual limitation time is six (6) years, except in the Northern Territory where it is three (3) years.

If you want to legally enforce your rights in the Courts then you must commence legal action before this time or you may lose your legal right of recovery.

We always recommend using a [debt recovery lawyer](https://stonegatelegal.com.au/debt-recovery-solicitors/) to ensure that your legal rights are protected.

## How Long can a Debt be Chased in Australia FAQ

Navigating the realm of debt recovery in Australia can often appear intricate and daunting.

With different rules and timeframes governing how and when you can chase debts, understanding your rights as a creditor is paramount.

Here are some [commonly asked questions](https://stonegatelegal.com.au/stonegate-legal-faq/) about this topic to help you unravel the complexities surrounding it.

### What is a Statute-Barred Debt?

A statute-barred debt is a debt which is older than the limitation period in your State or Territory, to which no payments have been made, and there has been no acknowledgement.

### Can you collect Statute-Barred Debts?

A creditor has no legal right of recovery for statute-barred debts.

### How do I know if a Debt is Statute Barred?

If it has been six (6) years since a creditor has received a payment toward the debt, and there has been no written correspondence between the parties acknowledging the debt, then there is a good chance that the debt is now statute barred.

### How Long can a Debt be Chased in Australia?

In every State and Territory in Australia, the usual limitation time is six (6) years, except in the Northern Territory where it is three (3) years.

### How long can I enforce a judgment for?

If judgment is entered against the debtor, then the creditor has a statutory limit of twelve (12) years to enforce the judgment debt. This includes six (6) years without leave of the Court, and a further six (6) years with leave of the court.

### How long can a debt be chased in Australia?

In most Australian states, the limitation period for most debts is six (6) years. However, in the Northern Territory, the limitation period is three (3) years.

### What does it mean when a debt is “statute barred”?

A statute-barred debt is one that is older than the limitation period in your State or Territory, has received no payments, and has had no acknowledgment. For such debts, they cannot be legally recovered.

### What is the implication of acknowledging a debt?

If a debtor acknowledges the debt or makes a payment towards it, the limitation period starts anew from that date. However, this acknowledgment must be in writing and signed by the debtor.

### When does the limitation period start?

The start of the limitation period varies. For instance, if a debt is based on a loan without repayment terms, it starts on the day the money is loaned. For contract breaches, it begins on the breach date.

### What about debts secured by a mortgage?

Debts secured by a mortgage or other charge on property have a limitation period of twelve (12) years.

### Can I collect on statute-barred debts?

Legally, statute-barred debts cannot be recovered. You can negotiate, but threatening legal action is not permissible.

### How do I determine if a debt is statute-barred?

If six (6) years have passed since a payment was made towards the debt and no written correspondence acknowledging the debt exists, the debt is likely statute-barred. It’s essential to calculate this correctly and seek legal advice if unsure.

### What happens if a judgment is entered against a debtor?

If a judgment is entered, the creditor has twelve (12) years to enforce the judgment debt, with the first six (6) years not requiring court leave and the subsequent six (6) years needing court leave.

### How long can a debt be chased in other Australian regions?

In New South Wales, South Australia, Tasmania, Victoria, Western Australia, and the Australian Capital Territory, the limitation period is six (6) years. In the Northern Territory, it’s three (3) years.

### What should I do if the limitation date for my debt is nearing?

If the limitation date for recovering a debt is approaching, it is recommended to contact a debt recovery lawyer to ensure your legal rights are upheld and the appropriate action is taken.

**If you have ever asked yourself how long can a debt be chased in Australia, and the limitation date is approaching, then contact our debt recovery lawyers today**

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[CONTACT US TODAY](https://stonegatelegal.com.au/contact-stonegate-legal/)

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#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation.

With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice.

Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings.

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## Subcontractors' Charge Guide
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# Subcontractors’ Charge – Construction Debt Recovery

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## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| March 9, 2019

## Article Summary

A “subbies charge,” more formally known as a subcontractor’s charge, is a legal mechanism available to subcontractors in the construction industry to secure payment for the work they have performed. This tool is particularly relevant when a subcontractor has not been paid by the contractor they are working for.

Here’s a brief summary:

1. **Legal Basis**: The concept of a subcontractor’s charge is typically governed by specific construction and building industry legislation. For example, in Queensland, Australia, it’s covered under the Building Industry Fairness (Security of Payment) Act 2017.
2. **Purpose**: The primary purpose of a subcontractor’s charge is to provide a form of security to subcontractors for the payment owed to them. It essentially allows a subcontractor to claim a charge over the money that is due to the contractor from the principal (the project owner).
3. **Process**: To initiate a subcontractor’s charge, the subcontractor must serve a Notice of Claim to the person or entity who is obliged to pay the contractor. This notice should state the amount owed and include details of the work performed.
4. **Effect**: Once a valid Notice of Claim is served and if the process is followed correctly, the subcontractor becomes a secured creditor. This means that in the event of the contractor’s insolvency, the subcontractor has a priority claim over other creditors for the amount owed.
5. **Time Limits and Compliance**: There are strict time limits and specific procedural requirements for issuing a subcontractor’s charge. Failure to comply with these requirements can invalidate the charge.
6. **Legal Assistance**: Given the complexity and strict legal requirements, subcontractors are often advised to seek legal assistance when issuing a subcontractor’s charge to ensure all legal criteria are met.

In summary, a subcontractor’s charge is a powerful tool for subcontractors to secure payment for their services, especially in situations where the contractor fails to make due payments. However, it requires careful adherence to legal procedures and timelines.

Table of Contents

[Toggle](https://stonegatelegal.com.au/subcontractors-charge-construction-debt/#)

![Subcontractors' Charge Construction Debt Recovery in Queensland](<Base64-Image-Removed>)A subcontractors’ charge under the old _Subcontractors’ Charges Act 1974_ (Qld) has been repealed and replaced with _Building Industry Fairness (Security of Payment) Act 2017_ (Qld) (“ **BIFA**”).

The provisions of the repealed legislation have been amended and incorporated into BIFA.

A subcontractors’ charge under the old _Subcontractors’ Charges Act_ are dealt with in Chapter 4 of BIFA.

This article will deal with making a subcontractors’ charge under BIFA in more detail below.

Contact us for advice and assistance with [Building and Construction Disputes](https://stonegatelegal.com.au/services/building-and-construction-disputes/)

**Very strict time limits apply to the different stages of BIFA. Ensure that you do not miss out on claiming your subcontractors’ charge by contacting our [building and construction lawyers](https://stonegatelegal.com.au/services/building-and-construction-lawyers/) today**

## Subcontractors’ Charge

If you are a subcontractor, owed money by a debtor contractor, then you may be able to serve a [Notice of Claim](https://www.qbcc.qld.gov.au/sites/default/files/2021-09/form-s122-bif-notice-of-claim.pdf) on the person obliged to pay the money under the contract (superior contractor by whom money is [claimed as payable](https://stonegatelegal.com.au/making-payment-claim-bifa-qld/)).  This is a subcontractors’ charge.

By serving this notice correctly, a subcontractor becomes a secured creditor of the debtor contractor, and in the event of insolvency may have a priority claim or be allowed to commence or continue with legal proceedings.

You will also need to serve a copy of the notice to the debtor contractor.

If eligible, and completed correctly, it is the superior contractor’s responsibility to pay to the subcontractor, the money owed to it by the debtor contractor.

This article will outline if you are eligible, explain the process, and provide useful information and links to guild you through the subcontractors’ charges chapter of BIFA.

## Parties Involved in the Subcontractors’ Charge

BIFA provides definitions for the following:

**Subcontractor** – [Section 6(3) of BIFA](http://classic.austlii.edu.au/au/legis/qld/consol_act/bifopa2017514/s6.html) says:

> _If the party to a contract, who is required to carry out work under the contract, subcontracts all or part of the work – the resulting subcontract is a subcontract for the contract; and the person required to carry out the work under the subcontract is a “subcontractor” for the contract; and the work required to be carried out under the subcontract is the “subcontracted work” for the contract._

**Contractor** – [Section 104 of BIFA](http://classic.austlii.edu.au/au/legis/qld/consol_act/bifopa2017514/s104.html) says:

> _“contractor” for a contract, means the party to the contract who is required to carry out work under the contract._

**Person** – [Section 104 of BIFA](http://classic.austlii.edu.au/au/legis/qld/consol_act/bifopa2017514/s104.html) says:

> _“person” includes an unincorporated association._

**Qualified Person** – [Section 147 of BIFA](http://classic.austlii.edu.au/au/legis/qld/consol_act/bifopa2017514/s147.html) defines a qualified person to be:

1. an architect registered under the Architects Act 2002; or
2. a registered professional engineer under the Professional Engineers Act 2002; or
3. a person licensed under the Queensland Building and Construction Commission Act 1991 to carry out or supervise work of the type to which the claim relates; or
4. a quantity surveyor who is a member of the Australian Institute of Quantity Surveyors; or
5. a person having expert knowledge of the work to which the claim relates and who is accepted in a particular case as a qualified person by the contractor and subcontractor.

Once you have correctly identified the parties to the [Notice of Claim](https://www.qbcc.qld.gov.au/sites/default/files/2021-09/form-s122-bif-notice-of-claim.pdf) then you are able to give the relevant parties your [Notice of Claim](https://www.qbcc.qld.gov.au/sites/default/files/2021-09/form-s122-bif-notice-of-claim.pdf).

The next eligibility criteria is to establish if the work conducted or goods are services provided are meet the requirements under BIFA.

### The Meaning of Work

[Section 105 of BIFA](http://classic.austlii.edu.au/au/legis/qld/consol_act/bifopa2017514/s105.html) says “ **Work**” for a contract:

1. means labour, whether skilled or unskilled, carried out by a person in connection with:
1. the construction, decoration, alteration or repair of a building or other structure; or
2. the development or working of a mine, quarry, sandpit, drain, embankment or other excavation in or on land; or
3. the placement, fixation or erection of materials, plant or machinery used or intended to be used for a purpose mentioned in subparagraph (i) or (ii); or
4. the alteration or improvement of a thing; or
5. the demolition, removal or relocation of a building or other structure;
2. and includes:
1. the supply of materials used by a subcontractor in connection with other work the subject of a contract; or
2. the manufacture or fabrication, wherever it happens, of project-specific components for a contract; or
3. the supply of labour for a contract, other than labour that is only administrative in nature.

So, if the [construction debt](https://stonegatelegal.com.au/building-construction-debt-recovery/) relates to “ **Work**” as defined in BIFA, and the subcontractor knows the relevant parties to the contract and the subcontract, then the subcontractor can issue a [Notice of Claim](https://www.qbcc.qld.gov.au/sites/default/files/2021-09/form-s122-bif-notice-of-claim.pdf).

### What is a Subcontractors’ Charge?

[Section 207 of BIFA](http://classic.austlii.edu.au/au/legis/qld/consol_act/bifopa2017514/s207.html) says:

> _“subcontractors’ charge” means a charge within the meaning of section 3 of the repealed Act (Subcontractors’ Charges Act 1974 (Qld))._

Section 3 of the _Subcontractors’ Charges Act 1974_ (Qld) defined “ **Charge**” as:

> _“charge” means a charge under this Act._

A charge pursuant to this Act is a security interest on monies owed to a subcontractor by a contractor, from monies payable to the contractor by the person obliged to pay the money under the contract.

The BIFA allows the payment of monies owed to a contractor, to essentially “leapfrog” the contractor, and be [paid directly](https://stonegatelegal.com.au/builders-subcontractors-charge-get-paid-protect-yourself/) to the subcontractor.

To do so, the subcontractor must issue a Notice of Claim on the person obliged to pay the money under the contract.

## Notice of Claim

If eligible, as discussed above, then a subcontractor must serve a Notice of Claim on the person obliged to pay the money under the contract. This is an approved form – [**FORM S122**](https://www.qbcc.qld.gov.au/sites/default/files/2021-09/form-s122-bif-notice-of-claim.pdf) – which you can download from the [QBCC website](http://www.qbcc.qld.gov.au/).

[Section 122 of BIFA](http://classic.austlii.edu.au/au/legis/qld/consol_act/bifopa2017514/s122.html) says:

1. The notice of claim must be made in the approved form and:
2. State the amount of the claim; and
3. Include details of the work done by the subcontractor, certified as prescribed by a qualified person; and
4. Include the other information prescribed by regulation.

The [Form S122](http://www.qbcc.qld.gov.au/sites/default/files/S122_Notice_Of_Claim.pdf) has the following headings:

1. Details of Claimant of Subcontractor Subcontract;
2. Details of Superior Contractor by Whom Money is Claimed as Payable;
3. Details of Contract;
4. Certification by Qualified Person; and
5. Witness Certification.

It is very important to get these details correct.  Failure to do so may mean that the form is defective, and the subcontractor may lose their secured interest.  We strongly suggest engaging a solicitor to complete this Notice of Claim.

### Strict Time Limits for Notice of Claim

[Section 122 of BIFA](http://classic.austlii.edu.au/au/legis/qld/consol_act/bifopa2017514/s122.html) says that:

> _(4) The notice of claim may be given even if the work is not completed, or payment of the money relating to the charge is not yet due._
>
> _(5) However, if the work has been completed, the notice of claim must be given within 3 months after practical completion for the work._
>
> _(8) If the notice of claim relates only to a retention amount for the contract, the notice (a) may be given at any time while work under the contract is being performed; and (b) must be given within 3 months after the expiration of the defects liability period for the contract._

This means:

1. Any time that the works are still being completed; or
2. After completion – for money owed under a contract – within three (3) months after the completion of works; or
3. After completion – for retention money – within three (3) months of the expiration of the maintenance period.

## Copy of Notice of Claim to Contractor

After giving a copy of the notice of claim to a person obliged to pay money to a contractor under a contract, the subcontractor must give a copy of the notice to the contractor.

[Section 123 of BIFA](http://classic.austlii.edu.au/au/legis/qld/consol_act/bifopa2017514/s123.html) says:

> _The subcontractor must (a) give the contractor a copy of the notice of claim; and (b) advise the contractor of the name and address of the person given the notice of claim.  If the subcontractor does not comply … the notice is of no effect and the subcontractor’s charge does not attach._

So, the contractor must have a copy of the notice of claim and be given the name and address of the person given the notice of claim.

Failure to do so means that the charge does not attach, and the subcontractor loses its security interest.

We strongly suggest engaging a solicitor to complete this.

**Very strict time limits apply to the different stages of BIFA. Ensure that you do not miss out on claiming your subcontractors’ charge by contacting our building and construction lawyers today**

Ok, so you have done all of that, now what happens?

## Person Must Retain Money

Once served with the notice of claim, the person obliged to pay money to a contractor under a contract must retain the money payable to the contractor.

[Section 126(2) of BIFA](http://classic.austlii.edu.au/au/legis/qld/consol_act/bifopa2017514/s126.html) says:

> _(2) The person must retain a sufficient part of the money that is or is to become payable by the person under the contract to satisfy the claim until the court in which the claim is heard makes an order about to whom, and in what way, the money is to be paid._

If the person fails to retain the money and pays it to the contractor, then the person becomes liable for that amount of the claim.  [Section 126(3) of BIFA](http://classic.austlii.edu.au/au/legis/qld/consol_act/bifopa2017514/s126.html) says:

> _(3) If the person fails to retain the money as required under subsection (2), the person is personally liable to pay to the subcontractor the amount of the claim, not exceeding the amount that the person is required to retain under subsection (2)._

As well as the person having to retain the money, the contractor has to respond to the notice of claim.  Failure to do so will incur a maximum of 20 penalty units.

## Contractor given copy of Notice of Claim must Respond

The contractor must respond to the notice of claim within 10 business days.

[Section 128(2) of BIFA](http://classic.austlii.edu.au/au/legis/qld/consol_act/bifopa2017514/s128.html) says:

> _(2) The contractor must give both of the following persons a written response to the claim within 10 business days after the contractor is given the copy of the notice of claim, unless the contractor has a reasonable excuse (a) the person given the notice of claim; (b) the subcontractor._

The response to the claim must be made in the approved form and:

1. Accept liability to pay the amount claimed; or
2. Accept liability to pay an amount stated in the response, but otherwise dispute the claim; or
3. Dispute the claim.

The approved form for the contractor’s response is **[Form S128](http://www.qbcc.qld.gov.au/sites/default/files/S128_Response_Notice_Of_Claim.pdf)** – Response to a Notice of Claim.

The details the contractor must include:

1. Details of claimant subcontractor (person who gave the notice of claim);
2. Details of superior contractor (by whom money is claimed as payable);
3. Details of contractor;
4. Details of the work done by the claimant subcontractor;
5. Declaration including if the contractor:
6. Accepts liability to pay the amount claimed; or
7. Accepts liability to pay an amount stated; or
8. Disputes the claim.
9. States amount for which liability is accepted

## If the Debtor Accepts Liability to Pay an Amount Claimed

If the contractor accepts the liability for the amount claimed, then the person must pay that amount to the subcontractor.

[Sections 129(2) of BIFA](http://classic.austlii.edu.au/au/legis/qld/consol_act/bifopa2017514/s129.html) says:

> _If, in the response to the claim, the contractor accepts liability to pay the amount claimed, the person given the notice of claim must pay the subcontractor the amount the person is required to retain._

If the contractor accepts liability to Pay a stated amount in the contractor’s notice, but otherwise disputes the balance of the claim, then the person must pay to the subcontractor the amount stated in the response to the notice of claim and retain the balance (the unsatisfied amount).

[Sections 129(3) of BIFA](http://classic.austlii.edu.au/au/legis/qld/consol_act/bifopa2017514/s129.html) says:

> _If, in the response to the claim, the contractor accepts liability to pay an amount stated in the response but otherwise disputes the claim, the person given the notice of claim must pay the subcontractor the amount the person is required to retain, up to the amount stated in the response._

## If the Contractor Disputes the Claim or Does Nothing

If the contractor disputes the claim, then the subcontractor must commence proceedings in relation to the charge, recover the amount claimed from the person, as a debt owing to the subcontractor, in any court of competent jurisdiction.

[Section 136 of BIFA](http://classic.austlii.edu.au/au/legis/qld/consol_act/bifopa2017514/s136.html) says:

> _A proceeding for a subcontractor’s charge must (a) be started within (i) if the claim is for the retention amount only – 4 months after the balance of the retention amount is payable; and (ii) otherwise—1 month after notice of the claim is given under section 122 to the person by whom the money is payable; and (b) be brought by way of action._

If the subcontractor does not commence proceedings in the required time to prove the debt, then the charge is deemed to be extinguished unless the subcontractor duly commences a proceeding under section 136 to enforce it.

## Debtor Contractor in Liquidation

If the contractor goes into liquidation, then a subcontractor who gave a notice of claim to the person prior to the commencement of the liquidation, and has elevated themselves to the status of a secured creditor, can take advantage of section [471C _Corporations Act 2001_ (CTH)](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s471c.html) which says:

> _Nothing in section [471B](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s471b.html) affects a secured creditor’s right to realise or otherwise deal with the security interest._

In [_MSI (Holdings) Pty Ltd v Mainstreet International Group Ltd_ \[2013\] QCA 27](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCA/2013/27.html) the Queensland Court of Appeal said:

> _Section 471C is concerned with the right of a secured creditor with respect to a security interest. The expression “secured creditor” is defined by s 51E of the Corporations Act to mean: a creditor of the corporation, if the debt owing to the creditor is secured by a security interest._
>
> _The expression “security interest” is defined in s51A to have a meaning which includes a charge. According to the definition in the Dictionary in s 9 of the Corporations Act, the word “charge” means: a charge created in any way and includes a mortgage …_
>
> _Plainly, the charge … was a security interest as defined. Just as plainly, at the time of commencement of the District Court proceeding … there was a debt owed by MSI … which was secured by the charge._
>
> _In my view, the commencement and continuation of the District Court proceeding is apt to be characterised as a realisation of \[a\] security interest for the purposes of s 471C._

As you can see, a subcontractor’s charge may have some substantial benefits for a creditor.

We strongly advise that you seek suitably qualified legal advice in relation to a subcontractor’s charge as soon as possible to secure the money owed to you by a contractor.

**Very strict time limits apply to the different stages of BIFA. Ensure that you do not miss out on claiming your subcontractors’ charge by contacting our building and construction lawyers today**

## Subcontractors Charge FAQ

Whether you’re a subcontractor seeking to secure payment for your work, or simply interested in understanding this legal mechanism, our FAQs are designed to offer valuable insights and guidance.

### What is a subcontractor’s charge?

A subcontractor’s charge is a legal claim that a subcontractor can make against money owed to a contractor by a project owner. It’s used when a subcontractor hasn’t been paid for their work. By issuing a Notice of Claim, the subcontractor becomes a secured creditor, gaining priority over other creditors in case of the contractor’s insolvency. This tool is governed by specific construction industry legislation and requires strict adherence to legal procedures.

### How does a subcontractor issue a Notice of Claim?

To issue a Notice of Claim, a subcontractor must serve it to the person or entity obligated to pay the contractor. This notice should detail the amount owed and the work done. It’s crucial to follow specific legal guidelines and timeframes when issuing this notice. Failure to comply with these requirements can invalidate the claim.

### What are the time limits for issuing a subcontractor’s charge?

The time limits for issuing a subcontractor’s charge are strict and vary depending on the legislation. Generally, a Notice of Claim must be served within a few months of completing the work. It’s essential to check the specific legislation in your jurisdiction to understand the exact time limits.

### Can a subcontractor issue a charge for partial work?

Yes, a subcontractor can issue a charge for partial work. The Notice of Claim can be served even if the work is not fully completed, as long as the subcontractor can accurately detail the work done and the amount owed.

### What happens if a contractor disputes a subcontractor’s charge?

If a contractor disputes a subcontractor’s charge, the subcontractor may need to commence legal proceedings to enforce the charge. This process involves proving the validity of the claim in court. It’s advisable to seek legal counsel to navigate this process effectively.

### Is a subcontractor’s charge applicable in all construction projects?

The applicability of a subcontractor’s charge depends on the specific construction and building industry legislation in the relevant jurisdiction. It’s generally applicable in most construction projects, but there may be exceptions based on the contract type or project nature.

### What is the role of a qualified person in a subcontractor’s charge?

A qualified person, such as a registered architect or engineer, may need to certify the details of the work done by the subcontractor in the Notice of Claim. This certification adds credibility to the claim and is often a legal requirement.

### Can a subcontractor’s charge be used for retention money?

Yes, a subcontractor’s charge can be used to claim retention money. The notice must be served within a specific timeframe after the expiration of the defects liability period for the contract.

### What if the contractor goes into liquidation?

If the contractor goes into liquidation, a subcontractor who has issued a Notice of Claim may have a secured creditor status. This means they have a priority claim over other creditors for the amount owed, under certain conditions.

### How does a subcontractor’s charge affect the project owner?

Once a Notice of Claim is served, the project owner (or superior contractor) must retain sufficient funds to satisfy the claim. If they fail to do so and pay the contractor instead, they may become personally liable for the amount of the claim.

### Are there any risks for a subcontractor in issuing a charge?

The main risk for a subcontractor in issuing a charge is non-compliance with the legal requirements, which can invalidate the claim. Additionally, if the claim is disputed, it may lead to legal proceedings, which can be costly and time-consuming.

### Should a subcontractor seek legal advice before issuing a charge?

Yes, it’s highly recommended that a subcontractor seeks legal advice before issuing a charge. Legal professionals can ensure compliance with the specific legal requirements and timeframes, and provide guidance in case of disputes or complications.

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#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

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Stonegate Legal Successfully Defends Federal Court Appeal Stonegate Legal is proud to announce its successful defence of an appeal in the Federal Court of Australia

[Read More](https://stonegatelegal.com.au/stonegate-legal-successfully-defends-federal-court-appeal/)

## Claim A No Obligation Case Evaluation

## Discuss Your Case With A Trusted Lawyer

We approach your dispute with – strategic thinking, commercial solutions & positive outcomes.Our honest process is designed to get you the best commercially sensible resolution

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## Quick Links

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Individual liability limited by a scheme approved under professional standards legislation.

## Litigation Services

- [Commercial Litigation](https://stonegatelegal.com.au/services/commercial-litigation/)
- [Building & Construction Disputes](https://stonegatelegal.com.au/services/building-and-construction-lawyers/)
- [Debt Recovery Lawyers](https://stonegatelegal.com.au/services/debt-recovery-lawyers/)
- [Civil / PersonalLitigation](https://stonegatelegal.com.au/services/civil-litigation/)
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- [Body Corporate Debt Recovery](https://stonegatelegal.com.au/services/body-corporate-debt-recovery/)
- [Commercial Lease Disputes](https://stonegatelegal.com.au/services/commercial-lease-disputes/)
- [Defamation Litigation](https://stonegatelegal.com.au/services/defamation-lawyers/)
- [Wills & Estates Litigation](https://stonegatelegal.com.au/services/estate-litigation-lawyers/)
- [Insolvency Lawyers](https://stonegatelegal.com.au/services/insolvency/)
- [Letters of Demand](https://stonegatelegal.com.au/letter-of-demand/)
- [Statutory Demands](https://stonegatelegal.com.au/statutory-demand/)
- [Bankruptcy Lawyers](https://stonegatelegal.com.au/bankruptcy/)
- [Drafting Credit Contracts](https://stonegatelegal.com.au/debt-contract-credit-application/)

- Office Hours

Monday – Friday

8:30 AM – 5:00 PM

- Brisbane City

[Level 10/ 95 North Quay,](https://maps.app.goo.gl/YdLbTuKmnziFrQDv5)

[Brisbane City, QLD 4000](https://maps.app.goo.gl/YdLbTuKmnziFrQDv5) – (appointment only)

- [07 3180 0143](tel:0731800143)

- Sunshine Coast - Main Office

[4/57-59 Mary Street,](https://maps.app.goo.gl/Suo6oYWeRohEDEBWA)

[Noosaville, QLD 4566](https://maps.app.goo.gl/Suo6oYWeRohEDEBWA)

- [07 5346 0366](tel:0753460366)

At Stonegate Legal, client satisfaction is our top priority. We are proud to have served hundreds of clients who have had positive experiences working with us.

Copyright © 2023 [**Stonegate Legal**](https://stonegatelegal.com.au/) Pty Ltd – All Rights Reserved – Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732) \| [Terms](https://stonegatelegal.com.au/terms-and-conditions/) \|  [Privacy](https://stonegatelegal.com.au/privacy-policy/) \| [Sitemaps](https://stonegatelegal.com.au/sitemap_index.xml) \| [\*Conditions Apply](https://stonegatelegal.com.au/terms-and-conditions/)

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## [Home](https://stonegatelegal.com.au/)

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[Debt Recovery / Collection](https://stonegatelegal.com.au/services/debt-disputes/)

[Corporations Disputes](https://stonegatelegal.com.au/services/corporations-dispute-lawyer/)

[Commercial Lease Disputes](https://stonegatelegal.com.au/services/commercial-lease-disputes/)

[Tax Debt Disputes](https://stonegatelegal.com.au/services/tax-debt-lawyers/)

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[Defamation Litigations](https://stonegatelegal.com.au/services/defamation-lawyers/)

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[Insolvency Law](https://stonegatelegal.com.au/services/insolvency/)

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## [News & Blogs](https://stonegatelegal.com.au/news-articles/)

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## Alternative Dispute Resolution
[Skip to content](https://stonegatelegal.com.au/alternative-dispute-resolution/#content)

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# Alternative Dispute Resolution

[Discuss Your Case Today](https://stonegatelegal.com.au/contact/)

## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| December 18, 2015

Table of Contents

[Toggle](https://stonegatelegal.com.au/alternative-dispute-resolution/#)

![alternative dispute resolution](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2018/04/what-is-genuine-dispute-statutory-demand-lawyers-300x291.png)Alternative Dispute Resolution or ADR is a term we use for resolving legal disputes without the cost of going to Court and incurring the costs of [civil litigation](https://stonegatelegal.com.au/services/civil-litigation/) or [commercial litigation](https://stonegatelegal.com.au/services/commercial-litigation/).

It involves trying to reach an agreement in which an impartial person called an ADR practitioner or alternative dispute resolution practitioner, assists people involved in a dispute and works to resolve the issues between the parties.

These dispute resolution processes may be advisory, facilitative, determinative, and in some cases there’s a combination of them.

1. In a facilitative process like mediation, the alternative dispute resolution expert (usually a barrister) uses multiple methods to address the issues and work to find a resolution to that dispute.
2. In advisory processes like expert appraisal or conciliation, the person will advise the parties about the various issues and the range of outcomes that may be possible.
3. In determinative processes like arbitration, there are more formal techniques used to inform the arbitrator so an award can be determined which will resolve the issue at hand.

**If you need to resolve a commercial or debt dispute using ADR then you should contact a lawyer**

**DEDICATED TEAM – COMMERCIALLY MINDED – PROVEN RESULTS**

[GET A FREE FEE ESTIMATE TODAY](https://stonegatelegal.com.au/free-case-evaluation/)

**OR CALL: [1300 545 133](tel:1300545133) FOR A PHONE CONSULTATION**

### ADR Alternative Dispute Resolution

In Australia currently there’s no uniform legislative framework for alternative dispute resolution operation. There are many laws which govern alternative dispute resolution operations in the different Australian jurisdictions. In all jurisdictions there are Commercial Arbitration Acts that define commercial arbitration conduct.

At Stonegate Legal, our dispute resolution lawyers have developed specialised negotiating strategies that help resolve commercial disputes. They have experience and are experts to representing our clients in expert determination, [negotiations](https://stonegatelegal.com.au/contract-negotiation/), mediation and other ADR techniques.

Our alternative dispute resolution lawyers combine ADR skills with litigation skills to achieve positive outcomes for clients.

### The Types of ADR

There are a number of different ADR including negotiation, mediation, arbitration, expert determination, adjudication, and/or conciliation.

#### Negotiation

Sometimes a commercial or debt dispute can be resolved by negotiation.  A negotiation will usually be the most cost-effective way of resolving commercial disputes and debt disputes.  We can negotiate on your behalf, both on an open and _without prejudice_ basis.

#### Mediation

The mediator is an independent person which helps the parties work out the issues in a dispute and then finds a solution that everyone can agree to.  The purpose of the mediation is to negotiate a settlement which will usually be put into a deed of settlement.

Find a mediator at the QLS – [http://services.qls.com.au/Web/FindLegalServices/ApprovedMediator](http://services.qls.com.au/)

#### Conciliation

This is similar to mediation. There’s an independent person called the conciliator that helps the parties involved in a dispute work out issues so there’s a resolution to the dispute.

The conciliator is usually an expert in the dispute subject. They work to find a solution to the dispute and are actively involved in finding the best solution. They look at weakness as well as strengths of your arguments, but don’t actually resolve the dispute for you.

#### You Have Control of the Outcome

There may be a tribunal or a court that can order you to try for a conciliation before nay trial occurs. Under the terms of a contract conciliation may be required to resolve disputes. In other cases, conciliation is voluntary so there’s no forcing the other party to any conciliation or alternative dispute resolution.

#### Arbitration

The parties involved pick an independent person called the arbitrator who acts as the judge. The arbitrator will make a decision which is legally binding and final for both you and the other parties involved.

Find an arbitrator at the QLS – [https://services.qls.com.au/](https://www.qls.com.au/pages/myqls)

**If you need to resolve a commercial or debt dispute using ADR then you should contact a lawyer**

**DEDICATED TEAM – COMMERCIALLY MINDED – PROVEN RESULTS**

[GET A FREE FEE ESTIMATE TODAY](https://stonegatelegal.com.au/free-case-evaluation/)

**OR CALL: [1300 545 133](tel:1300545133) FOR A PHONE CONSULTATION**

![Picture of Wayne Davis](<Base64-Image-Removed>)

#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

## NEWS & ARTICLES

### Discuss Your Case Today

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[![Statutory Demands in Construction - building and construction lawyers](<Base64-Image-Removed>)](https://stonegatelegal.com.au/statutory-demands-in-construction-complete-guide/)

#### [Statutory Demands in Construction – Complete Guide](https://stonegatelegal.com.au/statutory-demands-in-construction-complete-guide/)

[![Damages in Defamation Claims - Defamation lawyers in Australia](<Base64-Image-Removed>)](https://stonegatelegal.com.au/damages-in-defamation-claims-complete-guide/)

#### [Damages in Defamation Claims – Complete Guide](https://stonegatelegal.com.au/damages-in-defamation-claims-complete-guide/)

[![Extrinsic Evidence and the Parol Evidence Rule in Australia. Litigation lawyers](<Base64-Image-Removed>)](https://stonegatelegal.com.au/extrinsic-evidence-and-the-parol-evidence-rule/)

#### [Extrinsic Evidence and the Parol Evidence Rule](https://stonegatelegal.com.au/extrinsic-evidence-and-the-parol-evidence-rule/)

[![Can You Serve a Statutory Demand by Email in Australia - Stat demand lawyer](<Base64-Image-Removed>)](https://stonegatelegal.com.au/can-you-serve-a-statutory-demand-by-email-in-australia/)

#### [Can You Serve a Statutory Demand by Email in Australia?](https://stonegatelegal.com.au/can-you-serve-a-statutory-demand-by-email-in-australia/)

[![QCAT Building Disputes in Queensland - Complete Guide - construction lawyer Sunshine Coast](<Base64-Image-Removed>)](https://stonegatelegal.com.au/qcat-building-disputes-in-queensland-complete-guide/)

#### [QCAT Building Disputes in Queensland – Complete Guide](https://stonegatelegal.com.au/qcat-building-disputes-in-queensland-complete-guide/)

[![Who Can Sue for Defamation in Australia - defamation lawyers in Queensland](<Base64-Image-Removed>)](https://stonegatelegal.com.au/who-can-sue-for-defamation-in-australia/)

#### [Who Can Sue for Defamation in Australia?](https://stonegatelegal.com.au/who-can-sue-for-defamation-in-australia/)

## Claim A No Obligation Case Evaluation

## Discuss Your Case With A Trusted Lawyer

We approach your dispute with – strategic thinking, commercial solutions & positive outcomes.  Our honest process is designed to get you the best commercially sensible resolution.

[Discuss Your Case Today](https://stonegatelegal.com.au/contact/)

[OR Call Now](tel:0731800143)

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## Quick Links

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Individual liability limited by a scheme approved under professional standards legislation.

## Litigation Services

- [Commercial Litigation](https://stonegatelegal.com.au/services/commercial-litigation/)
- [Building & Construction Disputes](https://stonegatelegal.com.au/services/building-and-construction-lawyers/)
- [Debt Recovery Lawyers](https://stonegatelegal.com.au/services/debt-recovery-lawyers/)
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- [Body Corporate Debt Recovery](https://stonegatelegal.com.au/services/body-corporate-debt-recovery/)
- [Commercial Lease Disputes](https://stonegatelegal.com.au/services/commercial-lease-disputes/)
- [Defamation Litigation](https://stonegatelegal.com.au/services/defamation-lawyers/)
- [Wills & Estates Litigation](https://stonegatelegal.com.au/services/estate-litigation-lawyers/)
- [Insolvency Lawyers](https://stonegatelegal.com.au/services/insolvency/)
- [Letters of Demand](https://stonegatelegal.com.au/letter-of-demand/)
- [Statutory Demands](https://stonegatelegal.com.au/statutory-demand/)
- [Bankruptcy Lawyers](https://stonegatelegal.com.au/bankruptcy/)
- [Drafting Credit Contracts](https://stonegatelegal.com.au/debt-contract-credit-application/)

- Office Hours

Monday – Friday

8:30 AM – 5:00 PM

- Brisbane City

[Level 10/ 95 North Quay,](https://maps.app.goo.gl/YdLbTuKmnziFrQDv5)

[Brisbane City, QLD 4000](https://maps.app.goo.gl/YdLbTuKmnziFrQDv5) – (appointment only)

- [07 3180 0143](tel:0731800143)

- Sunshine Coast - Main Office

[4/57-59 Mary Street,](https://maps.app.goo.gl/Suo6oYWeRohEDEBWA)

[Noosaville, QLD 4566](https://maps.app.goo.gl/Suo6oYWeRohEDEBWA)

- [07 5346 0366](tel:0753460366)

At Stonegate Legal, client satisfaction is our top priority. We are proud to have served hundreds of clients who have had positive experiences working with us.

Copyright © 2023 [**Stonegate Legal**](https://stonegatelegal.com.au/) Pty Ltd – All Rights Reserved – Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732) \| [Terms](https://stonegatelegal.com.au/terms-and-conditions/) \|  [Privacy](https://stonegatelegal.com.au/privacy-policy/) \| [Sitemaps](https://stonegatelegal.com.au/sitemap_index.xml) \| [\*Conditions Apply](https://stonegatelegal.com.au/terms-and-conditions/)

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## [Home](https://stonegatelegal.com.au/)

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## Commercial Litigation Services
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# Commercial Litigation

Establishing and maintaining successful business ties is essential, yet they can occasionally become complex and unpredictable. Collaborate with a legally experienced team with a commercial focus to help you manage and resolve any conflicts.

[Book Your Free Consultation](https://stonegatelegal.com.au/services/commercial-litigation/#book)

[Speak To Our Trusted Lawyers Today](https://stonegatelegal.com.au/contact/)

### Get The Representation You Need In A Commerical Dispute

## Commercial LITIGATION & DISPUTE LAWYERS

## What Is Commercial Litigation?

Commercial litigation is a type of dispute resolution process in which two or more parties take legal action against each other to resolve a disagreement or dispute related to a commercial transaction.

This can include disputes over contracts, business relationships, intellectual property, and other business matters. The goal of commercial litigation is to reach an equitable resolution that is satisfactory to all parties involved.

[Contact Us Today](https://stonegatelegal.com.au/contact/)

## Benefits of Working With a Commercial Litigator

## Dispute Resolution

When a disagreement arises, our commercial litigation lawyers can provide you with multiple means to manage the situation. Common methods of resolution include mediation and arbitration. Our primary goal is to facilitate a solution that is mutually beneficial to all parties involved and circumvent the need to initiate any legal action.

## Legal Representation

It is usually not wise to approach a legal dispute unaccompanied by a commercial litigation lawyer. Our litigation lawyers possess the skills and knowledge required to confront the intricacies of the law, as well as represent you in court to make your case. Additionally, we can shield you and your business from any ill-advised actions.

## Handle Business Legality

Our commercial litigation lawyers can help you create your business documents in accordance with the law. We can also provide counsel on any potential legal violations and guide you in protecting yourself and your company from potential fraud and future legal issues. If any of these scenarios were to arise, our professionals are here to assist.

![book_discuss](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/book_discuss-1024x352.jpg)

### Commercial Disputes We Can Help You With

Our commercial litigation team are equipped to provide guidance and help with the following disputes.

Our experienced team of litigation lawyers will provide you with the best advice available and represent your interests in court. We take pride in our ability to listen to your needs and strive to give you the best service possible. Our lawyers are committed to helping you win your case, so book your free 30-minute initial consultation to discuss your case today.

[Discuss Your Case Today](https://stonegatelegal.com.au/services/commercial-litigation/#book)

No Obligation Case Evaluation

[Breach Of Contract](https://stonegatelegal.com.au/services/commercial-litigation/#collapse-c70abef687f038abaa96)

Our lawyers have extensive experience dealing with breach of contract disputes. We can help you review and interpret contracts, negotiate terms, and protect your rights in court.

[Construction Disputes](https://stonegatelegal.com.au/services/commercial-litigation/#collapse-092b264687f038abaa96)

Our litigation lawyers are experienced in resolving disputes related to construction projects, including contract disputes, delays, defects, and cost overruns. We will review the situation and provide advice that is tailored to your needs.

[Debtor / Creditor Disputes](https://stonegatelegal.com.au/services/commercial-litigation/#collapse-eba8349687f038abaa96)

Our team of litigation lawyers can help you recover any unpaid debts. We will review the situation, advise on the best course of action, and represent your interests in court if necessary.

[Misleading & Deceptive Conduct](https://stonegatelegal.com.au/services/commercial-litigation/#collapse-dd7c2e3687f038abaa96)

We can help you protect your rights if you have been the victim of misleading or deceptive conduct. We will review your situation, advise on the best course of action, and represent your interests in court if necessary.

[Australian Consumer Law Disputes](https://stonegatelegal.com.au/services/commercial-litigation/#collapse-c70abef687f038abbccc)

We can help you resolve disputes related to [Australian Consumer Law](https://consumer.gov.au/), including false or misleading representations, unconscionable conduct, and product safety issues. We will review the situation and provide advice that is tailored to your needs.

[Intellectual Property Disputes](https://stonegatelegal.com.au/services/commercial-litigation/#collapse-092b264687f038abbccc)

Our experienced team of litigation lawyers can help protect your intellectual property rights from infringement or misuse. We will review the situation, advise on the best course of action, and represent your interests in court if necessary.

[Partnership Disputes](https://stonegatelegal.com.au/services/commercial-litigation/#collapse-eba8349687f038abbccc)

Our team can help you resolve disagreements between partners in a fair and timely manner. We will work closely with you to understand the situation and provide legal advice that is tailored to your needs.

[Shareholder Disputes](https://stonegatelegal.com.au/services/commercial-litigation/#collapse-d7217ff687f038abbccc)

Our lawyers are experienced in professionally resolving disputes between shareholders. We will work closely with you to ensure that all parties are treated fairly and that any agreements are legally binding.

#### LEARN ONLINE

### Alternative Dispute Resolution

We are experienced in alternative dispute resolution (ADR) processes such as mediation and arbitration. We can provide advice on the best course of action, and represent your interests during the ADR process.

[View Our Video Library](https://www.youtube.com/@stonegatelegal)

### Our Team

## Meet Our Commercial Litigation Team

![Wayne Davis - Lawyer - Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/06/wayne.avif)

## Legal Practice Director / Principal Solicitor

## Wayne Davis

Wayne Davis is the principal solicitor, legal practice director of the firm, and leads the litigation team.  Wayne has an LLB, and GDLP and is admitted to the Supreme Court of Queensland and the High Court of Australia.  Wayne is a debt recovery, defamation, litigation, and insolvency professional.

Wayne is dedicated to achieving the best possible outcomes, whether through strategic negotiation, alternative dispute resolution, or courtroom advocacy. Wayne understand that every case is unique and takes a proactive approach to ensure your rights and interests are protected at every stage of the process.

### Education & Certifications

LLB – Bachelor of Laws, Graduate Diploma of Legal Practice (GDLP)

### Personal Quote

Don’t believe everything you think.

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Lease Disputes](https://stonegatelegal.com.au/tag/commercial-lease-disputes/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/) [Debt Recovery/Collection](https://stonegatelegal.com.au/tag/debt-recovery-collection/) [Defamation Litigation](https://stonegatelegal.com.au/tag/defamation-litigation/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [Statutory Demands](https://stonegatelegal.com.au/tag/statutory-demands/) [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/) [Wills/Estate Litigation](https://stonegatelegal.com.au/tag/wills-estate-litigation/)

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## Solicitor

## Shania Bryan

Shania is a solicitor at Stonegate Legal, based in Queensland. After nearly two years with the firm, Shania recently transitioned into her solicitor role following her admission to the Supreme Court of Queensland in December 2024. She holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP). Shania practices predominantly in defamation law and handles a majority of the defamation matters here at Stonegate Legal.

Her focus is advising and representing clients in disputes involving reputational harm, online publications, and media content. Shania works closely with individuals and businesses to navigate the intricacies of defamation claims and achieve effective resolutions.

### Education & Certifications

Bachelor of Laws (LLB) and Graduate Diploma of Legal Practice (GDLP)

### Personal Quote

Every experience is a chance to deepen my knowledge and contribute to our team’s success, fostering a culture of continuous learning and support

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Lease Disputes](https://stonegatelegal.com.au/tag/commercial-lease-disputes/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/) [Defamation Litigation](https://stonegatelegal.com.au/tag/defamation-litigation/) [Wills/Estate Litigation](https://stonegatelegal.com.au/tag/wills-estate-litigation/)

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## Solicitor

## Kirsty Walker

Kirsty has come into the legal profession later in life, having been a primary school teacher for 24 years. Her interest in the law stemmed from running a small construction company. After self-representing against debtors, she came to value the ability of the law to assist contractors in David and Goliath situations. Kirsty is admitted to the Supreme Court of Queensland and the High Court of Australia.

### Education & Certifications

Bachelor of Law (First Class Honours), Graduate Diploma Legal Practice, Bachelor of Criminology, and Justice Bachelor of Education (Primary), Certificate IV Small Business Management

### Personal Quote

Always pray to have eyes that see the best, a heart that forgives the worst, a mind that forgets the bad, and a soul that never loses faith.

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/)

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## Law Graduate / Paralegal

## Laylah Toovey

Laylah completed her Bachelor of Laws with Honours at the University of the Sunshine Coast and is currently undertaking her graduate diploma of legal practice at the College of Law. I have worked with Stonegate Legal since 2021, and within this time, she acquired a broad range of knowledge and experience across a diverse range of matters.

Laylah’s approach is centered on understanding your unique circumstances, protecting your interests, and advocating for the best possible outcome. Whether you’re facing commercial disputes, debt disputes, contract issues, or other contentious matters, Laylah and the team are here to guide you every step of the way.

### Education & Certifications

Bachelor of Laws

### Personal Quote

I am dedicated to supporting our senior team members, and achieving positive results for our clients

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Debt Recovery/Collection](https://stonegatelegal.com.au/tag/debt-recovery-collection/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [Statutory Demands](https://stonegatelegal.com.au/tag/statutory-demands/) [Wills/Estate Litigation](https://stonegatelegal.com.au/tag/wills-estate-litigation/)

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## Senior Paralegal

## Stacey Harvey

Stacey has been a part of the team at Stonegate Legal since 2022 but has worked in the industry for over 20 years, having extensive knowledge of the legal processes in Australia and specializing in debt recovery claims, default judgments, enforcement action, and bankruptcy.

Stacey spent a large portion of her career as a senior paralegal responsible for the performance and management of a team of paralegals and an administration department for many years.  During the first 18 years, she worked for one of Brisbane’s largest debt collection companies, where she managed large portfolios of debt for councils, schools, government departments, and insurance companies, along with debt purchased from various banks, utilities, and other credit providers.

### Education & Certifications

Justice of the Peace, Certificate III in Office Business Administration

### Personal Quote

Stay positive, work hard, make it happen.

## Areas of Interest

### [Commercial Lease Disputes](https://stonegatelegal.com.au/tag/commercial-lease-disputes/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Debt Recovery/Collection](https://stonegatelegal.com.au/tag/debt-recovery-collection/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [Statutory Demands](https://stonegatelegal.com.au/tag/statutory-demands/) [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/)

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## Law Graduate / Paralegal

## Caterine Molini

Caterine holds a law degree and passed the bar exam in 2011, practicing as a lawyer in Brazil until 2018. She also completed a postgraduate qualification in environmental law. Caterine holds a Certificate IV and a Diploma in Leadership and Management from Australia.

With 12 years of experience in civil litigation, insurance, and building and construction, Caterine spent six years leading a team to negotiate major agreements with insurance companies. She worked closely with engineers to ensure construction projects met environmental regulations, and she advocated for clear contracts to prevent issues and avoid costly litigation.

She is excited to be working towards admission as a Solicitor in Australia.

### Education & Certifications

Bachelor of Law (Brazil)

### Personal Quote

You are the size of your dreams. Dream big. Play smart, not hard.

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [insurance disputes](https://stonegatelegal.com.au/tag/insurance-disputes/) [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/)

## Commercial Litigation

### Who We Can Help

At [Stonegate Legal](https://stonegatelegal.com.au/), we provide legal advice and representation to businesses, entrepreneurs, and individuals who are involved in commercial litigation disputes. Our lawyers have extensive experience in handling a wide range of commercial disputes, from breach of contract claims to intellectual property infringement. We understand the complexities of resolving business disputes and will work diligently to ensure your rights are protected.

Our lawyers are committed to providing strategic advice and representation that is tailored to your specific needs. We will work with you to develop a comprehensive strategy for resolving your dispute as quickly and cost-effectively as possible.

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## Frequently Asked Questions

[What does a commercial litigator do?](https://stonegatelegal.com.au/services/commercial-litigation/#collapse-b0d504b687f038b4b5f4)

A commercial litigation lawyer helps to resolve commercial disputes, such as: breach of contract, construction disputes, debtor/creditor disputes, misleading & deceptive conduct, Australian Consumer Law disputes, intellectual property disputes, partnership disputes, product liability, and/or shareholder disputes.

[What is an example of commercial litigation?](https://stonegatelegal.com.au/services/commercial-litigation/#collapse-501f2bd687f038b4b5f4)

Any breach of a contract, building and construction disputes, debtor/creditor debt disputes, misleading & deceptive conduct matters, Australian Consumer Law disputes, intellectual property disputes (copyright, trademark), partnership disputes, product liability, and/or shareholder disputes

[What is business and commercial litigation?](https://stonegatelegal.com.au/services/commercial-litigation/#collapse-a771e63687f038b4b5f4)

Business and/or commercial litigation is essentially the attempt to resolve a dispute which arises from a business or commercial setting. Businesses sometimes encounter problems and/or disagreements, and we simply try to resolve those disputes.

[What is the difference between civil and commercial litigation?](https://stonegatelegal.com.au/services/commercial-litigation/#collapse-8cdd74f687f038b4b5f4)

Commercial litigation is the attempt to resolve commercial disputes. Civil litigation is the broad term used to describe all non-criminal / family litigation, and can include non-personal disputes such as Property damage, Defamation, Negligence, Insurance disputes, Estate litigation, Nuisance & Trespass, and Administrative reviews / appeals.

[When should you engage with a commercial litigation lawyer?](https://stonegatelegal.com.au/services/commercial-litigation/#collapse-e91b11d687f038b4b5f4)

It is important to engage with a commercial litigation lawyer as soon as possible when you are faced with a dispute. A lawyer can provide you with the legal advice and representation you need to successfully navigate the complexities of your dispute, and help protect your rights and interests.

[What services do Stonegate Legal’s commercial litigators provide?](https://stonegatelegal.com.au/services/commercial-litigation/#collapse-4e10eba687f038b4b5f4)

Stonegate Legal’s commercial litigators provide a range of dispute resolution services, including pre-litigation advice, negotiation, mediation, arbitration and court proceedings.

[What is a business dispute?](https://stonegatelegal.com.au/services/commercial-litigation/#collapse-f591981687f038b4b5f4)

A business dispute is a disagreement between two or more parties about a matter related to commercial activities. Business disputes can arise from contractual disagreements, intellectual property infringement, and other issues related to business operations.

[Will I need to go to court for my commercial dispute?](https://stonegatelegal.com.au/services/commercial-litigation/#collapse-881e487687f038b4b5f4)

It depends on the nature of the dispute and how it is being resolved. In some cases, a dispute can be resolved through negotiation, mediation or arbitration without ever going to court. However, if these methods are unsuccessful, court proceedings may be necessary. Your commercial litigation lawyer will be able to advise you on the best course of action for your specific dispute.

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## Misleading Conduct Insights
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# Misleading & Deceptive Conduct & Reliance Clauses

[Discuss Your Case Today](https://stonegatelegal.com.au/contact/)

## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| October 25, 2016

Table of Contents

[Toggle](https://stonegatelegal.com.au/misleading-deceptive-conduct/#)

![Misleading or Deceptive Conduct and Reliance Clauses Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2016/10/Misleading-or-Deceptive-Conduct-and-Reliance-Clauses-Stonegate-Legal-300x278.png)The High Court’s view of misleading or deceptive conduct and reliance clauses is stated in _[Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/2009/25.html)_ (“ **Campbell**”).

Campbell is a High Court decision relating to misleading or deceptive conduct and reliance clauses and the effectiveness of non-reliance clauses in [consumer disputes](https://stonegatelegal.com.au/services/civil-litigation/).

That case involved allegations of misleading or deceptive representations concerning the financial position of a company being purchased.

The case relates to whether:

1. A vendor of shares in a company provided documents prior to making of share sale agreement that did not accurately state company’s past financial performance;
2. Failed to correct some estimates of company’s expected performance when vendor knew or ought reasonably to have known, prior to making of agreement, that estimated performance not achieved; and
3. Incorporated some statements of financial performance in share sale agreement with various warranties as to their accuracy.

In Campbell the High Court said:

> _… of itself, neither the inclusion of an entire agreement clause in an agreement nor the inclusion of a provision expressly denying reliance upon pre-contractual representations will necessarily prevent the provision of misleading information before a contract was made constituting a contravention of the prohibition against misleading or deceptive conduct by which loss or damage was sustained. As pointed out … whether conduct is misleading or deceptive is a question of fact to be decided by reference to all of the relevant circumstances, of which the terms of the contract are but one._

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## Misleading or Deceptive Conduct and Reliance Clauses

The relevant share sale agreement contained an entire agreement clause and a warranty that the information provided was substantially accurate and not misleading.

The majority of the Court was of the opinion that non-reliance clauses nor entire agreement clauses will necessarily prevent the relevant conduct from being found to be misleading or deceptive.

The majority held that the question of whether conduct is misleading or deceptive is a question of fact to be decided by reference to all of the relevant circumstances, including the terms of the contract.

In [_Re Lezam Pty Limited and Jlw (Nsw) Pty Limited v Seabridge Australia Pty Limited \[1992\] FCA 206_](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/1992/206.html) the Court said:

> _Exclusion clauses in a contract will only preclude a remedy under the Act when those clauses demonstrate that the party in question did not, in fact, rely on the conduct or where the conduct could not, as a whole, have been seen to be misleading._

_Re Lezam_ is referred to in [_Mark Bain Constructions Pty Ltd v Avis; Mark Bain Constructions Pty Ltd v Barnscape Pty Ltd \[2012\] QCA 100_](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCA/2012/100.html) after which the Queensland Court of Appeal said:

> _It is a question of fact whether those clauses erased the effect of the representation in the minds of Mr and Mrs Brecht … Those clauses did not have that effect in this case. They relied on the representations made as to what would be the view from unit 7, Number One Park and their reliance induced them to enter into the … contract._

In [_Keeley & Ors v Horton & Anor \[2016\] QCA 68_](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCA/2016/68.html) the Queensland Court of Appeal again said:

> _\[i\]n Campbell … the share sale agreement contained warranties that, to the best of the vendor’s knowledge, all information given to the purchaser or its advisers was “substantially accurate and complete and not misleading”. Although the High Court remitted the issue of the breach of those warranties to the New South Wales Court of Appeal for further consideration, the plurality observed that, if a breach was then established, the purchaser would be “entitled to such damages as would put it in the position it would have been in if the contract had been performed according to its terms”._

### Conclusion

The Superior Courts in Queensland have followed the High Court in stating that reliance clauses or representation clauses may not be enforceable in the matter of deceptive or misleading conduct.

Whether there has been deceptive or misleading conduct in a matter of fact, to be assessed on the representations made in context with the surrounding facts of the case.

[Contact us](https://stonegatelegal.com.au/contact-stonegate-legal/) for more on Misleading or Deceptive Conduct and Reliance Clauses.

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#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

## NEWS & ARTICLES

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# Debt Recovery Solicitors

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## NEWS & ARTICLES

- [By \\
Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| December 3, 2017

## Article Summary

At Stonegate Legal, our debt recovery solicitors can do the following (amongst other things):

1. Our commercial debt recovery solicitors will seek to realise any security interest, guarantee, or charge that has been give to you, or attempt to defeat any security action.
2. Our debt collection solicitors can commence legal action for debt recovery in the Court with jurisdiction, or QCAT to recover monies that are due and payable to you.
3. Our business debt recovery solicitors can complete any due diligence checks for prospective new clients or customers.
4. Our debt collection solicitors will advise and assist you to enforce your enforceable money order judgment with enforcement warrants for seizure and sale of property, statutory demands & winding up applications, and bankruptcy notices & creditor’s petitions.
5. Our expert personal debt recovery lawyers will advise and assist you with obtaining freezing orders (mareva injunctions) against the real property of the debtor, or caveats (if applicable).

Debt recovery legal services include the following:

1. Identifying the possible causes of action and formulating a legal strategy.
2. Providing advice on prospects and risk of any debt recovery claim.
3. Negotiating with the debtor or the creditor to attempt to settle the dispute early.
4. Advising and assisting with alternative dispute resolution (ADR) before Court.
5. Advising and assisting with commencing or defending debt recovery proceedings in Court.
6. Helping creditors obtain an enforceable money order judgment against the debtor.
7. Assisting judgment creditors with enforcement of money order judgments or assisting judgment debtors with resisting enforcement.
8. Advice and assistance with insolvency – bankruptcy and liquidation.

Table of Contents

[Toggle](https://stonegatelegal.com.au/debt-recovery-solicitors/#)

![Debt Recovery Solicitors Queensland Brisbane Sunshine Coast](https://stonegatelegal.com.au/wp-content/uploads/2017/12/Debt-Recovery-Solicitors-Queensland-Brisbane-Sunshine-Coast.png)Debt recovery solicitors are legal practitioners, admitted to practise law in their State, Territory, or jurisdiction, who focus on the [**recovery of debts**](https://stonegatelegal.com.au/services/debt-recovery-lawyers/) and the enforcement of money orders.

Stonegate Legal focus on commercial litigation, debt recovery and insolvency law.

Debt recovery solicitors are different to debt collectors because they are actually admitted solicitors, who have passed the requirements to practice law in Queensland and understand the commercial debt recovery process.

Debt recovery solicitors offer legal debt recovery solutions, including:

01. Debt Recovery Advice to Creditors and Debtors;
02. Letter of Demand and [Calderbank Letter of Offer](https://stonegatelegal.com.au/settling-litigation-early-calderbank-offers/);
03. Recover Unpaid Accounts for your Business;
04. Suing for a Debt in the Courts or Tribunal;
05. Debt Dispute – Claim and Statement of Claim;
06. Enforcing a Judgment or Money Order;
07. Companies Served With a Creditor’s Statutory Demand;
08. Statutory Demands and Winding-up Applications;
09. Bankruptcy and personal insolvency;
10. Credit Agreements, Contract Terms, and Guarantees;
11. Caveats, the Enforcement of Mortgages other Security;
12. Personal Property Securities Registration; and
13. Mareva Injunction / Freezing Order.

What do Debt Recovery Solicitors do? Stonegate Legal - Solicitors in Brisbane and Sunshine Coast - YouTube

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## **Debt Recovery Advice to Creditors and Debtors**

It is not just creditors that debt recovery solicitors act for, but we also act for debtors.

It might not always be the case that a debtor does not want to pay, or does not have the means to pay.  In some cases a debt may arise because of:

1. An unfair contract term ( [liquidated damages](https://stonegatelegal.com.au/liquidated-damages-penalties/) clause for example); and/or
2. Incomplete or unsatisfactory work; and/or
3. The goods / services provided were not of sufficient quality; and/or
4. Any number of other genuine reasons.

We act for both creditors and debtors, plaintiffs and defendants, in all jurisdictions.  Debt recovery matters are not always as black and white as people think.

However, the majority of the work that debt recovery solicitors do is on behalf of creditors, chasing unpaid business debts.  We usually commence the [legal debt recovery procedure](https://stonegatelegal.com.au/legal-action-to-recover-debt-by-an-agent/) by sending the debtor or debtors a letter of demand.

## **Letter of Demand and Calderbank Letter of Offer**

In most cases a [letter of demand](https://stonegatelegal.com.au/letter-of-demand/) identifies the parties, identifies the contract, identifies the breach, and demands payment of consideration.

A letter of demand will also put the debtor on notice that a creditor intends to take a legal step in the proceeding should they not attempt to resolve this debt dispute.

At the very minimum, a letter of demand will include the following:

1. Proper identification of the debtor – [person or company](https://stonegatelegal.com.au/commence-proceedings-person-company/);
2. The amount of the debt outstanding, free from costs or interest (if claimed);
3. A description of the debt (why the money is owed);
4. The nature of the breach and when the debt was due and payable;
5. Include the date of the letter of demand;
6. Any relevant evidence such as contracts, [invoices](https://stonegatelegal.com.au/client-not-paying-invoice/), emails agreeing to work or other written agreements that you have with the person/company you are claiming the money from.
7. A time and date on which the debtor has to pay the debt, 7 or 14 days for example.

We offer a [fixed-fee letter of demand](https://stonegatelegal.com.au/letter-of-demand/) for initiating recovery of your outstanding debts.

## **Recover Unpaid Accounts for your Business**

There are a number of different types of debts that arise in daily life.  These include credit card debts, medical or dental debts, personal loan debts, unpaid mobile phone debts, unpaid utility bills (after moving for example), bank overdraft charges, unpaid car finance, unpaid payday loans, and so on.

However, the most common type of debt we encounter is [unpaid business debts](https://stonegatelegal.com.au/small-business-debt-recovery/), such as unpaid invoices from a customer after trade credit.  For example:

1. Your business provided goods and/or services under a contract;
2. Your business issued an invoice for the cost of providing those goods and/or services;
3. You gave fourteen (14) or thirty (30) days payment terms; and
4. They [do not pay the invoice](https://stonegatelegal.com.au/client-not-paying-invoice/).

Business debt recovery is best taken care of by focused **debt recovery solicitors** to ensure that you get the best possible chance of recovering your money.

We strongly advise attempting to resolve your debt disputes prior to initiating legal action and engaging debt recovery solicitors.  Litigation can be costly, and can be a long and drawn-out process.  If you can agree to settle this matter without resorting to the expense of a Court action, then we strongly advise you to do so.  Skilled debt recovery solicitors can negotiate a settlement with your debtor.

However, this is not always a viable option.  Sometimes you will have to commence legal proceedings to recover your debt in a Court or Tribunal, and you have to engage professional debt recovery solicitors.

## Suing for a Debt in the Courts or Tribunal

There are two main [options in Queensland for recovery](https://stonegatelegal.com.au/debt-recovery-services-in-queensland/) of a business debt, and small debt recovery, they are:

1. Suing in the [Court with jurisdiction](http://www.courts.qld.gov.au/); and
2. Suing in the [Queensland Civil and Administrative Tribunal](http://www.qcat.qld.gov.au/) (“QCAT”).

The jurisdiction of these courts and tribunals are:

1. [QCAT](http://www.qcat.qld.gov.au/) – **[small claims](https://stonegatelegal.com.au/small-claims-court-qld-complete-guide/)** of up to $25,000.00
2. [Magistrates Court](http://www.courts.qld.gov.au/courts/magistrates-court) – claims up to $150,000.00
3. [District Court](http://www.courts.qld.gov.au/courts/district-court) – claims up to $750,000.00
4. [Supreme Court](http://www.courts.qld.gov.au/courts/supreme-court) – claims over $750,000.00

There are pros and cons for commencing proceedings in a Tribunal or commencing proceedings in the Court.

### Pros and Cons of Commencing Proceedings in QCAT

The **pros** of commencing proceedings in [QCAT](http://www.qcat.qld.gov.au/) are:

1. It is a lot less expensive than commencing in the Court;
2. The process can be a lot quicker than the Court;
3. [QCAT](http://www.qcat.qld.gov.au/) is designed for self-represented people.

The **cons** of commencing proceedings in [QCAT](http://www.qcat.qld.gov.au/) are:

1. The minor debt jurisdiction is mostly a no costs jurisdiction.  This means that you will not be able to recover your costs save for a few designated items;
2. Legal representatives do not have an automatic right of appearance.  This means that if you want debt recovery solicitors to appear at a [QCAT](http://www.qcat.qld.gov.au/) hearing, you will need the leave of the tribunal, which is not always given;
3. The minor debt jurisdiction is capped at $25,000.00.

### Pros and Cons of Commencing Proceedings in the Court

The **pros** of commencing proceedings in the [Court](http://www.courts.qld.gov.au/) are:

1. It is a legal process, with judicial officers who understand the law.  It is less likely that you will get a non-typical result (as happens in QCAT);
2. You can use debt recovery solicitors and barristers to maximise your chances of successfully obtaining your desired outcome;
3. You are able to claim costs, either standard costs or indemnity costs of commencing the proceeding.

The **cons** of commencing proceedings in the [Court](http://www.courts.qld.gov.au/) are:

1. It is more expensive than QCAT;
2. It can take longer to reach your desired outcome.

## QCAT Minor Debt Dispute or Claim and Statement of Claim

Whatever you choose, either an application for a [minor debt dispute in QCAT](http://www.qcat.qld.gov.au/matter-types/debt-disputes) or commencing proceedings in the Court by claim and statement of claim, the processes are similar.

A [QCAT](http://www.qcat.qld.gov.au/) minor debt dispute is [commenced by application](http://www.qcat.qld.gov.au/).

The application is completed, and sealed with the seal of the Tribunal.  Once sealed you have to serve the respondent with the application.  The respondent then has twenty eight (28) days in which to file and serve a response to the application.

Then, both the applicant and the respondent attend a hearing to get the matter resolved.

Proceedings in the [Court](http://www.courts.qld.gov.au/) are commenced by claim and statement of claim.  The claim is then filed in the [Court](http://www.courts.qld.gov.au/) with jurisdiction and sealed with the Court’s stamp.

Once you have a sealed version, you (or your debt recovery solicitors) must personally serve the defendant with your claim and statement of claim.  Once served they have twenty eight (28) days in which to file and serve their defence and counterclaim.

In any of these jurisdictions, if the debtor ( [QCAT](http://www.qcat.qld.gov.au/) respondent or Court defendant) fails to serve a response or a defence within twenty eight (28) days, you can apply for a judgment ( [QCAT](http://www.qcat.qld.gov.au/) decision), allowing you to start enforcement proceedings.

## Enforcing a Judgment or Money Order

A decision in [QCAT](http://www.qcat.qld.gov.au/) is not an enforceable money order.

[Rule 793](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s793.html) of the _Uniform Civil Procedure Rules 1999_ (QLD) (“ _**UCPR**_“) says:

> _“enforceable money order” , of a court, means:_
>
> _(a) a money order of the court; or_
>
> _(b) a money order of another court or tribunal filed or registered under an Act in the court for enforcement._

[Section 131](http://classic.austlii.edu.au/au/legis/qld/consol_act/qcaata2009428/s131.html) of the _Queensland Civil and Administrative Tribunal Act 2009_ (Qld) says:

> _(1) This section applies to a final decision of the tribunal in a proceeding that is a monetary decision, to the extent the decision requires payment of an amount to a person._
>
> _(2) A person may enforce the final decision by filing a copy of the decision in the registry of a court of competent jurisdiction._
>
> _(3) On filing a copy of the final decision under subsection (2), the decision is taken to be a money order of the court in which it is filed and may be enforced accordingly._

So, if you have an enforceable judgment or money order from the Court, or you have registered your QCAT decision in the Court with jurisdiction, and your debtor still will not pay, then you can commence enforcement proceedings to enforce the money order.  Our debt recovery solicitors can do all of this for you.

There are a number of different enforcement options, they are commenced by:

1. Enforcement hearings;
2. Enforcement warrants;
3. Statutory demands; and/or
4. Bankruptcy notices.

It is very important that you get suitably qualified debt recovery solicitors to make these applications, as strict compliance is usually required.

## Companies Served With a Creditor’s Statutory Demand

Once you have an enforceable money order [against a company](https://stonegatelegal.com.au/how-to-sue-a-company-queensland/) as respondent / defendant, and the judgment debt is for $2,000.00 or more, then one of the best tools for enforcement is serving the company with a statutory demand.

| | |
| --- | --- |
| | |
| [Issuing Statutory Demands](https://stonegatelegal.com.au/statutory-demand/) | [Setting Aside Statutory Demands](https://stonegatelegal.com.au/setting-aside-statutory-demand/) |

If the debtor company fails to pay the judgment debt, or fails to “ _secure or compound for that amount or total to the creditor’s reasonable satisfaction, within 21 days after the demand is served on the company_” as per [section 459E(2)(c) of the Corporations Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s459e.html) then they are presumed to be insolvent.

Based upon that presumption of insolvency, the judgment creditor can apply to wind up the judgment debtor.

[_Commonwealth Bank of Australia v Parform Pty Ltd_ \[1995\] FCA 1445](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/1995/1445.html) said:

> _To “compound” for a debt is to accept an arrangement for payment of the amount of the debt or of a different amount._

So, if they don’t pay the judgment debt, or enter into a payment arrangement to the creditor’s reasonable satisfaction, then the judgment [creditor can apply for a winding up order](https://stonegatelegal.com.au/winding-up-a-company-that-owes-you-money/).

## Statutory Demands and Winding-up Applications

Non-compliance with a statutory demand raises the [legal presumption that a company is insolvent](https://stonegatelegal.com.au/%ef%bb%bfrebutting-presumption-insolvency/).  With that legal presumption assisting, the judgment creditor can apply to the [Federal Court](http://www.fedcourt.gov.au/) or [Supreme Court](http://www.courts.qld.gov.au/courts/supreme-court) for an order winding up the judgment debtor company.

Once the winding up order is made, and a liquidator is appointed, then all of the company’s assets can be liquidated to satisfy creditors.

In some circumstances, the liquidator is able to claw back assets which were made prior to the winding up process, adding to the asset pool.  These voidable transactions include:

1. Unfair preferences payments and uncommercial transactions;
2. Unfair Loans; and
3. Unreasonable Director-Related Transactions.

It is vital that you seek [suitably qualified legal advice](https://stonegatelegal.com.au/contact-debt-recovery-qld/) and assistance from debt recovery solicitors before attempting to wind up a judgment debtor company.

## Bankruptcy and Personal Insolvency

![business debt recovery in Queensland](https://stonegatelegal.com.au/wp-content/uploads/2017/12/business-debt-recovery-in-Queensland.jpg)If the judgment debtor is a person (and not a company), and the judgment debt is $10,000.00 or more, then you can [commence bankruptcy proceedings](https://stonegatelegal.com.au/bankruptcy/).

Bankruptcy proceedings are commenced by serving the judgment debtor with a [bankruptcy notice](https://www.afsa.gov.au/online-services/creditors-bankruptcy-notices).

Failure to comply with the bankruptcy notice entitles the judgment creditor to [present a creditor’s petition](http://www.fedcourt.gov.au/law-and-practice/guides/guides-bankruptcy/information-sheet-1) to the [Federal Circuit Court](http://www.federalcircuitcourt.gov.au/).

If a sequestration order is made, forcing the judgment debtor into bankruptcy, then most of their assets can be realised to satisfy the creditors.

The trustee in bankruptcy also has [claw back powers](https://stonegatelegal.com.au/what-are-voidable-transactions-in-bankruptcy/) under the [_Bankruptcy Act 1966_ (Cth)](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/index.html), and can attempt to void any transfer of property that are [voidable transactions in bankruptcy](https://stonegatelegal.com.au/what-are-voidable-transactions-in-bankruptcy/).  [Section 121 of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s121.html) says:

> _A transfer of property by a person who later becomes a bankrupt (the transferor) to another person (the transferee) is void against the trustee in the transferor’s bankruptcy if the property would probably have become part of the transferor’s estate_

Before thinking about making a judgment debtor bankrupt to satisfy your debts it is vital that you get legal advice from suitably qualified insolvency, bankruptcy and debt recovery solicitors.

## Credit Agreements, Contract Terms, and Guarantees

To improve your chances of satisfying your judgment debt by the methods above, debt recovery solicitors can also review your existing, or create new, credit agreements, contract terms, and guarantees.

Having the correct credit agreements, contract terms, and guarantees can drastically improve your chances of securing the total amount claimed, plus costs.

If you are a business that gives credit to your customers, or if you offer trade credit, it is vital that you have legal instruments which you can rely on when you need to.

Some of the options to include in credit agreements, contract terms, and guarantees, are favourable terms in the event of a default, and security for the credit, such as caveats and registrable mortgages over real property, or a registered interest on the [Personal Property Securities Register](https://www.ppsr.gov.au/), pursuant to the [_Personal Property Securities Act 2009_ (Cth)](http://classic.austlii.edu.au/au/legis/cth/consol_act/ppsa2009356/index.html).

## Caveats, the Enforcement of Mortgages other Security

**Caveats** – A [charging clause in a contract](https://stonegatelegal.com.au/contract-clauses-debt-recovery-in-queensland/) may allow you to lodge a caveat over the real property of the debtor as security for the debt.

A caveat is a great tool to protect your interests in a debt recovery matter as it prevents any dealing with the real property until the caveat is removed.

However, care should be taken with caveats!  If you do not have a charging clause in your contract, credit agreements, and guarantees, then you will need a “ _caveatable interest_”.  Lodging a caveat without a caveatable interest can have serious consequences for you.

**Mortgages** – A registered mortgage over the debtors’ real property is the one of the best securities that you can have.  Unlike the equitable mortgages created by charge (as above) a registered mortgage is a secured interest making you a secured creditor rather than an unsecured creditor.

However, it is highly unlikely that a trade debtor will agree to a registered mortgage on the title to his/her land.

**Director’s Guarantees** – If you have traded with a debtor company, it is essential that you get a directors guarantee.  A personal guarantee guarantees the obligations of the company, so if they default, then you can commence proceedings against the guarantor.

## Personal Property Securities Registration

If you are selling goods on trade credit, or finance, then it is essential that you secure your interest in those goods by registering your interest on the [Personal Property Securities Register](https://www.ppsr.gov.au/), pursuant to the [_Personal Property Securities Act 2009_ (Cth)](http://classic.austlii.edu.au/au/legis/cth/consol_act/ppsa2009356/index.html).

Once again, it is vital that you get this procedure correct.  Debt recovery solicitors can take care of your security interests for you.

## Mareva Injunction / Freezing Order

Freezing orders, also known as a **Mareva order** is based upon the English case of [_Mareva Compania Naviera SA v International Bulkcarriers SA_ \[1975\] 2 Lloyd’s Rep 509](https://www.austlii.edu.au/cgi-bin/LawCite?cit=%5b1980%5d%201%20All%20ER%20213), and extended to Queensland by [_Bank of New Zealand v Jones_ \[1982\] 2 Qd R 466](http://www.austlii.edu.au/cgi-bin/LawCite?cit=%281982%29%20Qd%20R%20466).

These legal principles were then added to the _UCPR_ by [_Uniform Civil Procedure Amendment Rule (No 1)_ 2007](https://www.legislation.qld.gov.au/view/html/asmade/sl-2007-0096), commencing on 1 June 2007.

[Rule 260A](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s260a.html) of the _UCPR_ says:

> _(1) The court may make an order (a “freezing order”) for the purpose of preventing the frustration or inhibition of the court’s process by seeking to meet a danger that a judgment or prospective judgment of the court will be wholly or partly unsatisfied._
>
> _(2) A freezing order may be an order restraining a respondent from removing any assets located in or outside Australia or from disposing of, dealing with, or diminishing the value of, those assets._

The requirements of a Mareva order or freezing order are numerous and complicated.  A debt recovery solicitor can help you to freeze a debtor’s property to help secure your chances of getting payment.

## Debt Recovery Solicitors – How Can They Help You?

![Debt Recovery Solicitors – How can they help you in Australia](https://stonegatelegal.com.au/wp-content/uploads/2023/01/Debt-Recovery-Solicitors-%E2%80%93-How-can-they-help-you-in-Australia-300x296.png)Debt recovery solicitors in Queensland deal with the legal recovery of outstanding debts, and the enforcement of money order judgments.

Debt solicitors can negotiate on your behalf, attend to alternative dispute resolution (if appropriate), and sue debtors in Court if necessary.

Debt collection solicitors also work for debtors, defending false debt recovery claims against them, or negotiating a settlement of the Court proceedings.

Commercial debt recovery solicitors deal with commercial or business debts, whereas personal debt recovery solicitors deal with personal debts.  At Stonegate Legal we do both.

Debt recovery solicitors can also help creditors and debtors navigate the insolvency minefield, helping with corporate insolvency (liquidation) and bankruptcy.

In this article, our debt recovery solicitors outline everything you need to know about debt recovery, the enforcement of money order judgments, and/or insolvency.

**Are you looking for the best debt recovery solicitors to help with unpaid debts?**

[CONTACT A DEBT SOLICITOR TODAY](https://stonegatelegal.com.au/contact-stonegate-legal/)

**OR CALL: [1300 545 133](tel:1300545133) FOR A FREE PHONE CONSULTATION**

## What are Debt Recovery Legal Services?

Debt recovery legal services include the following:

1. Identifying the possible causes of action and formulating a legal strategy.
2. Providing advice on prospects and risk of any debt recovery claim.
3. Negotiating with the debtor or the creditor to attempt to settle the dispute early.
4. Advising and assisting with alternative dispute resolution (ADR) before Court.
5. Advising and assisting with commencing or defending debt recovery proceedings in Court.
6. Helping creditors obtain an enforceable money order judgment against the debtor.
7. Assisting judgment creditors with enforcement of money order judgments or assisting judgment debtors with resisting enforcement.
8. Advice and assistance with insolvency – bankruptcy and liquidation.

Debt recovery solicitors can do a lot more than this, but this is an overview of the types of typical services that an experienced expert debt recovery solicitor can provide.

## What is the Role of Debt Recovery Solicitors?

Debt recovery solicitors are agents for the clients.  We provide advice and assistance in relation to all aspects of debt recovery, ADR (mediation & negotiation), civil procedure, risk analysis, obtaining an enforceable money judgment, enforcement of the money judgment, and insolvency.

A debt recovery solicitor will have your best interests in the forefront of their mind, and do what they can to ensure that legal costs are not wasted, but doing whatever is necessary to recover the debts.

Debt recovery solicitors will draft all of the Court documents so that they are particularised correctly, and that the Court documents are 100% compliant with the [_Uniform Civil Procedure Rules 1999_ (Qld)](https://www.legislation.qld.gov.au/view/html/inforce/current/sl-1999-0111) (“ **the UCPR**”).  Debt recovery solicitors will also appear for you in any Court proceedings so that you do not have to face the Court yourself.

A good debt recovery solicitor will properly advice on the commerciality of recovering the debt and be clear and up-front with costs throughout the entire process.

## What are Business Debt Collection Specialists?

Business debts are commercial debts owed in the course of business.  These are usually unpaid invoices for the provision of goods and services.

Commercial debt recovery solicitors help businesses and companies recover their aged accounts receivables.  This can include helping:

1. Banks and financial institutions.
2. Government agencies (such as recovering rates).
3. Healthcare providers (such as medical and dentists).
4. Landlords recovering [unpaid residential rent](https://stonegatelegal.com.au/unpaid-rent-arrears-queensland/) and commercial rent.
5. Body corporate schemes and management – [unpaid levies](https://stonegatelegal.com.au/recovering-outstanding-body-corporate-levies/).
6. Professional services – law firms and accountants.
7. [Building and construction debts](https://stonegatelegal.com.au/building-construction-debt-recovery/) (unpaid payment claims).
8. Utility providers (such as water and electricity providers).
9. Any and all [small businesses](https://stonegatelegal.com.au/legal-debt-recovery-options-for-businesses/) and self-employed individuals.

Business debt recovery solicitors provide current and timely advice to all businesses in Queensland in relation to the collection of business and commercial debts.

## What are the Steps in the Debt Collection Process?

There are a number of steps in the debt collection process.  At a bare minimum, these include:

1. Drafting a formal [letter of demand](https://stonegatelegal.com.au/letter-of-demand/).
2. [Alternative dispute resolution](https://stonegatelegal.com.au/alternative-dispute-resolution/) (mediation or negotiation).
3. [Debt recovery litigation](https://stonegatelegal.com.au/legal-debt-recovery-options-for-businesses/) in the Court with jurisdiction.
4. Preparing, filing, and serving a [claim & statement of claim](https://www.courts.qld.gov.au/going-to-court/money-disputes/claim-and-statement-of-claim).
5. Entering judgement (either default, summary, or after a trial).
6. Enforcing judgements with warrants or insolvency.

This is the very basic outline of the debt recovery process, but it is essentially the process from start to finish.  An expert debt recovery [lawyer](https://stonegatelegal.com.au/debt-recovery-lawyer/) will be able to advise and assist with all of the above.

### Debt Recovery Solicitors – Letter of Demand

The first step in the debt recovery process is to draft and send a formal [letter of demand from a solicitor](https://stonegatelegal.com.au/letter-of-demand/).

A letter of demand is a formal written request for payment to your debtor in relation to the payment an overdue and outstanding debt.

There are a number of good reasons why you may choose to draft and send a formal letter of demand before commencing legal action, including:

1. To clearly communicate your demands and expectations to the debtor.
2. To comply with any legal requirements or procedures that must be followed before taking legal action.
3. To establish a written record of your efforts to recover the debt.
4. To provide the debtor with an opportunity to resolve the matter without resorting to legal action.

Sending a letter of demand can often be an effective way to resolve a [debt dispute](https://stonegatelegal.com.au/services/debt-disputes/) without incurring the time and expense of going to court.

In some cases, the debtor may be willing to pay the debt or negotiate a repayment plan once they receive a letter of demand.

If the debtor does not respond to the letter of demand or refuses to pay the debt, you may choose to pursue mediation prior to commencing legal action in the Court with jurisdiction.

### Mediation and Alternative Dispute Resolution

If negotiation fails, then you might consider proposing [mediation](https://www.courts.qld.gov.au/going-to-court/alternative-dispute-resolution/mediation) before commencing debt recovery litigation in the Courts.

Mediation is a form of alternative dispute resolution (ADR) in which an independent third party called “the mediator” (usually a barrister) will assists the parties in reaching a settlement of the debt dispute.

There are a number of good reasons to look at mediation before taking legal action, including:

1. The mediation environment gives more control to the creditor and the debtor over the outcome of the debt dispute.
2. The mediation environment can help preserve business relationships, by encouraging communication in a non-adversarial environment.
3. Mediation is private and confidential (unlike court proceedings which are public).
4. Mediation is usually quicker and a lot less expensive than litigating in court.

Mediation can be a quick, easy, and inexpensive way to resolve debt disputes as it negates the time and expense of litigating in court.

However, it only works when two (2) parties to the debt dispute actually want to resolve the dispute.

If the other party is not willing to negotiate in good faith, then a mediation may be a waste of time, and it may be better to commence debt recovery litigation in Court.

### Commencing Debt Recovery Litigation

If you engage a debt recovery solicitor to [commence legal action in the Court](https://stonegatelegal.com.au/legal-proceedings-for-debt-recovery/), then there are a few distinct stages, including:

1. Drafting, filing, and serving an originating process ( [claim](https://www.courts.qld.gov.au/__data/assets/word_doc/0008/92897/Form-2-Claim-UCPR.doc) & [statement of claim](https://www.courts.qld.gov.au/__data/assets/word_doc/0010/92899/Form-16-Statement-of-claim-UCPR.doc)).
2. Continuing to draft, file and serve pleadings and interrogatories to continue with the Court process until disclosure.
3. Attending to making or defending and interlocutory applications in the proceeding.
4. Completing the disclosure process.
5. Compulsory mediation or settlement conference.
6. Preparing for trial or hearing.
7. Attendance at the trial or hearing.

Obviously it is more complex than this, but this gives you an idea of the steps involved.  Initially, you must draft, file, and serve the claim & statement of claim.

## Preparing a Claim & Statement of Claim

The initiating or originating document to commence debt recovery litigation is a [claim](https://www.courts.qld.gov.au/__data/assets/word_doc/0008/92897/Form-2-Claim-UCPR.doc), supported by a [statement of claim](https://www.courts.qld.gov.au/__data/assets/word_doc/0010/92899/Form-16-Statement-of-claim-UCPR.doc).  You need to plead the following at a minimum:

1. The names and contact details of the parties and the legal representatives.
2. A concise summary of the material facts which support your claim including sufficient particulars of those material facts.
3. Ensure that you have sufficiently pleaded all of the issues that are in dispute.
4. The relief that you are seeking from the court (debt, plus costs, plus interest).

You must ensure that you do not fall foul to the mistakes commonly made in pleading, such as failing to plead the following:

[Rule 149 of the UCPR](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s149.html) requires that each pleading, including the statement of claim, contain a statement of all the material facts on which the party relies, state specifically any matter that if not stated specifically may take another party by surprise, state specifically any relief the party claims, and if a claim under an Act is relied on identify the specific provision under the Act.

[Rule 150(1) of the UCPR](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s150.html) requires certain matters to be specifically pleaded, including breach of contract, every type of damage claimed, estoppel, and motive, intention or other condition of mind (including knowledge or notice). Also, under subrule (2), any fact from which any of the matters mentioned in subrule (1) is claimed to be an inference must be specifically pleaded.

[Under rule 152 of the UCPR](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s152.html), unless precise words are material, a pleading may state the effect of spoken words or a document as briefly as possible without setting out all of the spoken words or document.

[Rule 154(1) of the UCPR](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s154.html) provides that a party may make inconsistent allegations or claims in a pleading only if they are pleaded as alternatives.

[Under rule 155 of the UCPR](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s155.html), the pleading must state the nature and amount of the damages claimed, including the exact circumstances in which the loss or damage was suffered and the basis on which the amount claimed has been worked out or estimated.

[Rule 157 of the UCPR](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s157.html) provides that a party must include in a pleading particulars necessary to:

1. define the issues for, and prevent surprise at, the trial;
2. enable the opposite party to plead; and
3. support a matter specifically pleaded under rule 150.

[Under rule 171 of the UCPR](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s171.html), if a pleading or part of a pleading:

1. discloses no reasonable cause of action or defence;
2. has a tendency to prejudice or delay the fair trial of the proceeding; or
3. is unnecessary or scandalous,

the court may strike out all or part of the pleading and order the costs of the application to be paid by a party calculated on the indemnity basis.

[Rule 371 of the UCPR](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s371.html) provides that if there has been a failure to comply with the UCPR, the court may, amongst other things, set aside all or part of the proceeding.

Because of the strict requirements of pleading, we strongly recommend that a creditor engage a debt recovery solicitor to draft the claim & statement of claim, or brief a barrister.

## Entering Judgement Early (Default or Summary)

There are two ways to enter a judgment early against your debtor:

1. Default judgment; or
2. Summary judgment.

### Debt Recovery Solicitors – Getting a Default Judgment

After the debtor is served with the claim and statement of claim, the defendant has 28 days in which to file and serve a notice of intention to defend, and a defence.

If they do not file a defence within the requisite time then you can apply for a judgment in default.  This will be judgment for the full amount, plus the scale costs, plus interest.

The documents required are:

- [Form 025 – Request for default judgment (DOC, 32KB)](https://www.courts.qld.gov.au/__data/assets/word_doc/0006/88332/ucpr-f-25-070614.doc)
- [Form 026 – Default judgment (DOC, 31KB)](https://www.courts.qld.gov.au/__data/assets/word_doc/0007/88333/ucpr-f-26-070614.DOC)

### Debt Recovery Solicitors – Summary Judgment

If he does file a defence, but there is no defence to this matter then you can apply for a summary judgment if the court is satisfied that:

1. the defendant has no real prospect of successfully defending all or a part of the plaintiff’s claim; and
2. there is no need for a trial of the claim or the part of the claim.

Summary judgment is a lot harder to get and will only be given in the clearest of cases.

Read our detailed article on – [Getting a Summary Judgment in Queensland](https://stonegatelegal.com.au/summary-judgment-application-in-qld/).

If you manage to get an early judgment, or a judgment at trial, then this becomes an enforceable money order, and you can enforce this judgment against the property of the judgment debtor.

## Debt Recovery Solicitors – QCAT

Another option is the [Queensland Civil and Administrative Tribunal](https://www.qcat.qld.gov.au/) (“ **QCAT**”).

QCAT is essentially Queensland’s “small claims Court”. QCAT is a no-costs jurisdiction, so you will not be able to claim your legal costs, save for a few legislated items except in exceptional circumstances, but this is at the discretion of the tribunal.

The pros of commencing proceedings in [QCAT](https://www.qcat.qld.gov.au/) are:

1. It is a lot less expensive than commencing in the Court;
2. The process can be a lot quicker than the Court;
3. QCAT is designed for self-represented people.

The cons of commencing proceedings in [QCAT](https://www.qcat.qld.gov.au/) are:

1. The minor debt jurisdiction is mostly a no costs jurisdiction. This means that you will not be able to recover your costs save for a few designated items;
2. Legal representatives do not have an automatic right of appearance. This means that if you want us to appear at a QCAT hearing, you will need the leave of the tribunal, which is not always given.

As a general rule, a debt recovery solicitor will not likely represent you in QCAT, but it is an option to get your debt recovery lawyer to draft your application only, and then you take it over.

## Enforcing the Judgement Against the Judgment Debtor

After you have been given an enforceable money order judgment from the Court, a debt recovery lawyer will advise you and assist you with enforcing that money order judgment against the property of the debtor.  Your enforcement options are:

1. Enforcing the judgment in the Court; or
2. Enforcing with a statutory demand and Liquidation; or
3. Enforcing with Bankruptcy.

We will explain these in a little more detail below.

### Enforcing the Judgment in the Court

Your options for enforcing the Judgment in the Magistrates Court are:

1. Summon the debtor to an enforcement hearing to attempt to extract information regarding its financial position; and/or
2. Apply to the Court for the issue of one of the various types of enforcement warrant.

### Summon the Debtor to an Enforcement Hearing

This enforcement option is strictly an information gathering exercise. If the debtor provides documents showing any assets they own, the equity in those assets, and details of any debts owed to them, this method of enforcement has achieved its purpose, being gathering information to use to request an enforcement warrant.

This can include bank statements, mortgage pay-out figures, etc.

The first step is to give the debtor a written notice requiring them to complete a sworn statement of financial position. They have fourteen (14) days from receiving the notice to complete and return it.

If you are not satisfied with the contents of the completed statement of financial position, or the debtor does not return one at all, a creditor can then apply to the Court for an enforcement hearing summons order.

An enforcement hearing summons order is a Court order requiring a debtor to complete a statement of financial position (if they have not done so), produce substantial documents regarding their financial position, and appear in Court for the purpose of being cross examined about their financial position.

If a debtor is served with an enforcement hearing summons order at least fourteen (14) days before the date set for the enforcement hearing, but does not attend the hearing, the Court may issue a warrant for their arrest.

You do not need to summon the debtor to an enforcement hearing if you have details which are sufficient to issue an enforcement warrant. Either way, once you have the information, you can ask the Court to issue an enforcement warrant.

Read our very detailed article – [Enforcement Hearing and Statement of Financial Position](https://stonegatelegal.com.au/enforcement-hearing-statement-financial-position/)

Your option to apply to the Court for the issue of one of the various types of enforcement warrant is explained below.

### Issuing an Enforcement Warrant

There are a number of different types of enforcement warrants that can be issued by the Magistrate Court to enforce the Judgment, they are:

1. Enforcement warrant for seizure and sale of property;
2. Enforcement warrant for redirection of earnings;
3. Enforcement warrant for redirection of debt;
4. Enforcement warrant for regular redirections from financial institutions;
5. An order for payment by instalments.

### Enforcement Warrant for Seizure and Sale of Property

To issue a warrant for seizure and sale of property, the Court will need evidence showing what property is owned by this debtor and the equity in that property.

We can conduct a title search, but we will likely need a pay-out figure from the mortgagor.

Read our very detailed article – [Enforcement Warrant for Seizure and Sale of Property](https://stonegatelegal.com.au/warrant-for-seizure-and-sale-of-property/)

### Enforcement Warrant for Redirection of Earnings

To issue a warrant for redirection of earnings the Court will need to be provided with evidence of

1. whether the enforcement debtor is employed and the enforcement debtor’s employer has been identified;
2. whether the enforcement debtor has sufficient means of satisfying the order after deducting, the necessary living expenses of the enforcement debtor and the enforcement debtor’s dependants;
3. and any other known liabilities of the enforcement debtor.

We can usually ask for payslips etc at the enforcement hearing.

Read our article – [Enforcement Warrant for Redirection of Earnings](https://stonegatelegal.com.au/enforcement-warrant-for-redirection-of-earnings/)

### Enforcement Warrant for Redirection of Debt

A warrant for redirection of debts allows the creditor to enforce an enforceable money order over any debts owed to the judgment debtor by a third person.

The redirection warrant confers the obligation on the third person to pay the debt to the creditor rather than the debtor.

When the Court issues the UCPR enforcement warrant for redirection of debts, it then needs to be served on the third person who owes the debt to the judgment debtor.

Read our article – [Enforcement Warrant for Redirection of Debt](https://stonegatelegal.com.au/enforcement-warrant-redirection-debts/)

### Enforcement Warrant for Regular Redirections from Financial Institutions

A warrant for regular redirection from financial institutions is a warrant directed toward a third person (the financial institution) for a redirection of a regular deposit paid by a fourth person.

The enforcement warrant for regular redirection must also include:

1. The name of the financial institution;
2. Details of the enforcement debtor’s account;
3. The amount of the deduction to be made; and
4. The name and address of the enforcement creditor.

### An Order for Payment by Instalments

An order for payment by instalments is just that, and order that the debtor pays in instalments.

If the court enforcement option is not likely to yield and positive results, then a debt recovery solicitor can apply that the judgment debtor be made bankrupt (if a person) or wound up (if a company).

**Are you looking for the best debt recovery solicitors to help with unpaid debts?**

[CONTACT A DEBT SOLICITOR TODAY](https://stonegatelegal.com.au/contact-stonegate-legal/)

**OR CALL: [1300 545 133](tel:1300545133) FOR A FREE PHONE CONSULTATION**

## The Winding Up Process

If you think that the debtor company has assets, and the money order judgment is over $4,000.00, then a good debt recovery lawyer can serve that company with a statutory demand for payment.

Failure to comply with a statutory demand allows a creditor to commence proceedings to wind up the debtor company.

The liquidator is able to void certain transactions, or in some cases make the director personally liable for the debt.

If the debtor company does not respond to the statutory demand then they are presumed to be insolvent and a good debt recovery lawyer can take steps to wind it up in insolvency.

Once served with the statutory demand, the debtor company will have 21 days to do any of the following:

1. Make an application to the Court setting aside the demand.
2. Pay the amount claimed.
3. Request that the demand be withdrawn; or
4. Secure or compound for the debt.

If they pay, or reasonably secure or compound (enter into an arrangement to pay) for the debt, then the demand is extinguished.

Read our very detailed article – [Statutory demands – The Complete Guide](https://stonegatelegal.com.au/statutory-demand-complete-guide/)

Read our very detailed article – [Setting Aside a Statutory Demand – Complete Guide](https://stonegatelegal.com.au/setting-aside-statutory-demand-complete-guide/)

## The Presumption of Insolvency

Failure to comply with a [statutory demand](https://stonegatelegal.com.au/statutory-demand/) raises the legal presumption that the company is insolvent.

This legal presumption shifts the [onus of proof](https://stonegatelegal.com.au/debt-recovery-of-loans-between-family-members/) on the debtor company to prove that they are not insolvent.

With this legal presumption of insolvency assisting, within three (3) months after non-compliance with the statutory demand, [the company can be wound up](https://stonegatelegal.com.au/winding-up-applications/).

## Bankruptcy, Insolvency & Debt Recovery Solicitors

Alternatively, if Court enforcement is not likely to yield the required results, you can also enforce the money order (against a person, not a company) with [bankruptcy](https://stonegatelegal.com.au/bankruptcy/), if the money order judgment is over $10,000.00.

Initially, the judgment creditor will need to obtain and [serve a bankruptcy notice](https://stonegatelegal.com.au/can-you-still-serve-a-bankruptcy-notice-by-email/) on the judgment debtor.  A bankruptcy notice can be obtained from AFSA.

If the debtor does not comply with the bankruptcy notice within 21 days then they will have committed an act of bankruptcy, allowing you to present a [creditor’s petition](https://stonegatelegal.com.au/substituted-service-of-a-creditors-petition/) to the [Federal Circuit & Family Court of Australia](https://www.fcfcoa.gov.au/).

The creditor’s petition is an application for a “sequestration order”, which is an order making the judgment creditor bankrupt.

## The Proximity between Debt Recovery, Bankruptcy & Insolvency

As you can see, insolvency is one of the ways that a creditor can [enforce a money order judgment against the debtor](https://stonegatelegal.com.au/enforce-qcat-decision/).

This can either be with a statutory demand / winding up application – if the debtor is a company and the judgment is over $4,000.00.  Or, this can be with a bankruptcy notice / creditor’s petition – if the debtor is a human and the judgment is over $10,000.00.

There is a close proximity between debt recovery and insolvency, and so a good debt recovery solicitor will also understand insolvency law.

## Understanding the Debt Recovery Process

In essence, the debt recovery process can be broken down into three (3) broad steps:

1. Negotiating with the debtor prior to Court proceedings.
2. Commencing Court proceedings and obtaining an enforceable money order judgment; and
3. Enforcing that judgment against the property of the debtor.

A good debt recovery solicitor will also try to settle this debt dispute throughout the entire process, so that the matter can be resolved as quickly as possible, for the least amount of legal fees.

Read our article on – Settling Litigation Early

## Tips for Negotiating in Debt Disputes by Debt Recovery Solicitors

Debt recovery matters can quickly become uncommercial as the costs stary catching up to the amount of the debt.

Before you engage professional debt recovery solicitors, it is important to try to negotiate with your debtor.

Five (5) good tips for negotiating in debt disputes are:

1. Be clear and concise in your communication with the debtor and save everything.
2. Be open to finding a mutually satisfactory solution, or a compromise.
3. Gather all relevant information and documents and save them in case you need to go to Court.
4. Stay calm and professional at all times, so that you do not tick off the debtor and the negotiations fall over. Remember, it’s about recovering the debt, not ego.
5. Walk away from the negotiation table if necessary.

Ultimately, if you want that extra layer of separation, then you should use debt recovery solicitors to negotiate on your behalf.

## How to Choose the Right Debt Recovery Solicitors

Choosing the right debt recovery solicitor for you is important.  Here are some things that you should consider then choosing a debt recovery solicitor:

1. Find a solicitor that you can build a relationship with.
2. Check for quality and expertise in the area of debt recovery and enforcement.
3. Find a debt recovery solicitor that offers clear, jargon-free communication.
4. Look for a debt recovery lawyer who is very knowledgeable in the area of debt collection.
5. Check for references and reviews on Google and around the Internet.
6. Make sure that the debt recovery lawyer you choose is transparent with legal fees.
7. Go with your gut feeling.

Having a good relationship with your legal advisor is essential.

## When to Seek Legal Assistance of Debt Recovery Solicitors

As soon as the debt becomes overdue, and you start getting a bad feeling about the debt, then you should seek legal advice as soon as possible.

The older the debt, the less likely it is to be recovered.  So, it is important to engage a debt recovery solicitor as soon as possible after the debt is unpaid.

There are also a few times when it is important to seek legal advice, they are:

1. If the debtor or creditor has threatened legal action against you.
2. If you are being sued by a debtor or a creditor.
3. If you have been threatened with bankruptcy of winding up.
4. If you have been unable to negotiate a satisfactory outcome; or
5. If you are unsure of your legal rights or obligations in relation to the debt.

If any of these apply to you, then you should seek advice from a debt recovery lawyer asap.

## Costs and Fees Involved in Using Debt Recovery Solicitors

Most simple debt recover matters should be able to be run on a fixed fee, or fixed scale fee basis.

Ask your solicitor about fixed fee services, and/or scale fee services for simple unpaid invoice disputes.

It may not be possible to conduct your debt recovery matter on a fixed and/or scale fee basis if things get more complicated.  The major variables which will affect the legal fees are outlined below:

1. alternative courses of action may be pursued, therefore increasing the time taken on the matter.
2. that the party(s) to your debt recovery matter respond and negotiate.
3. the extent to which it will be necessary to engage Barrister(s) (if any) to assist.
4. the extent to which you assist by providing full and adequate instructions during the conduct of your debt recovery matter.
5. your debt recovery matter may be more complex than initially thought.
6. whether experts will be required to give evidence; and
7. whether it is possible to achieve a resolution of this matter without the need for further litigation.

## Stonegate Legal Debt Recovery Solicitors

At Stonegate Legal, our debt recovery solicitors can do the following:

1. Our [commercial](https://stonegatelegal.com.au/commercial-debt-recovery/) debt recovery solicitors will seek to realise any security interest, guarantee, or charge that has been give to you, or attempt to defeat any security action.
2. Our debt collection solicitors can commence legal action for debt recovery in the Court with jurisdiction, or QCAT to recover monies that are due and payable to you.
3. Our business debt recovery solicitors can complete any due diligence checks for prospective new clients or customers.
4. Our debt collection solicitors will advise and assist you to enforce your enforceable money order judgment with enforcement warrants for seizure and sale of property, statutory demands & winding up applications, and bankruptcy notices & creditor’s petitions.
5. Our expert personal [debt recovery lawyers](https://stonegatelegal.com.au/debt-recovery-lawyers-in-queensland/) will advise and assist you with obtaining freezing orders (mareva injunctions) against the real property of the debtor, or caveats (if applicable).

Stonegate Legal has experience in acting for:

1. Companies who are owed a debt (creditor) or who owe the debt (debtor).
2. Individuals who are owed a debt (creditor) or who owe the debt (debtor).
3. Debt collection agencies and mercantile agents.
4. Bankruptcy trustees and company liquidators.

**Are you looking for the best debt recovery solicitors to help with unpaid debts?**

[CONTACT A DEBT SOLICITOR TODAY](https://stonegatelegal.com.au/contact-stonegate-legal/)

**OR CALL: [1300 545 133](tel:1300545133) FOR A FREE PHONE CONSULTATION**

## Debt Recovery Solicitors FAQ

At Stonegate Legal we are always asked [legal debt recovery](https://stonegatelegal.com.au/legal-action-to-recover-debt-by-an-agent/) questions.  We have put the most frequently asked questions below for you.

### Why Send a Final Warning Letter Template Before Legal Action?

You can send a final warning in your debt recovery matter so that (a) it may settle before having to spend money on litigation; or (b) it will assist on the issue of legal costs when you are ultimately successful in the litigation.

### What Should I Do If I Receive a Demand Letter?

If you receive a demand letter, firstly do not ignore it or throw it in the bin.  Secondly, speak to a debt recovery lawyer as soon as possible to assess the letter, the dispute, and to give you initial advice.

### What If I Cannot Pay the Outstanding Amount?

If you cannot pay the outstanding amount, then you will need to negotiate a settlement of the debt and a repayment plan.  If you do not, then the creditor may obtain a judgment and enforce the judgment against your property.  Worst case scenario – you could lose your house.

### What Is a Statement of Claim?

A statement of claim is a document that supports the claim which starts debt recovery proceedings.  The claim and statement of claim must include the following as a minimum:

1. The names and contact details of the parties and the legal representatives.
2. A concise summary of the material facts which support your claim including sufficient particulars of those material facts.
3. Ensure that you have sufficiently pleaded all of the issues that are in dispute.
4. The relief that you are seeking from the court (debt, plus costs, plus interest).

### In What Period of Time Is a Party Required to Respond?

A defendant has 28 days to file a notice of intention to defend and defence once served with a statement of claim.

If the defendant does not respond in that time, then the plaintiff can obtain a judgment in default.

### How Should I Respond to a Statement of Claim?

You should respond to a statement of claim by completing, filing and service the following documents:

1. Notice of intention to defend; and
2. Defence.

### Does A Time Frame Exist for Serving a Statement of Claim?

Yes, a timeframe does exist for serving a statement of claim.  If someone owes you a debt, then you have six (6) years from the date that the cause of action arose in which to commence legal action.

Once the claim and statement of claim is filed in the Court, you must serve it within 12 months, or you need to send it back to the registry to get “refreshed” by the registrar.  It will simply be reissued.

### What Happens if the Judgement Debt Isn’t Paid?

If a judgment debt is not paid, then the judgment creditor can commence enforcement proceedings against you.  This can include issuing enforcement warrants for seizure and sale of property, statutory demands & winding up applications, and bankruptcy notices & creditor’s petitions

### What Is Bankruptcy and Insolvency?

Insolvency (bankruptcy and winding up) are one of the ways that a creditor can enforce a money order judgment against the debtor.

This can either be with a statutory demand / winding up application – if the debtor is a company and the judgment is over $4,000.00.  Or this can be with a bankruptcy notice / creditor’s petition – if the debtor is a human and the judgment is over $10,000.00.

### How to Collect Money Owed to a Small Business?

There are a few ways to collect money owed to a [small business](https://stonegatelegal.com.au/small-business-debt-recovery/) including:

1. Drafting a formal letter of demand.
2. Alternative dispute resolution (mediation or negotiation).
3. Debt recovery litigation in the Court with jurisdiction.
4. Preparing, filing, and serving a claim & statement of claim.
5. Entering judgement (either default, summary, or after a trial).
6. Enforcing judgements with warrants or insolvency.

### Is it Important to Keep Records During the Debt Recovery Process?

Yes, it is very important to keep records during debt recovery process.  It is important because if the matter proceeds to Court, you will need to use as much evidence as you possibly can to support your claim.  The more evidence you have in writing, the better.

**Are you looking for the best debt recovery solicitors to help with unpaid debts?**

[CONTACT A DEBT SOLICITOR TODAY](https://stonegatelegal.com.au/contact-stonegate-legal/)

**OR CALL: [1300 545 133](tel:1300545133) FOR A FREE PHONE CONSULTATION**

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#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation.

With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice.

Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings.

Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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## Calderbank Offers Explained
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# Settling Litigation Early – Calderbank Offers

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## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| August 26, 2018

## Article Summary

The article provides a comprehensive overview of Calderbank offers, which are genuine offers made by a party in litigation to settle a dispute.

Originating from the case _Calderbank v Calderbank_, these offers are part of the broader landscape of alternative dispute resolution methods that also include mediation, conciliation, arbitration, and expert determination.

Calderbank offers are made to encourage parties to settle disputes amicably instead of going to trial, thereby saving time and costs for both parties and the legal system. A unique feature of such offers is that they are made “without prejudice save as to costs,” allowing the offeror to be protected in terms of costs if the offeree unreasonably rejects the offer and fails to get a better outcome at trial.

The article breaks down the essential elements of a Calderbank offer, which include:

1. A genuine offer of compromise
2. A statement about cost calculation and application for indemnity costs
3. Sufficient information for the other party to make an informed decision
4. Clearly stated terms and a time period for acceptance

The concept of “without prejudice save as to costs” is also explained in detail, revealing how it promotes candid negotiations between parties by ensuring that what is said during settlement talks cannot be used against them later, except when determining costs.

Moreover, the article discusses the factors that courts consider when determining whether to award indemnity costs. These include the reasonableness of the offer, when it was made, the time allowed for its acceptance, and the terms’ clarity.

Finally, the article provides practical tips on what to include in a Calderbank offer and emphasises the importance of making such offers throughout legal proceedings to strengthen one’s case.

Overall, the article aims to guide individuals through the intricacies of making Calderbank offers, highlighting their strategic importance in settling disputes efficiently.

Table of Contents

[Toggle](https://stonegatelegal.com.au/settling-litigation-early-calderbank-offers/#)

**![Calderbank Offers Settling Litigation Early](<Base64-Image-Removed>)Calderbank Offers** are genuine offers made by a party in litigation to settle a dispute.

Calderbank offers are so called because of the case which gives them their name _Calderbank v Calderbank_ \[1975\] 3 All ER 333.

Parties to a dispute (debt dispute for example) are encouraged to compromise and settle their dispute rather than taking up the Courts time with expensive litigation.

There are a number of alternative dispute resolution methods depending on the type of matter you have, they include mediation, conciliation, arbitration, expert determination, and in most cases by negotiation.

The making of offers to settle the matter, either under the _Uniform Civil Procedure Rules 1999_ (QLD) (“ _**UCPR**_”) or under the cover of without prejudice negotiations is an essential part of the litigation process.

Our [Queensland litigation lawyers](https://stonegatelegal.com.au/services/commercial-litigation/) explain all you need to know about the Calderbank offers to settle, try to explain the Calderbank offer costs consequences, give a Calderbank offer definition, and the wording of Calderbank offers.

**If you have a commercial dispute and you want to end it with the least amount of stress and legal costs, you should engage a legal professional to negotiate on a without prejudice basis and draft Calderbank offers**

## What is a Calderbank Offer?

A Calderbank offer is a type of offer that can be made by a party looking to resolve a dispute that they are involved in.

Taking a dispute to trial is generally something to be avoided if it can be helped. A trial is a long, expensive process that will usually end with a winning and losing party, rather than both walking away with a resolution that is in some way beneficial.

For this reason, it is common for parties to look for alternative routes for resolving their matter, one of which may be a Calderbank offer.

It encourages parties to engage in negotiation rather than going to trial with the dispute so that they can both benefit from the arrangement.

It is made by one party to another. In order for it to be valid, it must be a genuine offer that the other party has a reasonable period to consider.

A defining feature of a Calderbank offer is that it is made “without prejudice save as to costs”, which will be explained later in the article!

A benefit of a Calderbank offers to the party making it is that it may provide them with cost protections if the receiving party chooses to reject it and fails to obtain a better outcome in trial.

If such is the case, the receiving party, or the offeree, may be required to pay part of the offeror’s costs.

This is because it will be considered unreasonable for the offeree to have rejected the offer in the first place and brought the dispute to trial.

## What are the Essential Elements of a Calderbank Offer?

Now that we have discussed the meaning and purpose of a Calderbank offer, it is time to discuss the essential elements.

A Calderbank offer is an important offer to make, and you should be sure to do it correctly to reap the benefits. Some of the key elements of a Calderbank offer include:

1. A statement about application for indemnity costs.
2. A statement about cost calculation.
3. Clearly state terms of the offer to settle.
4. Genuine offer of compromise.
5. It must contain sufficient information.
6. Must say it is a _Calderbank v Calderbank_ offer.
7. Set a time for the offer to be accepted.
8. It must say _without prejudice save as to costs._

We will explain these in more detail below.

## Without Prejudice Save as to Costs

One of the first requirements of any settlement negotiations is the requirement of the phrase “_**Without Prejudice Save as to Costs**_”.

**Without prejudice** – is a privilege which attaches to settlement negotiations. The primary reason is to encourage parties to settle their dispute without the matters raised in these negotiations being used against them, or to their prejudice in the course of proceedings.

In [_Cutts v Head_ \[1984\] 1 All ER 597](http://www.bailii.org/cgi-bin/markup.cgi?doc=ew/cases/EWCA/Civ/1983/8.html) Fox LJ said:

> _Parties should be encouraged so far as possible to settle their disputes without resort to litigation and should not be discouraged by the knowledge that anything that is said in the course of such negotiations (and that includes, of course, as much the failure to reply to an offer as an actual reply) may be used to their prejudice in the course of the proceedings. They should … be encouraged freely and frankly to put their cards on the table._

**Save as to costs** – allows the issue of the offer, and subsequent non-acceptance of the offer by the other party, to be raised at the conclusion of the proceedings on the issue of legal costs.

The idea is that if Party A makes an offer, which is not accepted by Party B, and Party A is awarded more than the amount of the offer, Party B would have been in a better position had they taken the offer and so Party A can rely on the offer and the non-acceptance by Party B on the issue of the costs of litigating past that point.

## Must Say it is a Calderbank v Calderbank Offer

Another element of a Calderbank offer is that the letter must state that it is a Calderbank offer.

This puts the other party on notice as to exactly what type of offer this is, and that it will likely be relied on in the issue of costs if the offer is rejected.

In the recent case of [_Gordon & Gordon_ \[2017\] FCCA 2899](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCCA/2017/2899.html) Judge Wilson said:

> _Importantly for present purposes, that letter contained a statement indicating that the proposal was put under principles well-known following the decisions in Calderbank and Cutts v Head. By expressing the proposal on the basis that it was underpinned by those cases, from that date the proposal put the husband at risk of an adverse costs order being made against him._

Usually, a Calderbank letter will include a sentence to the effect of:

> _This offer is made in accordance with the principles expressed in Calderbank v Calderbank \[1975\] 3 All ER 333_

## Genuine Offer of Compromise

Another essential element that you should be sure to include in a Calderbank offer is a compelling offer. You should always make your case!

It is important that you put some time and effort into making your offer so that the other party will be compelled to accept.

You will need to make your offer less than if you were to go to court and win.

Say, for example, you predict or are advised that you will win approximately $80,000 if you were to win in court.

You should make your offer less than $80,000, but enough that it still benefits you!

No one will be willing to accept an offer if they would pay the same if they went to court!

This can be difficult to fulfil in some matters, as you can’t always predict what the court will decide, so potentially seek legal advice or research similar matters.

The offer must be a genuine offer of compromise.  A compromise has been defined as the giving away of something.

In [_Cape York Airlines Pty Ltd v QBE Insurance (Australia) Ltd (No 2)_ \[2010\] QSC 365](http://classic.austlii.edu.au/au/cases/qld/QSC/2010/365.html) Daubney J said:

> _It is necessary to look at the substance of what is offered in the circumstances of the case to see whether the offer is in truth a compromise. The decision in this regard is one to be made by reference to all the circumstances of the case, not by applying a fixed mathematical formula._

So, for example a compromise for $50,000.00 in a claim worth over $10 million, may not be seen in the same way as an offer of $50,000.00 in a claim worth several hundred thousand.

The offer must be genuine.  In [_Tickell v Trifleska Pty Ltd_ (1991) 25 NSWLR 353](https://www.austlii.edu.au/cgi-bin/LawCite?cit=%281991%29+25+NSWLR+353&party1=&party2=&court=&juris=&article=&author=&year1=&year2=&synonyms=on&filter=on&cases-cited=&legis-cited=&section=).  Rogers CJ Comm D said:

> _Whether in the totality of the circumstances, the offer by the plaintiff represented any element of compromise or whether it was merely, yet another, formally stated demand for payment designed simply to trigger the entitlement to payment of costs on an indemnity basis._

## A Statement about Cost Calculation

A Calderbank offer should contain a statement about the offeror’s legal costs.  For example, the letter will contain the $$$ amount of the offer, then a statement about how costs are to be calculated.

This can include:

1. Plus costs calculated on the standard basis; or
2. Plus costs to be assessed if not agreed; or
3. Each party will bear their own costs; and so on.

## A Statement about Application for Indemnity Costs

In the Calderbank letter there should also be a statement warning the other party that the offeror intends to apply for indemnity costs if the offer is unreasonably rejected.

This foreshadowing of indemnity costs puts the other party on notice, and when tendered to the Court allows the Court to know that the risk of this order was fully known by the other party.

In [_Danidale Pty Ltd (t/as Bernie Cornfoot & Sons Earthmoving) v Abigroup Contractors Pty Ltd_ \[2007\] VSC 552](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/vic/VSC/2007/552.html) Habersberger J said:

> _Failing to warn the offeree that indemnity costs would be sought if it went ahead and sued and obtained a less favourable result is one matter to take into account in deciding whether the rejection of the offers was unreasonable … In my opinion, the offeree could have reasonably considered, at the date of the offer, that there was some prospect of it being found to be entitled to be paid more … if it sued._

## It Must Contain Sufficient Information

Another essential element that you should be sure to include in a Calderbank offer is sufficient information for the other party to consider.

A Calderbank offer can have very high stakes and it is important that it is considered in great detail.

The party’s choice to accept or turn down the offer can have serious effects on their finances and the costs that they will have to pay, as well as the outcome of the matter for all, so they should consider this choice in depth.

Without sufficient information, the party will not be able to make an informed decision about what it is that they are agreeing to, so ensure you explain the offer in great detail and with facts relevant to the proceeding.

## Set a Time for the Offer to be Accepted

Another essential element that you should be sure to include in a Calderbank offer is a time-period.

As we discussed previously, there are seriously high stakes involved in a Calderbank offer and whether or not you will accept it.

Not only this, but people have busy lives and schedules, and chances are they will have to fulfil responsibilities outside the dispute in question.

This being said it is the choice of the offeror how long they will have to consider before making a decision.

It is recommended that you provide the other party with 7-14 days to consider before choosing to accept or deny.

This is so they will have sufficient time to consider and consult a lawyer if they wish.

## Clearly State Terms of the Offer to Settle

Another essential element that you should be sure to include in a Calderbank offer is clearly stated terms of the agreement.

This essential is similar to the second on this list but is important and should be mentioned regardless.

When you create your Calderbank offer, you should be sure to state the terms of the agreement in a way that is easily understood and visible when reading.

Try to use relatively simple terminology and steer away from jargon that the other party may not understand!

You should also create a clear list of terms that can be easily found and be willing to discuss these terms if necessary.

## The Application for Indemnity Costs

If a party has served a Calderbank letter, which was unreasonably rejected by the other party, and then they then get an order not less favourable than the offer, then they can rely on the making of the offer, and its subsequent rejection, in an application for indemnity costs.

Unlike [rule 360 of the _UCPR_](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s360.html) which puts the onus on the defendant/respondent to show why an order for indemnity costs should not be made, the onus in relation to Calderbank offers is on the applicant to argue why an order for indemnity costs should be made.

Whether the Court awards costs on the indemnity basis is at the discretion of the Court.  The unreasonable rejection of a reasonable Calderbank offer of compromise is just one of the factors that the Court will consider.

In relation to the Calderbank offer (or offers) and the exercise of its discretion, some of the issues that the Court will look at include:

1. The reasonableness of the offer and the extent of the compromise;
2. The unreasonableness of the rejection of the offer;
3. When the offer was made, and the facts known to the offeree at the time;
4. The reasonableness of the time allowed for acceptance of the offer; and
5. The certainty of the terms of the offer.

## The Public Interest in Settling Matters Early

As previously mentioned, parties should be encouraged to settle their disputes without resort to litigation.

In [_Transit Australia P/L v Crewford Australia P/L_ \[1997\] QSC 141](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QSC/1997/141.html) Thomas J said:

> _The public policy behind taking account of such offers is that parties should be encouraged so far as possible to settle their disputes without resort to litigation and that it is hard to imagine anything more calculated to encourage obstinacy and unreasonableness than the comfortable knowledge that a litigant can refuse with impunity whatever may be offered to him even if it as much or more than everything to which he is entitled in the action._

Even though it may not seem like a win in some cases, the offer of a lesser amount, or the acceptance of a lesser amount, is in most cases a good result in commercial debt recovery actions, compared with the costs of litigating the matter to conclusion.

## What to Include in a Calderbank Offer?

It is always best to be thorough! Although not entirely essential, you should, where possible, try to include:

- The date that you sent out the correspondence somewhere in the letter;
- Directly state that you will depend on the other party for indemnity costs;
- Keep the Calderbank offer in terms of monetary value and no other act.
- Do not include legal costs;
- Make offers as often as feasible throughout the proceedings to make your case more effective;
- Mention the case that a Calderbank offer is based on, being [_Calderbank v Calderbank_ \[1975\] 3 All ER 333](https://www.nadr.co.uk/articles/published/MediationLawReports/CalderbankvCalderbank1975.pdf).
- Try to only include one plaintiff on each Calderbank offer, unless they are not disadvantaged or dissuaded from accepting the offer due to the presence of other plaintiffs and this can be proven to be true;
- If you believe that there is a reasonable chance that you will lose part of the case, make provisions for this possibility on the offer;
- Make an allowance for interest if it is reasonable/safe for you to do so.

## Should I Accept a Calderbank Offer?

What if I am on the other end of a Calderbank offer and am deciding on whether or not I should accept?

This can be a difficult decision, as the stakes are quite high, so it is important that you properly consider it.

It can be helpful to have a list of key considerations to be made to base your decision to accept on!

### Will I Win?

The first thing that you should consider if you receive a Calderbank offer is whether or not you think you will win. If you think that you will win the matter, you may choose not to accept the Calderbank offer as you can probably get a far better outcome if you win in court.

If you think that there is a reasonable chance that you will lose, it may be best to accept as this outcome is likely more favourable and you avoid indemnity costs.

### Is it Worth it?

Another important thing that you should consider if you receive a Calderbank offer is if it is worth it to continue.

Even if you could potentially do better in court, sometimes it is better to cut losses, save yourself some time and legal costs, and accept the offer.

### The Cost of a Win

Another important thing that you should consider if you receive a Calderbank offer is the cost of a win.

Say you do indeed win the matter, but the other party cannot pay the money ruled by the court. Then what happens?

If you think this will be the case, consider accepting the offer so that the matter can end and, again, losses can be cut.

## Calderbank Offers

Making Calderbank offers is an important step in any litigation proceeding.

Initially, it allows the parties to reach an agreement and settle the matter on just terms.

If the matter does not settle upon giving of a Calderbank offer (or Calderbank offers) then it sets the issuer on a better path to recover their legal fees on the indemnity basis, rather than on the standard basis.

**If you have a commercial dispute and you want to end it with the least amount of stress and legal costs, you should engage a legal professional to negotiate on a without prejudice basis and draft Calderbank offers**

## Calderbank Offers -FAQ

Navigating the complexities of legal disputes can be challenging, especially when it comes to the intricate details of settlement offers and procedures. Among these, Calderbank offers often come into play as a mechanism to resolve matters without the need for lengthy and expensive court proceedings.

This FAQ section aims to demystify the concept of Calderbank offers, providing you with a fundamental understanding of what they are, when to use them, and how they could impact your legal situation.

### What does a Calderbank offer mean?

A Calderbank offer is a formal, written settlement proposal made by one party to another in a legal dispute. It seeks to resolve the matter out of court and generally includes terms that, if accepted, will finalise the dispute. The offer is “ _without prejudice, save as to costs_,” meaning it can’t be used against the offering party in court except in relation to legal costs.

### When would you use a Calderbank offer?

A Calderbank offer is typically used when parties involved in a dispute wish to settle the matter without proceeding to a costly and time-consuming trial. It can be made at any stage of the legal proceedings, even before a lawsuit is formally filed, as long as both parties are aware of the dispute’s nature and scope.

### What are the benefits of making a Calderbank offer?

Making a Calderbank offer can save both time and legal expenses for all parties involved. Additionally, if the offer is reasonable but rejected, and the case goes to trial with an outcome that is less favourable for the rejecting party, the party who made the Calderbank offer may be entitled to recover a higher proportion of their legal costs, potentially on an indemnity basis.

### What is the purpose of the Calderbank letter?

The Calderbank letter serves as the formal written documentation of the Calderbank offer. It should clearly state the terms of the offer, the time limit for acceptance, and specify that it is being made “without prejudice, save as to costs.” The purpose is to provide a legal foundation for resolving the dispute amicably and to potentially influence the awarding of legal costs if the case proceeds to trial.

### Can you ignore a Calderbank offer?

Ignoring a Calderbank offer is not advisable. If you choose to ignore it and the matter proceeds to court, the court may consider the fact that a reasonable offer was made and rejected when determining how to allocate legal costs. This could result in you being required to pay a higher share of the other party’s legal costs.

### What is the difference between a formal offer and a Calderbank offer?

A formal offer is usually made in accordance with court rules and is automatically considered by the court in determining legal costs if the matter goes to trial. A Calderbank offer, on the other hand, is made “ _without prejudice, save as to costs_,” and is not automatically considered by the court for the purposes of the main proceedings. It must be expressly brought to the court’s attention, typically after the conclusion of the trial, when the question of legal costs is being decided.

### What is a Calderbank Offer?

A Calderbank offer is a formal offer made by one party involved in a dispute to another, aiming to resolve the matter before it reaches court or trial. It must be a genuine offer that the other party has a reasonable amount of time to consider.

### Why is it called a Calderbank Offer?

The term comes from the case [_Calderbank v Calderbank_ \[1975\] 3 All ER 333](https://www.nadr.co.uk/articles/published/MediationLawReports/CalderbankvCalderbank1975.pdf) which set the precedent for this type of offer.

### When should a Calderbank Offer be used?

A Calderbank offer can be used in various types of disputes including commercial conflicts and debt disputes. It’s generally used as an alternative to taking a dispute to trial, which can be costly and time-consuming.

### What are the advantages of making a Calderbank Offer?

If you make a Calderbank offer that is rejected, and then you obtain a more favourable outcome in court, you may be entitled to have some or all of your legal costs covered by the other party.

### What should be included in a Calderbank Offer?

A Calderbank offer should clearly state the terms of the offer to settle, the time period for acceptance, and other key elements like application for indemnity costs, and cost calculations. It should also be labelled as a Calderbank offer to alert the other party to its implications.

### What does “ _Without Prejudice Save as to Costs_” mean?

The phrase Without Prejudice Save as to Costs ensures that the offer cannot be used against the party making it during the proceedings, but can be considered when determining legal costs should the matter go to court.

### How long should the receiving party have to consider the offer?

While it ultimately depends on the offeror, it’s commonly recommended to allow the other party 7-14 days to consider the offer and consult legal advice if needed.

### What are indemnity costs?

Indemnity costs are a higher level of costs that the losing party may be ordered to pay. They are more than standard costs and are often sought if a reasonable Calderbank offer was rejected unreasonably.

### What factors will a court consider if a Calderbank offer is brought up in a legal costs argument?

The court will consider the reasonableness of the offer, the timing of the offer, the clarity of the terms, and other factors to decide if indemnity costs should be awarded.

### How does a Calderbank Offer affect public interest?

The public policy behind Calderbank offers is to encourage parties to settle disputes amicably and without resorting to litigation. This not only saves court resources but also benefits the parties involved by reducing the stress and cost associated with a trial.

### Can multiple plaintiffs be included in one Calderbank Offer?

It’s advisable to only include one plaintiff per offer unless it can be proven that the presence of multiple plaintiffs doesn’t discourage or disadvantage the other party from accepting the offer.

### Should I seek legal advice before making a Calderbank Offer?

Yes, given the legal implications and the potential for costs to be awarded, it’s advisable to consult with a legal professional before making a Calderbank offer.

### Can the offer include non-monetary terms?

It is recommended to keep Calderbank offers in terms of monetary value to avoid complications.

### How often can I make Calderbank Offers?

You can make them as often as feasible throughout the proceedings to strengthen your case and encourage settlement.

### Is a Calderbank Offer suitable for all kinds of disputes?

Calderbank offers are more commonly used in commercial and civil disputes. However, the applicability varies, and it’s advisable to consult a legal professional to understand if it’s suitable for your specific situation.

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**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

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# Informal Service of Court Documents in Queensland

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- \| June 29, 2024

## Article Summary

Informal service in Queensland pertains to the delivery of legal documents in a non-standard manner that does not strictly follow formal service regulations.

This approach is recognised when ensuring the recipient’s awareness of the documents and legal proceedings is more crucial than the method of delivery.

Informal service is governed by section 117 of the _Uniform Civil Procedures Rules 1999_ (UCPR).

- Informal service occurs when legal documents are delivered in an unconventional manner, ensuring the recipient is aware of the proceedings despite not following formal protocols.
- Essential for maintaining fairness by allowing the recipient to form a defence and seek legal assistance.
- Section 117 of the UCPR permits the court to validate informal service if there is evidence that the recipient received the documents.
- The court can declare the date of possession as the effective service date, facilitating timely legal proceedings.
- Common methods include email, mailing to the last known address, and leaving documents at a known address.
- These methods require proof that the recipient received and acknowledged the documents.
- Proof of service can include email receipts, mail tracking, witness statements, and follow-up communications.
- Robust evidence is crucial to demonstrate that the recipient was aware of the documents, meeting the court’s requirements for validating informal service.

In this article, our [litigation solicitors](https://stonegatelegal.com.au/services/commercial-litigation/) explain the process of informal service.

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## What is Informal Service?

Informal service occurs when a legal document is delivered to an individual in an unconventional manner under the regulations of service. This means that someone is made aware of the document and that it is being served to them, but it is not served to them formally or in a way that follows the rules of serving documents in civil proceedings.

When someone is being sued, it is often essential that they are made explicitly aware of the proceedings and the claims the other side is making against them. This allows them to form a case and seek legal guidance and assistance if they wish, giving them a fair opportunity to defend their case in the matter.

As a result, Queensland formed regulations for how a party should be served important legal documents to ensure they physically receive notice that they are sued.

However, informal service can occur when these regulations are not met but the court recognises reasonable service of documents, generally when a party recognises that they have received the documents and are aware of the proceedings.

The key consideration made by the court in cases of informal service is whether the document has effectively come to the attention of the person being served, rather than whether the service strictly adhered to the service regulations.

Avoidance of service to evade the lawsuit is common, so informal service rules recognise the need for justice to be administered in cases where physical service of documents may not be reasonable.

## What Does the Law Say about Informal Service?

As we discussed previously, the law allows for some forms of informal service in certain circumstances. This is established under section [117](https://www.austlii.edu.au/cgi-bin/viewdoc/au/legis/qld/consol_reg/ucpr1999305/s117.html?context=1;query=%22ucpr1999305%20s117%22;mask_path=) of the [Uniform Civil Procedures Rules 1999](https://www.austlii.edu.au/cgi-bin/viewdb/au/legis/qld/consol_reg/ucpr1999305/) (UCPR), which states:

> _“If—_
>
> _1\. for any reason, a document is not served as required by this chapter but the document or a copy of it came into the possession of the person to be served; and_
>
> _2\. the court is satisfied on the evidence before it that the document came into the person’s possession on or before a particular day;_
>
> _the court may, by order, decide that the possession of the document is service for these rules on the day it came into the person’s possession, or another day stated in the order.”_

## Methods of Informal Service in Qld

There are several ways that informal service can occur. Under general regulations in Queensland, the formal way to serve someone to start court proceedings ( [debt recovery proceedings](https://stonegatelegal.com.au/debt-recovery-services-in-queensland/), for example) is either physically handing them the documents in person or, if they refuse to take the documents, leaving them in their presence and explaining what they are.

However, provided the court finds there is sufficient evidence that the other side received the documents, there are several methods of informally serving them. They include:

3. **Email**: A common form of informal service is email delivery. Sending the claim or other documents to the other side using a known email can be an effective method of informal service. It is important to ensure the email is correct and the other side receives and acknowledges the email, however.
4. **Mail**: Posting the documents to the other side’s last known home address or place of business is another option for informal service. Express or tracked post is advised if important documents are being delivered through the mail.
5. **Leaving Documents to a Known Address**: Leaving the documents at the other side’s last known address or place of business can be another method of informal service. Contrary to mailing, the serving party will personally visit the address and deliver the documents. This means that it’s crucial to log this deliverance in some way, as the previous methods have inherent methods of tracking.

## Proof of Informal Service

If a party denies service, proving it has occurred can be a challenge. It’s essential to collect evidence of service to present to a court if the other side denies receiving the court documents. There are several key elements of evidence, including:

1. **Document Delivery**: To prove the informal service of court documents, it’s crucial to document the method and the time that the documents were delivered. This may be in the form of email receipts, mail tracking confirmation, text message logs, or a witness statement if the document was physically delivered to an address on the other side.
2. **Show the recipient awareness**: Once the documents have been delivered, it’s crucial to show evidence that the recipient is aware of the documents. This may be an email response, return letter, text, or verbal acknowledgement.
3. **Follow-up Communication**: If there has been any follow-up communication from either side, this may also be accepted as proof of informal service. If the other side has been in contact regarding the proceeding after its acknowledgement or if the party that served the documents follows up requesting confirmation or other contact, the court may consider this evidence.
4. **Alternative Attempts**: It is never ideal to serve a party informally. A reason for informal service must be presented and justified. Providing evidence of alternative attempts to serve the defending party, such as proof of refusal of service, can be used as evidence by the suing party to justify the informal service.

## Informal Service Case Law

The case law shows that the plaintiffs must make considerable efforts to serve documents and information in accordance with formal rules before resorting to informal service. Courts often find that more effort is required before informal service can be considered valid.

Courts have validated plaintiffs’ attempts at substituted service through multiple means, including contacting the defendant by phone and publishing a notice in a newspaper, illustrating the need for thorough attempts at formal service before seeking court approval for substituted service.

The court acknowledges thorough attempts to serve the defendant, including through social media and personal communication, validating the informal service and emphasising the importance of persistent efforts.

Courts require sufficient evidence that the defendant was aware of the proceedings through informal service. Robust evidence is necessary to show that the documents reached the defendant and they were aware of the proceedings.

Courts accept that documents left at a new address were effectively served when the defendant confirmed their identity but then tried to evade service. This demonstrates the court’s willingness to validate service when there is clear evidence the defendant received the documents.

The cases emphasise that if it is uncontested that a party received the documents, the court may permit informal service.  Courts commend the initiative shown in using unconventional methods like social media to inform the defendant, highlighting the importance of creativity and persistence in ensuring service.

### _D’ath v TNT Australia Pty Ltd_ \[1992\] 1 Qd R 369

The purpose of all service is to notify the concerned party, and it’s undisputed that the third party has received the amended documents.  In _[D’ath v TNT Australia Pty Ltd \[1992\] 1 Qd R 369](https://www.queenslandjudgments.com.au/case/id/501916)_, Master White (as she was then) said:

> _It was further submitted that the object of all service is only to give notice to the party concerned and it is uncontested that the third party has received the amended third party documents._
>
> So, consistent with rule 117, if a person can show that a document was given to the person to be served, and it is uncontested that the person received the document, then the Court may make an order for informal or substituted service.

### _AMCI P/L v Corcoal Management P/L & Ors_ \[2013\] QSC 50

In [_AMCI P/L v Corcoal Management P/L & Ors_ \[2013\] QSC 50](https://classic.austlii.edu.au/au/cases/qld/QSC/2013/50.html), the plaintiff sought an ex parte order to authorise informal service of the originating proceeding on the third defendant, a corporation registered in the Ajman Free Zone in the United Arab Emirates.

The plaintiff emailed the claim to the third defendant, where it was received and acknowledged by a director of the business. The reason the plaintiff served the defendant informally was due to the difficulties associated with serving a company in the United Arab Emirates.

They claimed there were legal difficulties, stating “the United Arab Emirates is not a convention country within the meaning of UCPR 130 and UCPR 140 and is not a Hague Convention country for the purposes of div 3 of ch 4 [pt 7](https://www.austlii.edu.au/cgi-bin/viewdoc/au/legis/qld/consol_act/aia1954230/index.html#p7) of the UCPR”.

The court found that there were various ways to mitigate the difficulties (e.g. legal firms/accounting offices in the UAE) and found that the plaintiff should have tried “a little harder” to serve the defendant formally, saying at \[30\]:

> _In general, it seems to me that a plaintiff should try a little harder to effect service in accordance with ch 4 pt 7 than has occurred to date in this case, at least on the evidence before me, before falling back on the power under UCPR 117 to dispense with compliance with the requirements that usually apply._

The application was adjourned to a date to be fixed. The court highlighted that the plaintiff needed to make more effort to serve according to the rules before resorting to informal service.

This illustrates that some good attempts must be made to effect service in the usual way under the rules should be attempted before attempting to make this application.

**Note**– perhaps obtain an affidavit of attempted service from your process server and ensure that all the attempts by you are documented in your affidavit.

### _Casburn v Dick_ \[2021\] QDC 336

In _[Casburn v Dick \[2021\] QDC 336](https://classic.austlii.edu.au/au/cases/qld/QDC/2021/336.html)_, the court considered whether the defendant of the case, who was not present in the court during the proceeding, was made sufficiently aware of the proceedings under informal service rules.

The plaintiff emailed the application and her affidavit to the defendant at his email at the Australian Taxation Office. She received an automatic reply, stating the defendant was out of office.

The court found that there was no satisfactory evidence that the defendant was informally served and that he was aware of the proceedings, finding informal service did not apply, finding:

> _I am not satisfied, on the basis of the evidence, that the originating application or the other documents – in particular, the applicant’s affidavit – have come into the possession of the respondent even though they may have come into his inbox and he might, in some circumstances, have had the opportunity to see them in his inbox, and even though it is possible that his executive assistant has drawn them to his attention. There is no evidence of any follow-up phone call or email to his executive assistant to find out whether she has, in fact, been able to draw the documents to his attention, nor is there any other evidence on which I can conclude that the respondent has seen the documents and has them in his possession._

The outcome of this case was that the court extended the limitation period for the defamation action but did not conclusively accept that the informal service under rule 117 was valid due to insufficient evidence of the defendant’s possession of the documents.

This illustrates that some good evidence of the attempts to ensure that that the documents have come into the possession of the person to be served is required to meet the threshold issues.

### _Murphy v Green_ \[2002\] QDC 010

In [_Murphy v Green_ \[2002\] QDC 010](https://www.queenslandjudgments.com.au/caselaw/qdc/2002/10), the plaintiff was unable to physically serve the respondent with the correct information and made efforts to serve the documents through several means.

The plaintiff contacted the Rockhampton Prison and spoke with a person who identified himself as the respondent. The plaintiff also delivered the documents to an address provided by the respondent.

The court decided that the steps taken by the plaintiff substituted service of the application and supporting documents, and the respondent was taken to have been served upon the date of publication of the advertisement in the Rockhampton Morning Bulletin.

The applicant took the following steps:

1. **Initial Attempt at Personal Service** – The applicant’s representative, Mr. Keith Stubbins, visited the last known address of the respondent (281 Campbell Street, Rockhampton) on 5 December 2001. He was informed by a male occupant that the respondent no longer resided there and had been recently imprisoned.
2. **Contact with Correctional Facility** – Mr. Stubbins contacted the Rockhampton Prison to locate the respondent but was informed that the respondent was no longer an inmate.
3. **Telephone Communication** – Mr. Stubbins later received a telephone call from an individual identifying himself as the respondent, Kerry Green. The respondent requested Mr. Stubbins to mail the documents to 281 Campbell Street, Rockhampton, ensuring that he would be able to collect them despite not residing there.
4. **Delivery of Documents** – Mr. Stubbins delivered the originating application and supporting documents to 281 Campbell Street, Rockhampton, with a note asking the respondent to contact the applicant’s solicitors. He spoke to another occupant, Chris Hill, who promised to hand over the documents to the respondent.
5. **Newspaper Advertisement** – The applicant arranged for an advertisement to be placed in the Rockhampton Morning Bulletin newspaper. The advertisement, which served to notify the respondent of the application, was published on 17 January 2002.

In this case, the Court found:

> _In those circumstances, it seems to me to be appropriate that I direct that it is unnecessary for a formal application for substituted service to be made and that the steps taken by the applicant as deposed to in the affidavit of Mr Stubbins and the affidavit of Mr Bailey be deemed to be substituted service of the application and supporting documents and that the respondent be taken to have been served upon the date of publication of the advertisement in the Rockhampton Morning Bulletin namely the 17th January 2002._

Again, this emphasises the importance of doing everything possible, similar to an [application for substituted service](https://stonegatelegal.com.au/substituted-service-queensland/), prior to making the application to the Court.

### _Symes v Saunders_ \[2011\] QDC 217

Similarly, in _[Symes v Saunders \[2011\] QDC 217](https://classic.austlii.edu.au/au/cases/qld/QDC/2011/217.html)_, in an application for substituted service, Judge Robin QC commended the applicant for trying to get the respondent served.  The types of service

1. **Facebook Notification** – Mr. Wallace, the applicant’s lawyer, located the respondent’s profile on Facebook. He communicated via Facebook, advising the respondent of the application and providing a copy of it (without supporting material). Mr. Wallace invited the respondent to contact him or his firm for further information and informed him of the return date.
2. **Personal Communication** – On 1 September 2011, the respondent contacted Mr. Wallace via Facebook and mobile phone. Mr. Wallace informed the respondent about the court hearing date and advised him to seek legal advice. The respondent discussed the incident underlying the application and provided additional contact details.

The respondent confirmed receipt of the application and the information and discussed the matter with Mr. Wallace.

The court acknowledged that the respondent was adequately informed of the application despite the absence of formal personal service.

The court proceeded with the hearing, determining that the service via Facebook was sufficient under rule 117, stating:

> _Mr Wallace deserves some commendation for his initiative and in the circumstances in my opinion the court is justified and ought, in the interests of efficiency and not requiring further costs to be incurred, to proceed to determine the application. In effect, the court is determining that there has been sufficient service of the originating application for purposes of rule 117._

Again, this emphasises the importance of doing everything possible to get the respondent served prior to making the application to the Court.

### _Deputy Commissioner of Taxation v Cooney_ \[2004\] QDC 478

In [_Deputy Commissioner of Taxation v Cooney_ \[2004\] QDC 478](https://classic.austlii.edu.au/au/cases/qld/QDC/2004/478.html), the plaintiff served the defendant at a new address. When the defendant answered the door at the new address, he confirmed he was the defendant before running up the staircase when he became aware of the reason for the plaintiff’s presence.

The plaintiff stuck the documents to the door of the new address to serve the defendant as he would not accept the documents. The defendant later claimed that the wrong person had been served and that the address was incorrect.

The court found that the defendant had been effectively served at his new address.

Because of this, Judge Robin QC said:

> _I am convinced that the documents left by Mr McDonald came into possession of the defendant on the 7th of September 2004, and in the circumstances, consider this is a suitable case for the use of Rule 117._

Ultimately ordering:

> _The Claim and Statement of Claim number 94 of 2003 were sufficiently served by Peter Alexander McDonald on behalf of the plaintiff on the defendant on 7 September 2004._

## Informal Service in Queensland FAQ

Welcome to the FAQ section on Informal Service of legal documents in Queensland.

This guide aims to answer common questions regarding the informal service process, its legal implications, and practical steps to ensure effective delivery and acknowledgement of court documents.

### What is Informal Service?

Informal service occurs when legal documents are delivered in a non-standard manner that doesn’t strictly follow the formal service regulations. The key is that the recipient becomes aware of the documents, allowing them to respond to legal proceedings. This method is recognised by courts when formal service proves impractical or is actively avoided by the recipient.

### Why is Informal Service Used?

Informal service is often used when formal methods are not feasible. This could be due to the recipient avoiding service, residing in a difficult-to-reach location, or other barriers. The court prioritises whether the recipient is aware of the proceedings over the strict adherence to service regulations, ensuring justice is upheld.

### What Does Section 117 of the Uniform Civil Procedures Rules 1999 Say?

Section 117 allows the court to accept informal service if it can be shown that the document came into the recipient’s possession. The court can then declare the date of possession as the effective date of service. This provision ensures that legal proceedings are not unduly delayed by technicalities in serving documents.

### How Can Legal Documents be Informally Served?

Informal service can be done through various methods like email, mailing to the last known address, or leaving documents at a known address. Each method requires proof that the recipient received and acknowledged the documents. These methods are recognised when traditional service methods fail.

### What Evidence is Required to Prove Informal Service?

Proof of informal service can include email receipts, mail tracking confirmations, witness statements, and follow-up communications. The evidence must convincingly show that the recipient was aware of the documents. Courts look for robust evidence to validate informal service.

### What is the Role of Follow-up Communication in Informal Service?

Follow-up communication can solidify the proof of informal service. If the recipient responds to emails, letters, or phone calls about the documents, this can be used as evidence that they were aware of the service. Courts value such interactions as they demonstrate acknowledgement of the legal documents.

### What are Some Case Examples of Informal Service?

Cases like D’ath v TNT Australia Pty Ltd and Deputy Commissioner of Taxation v Cooney illustrate how courts validate informal service when the recipient acknowledges the documents. These cases highlight the importance of showing the recipient’s awareness and the thorough efforts made to serve them.

### Can Social Media be Used for Informal Service?

Yes, social media has been used in some cases to serve documents informally. Courts have accepted service via platforms like Facebook when traditional methods fail, provided there is sufficient evidence that the recipient received and acknowledged the documents.

### What Happens if Informal Service is Contested?

If the recipient contests the service, the serving party must provide substantial evidence of delivery and awareness. Courts will evaluate the provided evidence to determine if the informal service meets the necessary legal standards. Persistent and documented efforts can support the validity of the service.

### How Important is Documentation in Informal Service?

Thorough documentation is crucial. Keeping records of all attempts, communications, and acknowledgements helps in proving the service in court. Courts rely heavily on documented evidence to validate informal service and ensure fair legal proceedings.

### What Should be Done if Formal Service Fails?

If formal service fails, attempt alternative methods and document each effort. Informal service should only be considered after exhaustive attempts at formal service. Providing evidence of these attempts strengthens the case for accepting informal service.

### Can Informal Service be Used for All Legal Documents?

Informal service is generally used for civil proceedings, but its applicability can vary depending on the document type and the specific legal context. Always seek legal advice to ensure compliance with the relevant rules and regulations.

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# Bankruptcy Annulment – Ending Your Bankruptcy Early

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## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| May 30, 2020

## Article Summary

A bankruptcy can be annulled in one (1) of three (3) ways:

1. The bankrupt pays all of his/her debts; or
2. Compromise the debts with a creditors’ agreement; or
3. Make a bankruptcy annulment application in Court.

Section 153A(1) of the Bankruptcy Act says that if the trustee is satisfied that all the bankrupt’s debts have been paid in full, the bankruptcy is annulled, by force of that subsection, on the date on which the last such payment was made.

Bankruptcy annulment can also happen if the bankrupt proposes a scheme of arrangement or composition (a section 73 proposal), which is passed by a special resolution of the bankrupts’ creditors. The special resolution is passed at the section 73 bankruptcy annulment creditors meeting if the majority of creditors vote to accept it; and also 75% of the total value of the creditors vote for the section 73 bankruptcy annulment proposal.

Lastly, there are three (3) grounds that a Court will consider in a bankruptcy annulment application.  These grounds are if the Court is satisfied that:

1. A sequestration order ought not to have been made; or
2. A debtor’s petition ought not to have been presented; or
3. A debtor’s petition ought not to have been accepted by the Official Receiver.

If the bankrupt manages to persuade the Court that one of the above occurred, then the Court may make an annulment of bankruptcy order.

Our **bankruptcy lawyers** will explain bankruptcy annulment in a lot more detail below.

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![Bankruptcy Annulment Ending Your Bankruptcy Early in Queensland](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2020/05/Bankruptcy-Annulment-Ending-Your-Bankruptcy-Early-in-Queensland-300x300.png)Bankruptcy annulment happens in one of three ways.

The first way for bankruptcy annulment is to pay all of your debts.

The second way for the annulment of the bankruptcy is to compromise the debts with a creditors’ agreement.

The final way is to apply to the Court for an order annulling the bankruptcy.

Bankruptcy annulment essentially puts the bankrupt back in the position they were before the bankruptcy.

Any property of the bankrupt which vests in the trustee will again vest in the now ex-bankrupt person.

Our **[bankruptcy lawyers](https://stonegatelegal.com.au/bankruptcy/)** will explain bankruptcy annulment in more detail below.

## Bankruptcy Annulment

As previously stated, a bankruptcy can be annulled in one (1) of three (3) ways:

1. The bankrupt pays all of his/her debts;
2. Compromise the debts with a creditors’ agreement; and
3. Make a bankruptcy annulment application in Court.

We will discuss these in more detail below.

## The Bankrupt Pays all of His / Her Debts

The bankruptcy will be annulled if the trustee is satisfied that all of the bankrupts’ debts proved in the bankruptcy have been paid in full.

[Section 153A(1) of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s153a.html) says:

> _If the trustee is satisfied that all the bankrupt’s debts have been paid in full, the bankruptcy is annulled, by force of this subsection, on the date on which the last such payment was made._

This also includes any interest on those debts, and costs expenses and any charges on those debts or incurred by the trustee during the administration of the bankruptcy.

This will usually occur when the debtor did not have the means to raise sufficient cash to pay debts but had enough assets when realised and sold to pay the debts.

This is called the “ _cash flow test_” and the “ _balance sheet test_”.

However the debts get paid, the bankruptcy annulment will occur upon payment of the final debt.

### Payment of the Trustee’s Remuneration

To annul the bankruptcy in this way the bankrupt must also pay the costs expenses and any charges incurred by the trustee, and also the trustee’s remuneration.

[Section 153A(1) of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s153a.html) says:

> _“ **bankrupt’s debts**” means all debts that have been proved in the bankruptcy and includes interest payable on such of those debts as bear interest, and the costs, charges and expenses of the administration of the bankruptcy, including the remuneration and expenses of the trustee._

This can be considerable, but the trustee’s remuneration must be agreed before the annulment can occur.

If the bankrupt is unable to pay all of his / her debts, then the bankrupt can propose a scheme of arrangement or composition.

## Compromise the Debts with a Creditors’ Agreement

Bankruptcy annulment can also happen if the bankrupt proposes a scheme of arrangement or composition, which is passed by a special resolution of the bankrupts’ creditors.

[Section 73(1) of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s73.html) says:

> _Where a bankrupt desires to make a proposal to his or her creditors for:_
>
> _(a)  a composition in satisfaction of his or her debts; or_
>
> _(b)  a scheme of arrangement of his or her affairs;_
>
> _he or she may lodge with the trustee a proposal in writing signed by him or her setting out the terms of the proposed composition or scheme of arrangement and particulars of any sureties or securities forming part of the proposal._

Then, [section 74(1) of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s74.html) says:

> _If the proposal is accepted by a special resolution of creditors at a meeting held in accordance with the Insolvency Practice Rules, the bankruptcy is annulled, by force of this subsection, on the day the special resolution was passed._

Ok, so what does that all mean?

### Definitions of the Words

**Composition** is [defined as](https://www.lexico.com/en/definition/composition) – A legal agreement to pay an amount of money in lieu of a larger debt or other obligation.  Basically, an arrangement for a lesser sum than the amount owed.

**Scheme of Arrangement** – is a voluntary agreement between a bankrupt and his / her creditors in satisfaction of the debts.

**Special Resolution** – is a resolution put to creditors in a meeting and is passed.

**Sureties** are [defined as](https://www.lexico.com/en/definition/surety) – A person who takes responsibility for another’s performance of an undertaking, for example their appearing in court or the payment of a debt.

**Securities** are [defined as](https://www.lexico.com/en/definition/security) – things deposited or pledged as a guarantee of the fulfilment of an undertaking or the repayment of a loan, to be forfeited in case of default.

### The Process of Making the Agreement

To enter into a scheme of arrangement or composition, there must be the following:

1. A proposal to the creditors;
2. A meeting of the creditors; and
3. The creditors must accept the proposal by special resolution.

We will explain the process in more detail below.

### A Proposal to the Creditors

A section 73 bankruptcy annulment proposal must be lodged in writing with the trustee.

Pursuant to [section 73(1)](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s73.html) above it must set out the terms of the proposed composition or scheme of arrangement and any particulars of any sureties or securities.

The proposal should include the following information:

1. Where the funds are coming from;
2. Particulars of any surety or security; and
3. An estimate of the amount of dividend that may be payable;

Once drafted and lodged with the trustee, the trustee must call a meeting of creditors.

The Insolvency _[Practice Rules (Bankruptcy) 2016](https://www.legislation.gov.au/Series/F2016L02004)_ sets out the rules for calling creditor’s meetings.

### Section 73 Bankruptcy Annulment Meeting of the Creditors

Only creditors who have proved their debts can vote at the creditors meeting.

At the meeting of creditors, each of the creditors can vote by giving a [written notice](https://stonegatelegal.com.au/what-is-a-bankruptcy-notice/) to the trustee before the meeting, and do not have to be physically present.

The trustee can prompt questions and invite questions from any creditors present.

It is then put to a vote and a determination is made whether to accept or reject the proposal.

### The Creditors must Accept the Proposal

The special resolution is passed at the section 73 bankruptcy annulment creditors meeting if the majority of creditors vote to accept it; and also 75% of the total value of the creditors vote for the section 73 bankruptcy annulment proposal.

Section 75-132 of the _[Practice Rules (Bankruptcy) 2016](https://www.legislation.gov.au/Series/F2016L02004)_ says:

> _A special resolution is passed at a meeting of creditors of a regulated debtor if:_
>
> _(a) a majority of the creditors voting at the meeting vote in favour of the resolution; and_
>
> _(b) at least 75% in value of the creditors voting at the meeting vote in favour of the resolution; and_
>
> _(c) if the resolution relates to paragraph 109(1)(j) of the Act — the notice convening the meeting at which the resolution was passed contained a copy of the proposed resolution._

If the above does not happen, then the special resolution is not passed.

If the special resolution is passed then the bankruptcy is annulled immediately automatically, and the trustee must inform the [Official Receiver](https://www.afsa.gov.au/).

### The Effect of the Scheme of Arrangement

If the resolution passes, then it is binding on all creditors of the bankrupt.

All [proved debts](https://stonegatelegal.com.au/debt-recovery-lawyers-10-tips-and-tricks/) are then released at whatever dividend return the creditors voted for pursuant to the scheme of arrangement.

However, the debtor / ex-bankrupt is not released from certain debts if they would not be released from if the bankruptcy were discharged.

The scheme of arrangement can also be varied, set aside and/or terminated in certain circumstances.

If the resolution does not pass, then a bankrupt can apply to the Court for annulment of bankruptcy.

## Make a Bankruptcy Annulment Application in Court

There are three (3) grounds that a Court will consider in a bankruptcy annulment application.  These grounds are if the Court is satisfied that:

1. A sequestration order ought not to have been made; or
2. A debtor’s petition ought not to have been presented; or
3. A debtor’s petition ought not to have been accepted by the Official Receiver.

This is pursuant to [section 153B of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s153b.html) says:

> _If the Court is satisfied that a sequestration order ought not to have been made or, in the case of a debtor’s petition, that the petition ought not to have been presented or ought not to have been accepted by the Official Receiver, the Court may make an order annulling the bankruptcy._

If the bankrupt manages to persuade the Court that one of the above occurred, then the Court may make an annulment of bankruptcy order

Again, these will be explained in more detail below.

### A Sequestration Order Ought not to have been Made

If a bankrupt can prove in the bankruptcy annulment application that there existed at the time of the sequestration order, a set of facts which had the Court known about, would not have made the sequestration order.

Typically, these facts are things like:

1. Non-service or incorrect of the creditor’s petition;
2. The debt was not owed by the bankrupt;
3. The debt had been paid by the bankrupt;
4. The invalidity of the judgment forming the basis of the bankruptcy; and/or
5. The bankrupt is denied natural justice;

Obviously, the onus of proving these matters falls on the applicant.

The Court must determine firstly if the sequestration order should have been made, and then secondly exercise its discretion whether to make the annulment of [bankruptcy order](https://stonegatelegal.com.au/what-is-bankruptcy/).

In [_Barnes v Lion Finance Pty Ltd_ \[2015\] FCA 951](http://classic.austlii.edu.au/au/cases/cth/FCA/2015/951.html) at \[22\], Beach J summarised the position in relation to the exercise of the discretion under s 153B(1):

> _…as to the phrase “ought not to have been made”, the question is whether on the facts at the time, now known to have existed at the time, the court making the sequestration order would have been bound not to make the sequestration order. The test is not whether such a court might not have made the order or that it was likely that the court would not have made the order. The question is whether that court was bound not to make the order. Fourth, even if the condition is satisfied, nevertheless the Court may still refuse to exercise its discretion to annul. In the exercise of its discretion, the Court may consider:_

> _whether the applicant is solvent at the time of the annulment application;_

> _whether the applicant has made full disclosure of his financial affairs;_

> _any failure by the applicant to attend the hearing concerning the making of the sequestration order or to oppose such an order, and the explanation for such conduct;_

> _any failure by the applicant to put before the earlier court facts then known to the applicant and the explanation for that failure;_

> _whether the applicant has delayed in making the annulment application and the time that has elapsed since the making of the sequestration order;_

> _the preparedness of the applicant to pay the costs thrown away by reason of the annulment application and the trustee’s costs and expenses of the bankruptcy to the extent that they have not otherwise been recovered from the bankrupt’s estate;_

> _the rights and interests of the creditors, including the applicant’s preparedness to pay any outstanding debts as an alternative arrangement to the continuation of the bankruptcy;_

> _the conduct of the applicant during the period of the bankruptcy, including the applicant’s co-operation with the trustee and also whether there has been any conduct that may give rise to bankruptcy offences;_

> _the steps taken by the trustee to investigate and realise the estate and whether there has been any impediment due to the conduct of the applicant or a third party;_

> _whether it is fair or just to the applicant or the creditors to grant the annulment;_

> _the public interest…_

If the debtor became bankrupt by way of a debtor’s petition, then the Court may also make an annulment of bankruptcy order if the petition ought not to have been presented.

### A Debtor’s Petition Ought not to have been Presented

If a bankrupt can prove in a bankruptcy annulment application that there existed at the time of presenting the debtor’s petition, a set of facts which would have meant that the petition would not have been accepted.

Typically, these facts in these bankruptcy annulment applications are things like:

1. An abuse of process;
2. The debtor was not insolvent; or
3. The Court is satisfied that the debtor can make arrangements to pay creditors.

A bankruptcy can also be annulled if the debtor’s petition ought not to have been accepted by the [Official Receiver](https://www.afsa.gov.au/).

### A Debtor’s Petition Ought not to have been Accepted

These bankruptcy annulment application cases are usually limited to where the [Official Receiver](https://www.afsa.gov.au/) accepted a debtors petition where the prerequisites contained at 55(3)(a) of the _Bankruptcy Act_ had not been met.

[Section 55(3)(a) of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s55.html) says:

> _(3)  The Official Receiver may reject a debtor’s petition if:_
>
> _(a)  the petition does not comply substantially with the approved form; or_
>
> _(b)  the petition is not accompanied by a statement of affairs; or_
>
> _(c)  the Official Receiver thinks that the statement of affairs accompanying the petition is inadequate._

If the Official Receiver accepted it when it should not have, then an annulment of bankruptcy order can be made.

## What is the Effect of Bankruptcy Annulment?

There are a number of effects on the annulment of the bankruptcy which are contained at [section 154 of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s154.html).  In relation to any property, they include:

1. Anything duly done by the trustee before annulment is validly done;
2. Any property vesting in the trustee can be applied to costs, charges, expenses, and the trustee’s remuneration;
3. If there is a shortfall in vested property and it is not enough to pay the costs, charges, expenses, and the trustee’s remuneration, then the balance becomes a debt owed by the ex-bankrupt to the trustee, and may be recovered in Court; and
4. The remainder of that property still vested in the trustee reverts to the bankrupt.

If the annulment is given, then an ex-bankrupts name will stay on the [National Personal Insolvency Index](https://www.afsa.gov.au/online-services/bankruptcy-register-search/npii) (“ **NPII**”) with the bankruptcy listed as “ **annulled**”.

Credit reporting agencies will keep a record of this for a further seven (7) years.

An ex-bankrupt may still be liable for any debts not covered by bankruptcy.

## Bankruptcy Annulment Lawyers

As you can see, there is a few ways in which a bankruptcy can be annulled, and you will need advice from a [bankruptcy lawyer](https://stonegatelegal.com.au/bankruptcy-lawyers-101-complete-guide/).

If you think that you can satisfy the requirements above, then you should contact a [bankruptcy lawyer](https://stonegatelegal.com.au/bankruptcy/) as soon as possible to discuss your proposal.

**FOCUSED LAWYERS – BANKRUPTCY EXPERTS – PROVEN RESULTS**

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#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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## Suing Companies in Queensland
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# How to Sue a Company in Queensland

[Discuss Your Case Today](https://stonegatelegal.com.au/contact/)

## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| June 10, 2018

## Article Summary

Suing a company in Queensland involves various considerations and legal steps. This article provides a detailed guide on the process, especially emphasising the importance of understanding the financial and legal aspects before proceeding.

This article discusses suing for unpaid invoices as the most common reason for legal action against a company.

**Key Considerations Before Suing**

Before suing, one must check if the company is still registered with ASIC and assess if the company has any significant assets or money. This helps determine the feasibility of successful debt recovery.

Also, one should consider their financial capacity to pursue legal action and if there are any personal guarantees from company directors or security over company or personal assets.

**Legal Procedures for Suing**

The process of issuing a statutory demand begins with issuing a statutory demand if the debt is undisputed and exceeds $4,000. If the company fails to respond within 21 days, they are deemed insolvent, and the creditor can proceed to a winding-up application.

Alternatively, one can file a claim and statement of claim in court. The choice of court (Magistrates, District, or Supreme Court) depends on the debt amount.

**Enforcement and Costs**

If successful, the creditor can enforce a judgment or court decision to recover the debt. However, legal proceedings can be costly, and it’s essential to assess whether the potential recovery justifies the expenses.

In this article, our [commercial litigation lawyers](https://stonegatelegal.com.au/services/commercial-litigation/) advise consulting with a qualified solicitor to navigate the complexities and risks associated with suing a company.

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## How to Sue a Company in Queensland

Are you looking for information on how to sue a company?

Do you want to know how to sue a company in Court or serve the debtor company with a [statutory demand](https://stonegatelegal.com.au/statutory-demand/)?

One of the most common reasons to sue a company is because the company has not paid its invoices for good and services provided by a creditor.

There are a number of things to consider before you start suing a company.

Our [experienced commercial litigation lawyers](https://stonegatelegal.com.au/services/commercial-litigation/) explain what a creditor should consider and give you the know how to sue a company in Australia and what lawyers that sue companies do.

## What is a Company?

A company is a separate legal entity, distinct from its directors, secretary, and shareholders.

A company has the same legal rights as a natural person for business purposes and can be a vehicle for trading, can incur debts, and has the ability to be sued and to sue in its own name.

Most commonly in Australia, a company is a ‘ _proprietary limited_’ company, identified with the use of **PTY LTD**.  A ‘ _proprietary_’ company means that the company is privately owned, and the ‘ _limited_’ means that the liability of the shareholders is limited, meaning that they are not liable for debts incurred by the company (save for any unpaid amounts on shares).

## Why do you need to Sue a Company?

When thinking about how to sue a company, the most common reason that a person, or a company, may need to sue a company is because the company owes you money, [unpaid invoices](https://stonegatelegal.com.au/client-not-paying-invoice/) for example.

Debt recovery against companies is very common.  You or your business provide goods and/or services to a company ( _Company Pty Ltd_ – for example). You then raise an invoice for those goods and/or services, and the company does not pay the invoice.

A company can trade, and can incur debts, as mentioned above, and as such can be liable for those debts when they go unpaid.

If you intend to recover those debts, you may need to [commence legal action](https://stonegatelegal.com.au/services/commercial-disputes/) against the company.

## How to Sue a Company in Australia

If you need to know how to sue a company, there are two (2) main ways to commence legal action against a company in Australia, they are:

1. Commence legal proceedings in a Court with jurisdiction; and
2. Issue the company with a creditor’s statutory demand.

There are advantages and disadvantages with each. But, before you commence any legal action, there are a number of things to consider first.  These are:

1. Is the company still registered with [ASIC](https://asic.gov.au/)?
2. Does the company have any money or assets?
3. Do you have the money to commence legal action?
4. Do you have any personal guarantees from directors?
5. Do you have security over company or personal assets?

I will discuss these issues further in more detail below.

## Is the company still registered with ASIC?

When thinking about how to sue a company, one of the first things to check before knowing how to sue a company, is the free [ASIC Connect site](https://asicconnect.asic.gov.au/public/), to see if the company is still registered.  Sometimes when a debtor company owes a lot of money to a creditor (or creditors) then its directors attempt to simply deregister the company.

The ASIC Connect site is a good first base, however it is worth paying a few dollars and obtaining a [current extract from ASIC](https://asic.gov.au/online-services/search-asics-registers/search-fees/).

A current extract will provide you with all of the information needed to sue the company, as well as giving you all the up-to-date company information, including:

1. The current status of the company;
2. The current directors & secretary;
3. The current registered office of the company;
4. The principal place of business for the company; and
5. Whether any defaults or writs / judgments have been registered against it.

A [current extract](https://download.asic.gov.au/media/4017292/current-company-extract-paid.pdf) will give you a good idea if you can still sue the company.

### Stop Deregistration of a Company

If it is being deregistered, you can contact ASIC and ask them to [stop deregistration of the company](https://asic.gov.au/for-business/closing-your-company/deregistration/stopping-deregistration/) if you are commencing legal proceedings against a company, or you are intending to commence legal proceedings against the company.

If a company has been deregistered, then you will need a Court Order reinstating the company.  Serious consideration should be given to the value of such an order.

## Does the company have any money or assets?

When thinking about how to sue a company, you should seriously consider whether the company has any assets or money, or if it is even trading at all.

As previously mentioned, a company is a legal entity apart from its directors, secretary and shareholders.  As such, any chance of being successful in legal action to recover debts from a company, will largely depend on whether the company has any means of satisfying the debt.

Some company assets may include, company vehicles, trade tools, real property, and cash.

**Note** – There are some instances where a director can be personally liable for the debts incurred by the company, there are instances where a liquidator can claw-back or void transactions made out of the company so that those assets can form part of the company asset pool again, which I discuss in more detail below.

### Useful Tips for Searches

You can conduct, or pay to have them conducted, a number of searches to see if the debtor company has assets in its name.  These searches can include:

1. [PPSR Search](https://www.ppsr.gov.au/) – of the Personal Property Securities Register to see if anyone has a charge over company assets;
2. [Land Titles Search](https://www.infotrack.com.au/products/property-searches/title-search/) – to see if the company owns real property;
3. [Vehicle Registration Search](https://www.confirm.citec.com.au/citecConfirm/elearning/vehicle/qld_motor_vehicle_register.shtml)– if you know the registration numbers of the vehicles, to see who the vehicles are registered to; and
4. Any number of other searches.

## Do you have the money to commence legal action?

When thinking about how to sue a company, whether you commence proceedings in the Court with jurisdiction, or you issue the company with a statutory demand, and proceed with a winding-up application, it is likely to become expensive.

Although if you are successful in litigation, you may be entitled to claim your costs of the litigation, you may still need to pay your solicitor in the first instance.

You should be mindful that you may not get all of your legal fees back even if you win.  Costs are calculated in a number of different ways.

You should always remember that you might lose your case, in which case you may be liable for the costs of the company.

## Do you have any personal guarantees from directors?

One way to improve your chances of recovery against a company is to have personal guarantees from the directors of the company, guaranteeing the debts incurred by the company.

If you are in business offering credit on a regular basis then we strongly suggest that you get personal directors guarantees.  This will ensure that if the company does not hold any assets that you recover your debt against the personal assets of the guarantors.

If your contract or credit application with the debtor company includes a personal guarantee from the director or directors, then you will be in a much better position to commence legal proceedings against the company.

## Do you have security over company or personal assets?

When thinking about how to sue a company, another way to improve your chances of recovery against a company is to take some security over personal or company assets.  For example, if you are selling plant and equipment to a company on credit terms, register a [_Personal Property Securities Act 2009_ (Cth)](http://www8.austlii.edu.au/cgi-bin/viewdb/au/legis/cth/consol_act/ppsa2009356/) charge over that equipment.

Or, if it is reasonable to do so, have a [charging clause in your contract](https://stonegatelegal.com.au/debt-contract-credit-application/) charging the director’s real property, allowing you to lodge a caveat on the title.

### Moving Forward

So, you have conducted your searches, the company is still registered, it owns vehicles and/or real property, or you have personal guarantees or security, and you have some funds to support legal action – then you are ready to commence legal action.

## Issue the Debtor Company a Statutory Demand

A creditor’s statutory demand is a demand for payment of an undisputed debt made under section [459E of the _Corporations Act 2001_(Cth)](http://www8.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/ca2001172/s459e.html).

A statutory demand is a demand made on a company only, you cannot issue a statutory demand to a person, the guarantor for example.

### Statutory Minimum for a Statutory Demand

The statutory minimum amount of the debt (or debts) is $4,000.00. This means that if the amount (or amounts) owing by the company does not exceed $4,000.00 then you will be unable to issue a statutory demand.

[Section 9 of the _Corporations Act_](http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html) says:

> _“statutory minimum ” means:_
>
> _(a)  if an amount greater than $2,000 is prescribed–the prescribed amount; or_
>
> _(b)  otherwise–$2,000._

The prescribed amount is $4,000.00 from 1 July 2021.

This is the first threshold requirement for issuing a stat demand.

### Debt must be Due and Payable

The debt must be due and payable at the time of issuing the statutory demand.

[Section 459E(1) of the _Corporations Act_](http://www8.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/ca2001172/s459e.html) says:

> _(1) A person may serve on a company a demand relating to:_
>
> _(a) a single debt that the company owes to the person, that is due and payable and whose amount is at least the statutory minimum; or_
>
> _(b) 2 or more debts that the company owes to the person, that are due and payable and whose amounts total at least the statutory minimum._

[Section 95A of the _Corporations Act_](http://www8.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/ca2001172/s95a.html) defines “ **Solvency**” and “ **Insolvency**” to mean:

> _Solvency and insolvency_
>
> _(1)  A person is solvent if, and only if, the person is able to pay all the person’s debts, as and when they become due and payable._
>
> _(2)  A person who is not solvent is insolvent._

So, for a company to be wound up in insolvency, the company must be insolvent.  A company is insolvent if it is unable to pay its debts when they become due and payable.

This is the second threshold requirement for issuing a stat demand.

### Form of the Statutory Demand

A statutory demand must be in the correct form.  The correct form of the demand is Form 509H.

Form 509H is contained in [Schedule 2 of the _Corporations Regulations 2001_ (Cth)](http://www5.austlii.edu.au/au/legis/cth/consol_reg/cr2001281/sch2schedule.html) and must be copied exactly.

You must ensure that all of the details are completed correctly.  If not, then this incorrect form can allow the debtor company to [set the demand aside](https://stonegatelegal.com.au/setting-aside-statutory-demand-complete-guide/).

Defects in a statutory demand have in some instances caused the demand to be set aside, if the defect in the demand will cause substantial injustice.  These include:

1. A defect in the name of the debtor company;
2. A defect in the amount of the debt; and
3. The debt has not been particularised sufficiently.

If the form of the demand is defective, and that defect is likely to cause substantial injustice, then the debtor company may successfully apply to have the demand set aside.

### Form of the Affidavit in Support of a Statutory Demand

The form of the affidavit in support of the statutory demand is [Form 7](http://www.fedcourt.gov.au/forms-and-fees/forms/corporations-rules/corpform7.doc).

The Form 7 affidavit in support of a statutory demand can be downloaded from the [Federal Court website](http://www.fedcourt.gov.au/).

All a deponent has to do is to adapt the pro-forma affidavit to ensure that it deposes to everything that is required.

In [_Frayson Pty Ltd -v- Stirfry Enterprises Pty Ltd_ \[2008\] WASC 301](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/wa/WASC/2008/301.html) Master Sanderson said:

> _It is difficult to imagine that anything could be more straightforward than adapting this pro forma affidavit …_

However, people get it wrong all of the time.

The most important things to remember are:

1. The witness did not sign the affidavit correctly;
2. The deponent did not swear or affirm all of the elements required by section 459E(3) of the Corporations Act, and by the Rules;
3. The affidavit was sworn or affirmed by a deponent who did not have knowledge of the relevant facts;
4. The affidavit was sworn or affirmed on a date pre-dating the date on the statutory demand;
5. Failure of the deponent to depose to the fact that the debt is due and payable; and
6. Failure of the deponent to depose to the fact that there is no genuine dispute in relation to the debt.

If the form of the affidavit in support of the demand is defective, and that defect is likely to cause substantial injustice, or some other reason, then the debtor company may successfully apply to have the demand set aside.

## Non-Compliance with the Statutory Demand

Once you have correctly drafted the statutory demand, the affidavit in support, and you have [correctly served the statutory demand](https://stonegatelegal.com.au/statutory-demand-complete-guide/), what happens next?

The debtor company will have twenty-one (21) days to do one of the following:

1. Pay the debt; or
2. Arrange to compound for the debt; or
3. Successfully request that the demand be withdrawn; or
4. Successfully apply for the demand to be set-aside.

If it fails to do any of these within the very strict twenty-one (21) day timeframe, then the debtor company is deemed to be insolvent, and you can apply to wind the debtor company up in insolvency.

## How to Sue a Company – Winding Up Application

A winding up application is commenced in the [Federal Court of Australia](http://www.fedcourt.gov.au/) or in the [Supreme Court](http://www.courts.qld.gov.au/courts/supreme-court) in your jurisdiction.

If the company is wound up, and there are enough assets to pay creditors, then you will likely receive a dividend from the liquidator to satisfy the debt owed, plus a scale amount toward the cost of the winding up application.

Read more about winding up [here](https://stonegatelegal.com.au/services/insolvency/)

If the debtor company has expressed some genuine dispute as to the existence or amount of the debt, or it says that there is an offsetting claim, or a statutory demand is not appropriate in your particular circumstances, then you may need to sue the debtor company in the Court with jurisdiction.

## How to Sue a Company in Court

This part of the article will tell you briefly how to sue a company in the court with jurisdiction.

The [Courts in Queensland](http://www.courts.qld.gov.au/) have different monetary jurisdictions in relation to an action for debt recovery, they are:

1. Magistrates Court – up to $150,000.00; or
2. District Court – from $150,000.00 to $750,000.00; or
3. Supreme Court – from $750,000.00 and above.

Depending on the amount of the debt, you can commence legal proceedings in any one of these Courts.

## Claim and Statement of Claim

Proceedings against a company are commenced by claim and statement of claim, in accordance with the [_Uniform Civil Procedure Rules 1999_ (Qld)](http://www8.austlii.edu.au/cgi-bin/viewdb/au/legis/qld/consol_reg/ucpr1999305/) (“ _**UCPR**_”).

The Claim form is [UCPR Form 2](http://www.courts.qld.gov.au/__data/assets/word_doc/0008/92897/Form-2-Claim-UCPR.doc).

The Statement of Claim is [UCPR Form 16](http://www.courts.qld.gov.au/__data/assets/word_doc/0010/92899/Form-16-Statement-of-claim-UCPR.doc).

The claim outlines the amount of the claim, and any specific orders that you want, such as interest, costs, or any other order allowable under the _UCPR_.

The statement of claim is the document which supports the claim and “ _pleads_” the material facts which give rise to the cause of action you are claiming.

## How to Sue a Company for Breach of Contract

Most debt recovery action is an action for [breach of contract](https://stonegatelegal.com.au/breach-of-contract/).

In your statement of claim you will need to plead the material facts needed to establish the contract and the breach of the contract.

Firstly you must establish that there is or was a contract.  You must plead all of the material facts which gave rise to the contract.

If there is a written contract or credit application, then plead to the document with enough particularity so that the defendant can identify it.

If there is no written contract, then you need to plead the steps on which the contract was formed.

Once you have sufficiently pleaded the contract, you need to sufficiently plead the breach of the contract, namely that the debtor company has not paid for the goods and/or services provided by you.

Finally you will need to plead the losses that you have incurred as a result of the breach of the contract.

### Serving the Defendant Company

A claim and statement of claim is an originating process, being that it is an origination document used to commence proceedings.

Service of an originating process on a company is made in accordance with [rule 107 of the _UCPR_](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s107.html) which says:

> _A document required to be served personally on a corporation must be served in the way provided for the service of documents under the Corporations Act or another applicable law._

The applicable section of the _Corporations Act_ is [section 109X](http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s109x.html), which says:

> _(1)  For the purposes of any law, a document may be served on a company by:_
>
> _(a)  leaving it at, or posting it to, the company’s registered office; or_
>
> _(b)  delivering a copy of the document personally to a director of the company who resides in Australia or in an external Territory_

Once served, the debtor company will have twenty-eight (28) days to file and serve a defence and a counterclaim (if any).

### If the Debtor Company Files a Defence

If the defendant debtor company files and serves you with a defence and a counterclaim, then you will need to file and serve a reply to the defence and an answer to the counterclaim (if any).

You will then need to complete your disclosure obligation.  Firstly the parties need to exchange their list of documents, and then disclose the documents.  [Rule 211 of the _UCPR_](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s211.html) states:

> _(1) A party to a proceeding has a duty to disclose to each other party each document—_
>
> _(a) in the possession or under the control of the first party; and_
>
> _(b) directly relevant to an allegation in issue in the pleadings; and_
>
> _(c) if there are no pleadings—directly relevant to a matter in issue in the proceeding._

Once disclosure has been made, then the matter will go to a [settlement conference](http://www.courts.qld.gov.au/going-to-court/settlement-conferences), where each party will be encouraged to settle the matter.

If no agreement is reached at the settlement conference, then the matter will usually proceed to a trial, where a judge or magistrates will decide, hopefully in your favour.

### If the Debtor Company Does Not File a Defence

If the debtor company does not file a defence, then you will be able to request a judgment in default from the Court.

This means that you will get what you have claimed in your statement of claim, with interest and scale costs.

You will then be able to [enforce this judgment](https://stonegatelegal.com.au/enforcing-a-judgment/) on the debtor company.

There is an alternative to suing a company in Court.  If you have a debt of less than $25,000.00 then you may be able to sue the debtor company in the [Queensland Civil and Administrative Tribunal](http://www.qcat.qld.gov.au/), more commonly known as QCAT.

## How to Sue a Company in QCAT

This part of the article lets you know how to sue a company in QCAT.

The Queensland Civil and Administrative Tribunal (“ _**QCAT**_”) is the minor civil claims jurisdiction in Queensland.  [QCAT](http://www.qcat.qld.gov.au/) is what most people mean when they refer to the “ _small claims court_”.

QCAT has jurisdiction to hear minor debt claims up to $25,000.00.

A proceeding in QCAT is commenced in much the same way as the Court.  Instead of a claim and statement of claim, you proceed with an application.  Instead of a defence the debtor company has to file and serve a response to your application.

If the respondent debtor company files and serves the response, then the matter will be listed for a mediation of a hearing, and will likely be decided by the QCAT Member, hopefully in your favour.

If the debtor company does not file and serve you with a response, then you will be able to request a decision in default from QCAT.

This means that you will get what you have claimed in your application, with interest and scale costs.

## Enforcement of a Judgment against a Company

Once you have a judgment from the Court, or a decision in QCAT registered in the Court, and the debtor company still does not pay, then you are able to enforce that money order.

Read [here](https://stonegatelegal.com.au/enforcing-a-judgment/) about enforcing a money order.

## Suing a Company FAQ

### How do I sue a company in Australia?

If you need to know how to sue a company, there are two (2) main ways to commence legal action against a company in Australia, they are: Commence legal proceedings in a Court with jurisdiction; and. Issue the company with a creditor’s statutory demand.

### How do I file a lawsuit against a company?

Most lawsuits are commenced by a claim and statement of claim.  Alternatively, they are commenced by application and a supporting affidavit.  It depends on which jurisdiction you are bringing the claim, and also the type of claim.

### What can you sue a company for?

You can sue a company for almost everything that you can sue a person for.  Most commonly:

- Breach of contract
- Debt recovery / insolvency
- Employment disputes
- Products liability claims
- Discrimination or harassment
- Defamation
- Breaches of the Australian Consumer Law

### Can you sue an individual in a company?

Yes.  An individual in a company can be personally liable in a number of ways, such as:

- Signed a personal guarantee
- Breaches of the Australian Consumer Law
- Insolvent trading
- Breaches of director’s duties.

### How much money does it cost to sue a company?

It really depends on the type of law firm you use, the type of cause of action you bring, and the conduct of the company defendant or their lawyers.  It can be a few thousand dollars to more than a million dollars.

### Do you need a lawyer to sue a company?

No.  However we strongly advise that you do use a lawyer.  The main reason is that in most jurisdictions, the loser in the Court action has to pay the winner’s legal costs.  If you do not use a lawyer then you have a far greater risk of an adverse costs order being made against you.

### What are good reasons to sue a company?

There are a number of good reasons to sue a company.  These include:

- Breach of contract
- Employment disputes
- Defamation
- Debt recovery / insolvency
- Discrimination or harassment
- Products liability claims
- Breaches of the Australian Consumer Law

### What happens if you sue a company and it has no money?

If you sue a company that has no money then you will likely get no money.  If the director(s) can be made to be personally liable, then this will likely assist in getting money.  A good lawyer will assess the risks of litigation against any possible fruits of the litigation.

### How long do you have to sue a company in Australia?

The limitation dates will vary depending on the cause of action.  For example:

- Breach of contract – 6 years
- Defamation – 1 year
- Debt recovery – 6 years

## How to Sue a Company in Queensland

This is a guide on how to sue a company in Queensland.

If you are owed money under a contract, and the company has assets, then you may successfully recover some or all of the debt amount.

This article lets you know how to sue a company.  If you are thinking about suing a company, then we strongly recommend engaging a suitably qualified solicitor.

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#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

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# Substituted Service of a Creditor’s Petition

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## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| March 3, 2018

## Article Summary

The article provides a detailed explanation of the substituted service of a creditor’s petition under the Bankruptcy Act 1966. This legal process allows a creditor to serve a debtor with a petition through alternative methods when personal service is impracticable.

The Federal Circuit Court has the discretion to order substituted service if abnormal difficulties in personal service exist and there is a reasonable probability that the debtor will be informed of the petition.

The article outlines the legislative framework, including key sections of the Bankruptcy Act and the Federal Circuit Court Rules, and details the two-limbed test required for substituted service: demonstrating impracticability of personal service and ensuring the alternative method will likely notify the debtor.

Practical guidance on the application process, including necessary forms and affidavit evidence, is also provided.

In this article our **[bankruptcy lawyers](https://stonegatelegal.com.au/services/insolvency/)** emphasise the importance of taking reasonable steps to serve the debtor and offers examples from case law to illustrate the Court’s considerations in granting substituted service.

Table of Contents

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![Substituted Service of a Creditor's Petition](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2018/03/Substituted-Service-of-a-Creditors-Petition.png)Substituted Service of a Creditor’s Petition is an application for an order that a respondent debtor who does not want to be served personally, can be served another way.

A creditor’s petition is an originating process and as such is required to be personally served on the debtor.

However, if you have had any experience with sophisticated debtors then you know that this can be easier said than done.

In some cases judgment debtors will go to extreme lengths to avoid being personally served.  Some never answer the door, some move house in the middle of the night, some move interstate, and some dye or shave their hair and assume an alias.

If it is impracticable to serve a document in this way, the Court may make an order dispensing with service or substituting another way of serving the document, by ordering substituted service of a creditor’s petition.

Our [insolvency lawyers](https://stonegatelegal.com.au/bankruptcy/) explain how to make an application for substituted service of a creditor’s petition.

## 309(2) of the Bankruptcy Act 1966

The _Bankruptcy Act 1966_ (Cth) [confers concurrent jurisdiction](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s27.html) on the [Federal Circuit Court of Australia](http://www.federalcircuitcourt.gov.au/) and the [Federal Court of Australia](http://www.fedcourt.gov.au/).

Section [309(2) of the _Bankruptcy Act 1966_ (Cth)](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s309.html) gives a discretion to the [Federal Circuit Court](http://www.federalcircuitcourt.gov.au/) to order service of a document in a manner specified by the Court, it says:

> _(2)  Where a notice or other document is required by this Act to be served on or given to a person, the Court may, in a particular case, order that it be given or served in a manner specified by the Court, whether or not any other manner of giving or serving the notice or other document is prescribed._

The leading authority considering section 309(2) is [_Ginnane v Diners Club Limited_ \[1993\] FCA 167](http://classic.austlii.edu.au/au/cases/cth/FCA/1993/167.html) as per Northrop, Shepherd and Einfeld JJ:

> _The discretion conferred by s 309(2) is unfettered but the authorities show that in relation to a creditor’s petition, the discretion is not to be exercised lightly. Normally, before exercising the discretion in relation to a petition, the court must be satisfied that abnormal difficulties exist in effecting personal service of the petition on the debtor and that there is a reasonable probability that the debtor will be informed of the petition as a result of the form of service identified._

See also [_Equititrust Limited v Bosiljevac_\[2007\] FCA 323](http://www.austlii.edu.au/au/cases/cth/FCA/2007/323.html); and [_Re: Mendoca Ex parte Commissioner of Taxation_(1969) 15 FLR 256](http://classic.austlii.edu.au/cgi-bin/LawCite?cit=%281969%29%2015%20FLR%20256).

## Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021

[Rule 2.01](https://classic.austlii.edu.au/au/legis/cth/num_reg/fcafcoa2r2021202101200680/s2.01.html) of the _Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021_ (Cth) says:

> _(1) Unless these Rules otherwise provide, a person must make an application required or permitted by the Bankruptcy Act to be made to the Court:_
>
> _(a) if the application is not made in a proceeding already commenced in the Court–by filing an application in accordance with Form B2; or_
>
> _(b) in any other case–by filing an interim application in accordance with Form B3._

An application for an order for substituted service of a creditor’s petition is an interim application and must be made by filing an interim application in accordance with [Form B3](https://www.fedcourt.gov.au/forms-and-fees/forms/bankruptcy-rules/2016-forms/FCAB03-Form-B3-Interim-application.docx).

Then subsection 4 goes on to say:

> _(4) An interim application filed in accordance with [Form B3](https://www.fedcourt.gov.au/forms-and-fees/forms/bankruptcy-rules/2016-forms/FCAB03-Form-B3-Interim-application.docx) must state:_
>
> _(a) if appropriate, each section of the Bankruptcy Act, or of the Bankruptcy Regulations , or each rule of Court under which the application is made; and_
>
> _(b) the relief sought._

In the old legislation, the rule stated:

> _(1)  If, for any reason, it is impracticable to serve a document in a way required under this Part, the Court may make an order dispensing with service or substituting another way of serving the document._
>
> _(2)  The Court may specify the steps to be taken for bringing the document to the attention of the person to be served._
>
> _(3)  The Court may specify that the document is to be taken to have been served on the happening of a specified event or at the end of a specified time._

The above _Act_ and _Rules_ essentially provide for a two-limbed test:

1. **The First Limb** – it has to be impracticable to serve a document in a way required under this Part; and
2. **The Second Limb** – the Court must be satisfied that the steps to be taken will bring the document to the attention of the person to be served.

In [_Deputy Commissioner of Taxation v Barnes_ \[2008\] FMCA 7](http://classic.austlii.edu.au/au/cases/cth/FMCA/2008/7.html) the Federal Magistrates Court of Australia (now called the Federal Circuit Court of Australia) followed [_Ginnane v Diners Club Limited_ \[1993\] FCA 167](http://classic.austlii.edu.au/au/cases/cth/FCA/1993/167.html) and said:

> _Under s.309(2) of the Bankruptcy Act the discretion conferred is unfettered but not to be exercised lightly. The Court must be satisfied that:_
>
> _a)       abnormal difficulty exists in effecting personal service of the creditors petition on the Respondents; and_
>
> _b)      there is a reasonable probability that the Respondents will be informed of the petition as a result of the form of service identified_

This article will now explore the requirements of each limb below and explain the Substituted Service of a Creditor’s Petition.

You could also try to make an [application for informal service](https://stonegatelegal.com.au/informal-service-of-court-documents-in-queensland/).

## Impracticable to Serve a Document in a way Required under this Part

**Impracticable** is one of those words that you first hear in law school, and if you have never been to law school, you may have never heard of the word im-prac-tic-a-ble.

The dictionary definitions are here _Impossible in practice to do or carry out_ [or here](https://www.merriam-webster.com/dictionary/impracticable) _not practicable: incapable of being performed or accomplished_.  Impracticable is a synonym of impractical.

**Document** is not defined but the case law has included a creditor’s petition.

Therefore, if you have taken reasonable steps to personally serve the debtor, but it is:

1. Impossible or incapable of being performed or impractical;
2. To hand the respondent debtor, or put down in the presence of the debtor telling the debtor what it is;
3. A copy of the documents required to be served.

Then you will likely satisfy the first limb of the test.

In [_Low v Maye_ \[2015\] FCCA 3485](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCCA/2015/3485.html) the Court considered that reasonable steps had been taken when they said:

> _Court is satisfied that reasonable steps have been taken by the applicant trustee to ascertain the respondent bankrupt’s whereabouts for the purposes of serving the substantive application on the respondent bankrupt. Telephone book and Electoral Roll searches have been conducted, various addresses for persons with the surname “Maye” have been ascertained, and the process server has undertaken enquiries in relation to those persons, and has ascertained the whereabouts of the respondent bankrupt’s ex-wife, brother, daughter and sons from whom certain information was able to be obtained._

In [_Klages (WA) Pty Ltd v Walker_ \[2008\] FMCA 348](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FMCA/2008/348.html) the Court said:

> _The Court is not, however, satisfied that there is abnormal difficulty as yet demonstrated; or that reasonable steps have yet been taken to precisely ascertain the Respondent’s whereabouts or for the purposes of serving the documents on him. At this stage all that has happened is that the Respondent’s solicitors have made inquiries of persons who may be expected to have some knowledge of the whereabouts of the Respondent and those inquiries have drawn a blank._

In [_PAR & RV Scragg Trading as Peter Scragg & Associates v Vonta_ \[2017\] FCCA 1686](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCCA/2017/1686.html) the Court said:

> _I am satisfied that the petitioner took all reasonable steps to bring the petition to Ms Vonta’s notice. The process server made several attempts at service._

In [_Atap Pty Ltd & Anor v Dorotich_ \[2014\] FCCA 203](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCCA/2014/203.html) the Court said:

> _It is not part of the Court’s role to order substituted service of documents merely because lawyers assume, or assert, that it is difficult to serve a person, when in fact, no proper enquiries or reasonable steps have been made to see if service might be accepted by the respondent, or might be avoided by the respondent. Substituted service orders ought not be made where no, or no reasonable, steps or enquiries have been made to otherwise effect service._

## Substituted Service of a Creditors Petition

![Harry Gibbs Commonwealth Law Courts Building bankruptcy in Brisbane](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2018/03/Harry-Gibbs-Commonwealth-Law-Courts-Building-bankruptcy-in-Brisbane.jpg)If you or your [bankruptcy lawyers](https://stonegatelegal.com.au/bankruptcy-lawyers-101-complete-guide/) have taken all reasonable steps to try to personally serve the [respondent debtor](https://stonegatelegal.com.au/debt-recovery-services-in-queensland/), and you have not been able, then you will have satisfied the first limb of this test.  This evidence will need to be included in your affidavit in support of the application.

As a general rule, the Courts like to see a minimum of six (6) attempts at service, over about two (2) weeks.  This is a general rule-of-thumb, as some instances may require more, and some instances may require less, as illustrated by the above cases.

If you genuinely cannot personally serve this debtor, then you will need to prove to the Court that the form of service that you have identified will bring the creditor’s petition to the respondent debtor’s attention.

## Reasonable Probability that the Respondent will be Informed of the Petition as a Result of the Form of Service Identified

The Court needs to be satisfied that the method or methods that you propose for service, will actually bring the creditor’s petition to the attention of the respondent debtor.

In [_Re Mendonca; Ex parte Commissioner of Taxation_ (1969) 15 FLR 256](http://www.austlii.edu.au/cgi-bin/LawCite?cit=%281969%29%2015%20FLR%20256) the Court said:

> _It is a fundamental rule that a method of substituted service will not be allowed which will not in all reasonable probability be effective to bring knowledge of the proceedings to the debtor._

In [_Klages (WA) Pty Ltd v Walker_ \[2008\] FMCA 348](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FMCA/2008/348.html) the Court said:

> _There is no evidence such as to satisfy the Court in this case which indicates that any of the persons upon whom it is proposed to serve the documents will or will be likely to draw the Respondent’s attention to the documents … It might be the case that various electronic means, such as SMS or email, which have not yet been proposed, might be more appropriate means of drawing the Respondents’ attention to the documents to be served, given that the Respondents’ physical whereabouts are unknown._

In [_Low v Maye_ \[2015\] FCCA 3485](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCCA/2015/3485.html) after submitting affidavit evidence from the bankrupt’s brother of an active post office box and an active mobile telephone number (amongst other evidence), the Court said:

> _There is sufficient information concerning the likelihood that the respondent bankrupt is the user of the post office box addresses and the mobile telephone number referred to above, to warrant the conclusion that those modes of communication are being used by the respondent bankrupt, and that service upon them is likely to draw the respondent bankrupt’s attention to the documents to be served._

If you can provide current evidence that the respondent debtor:

1. Has a current mobile phone number that they are actively using; and/or
2. Has a current email address of email addresses that they are actively using; and/or
3. Has a current post office box address that they are actively using; and/or
4. Has a current residential address that they are actively using; and/or
5. Any other relevant considerations; then

It is likely that the Court will make the order using these, in combination, to bring the creditor’s petition to the attention of the persona to be served.

If you can provide affidavit evidence of the above, then you will likely get your order.

## Substituted Service of a Creditor’s Petition Process

If you meet the requirements of both limbs of the test above, you can make the application for substituted service of the creditor’s petition.

The application for is [Form B3 Interim application](https://www.fedcourt.gov.au/forms-and-fees/forms/bankruptcy-rules/2016-forms/FCAB03-Form-B3-Interim-application.docx).  It must be filed in the same file as the creditor’s petition and include the draft orders you are seeking.  A copy of the [Registrars’ Bankruptcy & General Matters – Standard Orders is here](http://www.federalcircuitcourt.gov.au/wps/wcm/connect/60ee102c-e56e-42ab-be6c-c62db697231d/Registrar%27s+Bankruptcy+Matters+-+Standard+Orders+October+2016.pdf?MOD=AJPERES&CONVERT_TO=url&CACHEID=ROOTWORKSPACE-60ee102c-e56e-42ab-be6c-c62db697231d-lLhRrPb).

In support of the application and draft order(s) you will need to provide affidavit evidence of both limbs of the test, as above.  The form of the affidavit is [Form 59 Affidavit](http://www.fedcourt.gov.au/forms-and-fees/forms/federal-court-rules#form59).

Once you have all of this material, you can lodge the documents electronically via [eLodgment](http://www.fedcourt.gov.au/online-services/elodgment) facility.

Once the documents have been lodged, they will be given a return date with the location as [eCourtroom](https://www.fedcourt.gov.au/online-services/ecourtroom).

Find out more about the Federal Courts [eCourtroom here](https://www.fedcourt.gov.au/online-services/ecourtroom).

If successful you will be give the order (or an order that the Registrar thinks fit).

You will then need to serve the respondent debtor in the way stated in the order, and provide an affidavit evidencing this.

If you do all of this, then it is likely that you will be able to continue with the hearing of the creditor’s petition at the next return date.

## The Fees for an Application for Substituted Service of a Creditor’s Petition

The fees are provided in [Schedule 1 of the _Federal Court and Federal Circuit and Family Court Regulations 2022_ (Cth)](https://classic.austlii.edu.au/au/legis/cth/consol_reg/fcafcafcr2022530/sch1.html).

The fee for the Interlocutory / interim application is:

1. **$1,060.00** for a corporate applicant; and
2. **$430.00** for a personal applicant.

You may be entitled to an exemption of these fees, click here for more information.

## FAQ on Substituted Service of a Creditor’s Petition

This FAQ section provides clear and concise answers to common questions about the substituted service of a creditor’s petition after non-compliance with a [bankruptcy notice](https://stonegatelegal.com.au/what-is-a-bankruptcy-notice/), outlining the legal framework, requirements, and practical steps involved.

Whether you’re a creditor dealing with an elusive debtor or seeking to understand this legal process, these FAQs offer valuable guidance and insights.

### What is substituted service of a creditor’s petition?

Substituted service of a creditor’s petition is a legal process that allows a creditor to serve a debtor with a petition through alternative methods when personal service is impracticable. This might be necessary when a debtor avoids personal service by moving house, changing appearance, or using other tactics.

### Why might substituted service of a creditor’s petition be necessary?

Substituted service is necessary when a debtor is actively avoiding personal service. This can include not answering the door, moving without notice, or using aliases. The court recognises these tactics and allows for alternative methods to ensure the debtor is informed.

### What are the two main requirements for obtaining substituted service?

The two main requirements are proving that personal service is impracticable and showing that the alternative method proposed will likely inform the debtor of the petition. Both conditions must be met to satisfy the court.

### How does the court determine if personal service is impracticable?

The court considers whether reasonable steps have been taken to serve the debtor personally. This includes multiple attempts at different times and possibly at different locations. The court looks for evidence that personal service is impossible or highly impractical.

### What evidence is needed to support an application for substituted service?

Evidence includes detailed records of attempts to serve the debtor, such as dates, times, and methods used. It might also include witness statements or surveillance showing the debtor’s evasive behaviour. The goal is to demonstrate exhaustive efforts to achieve personal service.

### What alternative methods of service might the court approve?

The court might approve methods such as serving the petition via email, SMS, posting it to a known address, or leaving it with a person likely to inform the debtor. The method must have a reasonable probability of reaching the debtor.

### Can electronic means be used for substituted service of a creditor’s petition?

Yes, electronic means such as email or SMS can be used if there is evidence that the debtor uses these communication channels. The court needs assurance that these methods will effectively inform the debtor about the petition.

### How many attempts at personal service are considered reasonable?

Generally, courts like to see at least six attempts over a period of about two weeks. However, the exact number may vary based on the specific circumstances of each case.

### What is the cost of filing an application for substituted service?

The cost for an interlocutory or interim application is $1,060 for a corporate applicant and $430 for a personal applicant. Fee exemptions may be available under certain conditions.

### What forms are required for applying for substituted service?

The application requires a Form B3 Interim Application and Form 59 Affidavit. These forms should include evidence of attempts at personal service and the proposed alternative method of service.

### What happens after the application for substituted service is filed?

Once filed, the documents are lodged electronically, and a return date is set for an eCourtroom session. If the court grants the order, the creditor must serve the debtor in the manner specified by the court and provide proof of this service.

### What criteria does the court consider for substituted service of a creditor’s petition?

The court considers whether the proposed method will likely inform the debtor, the cost and practicality of the method, and any other relevant factors. The goal is to ensure the debtor receives actual notice of the petition.

### Can a creditor proceed with the hearing if substituted service is successful?

Yes, if substituted service is successful and the debtor is properly notified, the creditor can proceed with the hearing of the creditor’s petition at the next return date. The creditor must provide evidence of compliance with the court’s order.

### Why is it important to follow the proper process for substituted service of a creditor’s petition?

Following the proper process ensures that the debtor is fairly notified and that the creditor’s actions are legally sound. Failure to comply with legal requirements can result in delays, additional costs, and potentially invalid service, undermining the entire debt recovery process.

![Picture of Wayne Davis](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/desktop/optimized/rev-748d11d/secure.gravatar.com/avatar/5841d7da8b6c7d486226c9358f93fc5a.5b54ec283af918fb28f171190159c8892905cb00c7f8bf19a380e6224d11fa82)

#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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## Understanding Bankruptcy Notices
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# What is a Bankruptcy Notice?

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## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| June 17, 2023

## Article Summary

The basic requirements for a bankruptcy notice include:

1. the debt must be a judgment debt; and
2. the judgment debt must be more than $10,000.00; and
3. the judgment debt must be no more that six (6) years old.

If you meet these criteria, and the judgment debtor is a human (not a company) then you can apply for a bankruptcy notice.

Debtors will have 21 days to respond to a bankruptcy notice. During this time, the judgment debtor must

1. pay to the creditor the amount of the debt claimed; or
2. make arrangements to the creditor’s satisfaction for settlement of the debt; or
3. apply to set aside the bankruptcy notice.

If the judgment debtor does not do any of these things, then they will commit “ _an act of bankruptcy_“.  Using this act of bankruptcy, the creditor can apply for a sequestration order (making the debtor bankrupt).

Issuing a bankruptcy notice can be a way for you to gain some control over the situation so that you can collect at least part of the money that you are owed or commence negotiations for the settlement of those funds.

This article explains bankruptcy notices in more detail.

Table of Contents

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A bankruptcy notice is the first document served on a human judgment debtor to commence bankruptcy proceedings against that debtor.

Once served, the judgment debtor will have 21 days to:

1. pay to the creditor the amount of the debt claimed; or
2. make arrangements to the creditor’s satisfaction for settlement of the debt; or
3. apply to set aside the Bankruptcy Notice.

Failure to do any of those things, and the judgment debtor commits an “ _act of bankruptcy_”.

This act of bankruptcy lasts for six (6) months and is the prerequisite for the judgment creditor to file a creditor’s petition in the Court.

In this article our [insolvency lawyers](https://stonegatelegal.com.au/services/insolvency/) and [debt recovery lawyers](https://stonegatelegal.com.au/services/debt-disputes/) will discuss the basics of a bankruptcy notice and what it entails so that you can decide if it is a tool that will work for you!

**If you need to serve a bankruptcy notice then it is important to get it right and you should contact a lawyer**

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## Why use a Bankruptcy Notice?

If you are a [judgment creditor](https://stonegatelegal.com.au/bankruptcy/) with a lot of debt, chances are that you are quite frustrated and fed up with this situation and it can be difficult to understand how to go about [enforcing your judgment against the debtor](https://stonegatelegal.com.au/enforcing-a-judgment/).

Issuing a bankruptcy notice can be a way for you to gain some control over the situation so that you can [collect at least part of the money](https://stonegatelegal.com.au/debt-recovery-solicitors-how-can-they-help-you/) that you are owed or commence negotiations for the settlement of those funds.

This may sound a little extreme, but it can be a very effective tool if nothing else is seeming to work. However, it is a big step to take, so it is important that you are fully informed before taking any steps towards doing so.

## What is a Bankruptcy Notice?

A bankruptcy notice is [a formal demand of payment sent by a creditor to a human debtor](https://stonegatelegal.com.au/bankruptcy-lawyers-101-complete-guide/) (not a company) pursuant to [section 41 of the _Bankruptcy Act 1966_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s41.html) (Cth).

A bankruptcy notice can be obtained when a creditor obtains a judgement or several judgements from a court that states that a debtor owes them an amount more than the statutory minimum.

The statutory minimum is defined at [section 5(1) of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s5.html#statutory_minimum) to mean:

> _“statutory minimum” means:_
>
> _(a)  if an amount greater than $5,000 is prescribed–the prescribed amount; or_
>
> _(b)  otherwise–$5,000._

This allows for this amount to be changed by regulation (which it has). [Regulation 10A of the _Bankruptcy Regulations 2021_](http://classic.austlii.edu.au/au/legis/cth/num_reg/br2021202100261267/s10a.html) states:

> _For the purposes of paragraph (a) of the definition of statutory minimum in subsection 5(1) of the Act, the amount prescribed is **$10,000**._

The debt or debts must total the statutory minimum of $10,000.00 and must be less than six (6) years old.  This is an important step, as you cannot serve a debtor with a bankruptcy notice unless they owe you or your business at least this amount of money and within this time limit.

Once a bankruptcy notice has been served, the debtor will have committed an “ _act of bankruptcy_” if they have not complied with the terms of the notice or had it set aside by the court within 21 days.

[Section 40(1)(g) of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s40.html) defines this act of bankruptcy to mean:

> _(1)  A debtor commits an act of bankruptcy in each of the following cases:_
>
> _… (g) if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not:_
>
> _(i) where the notice was served in Australia–within the time fixed for compliance with the notice; or_
>
> _(ii) where the notice was served elsewhere–within the time specified by the order giving leave to effect the service;_
>
> _comply with the requirements of the notice or satisfy the Court that he or she has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained._

A debtor committing an act of bankruptcy will allow a creditor to make a [creditors petition](https://stonegatelegal.com.au/substituted-service-of-a-creditors-petition/) for the declaration of bankruptcy.

This will mean that the debtor is declared to be bankrupt and a bankruptcy trustee is appointed to deal with debt payments and other financial responsibilities, which may be a better option for the creditors.

## What is the Purpose of a Bankruptcy Notice?

So, now that we know what it is, what is the purpose of a bankruptcy notice?

A bankruptcy notice can act as a final warning to your debtor to pay the debt or face the consequences and can be great [leverage in settlement negotiations](https://stonegatelegal.com.au/legal-proceedings-for-debt-recovery/).

Bankruptcy is a serious financial situation to be in. Most people will do their utmost to avoid it, seeing as it affects their finances, credit, and financial opportunities for the foreseeable future.

Serving a bankruptcy notice can also help to promote a discussion between the parties regarding [negotiating a payment plan](https://stonegatelegal.com.au/debt-recovery-solicitors-how-can-they-help-you/) or simply payment in full, and forces a very short 21 day timeline to stop the debtor delaying further.

Some are too embarrassed to confront their financial struggles head on, so a bankruptcy notice can act as a gentle nudge in the right direction.

Regardless, having a professional trustee managing your debtors’ finances can be helpful to you and all other creditors, so it is something of a win-win in some circumstances.

## What Should I Consider Before I Apply?

Applying for a bankruptcy notice is a big decision that requires a lot of thought and consideration.

What is it that you should be considering exactly when you are making this decision? What are the factors that will, or at least should, have an influence on the notice and on your decision to go through with it or not?

The first thing that you must consider is if a bankruptcy notice is even a viable option for you. Does the judgment debt that you are looking to collect exceed the amount of $10,000, and is less than six (6) years old? If not, you will be unable to obtain a bankruptcy notice from [AFSA](https://www.afsa.gov.au/) regardless, so this would be the end of the road for this route.

You should also consider alternative options for [collecting the debt](https://www.advancedebtcollection.com.au/) other than a bankruptcy notice.

As you a probably aware, there are plenty of ways that you can collect a debt. All of the methods available and feasible for you to do should be exhausted before you engage in an application for a bankruptcy notice, excluding the ones that take more time, and money, or entail more serious consequences for either party of course.

A bankruptcy notice is a serious thing and should be considered to be something of a final resort.

Finally, it is important that you check to see if your debtor is already engaged in a debt or [insolvency agreement](https://stonegatelegal.com.au/what-is-a-part-x-personal-insolvency-agreement/) before engaging in the bankruptcy notice application process. To check this, you can [bankruptcy search](https://services.afsa.gov.au/brs/search) on the [National Personal Insolvency Index](https://www.afsa.gov.au/online-services-help/bankruptcy-register-search/national-personal-insolvency-index-npii) (NPII) for any recent insolvency actions taken by a debtor.

## How Do I Apply for a Bankruptcy Notice?

So, you have made the proper considerations for the bankruptcy notice, and you are ready to begin the application process. An application can be made by either the creditor themselves or the solicitor or agent of the creditor.

If the latter is the case, it should be made known during the application process. If you wish for your solicitor/agent to apply for a bankruptcy notice for you, it is important that they are explicitly aware that this is what you want them to do and that you know what it entails, as it is expected of them to have this direct approval.

The application must be submitted to the [Australian Financial Security Authority](https://www.afsa.gov.au/) (AFSA) Online Service website.

In order for this to occur, the creditor must have created a profile so that it can be submitted and processed. They will be required to pay a fee of $470 upon application, which can be made online.

To apply online for the delivery of a bankruptcy notice, the creditor will be required to present several documents. You will have to upload a sealed copy of the [judgement](https://stonegatelegal.com.au/summary-judgment-application-in-qld/) made, or court order issued regarding the payment of the debt exceeding the amount of $10,000.

If this process is not completed in its entirety, it will be returned to the creditor or the creditors’ solicitor or agent for resubmission.

## Completing a Bankruptcy Notice

Initially, before completing the bankruptcy notice paperwork, you should conduct a [bankruptcy search](https://services.afsa.gov.au/brs/search) to see if your debtor is already bankrupt or involved in a debt or [personal insolvency agreement](https://stonegatelegal.com.au/what-is-a-part-x-personal-insolvency-agreement/).  You can find more information about bankruptcy searches – [https://www.afsa.gov.au/online-services-help/bankruptcy-register-search](https://www.afsa.gov.au/online-services-help/bankruptcy-register-search).

If you get a clear search, then you can [create an account with AFSA](https://www.afsa.gov.au/online-services-help/creditor-bankruptcy-notices) and start the bankruptcy notice process.

There are essentially three (3) sections to a bankruptcy notice:

1. The creditor/debtor information; and
2. The judgment debt information; and
3. The interest/costs information.

I will explain these in more detail below.

### The Creditor/Debtor Information

The first step is to input the debtor and the creditor information, including title (Mr, Mrs), given name/s (the first name/s), the surname, and the address of both parties.

This must be exactly the same as contained on the judgment.

![P1 the creditor and debtor information on the judgment debt](<Base64-Image-Removed>)

Once you have this information correct, then you will be asked to complete the debt information.

### The Judgment Debt Information

This is the section where a creditor can add the judgment debt amount, legal costs (if any), and post-judgment interest.

The amount of the judgment debt is the amount of the money order on the judgment, including costs and interest (until the date of judgment).

Where any further legal costs are being claimed (not included in the judgment), a certificate of taxed or assessed costs in support of the amount claimed is to be uploaded and attached to the bankruptcy notice.  In most cases, this will be $nil.

![P2 debt and judgment on a bankruptcy notice](<Base64-Image-Removed>)

Lastly, any post-judgment interest is to be added.

### The Interest/Costs Information

The post-judgment interest is calculated from the date of the judgment to the date of issuing the bankruptcy notice.  This is calculated in accordance with section 59(2) and (3) of the Civil Proceedings Act 2011 (Qld) which say:

> _(2) Interest is payable from the date of a money order on the money order debt unless the court otherwise orders._
>
> _(3) The interest is payable at the rate prescribed under a [practice direction](https://www.courts.qld.gov.au/__data/assets/pdf_file/0004/180553/sc-pd7of2013.pdf) made under the Supreme Court of Queensland Act 1991 unless the court otherwise orders._

The practice direction for calculating interest is [Practice Direction Number 7 of 2013](https://www.courts.qld.gov.au/__data/assets/pdf_file/0004/180553/sc-pd7of2013.pdf), which says:

> _4\. The following is the rate applicable to a money order debt:_
>
> _(a) in respect of the period from 1 January to 30 June in any year, a rate six percent above the cash rate last published by the Reserve Bank of Australia before that period commenced; and_
>
> _(b) in respect of the period from 1 July to 31 December in any year, a rate six percent above the cash rate last published by the Reserve Bank of Australia before that period commenced._

So, interest is calculated at 6% above the [cash rate at the Reserve Bank of Australia](https://www.rba.gov.au/statistics/cash-rate/).

![P3 interest calculation on a bankruptcy notice](<Base64-Image-Removed>)

The easiest way to calculate interest is to go to the [Court Interest Calculator](https://www.courts.qld.gov.au/courts-calculator/calculator).

## Submit Your Notice to AFSA

Once you complete the data entry process, and uploaded the judgment and any other relevant documents, then there is a $470.00 lodgement fee to pay.

Once this is paid then you can submit your bankruptcy notice.  It will be checked by AFSA and either approved or rejected.  If it is rejected, then AFSA will simply want some minor amendments to ensure it is compliant.  Once you get the approved documents back, the bankruptcy notice will need to be served.

## How Do I Serve a Bankruptcy Notice?

Once your application for a bankruptcy notice has been accepted, the next step is serving the debtor with it. Serving a debtor is the process of presenting them with the bankruptcy notice so that the process can begin, and they have to comply with the terms.

Upon AFSA’s acceptance of the bankruptcy notice and its issue to you, the creditor, it must be served to the debtor within 6 months.

[Regulation 102](http://classic.austlii.edu.au/au/legis/cth/num_reg/br2021202100261267/s102.html) of the Bankruptcy Regulations 2021 relates to the service of documents.  It says:

> _(1) Unless the contrary intention appears, if a document is required or permitted by the Act or this instrument to be given or sent to, or served on, a person (other than the Inspector-General, the Official Receiver or the Official Trustee), the document may be:_
>
> _(a) sent by a courier service to the person at the address of the person last known to the person serving the document; or_
>
> _(b) left, in an envelope or similar packaging marked with the person’s name and any relevant document exchange number, at a document exchange where the person maintains a document exchange facility._

Subsection (1) also has a note which says – Note 1: see also [section 28A](http://www.austlii.edu.au/au/legis/cth/consol_act/aia1901230/s28a.html) of the _[Acts Interpretation Act 1901](http://www.austlii.edu.au/au/legis/cth/consol_act/aia1901230/)_. Section 28A says:

> _(1) For the purposes of any Act that requires or permits a document to be served on a person, whether the expression “serve”, “give” or “send” or any other expression is used, then the document may be served:_
>
> _(a) on a natural person:_
>
> _(i) by delivering it to the person personally; or_
>
> _(ii) by leaving it at, or by sending it by pre-paid post to, the address of the place of residence or business of the person last known to the person serving the document …_

As you can see, there are several ways that a bankruptcy notice may be officially served to a debtor. Due to the severity of the consequence of non-compliance, being an act of bankruptcy, it is always recommended that you personally serve the debtor.

This is so you can explain what it is, what it entails, and what they must do, especially if they are not too aware of legal jargon or what bankruptcy means for them. However, you may also serve a bankruptcy notice through:

1. Post, leaving it at their address, sending by courier, or sending by email.

Your lawyer, if you have one, will likely advise you on the best method of serving the notice as they will be able to assess the situation and its details.

Once it has been served to the debtor, the 21 day timeline will begin in which they must comply with the terms of the notice and pay the debt in question.

If you are unable to set this aside, then you may be able to [annul your bankruptcy](https://stonegatelegal.com.au/bankruptcy-annulment-ending-your-bankruptcy-early/).

## Frequently Asked Questions about Bankruptcy Notices

Below, you will find answers to common queries that we can asked by our clients regarding bankruptcy notices and their implications.

### What are the requirements for a bankruptcy notice?

The basic requirements for a bankruptcy notice include, the debt must be a judgment debt, the judgment debt must be more than $10,000.00, and the judgment debt must be no more that six (6) years old.

### Can a bankruptcy notice be withdrawn?

Yes, a bankruptcy notice can be withdrawn if the debtor manages to settle their debts or negotiate an agreement with the creditor. The notice must be withdrawn in writing. However, it is crucial to consult with legal professionals to ensure the necessary steps are taken to rectify the situation and prevent further legal action.

### How long do I have to respond to a bankruptcy notice?

Debtors typically have 21 days to respond to a bankruptcy notice. During this time, the judgment debtor must 1. pay to the creditor the amount of the debt claimed; or 2. make arrangements to the creditor’s satisfaction for settlement of the debt; or 3. apply to set aside the bankruptcy notice.

### Can I negotiate with creditors after receiving a bankruptcy notice?

Yes, negotiation with creditors is possible even after receiving a bankruptcy notice. Be mindful that unless an extension of time has been requested, the 21 day time limit means 21 days only, so all negotiations must be concluded on or before this time.

### Can a bankruptcy notice be challenged in court?

Yes, debtors have the right to set aside a bankruptcy notice in court if they believe there are valid grounds for doing so. A bankruptcy notice can be set aside if There is a defect in the notice; and/or the judgment debt allowing the notice is disputed; and/or the debtor has a cross-demand, set-off, or counterclaim which is equal to, or more than the judgment debt; and/or the notice is an abuse of process.  Read our article of [how to set aside a bankruptcy notice](https://stonegatelegal.com.au/set-aside-a-bankruptcy-notice/).

### Can bankruptcy notices be issued for any type of debt?

Bankruptcy notices can be issued for various types of debts, including credit card debt, personal loans, unpaid bills, and outstanding taxes. However, the debts must be judgment debts, be for $10,000.00 or more, and not be more than six (6) years old.

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**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

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## Litigation Services

- [Commercial Litigation](https://stonegatelegal.com.au/services/commercial-litigation/)
- [Building & Construction Disputes](https://stonegatelegal.com.au/services/building-and-construction-lawyers/)
- [Debt Recovery Lawyers](https://stonegatelegal.com.au/services/debt-recovery-lawyers/)
- [Civil / PersonalLitigation](https://stonegatelegal.com.au/services/civil-litigation/)
- [Tax Debt Disputes](https://stonegatelegal.com.au/services/tax-debt-lawyers/)
- [Corporations Disputes](https://stonegatelegal.com.au/services/corporations-dispute-lawyer/)
- [Body Corporate Debt Recovery](https://stonegatelegal.com.au/services/body-corporate-debt-recovery/)
- [Commercial Lease Disputes](https://stonegatelegal.com.au/services/commercial-lease-disputes/)
- [Defamation Litigation](https://stonegatelegal.com.au/services/defamation-lawyers/)
- [Wills & Estates Litigation](https://stonegatelegal.com.au/services/estate-litigation-lawyers/)
- [Insolvency Lawyers](https://stonegatelegal.com.au/services/insolvency/)
- [Letters of Demand](https://stonegatelegal.com.au/letter-of-demand/)
- [Statutory Demands](https://stonegatelegal.com.au/statutory-demand/)
- [Bankruptcy Lawyers](https://stonegatelegal.com.au/bankruptcy/)
- [Drafting Credit Contracts](https://stonegatelegal.com.au/debt-contract-credit-application/)

- Office Hours

Monday – Friday

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- Brisbane City

[Level 10/ 95 North Quay,](https://maps.app.goo.gl/YdLbTuKmnziFrQDv5)

[Brisbane City, QLD 4000](https://maps.app.goo.gl/YdLbTuKmnziFrQDv5) – (appointment only)

- [07 3180 0143](tel:0731800143)

- Sunshine Coast - Main Office

[4/57-59 Mary Street,](https://maps.app.goo.gl/Suo6oYWeRohEDEBWA)

[Noosaville, QLD 4566](https://maps.app.goo.gl/Suo6oYWeRohEDEBWA)

- [07 5346 0366](tel:0753460366)

At Stonegate Legal, client satisfaction is our top priority. We are proud to have served hundreds of clients who have had positive experiences working with us.

Copyright © 2023 [**Stonegate Legal**](https://stonegatelegal.com.au/) Pty Ltd – All Rights Reserved – Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732) \| [Terms](https://stonegatelegal.com.au/terms-and-conditions/) \|  [Privacy](https://stonegatelegal.com.au/privacy-policy/) \| [Sitemaps](https://stonegatelegal.com.au/sitemap_index.xml) \| [\*Conditions Apply](https://stonegatelegal.com.au/terms-and-conditions/)

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# Frequently Asked Questions

The Stonegate Legal FAQ page will attempt to answer all of your commercial litigation, debt dispute, and insolvency frequently asked questions

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## Common Questions

## QUEENSLAND LITIGATION & DISPUTE LAWYERS

## Helping You Make Informed Decisions

Commercial litigation is a type of dispute resolution process in which two or more parties take legal action against each other to resolve a disagreement or dispute related to a commercial transaction.

This can include disputes over contracts, business relationships, intellectual property, and other business matters. The goal of commercial litigation is to reach an equitable resolution that is satisfactory to all parties involved.

[Contact Us Today](https://stonegatelegal.com.au/stonegate-legal-faq/#)

## Frequently Asked Questions

Debt Recovery QCAT Statutory demand Bankruptcy

[What is legal debt recovery?](https://stonegatelegal.com.au/stonegate-legal-faq/#collapse-b0d504b687f0395bdd70)

Legal [debt recovery](https://stonegatelegal.com.au/services/debt-disputes/) is the act of recovering unpaid debts from debtors using the Courts or the Queensland Civil and Administrative Tribunal (“ _**QCAT**_“). Usually commenced by claim and statement of claim, the aim is to get an enforceable judgment or money order.

[What is the minimum amount of debt?](https://stonegatelegal.com.au/stonegate-legal-faq/#collapse-4e10eba687f0395bdd70)

There is no minimum amount of debt that you can recover, however if the cost of recovering the debt is more than the debt amount, then it may not be worth trying to recover.  QCAT can recover debts up to $25,000.00 and the Magistrates Court up to $150,000.00.

[What are the fees in the Magistrates Court?](https://stonegatelegal.com.au/stonegate-legal-faq/#collapse-f591981687f0395bdd70)

The fees in the Magistrates Court are governed by the _Uniform Civil Procedure (Fees) Regulation 2009_ (QLD). They will likely change every year, so you can look on the [Magistrates Court website](http://www.courts.qld.gov.au/about/fees/fees-in-the-courts/magistrates-court-fees) itself to see the current fees for civil debt recovery action.

[Is there a limitation date on a debt to be recovered?](https://stonegatelegal.com.au/stonegate-legal-faq/#collapse-de9d696687f0395bdd70)

Yes.  [Section 10 of the _Limitation of Actions Act 1974_ (QLD)](http://classic.austlii.edu.au/au/legis/qld/consol_act/loaa1974226/s10.html) says that:

> _The following actions shall not be brought after the expiration of 6 years from the date on which the cause of action arose … an action founded on simple contract or quasi-contract_

This means that an action in debt recovery, being an action for a breach of contract cannot be brought after six (6) years from when the cause of action arose.

The date of the cause of action can be extended by acknowledgement of debt and/or part payment subject to [section 35(3) of the _Limitation of Actions Act 1974_ (QLD)](http://classic.austlii.edu.au/au/legis/qld/consol_act/loaa1974226/s35.html). We strongly advise getting legal advic

[How long can old debts be collected?](https://stonegatelegal.com.au/stonegate-legal-faq/#collapse-76bd720687f0395bdd70)

As mentioned above, a creditor has six (6) years from the last time the debtor acknowledges the debt in writing, or makes a payment toward the debt, until that old debt can be collected.

**TIP** – If you are reaching the end of a six (6) year limitation period, try to get the debtor to make a small payment, or a written acknowledgement that the debt remains due and payable, and the limitation period starts over again.

Read [How Long can a Debt be Chased in Australia?](https://stonegatelegal.com.au/how-long-can-debt-chased-australia/)

[How much does debt recovery cost?](https://stonegatelegal.com.au/stonegate-legal-faq/#collapse-4800f59687f0395bdd70)

It really depends on how far the debtor makes a creditor take the matter.  We have successfully recovered debts with a [letter of demand](https://stonegatelegal.com.au/letter-of-demand/).  We have also had to wind up a debtor company or bankrupt a person in order to enforce a final judgment or final order of the Court.

If you want to have a confidential chat about fees and costs call us on [1300 545 133](tel:1300545133)

[Can you go to jail for a debt?](https://stonegatelegal.com.au/stonegate-legal-faq/#collapse-1d9d364687f0395bdd70)

No, not usually.  The _Bankruptcy Act 1966_ (CTH) has provisions where breach could allow for a jail term.  There are also provisions in the _Corporations Act 2001_ (CTH) where serious breach of a director’s duties can result in jail time if successfully prosecuted.  Also, if the debt arose under circumstances such as theft or fraud, then the debtor could go to jail if successfully prosecuted.

However, an unpaid debt will not usually result in a jail sentence on its own.

[What is QCAT?](https://stonegatelegal.com.au/stonegate-legal-faq/#collapse-b0d504b687f0395bf9ff)

QCAT is the Queensland Civil and Administrative Tribunal. It was set up for self-represented people to deal with minor or small claim amounts of up to $25,000.00.  It is less expensive and less formal than the Magistrates Court.

[What are the advantages of QCAT?](https://stonegatelegal.com.au/stonegate-legal-faq/#collapse-7b74ba4687f0395bf9ff)

The main advantages of commencing proceedings in QCAT are:

1. It is a lot less expensive than commencing in the Court;
2. The process can be a lot quicker than the Court; and
3. QCAT is designed for self-represented people.

[What are the disadvantages of QCAT?](https://stonegatelegal.com.au/stonegate-legal-faq/#collapse-a5c460c687f0395bf9ff)

The main disadvantages of commencing proceedings in QCAT are:

1. The minor debt jurisdiction is mostly a no costs jurisdiction. This means that you will not be able to recover your costs save for a few designated items;
2. Legal representatives do not have an automatic right of appearance. This means that if you want us to appear at a QCAT hearing, you will need the leave of the tribunal, which is not always given.

[What are the fees in QCAT?](https://stonegatelegal.com.au/stonegate-legal-faq/#collapse-b8f7fac687f0395bf9ff)

The fees in QCAT range from about $20.00 or $30.00 to over $300.00 for a minor debt claim, depending on the amount of the claim.  You can check the [QCAT Fees and Allowances](http://www.qcat.qld.gov.au/applications/fees-and-allowances) page of the QCAT Website for more current fees.

[Where can I get the QCAT forms](https://stonegatelegal.com.au/stonegate-legal-faq/#collapse-e1d5d5f687f0395bf9ff)

You can get the QCAT minor debt forms from the [QCAT website](http://www.qcat.qld.gov.au/applications/forms).  However, because we are awesome, you can get them here too:

1. [Form 3 – Application for minor civil dispute – minor debt](http://www.qcat.qld.gov.au/)
2. [Form 55 – Application to set aside or amend a default decision](http://www.qcat.qld.gov.au/__data/assets/pdf_file/0004/165469/form-55-app-to-set-aside-default-decision.pdf)
3. [Form 6 – Request for decision by default – minor civil dispute – minor debt](http://www.qcat.qld.gov.au/__data/assets/pdf_file/0005/100859/form-06-req-for-decision-by-default-mcd.pdf)
4. [Form 7 – Response to minor civil dispute – minor debt](http://www.qcat.qld.gov.au/__data/assets/pdf_file/0015/100860/form-07-response-to-mcd-minor-debt.pdf)

[Where is QCAT?](https://stonegatelegal.com.au/stonegate-legal-faq/#collapse-7311905687f0395bf9ff)

1. QCAT is located at [Level 9, 259 Queen St, Brisbane City, QLD 4000](https://goo.gl/maps/7rN71iZHkfB2).

If you need to go to a hearing, then you may be able to [appear by telephone](http://www.qcat.qld.gov.au/going-to-the-tribunal/attending-by-phone) rather than going to Brisbane in person.


[What is a statutory demand?](https://stonegatelegal.com.au/stonegate-legal-faq/#collapse-b0d504b687f0395c1370)

A statutory demand is a demand for payment made to a company under the [_Corporations Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s459e.html) which raised the presumption of insolvency if not complied with. It is this legal presumption of insolvency which allows a creditor to apply to wind the company up.

[What are the requirements for a statutory demand?](https://stonegatelegal.com.au/stonegate-legal-faq/#collapse-3c88bbe687f0395c1370)

To be eligible to send a statutory demand you must be a creditor of the company, the debt must be $2,000.00 or more, there must not be a genuine dispute or offsetting claim, and the debt must be due and payable at the time of serving the demand.

[What do I do if served with a statutory demand?](https://stonegatelegal.com.au/stonegate-legal-faq/#collapse-6814009687f0395c1370)

If you have been served with a statutory demand then you must either:

1. Comply with the statutory demand; or
2. Request that the demand is withdrawn; or
3. Apply to set aside the statutory demand.

Failure to do any of these things within 21 days will mean that your company is presumed to be insolvent and the issuer can make an application to the Court for an order winding the debtor company up in insolvency.

[How to I comply with a statutory demand?](https://stonegatelegal.com.au/stonegate-legal-faq/#collapse-68f9b67687f0395c1370)

You can comply with a statutory demand by doing either of the following:

1. To pay to the creditor the amount of the debt or total of the amounts of the debts; or
2. To secure or compound for the amount of the debt or total of the amounts of the debts, to the creditor’s reasonable satisfaction.

[How to I request that the statutory demand is withdrawn?](https://stonegatelegal.com.au/stonegate-legal-faq/#collapse-0acbca1687f0395c1370)

You can write to the issuer stating your reasons for being successful in an application setting the demand aside, and asking the issuer to withdraw the demand.  If they do not withdraw the demand, and you successfully apply to set the demand aside, then the issuer may have to pay the costs of the application.

[How to I set aside a statutory demand?](https://stonegatelegal.com.au/stonegate-legal-faq/#collapse-7ac5f23687f0395c1370)

You can apply to the Court for an order setting aside a statutory demand if you have one of the following grounds:

1. You have a genuine dispute; and/or
2. You have an offsetting claim; and/or
3. The statutory demand is defective causing substantial injustice; and/or
4. Some other reason (such as an abuse of process).

If you are applying to set the demand aside, a sealed copy of the application and supporting affidavit must be filed and served on the issuer on or before the 21 day limit.

[https://stonegatelegal.com.au/statutory-demand-complete-guide/](https://stonegatelegal.com.au/statutory-demand-complete-guide/)

[https://stonegatelegal.com.au/setting-aside-statutory-demand-complete-guide/](https://stonegatelegal.com.au/setting-aside-statutory-demand-complete-guide/)

[How Long does a Statutory Demand Last?](https://stonegatelegal.com.au/stonegate-legal-faq/#collapse-0832ea9687f0395c1370)

Once served the debtor has **21 days** to comply.  If the debtor does not comply then they are presumed to be insolvent. This presumption of insolvency lasts for **three (3) months**.

[What is a Bankruptcy Notice?](https://stonegatelegal.com.au/stonegate-legal-faq/#collapse-b0d504b687f0395c2e52)

A bankruptcy notice is a formal demand for payment pursuant to a final judgment or final order of $10,000.00 or more. The judgment debtor has 21 days to comply with the bankruptcy notice or they commit an act of bankruptcy.

[How do I make someone bankrupt?](https://stonegatelegal.com.au/stonegate-legal-faq/#collapse-e8534c6687f0395c2e52)

The most common way that a creditor is allowed to present a creditor’s petition to the Federal Circuit Court, and bankrupt an insolvent debtor is because of an act of bankruptcy caused by non-compliance with a bankruptcy notice.  However, there are a number of other acts of bankruptcy which you can find at [section 40 of the _Bankruptcy Act 1966_ (CTH)](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s40.html).

[What is a Creditor’s Petition?](https://stonegatelegal.com.au/stonegate-legal-faq/#collapse-87a8d86687f0395c2e52)

A Creditor’s Petition is an application to the [Federal Circuit Court](http://www.federalcircuitcourt.gov.au/wps/wcm/connect/fccweb/home) for an order making a person bankrupt.  A creditor’s petition if filed in the Court with the supporting documents.  The order making a person bankrupt is called a “ _sequestration order_“.

[How do I set aside a bankruptcy notice?](https://stonegatelegal.com.au/stonegate-legal-faq/#collapse-39bb94a687f0395c2e52)

If you want to [set aside a bankruptcy notice](https://stonegatelegal.com.au/set-aside-a-bankruptcy-notice/) then there are four (4) main grounds to do so, they are:

1. There is a defect in the notice; and/or
2. The judgment debt allowing the notice is disputed; and/or
3. The debtor has a cross-demand, set-off, or counterclaim which is equal to, or more than the judgment debt; and/or
4. The notice is an abuse of process.

Once again, the time limits are very strict and must be complied with.

[What is the cost of Bankruptcy?](https://stonegatelegal.com.au/stonegate-legal-faq/#collapse-081ac96687f0395c2e52)

The [filing fee](http://www.federalcircuitcourt.gov.au/wps/wcm/connect/fccweb/forms-and-fees/fees-and-costs/fees-gfl/fees-gfl) for bankruptcy is **$3,805.00**(corporate) or **$1,585.00** (personal) with short form amount of **$2,718.00** allowable to be [claimed](http://www.fedcourt.gov.au/forms-and-fees/legal-costs/allowable).

The legal fees up to the cost of the sequestration order being made will vary depending on your law firm.  Please [contact us](https://stonegatelegal.com.au/contact-stonegate-legal/) for an estimate of our fees.

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## Litigation Services

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- Office Hours

Monday – Friday

8:30 AM – 5:00 PM

- Brisbane City

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[Brisbane City, QLD 4000](https://maps.app.goo.gl/YdLbTuKmnziFrQDv5) – (appointment only)

- [07 3180 0143](tel:0731800143)

- Sunshine Coast - Main Office

[4/57-59 Mary Street,](https://maps.app.goo.gl/Suo6oYWeRohEDEBWA)

[Noosaville, QLD 4566](https://maps.app.goo.gl/Suo6oYWeRohEDEBWA)

- [07 5346 0366](tel:0753460366)

At Stonegate Legal, client satisfaction is our top priority. We are proud to have served hundreds of clients who have had positive experiences working with us.

Copyright © 2023 [**Stonegate Legal**](https://stonegatelegal.com.au/) Pty Ltd – All Rights Reserved – Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732) \| [Terms](https://stonegatelegal.com.au/terms-and-conditions/) \|  [Privacy](https://stonegatelegal.com.au/privacy-policy/) \| [Sitemaps](https://stonegatelegal.com.au/sitemap_index.xml) \| [\*Conditions Apply](https://stonegatelegal.com.au/terms-and-conditions/)

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## Small Business Debt Collection
[Skip to content](https://stonegatelegal.com.au/small-business-debt-collection-27-tips-and-faq/#content)

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# Small Business Debt Collection – 27 Tips and FAQ

[Discuss Your Case Today](https://stonegatelegal.com.au/contact/)

## NEWS & ARTICLES

- [By \\
Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| October 28, 2018

## Article Summary

This article provides a comprehensive guide on managing debt collection for small businesses in Queensland.

The article is designed to help small businesses handle debt recovery effectively, reduce stress, and save time by implementing strategic practices throughout the debt collection process, including:

**1\. Pre-collection Preparation:**

- **Terms and Conditions:** Emphasise having clear, enforceable terms and conditions in credit contracts to maximise debt recovery chances and specify remedies for breaches, including recovering collection and legal fees.
- **Credit and Background Checks:** Conduct thorough due diligence before extending credit, including credit report checks and verifying trade references to assess the payment reliability of potential clients.

**2\. Debt Collection Process:**

- **Initial Contact:** Start by personally calling defaulting customers to understand non-payment reasons, documenting everything during the interaction.
- **Communication Strategies:** Remain calm, professional, and avoid harassment. Use multiple methods for sending reminders and escalate the directness gradually through three reminder stages before proceeding to a formal demand letter.
- **Formal Demand and Legal Steps:** Clearly articulate the details of the debt and the legal actions intended if payment is not made by a specific date. This is critical to establish clear expectations and legal grounds for potential recovery efforts.

**3\. Alternative Resolution and Legal Action:**

- **Settlement and Compromise:** Before escalating to costly legal actions, consider settling the matter by negotiating a reasonable repayment. This could involve accepting a lesser amount than the full debt to avoid legal expenses and prolonged disputes.
- **Legal Advice:** Engage with specialised debt recovery lawyers for professional advice, especially when dealing with complex cases or large amounts, to ensure compliance and effectiveness in debt recovery.

**4\. FAQs and Additional Guidance:**

- The article also addresses frequently asked questions about debt collection tailored to the needs of small businesses, discussing aspects like the appropriateness of debt collection services, the feasibility of recovering small or old debts, and the potential costs involved.

In this guide, our **[debt recovery solicitors](https://stonegatelegal.com.au/services/debt-recovery-lawyers/)** aims to equip small business owners with the necessary tools and knowledge to manage debt collection internally before considering the involvement of professional debt collectors or legal proceedings, thus optimising financial management and customer relationships.

Table of Contents

[Toggle](https://stonegatelegal.com.au/small-business-debt-collection-27-tips-and-faq/#)

![Small Business Debt Collection in Queensland](https://stonegatelegal.com.au/wp-content/uploads/2018/10/Small-Business-Debt-Collection-in-Queensland.png)

## Small Business Debt Collection – 27 Tips and FAQ

Small business debt collection is an unfortunate but vital part of running any small business in Queensland.

If you offer goods and/or services on credit, then you will have experienced the stress and time constraints with attempting to recover these bad debts yourself.

A small business debt collection lawyer can give you advice and assistance you need to reduce the stress of having to recover bad debts from your customers/clients, and also free-up your valuable time to actually get your work done!

Our [debt recovery lawyers](https://stonegatelegal.com.au/services/debt-disputes/) have written this article to give you industry tips for your small business debt collection, and also answer the most common questions.

## Small Business Debt Collection

There are a number of things that you can do before you even enter into an agreement with a bad paying client/customer in relation to small business debt collection.

### Terms and Conditions

Ensure that you have air-tight [terms and conditions](https://stonegatelegal.com.au/how-to-improve-your-debt-recovery-prospects/).  Correctly drafted terms and conditions will not help much if a debtor decided not to pay the invoice, however a good [credit application](https://stonegatelegal.com.au/debt-contract-credit-application/) or contract will maximise your chances of recovering the debt.

Good terms and conditions in a credit contract will correctly identify the parties, correctly identify a breach, and then correctly identify the remedies available to you as a result of the breach.

With good terms and conditions in a credit contract, you will be able to recover your debt collection and legal fees, prescribe a default interest rate, and take security for the debt.

Always ensure that you have a fully executed credit contract with enforceable terms of trade before you offer any goods and/or services on credit.

### Conduct Credit Report Checks

Before you agree to provide your goods and/or services on credit you should do your due diligence.  Part of the due diligence procedure is to conduct credit report checks on the customer.

A credit check can be provided by a number of different credit reporting companies.

However, you can also get a credit report on a company by getting a current extract from [ASIC](https://asic.gov.au/).  The ASIC current extract has a credit score but will also show any litigation commenced against the company, any defaults or judgments lodged against the company.

In relation to small business debt collection, a current extract will also ensure that you have correctly identified the customer / client in your credit contract, which is very important if they default.

### Always Check Trade References

Part of the application process should include a number of trade references.

A trade reference is a company / business that your potential credit applicant has already conducted business with on credit.

We always recommend getting at least two (2) trade references and contacting those references to ensure that your customer / client pays their debts.

Always check trade references – they might say “ _they are sometimes a bit late, but they always let us know and make the payment when they can_”.

This might be good enough for you to engage with them, but at least you know that before entering into the agreement.

### Ensure Proper Record Keeping

You should ensure that you keep proper records of all of the above.  There is no point going through the small business debt collection process above, only to not have a copy of the contract when it comes time to sue.

Keep the original credit agreement, the ASIC search and/or credit report, the trade references, and any other information safe.

We would also recommend keeping digital copies of the above also.  You would be surprised how many people come to us alleging breach of contract, but do not have a copy of the contract.

## Small Business Debt Collection Process

If you do the above, then it will likely make the small business debt collection process less expensive, and less time consuming.  However, inevitably as a small business offering goods and/or services on credit, you will have to recover debts from clients who have not paid their bills.

This section outlines the small business debt collection process.

### Call Your Customers Who Owe the Debt

Initially, upon default – for example seven (7) days after issuing the invoice as per your terms and conditions – give the debtor a call to see why they haven’t paid.

It might be that they have genuinely forgotten, or did not receive the invoice, or another genuine reason why it has slipped through the net.

If they agree to pay, then always give the debtor a time and date on which the debt must be paid by.  Diarise that date, and then follow up on that date if the debt has not been paid.

**TIP** – Never leave the payment terms open-ended. Always give a time and date on which a payment needs to be made.

Whether you make one or more telephone calls to a debtor, you should always remember to do the following:

### Document Everything

Have a notepad and paper and write everything down.  If they say anything, write it down.  If you make any agreements, write it down.  If they make further promises to pay, write it down.

This is important because you might need to rely of any representations made at a future date, and if you have documented it sufficiently, then this makes it a lot easier.

Going one step further, once the conversation has ended, send the debtor an email confirming what you spoke about, and any agreements made.  This email will include the exact time and date and will be good evidence if you need to rely on it in the future.

### Stay Cool, Calm and Collected

There is a great old saying:

> _“You catch more flies with honey than you do with vinegar”_

Yes, it feels personal when a debtor does not pay their invoice, but it is not personal, it is just a commercial problem.

If you get upset or personal on the telephone, or raise your voice, or react to something that the debtor says, then it may only hinder the process rather than helping.

### Avoid Harassing the Debtor

There are a number of small business debt collection [guidelines](https://www.accc.gov.au/consumers/debt-debt-collection/dealing-with-debt-collectors) which say that you are not allowed to harass or hassle a debtor in relation to collecting your small business debt.  You must not:

1. Unreasonably harass or hassle the debtor;
2. Mislead or deceive or attempt to mislead or deceive the debtor;
3. Act unconscionably toward the debtor – take unfair advantage of any vulnerability or disability; or
4. Use any physical force or coercion against the debtor.

### Stay Polite & Professional

Remember that this is a purely commercial matter and you should conduct yourself in a professional and commercial manner.

### Find Out the Reason for Non-Payment

You should attempt to gauge the reason for the default.  The business might be having some short-term cash-flow problems, or someone could have been sick, or any number of other reasons.

There is a difference between a debtor who can’t pay and a debtor who won’t pay.

If you can gauge the reason for the breach, then it might help you to decide how to progress the matter forward.  However, debtors do not tell the truth so you should be prepared for all kinds of excuses.

### Be Prepared for Excuses

We hear all kinds of excuses!  I didn’t get the invoice, we put in the wrong account number, they are waiting for a payment to come in, etc.

Be prepared for the debtor to make an excuse and prepare an answer.  Instead of treating these as excuses, treat them as problems that you can provide a solution to.

For example, if they say that they did not receive the invoice, send it to them by email while they are on the phone – then ask them if they received it.

### Ask for a Good Faith Gesture

At the end of the call you should ask for a good faith gesture.

A payment toward the debt is a good thing to request because it shows that the debtor acknowledges the debt and indicates that the debt is not disputed.

If you do not get any luck from your phone calls, then you should start sending reminder letters.

### Reminder Letters of Emails

Sending reminder letters or reminder emails is the next step in the small business debt collection process.

The general rule-of-thumb is that you give a debtor three (3) reminders that the debt is overdue.

You should resent the invoice with the reminder letters so that the debtor cannot say that they did not know what to pay, or how to pay, etc.

Save copies of the letters or emails in case you need to rely on them in the future, and also save any replies that you get after sending them.

### Use Multiple Methods

It might be possible that a debtor company do not check their post office box for example, and so you should use a few different methods to try to get these letters in front of the debtor.

Send by mail using express post to prove delivery.  Send by email and request a delivery and read receipt.  If reasonable, you can send a text message – for example if you have communicated with the debtor by text prior to default.

Another avenue would be to send the unpaid invoices and the reminder letters to the accounts department of the debtor company, then follow up with a telephone call.

Diarise all attempts to deliver the reminder letters.

### Gradually Increase Directness

If you send three (3) reminder letters, then you should increase the directness with each letter.  The first should be a friendly reminder, the second less friendly and more formal, and finally the last reminder letter should be the most formal letter before the formal letter of demand.

If you still get no response from your reminders, then you may have to get serious and send the debtor a letter of demand.

## Small Business Debt Collection – Letter of Demand

A letter of demand is the first step in the [commercial debt recovery](https://stonegatelegal.com.au/commercial-debt-recovery/) process.

The final letter of demand demands payment and foreshadows the action that you intend to take if the debtor does not pay or attempt to make repayments.

There are a number of things that you should include in your letter of demand.

### Write Clearly and Professionally

You should spell out the particulars of the small business debt collection matter in the letter of demand, including all the attempts that you have made to recover the debt.

Clear, professional, and succinct communication is one of the keys to successful debt collection.

You can use bullet-points to date the list of chronological events, for example.

### Know Your Small Business Debt Collection Rights

A letter of demand should spell out your legal rights and their legal obligations.

It is very important that you do not include a remedy available to you in law, that you are not entitled to.  It is unethical to foreshadow an action that you are not able to bring.

For example, you cannot foreshadow winding-up or bankruptcy if the debts fall below the statutory minimums.

You should always seek legal advice before threatening legal action.

### Clearly Explain the Ramifications

You should clearly explain the ramifications of the action that you intend to bring if they do not comply with the letter of demand.

Bankruptcy and winding up have serious consequences for people in the building and construction industries, or real estate industry for example.

Also, explain the consequences of having a default registered against them.

Again, it is important not to foreshadow a consequence if it is not an available remedy.

### Give Time for Compliance

A letter of demand must have a definite time for compliance.  You should say that payment must be made “_on or before 5pm on XX November 20XX_”.

If they do nothing, then you will likely have to commence legal action to recover this debt.

We have comprehensive [information on letters of demand here](https://stonegatelegal.com.au/letter-of-demand/)

### Attempt to Compromise and Settle

If you do not want to incur the costs of [business debt recovery](https://stonegatelegal.com.au/commercial-debt-recovery/) then you should consider making an offer to settle the matter early, put it behind you, and getting on with your life.

If you are forced to go to Court to recover the debt, or write it off altogether, then you will not recover all of the costs of doing so.  So, you should consider compromising and accepting a lesser amount on a _without prejudice_ basis.

For example, if your debt is $10,000.00 and you will be $3,000.00 out-of-pocket, then it is worth making an offer for around $7,000.00 now.  Although it may not seem like it, it is actually a great result.

We have information about [settling matters early here](https://stonegatelegal.com.au/settling-litigation-early-calderbank-offers/).

### Ask for a Counter-Offer

If you make a _without prejudice_ offer to settle, then you should also ask for a counteroffer.

This is essentially a negotiation, so the usual negotiation procedure should apply.  If you are prepared to compromise by $3,000.00 then you should come in by dropping $1,000.00 and asking that the debtor make a counteroffer.  They might offer a $2,000.00 reduction for example and you can accept that offer.

We advise using a lawyer to negotiate on your behalf on a _without prejudice_ basis.  Read our extensive article here about [Settling Litigation Early](https://stonegatelegal.com.au/settling-litigation-early-calderbank-offers/).

## What else can a Small Business do?

There are a number of other things that you can do.  These include [alternative dispute resolution](https://stonegatelegal.com.au/alternative-dispute-resolution/), filing a default on the debtors’ credit file, and commence legal action.

### Alternative Dispute Resolution

There are a number of alternative dispute resolution methods that you can use to attempt to resolve your dispute.

You can attempt to mediate the debt dispute. This involves meeting with the debtor and a mediator and attempting to reach an agreement.

You can attempt to conciliate the agreement or engage an arbitrator to decide the debt dispute.

Read more about alternative dispute resolution on the [Queensland Law Society website](http://www.qls.com.au/For_the_community/Alternative_Dispute_Resolution).

### Lodge a Default on the Credit File

If you meet the criteria, then you might be able to lodge a default on the debtors’ credit file.

This means that anyone who does a credit check will be notified that they defaulted on your debt.  This will stop this debtor from doing this again to someone else and may also encourage the debtor to pay your debt, rather than having this on their credit file.

### Seek Small Business Debt Collection Legal Advice

If all else fails, you should consider getting legal advice from a dedicated debt recovery and insolvency lawyer.  We specialise in debt recovery for small businesses, SME and corporate debts in Queensland.

A debt recovery lawyer will be able to advise you on the commercial realities of your small business [debt recovery matter](https://stonegatelegal.com.au/legal-debt-recovery-options-for-businesses/), and give you advice and assistance with your debt recovery matter and the enforcement of money orders.

## FAQ Small Business Debt Collection

See below for the most asked questions in relation to small business debt recovery.

### Are all debt collection services in Australia the same?

No!  There are a number of different debt collection services. From no collection no fee single person debt collectors, to debt collection practises in large law firms and everything in between.

We specialise in [debt recovery](https://stonegatelegal.com.au/services/debt-disputes/), the [enforcement of money orders](https://stonegatelegal.com.au/enforcing-a-judgment/), and [insolvency](https://stonegatelegal.com.au/services/insolvency/).

### Is Small Business Debt Collection only for Large Companies?

Not at all.  We specialise in small business debt collection and SME debt collection.  However, the commercial realities of debt collection for small businesses may make it too expensive.

### Are my Debts Are too Small?

We do not have a minimum requirement for the amount of the debt that we can attempt to collect.  However, the commercial realities of [engaging a debt collection lawyer](https://stonegatelegal.com.au/debt-collection-lawyer-or-debt-collection-agency/) to recover a small debt may not make it a viable option.

It is not commercially sound to spend $5,000.00 to recover a $5,000.00 debt.

### Are there any Additional Costs?

It depends what you instruct us to do.  There are a number of third-parties that will require payment on top of our fees.  Process servers, Court bailiffs, filing fees, express post, etc.

### Can a debt be too old to recover?

Yes, six (6) years.  The [Section 10 of the _Limitation of Actions Act 1974_ (QLD)](http://classic.austlii.edu.au/au/legis/qld/consol_act/loaa1974226/s10.html) states that:

> _The following actions shall not be brought after the expiration of 6 years from the date on which the cause of action arose … (a) … an action founded on simple contract or quasi-contract_

The cause of action arises in contract upon the breach of contract.

However, the six (6) year accrual can start over again.  [Section 36 of the _Limitation of Actions Act 1974_ (QLD)](http://classic.austlii.edu.au/au/legis/qld/consol_act/loaa1974226/s35.html) states that:

> _Where a right of action has accrued to recover a debt or other liquidated pecuniary claim … and the person liable or accountable therefor acknowledges the claim or makes a payment in respect thereof, the right shall be deemed to have accrued on and not before the date of the acknowledgement or the last payment._

### Can I add Collection Costs to my Debtor’s Overdue Invoice?

There is no legal right to recover the debt collection costs unless that right is contained in your credit agreement or contract.

A carefully worded contract can allow you to claim a lot more than you would be ordinarily.  This is why we always recommend getting a credit contract before offering credit to your clients.

### Can I Recover Legal Costs if I Sue Someone?

The Court will usually award costs to the party who is successful in the litigation.

However, the costs awarded at a trial will not represent the actual amount of the legal costs actually spent.  You will usually only be able to recover between about 30% to 80% of the actual money spent.

### Can I Refer my Debt if I don’t have any Details?

Yes, you can.  This happens quite a lot.  In debt recovery matters involving unpaid rent, it is quite common for the debtor/tenant to be evicted and not provide a forwarding address.

We can conduct a number of searches including vehicle registration searches, and other online databases to attempt to find the debtor.

We can also refer the matter to a private investigator who can perform a skip trace.

### Do Small Business Debt Collectors Harass People?

I don’t know!  All I can say is that we absolutely do not.

We reasonably, and professionally recover the debt without ever harassing people.  We are lawyers, and as such we have an ethical obligation to our clients, but also self-represented people such as debtors.

### How do I Submit a Debt for Collection?

We have an online debt collection portal where you can provide us with all of the information that we need, and also upload all of the documents that we require.

### How much does Small Business Debt Collection Cost?

It really depends on the conduct of the debtor.

If the debtor is reasonable and agrees to pay, then just the cost of the initial consultation and letter of demand.  However, if the debtor does everything in their power to make things difficult, then the costs may escalate.

However, at every stage in the proceeding we give you advice, present to with legal options, outline how much each choice will cost, and let you make that decision.

### How Overdue Should my Debt be?

It doesn’t really matter, as long as it is overdue.

However, thought should be given to attempting some small business [debt collection](https://stonegatelegal.com.au/30-tips-to-reduce-bad-business-debts/) yourself before instructing small business [debt collection lawyers](https://stonegatelegal.com.au/why-use-a-debt-recovery-law-firm/).

### Are Lawyers Better at Recovering Debts?

Yes.  Debt collectors are good, but they can only get to a certain point before they are unable to collect.  Debt recovery lawyers can assist right from the start, through the negotiation process, through the Court or QCAT process, through to the enforcement and insolvency process.

### Should I Accept a Payment Plan?

Although this might sound counter-intuitive, as a litigation lawyer we always encourage people **NOT** to litigate.  Litigation is stressful, expensive, and time consuming.  If you can settle on an amount that you are comfortable with, then we would mostly encourage that.

It depends on the strength of your case, the default clauses in your contract, the debtor’s financial position, and a number of other factors.

However, on the most part, we recommend attempting to resolve your debt recover matters by instructing a debt recover lawyer to negotiate on your behalf.

### Do I go to QCAT or the Magistrates / District / Supreme Courts?

It is up to you.  If you have a debt less than $25,000.00 then you can commence proceedings in QCAT or the [Magistrates Court](https://www.courts.qld.gov.au/courts/magistrates-court).  There are advantages and disadvantages to both.

If you have a debt between $150,000.00 and $750,000.00 then you must commence proceedings in the [District Court](https://www.courts.qld.gov.au/courts/district-court).

If you have a debt over $750,000.00 then you must commence proceedings in the [Supreme Court](https://www.courts.qld.gov.au/courts/supreme-court).

### What Information do I need to Provide to you to Collect a Debt?

We need proper instructions to act for a client in a debt recovery matter.  At a minimum we will need proper particulars on the creditor, the debtor, the contract or credit agreement, and particulars of the debt and the breach of the contract.

The more information you can give us, the better.

### What types of Businesses use Debt Recovery Lawyers?

Any and all businesses will at some time need to recover debts.  Especially businesses that offer goods and/or services on credit to a customer / client.  Small business debt collection is just part of doing business.

We also have a lot of clients in the building and construction industries, or parallel businesses to the building and constructions industry.

### Where do you Provide Small Business Debt Collection Services?

We operate our small business debt collection services in Queensland.  However, we can serve debtors in all States and Territories in Australia.

We also practise in the Federal jurisdiction, bankruptcy and liquidation for example, and so we are able to practise Australia-wide.

### Will I lose my Client if I Engage a Small Business Debt Collector?

Maybe!  But do you want a customer who doesn’t pay their bills?

We are professional, ethical, and commercial in all of our dealings with a debtor or a debtor’s solicitor.

![Picture of Wayne Davis](https://secure.gravatar.com/avatar/5b54ec283af918fb28f171190159c8892905cb00c7f8bf19a380e6224d11fa82?s=300&d=mm&r=g)

#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation.

With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice.

Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings.

Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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- [Litigation Services](https://stonegatelegal.com.au/services/)
- [Frequently Asked Questions](https://stonegatelegal.com.au/stonegate-legal-faq/)
- [News & Blogs](https://stonegatelegal.com.au/news-articles/)
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Individual liability limited by a scheme approved under professional standards legislation.

## Litigation Services

- [Commercial Litigation](https://stonegatelegal.com.au/services/commercial-litigation/)
- [Building & Construction Disputes](https://stonegatelegal.com.au/services/building-and-construction-lawyers/)
- [Debt Recovery Lawyers](https://stonegatelegal.com.au/services/debt-recovery-lawyers/)
- [Civil / PersonalLitigation](https://stonegatelegal.com.au/services/civil-litigation/)
- [Tax Debt Disputes](https://stonegatelegal.com.au/services/tax-debt-lawyers/)
- [Corporations Disputes](https://stonegatelegal.com.au/services/corporations-dispute-lawyer/)
- [Body Corporate Debt Recovery](https://stonegatelegal.com.au/services/body-corporate-debt-recovery/)
- [Commercial Lease Disputes](https://stonegatelegal.com.au/services/commercial-lease-disputes/)
- [Defamation Litigation](https://stonegatelegal.com.au/services/defamation-lawyers/)
- [Wills & Estates Litigation](https://stonegatelegal.com.au/services/estate-litigation-lawyers/)
- [Insolvency Lawyers](https://stonegatelegal.com.au/services/insolvency/)
- [Letters of Demand](https://stonegatelegal.com.au/letter-of-demand/)
- [Statutory Demands](https://stonegatelegal.com.au/statutory-demand/)
- [Bankruptcy Lawyers](https://stonegatelegal.com.au/bankruptcy/)
- [Drafting Credit Contracts](https://stonegatelegal.com.au/debt-contract-credit-application/)

- Office Hours

Monday – Friday

8:30 AM – 5:00 PM

- Brisbane City

[Level 10/ 95 North Quay,](https://maps.app.goo.gl/YdLbTuKmnziFrQDv5)

[Brisbane City, QLD 4000](https://maps.app.goo.gl/YdLbTuKmnziFrQDv5) – (appointment only)

- [07 3180 0143](tel:0731800143)

- Sunshine Coast - Main Office

[4/57-59 Mary Street,](https://maps.app.goo.gl/Suo6oYWeRohEDEBWA)

[Noosaville, QLD 4566](https://maps.app.goo.gl/Suo6oYWeRohEDEBWA)

- [07 5346 0366](tel:0753460366)

At Stonegate Legal, client satisfaction is our top priority. We are proud to have served hundreds of clients who have had positive experiences working with us.

Copyright © 2023 [**Stonegate Legal**](https://stonegatelegal.com.au/) Pty Ltd – All Rights Reserved – Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732) \| [Terms](https://stonegatelegal.com.au/terms-and-conditions/) \|  [Privacy](https://stonegatelegal.com.au/privacy-policy/) \| [Sitemaps](https://stonegatelegal.com.au/sitemap_index.xml) \| [\*Conditions Apply](https://stonegatelegal.com.au/terms-and-conditions/)

## Expert Litigation Services
[Skip to content](https://stonegatelegal.com.au/about-stonegate-legal/#content)

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[1300 545 133](tel:1300%20545%20133)

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[1300 545 133](tel:1300%20545%20133)

[Contact Us](https://stonegatelegal.com.au/contact/)

# Your Partner in Navigating Complex Litigation.

Stonegate Legal is a dedicated commercial litigation law firm focussing on building and construction disputes, debt recovery/collection, corporations disputes, commercial lease disputes, defamation, libel & slander, issuing and defending statutory demands.  We combine the latest technology and up-to-date software to give our clients a service like no other.

[Speak To Our Trusted Lawyers Today](https://stonegatelegal.com.au/contact/)

## Our Mission

Our mission is to provide our clients with the best legal counsel available. We work to give the highest quality of service by creating customised plans that address our clients’ individual necessities and objectives. We are committed to open dialogue, clarity, and the pursuit of just and profitable results, with the goal of forming enduring partnerships with our clients that are grounded in faith and mutual esteem.

## Our Values

We have an unwavering commitment to delivering the highest quality of representation and are driven by the following fundamental principles:

- Transparency
- Experience
- Expertise
- Reassurance

## Litigation & Dispute Resolution

## Discuss Your Case Today

- Receive a no-fee, no-obligation 30 minute consult

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Email

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Required Service

Commercial LitigationBuilding & Construction LawDebt DisputeInsolvency LawStatutory DemandBankruptcyNot Sure

Message

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## Queensland Litigation & Dispute Lawyers

## Behind Stonegate Legal

[Wayne Davis](https://www.qls.com.au/Directories/Find-A-Solicitor/W/Wayne-Philip-Davis) is the principal lawyer and legal practice director of [Stonegate Legal](https://www.qls.com.au/Directories/QLS-Directory/Organisations/S/Stonegate-Legal-Pty-Ltd) and has an LLB, and GDLP and is admitted to the Supreme Court of Queensland and the High Court of Australia. Wayne is a commercial litigation expert who is experienced in:

- Commercial Litigation
- Legal Debt Recovery
- Building and Construction Law
- Commencing & Defending Legal Action in Court
- Defamation Litigation
- Alternative Dispute Resolution (mediations)
- Issuing and Opposing Bankruptcy Notices
- Bankruptcy Law & Sequestrations Orders
- Issuing & Opposing Statutory Demands
- Winding-Up Applications & Liquidations Law
- Corporations Disputes (Director / Shareholder Disputes)
- Commercial Lease Disputes
- Wills/Estate Litigation

![About Stonegate Legal Wayne Davis expert litigation lawyer in Australia](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2025/01/About-Stonegate-Legal-Wayne-Davis-expert-litigation-lawyer-in-Australia-scaled.jpg)

## No Obligation Consultation With A Trusted Litigation Lawyer

Rely on us to provide dependable support and legal advice, helping you make your way through the complex litigation environment while always putting your welfare & best interest first. Make a wise decision and join forces with us now.

[Litigation Services](https://stonegatelegal.com.au/services/)

[OR Speak To A Trusted Lawyer Today](https://stonegatelegal.com.au/contact/)

## The Stonegate Legal Story

![about Stonegate Legal logo about us litigation lawyers in Queensland](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2025/01/Stonegate-Logo-FINAL-v2-Litigation-Lawyers-01-300x300.png)

Stonegate Legal’s journey began in 2019, here on the picturesque Sunshine Coast. Wayne, our founder, had spent years working with law firms in both Brisbane’s bustling CBD and the Sunshine Coast. Through these experiences, he saw an opportunity to do things differently—offering a legal service model that is innovative, approachable, and centered on delivering exceptional client outcomes.

Starting as a sole practitioner with a vision for a better way, Stonegate Legal quickly established itself as a firm driven by integrity, professionalism, and forward-thinking solutions. What began as a modest practice soon evolved into a thriving law firm with a team of dedicated professionals, operating out of our stunning office in Noosa.

**From Humble Beginnings to a Trusted Name**

In just a few short years, Stonegate Legal has transformed into a trusted partner for businesses and individuals alike. Recognised across the Sunshine Coast and Brisbane for our commitment to technology-driven legal solutions, we pride ourselves on delivering tailored advice and strategies designed to achieve the best outcomes for our clients.

Our growth has been built on a foundation of trust and excellence. By continuously investing in professional development and cutting-edge legal tools, we ensure that our clients receive top-tier service and expert guidance in navigating the complexities of litigation and dispute resolution.

**Guiding You with Confidence**

At Stonegate Legal, we understand that litigation can be daunting. That’s why our mission is to stand as a reliable partner, guiding our clients through challenges with clarity, confidence, and care. Whether we’re assisting a small business with commercial disputes or helping individuals protect their legal rights, we’re committed to providing the expertise and support you need to succeed.

**Looking Ahead**

As we continue to grow, our focus remains on building long-lasting relationships and making a positive impact within the communities we serve. With a reputation for excellence across the Sunshine Coast and Brisbane, Stonegate Legal is more than a law firm—we are a trusted ally in navigating life’s legal challenges.

Welcome to Stonegate Legal. Together, we’ll achieve success and create a future defined by opportunity, resilience, and trust.

### Make Informed Decisions with Stonegate Legal

#### Personalised Approach

We are dedicated to providing individualised services to all of our clients. We strive to get to know each person and the particulars of their situation in order to come up with a strategy that is suited to their particular objectives and requirements.

#### Extensive Experience & Legal Knowledge

We bring an abundance of knowledge and proficiency to the equation. With an expansive comprehension of the legal environment, we give our customers the premier counsel and representation, and we’re devoted to reaching the greatest possible results for their matters.

#### Results Driven

Our legal experts are devoted to obtaining positive results for our customers. We strive to ensure that the results are just and advantageous to them, and we’re not hesitant to think outside of the box to meet our clients’ wishes.

[![Member of the QLD Law Society](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/memberoftheQLDlawsociety.png)](https://www.qls.com.au/Directories/QLS-Directory/Organisations/S/Stonegate-Legal-Pty-Ltd) Member of the Queensland Law Society

[![](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2025/01/HIA-professional-services-member-768x231.png)](https://hia.com.au/business-support/professional-services-list/professional-services-list-qld) HIA Professional Services Member

### Litigation Services

[Stonegate Legal](https://stonegatelegal.com.au/) provides a comprehensive selection of commercial litigation, debt recovery/collection, and general litigation and legal disputes, encompassing:

[Our Expertise](https://stonegatelegal.com.au/services/)

[![About Stonegate Legal Commercial Litigation Lawyers](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/Asset-18Banking.png)](https://stonegatelegal.com.au/services/commercial-litigation/)

### [Commercial Litigation](https://stonegatelegal.com.au/services/commercial-litigation/)

[![About Stonegate Legal Building & Construction Lawyers](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/Asset-20Banking.png)](https://stonegatelegal.com.au/services/building-and-construction-lawyers/)

### [Building & Construction](https://stonegatelegal.com.au/services/building-and-construction-lawyers/)

[![Asset 3People](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/Asset-3People.png)](https://stonegatelegal.com.au/services/civil-litigation/)

### [Civil Disputes](https://stonegatelegal.com.au/services/civil-litigation/)

[![About Stonegate Legal Defamation, Libel, & Slander Lawyers](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/Asset-19Banking.png)](https://stonegatelegal.com.au/services/defamation-lawyers/)

### [Defamation, Libel, Slander](https://stonegatelegal.com.au/services/defamation-lawyers/)

[![Asset 8Banking](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/Asset-8Banking.png)](https://stonegatelegal.com.au/services/estate-litigation-lawyers/)

### [Will/Estate Disputes](https://stonegatelegal.com.au/services/estate-litigation-lawyers/)

[![About Stonegate Legal Commercial Litigation Lawyers](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/Asset-18Banking.png)](https://stonegatelegal.com.au/services/debt-disputes/)

### [Debt Disputes](https://stonegatelegal.com.au/services/debt-disputes/)

[![Asset 12](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/Asset-12.png)](https://stonegatelegal.com.au/statutory-demand/)

### [Statutory Demand](https://stonegatelegal.com.au/statutory-demand/)

[![Asset 2](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/Asset-2.png)](https://stonegatelegal.com.au/services/commercial-lease-disputes/)

### [Lease Disputes](https://stonegatelegal.com.au/services/commercial-lease-disputes/)

![about us - case studies and success stories - happy clients](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2025/01/about-us-case-studies-and-success-stories-happy-clients-1024x683.jpg)

## Case Studies - Success Stories

[_KV Projects Pty Ltd v Regal Bridges Pty Ltd and Ors (No. 2)_ \[2021\] QDC 37](https://austlii.edu.au/cgi-bin/viewdoc/au/cases/qld/QDC/2021/37.html) – we obtained a judgment of $205,363.03 and $27,184.14 costs.

[_Angela Hastings v Vantage Holdings Australia Pty Ltd_ \[2021\] FWC 5035](https://austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FWC/2021/5035.html) – successful unfair dismissal claim – our client got $36,217.00 + super.

[_DSGN Kartell Pty Ltd v Pathmaperuma & Anor_ \[2020\] QCAT 211](https://austlii.edu.au/cgi-bin/viewdoc/au/cases/qld/QCAT/2020/211.html) – we successfully argued that costs should be paid to our client after the applicant withdrew the claim as they knew they would lose.

[_KV Projects Pty Ltd v Regal Bridges Pty Ltd and Ors_ \[2020\] QDC 261](https://austlii.edu.au/cgi-bin/viewdoc/au/cases/qld/QDC/2020/261.html) – We successfully obtained orders for [substituted service](https://stonegatelegal.com.au/substituted-service-queensland/) against defendants who were trying not to be served.

[_JDT v PDL_ (No 2) \[2022\] QDC 147](https://austlii.edu.au/cgi-bin/viewdoc/au/cases/qld/QDC/2022/147.html) – we successfully argued that our client’s name should be anonymised after [false sexual assault claims](https://stonegatelegal.com.au/false-sexual-allegations-defamation-claims/), to protect him in the defamation proceeding.

[_Appello Pty Ltd v Heyward_ \[2025\] FCA 190](https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA/2025/190.html) – with the help of counsel, we successfully defended an appeal in the Federal Court of Australia.

**Defamation Success Stories**

We have argued over 70 defamation disputes, successfully sending concerns notices, and reaching a resolution without resorting to costly litigation. We have also argued defamation cases in Court.

**Debt Recovery Success Stories**

We have successfully managed over 225 debt recovery matters, recovering millions of dollars for clients, issuing enforcement warrants, statutory demands, and bankruptcy notices.

**Construction Success Stories**

We have successfully argued over 200 building and construction matters, resolving many before they get to Court, unfair price increases, defective & incomplete works, QBCC and contract compliance.

[Meet Our Litigation Team - Click Here](https://stonegatelegal.com.au/the-stonegate-legal-team/)

## Stonegate Legal Happy Clients - Google Reviews

I highly recommend Stonegate Legal for any business matter. Wayne was extremely professional and achieved positive outcomes for my case. His expertise and dedication are exceptional. What sets Wayne and Stonegate Legal apart is their genuine care for their clients. They always ensured I felt informed and supported, and their responsiveness to my questions and concerns was truly commendable. Don't hesitate to seek their assistance. They are the best!

![Jayne](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/plugins/elementor/assets/images/placeholder.png)

Jayne

I never thought that I would have a building and construction dispute, which was a nightmare until I engaged Stonegate to help me and it was so relieving that there was a legal professional behind me during the dispute journey. They gave me absolutely professional and thorough advice on the dispute according to my best interests. They are truly proficient, and experts in building and construction disputes. I am so happy that I chose the right legal representative who provided professional services that helped me to resolve the costly dispute

![Debbie](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/plugins/elementor/assets/images/placeholder.png)

Debbie

The team at Stonegate Legal are absolutely amazing. They go above and beyond to ensure you feel supported and understand the process at each step of the way. I would highly recommend these guys, they truely care about their clients and their needs.

Peter

Wayne Davis from Stonegate Legal offered us exceptional professional and upfront advice on our legal matter and supported us the whole way through. Wayne explained the fee's involved from the start to ensure we understood costs, in which we were very thankful. Thank you Wayne we are so grateful for your help on this matter, and to have had a successful outcome! We would highly recommend Wayne Davis for anyone seeking a lawyer who shows honesty and integrity.

Kim

Stonegate Legal helped out when a vendor of a service failed to do the right thing. After speaking with the team, they assured me that I was within my rights to seek assistance. Within a very very short period of time the issue was resolved with the Vendor finally choosing to do the right thing. Thank you once again for providing a great service, it certainly took a lot of stress out of the situation for me and your ability to identify and get the issue resolved without conflict was brilliant.

Neil

After having some issues with vendors paying their bills I searched for a solicitor to assist in issuing a Statutory Demand. I found two solicitor's firms who had useful websites explaining the process. I contacted both and only Wayne from Stonegate Legal contacted me on the next business day (I am still waiting a month later for the other solicitor's firm). The process was explained to me and it was clear and simple. His pricing structure was clearly laid out so I understood what my commitments would be. Wayne was helpful and provided all information necessary. Should the need arise for a commercial solicitor in the future, I will have no hesitation to use Stonegate Legal again.

Nicholas

Wayne provided good advice, and got us the outcome we were looking for. He was easy to deal with and kept me well informed through the process letting me know the options available as well as his advice. I would recommend Wayne if you are having trouble getting people to pay up!

Andrew

## About Stonegate Legal - FAQ

[What areas of law does Stonegate Legal specialise in?](https://stonegatelegal.com.au/about-stonegate-legal/#collapse-e1d6fc5687f043f86f0b)

At Stonegate Legal, we specialise in commercial litigation, debt recovery, defamation disputes, construction disputes, and insolvency law. Our goal is to provide expert legal solutions tailored to our clients' unique needs.

[Where is Stonegate Legal located?](https://stonegatelegal.com.au/about-stonegate-legal/#collapse-00f709a687f043f86f0b)

We are located on the picturesque Sunshine Coast, with a stunning office in Noosa. We proudly serve clients across the Sunshine Coast, Brisbane, and beyond.

[Who is the founder of Stonegate Legal?](https://stonegatelegal.com.au/about-stonegate-legal/#collapse-c9600e5687f043f86f0b)

Stonegate Legal was founded in 2019 by Wayne Davis, who brings years of experience from esteemed law firms in Brisbane and the Sunshine Coast. Wayne’s vision was to create an innovative and approachable legal service model.

[What makes Stonegate Legal different from other law firms?](https://stonegatelegal.com.au/about-stonegate-legal/#collapse-5b23416687f043f86f0b)

Our commitment to innovation, technology-driven solutions, and a personalised approach sets us apart. We prioritise transparency, professionalism, and achieving the best outcomes for our clients.

[Do you offer consultations, and are they free?](https://stonegatelegal.com.au/about-stonegate-legal/#collapse-16d7499687f043f86f0b)

Yes, we offer obligation-free consultations. This allows us to understand your legal challenges and discuss how we can help you achieve a favorable outcome.

[How does Stonegate Legal ensure a personalised approach?](https://stonegatelegal.com.au/about-stonegate-legal/#collapse-256974d687f043f86f0b)

We take the time to understand your specific circumstances and objectives. Each case is handled with care, and we design tailored strategies to meet your goals effectively and efficiently.

[What types of clients do you serve?](https://stonegatelegal.com.au/about-stonegate-legal/#collapse-96a6174687f043f86f0b)

We work with a wide range of clients, including small businesses, individuals, and larger corporations. Whether it’s a commercial dispute or personal legal matter, we’re here to help.

[How does Stonegate Legal use technology in its legal services?](https://stonegatelegal.com.au/about-stonegate-legal/#collapse-499747f687f043f86f0b)

We leverage cutting-edge legal tools and up-to-date software to streamline processes, enhance communication, and deliver precise, efficient outcomes for our clients.

[What is Stonegate Legal’s mission?](https://stonegatelegal.com.au/about-stonegate-legal/#collapse-8c3f94a687f043f86f0b)

Our mission is to guide our clients through legal challenges with clarity, confidence, and care. We strive to build lasting relationships and make a positive impact within the communities we serve.

[How can I get started with Stonegate Legal?](https://stonegatelegal.com.au/about-stonegate-legal/#collapse-fd93fc7687f043f86f0b)

Getting started is easy! Contact us to book your obligation-free consultation. During this session, we’ll discuss your legal needs, outline possible strategies, and help you move forward confidently.

[![Stonegate Legal - Litigation Lawyers](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/Logo_transparrent_Stonegatelegal-3.png)](https://stonegatelegal.com.au/)

## Quick Links

- [Home](https://stonegatelegal.com.au/)
- [About](https://stonegatelegal.com.au/about-stonegate-legal/)
- [Litigation Services](https://stonegatelegal.com.au/services/)
- [Frequently Asked Questions](https://stonegatelegal.com.au/stonegate-legal-faq/)
- [News & Blogs](https://stonegatelegal.com.au/news-articles/)
- [Free Case Evaluation](https://stonegatelegal.com.au/free-case-evaluation/)
- [Contact](https://stonegatelegal.com.au/contact/)

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Individual liability limited by a scheme approved under professional standards legislation.

## Litigation Services

- [Commercial Litigation](https://stonegatelegal.com.au/services/commercial-litigation/)
- [Building & Construction Disputes](https://stonegatelegal.com.au/services/building-and-construction-lawyers/)
- [Debt Recovery Lawyers](https://stonegatelegal.com.au/services/debt-recovery-lawyers/)
- [Civil / PersonalLitigation](https://stonegatelegal.com.au/services/civil-litigation/)
- [Tax Debt Disputes](https://stonegatelegal.com.au/services/tax-debt-lawyers/)
- [Corporations Disputes](https://stonegatelegal.com.au/services/corporations-dispute-lawyer/)
- [Body Corporate Debt Recovery](https://stonegatelegal.com.au/services/body-corporate-debt-recovery/)
- [Commercial Lease Disputes](https://stonegatelegal.com.au/services/commercial-lease-disputes/)
- [Defamation Litigation](https://stonegatelegal.com.au/services/defamation-lawyers/)
- [Wills & Estates Litigation](https://stonegatelegal.com.au/services/estate-litigation-lawyers/)
- [Insolvency Lawyers](https://stonegatelegal.com.au/services/insolvency/)
- [Letters of Demand](https://stonegatelegal.com.au/letter-of-demand/)
- [Statutory Demands](https://stonegatelegal.com.au/statutory-demand/)
- [Bankruptcy Lawyers](https://stonegatelegal.com.au/bankruptcy/)
- [Drafting Credit Contracts](https://stonegatelegal.com.au/debt-contract-credit-application/)

- Office Hours

Monday – Friday

8:30 AM – 5:00 PM

- Brisbane City

[Level 10/ 95 North Quay,](https://maps.app.goo.gl/YdLbTuKmnziFrQDv5)

[Brisbane City, QLD 4000](https://maps.app.goo.gl/YdLbTuKmnziFrQDv5) – (appointment only)

- [07 3180 0143](tel:0731800143)

- Sunshine Coast - Main Office

[4/57-59 Mary Street,](https://maps.app.goo.gl/Suo6oYWeRohEDEBWA)

[Noosaville, QLD 4566](https://maps.app.goo.gl/Suo6oYWeRohEDEBWA)

- [07 5346 0366](tel:0753460366)

At Stonegate Legal, client satisfaction is our top priority. We are proud to have served hundreds of clients who have had positive experiences working with us.

Copyright © 2023 [**Stonegate Legal**](https://stonegatelegal.com.au/) Pty Ltd – All Rights Reserved – Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732) \| [Terms](https://stonegatelegal.com.au/terms-and-conditions/) \|  [Privacy](https://stonegatelegal.com.au/privacy-policy/) \| [Sitemaps](https://stonegatelegal.com.au/sitemap_index.xml) \| [\*Conditions Apply](https://stonegatelegal.com.au/terms-and-conditions/)

[![Stonegate Legal - Litigation Lawyers](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/Logo_transparrent_Stonegatelegal-3.png)](https://stonegatelegal.com.au/)

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# Debt Recovery from Deceased Estates Qld

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## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| July 8, 2023

## Article Summary

The property of the deceased vests in the executor and can be used to pay the debts of the deceased in solvent deceased estates.

If the estate does not have enough money to pay its debts it is an insolvent estate.  This essentially means that except for the cost of the funeral and any testamentary and administration expenses, the balance of the estate is administered as if it were a bankruptcy.

The first step that must be taken by the ones close to the deceased or the executor of the will in order for the process to proceed is that you must be notified of the passing of the deceased.

After notice is given as above, the executor of the deceased estate will gather your information from the debtor’s financial information and prepare to contact you and all other creditors; or you will need to contact them within at least 6 weeks after the date of publication of the notice.

Once the debt is accepted by the executor of the deceased estate, may (as a guide) prioritise payment in the following order:

1. Funeral and testamentary expenses.
2. Payment of secured debts.
3. Costs of administration.
4. Ordinary debts and liabilities.

In this article our lawyers will discuss the process and details of debt recovery from deceased estates, and how you can navigate this process for the best results.

Table of Contents

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Are you a creditor that is looking into debt recovery from deceased estates, but are confused about how it works and where you can start?

If so, you may be feeling very stressed about the matter as it can be difficult to collect debts in general even without this added complication.

Collecting debt from a deceased estate is a delicate process. As there is someone that has died, emotions are high and concerns about debts are generally quite minimal.

Imagine if someone close to you died and you are trying to navigate the grief of the scenario and the arrangements of the funeral. Sounds pretty emotionally painful, right?

Now imagine you have to concern yourself with debt repayments and financial matters. Saying this, it is a process that must be done!

After all, there could be significant funds to collect, and it may be the difference between your financial stability. That being said, there is a lengthy and complicated process involved, that can be difficult to begin.

In this article our **[debt recovery lawyers](https://stonegatelegal.com.au/services/debt-disputes/)** & **[estate litigation lawyers](https://stonegatelegal.com.au/services/estate-litigation-lawyers/)** will discuss the process and details of debt recovery from deceased estates, and how you can navigate this process for the best results.

## What is a Deceased Estate?

If you have never been involved in a matter like this, this is an important place to start!

The term ‘_deceased estate_’ refers to the total assets, liabilities, and responsibilities left behind by a person who has died.

Death can be quite sudden. Not everyone has time to prepare themselves for their passing and it can be difficult to do so even if they are aware.

This can result in a list of issues left behind for others to deal with! As difficult as it can be, sometimes the [family or loved ones of the deceased](https://stonegatelegal.com.au/debt-recovery-of-loans-between-family-members/) is required to make arrangements with any creditors or people involved in another contract with the deceased for the process to begin.

A deceased estate encompasses all financial affairs that the person that passed was involved in. This includes their home and any other belongings, any outstanding debts, and all financial agreements and contracts that they were a party in.

In many circumstances, the deceased person will create the instructions regarding their estate with a lawyer and relay them in the form of a Will.

This is to rid the potential beneficiaries of the estate of legal action or conflict, or simply to ensure that their wishes are followed properly.

## Can I Claim Debt Recovery from Deceased Estates

Yes, the property of the deceased vests in the executor and can be used to pay the debts of the deceased in solvent estates.

Debt is defined in [section 5 of the _Succession Act 1981_ (Qld)](http://classic.austlii.edu.au/au/legis/qld/consol_act/sa1981138/s5.html) which says:

> _The term ‘deceased estate’ refers to the total assets, liabilities, and responsibilities left behind by a person who has died._

[Section 56 of the _Succession Act 1981_ (Qld)](http://classic.austlii.edu.au/au/legis/qld/consol_act/sa1981138/s56.html) says:

> _The property of a deceased person which on his or her death devolves to and vests in his or her executor or the public trustee is assets for the payment of his or her debts and any disposition by will inconsistent with this enactment is void as against creditors, and the court shall, if necessary, administer the property for the purposes of the payment of the debts._

If the estate does not have enough money to pay its debts it is an insolvent estate.

The payment of debts in the case of insolvent estates is dealt with at [section 57 of the _Succession Act 1981_ (Qld)](http://classic.austlii.edu.au/au/legis/qld/consol_act/sa1981138/s57.html) which says:

> _Where the estate of a deceased person is insolvent—_
>
> _(a) the funeral, testamentary and administration expenses have priority; and_
>
> _(b) subject as aforesaid and to this Act, the same rules shall prevail and be observed as to the respective rights of secured and unsecured creditors and as to debts and liabilities provable and as to the valuation of annuities and future and contingent liabilities, respectively, and as to the priorities of debts and liabilities as may be in force for the time being under the law of bankruptcy with respect to the administration of estates of deceased persons in bankruptcy._

This essentially means that except for the cost of the funeral and any testamentary and administration expenses, the balance of the estate is administered as if it were a [bankruptcy](https://stonegatelegal.com.au/what-is-bankruptcy/).

## Secured vs Unsecured Debt

When managing debts from a deceased estate, a key consideration that should be made is regarding whether or not the debt is secured. There are two types of debt that can be dealt with by the executor of the Will, secured or unsecured debt.

Secured debts are debts that are backed by collateral. This means that if the borrower does not make payments on the loan, the creditor can claim the collateral and they do not lose all that much.

An example of a secured loan is a home loan. If you take out a home loan and do not make payments towards it, the bank can claim the house and sell it.  The risk on these types of loans is relatively low as the collateral acts as security for the creditor. Payments of debts on property mortgaged or charged is dealt with at [section 61 of the _Succession Act 1981_ (Qld)](http://classic.austlii.edu.au/au/legis/qld/consol_act/sa1981138/s61.html) which says:

> _(1) Where a person dies possessed of, or entitled to, or under a general power of appointment by will disposes of, an interest in property, which at the time of his or her death is charged with the payment of any debt, whether by way of mortgage, charge or otherwise, legal or equitable (including a lien for unpaid purchase money), and the deceased has not by will signified a contrary or other intention, the interest so charged shall, as between the different persons claiming through the deceased, be primarily liable for the payment of the debt; and every part of the said interest, according to its value, shall bear a proportionate part of the charge of the whole thereof._
>
> _(2) A contrary or other intention is not signified by a general direction, charge or trust for the payment of debts or of all the debts of the testator out of the testator’s estate or out of the testator’s residuary estate or by a gift of any such estate after or subject to the payment of debts._

An unsecured debt, on the other hand, is a debt that is not backed by collateral (such as real property) and is given based solely on the credit of the debtor.

If this loan is not paid, the creditor will have to take legal action against the debtor for it to be paid.

Depending on the type of debt that you are looking to collect your process will look quite different. If you are the creditor for a secured debt, you can simply claim the collateral and move on. An unsecured debt will need to be paid from the estate but will come only after secured loans are paid.

## Notification to Debtors from Deceased Estates

The next step that must be taken by the ones close to the deceased or the executor of the Will in order for the process to proceed is that you must be notified of the passing of the deceased.

Although this particular element of the collection from a deceased estate process is not your personal responsibility, it is best to know as much about the process as you can.

This way, you will be informed and can follow up with the executor if they are yet to notify the creditors of the death and you have found out through other routes.

The executor of the deceased’s will should formally contact you to inform you of their death.

[Section 67(1) of the _Trusts Act 1973_ (Qld)](http://classic.austlii.edu.au/au/legis/qld/consol_act/ta1973132/s67.html) states:

> _With a view to the distribution of any trust property or estate a trustee or personal representative may give notice by advertisement in—_
>
> _(a) if the notice is included in a notice of intention to apply for a grant—a publication approved by the Chief Justice under a practice direction; or_
>
> _(b) otherwise—a newspaper circulating throughout the State and sold at least once each week;_
>
> _and such other notices as would be directed by the court to be given in an action for administration, requiring any person having any claim, whether as creditor or beneficiary or otherwise, to send particulars of the person’s claim not later than the date fixed in the notice, being a date at least 6 weeks after the date of publication of the notice._

After notice is given as above, the executor of the deceased estate will gather your information from the debtor’s financial information and prepare to contact you and all other creditors; or you will need to contact them within at least 6 weeks after the date of publication of the notice.

This process should be done in a timely manner so that you can start the process of collecting the debt as soon as possible.  If a creditor does not notify the deceased estate, then [section 67(3) of the _Trusts Act 1973_ (Qld)](http://classic.austlii.edu.au/au/legis/qld/consol_act/ta1973132/s67.html) states:

> _After the date fixed by the last of the notices to be published the trustee or personal representative may distribute the trust property or estate having regard only to the claims, whether formal or not, of which the trustee or personal representative has notice at the time of the distribution; and the trustee or personal representative shall not, as respects any trust property or estate so distributed, be liable to any person of whose claim the trustee or personal representative had no notice at the time of the distribution._

## Submitting a Claim for Debt Recovery from Deceased Estates

When looking to [recover a debt](https://stonegatelegal.com.au/debt-recovery-solicitors-how-can-they-help-you/) from a deceased estate, the next step that must be taken is to submit a claim against the estate.

This involves you stating that you wish to collect a debt from the estate, as above.

Once the executor of the will has sent out the notice of the death stating that any creditors must take action to claim their debt, you will be allowed 6 weeks to submit your claim.

## Verification of Debt to the Deceased Estate

Once you have made your claim against the estate to collect your debt, you must verify the existence of the debt.

Dealing with the estate of a deceased individual is a matter of the law. It involves regulations and processes that must be followed according to Queensland legislation.

Like many other matters of the law, it also requires evidence to make a claim of a debt against the estate of the deceased. You must provide evidence that this person legitimately owed you a debt in order to collect it.

This can be pretty straight forward if there was a contract created. If not, it may be a little difficult to prove. Any records that you have, or discussions recorded of the client acknowledging the debt will likely suffice as evidence depending on the executor of the will.

Once you have provided evidence, the executor of the will should analyse it to make sure that it is legit, and you can then move on to collecting the debt.

## Priority of Payment of Debt from Deceased Estates

Priority of payment is another important consideration when you are looking to collect a debt from a deceased party. The Executor of the deceased estate, when settling the debts of the deceased, may (as a guide) prioritise payment in the following order:

1. Funeral and testamentary expenses.
2. Payment of secured debts.
3. Costs of administration.
4. Ordinary debts and liabilities.

As the person is no longer alive, they will no longer have any form of income coming into their estate. This means that their estate is limited to whatever it is when they die, which will eventually run out as it is used to make payments and is distributed to beneficiaries.

What happens if there is not enough money in their estate today all of their debts, though? Which debts are treated as a priority, and which are paid only if there is enough money?

Estates of this kind are considered to be insolvent estates and can be administered by a bankruptcy trustee, as stated under the _[Bankruptcy Act 1966](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/index.html#s244)_. This means that a professional in managing insolvency can come into the matter and divide the estate appropriately among creditors.

The costs of a funeral are the priority in any circumstance in Queensland, however.

## Negotiation of Debt Recovery from Deceased Estates

Negotiation of the debt is another step that may be relevant in your matter when you are dealing with debt recovery from deceased estates.

When someone dies, there are a lot of costs and emotional turmoil that must be dealt with. This can take a lot, both mentally and financially, out of the family of the deceased, which can be difficult to deal with.

In these situations, they may come to you asking if you would be willing to negotiate the debt in any way. You are in your rights to refuse to negotiate and simply request that the money is taken out of the estate and paid.

However, you may also wish to engage in the negotiation if you sympathise with the family or do not want to get involved in an expensive legal battle.

This may take some negotiation on your part to allow this, however, which may be something that you are willing to do. When you negotiate, make sure to hold your needs firm. It may just be a matter of extending the payment period out a little or something along those lines!

## Debt Recovery from Deceased Estates Disputes

When you are looking to collect a debt from a deceased estate, you may be faced with some [disputes from the beneficiaries](https://stonegatelegal.com.au/contesting-a-will-in-qld-family-provision-claim/). This can be difficult for all involved.

When involved in a dispute, you should first consult a lawyer to advise on what action is best to take and how this may work for you.

Depending on your circumstance, your lawyer will likely recommend that you engage in alternative dispute resolution prior to [civil litigation](https://stonegatelegal.com.au/services/civil-litigation/). Alternative dispute resolution can be extremely effective in resolving a matter outside of court, which is generally better for both parties, so that you can move on with as little resources put into this matter as possible.

It involves methods such as mediation, the process of gathering with the other party and an impartial mediator to discuss and resolve the issue, or arbitration, where the third party will listen to both side and decide on the better option for you!

However, you choose to act, make sure that the method works for your effectively and that you have done your due diligence before taking any type of action!

## Exceptions to the Rule

Another consideration that you should make are the more complicated and exceptional matters to the general rules that we have discussed earlier. It is vital to note that not all cases will look exactly how we have stated in this article.

For instance, specific types of debts are discharged upon the death of the borrower, and some assets will not form part of the deceased estate as it will pass to the joint owner by survivorship.

Furthermore, cases of insolvent estates, which were discussed earlier, will be quite complicated and you may not be paid the debt owed due to payment priorities.

Another case may be if the debt in question had co-signers, meaning other people that would pay the debt if the main party did not, or joint debt holders, meaning they shared debt payments with the deceased.

Co-signers can be held personally liable for all of the debts upon the death of the main signer. Joint signers will likely be solely responsible for the debt.

## What Cannot be Used for Debt Recovery from Deceased Estates

Assets held jointly by the deceased and another person (wife / husband for example), such as money in a bank account, stocks / shares, and [real property](https://stonegatelegal.com.au/warrant-for-seizure-and-sale-of-property/), will not form part of the deceased’s Estate, and will not be available to pay the estates’ debts.

Instead, they will be transferred to the surviving joint tenant/s by a process known as survivorship.

If the deceased had a policy of life insurance had a superannuation fund with a designated a beneficiary to receive the benefits upon their death, those benefits will be directly paid to the nominated beneficiary.

These benefits also do not constitute part of the deceased’s Estate and, therefore, cannot be utilised to settle the deceased’s debts.

## Debt Recovery from Deceased Estates FAQ

As estate litigation lawyers and debt recovery lawyers, we get asked the same questions quite often.  In this FAQ section we attempt to answer those questions.

### What is a deceased estate?

The term ‘ _deceased estate_’ refers to the total assets, liabilities, and responsibilities left behind by a person who has died.

### What is the difference between secured and unsecured debt when collecting from a deceased estate?

Secured debts are debts that are backed by collateral. This means that if the borrower does not make payments on the loan, the creditor can claim the collateral and they do not lose all that much.

An unsecured debt, on the other hand, is a debt that is not backed by collateral (such as real property) and is given based solely on the credit of the debtor.

### How do creditors submit a claim for debt recovery from a deceased estate?

Once the executor of the will has sent out the notice of the death stating that any creditors must take action to claim their debt, you will be allowed 6 weeks to submit your claim. This involves you stating that you wish to collect a debt from the estate, as above.

### What is the priority of debt payment from a deceased estate?

Priority of payment is another important consideration when you are looking to collect a debt from a deceased party. The Executor of the deceased estate, when settling the debts of the deceased, may (as a guide) prioritise payment in the following order:

1. Funeral and testamentary expenses.
2. Payment of secured debts.
3. Costs of administration.
4. Ordinary debts and liabilities.

### What happens if there are not enough assets in the deceased’s estate to cover all the debts?

Estates of this kind are considered to be insolvent estates and can be administered by a bankruptcy trustee, as stated under the _[Bankruptcy Act 1966](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/index.html#s244)_. This means that a professional in managing insolvency can come into the matter and divide the estate appropriately among creditors.

### Can a creditor negotiate the repayment terms with the executor of the deceased’s estate?

When someone dies, there are a lot of costs and emotional turmoil that must be dealt with. This can take a lot, both mentally and financially, out of the family of the deceased, which can be difficult to deal with.

In these situations, they may come to you asking if you would be willing to negotiate the debt in any way. You are in your rights to refuse to negotiate and simply request that the money is taken out of the estate and paid.

### Are there any exceptions or special circumstances that may affect the debt recovery process from a deceased estate?

Specific types of debts are discharged upon the death of the borrower, and some assets will not form part of the deceased estate as it will pass to the joint owner by survivorship.

![Picture of Wayne Davis](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/desktop/optimized/rev-748d11d/secure.gravatar.com/avatar/5841d7da8b6c7d486226c9358f93fc5a.5b54ec283af918fb28f171190159c8892905cb00c7f8bf19a380e6224d11fa82)

#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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## Stonegate Legal - Litigation Lawyers

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## Free Case Evaluation

If you need to commence legal debt recovery through the Court or QCAT to recover money owed to you or need to resolve a commercial dispute, then please choose Legal Debt Recovery case evaluation option.

No Obligation Case Evaluation

[Statutory Demand Case Evaluation](https://stonegatelegal.com.au/book-a-free-consultation/#collapse-c70abef687f0384b1ffe)

If your debtor is a company that is unable to pay its debts when they become due and payable, and the debt owed is over $4,000.00 then you can issue a creditor’s statutory demand.  Please choose the [statutory demand](https://stonegatelegal.com.au/statutory-demand/) case evaluation option.

[Setting Aside A Statutory Demand](https://stonegatelegal.com.au/book-a-free-consultation/#collapse-092b264687f0384b1ffe)

If you have been served with a creditor’s statutory demand and you have one or more of the following grounds then choose the setting aside a statutory demand case evaluation option:

1. Genuine dispute about the amount or existence of the debt; and/or
2. A genuine offsetting claim; and/or
3. A defect in the demand causing substantial injustice; and/or
4. Some other reason (defect in the affidavit or abuse of process).

[Enforcement Of Money Order](https://stonegatelegal.com.au/book-a-free-consultation/#collapse-eba8349687f0384b1ffe)

If you have managed to obtain a judgment, money order, adjudication QCAT decision and the debtor still refuses to pay, you will need to choose the enforcing a money order case evaluation option.

We can assist you with enforcement warrants, [bankruptcy](https://stonegatelegal.com.au/bankruptcy/) notice, and/or a statutory demand.

[Winding up A Company](https://stonegatelegal.com.au/book-a-free-consultation/#collapse-c70abef687f0384b326a)

If you need to wind up a debtor company in insolvency, for non-compliance with a creditor’s statutory demand for example, then you will need to choose the winding up a company case evaluation option.

[Bankruptcy Case Evaluation](https://stonegatelegal.com.au/book-a-free-consultation/#collapse-092b264687f0384b326a)

If you have a judgment and you want to serve the judgment debtor with an insolvency notice, or you have non-compliance with a bankruptcy notice and you want to start the bankruptcy process by application to the [Federal Circuit Court](http://www.federalcircuitcourt.gov.au/wps/wcm/connect/fccweb/home), then you need to check the bankruptcy option.

[Voidable Transactions](https://stonegatelegal.com.au/book-a-free-consultation/#collapse-eba8349687f0384b326a)

If you have been served with a letter from a liquidator threatening:

1. [588FA – Unfair preferences](https://stonegatelegal.com.au/unfair-preference-claims-and-how-to-defeat-them/);
2. [588FB – Uncommercial transactions](https://stonegatelegal.com.au/uncommercial-transactions-claims-and-how-to-defeat-them/);
3. [588FC – Insolvent transactions](https://stonegatelegal.com.au/what-are-insolvent-transactions/);
4. [588FD – Unfair loans to a company](https://stonegatelegal.com.au/what-are-unfair-loans-in-company-insolvency/); and
5. [588FDA – Unreasonable director-related transactions](https://stonegatelegal.com.au/unreasonable-director-related-transactions-and-how-to-defeat-them/).

You will need to check the voidable transactions case evaluation option.

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## Unfair Preference Claims
[Skip to content](https://stonegatelegal.com.au/unfair-preference-claims-and-how-to-defeat-them/#content)

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# Unfair Preference Claims and how to Defeat Them

[Discuss Your Case Today](https://stonegatelegal.com.au/contact/)

## NEWS & ARTICLES

- [By \\
Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| April 7, 2019

## Article Summary

Unfair preference claims are a type of voidable transaction in company insolvency, as defined in section 588FA of the _Corporations Act 2001_ (CTH). These claims arise when a transaction occurs between an insolvent company and an unsecured creditor, resulting in the creditor receiving more than they would in a company winding up. If this occurs, a liquidator may be entitled to recover these funds.

The article details various aspects of unfair preference claims, including:

1. **Definition and Criteria**: An unfair preference involves a transaction during the company’s insolvency, favouring one creditor over others.
2. **Voidable Transactions**: These include unfair preferences, uncommercial transactions, insolvent transactions, unfair loans, and unreasonable director-related transactions, with specific criteria outlined in section 588FE of the Corporations Act.
3. **Transaction and Insolvent Transaction Definitions**: The Corporations Act defines these terms broadly, encompassing various forms of company activities and obligations.
4. **Timeframes for Claims**: The liquidator must prove the transaction occurred within specific timeframes relative to the ‘relation-back day’, which varies based on the nature of the transaction and the parties involved.
5. **Defences and Exceptions**: The article explains possible defences against unfair preference claims, such as transactions made in good faith and without knowledge of the company’s insolvency. It also outlines exceptions and scenarios where these claims may not apply.
6. **Secured vs. Unsecured Creditors**: The distinction between these two types of creditors is crucial, as the voidable transaction regime may not apply to secured creditors.
7. **Running Account Partial Defence**: This involves a series of transactions forming a running account, potentially reducing the unfair preference claim.

The article emphasises the importance of consulting an insolvency lawyer if faced with an unfair preference claim, to explore potential defences and exceptions.

Table of Contents

[Toggle](https://stonegatelegal.com.au/unfair-preference-claims-and-how-to-defeat-them/#)

![Unfair Preference Claims and how to Beat them Queensland](https://stonegatelegal.com.au/wp-content/uploads/2019/04/Unfair-Preference-Claims-and-how-to-Beat-them-Queensland.png)Unfair preference claims are one of the types of voidable transactions in company insolvency and is outlined at section 588FA of the _Corporations Act 2001_ (CTH) (“ _**the Corporations Act**_”).

An unfair preference occurs when:

1. There is a transaction between the company and an unsecured creditor; and
2. The transaction occurred while the company was insolvent; and
3. The transaction results in the creditor receiving more than the creditor would receive from the company if the creditor were to prove for the debt in a winding up of the company.

If this happens, then a liquidator may be entitled to recover those funds from the creditor.

There are a number of defences and exceptions to the above which may mean that a creditor does not have to repay hard-earned monies to the liquidator.

In this article our [experienced insolvency lawyers](https://stonegatelegal.com.au/services/insolvency/) explain in detail unfair preference claims under the voidable transaction regime and details the possible defences and exceptions to unfair preference claims.

Insolvency Lawyers in Queensland - YouTube

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**If you have been contacted by a liquidator in relation to unfair preference claims you should contact an insolvency lawyer as soon as possible to attempt to defend the liquidator’s demand for money**

## What are Voidable Transactions?

A voidable transaction in company insolvency is a transaction entered into by the company and a third-party which can be avoided and recovered by the liquidator of the company in liquidation.

Voidable transactions can include:

1. 588FA – Unfair preferences;
2. [588FB – Uncommercial transactions](https://stonegatelegal.com.au/uncommercial-transactions-claims-and-how-to-defeat-them/);
3. [588FC – Insolvent transactions](https://stonegatelegal.com.au/what-are-insolvent-transactions/);
4. [588FD – Unfair loans to a company](https://stonegatelegal.com.au/what-are-unfair-loans-in-company-insolvency/); and
5. [588FDA – Unreasonable director-related transactions](https://stonegatelegal.com.au/unreasonable-director-related-transactions-and-how-to-defeat-them/).

[Section 588FE of the _Corporations Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588fe.html) outlines the criteria for a transaction able to be avoided by the liquidator.

1. There must be a transaction; and
2. The transaction must be an insolvent transaction; and
3. It was entered into, or an act was done for the purpose of giving effect to it:
1. During the 6 months ending on the relation-back day; or
2. It is also an uncommercial transaction – 2 years ending on the relation-back day; or
3. It is also a related entity of the company – 4 years ending on the relation-back day; or
4. The company became a party to the transaction for the purpose of defeating, delaying, or interfering with, the rights of any or all of its creditors – 10 years ending on the relation-back day.

Then, each of the voidable transactions have their own specific requirements.

### What is a Transaction?

[Section 9 of the _Corporations Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html) defines a transaction to mean:

> _“ **transaction**” … means a transaction to which the body is a party, for example (but without limitation):_
>
> _(a) a conveyance, transfer or other disposition by the body of property of the body; and_
>
> _(b) a security interest granted by the body in its property (including a security interest in the body’s PPSA retention of title property); and_
>
> _(c) a guarantee given by the body; and_
>
> _(d) a payment made by the body; and_
>
> _(e) an obligation incurred by the body; and_
>
> _(f) a release or waiver by the body; and_
>
> _(g) a loan to the body;_
>
> _and includes such a transaction that has been completed or given effect to, or that has terminated._

Obviously, this is just a list of examples and [section 9](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html) explicitly does not limit the scope of what a transaction can be.

### What is an Insolvent Transaction?

[Section 95A of the of the _Corporations Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s95a.html) defines solvent and insolvent to mean:

> _(1) A person is solvent if, and only if, the person is able to pay all the person’s debts, as and when they become due and payable._
>
> _(2) A person who is not solvent is insolvent._

This essentially means that a company that is unable to pay its debts as and when they become due and payable is insolvent.

Care should be taken however to distinguish a temporary lack of liquidity with insolvency.  In [_Sandell v Porter_ (1966) 115 CLR 666](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/1966/28.html) the High Court said:

> _The conclusion of insolvency ought to be clear from a consideration of the debtor’s financial position in its entirety and generally speaking ought not to be drawn simply from evidence of a temporary lack of liquidity._

[Section 9 of the _Corporations Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html) says:

> _“ **insolvent transaction**” has the meaning given by section 588FC._

[Section 588FC of the _Corporations Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588fc.html) says:

> _A transaction of a company is an insolvent transaction of the company if, and only if, it is an unfair preference given by the company, or an uncommercial transaction of the company, and:_
>
> _(a) any of the following happens at a time when the company is insolvent:_
>
> _(i) the transaction is entered into; or_
>
> _(ii) an act is done, or an omission is made, for the purpose of giving effect to the transaction; or_
>
> _(b) the company becomes insolvent because of, or because of matters including:_
>
> _(i) entering into the transaction; or_
>
> _(ii) a person doing an act, or making an omission, for the purpose of giving effect to the transaction._

So, an insolvent transaction is a transaction entered into, or an act is done giving effect to a transaction, at a time when a company is unable to pay its debts as and when they become due and payable.

Or the company becomes unable to pay its debts as and when they become due and payable because the transaction was entered into, or because of the act being done giving effect to a transaction.

So that is a voidable transaction.  This article will focus on Unfair Preference Claims.

## What are Unfair Preference Claims?

An unfair preference means that because one (1) creditor has been paid more than if it had to prove its debt in the liquidation, while other creditors have not been paid, that creditor will be preferred.

[Section 588FA(1) of the _Corporations Act 2001_ (CTH)](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588fa.html) says:

> _(1) A transaction is an unfair preference given by a company to a creditor of the company if, and only if:_
>
> _(a) the company and the creditor are parties to the transaction (even if someone else is also a party); and_
>
> _(b) the transaction results in the creditor receiving from the company, in respect of an unsecured debt that the company owes to the creditor, more than the creditor would receive from the company in respect of the debt if the transaction were set aside and the creditor were to prove for the debt in a winding up of the company;_
>
> _even if the transaction is entered into, is given effect to, or is required to be given effect to, because of an order of an Australian court or a direction by an agency._

As previously outlined above, an unfair preference occurs when:

1. There is a transaction between the company and an unsecured creditor; and
2. The transaction occurred while the company was insolvent; and
3. The transaction results in the creditor receiving more than the creditor would receive from the company if the creditor were to prove for the debt in a winding up of the company.

In [_Ashala Model Agency Pty Ltd (in liq) & Anor v Featherstone & Anor_ \[2016\] QSC 121](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QSC/2016/121.html) Jackson J said at \[139\]:

> _… an unfair preference turns on the result or effect of the transaction in relation to an unsecured debt owed to the creditor, by comparing what the creditor received from the company with what the creditor would have received on a winding up (in a pari passu distribution of the available assets to the unsecured creditors in accordance with the statutory priorities)._

### Timeframes for Unfair Preference Claims

The liquidator must prove that the insolvent transaction was entered into, or an act was done for the purpose of giving effect to it during the 6 months ending on the relation-back day.

Alternatively, if the preferred entity is also a related entity of the company, then the insolvent transaction was entered into, or an act was done for the purpose of giving effect to it during the 4 years ending on the relation-back day.

Lastly, if the company became a party to the transaction for the purpose of defeating, delaying, or interfering with, the rights of any or all of its creditors then the insolvent transaction was entered into, or an act was done for the purpose of giving effect to it during the 10 years ending on the relation-back day.

This raises some further questions, namely:

1. What is the relation-back day? and
2. What is a related entity?

### What is the Relation Back Day?

The relation-back day is the day that either the winding up application was filed; or the day on which one of the other days outlined at [513B of the _Corporations Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s513b.html) or [513C of the _Corporations Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s513c.html).

[Section 9 of the _Corporations Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html) says:

> _“relation-back day” has the meaning given by section 91._

[Section 91 of the _Corporations Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s91.html) has a table which basically says the relation-back day is (depending on the circumstances):

1. The date of the filing of the winding up application; or
2. The date the company resolves that it be wound up voluntarily; or
3. The date that the deed of company arrangement was executed.

So, if a creditor applies to a Court for an order winding up the debtor company on 20 June, and the company is subsequently wound-up, then the relation-back day is 20 June.

This means that for a transaction from an unrelated entity to be a voidable transaction, it must have occurred six (6) months prior to 20 June.

This means that for a transaction from a related entity to be a voidable transaction, it must have occurred two (2) years prior to 20 June.

### What is a Related Entity?

A related entity is defined at [section 9 of the _Corporations Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html).  The most common include:

1. A director or member of the body or of a related body corporate; and/or
2. A relative of such a director or member; and/or
3. A relative of a spouse of such a director or member; and/or
4. A body corporate that is related to the first-mentioned body.

So, a transaction to a related entity could include a transaction from the company to a director, a wife of a director, or a related company of the company in liquidation.

### Example of an Unfair Preference in Liquidation

A typical example of an unfair preference in liquidation is:

1. A building contractor engages 3 subcontractors to conduct work;
2. The contractor pays one of the subcontractors, but not the other two;
3. The contractor goes into liquidation two (2) months later;
4. The two unpaid contractors become unsecured creditors in the liquidation;
5. The money paid to the single subcontractor may be an unfair preference and recoverable by the liquidator.

The idea is to recover as much as possible into the fund to pay all creditors of the company in liquidation.  This is understandable, but not nice for small subcontractors who need the money.

However, there are a number of defences and exceptions to unfair preference claims.

## Defences to Unfair Preference Claims

There are defences to unfair preference claims.  They include:

1. The party entered into the transaction in good faith; and
2. At the time of entering into the transaction a reasonable creditor did not know, or ought not to suspect that the company was insolvent.

[Section 588FG of the _Corporations Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588fg.html) prescribes transaction which are not voidable as against certain persons. As against a creditor, [588FG(2)](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588fg.html) says:

> _(2) A court is not to make under section 588FF an order materially prejudicing a right or interest of a person if the transaction is not an unfair loan to the company, or an unreasonable director-related transaction of the company, and it is proved that:_
>
> _(a) the person became a party to the transaction in good faith; and_
>
> _(b) at the time when the person became such a party:_
>
> _(i) the person had no reasonable grounds for suspecting that the company was insolvent at that time or would become insolvent as mentioned in paragraph 588FC(b); and_
>
> _(ii) a reasonable person in the person’s circumstances would have had no such grounds for so suspecting; and_
>
> _(c) the person has provided valuable consideration under the transaction or has changed his, her or its position in reliance on the transaction._

The most important of the above is proving that a creditor did not know, or ought to have known, that the company in liquidation was insolvent at the time of the transaction.

### The Suspicion of Insolvency

Obviously, the wording of [588FG(2)](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588fg.html) posits an objective test.

The use of the words “_a reasonable person in the person’s circumstances_” means that it is not simply what the creditor knew, but what a reasonable creditor in the creditor’s position would or should have known.

By way of example, a creditor can rely on the following to make a case to show that a reasonable creditor in their situation had no way of knowing if the company in liquidation was insolvent at the time of the transaction:

1. Age of the debts are not unreasonable;
2. The creditor and the company had a good payment history;
3. History of late payments followed by payments;
4. Industry specific reasons (such as irregular payments being normal);
5. No demands made by the creditor of its solicitors;
6. No evidence of continued or persistent demands for payment;
7. Phone calls are being returned by the company, and communication was reasonable; and
8. Statements that the company were just having short-term liquidity issues.

This is by no means an exhaustive list, but it illustrates ways in which a creditor can persuade a liquidator or a Court that it not only had no knowledge of insolvency but didn’t reasonably suspect insolvency, thereby defending the unfair preference claim.

However, as well as these defences, there are a number of exceptions to unfair preference claims.

### Exceptions to Unfair Preference Claims

Obviously, as the liquidator needs to prove that the party to the transaction meets the threshold matters relating to an unfair preference claim.  So, if it cannot then it may not be a valid claim.

The threshold issues include:

1. There was a transaction;
2. That transaction was an insolvent transaction;
3. Within the timeframe outlined above – 6 months, 2 years, or 10 years;
4. Between the company and a creditor; and
5. The creditor was an unsecured creditor.

If a creditor can successfully argue these points, then the liquidator may not have an unfair preference claim.

### Secured Creditor vs Unsecured Creditor

If a creditor is a secured creditor then the voidable transaction regime may not apply.

A security can include:

1. Bailment;
2. A charge or mortgage;
3. Goods provided on consignment;
4. Retention of title; and/or
5. Perfected security on the PPSR.

If you offer goods and/or services on trade credit, then it is advisable for a number of reasons to take security over the trade debtor’s property.

A properly worded credit agreement can not only assist with recovering bad debts, continuing or proceeding with legal action against a company in liquidation, but it may also defeat a claim for unfair preference.

It can also be a partial defence if the company and the creditor had a running account.

## The Running Account “Partial Defence”

A single transaction may not be a preference if it forms a running account between the company in liquidation and the creditor.

[Section 588FA(3) of the _Corporations Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588fa.html) says:

> _(3) Where:_
>
> _(a) a transaction is, for commercial purposes, an integral part of a continuing business relationship (for example, a running account) between a company and a creditor of the company (including such a relationship to which other persons are parties); and_
>
> _(b) in the course of the relationship, the level of the company’s net indebtedness to the creditor is [increased](https://stonegatelegal.com.au/price-increase-clauses-in-building-contracts-are-they-unfair/) and reduced from time to time as the result of a series of transactions forming part of the relationship;__then:_
>
> _(c) subsection (1) applies in relation to all the transactions forming part of the relationship as if they together constituted a single transaction; and_
>
> _(d) the transaction referred to in paragraph (a) may only be taken to be an unfair preference given by the company to the creditor if, because of subsection (1) as applying because of paragraph (c) of this subsection, the single transaction referred to in the last-mentioned paragraph is taken to be such an unfair preference._

What this means for a creditor who has a running account with the company in liquidation is that it may allow for a partial or complete reduction in the unfair preference claim.

The transactions in the running account form one transaction and the preference is calculated on the net position.

The running account reduction is calculated in the following way:

1. The liquidator will create a six (6) month running balance;
2. The most amount owed at one time during that period is Peak Indebtedness (PI);
3. The amount owed at the time of the relation-back day is Current Indebtedness (CI);
4. The net difference between the two is the unfair preference amount (PC).

**So, PI – CI = PC.**

If PI is greater than CI then there is an unfair preference claim.

If PI is less than CI then there is not an unfair preference claim.

For example:

1. XYZ Contractors had a running account with A1 Earthmoving;
2. PI during the six (6) months prior to the relation-back day was $135,496.00;
3. The CI on the relation-back day was $104,633.00;
4. $135,496.00 – $104,633.00 = PC;
5. PC = $30,863.00

## What is NOT an Unfair Preference?

The following a potentially transactions which an unfair preference claim may not apply:

1. There is a genuine pre-payment to a person who is not a creditor of the company; or
2. A purchase from a supplier on a cash on delivery basis as it may not give rise to a debtor/creditor relationship; or
3. Payment to a creditor that is a secured creditor of the company in liquidation; or
4. A right of set-off unless knowledge of insolvency is proved; or
5. A transaction where the company receives equivalent value to any payment.

**If you have been contacted by a liquidator in relation to unfair preference claims you should contact an insolvency lawyer as soon as possible to attempt to defend the liquidator’s demand for money**

## Frequently Asked Questions (FAQs) on Unfair Preference Claims

Navigating the complexities of unfair preference claims in the context of company insolvency can be challenging. This FAQ section aims to provide clear, concise answers to some of the most common questions regarding these claims.

### What exactly constitutes an unfair preference claim?

An unfair preference claim arises under the _Corporations Act 2001_ when an insolvent company conducts a transaction that unfairly benefits one creditor over others. This typically occurs when the company, knowing its insolvency, pays or settles debts with one creditor, thereby leaving less for other creditors in the event of liquidation. These transactions are considered voidable, (similar to [voidable transactions in bankruptcy](https://stonegatelegal.com.au/voidable-transactions-bankruptcy/)) meaning they can be reversed or annulled by a liquidator.

### When is a liquidator entitled to make an unfair preference claim?

A liquidator can make an unfair preference claim if they can demonstrate that the transaction occurred at a time when the company was insolvent and within certain timeframes specified by the Corporations Act. These timeframes vary but are generally within six months before the ‘relation-back day’, which is a pivotal date in the liquidation process. For transactions involving related parties, this period can extend up to four years.

### What types of transactions are considered voidable in company insolvency?

In the context of company insolvency, voidable transactions include not just unfair preferences but also uncommercial transactions, insolvent transactions, unfair loans, and unreasonable director-related transactions. These are transactions that the company entered into which either didn’t provide adequate value, were made while insolvent, or unfairly benefited certain parties, and can be contested and potentially reversed by a liquidator.

### How does the Corporations Act define a transaction for these claims?

The Corporations Act defines a transaction in a very broad sense. It includes any transfer of property or an interest in property, any payment made, any obligation incurred, and any release, waiver, or granting of security. This broad definition ensures that a wide range of activities can be scrutinized and potentially reversed if they meet the criteria of an unfair preference.

### What are the specific timeframes for initiating an unfair preference claim?

The specific timeframes for initiating an unfair preference claim depend on the nature of the creditor and the transaction. Generally, for unrelated creditors, the transaction must have occurred within six months before the ‘relation-back day’. For related parties, this period extends to four years. These timeframes are crucial as they determine the window within which a liquidator can challenge a transaction.

### How can a creditor defend against an unfair preference claim?

Creditors can defend against an unfair preference claim by demonstrating that the transaction was conducted in good faith, for value, and without the knowledge of the company’s insolvency. This might involve proving that the transaction was a normal part of business dealings and that the creditor had no reason to suspect the company was insolvent at the time.

### What distinguishes secured from unsecured creditors in these claims?

The key difference between secured and unsecured creditors in the context of these claims lies in the presence of collateral. Secured creditors have some form of collateral backing their claim, which generally protects them from unfair preference claims. Unsecured creditors, on the other hand, do not have this security and are therefore more likely to be involved in such claims.

### Can you explain the ‘running account’ partial defence in more detail?

The ‘running account’ partial defence is applicable in scenarios where there is a continuing business relationship involving a series of transactions, rather than a one-off payment. This defence recognizes that in a running account, the balance owed can fluctuate over time. If this defence is successful, it can reduce the amount that the liquidator can claim back, as it considers the net effect of the transactions over a period rather than each transaction in isolation.

### Are all transactions conducted during a company’s insolvency period considered unfair preferences?

Not all transactions conducted during a company’s insolvency period are automatically deemed unfair preferences. Each transaction is assessed based on its individual merits, the circumstances under which it was conducted, and whether it meets the criteria set out in the Corporations Act. The intent, nature, and timing of the transaction are key factors in this assessment.

### Why is consulting an insolvency lawyer crucial when facing an unfair preference claim?

Consulting an insolvency lawyer is crucial because these claims involve complex legal principles and significant financial implications. An experienced lawyer can provide expert advice on the nuances of the law, help identify potential defences and exceptions, and guide the creditor or company through the legal process. This expertise is invaluable in navigating the complexities of insolvency law and in potentially mitigating the impact of an unfair preference claim.

![Picture of Wayne Davis](https://secure.gravatar.com/avatar/5b54ec283af918fb28f171190159c8892905cb00c7f8bf19a380e6224d11fa82?s=300&d=mm&r=g)

#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation.

With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice.

Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings.

Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

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## Collecting Statute-Barred Debts
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# How to Collect Statute Barred Debts

[Discuss Your Case Today](https://stonegatelegal.com.au/contact/)

## NEWS & ARTICLES

- [By \\
Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| January 28, 2024

## Article Summary

In Australia, debts become statute-barred after a specific time period, generally six years in most states and territories (three years in the Northern Territory), from the date the cause of action arose. Once this period expires, the debt is considered statute-barred, meaning it cannot be legally recovered, subject to certain exceptions.

The cause of action in contract accrues at the time of the breach of the contract, typically the date of a missed payment. For debts repayable on demand, the limitation period starts from the date the money was loaned, not the date of breach.

The limitation period can restart if the debtor acknowledges the debt or makes a payment towards it. This acknowledgment must be in writing and signed by the person making it. Any payment towards the debt, except for part of the rent or interest due, restarts the six-year limitation period.

In Queensland, the creditor has twelve years to enforce a judgment debt, including six years without the court’s leave and an additional six years with the court’s leave.

While statute barring prevents legal collection of a debt, it doesn’t extinguish the debt itself (except in New South Wales). Creditors can still accept voluntary payments towards the debt. However, extreme care must be taken to avoid engaging in unconscionable, misleading, or deceptive conduct.

The article highlights important legal considerations and case law, emphasising the need for transparency and caution in debt collection practices to avoid legal challenges and findings of unconscionable conduct.

This article provides a lot more information on how to collect statute barred debts.

Table of Contents

[Toggle](https://stonegatelegal.com.au/how-to-collect-statute-barred-debts/#)

![What is a statute-barred debt in Australia - litigation lawyers](https://stonegatelegal.com.au/wp-content/uploads/2024/01/What-is-a-statute-barred-debt-in-Australia-litigation-lawyers-300x298.png)Are you a creditor or a financial controller looking at how to collect statute barred debts?

If so, this may cause a lot of concern for you as a creditor, as dealing with statute-barred debt is a difficult situation to find yourself in and may prevent you from recovering the debt.

In most states and territories in Australia, a debt is statute barred after six (6) years from the date the cause of action arose (three (3) years in NT).

When dealing with any debt, debtors can be problematic or consistently unwilling to pay, which can result in you simply giving up on the debt. Although this is not generally a good decision, business can be difficult and sometimes the decision to cut your losses can be the best one for you at a time.

However, it is important that you understand statute barring and the financial difficulties associated with it, as it can cause some serious issues for you if you decide to pursue the debt after an extended period. But what does it mean for a debt to be statute-barred and how can one go about collecting a debt that has been statute-barred?

In this article our [experienced Qld debt recovery solicitors](https://stonegatelegal.com.au/services/debt-recovery-lawyers/) will explore statute-barring law in Queensland and how to manage a debt that has been statute-barred in your business.

**If you have ever asked yourself how to collect statute barred debts in Australia, and the limitation date is approaching, then contact our debt recovery lawyers today for a free 30 minute consultation about our debt recovery services**

## What are Statute-Barred Debts?

The first question that you may have when discussing this topic is what statute-barred debt is.

In Australia, creditors are only permitted [a specific amount of time to collect a debt](https://stonegatelegal.com.au/how-long-can-debt-chased-australia/). Once this period has expired, the debt becomes statute-barred, which means that it can no longer be legally recovered (subject to exceptions). The defendant is allowed to plead limitation of actions as a complete defence to any financial claim.

A debt will become statute-barred if a certain amount of time has passed since payment has been made or acknowledged in any sense by the debtor or the creditor, and no legal action has been taken by the creditor to collect the debt.

In Queensland, the period before a debt is statute-barred is generally 6 years, with some exceptions, depending on the type of debt, established by the [Limitation of Actions Act 1974](https://www.legislation.qld.gov.au/view/html/inforce/current/act-1974-075). This means that if a debtor has made no payments or acknowledgements towards it for 6 years, and the creditor has not commenced court proceedings to recover the debt, then the debt may become statute-barred.

[Section 10 of the _Limitation of Actions Act 1974_ (QLD)](http://classic.austlii.edu.au/au/legis/qld/consol_act/loaa1974226/s10.html) says:

> _(1) The following actions shall not be brought after the expiration of 6 years from the date on which the cause of action arose—_
>
> _(a) … an action founded on simple contract or quasi-contract …_

However, an action to recover money secured by mortgage or charge or to recover proceeds of the sale of land cannot be after the expiration of 12 years.  [Section 26 of the _Limitation of Actions Act 1974_ (QLD)](https://classic.austlii.edu.au/au/legis/qld/consol_act/loaa1974226/s26.html) says:

> _An action shall not be brought to recover a principal sum of money secured by a mortgage or other charge on property whether real or personal nor to recover proceeds of the sale of land after the expiration of 12 years from the date on which the right to receive the money accrued._

It’s important to note that a debtor making even a small financial payment towards the debt can restart the limitation period. Additionally, not all types of debts are subject to a statute of limitations, as certain debts like student loans, child support, and tax debts often have different rules.

When a debt is statute-barred, it means that the law prevents the creditor from taking legal action to recover the debt, and the debtor can plead this as a complete defence. However, the debt still exists, and the creditor may still contact the debtor to request payment.

## When Does the Cause of Action Accrue for Debt?

[_Gibbs v Guild_ (1882) 9 QBD 59](http://www.commonlii.org/uk/cases/UKLawRpKQB/1882/29.html) is the authority that a cause of action in contract accrues at the time of the breach of the contract (or the date of the missed payment).

In [_Evans v Baystate Pty Ltd t/as Domaine Plus Real Estate_ \[2020\] NSWCATAP 275](https://classic.austlii.edu.au/au/cases/nsw/NSWCATAP/2020/275.html) A P Coleman SC, Senior Member and M Gracie, Senior Member, citing _Gibbs v Guild_ said at \[19\]:

> _It is well established that a cause of action in contract accrues on breach of the contract rather than when damage is suffered: see for example Gibbs v Guild (1882) 9 QBD 59._

So, a breach of financial contract in relation to a debt will usually be upon the failure of repayment, unless it is a loan repayable upon demand.

## Debt Repayable on Demand

A debt is considered “repayable on demand” under two circumstances:

1. When no repayment time is specified, implying a legal obligation to repay on demand.
2. When the involved parties explicitly state the debt is to be repaid upon demand.

By default, any debt without a specified repayment term or date is understood to be repayable on demand, qualifying it as an “immediate debt” in legal contexts.

In [_Young v Queensland Trustees Ltd_ (1956) 99 CLR 560](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/1956/51.html) the High Court held that in Australia:

> _A loan of money payable on request creates an immediate debt._

This comes from a long line of precedents in relation to a debt repayable on demand, going back hundreds of years.

In [_Collins v Benning_ (1701) 12 Mod Rep 444](http://www.worldlii.org/int/cases/EngR/1796/1555.pdf) the Court decided that:

> _If the promise were for a collateral thing, which would create no debt till demand, it might be so; but here it is an indebitatus assumpsit, which shews a debt at the time of the promise, therefore the plea is good._

In [_Norton v. Ellam_ \[1837\] EngR 183](http://www.worldlii.org/int/cases/EngR/1837/183.pdf) Parke B said:

> _Where money is lent, simply, it is not denied that the statute begins to run from the time of lending._

[_Re Brown’s Estate_ \[1893\] 2 Ch 300](http://www.austlii.edu.au/cgi-bin/LawCite?cit=%5B1893%5D+2+Ch+300&party1=&party2=&court=&juris=&article=&author=&year1=&year2=&synonyms=on&filter=on&cases-cited=&legis-cited=&section=) where Chitty J said:

_The law is quite settled that, with regard to a promissory note payable on demand, no demand is necessary before bringing an action… \[W\]here there is a present debt and a promise to pay on demand, the demand is not considered to be a condition precedent to the bringing of the action._

This means that the statute of limitations begins from the **date the money was loaned**, and not the **day of the breach of the contract**.

Read more here – [When is a Loan Repayable on Demand?](https://stonegatelegal.com.au/loan-repayable-on-demand/)

## Fresh Accrual of Action

It is possible for the six (6) year limitation period to start again, essentially restarting the clock.

[Section 35(3) of the _Limitation of Actions Act 1974_ (QLD)](http://classic.austlii.edu.au/au/legis/qld/consol_act/loaa1974226/s35.html) says:

> _Where a right of action has accrued to recover a debt or other liquidated pecuniary claim … and the person liable or accountable therefor acknowledges the claim or makes a payment in respect thereof, the right shall be deemed to have accrued on and not before the date of the acknowledgment or the last payment._

So, if a debtor acknowledges the claim or makes a payment toward the debt, then the cause of action accrues as at that date, essentially restarting the six (6) year countdown.

In _Busch v Stevens_ \[1963\] 1 QB 1, the Court described this as:

> _… a notional birthday and on that day, like the phoenix of fable, it rises again in renewed youth—and also like the phoenix, it is still itself._

Like the phoenix, the limitation period can be re-started at any time – even if the original limitation period has already expired.

### Acknowledgement of Debt

As we know, the statute of limitation period starts when a debtor last acknowledges the debt. But what does it mean to acknowledge a debt?

[Section 36 of the _Limitation of Actions Act 1974_ (QLD)](http://classic.austlii.edu.au/au/legis/qld/consol_act/loaa1974226/s36.html) says:

> _Every acknowledgment referred to in section 35 shall be in writing and signed by the person making the acknowledgment._

This means that a debtor may acknowledge the debt, but that acknowledgement must be in writing and must be signed.

An acknowledgement of debt is a formal recognition by a debtor of the existence of a debt and the amount owed to the creditor. It can be made through a written agreement, such as a Deed of Acknowledgment of Debt, or through a payment schedule agreement, or simply just in an email.

In [_Hepburn v McDonald_ \[1918\] ArgusLawRp 66](https://www8.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/ArgusLawRp/1918/66.html), the High Court defined an acknowledgment by reference to the test in _Green v. Humphreys_ and said:

> _… an admission by the writer that there is a debt owing by him …. In order to take the case out of the Statute there must upon the fair construction of the letter, read by the light of the surrounding circumstances, be an admission that the writer owes the debt._

In [_Bucknell v The Commercial Banking Company of Sydney Limited_ \[1937\] HCA 35](http://www.austlii.edu.au/au/cases/cth/HCA/1937/35.html), Dixon J said:

> _The letter upon which the plaintiff depends **contains no express promise** either conditional or unconditional, restricted or unrestricted. **But although a document relied upon as an acknowledgment contains no express promise, it may effect a revival of the debtor’s liability if there is found in it a distinct admission of the debt**. The law implies from an acknowledgment of the existence of the liability a promise to discharge it. Words clearly acknowledging that the writer is liable suffice to raise the implication._

In [_Stage Club Ltd v Millers Hotels Pty Ltd_ \[1981\] HCA 71](http://classic.austlii.edu.au/au/cases/cth/HCA/1981/71.html) Gibbs CJ of the Hight Court of Australia said:

> _… it is no longer necessary that there should be a promise to pay, it is still necessary, in my opinion, that an acknowledgment should admit or recognize the present existence of a cause of action; in other words, where the claim is for payment of a debt, an acknowledgment, to be sufficient, must recognize the present existence of the debt._

Gibbs CJ then agreed with Kerr J in [_Surrendra Overseas Ltd v Government of Sri Lanka_ \[1977\] 1 WLR 565](https://www.austlii.edu.au/cgi-bin/LawCite?cit=%5B1977%5D+1+WLR+565+&party1=&party2=&court=&juris=&article=&author=&year1=&year2=&synonyms=on&filter=on&cases-cited=&legis-cited=&section=) who said that:

> _To acknowledge a claim, as a matter of ordinary English, signifies an admission that it is due. There is no acknowledgment of a debt unless there is an admission that there is a debt . . . outstanding and unpaid._

For an acknowledgement of debt, the debtor must:

1. Recognise the present existence of the debt; and
2. Admit that the debt is outstanding and unpaid; and
3. The acknowledgement must be in writing; and
4. Signed by the person making the acknowledgement.

For a fantastic overview of all of the relevant principles, I invite you to read the decision of Porter KC DCJ in [_Commercial Images (Aust) Pty Ltd (in liq) v Manicaros_ \[2023\] QDC 77](https://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QDC/2023/77.html) from paragraph \[53\] onwards.

There can also be a fresh accrual of action when a payment is made toward the debt.

### Making a Payment Toward the Debt

Any payment toward the debt starts the six (6) year limitation period again, except for payment of a part of the rent or interest due.

Where a debt relates to a number of different invoices, each invoice has its own separate date and therefore cause of action and therefore has its own limitation period.

A running account is a type of account that is used continuously, accumulating debts over time as new charges are incurred. In such an account, payments are applied to the overall balance rather than to individual invoices. This approach can extend the limitation period for the account as a whole, rather than for each separate invoice.

When it is proven that a debtor has a running account with a creditor, any partial payment made towards this account can acknowledge the debt. This acknowledgment has the effect of resetting the limitation period, which then starts anew from the date of the most recent payment.

If a running account is confirmed to exist between a creditor and a debtor, the creditor can use the date of the last payment made on the account to determine when the limitation period will expire.

In [_Re Footman Bower & Co Ltd_ \[1961\] Ch 443](http://www.worldlii.org/int/cases/EngR/1815/77.pdf), the Court said:

> _When, as in the present case, there is an account running between the parties which to the knowledge of both parties is of that kind and kept in that way, then, if the debtor makes a payment ‘generally on account’ it appears to me that he must be taken to be making it on account generally of whatever is owing on the balance of the account. A payment ‘on account’ imports an acknowledgment of a liability for a larger sum._

So, if a debtor acknowledges the debt or makes a payment toward that debt, then the 6 year time limit restarts. This is how a creditor can collect statute barred debts.

**If you have ever asked yourself how to collect statute barred debts in Australia, and the limitation date is approaching, then contact our debt recovery lawyers today for a free 30 minute consultation about our debt recovery services**

## What is the Limitation Date on Judgment Debts?

If judgment is entered against the debtor in Queensland, then the creditor has a statutory limit of twelve (12) years to enforce the judgment debt.  This includes six (6) years without leave of the Court, and a further six (6) years with leave of the court.

[Section 10(4) of the _Limitation of Actions Act 1974_ (QLD)](http://classic.austlii.edu.au/au/legis/qld/consol_act/loaa1974226/s10.html) says:

> _An action shall not be brought upon a judgment after the expiration of 12 years from the date on which the judgment becomes enforceable._

Also, in Queensland [rule 799 of the _UCPR_](https://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s799.html) states:

> _(1) An enforcement creditor may start enforcement proceedings without leave at any time within 6 years after the day the money order was made._
>
> _(2) In addition to another law requiring a court’s leave before an order may be enforced, an enforcement creditor requires a court’s leave to start enforcement proceedings if—_
>
> _(a) it is more than 6 years since the money order was made_

## Can you Collect Statute Barred Debt?

You may be able to collect statute-barred debt in some circumstances. As we know, statute barring prevents a debtor from collecting a debt under the law. It does not, however, prevent debtors from making payments toward the debt, nor does it extinguish the debt in question (except in New South Wales where [section 63 of the _Limitation Act 1969_ (NSW)](https://classic.austlii.edu.au/au/legis/nsw/consol_act/la1969133/s63.html) extinguishes the debt, meaning legal recovery of the debt is no longer possible).

Everywhere else but NSW, provided a debtor voluntarily offers to make the payment, and you do not foreshadow legal action if they do not pay, you may still accept payments toward the debt. If they do make a payment toward this debt, then pursuant to [Section 35(3) of the _Limitation of Actions Act 1974_ (QLD)](http://classic.austlii.edu.au/au/legis/qld/consol_act/loaa1974226/s35.html) this would amount to a fresh accrual of action, and the creditor can then commence legal action to recover the debt.

Further, if a debtor gives you a written acknowledgment of debt, which:

1. Recognises the present existence of the debt; and
2. Admits that the debt is outstanding and unpaid; and
3. Is in writing; and
4. Signed by the person making the acknowledgement.

Then pursuant to [Section 35(3) of the _Limitation of Actions Act 1974_ (QLD)](http://classic.austlii.edu.au/au/legis/qld/consol_act/loaa1974226/s35.html) this would amount to a fresh accrual of action, and the creditor can then commence legal action to recover the debt.

### Extreme Care Should be Taken

If you want to recover statute barred debts then extreme care should be taken so as not to engage in conduct that is unconscionable or that is misleading or deceptive.

Part 2, Division 2 of the _ASIC Act_ sets out a number of prohibitions:

1. Section [12DA](https://www5.austlii.edu.au/au/legis/cth/consol_act/asaica2001529/s12da.html) (prohibiting misleading or deceptive conduct).
2. Section [12DB](https://www5.austlii.edu.au/au/legis/cth/consol_act/asaica2001529/s12db.html) (prohibiting false or misleading representations).
3. Section [12DJ](https://www5.austlii.edu.au/au/legis/cth/consol_act/asaica2001529/s12dj.html) (prohibiting physical force or undue harassment or coercion).
4. Sections [12CA](https://www5.austlii.edu.au/au/legis/cth/consol_act/asaica2001529/s12ca.html) and [12CB](https://www5.austlii.edu.au/au/legis/cth/consol_act/asaica2001529/s12cb.html) (prohibiting unconscionable conduct).

It is vital that you do not fall foul of these things, especially if you are a lawyer or a debt collectors, as your license to practice could be on the line (in extreme cases).

### Collection House Ltd v Taylor Case

[_Collection House Limited v Taylor_ \[2004\] VSC 49](https://classic.austlii.edu.au/au/cases/vic/VSC/2004/49.html) is a pivotal example of a case relating to collecting statute barred debts. In this case, a debtor, Taylor, was contacted by Collection House about a debt that was statute-barred.

The court found that the conduct of Collection House in this instance was unconscionable. The court’s judgment focused on the pressure exerted on the debtor and the lack of disclosure about the debt being statute-barred.

Although the court in the Collection House case did not make a final decision on whether the statement made to Taylor (that the debt could still be pursued despite being statute-barred) was misleading or deceptive, it was critical of Collection House’s arguments. The court was not persuaded by Collection House’s justification for their statement.

The case underscores the importance of transparency in debt collection practices. Misleading a debtor about the nature of their debt, especially regarding its statute-barred status, can lead to legal challenges and findings of unconscionable conduct.

Read this [ASIC report](https://download.asic.gov.au/media/1347476/statute_barred_debts_report.pdf) that implies that debt collectors should avoid practices that could be construed as misleading or deceptive, particularly in relation to the collection of statute-barred debts. This includes being clear about the status of the debt and not implying legal actions that are not feasible due to the debt being statute-barred.

### Can Silence be Misleading and Deceptive Conduct?

In certain situations, failing to share information or remaining silent can be seen as an act of deception or misrepresentation. It’s not always necessary for the behaviour to suggest explicitly or implicitly something untrue; rather, it becomes an issue if it has the potential to confuse or mislead a consumer.

When evaluating whether silence or a lack of information disclosure amounts to deceptive or misleading behaviour, the Courts apply an objective standard. This involves assessing whether there was an anticipated need for disclosure under the specific circumstances.

If such an expectation existed, then the behaviour in question might be considered deceptive or misleading. Nonetheless, the Courts do not universally require individuals or corporations to disclose information in every business dealing or scenario. Instead, they decide if deceptive or misleading conduct occurred on an individual case basis.

## Key Takeaways

Dealing with statute-barring regarding your debts can be a difficult and stressful process. This is why prevention is a better solution than remedy!

It is important that, as a creditor, you take the necessary precautions to prevent a debt from becoming statute barred. If you are concerned about a debt or have had a debt statute barred, it is wise to seek the advice of a lawyer to advise you on your options and next moves.

It is possible to collect statute barred debts, but extreme care should be taken before you contact the debtor.  We advise to [always seek legal advice](https://stonegatelegal.com.au/debt-recovery-services-in-queensland/).

**If you have ever asked yourself how to collect statute barred debts in Australia, and the limitation date is approaching, then contact our debt recovery lawyers today for a free 30 minute consultation about our debt recovery services**

## Useful Links

All the states and territories limitation dates for debt are:

1. Australian Capital Territory – 6 years – [Section 11 of the _Limitation Act 1985_(ACT)](http://classic.austlii.edu.au/au/legis/act/consol_act/la1985133/s11.html)
2. New South Wales – 6 years – [Section 14 of the _Limitation Act 1969_ (NSW)](http://classic.austlii.edu.au/au/legis/nsw/consol_act/la1969133/s14.html)
3. Northern Territory – 3 years – [Section 12 of the _Limitation Act_(NT)](http://classic.austlii.edu.au/au/legis/nt/consol_act/la133/s12.html)
4. South Australia – 6 years – [Section 35 of the _Limitation of Actions Act 1936_(SA)](http://classic.austlii.edu.au/au/legis/sa/consol_act/loaa1936226/s35.html)
5. Tasmania – 6 years – [Section 4 of the _Limitation Act 1974_(TAS)](http://classic.austlii.edu.au/au/legis/tas/consol_act/la1974133/s4.html)
6. Victoria – 6 years – [Section 5 of the _Limitation of Actions Act 1958_(VIC)](http://classic.austlii.edu.au/au/legis/vic/consol_act/loaa1958226/s5.html)
7. Western Australia – 6 years – [Section 13 of the _Limitation Act 2005_(WA)](http://classic.austlii.edu.au/au/legis/wa/consol_act/la2005133/s13.html)

## How to Collect Statute Barred Debts FAQ

Welcome to our comprehensive FAQ section on how to collect statute barred debts in Australia. This resource is designed to provide clear and concise answers to some of the most common questions regarding the collection of debts that have reached or exceeded the limitation period under Australian law.

Whether you are a creditor seeking to understand your rights and responsibilities, or a debtor wanting to know more about your obligations and options, these FAQs offer valuable insights into the legal landscape of debt collection in Australia.

### What is a statute-barred debt in Australia?

A statute-barred debt in Australia refers to a debt that has surpassed the legal time limit within which a creditor can enforce collection through the court system. In most Australian states and territories, this period is six years from the date the cause of action arose, and three years in the Northern Territory. Once this period lapses, the debt becomes statute-barred, meaning it cannot be legally recovered, with certain exceptions.

### When does the limitation period for a debt start?

The limitation period for a debt typically starts from the date of breach of contract, which is usually the date of the missed payment. For debts that are repayable on demand, the limitation period begins from the date the money was loaned. This period is crucial in determining the statute-barred status of a debt.

### Can the limitation period for a debt be restarted?

Yes, the limitation period for a debt can restart. This happens if the debtor acknowledges the debt or makes a payment towards it. The acknowledgment must be in writing and signed by the debtor. Any such acknowledgment or payment effectively resets the limitation period, starting a new six-year countdown.

### What happens if a debt becomes statute-barred?

Once a debt becomes statute-barred, the creditor is legally barred from using the court system to enforce the debt. However, the debt still exists. The creditor can request payment from the debtor, but cannot threaten legal action for recovery. In New South Wales, the debt is extinguished and cannot be recovered.

### Is it legal to collect a statute-barred debt?

While it’s legal to request payment on a statute-barred debt, creditors must not mislead or deceive the debtor about the nature of the debt. Creditors can accept voluntary payments but cannot imply that legal action can be taken for statute-barred debts, except under specific circumstances where the limitation period has been reset.

### How does a debtor’s payment affect a statute-barred debt?

If a debtor makes a payment towards a statute-barred debt, it can restart the limitation period. This means the creditor may then have a new six-year period to legally pursue the debt. However, this does not apply to partial payments of rent or interest due.

### Can a creditor enforce a judgment on a statute-barred debt?

If a creditor has obtained a judgment against the debtor before the debt became statute-barred, they generally have up to twelve years to enforce the judgment in Queensland. This includes six years without the court’s leave and an additional six years with the court’s leave.

### What should a creditor do if a debt is nearing its limitation date?

If a debt is nearing its limitation date, a creditor should consider taking legal action to recover the debt before it becomes statute-barred. It’s advisable to seek legal counsel to understand the best course of action and ensure compliance with legal standards and ethical practices.

### What is considered an acknowledgment of debt?

An acknowledgment of debt must be a clear admission by the debtor of the debt’s existence and must be in writing and signed by the debtor. This acknowledgment can take various forms, such as a written agreement, a payment schedule, or even a signed email.

### Can a creditor contact a debtor about a statute-barred debt?

Yes, a creditor can contact a debtor about a statute-barred debt to request payment. However, the creditor must not mislead the debtor about the legal status of the debt or imply that legal action can be taken for its recovery when it cannot.

### What are the risks of trying to collect a statute-barred debt?

Attempting to collect a statute-barred debt carries risks, especially if the creditor engages in unconscionable, misleading, or deceptive conduct. Such actions can lead to legal challenges, reputational damage, and potential penalties under Australian consumer law.

### Does the statute of limitations apply to all types of debts?

Most types of debts are subject to a statute of limitations, but there are exceptions. Certain debts, like student loans, child support, and tax debts, often have different rules and may not be subject to the standard limitation periods.

### What is the limitation period for debts in different Australian states?

The limitation period for debts varies across Australian states and territories. It’s generally six years in the Australian Capital Territory, New South Wales, South Australia, Tasmania, Victoria, and Western Australia, and three years in the Northern Territory.

### Can a debtor dispute a debt after the limitation period has passed?

Yes, a debtor can dispute a debt after the limitation period has passed by raising the defence that the debt is statute-barred. This defence, if valid, prevents the creditor from enforcing the debt through the court system.

### Should a creditor seek legal advice for collecting old debts?

Yes, it’s highly advisable for creditors to [seek legal advice](https://stonegatelegal.com.au/debt-recovery-solicitors/) when dealing with old debts, especially those nearing or beyond the limitation period. Legal counsel can provide guidance on the complexities of debt collection laws and ensure that the creditor’s actions are compliant and ethical.

![Picture of Wayne Davis](https://secure.gravatar.com/avatar/5b54ec283af918fb28f171190159c8892905cb00c7f8bf19a380e6224d11fa82?s=300&d=mm&r=g)

#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation.

With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice.

Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings.

Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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## Commercial Lease Disputes
[Skip to content](https://stonegatelegal.com.au/services/commercial-lease-disputes/#content)

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# Commercial Lease Dispute Lawyer

Stonegate Legal provides legal representation to a diverse group of property owners and renters of commercial spaces and retail stores located in Brisbane and throughout Queensland.

[Book A Consultation](https://stonegatelegal.com.au/services/commercial-lease-disputes/#book)

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### Get The Legal Support You Need

## Legal Guidance for Commercial and Retail Leases

### Protect Your Business Interests with Our Commercial Lease Lawyers

It is not uncommon for business and commercial lease disputes to arise, and the consequences of one party’s actions can be significant for the other. Such disputes often occur when there is uncertainty regarding the rights and obligations outlined in the lease terms.

In Queensland, leases are classified as either retail or non-retail, with retail leases pertaining to locations that serve customers directly, such as shops, while non-retail leases apply to places like warehouses and factories. Relevant legislation includes the Retail Shop Leases Act 1994 (Qld) (RSL Act) and the [Property Law Act 1974](http://www8.austlii.edu.au/cgi-bin/viewdoc/au/legis/qld/consol_act/pla1974179/s124.html) (Qld) (PLA).

## Types of Commercial Lease Disputes

#### There Are a Number of Ways That a Dispute Can Arise with Commercial Leases

[1\. Disputes arising from assignment of the commercial lease](https://stonegatelegal.com.au/services/commercial-lease-disputes/#collapse-c70abef687f03a76eab1)

[2\. Commercial lease disputes regarding unauthorised works to premises](https://stonegatelegal.com.au/services/commercial-lease-disputes/#collapse-092b264687f03a76eab1)

[3\. Damage to premises by either the tenant or the landlord (or mother nature)](https://stonegatelegal.com.au/services/commercial-lease-disputes/#collapse-eba8349687f03a76eab1)

[4\. Commercial lease disputes because of failure to notify within the correct time to accept an option](https://stonegatelegal.com.au/services/commercial-lease-disputes/#collapse-ddcf901687f03a76eab1)

[5\. Commercial lease disputes relating to the landlord or tenant failing to maintain the premises](https://stonegatelegal.com.au/services/commercial-lease-disputes/#collapse-478192d687f03a76eab1)

[6\. Commercial lease disputes in relation to failure to pay rent, paying the incorrect amount or rent, and/or failure to pay the outgoings.](https://stonegatelegal.com.au/services/commercial-lease-disputes/#collapse-3f42c1d687f03a76eab1)

[7\. Commercial lease disputes in relation to the insurance kept by the tenant and/or landlord](https://stonegatelegal.com.au/services/commercial-lease-disputes/#collapse-9e292e7687f03a76eab1)

[8\. Interruption to access to the premises.](https://stonegatelegal.com.au/services/commercial-lease-disputes/#collapse-c70abef687f03a7708c0)

[9\. Commercial lease disputes relating to the landlord failing to provide quiet enjoyment of the premises](https://stonegatelegal.com.au/services/commercial-lease-disputes/#collapse-092b264687f03a7708c0)

[10\. Commercial lease disputes because of the tenant’s failure to make good the premises](https://stonegatelegal.com.au/services/commercial-lease-disputes/#collapse-eba8349687f03a7708c0)

[11\. The landlord or the tenant refusing consent to an assignment causing a dispute](https://stonegatelegal.com.au/services/commercial-lease-disputes/#collapse-ddcf901687f03a7708c0)

[12\. Commercial lease disputes relating to subletting tenancy without permission](https://stonegatelegal.com.au/services/commercial-lease-disputes/#collapse-478192d687f03a7708c0)

[13\. Tenant being locked out of premises without the adequate notice to remedy the breach](https://stonegatelegal.com.au/services/commercial-lease-disputes/#collapse-3f42c1d687f03a7708c0)

[14\. The tenant using the premises for a different purpose other than specified in the lease](https://stonegatelegal.com.au/services/commercial-lease-disputes/#collapse-9e292e7687f03a7708c0)

[15\. Commercial lease disputes in relation to withholding security deposit (bond)](https://stonegatelegal.com.au/services/commercial-lease-disputes/#collapse-93d0e11687f03a7708c0)

### Claim A No Obligation Case Evaluation

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## Find The Right Help

[Stonegate Legal](https://stonegatelegal.com.au/)’s team of experienced lawyers have extensive experience in commercial and retail lease disputes throughout Brisbane and Queensland. We understand the complexities of the legal system and can provide advice on how to manage any dispute. Whether you need assistance in negotiating a new lease agreement, or you are involved in a dispute with your current landlord, our team can help.

We are committed to providing representation that is tailored to the individual needs of our clients and offer practical solutions that will protect their business interests.

[What is a Notice to Remedy Breach?](https://stonegatelegal.com.au/services/commercial-lease-disputes/#collapse-c70abef687f03a77c50c)

When a tenant violates the terms of their lease agreement, a landlord or property manager may issue a legal document known as a Notice to Remedy Breach.

This document notifies the tenant of their breach and outlines the actions required to correct the issue. Common breaches include late rent payments, property damage, noise violations, occupancy restrictions, and illegal activities on the premises.

The notice typically includes a deadline for remedying the breach and may also warn that failure to comply could result in eviction proceedings. If the tenant fails to correct the breach within the specified timeframe, the landlord may have the right to terminate the lease and initiate eviction proceedings.

[Requirements of a Notice to Remedy Breach](https://stonegatelegal.com.au/services/commercial-lease-disputes/#collapse-092b264687f03a77c50c)

For a landlord to effectively give a tenant a notice to remedy breach, they must ensure that certain requirements are met.

These include making sure the notice is in writing, accurately identifies all parties involved, specifies the details of the breach, outlines any necessary rent payments, provides instructions on how to remedy the breach, includes specific notes, states a reasonable timeframe for remediation, and is served properly to the lessee. Any omission of these requirements may render the notice ineffective.

[Eviction of a Tenant Because of Breach](https://stonegatelegal.com.au/services/commercial-lease-disputes/#collapse-eba8349687f03a77c50c)

If the tenant fails to rectify any breach of covenant, obligation, condition, or agreement within a reasonable period, the landlord has the option to terminate the lease (depending on the lease terms).

In such a scenario or if there is a dispute concerning the commercial lease dispute, the tenant can request relief against forfeiture.

As per [Section 124(2) of the PLA](http://www8.austlii.edu.au/cgi-bin/viewdoc/au/legis/qld/consol_act/pla1974179/s124.html), the tenant can seek relief from the court, which may include orders for costs, expenses, damages, compensation, penalty, or an injunction to prevent future breaches.

[Discuss Your Case Today](https://stonegatelegal.com.au/contact/)

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### Our Team

## Meet Our Commercial Lease Dispute Team

![Wayne Davis - Lawyer - Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/06/wayne.avif)

## Legal Practice Director / Principal Solicitor

## Wayne Davis

Wayne Davis is the principal solicitor, legal practice director of the firm, and leads the litigation team.  Wayne has an LLB, and GDLP and is admitted to the Supreme Court of Queensland and the High Court of Australia.  Wayne is a debt recovery, defamation, litigation, and insolvency professional.

Wayne is dedicated to achieving the best possible outcomes, whether through strategic negotiation, alternative dispute resolution, or courtroom advocacy. Wayne understand that every case is unique and takes a proactive approach to ensure your rights and interests are protected at every stage of the process.

### Education & Certifications

LLB – Bachelor of Laws, Graduate Diploma of Legal Practice (GDLP)

### Personal Quote

Don’t believe everything you think.

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Lease Disputes](https://stonegatelegal.com.au/tag/commercial-lease-disputes/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/) [Debt Recovery/Collection](https://stonegatelegal.com.au/tag/debt-recovery-collection/) [Defamation Litigation](https://stonegatelegal.com.au/tag/defamation-litigation/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [Statutory Demands](https://stonegatelegal.com.au/tag/statutory-demands/) [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/) [Wills/Estate Litigation](https://stonegatelegal.com.au/tag/wills-estate-litigation/)

![Shania Bryan - Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/06/shania.avif)

## Solicitor

## Shania Bryan

Shania is a solicitor at Stonegate Legal, based in Queensland. After nearly two years with the firm, Shania recently transitioned into her solicitor role following her admission to the Supreme Court of Queensland in December 2024. She holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP). Shania practices predominantly in defamation law and handles a majority of the defamation matters here at Stonegate Legal.

Her focus is advising and representing clients in disputes involving reputational harm, online publications, and media content. Shania works closely with individuals and businesses to navigate the intricacies of defamation claims and achieve effective resolutions.

### Education & Certifications

Bachelor of Laws (LLB) and Graduate Diploma of Legal Practice (GDLP)

### Personal Quote

Every experience is a chance to deepen my knowledge and contribute to our team’s success, fostering a culture of continuous learning and support

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Lease Disputes](https://stonegatelegal.com.au/tag/commercial-lease-disputes/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/) [Defamation Litigation](https://stonegatelegal.com.au/tag/defamation-litigation/) [Wills/Estate Litigation](https://stonegatelegal.com.au/tag/wills-estate-litigation/)

![Stacey Harvey Paralegal - Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/06/20250624-Stonegate-Legal-13-1024x1024.jpg)

## Senior Paralegal

## Stacey Harvey

Stacey has been a part of the team at Stonegate Legal since 2022 but has worked in the industry for over 20 years, having extensive knowledge of the legal processes in Australia and specializing in debt recovery claims, default judgments, enforcement action, and bankruptcy.

Stacey spent a large portion of her career as a senior paralegal responsible for the performance and management of a team of paralegals and an administration department for many years.  During the first 18 years, she worked for one of Brisbane’s largest debt collection companies, where she managed large portfolios of debt for councils, schools, government departments, and insurance companies, along with debt purchased from various banks, utilities, and other credit providers.

### Education & Certifications

Justice of the Peace, Certificate III in Office Business Administration

### Personal Quote

Stay positive, work hard, make it happen.

## Areas of Interest

### [Commercial Lease Disputes](https://stonegatelegal.com.au/tag/commercial-lease-disputes/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Debt Recovery/Collection](https://stonegatelegal.com.au/tag/debt-recovery-collection/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [Statutory Demands](https://stonegatelegal.com.au/tag/statutory-demands/) [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/)

## Frequently Asked Questions

[Where can we help you?](https://stonegatelegal.com.au/services/commercial-lease-disputes/#collapse-b0d504b687f03a7d0669)

Stonegate Legal’s team of experienced lawyers provide legal representation to property owners and renters of commercial spaces and retail stores located in Brisbane and throughout Queensland.

[What type of lease disputes do we handle?](https://stonegatelegal.com.au/services/commercial-lease-disputes/#collapse-4e10eba687f03a7d0669)

We handle all types of commercial and retail lease disputes, including those involving uncertainty regarding the rights and obligations outlined in the lease terms. We also provide assistance in negotiating new lease agreements, as well as help clients involved in disputes with their current landlord.

[Will I have to go to court?](https://stonegatelegal.com.au/services/commercial-lease-disputes/#collapse-f591981687f03a7d0669)

It is not always necessary to go to court in order to resolve a commercial or retail lease dispute. Our team will provide tailored advice and assistance to help you protect your business interests and can work with you to find the best solution for your situation.

## Litigation & Dispute Resolution

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- Office Hours

Monday – Friday

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- [07 3180 0143](tel:0731800143)

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- [07 5346 0366](tel:0753460366)

At Stonegate Legal, client satisfaction is our top priority. We are proud to have served hundreds of clients who have had positive experiences working with us.

Copyright © 2023 [**Stonegate Legal**](https://stonegatelegal.com.au/) Pty Ltd – All Rights Reserved – Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732) \| [Terms](https://stonegatelegal.com.au/terms-and-conditions/) \|  [Privacy](https://stonegatelegal.com.au/privacy-policy/) \| [Sitemaps](https://stonegatelegal.com.au/sitemap_index.xml) \| [\*Conditions Apply](https://stonegatelegal.com.au/terms-and-conditions/)

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1300 545 133

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## Corporate Dispute Lawyers
[Skip to content](https://stonegatelegal.com.au/services/corporations-dispute-lawyer/#content)

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[Contact Us](https://stonegatelegal.com.au/contact/)

# Corporations Disputes Lawyer

Clashes between corporations are rising in today’s business world, leading to disputes over contracts, IP, and partnerships. Stonegate Legal is here to help with a skilled team of corporate law and conflict resolution lawyers, committed to helping businesses succeed in complex legal challenges.

[Book Your Free Consultation](https://stonegatelegal.com.au/services/corporations-dispute-lawyer/#book)

[Speak To Our Trusted Lawyers Today](https://stonegatelegal.com.au/contact/)

![sgl](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/04/sgl.jpg)

### Comprehensive Corporate Legal Solutions

Stonegate Legal is a renowned corporate legal practice that stands out for its comprehensive solutions for corporate disputes. Our team offers a wide range of services that encompass legal advice, mediation, litigation, and arbitration. We specialise in corporate litigation, including contract disagreements, trust and estate controversies, and shareholder conflicts.

### Providing Superior Corporate Law Counsel & Represent

Our team of skilled lawyers possess an abundance of expertise in corporate law and are committed to assisting and providing counsel to our clients in any corporate-related disputes. We are devoted to delivering exceptional legal guidance and representation with the aim of protecting our clients’ interests and achieving favourable outcomes.

## Corporations Disputes We Can Help You With

Stonegate Legal is distinguished for its expertise in corporate law. Our lawyers have a thorough knowledge of the intricate legal matters corporations must manage, and have demonstrated a remarkable record of success in handling a variety of corporate conflicts.

We are firmly committed to delivering practical and economical resolutions in order to shield our clients’ interests and meet their objectives. Reach out to us now to find out more about how we can assist you with your corporate conflicts.

[Book A Consultation](https://stonegatelegal.com.au/services/corporations-dispute-lawyer/#book)

[Speak To Our Trusted Lawyers Today](https://stonegatelegal.com.au/contact/)

![About Stonegate Legal Defamation, Libel, & Slander Lawyers](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/Asset-19Banking.png)

### Oppression of minority shareholders

![bank](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/bank.svg)

### Insolvent trading claims and disputes

![Asset 12](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/Asset-12.png)

### Breach Of Confidentiality

![Asset 2](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/Asset-2.png)

### Breach of continuous disclosure obligations

![Asset 3People](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/Asset-3People.png)

### Breach of directors’ duties

![Asset 2](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/Asset-2.png)

### Discrimination or harassment

![Asset 13](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/Asset-13.png)

### False or misleading advertising

![Asset 20](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/Asset-20.png)

### Fraud or dishonesty by company officers

![Asset 12](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/Asset-12.png)

### Partnership Disputes

![Asset 23Banking](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/Asset-23Banking.png)

### Insider trading allegations

![Asset 24](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/Asset-24.png)

### Misleading or deceptive conduct

![Asset 2](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/Asset-2.png)

### Unconscionable conduct

### What Are Corporate Disputes

Corporate disputes encompass various types, such as oppression of minority shareholders, breach of directors’ duties, breach of confidentiality, and instances of fraud or dishonesty involving company officers.

In Australia, the Corporations Act establishes a comprehensive framework that outlines the rights, obligations, and remedies applicable to shareholders, company directors, and other stakeholders involved in corporate affairs. Apart from the aforementioned types of disputes, conflicts may arise due to breach of contract or shareholders agreement, violations or repudiation of a share sale agreement, disagreements between shareholders or directors and shareholders, and disputes concerning the management of the company. These various circumstances contribute to the complexity and diversity of corporate disputes in the business world.

## Corporation Dispute Lawyers QLD

### Expert Legal Representation for Complex Corporate Disputes

### Experienced Legal Team

Corporate disputes can arise in any type of business or organization, from small start-ups to large multinational corporations. These disputes can take many forms, including shareholder disputes, breach of contract claims, and disputes over intellectual property rights. When these disputes occur, it is important to work with a skilled legal team that has experience in resolving complex corporate disputes. At Stonegate Legal, we have a team of lawyers who are dedicated to helping clients navigate the legal process and achieve the best possible outcome in their case.

### Effective Approaches to Resolve Corporate Disputes

Resolving a corporate dispute can be a lengthy and complex process that requires a deep understanding of corporate law and business practices. Our team of lawyers work closely with our clients to develop a comprehensive strategy for resolving their dispute. This includes conducting a thorough investigation, negotiating with opposing parties, and, when necessary, litigating the case in court. Our goal is always to achieve the best possible outcome for our clients, whether through a settlement agreement or a favourable court ruling.

### Legal Assistance with Care

When you are facing a corporate dispute, it can be stressful and overwhelming. At Stonegate Legal, we understand the challenges that our clients are facing and are committed to providing them with the support and guidance they need throughout the legal process. We pride ourselves on being responsive and accessible to our clients, and we work hard to ensure that they are kept informed of all developments in their case. With our experience and expertise in handling corporate disputes, you can feel confident that your case is in good hands.

## What Are Corporate Disputes?

## Queensland Corporate Dispute Lawyers

### Dealing With Corporations Disputes

Corporate disputes refer to any altercation between two or more entities that may hold an economic or legal stake in the disagreement. These arguments typically come about due to a difference of opinion concerning control of assets or services, or the settlement of fees or royalties.

In addition, corporate disputes can be triggered by questionable business practices, contractual infringements, or appropriating another company’s intellectual property. As such, the parties must engage in dialogue or take the dispute to a legal tribunal.

Frequently Asked Questions

[What services does a corporate dispute lawyer at Stonegate Legal provide?](https://stonegatelegal.com.au/services/corporations-dispute-lawyer/#collapse-b0d504b687f0375e1819)

At Stonegate Legal, we provide legal services to companies dealing with disputes, conflicts or legal challenges that arise in the course of their business operations.

[What is the process for resolving a corporate dispute?](https://stonegatelegal.com.au/services/corporations-dispute-lawyer/#collapse-4e10eba687f0375e1819)

The process for resolving a corporate dispute involves pre-dispute negotiation, filing a lawsuit or arbitration, discovery, pretrial motions, trial or hearing, judgment or award, and appeals. The specifics may vary depending on the situation and case.

[Can a corporate dispute be resolved without going to court?](https://stonegatelegal.com.au/services/corporations-dispute-lawyer/#collapse-f591981687f0375e1819)

Yes, in many cases, a corporate dispute can be resolved without the need to go to court. One of our corporate dispute lawyers can help you negotiate a settlement with the other party, or assist you in finding an alternative resolution such as mediation.

This can be beneficial for all parties involved, as it often saves time and money that would have been spent on court proceedings.

[How long does a corporate dispute typically take to resolve?](https://stonegatelegal.com.au/services/corporations-dispute-lawyer/#collapse-de9d696687f0375e1819)

The length of time it takes to resolve a corporate dispute varies greatly depending on the complexity of the case and any other factors that may be involved.

Generally, if both parties are willing to work together and make reasonable compromises, it can be possible to resolve the dispute in a short period of time. However, if negotiations break down or the other party is unwilling to cooperate, it may take longer for the dispute to be resolved in court.

## Corporations Dispute Lawyers QLD

## Meet Our Corporations Dispute Team

![Wayne Davis - Lawyer - Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/06/wayne.avif)

## Legal Practice Director / Principal Solicitor

## Wayne Davis

Wayne Davis is the principal solicitor, legal practice director of the firm, and leads the litigation team.  Wayne has an LLB, and GDLP and is admitted to the Supreme Court of Queensland and the High Court of Australia.  Wayne is a debt recovery, defamation, litigation, and insolvency professional.

Wayne is dedicated to achieving the best possible outcomes, whether through strategic negotiation, alternative dispute resolution, or courtroom advocacy. Wayne understand that every case is unique and takes a proactive approach to ensure your rights and interests are protected at every stage of the process.

### Education & Certifications

LLB – Bachelor of Laws, Graduate Diploma of Legal Practice (GDLP)

### Personal Quote

Don’t believe everything you think.

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Lease Disputes](https://stonegatelegal.com.au/tag/commercial-lease-disputes/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/) [Debt Recovery/Collection](https://stonegatelegal.com.au/tag/debt-recovery-collection/) [Defamation Litigation](https://stonegatelegal.com.au/tag/defamation-litigation/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [Statutory Demands](https://stonegatelegal.com.au/tag/statutory-demands/) [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/) [Wills/Estate Litigation](https://stonegatelegal.com.au/tag/wills-estate-litigation/)

![Shania Bryan - Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/06/shania.avif)

## Solicitor

## Shania Bryan

Shania is a solicitor at Stonegate Legal, based in Queensland. After nearly two years with the firm, Shania recently transitioned into her solicitor role following her admission to the Supreme Court of Queensland in December 2024. She holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP). Shania practices predominantly in defamation law and handles a majority of the defamation matters here at Stonegate Legal.

Her focus is advising and representing clients in disputes involving reputational harm, online publications, and media content. Shania works closely with individuals and businesses to navigate the intricacies of defamation claims and achieve effective resolutions.

### Education & Certifications

Bachelor of Laws (LLB) and Graduate Diploma of Legal Practice (GDLP)

### Personal Quote

Every experience is a chance to deepen my knowledge and contribute to our team’s success, fostering a culture of continuous learning and support

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Lease Disputes](https://stonegatelegal.com.au/tag/commercial-lease-disputes/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/) [Defamation Litigation](https://stonegatelegal.com.au/tag/defamation-litigation/) [Wills/Estate Litigation](https://stonegatelegal.com.au/tag/wills-estate-litigation/)

![Caterine Molini - Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/06/20241210-Stonegate-Legal-101-1-scaled-1-1024x1024.jpg)

## Law Graduate / Paralegal

## Caterine Molini

Caterine holds a law degree and passed the bar exam in 2011, practicing as a lawyer in Brazil until 2018. She also completed a postgraduate qualification in environmental law. Caterine holds a Certificate IV and a Diploma in Leadership and Management from Australia.

With 12 years of experience in civil litigation, insurance, and building and construction, Caterine spent six years leading a team to negotiate major agreements with insurance companies. She worked closely with engineers to ensure construction projects met environmental regulations, and she advocated for clear contracts to prevent issues and avoid costly litigation.

She is excited to be working towards admission as a Solicitor in Australia.

### Education & Certifications

Bachelor of Law (Brazil)

### Personal Quote

You are the size of your dreams. Dream big. Play smart, not hard.

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [insurance disputes](https://stonegatelegal.com.au/tag/insurance-disputes/) [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/)

![](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2025/06/20250624-Stonegate-Legal-40-1024x1024.jpg)

## Paralegal

## Maddison Payne

Maddi is an emerging legal professional currently undertaking a Bachelor of Laws with Honours at Queensland University of Technology (QUT), where she is committed to excelling both academically and professionally.

At the outset of her career, Maddi applies a methodical and research-oriented approach to all aspects of legal support, ensuring thorough case preparation and a deep understanding of legal procedures. Her dedication to both her studies and her work is reflected in her meticulous attention to detail and her drive for delivering high-quality results.

Maddi is committed to providing valuable and effective support to our senior legal team, leveraging her academic foundation and professional skills to assist on complex cases with accuracy and integrity. With a keen interest and focus for matters concerning defamation, corporate litigation, professional negligence, corporate disputes, and commercial litigation, she is driven to developing a comprehensive understanding of law that underpins her work as a paralegal and future prospects of becoming a lawyer.

### Education & Certifications

Bachelor of Laws LLB (Honours) (completing), Diploma of Business BSB (Communications & Media)

### Personal Quote

Keep your concentration here and now where it belongs. Be mindful of the future, but not at the expense of the moment.

## Areas of Interest

### [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/) [Defamation Litigation](https://stonegatelegal.com.au/tag/defamation-litigation/)

## Litigation & Dispute Resolution

## Discuss Your Case Today

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## Litigation Services

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[Noosaville, QLD 4566](https://maps.app.goo.gl/Suo6oYWeRohEDEBWA)

- [07 5346 0366](tel:0753460366)

At Stonegate Legal, client satisfaction is our top priority. We are proud to have served hundreds of clients who have had positive experiences working with us.

Copyright © 2023 [**Stonegate Legal**](https://stonegatelegal.com.au/) Pty Ltd – All Rights Reserved – Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732) \| [Terms](https://stonegatelegal.com.au/terms-and-conditions/) \|  [Privacy](https://stonegatelegal.com.au/privacy-policy/) \| [Sitemaps](https://stonegatelegal.com.au/sitemap_index.xml) \| [\*Conditions Apply](https://stonegatelegal.com.au/terms-and-conditions/)

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## Rebutting Insolvency Presumption
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# Rebutting the Presumption of Insolvency

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## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| September 11, 2016

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![Rebutting the Presumption of Insolvency Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2016/09/Rebutting-the-Presumption-of-Insolvency-Stonegate-Legal-300x296.png)Rebutting the Presumption of Insolvency – If a company has failed to [set aside a statutory demand](https://stonegatelegal.com.au/setting-aside-statutory-demand/) within twenty one (21) days from the date the statutory demand was served on the company then the _Corporations Act 2001 (“ **the Act**”)_ allows for a presumption that the company is insolvent and the risk that the company could be [wound up in liquidation](https://stonegatelegal.com.au/winding-up-applications/).

At law, a presumption moves the onus to a particular party, in the case of insolvency, the presumption shifts the onus and therefore the burden of proof, to the company to prove solvency.

However, the standard of proof needed in rebutting the presumption of insolvency is more than simply providing a balance sheet to the Court.

It is often the case that a forensic accounting firm will be engaged to conduct an independent audit of the company’s books and business records.

**Being wound-up in insolvency can have devastating results for the company and the director(s) of the company!  We advise contacting a dedicated, professional insolvency solicitor for advice and assistance.**

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## Evidence Required Rebutting the Presumption of Insolvency

One of the key cases on this subject of Rebutting the [Presumption of Insolvency](https://stonegatelegal.com.au/the-presumption-of-insolvency-for-unsatisfied-execution/) is _[Ace Contractors & Staff Pty Ltd v Westgarth Development Pty Ltd \[1999\] FCA 728](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/1999/728.html)_ where the Federal Court summarised the relevant authorities and said:

1. The respondent is presumed to be insolvent and as such bears the onus of proving its solvency: [_s 459C(2)_](http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s459c.html) and (3); Elite Motor Campers Australia v Leisureport Pty Ltd (1996) 22 ACSR 235 per Spender J; _[Commissioner of Taxation v Simionato Holdings Pty Ltd. \[1997\] FCA 125](http://www.austlii.edu.au/au/cases/cth/FCA/1997/125.html)_ per Mansfield J.
2. In order to discharge that onus the Court should ordinarily be presented with the “fullest and best” evidence of the financial position of the respondent: Commonwealth Bank of Australia v Begonia (1993) 11 ACLC 1075 at 1081 per Hayne J.
3. Unaudited accounts and unverified claims of ownership or valuation are not ordinarily probative of solvency. Nor are bald assertions of solvency arising from a general review of the accounts, even if made by qualified accountants who have detailed knowledge of how those accounts were prepared: Simionato Holdings Pty Ltd (supra); _[Re Citic Commodity Trading Pty Ltd v JBL Enterprises (WA) Pty Ltd \[1998\] FCA 232](http://www.austlii.edu.au/au/cases/cth/FCA/1998/232.html)_ per Heerey J; _[Leslie v Howship Holdings Pty Ltd (1997) 15 ACLC 459](http://www.austlii.edu.au/cgi-bin/LawCite?cit=%281997%29%2015%20ACLC%20459)_ at 463 per Sackville J.
4. There is a distinction between solvency and a surplus of assets. A company may be at the same time insolvent and wealthy. The nature of a company’s assets, and its ability to convert those assets into cash within a relatively short time, at least to the extent of meeting all its debts as and when they fall due, must be considered in determining solvency: _[Rees v Bank of New South Wales \[1964\] HCA 47](http://www.austlii.edu.au/au/cases/cth/HCA/1964/47.html)_; (1964) 111 CLR 210; _[Re Tweeds Garages Ltd \[1962\] Ch 406](http://www.austlii.edu.au/cgi-bin/LawCite?cit=%5b1962%5d%20Ch%20406)_ at 410 per Plowman J; Simionato Holdings Pty Ltd (supra); _[Melbase Corporation Pty Ltd v Segenhoe Ltd \[1995\] FCA 1225](http://www.austlii.edu.au/au/cases/cth/FCA/1995/1225.html)_; (1995) 13 ACLC 823 at 832 per Lindgren J; Leslie v Howship Holdings Pty Ltd (supra) at 465-466.
5. The adoption of a cash flow test for solvency does not mean that the extent of the company’s assets is irrelevant to the inquiry. The credit resources available to the company must also be taken into account: _[Sandell v Porter \[1966\] HCA 28](http://www.austlii.edu.au/au/cases/cth/HCA/1966/28.html)_; (1966) 115 CLR 666 at 671 per Barwick CJ (with whom McTiernan and Windeyer JJ agreed); Leslie v Howship Holdings Pty Ltd (supra) at 466; _[Taylor v ANZ Banking Group Ltd (1988) 6 ACLC 808](http://www.austlii.edu.au/au/journals/AUConstrLawNlr/1990/34.html)_ at 812 per McGarvie J.
6. The question of solvency must be assessed at the date of the hearing. However, this does not mean that future events are to be ignored: Leslie v Howship Holdings Pty Ltd (supra) at 466-467.
7. It is no abuse of process for an applicant to seek to wind up a company presumed to be insolvent by reason of its failure to [comply with a statutory demand](https://stonegatelegal.com.au/how-to-comply-with-a-statutory-demand/) merely because that company contends that it is solvent, or because there may be alternative means available to the applicant to vindicate its rights: Elite Motor Campers Australia v Leisureport Pty Ltd.

This summary of authorities has been cited as authority in a number of recent cases including _[Australian Securities and Investments Commission v Bilkurra Investments Pty Ltd \[2016\] FCA 371](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/2016/371.html)_; and _[Soundwave Festival Pty Limited v Altered State (W.A.) Pty Limited (No 2) \[2014\] FCA 562](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/2014/562.html)_ among others.

### What is Solvency and Insolvency?

Solvency and insolvency are defined in section _[95A of the Act](http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s95a.html)_ as meaning a company which is unable to pay all its debts as and when they become due and payable.

As mentioned above, a company can be asset rich, but cash poor and be deemed to be insolvent.  Any assets that cannot be liquidated and turned into cash relatively quickly to satisfy creditors may not be assessed when proving solvency to rebut the insolvency presumption.

In _[ASIC v Plymin, Elliott & Harrison \[2003\] VSC 123](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/vic/VSC/2003/123.html)_, the Court summarised a list of indicators that may be used to signify that a company may be insolvent, and therefore, the inverse of these may be used to prove that a company is solvent:

> _“1\. Continuing losses. 2. Liquidity ratios below 1. 3. Overdue Commonwealth and State taxes. 4. Poor relationship with present Bank, including inability to borrow further funds. 5. No access to alternative finance. 6. Inability to raise further equity capital. 7. Suppliers placing \[company\] on COD, or otherwise demanding special payments before resuming supply. 8. Creditors unpaid outside trading terms. 9. Issuing of post-dated cheques. 10. Dishonoured cheques. 11. Special arrangements with selected creditors. 12. Solicitors’ letters, summons\[es\], judgments or warrants issued against the company. 13. Payments to creditors of rounded sums which are not reconcilable to specific invoices. 14. Inability to produce timely and accurate financial information to display the company’s trading performance and financial position, and make reliable forecasts.”_

The case is – [http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/vic/VSC/2003/123.html](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/vic/VSC/2003/123.html) at 386.

### Rebutting the Presumption of Insolvency

There are a lot of factors to consider when making an application rebutting the presumption of insolvency under the Act.  These factors may or may not be relevant to your exact situation and it is vital that you get professional help from the beginning.

If you have been served with a claim and statement of claim, or a creditor has been given judgment against you, or you have been served with a statutory demand, it is imperative that you address the pending legal issues as soon as possible to prevent the [presumption of insolvency](https://stonegatelegal.com.au/the-presumption-of-insolvency-for-unsatisfied-execution/), the potential for an application winding your company up and the long and expensive road to proving that you are solvent.

**Being wound-up in insolvency can have devastating results for the company and the director(s) of the company!  We advise contacting a dedicated, professional insolvency solicitor for advice and assistance.**

**DEDICATED TEAM – FAST TURNAROUND – PROVEN RESULTS**

[GET A FREE FEE ESTIMATE TODAY](https://stonegatelegal.com.au/free-case-evaluation/)

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#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

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## Contesting a Will QLD
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# Contesting A Will in Qld (Family Provision Claim)

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## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| April 24, 2021

## Article Summary

In Queensland, a spouse, child or dependant can contest a will and make a family provision application. This includes:

1. A child (including unborn child); or stepchild; or adopted child.
2. The husband or wife of the deceased; or the de facto partner of the deceased; or the registered partner of the deceased; or the former husband, wife or registered partner of the deceased.
3. A dependent parent of the deceased; or the parent of a surviving child under the age of 18 years of that deceased person; or a dependent person under the age of 18 years.

In Queensland the time limits are six (6) months from the date of death to notify the executor, and nine (9) months from the date of death of the deceased to file the family provision application.

If you are an eligible applicant; and you have brought the claim within the time limits, then you can make a claim against the deceased estate.

The Court will consider the following factors:

1. Has adequate provision been made for the Applicant?
2. What provision should be made for the Applicant (if any)?

If you are an eligible person, and you want to contest a will by making a family provision application, then our wills and estates lawyers can help you.

Table of Contents

[Toggle](https://stonegatelegal.com.au/contesting-a-will-in-qld-family-provision-claim/#)

![Contesting A Will in Qld (Family Provision Claim)](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2021/04/Contesting-A-Will-in-Qld-Family-Provision-Claim-300x293.png)Contesting a will, also known as making a family provision claim, is the process of seeking a further or better provision in a deceased person’s will.

There are a number of factors to consider when making a family provision claim, such as:

1. Whether you are an eligible Applicant
2. Whether you have brought the claim within the time limits
3. What the court considers when making a decision.

If you have not been properly provided for in a will, or you have been left out of the will altogether, then you might be able to make a claim by contesting a will.

You can contest a will by making a family provision application in the District Court or the Supreme Court in Queensland.

In this article our [estate litigation lawyers](https://stonegatelegal.com.au/services/estate-litigation-lawyers/) will explain everything you need to know about contesting a will by making a family provision application in Queensland.

**If you are an eligible person, and you want to contest a will by making a family provision application, then our wills and estates lawyers can help you.**

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## Contesting A Will in Qld

If you are contesting a will or your provision in a will, the determination is essentially a two (2) step process.

The first stage in contesting a will involves a basic assessment of the provision.

If a person is left with an inadequate provision, then what was the proper level of maintenance.

This initial assessment must have regard to (inter alia):

1. The financial position of the parties; and
2. The relationship between the deceased and other persons who have claims; and
3. Any support provided to the claimant by the deceased during their life; and
4. Any promises or statements made to the claimant by the deceased; and
5. The size and nature of the deceased’s estate and any contribution made by the claimant to that estate; and
6. The standard and quality of living that the claimant has become accustomed; and
7. The totality of the relationship between the applicant and the deceased.

The second step is essentially the assessment of what the proper level of maintenance is and what would be an adequate provision.

This second step will determine the Court order that should be made.

However, there are a number of eligibility requirements.

## Eligibility Requirements for a Family Provision Claim

There are a number of requirements when contesting a will with a family provision claim, including:

1. You must be an eligible applicant; and
2. The application must be made within the right time limit; and

We will explain these in more detail below.

### Contesting a Will – Eligible Applicant

In order to contest a will, you must be an eligible person.

[Section 41(1)](http://classic.austlii.edu.au/au/legis/qld/consol_act/sa1981138/s41.html) of the _Succession Act 1981_ (Qld) says:

> _If any person (the “ **deceased person**“) dies whether testate or intestate and in terms of the will or as a result of the intestacy adequate provision is not made from the estate for the proper maintenance and support of the deceased person’s **spouse, child or dependant**, the court may, in its discretion, on application by or on behalf of the said spouse, child or dependant, order that such provision as the court thinks fit shall be made out of the estate of the deceased person for such spouse, child or dependant._ \[my emphasis\]

So, to make a family provision claim, the applicant must be:

1. A spouse of the deceased; or
2. A child of the deceased; or
3. A dependant of the deceased.

#### A Spouse of the Deceased

A spouse of the deceased can include:

1. The husband or wife of the deceased; or
2. The de facto partner of the deceased; or
3. The registered partner of the deceased; or
4. The former husband, wife or registered partner of the deceased.

In relation to contesting a will by the spouse of the deceased, the Court will try to balance a number of different factors.

The spouse she must be secure in his/her home, have a sufficient income to permit him/her to live in a style to which she is accustomed, and have a fund to enable him/her to meet any unforeseen contingencies.

However, this is balanced against the duration of the marriage, any real contribution to the estate, and any terms of the arrangement between spouses (amongst others).

#### A Child of the Deceased

A child of the deceased can include any:

1. Child (including unborn child); or
2. A stepchild; or
3. An adopted child.

There are a number of issues that the Court will look at when assessing the eligibility of an adult child to further [provision from the deceased estate](https://stonegatelegal.com.au/debt-recovery-from-deceased-estates-qld/), including (inter alia):

1. The relationship between parent and child at adulthood; and/or
2. The moral obligation, or community expectation between parent and child; and/or
3. Whether the child is still a dependent or not; and/or
4. The lack of reserves to meet ill health, or the need for financial security; and/or
5. A fund to protect against change of circumstances or fortune; and/or
6. The inability to earn an income.

This is just a few of the things that a Court will take into consideration when exercising its discretion if contesting a will.

The Court will also look at the matter holistically, and apply other relevant factors it deems fit.

#### A Dependant of the Deceased

A dependant of the deceased can include any person who was being wholly or substantially maintained or supported by that deceased at the time of death being:

1. a parent of that deceased person; or
2. the parent of a surviving child under the age of 18 years of that deceased person; or
3. a person under the age of 18 years.

Wholly is given its normal meaning.  Substantially, is something less than wholly but still significant, or in the main, or as to the greater part.  Substantially is not minimal, ephemeral, or nominal.

In _[Lohse v Lewis & Anor \[2004\] QSC 36](http://classic.austlii.edu.au/au/cases/qld/QSC/2004/36.html)_ at \[95\] the Court said:

> _It would make a nonsense of the requirement, if the word “substantially” did not take its meaning from the context given by the use of the word “wholly”. The word “wholly” is unambiguous. The word “substantially” indicates something less than “wholly”, but it connotes something which is still significant. It could not possibly mean in that context “not merely nominal, ephemeral or minimal”. It could in this context be appropriately paraphrased by the words “in the main” or “as to the greater part”.  In determining whether the maintenance or support at the date of death is substantial, the future arrangements that had been planned between the parties and for which provision was made must also be taken into account._

Whether a person is a dependent in relation to contesting a will, will depend on the facts of each matter.

### Contesting a Will – Time Limit

If you are an eligible applicant, and you think that you have not been adequately provided for in the will, then if you are contesting a will with a family provision application, it must be made within a strict time limit.

[Section 44(3)(a)](http://classic.austlii.edu.au/au/legis/qld/consol_act/sa1981138/s44.html) of the _Succession Act 1981_ (Qld) says:

> _(3) No action shall lie against the personal representative by reason of the personal representative having distributed any part of the estate if the distribution was properly made by the personal representative … (a) not earlier than 6 months after the deceased’s death and without notice of any application or intended application under section 41 (1) or 42 in relation to the estate_

This essentially means that if you are thinking about contesting a will, then you must provide notice of the application to the executor within **six (6) months** of the death of the deceased.

We recommend that you provide the executor with notice as soon as possible, but certainly before the six (6) month time limit.

If the executor of the estate does not receive notice of the family provision claim, after six (6) months has passed they are able to distribute the estate.

After notice has been given, [Section 44(3)(b)](http://classic.austlii.edu.au/au/legis/qld/consol_act/sa1981138/s44.html) of the _Succession Act 1981_ (Qld) says:

> _(3) No action shall lie against the personal representative by reason of the personal representative having distributed any part of the estate if the distribution was properly made by the personal representative … (b) if notice under section 41(1) or 42 has been received—not earlier than 9 months after the deceased’s death, unless the personal representative receives written notice that the application has been commenced in the court or is served with a copy of the application._

This essentially means that if you are thinking about contesting a will, then you must file the family provision application within **nine (9) months** of the death of the deceased.

### Contesting a Will – Out of Time Applications

In a few instances cases, an application can be made outside of these time limits.

However, this is purely at the court’s discretion, considering a number of factors, including:

1. The length of the delay in bringing the application; and
2. The reason for the delay in bringing the application; and
3. Whether the distribution of the estate has occurred.

However, these are rare cases and are only allowed in the narrowest of circumstances.

## Factors the Court Considers when Contesting a Will

If you are an eligible applicant, and you are within time, then you can contest a will in Queensland by making a family provision application.

The Court will consider the following factors:

1. Has adequate provision been made for the Applicant?
2. What provision should be made for the Applicant (if any)?

We will explore these in more detail below.

### Has Adequate Provision been made for the Applicant?

The Courts will take a number of factors into consideration when exercising their discretion when contesting a will.

As well as the factors mentioned above, the Court may also consider, inter alia, the following:

01. Contributions made to the deceased estate by the applicant.
02. Current community attitudes or any moral claims.
03. Estrangement or disentitling conduct.
04. Any gifts or financial transactions made by the deceased to the applicant.
05. The financial position of the applicant.
06. The influence of the deceased on the lifestyle of the applicant.
07. The relationship between the applicant and the deceased.
08. The relationship between the deceased and others who have a claim.
09. The size and nature of the estate.
10. Whether anyone else can support the applicant.
11. Whether the applicant has to support other people.
12. Any other matter relevant to the court.

If it is determined that you have not been adequately provided for in a will, then the Court will determine what provision should be made (if any).

### What Provision should be made for the Applicant (if any)?

In relation to contesting a will, whether a Court will order further provision should be made is based on consideration of the matters referred to above, and more.

The Court should not be recklessly extravagant or wasteful with the estate of the deceased and must do no more than what is necessary to finalise the claim.

## What is a Family Provision Application?

Contesting a will with a family provision application is an application to the Court for an order that further provision be provided from the estate of the deceased to the applicant.

The jurisdiction in Queensland is usually the [District Court](https://www.courts.qld.gov.au/courts/district-court).  However, if the net value of the estate exceeds $750,000, then it is better to file in the [Supreme Court](https://www.courts.qld.gov.au/courts/supreme-court).

Applications are made in accordance with [District Court Practice Direction 8 of 2001](https://www.courts.qld.gov.au/__data/assets/pdf_file/0004/85594/dc-pd-8of2001.pdf).

The types of order that the Court can make includes:

1. That adequate provision be made for the proper maintenance and support of (the Applicant) out of the estate of the deceased; and
2. Any costs of and incidental to the application be paid out of the estate of the deceased on an indemnity basis; and
3. Any such further or other orders as to the Court may seem meet.

The usual procedure is to have an application, draft order, and supporting affidavits.

The family provision application should also include the following information (if applicable):

01. The full name, address, and occupation of the deceased; and/or
02. The date of the deceased’s death and death certificate; and/or
03. The age of the deceased at the date they died; and/or
04. Grounds for reduction of provision or disentitlement (if any); and/or
05. The personal details of the applicant (name, address, age, relationship to the deceased); and/or
06. The personal details and financial circumstances of any beneficiaries; and/or
07. Are there any competing claims on the deceased estate; and/or
08. Any contribution to build the deceased’s estate by the applicant; and/or
09. Any maintenance and/or support of the applicant by the deceased; and/or
10. Proof of the domicile of the deceased; and/or
11. Evidence of the eligibility of applicant to bring the claim; and/or
12. The financial circumstances of the applicant; and/or
13. Proof that the application is brought within time; and/or
14. The name, age, and DOB of any dependants / children of the applicant; and/or
15. Any reasons for failing to make sufficient provision for the applicant; and/or
16. The applicant’s relationship with the deceased; and/or
17. The applicant’s health, mental health, and/or any incapacities; and/or
18. The location and value of the deceased estate; and/or
19. Any evidence that the deceased died testate or intestate.

The application should also include any other relevant information and any evidence that will be beneficial to the application.

**If you are an eligible person, and you want to contest a will by making a [family provision application](https://stonegatelegal.com.au/services/civil-litigation/), then our wills and estates lawyers can help you.**

**CONTACT OUR EXPERT ESTATE LITIGATION LAWYERS**

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## Contesting A Will FAQ

We get asked a number of regular questions in relation to contesting a will.

Our contesting a will by family provision claim frequently asked questions will hope to answer some of them.

### How much does contesting a will cost in Qld?

It depends on what happens in the [litigation](https://stonegatelegal.com.au/litigation-lawyers-sunshine-coast/).  If it settles early then it will cost less than if it goes all the way to a trial.

### Is there a time limit when contesting a will?

Yes.  In Queensland the time limits are six (6) months from the date of death to notify the executor, and nine (9) months from the date of death of the deceased to file the family provision application.

### Who can contest a will?

In Queensland, a spouse, child or dependant can contest a will.  This includes a child (including unborn child); or stepchild; or adopted child.  The husband or wife of the deceased; or the de facto partner of the deceased; or the registered partner of the deceased; or the former husband, wife or registered partner of the deceased.  A dependent parent of the deceased; or the parent of a surviving child under the age of 18 years of that deceased person; or a dependent person under the age of 18 years.

### Who pays the costs in will challenge cases?

The usual process in the Court is that costs follow the event.  This means that the “winner” of the litigation has a percentage of their costs paid by the “loser” of the litigation.

In some cases, the costs may be paid out of the estate.

### Do I need to go to court when contesting a will?

No.  Most family provision claims settle out of court.  You will need to put forward your best case to the executor of the estate, and the claim will likely settle without the need for Court intervention.

### How long does it take when contesting a will?

You have six (6) months from the date of death to give notice to the executor that you intend to make a family provision claim.  You have nine (9) months from the date of death to actually file the claim in the District Court of Queensland or the Supreme Court of Queensland.

### Can a niece or nephew contest a will in Queensland?

A niece or nephew can only contest a will in Queensland if they are also a dependent of the deceased.  This means that they are a person who was being wholly or substantially maintained or supported by that deceased at the time of death.

### When must family provision applications be brought?

In Queensland, a family provision claim must be brought (filed) within nine (9) months from the date of the death of the deceased.

### What do I do if I feel I have been unfairly left out of a will?

If you have been unfairly left out of a will; you are an eligible applicant; and you are within the required time limit; then you can make a family provision application.

A family provision application seeks to obtain an order from the Court that you be given a better share of the deceased estate.  This is also known as contesting a will.

### Can I contest a will?

A person can contest a will if they are an eligible person (a spouse, child, or dependant) and the time limits have not expired.  There are some cases where a person is allowed to contest the will outside of time, but these are not common.

### By contesting a will, do I have to go to court?

No.  The first step in the process is to give notice to the executor of the estate that you intend to make a family provision claim.  If you are an eligible person; are within the required time limits; and have a genuine claim; then it is very likely that the matter will simply settle before going to Court.

### I was financially dependent on the deceased. What are my options?

As a dependent of the deceased, you may be able to make a claim against the estate if you are:

1. a parent of that deceased person; or
2. the parent of a surviving child under the age of 18 years of that deceased person; or
3. a person under the age of 18 years.

A dependant of the deceased can include any person who was being wholly or substantially maintained or supported by that deceased at the time of death.

### I am estranged from my parents; can I claim against their estate?

Yes.  Estrangement does not exclude you from making a family provision application in Queensland.  However, if the estrangement also includes disentitlement, then this might be a lot harder case to run and may reduce the amount of provision you will be awarded.  An example of disentitling conduct might be serious domestic and family violence, for example.

### Can I contest a will after probate has been granted?

A family provision application to contest a will must be brought within nine (9) months of the date of death.  You can contest a will after probate has been granted if it is still within the nine (9) months after the death of the deceased.

### Does superannuation form part of a deceased’s estate monies?

Superannuation and policies of life insurance may or may not form part of a deceased estate.

Payments of superannuation and policies of life insurance can go directly to beneficiaries after the death of the deceased.  The trustee has discretion to pay any superannuation payments to the deceased’s personal representative or a dependant.

### I am the de facto partner of the deceased. Am I entitled to a share of the estate?

Yes and no!  An eligible person includes a de facto partner of the deceased.  However, just because you are an eligible person does not mean that you are automatically entitled to a share of the estate.  You must also prove that you meet the other requirements allowing for a larger provision from the deceased estate.

### Can grandchildren contest a will?

A grandchild can only contest a will in Queensland if they are also a dependent of the deceased.  This means that they are a person who was being wholly or substantially maintained or supported by that deceased at the time of death.

**If you are an eligible person, and you want to contest a will by making a family provision application, then our [wills and estates lawyers](https://stonegatelegal.com.au/) can help you.**

**CONTACT OUR EXPERT ESTATE LITIGATION LAWYERS**

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### The Steps for Bankruptcy

[The debtor must be a natural person](https://stonegatelegal.com.au/bankruptcy/#collapse-c70abef687f06b819eb0)

Individuals are subject to bankruptcy, which means that if a company fails to repay its debts and is liquidated, the director who provided personal guarantees can also face bankruptcy. This applies even if the debt was contracted with the company and not the individual.

[Have a judgment or order from the Court of $10,000.00 or more](https://stonegatelegal.com.au/bankruptcy/#collapse-092b264687f06b819eb0)

According to [Section 41](http://www8.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/ba1966142/s41.html) of the Bankruptcy Act 1966 (CTH), a creditor can apply for a bankruptcy notice on a debtor if they have obtained a final judgment or order worth at least $10,000. This amount can be from one or multiple judgments or orders from the same creditor against the same debtor. The section also specifies that the judgments or orders should not be more than six years old. Therefore, a debtor can apply for a bankruptcy notice if they have a judgment or order worth over $10,000 that is less than six years old.

[Apply for a notice at AFSA](https://stonegatelegal.com.au/bankruptcy/#collapse-eba8349687f06b819eb0)

It is necessary to conduct a bankruptcy search before filing for a bankruptcy notice to determine whether or not the debtor has already declared bankruptcy. The [Australian Financial Security Authority](https://www.afsa.gov.au/) (AFSA) is responsible for issuing bankruptcy notices. It is crucial to ensure that the notice is correctly filled out as it can be challenged and set aside for reasons such as errors in the creditor or debtor's name, over-claiming, or other irregularities. It is important to avoid any mistakes in the application for a sequestration order to prevent the debtor from disputing it later.

[Serve the notice on the judgment debtor](https://stonegatelegal.com.au/bankruptcy/#collapse-ddcf901687f06b819eb0)

After receiving the notice from AFSA, it is crucial to ensure that it is served on the debtor in a correct manner, as incorrect service can lead to the debtor challenging the notice and potentially defeating your application for a sequestration order. According to Section 16.01 of the Bankruptcy Regulations 1996 (CTH), if a document needs to be given or sent to a person, it can be done so by post, courier service, or by leaving it at their last-known address or document exchange facility.

[File a creditor’s petition with the Federal Court](https://stonegatelegal.com.au/bankruptcy/#collapse-478192d687f06b819eb0)

If a debtor commits an act of bankruptcy and satisfies all the requirements, a creditor can file a petition to the Federal Circuit Court for a sequestration order. This petition involves filing an application, an affidavit in support of the application, affidavit of service of the notice, and consent to act as trustee from a trustee in bankruptcy. Further affidavits need to be provided before the hearing. If everything is done correctly, the Federal Circuit Court will issue a sequestration order, which will force the debtor into bankruptcy. To ensure that all steps are completed correctly, it is crucial to seek assistance from a bankruptcy solicitor who is well-versed in the process.

![sgl](https://stonegatelegal.com.au/wp-content/uploads/2023/04/sgl.jpg)

### Request a Free Consultation

If you're struggling with overwhelming debt and considering bankruptcy, don't hesitate to reach out to our experienced bankruptcy lawyers. We are here to provide you with the support and guidance you need to navigate this difficult time.



[Contact Us Today](https://stonegatelegal.com.au/contact/)

### What Is Bankruptcy?

When a person declares bankruptcy, they must hand over control of their financial affairs to a trustee whose job is to ensure that the bankrupt’s assets are distributed fairly among their creditors. This process enables the debtor to begin anew by absolving them of debts they cannot repay and provide creditors with an opportunity to recoup some of their losses.

The Bankruptcy Act of 1966 (Cth) and the Australian Financial Security Authority (AFSA) regulate bankruptcy proceedings in Australia.

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If a contractor becomes bankrupt, it can have significant impacts on the construction project and the parties involved, including subcontractors, suppliers, and property owners. Our litigation lawyers can assist with disputes and issues that arise from the insolvency of a contractor.](https://stonegatelegal.com.au/services/building-and-construction-lawyers/)

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## Trusted Bankruptcy Lawyers

### Why Choose Stonegate Legal?

Stonegate Legal is a team of proficient lawyers with ample experience in handling bankruptcy matters, including personal and corporate [insolvency](https://stonegatelegal.com.au/services/insolvency/) cases. We offer comprehensive services that cover all aspects of bankruptcy notices, including contesting them, and provide guidance to help you understand your legal obligations and rights.

Our lawyers are committed to providing strategic advice and representation that is tailored to your specific needs. We will work with you to develop a comprehensive strategy for resolving your dispute as quickly as possible.

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Frequently Asked Questions

[How long does the bankruptcy process take?](https://stonegatelegal.com.au/bankruptcy/#collapse-b0d504b687f06b8cebb3)

The duration of the bankruptcy process varies from person to person and is dependent on several factors. Generally, a bankruptcy will last for three years from the day it is declared, however, the period can be extended if necessary. During this time, you may be required to submit regular reports to your trustee about your financial affairs and assets. At Stonegate Legal, we can help you understand what is expected of you throughout the process and ensure that all deadlines are met.

[Can a business continue to operate while in bankruptcy?](https://stonegatelegal.com.au/bankruptcy/#collapse-4e10eba687f06b8cebb3)

Yes, a business can continue to operate while in bankruptcy. However, the business must be managed by a trustee who will take control of the company’s assets and debts. The trustee will ensure that the assets are used to pay creditors and that any profits are used to benefit all creditors. They may also need to restructure or liquidate the business if it is no longer viable. Our experienced attorneys will provide you with guidance and advice throughout this process.

[What are the options for restructuring a business's debt outside of bankruptcy?](https://stonegatelegal.com.au/bankruptcy/#collapse-f591981687f06b8cebb3)

In some cases, it may be possible to restructure a business's debt outside of bankruptcy. This can involve negotiating with creditors to reduce or change the terms of the debt. It is important to note that this process can be complex and time-consuming, so it is important to seek legal advice before proceeding. At Stonegate Legal, our team of experienced solicitors can provide you with tailored advice and support throughout the process.

[What happens to my assets?](https://stonegatelegal.com.au/bankruptcy/#collapse-de9d696687f06b8cebb3)

When you declare bankruptcy, you may be required to surrender some of your assets to a trustee. These assets will then be used to pay off your creditors. It is important to note that certain assets are exempt from bankruptcy and cannot be taken away from you.

Our team of experienced solicitors can provide you with advice on which assets are exempt and which are not, as well as the steps you need to take to protect them.

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## Part X Personal Insolvency
[Skip to content](https://stonegatelegal.com.au/what-is-a-part-x-personal-insolvency-agreement/#content)

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# What is a Part X Personal Insolvency Agreement?

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## NEWS & ARTICLES

- [By \\
Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| July 31, 2022

## Article Summary

A personal insolvency agreement may be a viable road for you to take if you do not wish to declare bankruptcy but find yourself insolvent.

There are however quite significant consequences to a personal insolvency agreement, so it is important you are aware of your rights and responsibilities regarding the matter.

Furthermore, it is recommended you pursue the help of a professional, such as a financial counsellor, if you find yourself considering a personal insolvency agreement!

It is vitally important that before entering a personal insolvency agreement

1. You seek advice from suitably qualified professionals.
2. You know and understand all of your options
3. You know and fully understand all of the consequences

Table of Contents

[Toggle](https://stonegatelegal.com.au/what-is-a-part-x-personal-insolvency-agreement/#)

![What is a Part X Personal Insolvency Agreement in Australia Noosa](https://stonegatelegal.com.au/wp-content/uploads/2022/07/What-is-a-Part-X-Personal-Insolvency-Agreement-in-Australia-Noosa-300x292.png)A personal insolvency agreement (PIA) is a legally binding agreement between a debtor and a creditor that aims to ensure debts are appropriately repaid.

In Australia, personal insolvency agreements are supervised under the _[Bankruptcy Act 1966](https://www.legislation.gov.au/Details/C2016C01107)_.

A personal insolvency agreement is generally used to allow a higher level of negotiation to take place regarding the debt. It is administered by a trustee, who must be registered.

A PIA is perfect for [tax debts](https://stonegatelegal.com.au/resolving-tax-debts-ato-tax-disputes/), joint debts, some secured debts, and unsecured debts which are the same as those covered in bankruptcy.

Those who enter into a personal insolvency agreement are likely to experience the consequences of insolvency, so it is important to be aware of said consequences before signing.

A part X personal insolvency agreement requires:

1. The appointment of a bankruptcy trustee to take control of your property and
2. The bankruptcy trustee making an offer to your creditors to settle the debts (including the ATO).
3. The offer may be to pay all or part of your debts by lump sum or by instalments.

If the required amount of your creditors agree, then the agreement remains in place until it is completed, and the debtor avoids bankruptcy.

[CONTACT AN INSOLVENCY LAWYER TODAY](https://stonegatelegal.com.au/contact-stonegate-legal/)

**OR CALL: [1300 545 133](tel:1300545133) FOR A FREE PHONE CONSULTATION**

## Part X (10) of the Bankruptcy Act 1966

Under [section 188A](http://www8.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s188a.html), found in part X of the Bankruptcy Act 1966, personal insolvency must:

> _(1)  A personal insolvency agreement is a deed that:_
>
> _(a) Is expressed to be entered into under this Part; and_
>
> _(b) complies with subsection 2)._
>
> _2) A personal insolvency agreement must:_
>
> _(a) identify the debtor’s property (whether or not already owned by the debtor when he or she executes the agreement) that is to be available to pay creditors’ claims; and_
>
> _(b) specify how the property is to be dealt with; and_
>
> _(c) identify the debtor’s income (whether or not already derived by the debtor when he or_
>
> _she executes the agreement) that is to be available to pay creditors’ claims; and_
>
> _(d) specify how the income is to be dealt with; and_
>
> _(e) specify the extent (if any) to which the debtor is to be released from his or her provable debts; and_
>
> _(f) specify the conditions (if any) for the agreement to come into operation; and_
>
> _(g) specify the circumstances in which or the events on which, the agreement terminates; and_
>
> _(h) specify the order in which proceeds of realising the property referred to in paragraph (a) are to be distributed among creditors; and_
>
> _(i) specify the order in which income referred to in paragraph (c) is to be distributed among creditors; and_
>
> _(j) specify whether or not the antecedent transactions provisions of this Act apply to the debtor; and_
>
> _(k) make provision for a person or persons to be trustee or trustees of the agreement; and_
>
> _(l) provide that the debtor will execute such instruments and generally do all such acts and things in relation to his or her property and income as is required by the agreement.”_

## What are the expected outcomes of a PIA?

The expected outcomes include (inter alia):

1. The debtor will avoid the restrictions of bankruptcy.
2. The PIA will ensure that the creditors get a fair distribution of assets
3. The debtor will get relief from their debts and debt collectors.
4. The debtor can keep their jobs and maintain their source of income.
5. Provide a better result to creditor’s than would be paid in bankruptcy.

These are just some of the advantages of using a part X insolvency agreement rather than going bankrupt.

## What is the Process of a Part X Insolvency Agreement?

Before an individual is legally allowed to enter into a personal insolvency agreement, the following conditions must be fulfilled:

1. The debtor must be [insolvent](https://stonegatelegal.com.au/services/insolvency/);
2. They must be present in Australia or have some connection to Australia;
3. They must have not entered another insolvency agreement within the previous 6-month period unless permission from the court has been provided.

For an insolvency agreement to pass then the creditors must pass a special resolution, which means that the majority of the creditors must vote for it, and over 75% of the dollar value of the debt owed by the creditors.

We will explain “insolvent” in more detail below.

### The Debtor must be Insolvent

The [definition in the Bankruptcy Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s5.html) states:

> _A person is solvent if, and only if, the person is able to pay all the person’s debts, as and when they become due and payable._
>
> _A person who is not solvent is insolvent._

So essentially, if you are unable to pay all of your debts as and when they become due and payable, then [you are insolvent](https://stonegatelegal.com.au/services/insolvency/).  This includes [tax debts](https://stonegatelegal.com.au/services/tax-debt-lawyers/).

This may not always be the case, but this is the general principal.

A debtor must then, once the evidence of the above has been provided, select a trustee to supervise their agreement. They may select either a registered bankruptcy trustee or the [Official Trustee](https://www.afsa.gov.au/setting-up-a-personal-insolvency-agreement)(“ **AFSA**”).

Once selected, the debtor must provide the trustee with these documents:

1. An authority, as stated under [section 188 of the Bankruptcy Act 1966](http://www8.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s188a.html), hands over control of assets, and allows them to organise a meeting with the creditors to discuss the control; and
2. A statement of affairs, discussing all assets, financial liabilities, and personal details; and
3. A personal insolvency agreement, in the form of a draft, explaining the action you wish to take and the agreement you wish to come to with your creditors.

These can be worked on between the debtor and the insolvency practitioner.

## Why Should I Make a Personal Insolvency Agreement?

A personal insolvency agreement may be right for you if you find yourself unable to repay debts but do not wish to declare [bankruptcy](https://stonegatelegal.com.au/what-is-bankruptcy/).

Bankruptcy can be detrimental to the financial future of an individual, a reason you may want to consider a PIA instead of declaring.

Declaring bankruptcy will likely cause your business or establishment to be seized and liquidated by your bankruptcy trustee, leading, as suggested, to the shutdown of your business.

Trustees will also generally be required to seize any other assets you may have had pre-bankruptcy.

Bankruptcy will generally last in Queensland for three years and one day. A personal insolvency agreement is an alternative you can take to bankruptcy to protect your finances and future economic health.

## Why Choose a Personal Insolvency Agreement?

A PIA is great in certain situations.  This can include:

1. There are no income, asset, or debt limits that apply to a PIA (unlike a Part IX Debt Agreement).
2. You will not be locked into the three (3) year bankruptcy term, as the length of the personal insolvency agreement will be set at the amount of time you negotiate.
3. In some cases, it may be possible to keep assets like your house or car if the terms of the PIA allow for it.

A personal insolvency agreement includes the following types of debts:

1. Joint debts (of the debtor and another person).
2. Secured debts (by way of mortgage or charge for example).
3. Tax debts (as a result of a director penalty notice for example).
4. Unsecured debts (most day-to-day debts, credit cards for example).

What about secured debts?

### Secured Debts

A personal insolvency agreement may not release you from all unsecured debts. The trustee must disclose the PIA to the secured creditor and they can choose if they want to participate or seek to realise their security.

Some examples of secured debts include:

1. Any vehicle loan (the vehicle is used as security).
2. Any hire purchase agreements (the hired items are the security).
3. Home loan (real property) (the property is used as security by mortgage).
4. Business loans (the business assets are used as security).
5. Chattel mortgage (the chattel is used as security).

Some examples of debts which are not covered inclide:

1. Local council rates.
2. Debts incurred after the PIA.
3. Fraudulent secured debts.
4. Local water rates.

So, it is up to the debtor to see if this type of agreement is right for them.

[CONTACT AN INSOLVENCY LAWYER TODAY](https://stonegatelegal.com.au/contact-stonegate-legal/)

**OR CALL: [1300 545 133](tel:1300545133) FOR A FREE PHONE CONSULTATION**

## Tax Debts with the ATO

[Tax debts](https://stonegatelegal.com.au/services/tax-debt-lawyers/) can be included in personal insolvency agreements.

So, if you have been served with a [director penalty notice](https://stonegatelegal.com.au/director-penalty-notice-complete-guide-for-directors/) and this has now made you insolvent and/or unable to pay the notice, then a part X agreement could be the perfect option.

There is no upper limit on a part X insolvency agreement and so if you owe a significant sum of money to the ATO, then a part X agreement can be proposed.

If you owe significant tax debts, and you do not want to go bankrupt, then you can propose a part X insolvency agreement to reduce and clear those debts.

## What are the Consequences of a Personal Insolvency Agreement?

As with most insolvency arrangements, several consequences are likely to accompany a personal insolvency agreement. It is vital that you are aware of these consequences so you can make an informed decision as to if a PIA is right for you.

When you enter into a PIA, there is a chance that you will not be cleared of all debts! Debts are only supported by this agreement if they are unsecured (unless the security holder allows for it – as above).

An unsecured debt, for those wondering, is a debt not supported by collateral.

Furthermore, to initiate the process of a PIA, you must pay a fee. This fee will depend on the trustee of your choice and will have to be paid before you can begin the agreement.

Depending on the severity of your financial situation, this may not be viable for you, so it is important to consider the fee before taking any action.

A personal insolvency agreement will have quite a large impact on your credit score. As with bankruptcy, your name will permanently appear on the [National Personal Insolvency Index](https://www.afsa.gov.au/the-national-personal-insolvency-index) and the details of the insolvency will remain present on your credit file for up to a 5-year period.

If your Part X insolvency agreement is breached by the debtor then this is an act of bankruptcy pursuant to [section 40(1)(m) of the Bankruptcy Act 1966](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s40.html), which says:

> _(1)  A debtor commits an act of bankruptcy in each of the following cases:_
>
> _(m)  if a personal insolvency agreement executed by him or her under Part X is:_
>
> _(i)  set aside by the Court; or_
>
> _(ii)  terminated._

If the debtor commits an act of bankruptcy, then a creditor can present a creditor’s petition, commencing the bankruptcy process.

A debtor will also be disqualified from being a director of a company for the duration of the personal insolvency agreement.

## What if I’m the Creditor?

You may be reading this article as a creditor involved in a personal insolvency agreement and be questioning what your rights are in the matter.

As a creditor, your debtor will be required to, as aforementioned, appoint a trustee who will likely come to you with a proposal.

Just so you are aware, it is the responsibility of the trustee to take complete control of your creditor’s property and prepare a report that details what you and your debtor will gain from the agreement.

Once the debtor has elected a trustee, they will then be required to organise a meeting of the creditors, a meeting that you will have to attend.

As stated on the Australian Financial Security Authority website, the trustee must send you the following information a minimum of 10 days prior to the meeting:

- notice in writing of the date, time, and place of the meeting
- the trustee’s report
- the trustee’s statement about resolutions to vote on, and
- an estimate of the trustee’s costs for managing the agreement.

You may, at this meeting, vote on your acceptance or lack thereof on the terms of the personal insolvency agreement.

If the creditors decide to accept the agreement, they must comply with the terms discussed. They must then also select a trustee to manage the terms of the agreement.

This may be the same trustee as the one appointed by the debtor, but creditors may appoint a trustee of their choice.

If the creditors decide that they do not want to accept the agreement, they will then have a decision to make. They may return control to the debtor, or they may demand the debtor presents an application for bankruptcy within the following 7-day period.

They also may decide to not make a special resolution, meaning the trustee will remain in control of the individual’s property until whichever of the following occurrences happen sooner:

- Four months pass from the date the trustee was appointed; or
- The property is released from the control of the trustee by a court of law; or
- The debtor declares bankruptcy; or
- The debtor dies.

## Key Takeaways

A personal insolvency agreement may be a viable road for you to take if you do not wish to [declare bankruptcy](https://stonegatelegal.com.au/bankruptcy-lawyers-101-complete-guide/) but find yourself insolvent.

There are however quite significant consequences to a PIA, so it is important you are aware of your rights and responsibilities regarding the matter.

Furthermore, it is recommended you pursue the help of a professional, such as a financial counsellor, if you find yourself considering a PIA!

It is vitally important that before entering a personal insolvency agreement

1. You seek advice from suitably qualified professionals.
2. You know and understand all of your options
3. You know and fully understand all of the consequences

[CONTACT AN INSOLVENCY LAWYER TODAY](https://stonegatelegal.com.au/contact-stonegate-legal/)

**OR CALL: [1300 545 133](tel:1300545133) FOR A FREE PHONE CONSULTATION**

## Personal Insolvency Agreement FAQ

We get a lot of enquiries in relation to insolvency law, and especially debt agreements, insolvency agreements, and bankruptcy.

Here are just a few frequently asked questions in relation to personal insolvency agreements.

### Does a Personal Insolvency Agreement hurt your credit rating?

Yes, a PIA will go on your credit rating, and you will be listed on the personal insolvency index PII.

### How do I apply for a Personal Insolvency Agreement?

First, get advice.  Secondly, appoint a trustee. The trustee will step through the process and the rest of the forms you will be required to complete.

### How long does a Personal Insolvency Agreement stay on your credit history?

Five years.  A PIA will remain on your credit record for five years sometimes longer).  A PIA will always remain of the [national personal insolvency index NPII](https://www.afsa.gov.au/the-national-personal-insolvency-index).

### How long does Personal Insolvency last?

A personal insolvency agreement will last however long you agree for it to last, or sooner if you can get it paid off faster.

### How much does it cost for a Personal Insolvency Agreement?

It really depends on the amount of debt, type of debt, and the creditors.  However, they can cost as much as $15,000.00.

### What are the advantages of a PIA?

1. The debtor will avoid the restrictions of bankruptcy.
2. The PIA will ensure that the creditors get a fair distribution of assets
3. The debtor will get relief from their debts and debt collectors.
4. The debtor can keep their jobs and maintain their source of income.
5. Provide a better result to creditor’s than would be paid in bankruptcy.

### What are the alternatives to a Personal Insolvency Agreement?

Alternatives to a personal insolvency agreement include – an informal agreement, a part IX debt agreement, or bankruptcy.

### What are the consequences of a Personal Insolvency Agreement?

Some of the consequences of a Personal Insolvency Agreement including paying a fee (sometimes over $10k), it has a large impact on your credit score, if breached by the debtor then this is an act of bankruptcy, and you will be disqualified from being a director of a company.

### What is personal insolvency?

If you are unable to pay all of your debts as and when they become due and payable, then you are personally insolvent.  This includes tax debts.

The [definition in the Bankruptcy Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s5.html) states:

> _A person is solvent if, and only if, the person is able to pay all the person’s debts, as and when they become due and payable._
>
> _A person who is not solvent is insolvent._

### What is the National Personal Insolvency Index?

The National Personal Insolvency Index (NPII) is a database which is publicly available (for a fee) of the record of personal insolvency in Australia.

### What types of debts are covered by a Part 10 Debt Agreement?

The types of debts are covered by a Part 10 Debt Agreement includes tax debts, joint debts, some secured debts, and unsecured debts, and are the same as those covered in bankruptcy.

### Who administers a Personal Insolvency Agreement?

A private bankruptcy trustee or the Official Trustee ( [Australian Financial Security Authority](https://www.afsa.gov.au/)) (“ **AFSA**”).

### Who can propose a PIA?

A debtor who is insolvent can propose a personal insolvency agreement.

[CONTACT AN INSOLVENCY LAWYER TODAY](https://stonegatelegal.com.au/contact-stonegate-legal/)

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#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation.

With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice.

Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings.

Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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#### [Statutory Demands in Construction – Complete Guide](https://stonegatelegal.com.au/statutory-demands-in-construction-complete-guide/)

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#### [Damages in Defamation Claims – Complete Guide](https://stonegatelegal.com.au/damages-in-defamation-claims-complete-guide/)

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#### [Extrinsic Evidence and the Parol Evidence Rule](https://stonegatelegal.com.au/extrinsic-evidence-and-the-parol-evidence-rule/)

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#### [Can You Serve a Statutory Demand by Email in Australia?](https://stonegatelegal.com.au/can-you-serve-a-statutory-demand-by-email-in-australia/)

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#### [QCAT Building Disputes in Queensland – Complete Guide](https://stonegatelegal.com.au/qcat-building-disputes-in-queensland-complete-guide/)

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#### [Who Can Sue for Defamation in Australia?](https://stonegatelegal.com.au/who-can-sue-for-defamation-in-australia/)

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## Litigation Services

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At Stonegate Legal, client satisfaction is our top priority. We are proud to have served hundreds of clients who have had positive experiences working with us.

Copyright © 2023 [**Stonegate Legal**](https://stonegatelegal.com.au/) Pty Ltd – All Rights Reserved – Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732) \| [Terms](https://stonegatelegal.com.au/terms-and-conditions/) \|  [Privacy](https://stonegatelegal.com.au/privacy-policy/) \| [Sitemaps](https://stonegatelegal.com.au/sitemap_index.xml) \| [\*Conditions Apply](https://stonegatelegal.com.au/terms-and-conditions/)

## Shania Bryan - Solicitor
[Skip to content](https://stonegatelegal.com.au/team-member/shania-bryan/#content)

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# Shania Bryan

Shania is a solicitor at Stonegate Legal, based in Queensland. After nearly two years with the firm, Shania recently transitioned into her solicitor role following her admission to the Supreme Court of Queensland in December 2024. She holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP). Shania practices predominantly in defamation law and handles a majority of the defamation matters here at Stonegate Legal.

Her focus is advising and representing clients in disputes involving reputational harm, online publications, and media content. Shania works closely with individuals and businesses to navigate the intricacies of defamation claims and achieve effective resolutions.

Tagged [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/), [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/), [Commercial Lease Disputes](https://stonegatelegal.com.au/tag/commercial-lease-disputes/), [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/), [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/), [Defamation Litigation](https://stonegatelegal.com.au/tag/defamation-litigation/), [Wills/Estate Litigation](https://stonegatelegal.com.au/tag/wills-estate-litigation/)

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- Office Hours

Monday – Friday

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At Stonegate Legal, client satisfaction is our top priority. We are proud to have served hundreds of clients who have had positive experiences working with us.

Copyright © 2023 [**Stonegate Legal**](https://stonegatelegal.com.au/) Pty Ltd – All Rights Reserved – Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732) \| [Terms](https://stonegatelegal.com.au/terms-and-conditions/) \|  [Privacy](https://stonegatelegal.com.au/privacy-policy/) \| [Sitemaps](https://stonegatelegal.com.au/sitemap_index.xml) \| [\*Conditions Apply](https://stonegatelegal.com.au/terms-and-conditions/)

## Debt Recovery Lawyers
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# Debt Recovery Lawyers

Our debt recovery lawyers are adept in business-related and debt-related disputes, enforcement of money orders, and insolvency. We diligently strive to recover your outstanding debts.

[Book A Consultation](https://stonegatelegal.com.au/services/debt-recovery-lawyers/#book)

[Speak To Our Trusted Lawyers Today](https://stonegatelegal.com.au/contact/)

## DEBT RECOVERY LAWYERS IN QUEENSLAND

## Why Choose Stonegate Legal To Recover Your Debts?

Stonegate Legal are an experienced team of debt recovery lawyers in Queensland (offices in Brisbane & the [Sunshine Coast](https://stonegatelegal.com.au/services/debt-recovery-sunshine-coast/)), who provide the highest quality legal advice and representation. We understand that debt disputes can be complex, so we work closely with our clients to ensure their rights are protected.

Our team has a proven track record of success in debt dispute cases, and we strive to ensure our clients get the best outcome possible. We will guide you through all stages of the process, from filing court documents to negotiating with creditors. With Stonegate Legal, you can rest assured that your rights will be protected and your debts will be managed in a timely and effective manner.

## Your Debt Recovery Lawyers

## Queensland Debt Recovery Lawyers

## Dealing With Debt Disputes

Using debt recovery lawyers can be a great way of quickly and efficiently getting the money you are owed. At [Stonegate Legal](https://stonegatelegal.com.au/), we have the legal expertise and determination to help you recover the debt you deserve. Our legal representation is designed to send a clear message to debtors that the debt must be paid.

This can help you save time and money in retrieving what is owed to you, no matter the amount. We are committed to helping you reclaim the money you are entitled to, and our team of skilled debt collection professionals will work hard to ensure that you receive it.

[Meet The Team](https://stonegatelegal.com.au/the-stonegate-legal-team/)

## Debt Dispute Lawyers

### Your Debt can be recovered by following these steps:

- 1\. Sending the debtor an official letter of demand foreshadowing legal action;
- 2\. Starting proceedings in the Court with jurisdiction
- 3\. Filing and serving a claim and statement of claim;
- 4\. Getting judgment; then
- 5\. Enforcement of that judgment in the Court; or
- 6\. Enforce the judgment with a statutory demand or bankruptcy notice;
- 7\. Bankrupt the debtor in the Federal Circuit Court or wind them up in the Federal Court.

![sgl](<Base64-Image-Removed>)

### Request a Free Consultation

Don't let unpaid debts impact your bottom line. Contact Stonegate Legal today for a free debt recovery consultation and let our experienced lawyers help you recover what's rightfully yours.

[Contact Us Today](https://stonegatelegal.com.au/contact/)

## Debt Recovery & Dispute Services

### Make Informed Decisions with Stonegate Legal

### Extensive Experience & Legal Knowledge

Our debt recovery lawyers have extensive experience in the field of credit and debt recovery and understand the legal system. We can provide you with comprehensive advice on the most effective methods to recover your debt.

### Respectful & Professional Service

We understand that our clients may be dealing with difficult and stressful situations. Our debt recovery lawyers will always provide respectful and professional service to ensure that your case is handled quickly, efficiently, and effectively.

### Tailored Solutions

Every debt recovery case is unique and requires an individual approach. Our debt recovery lawyers will tailor a solution specific to your needs to ensure that you receive the best possible outcome.

### Discuss You Case With Trusted Debt Recovery Lawyers

Our debt recovery lawyers understand the importance of successful debt collection and are committed to providing clients with the most effective and efficient debt recovery strategies. We offer a free initial consultation to assess your case, discuss your options, and provide an overview of the services we can offer.

[Discuss Your Case Today](https://stonegatelegal.com.au/services/debt-recovery-lawyers/#book)

[OR Call Now](tel:1300545133)

## Debt Recovery In Queensland

Debt recovery in Queensland is a complex process that requires careful consideration and strict adherence to the relevant legislation. Depending on the type of debt and the circumstances of the debtor, different courts in Queensland have different monetary jurisdictions.

This means that debtors must be aware of the different monetary limits for each court before initiating a debt recovery action.

This is where our debt recovery lawyers can help!

Small Claims Up To $25,000

QCAT

Claims Up To $750,000

District Court

Claims Up To $150,000

[Magistrates Court](https://www.courts.qld.gov.au/courts/magistrates-court)

Claims Up To $750,000

Supreme Court

## The Debt Recovery Process

Our team of experienced debt recovery lawyers will be able to assist you in navigating each step of this process, ensuring that your rights are protected throughout and that you receive an outcome and payment that is in your best interests.

[Discuss Your Case Today](https://stonegatelegal.com.au/contact/)

No Obligation Case Evaluation

[Filling and Serving A Claim Statement Of Claim](https://stonegatelegal.com.au/services/debt-recovery-lawyers/#collapse-c70abef687f0567e5a39)

The first step in debt recovery is to file a Statement Of Claim with the relevant court. This document outlines the details of the debt including who is owed, how much is owed, and when it became due. This document must be served on the debtor for them to be aware of their obligations and for the court action to commence.

[Getting Default Judgement](https://stonegatelegal.com.au/services/debt-recovery-lawyers/#collapse-092b264687f0567e5a39)

To formally request a court ruling, an application for default judgment must be submitted. This judgment can be an enforced order from the court to the defendant to pay the debt owed. It is imperative to be able to demonstrate proper service, along with all the required details in the affidavit in support of the default judgment request.

[Enforcement Of Judgement](https://stonegatelegal.com.au/services/debt-recovery-lawyers/#collapse-eba8349687f0567e5a39)

After you receive a ruling in your favour, you may then initiate enforcement proceedings, such as:

- Obtaining an enforcement warrant to seize assets
- Filing for bankruptcy in the case of an individual debtor
- Issuing a [Statutory Demand](https://stonegatelegal.com.au/statutory-demand/) if the debtor is a corporation
- Pursuing liquidation proceedings to wind up the company. Dealing with debt disputes in Queensland can be complex, so it is essential to get professional legal guidance.

[Enforcement Warrants – Debt Disputes](https://stonegatelegal.com.au/services/debt-recovery-lawyers/#collapse-c70abef687f056802479)

An enforcement warrant is a court-issued order allowing a sheriff/bailiff to seize a debtor's assets to pay off debt when the debtor fails to respond to a summons.

[Bankruptcy](https://stonegatelegal.com.au/services/debt-recovery-lawyers/#collapse-092b264687f056802479)

[Bankruptcy](https://stonegatelegal.com.au/bankruptcy/) proceedings are initiated when an individual debtor has failed to pay debts despite judgement being granted in court. The objective is to liquidate the debtor's assets to pay off creditors.

[Winding Up Application](https://stonegatelegal.com.au/services/debt-recovery-lawyers/#collapse-eba8349687f056802479)

After a court decision in your favour, you can enforce the judgement by petitioning the court to [wind up the company](https://stonegatelegal.com.au/winding-up-a-company-that-owes-you-money/) due to insolvency. This requires sending a demand and a copy of the judgement to the debtor; if they don't take action within 21 days, they'll be legally assumed insolvent, and you can apply to the court to have the company liquidated. The assets will be sold, and the proceeds will be used to pay off your debt and other creditors.

## Trusted Australian Debt Collection Agency

## Professional Debt Collectors

we provide debt collection services to help businesses recover outstanding debts. Therefore, our team of experienced debt recovery specialists understand the challenges businesses face when dealing with unpaid accounts. With our extensive training, we can quickly and efficiently collect an overdue debt and bad debts, using a combination of advanced technology and proven techniques. Our priority is to ensure that we maintain ethical and respectful approaches when dealing with creditors, to ensure positive relationships are maintained.

We have expertise in both personal and commercial debt recovery, and we have helped companies of all sizes to resolve their overdue debts. We understand the importance of timely debt recovery and work tirelessly to ensure that our clients’ needs are met. Our team is equipped to handle legal proceedings if necessary, and we have a strong track record of success in this area.

If your business is struggling with unpaid accounts, then let our experienced team help you recover debt today.

## Collecting Debt Across Australia

## How Our Debt Collectors Can Help You

While we are not a debt collection agency, we are proud of the success we have achieved for our clients needing our debt collection services. Our team has a thorough understanding of Australian debt collection legislation, allowing us to work efficiently and effectively in recovering debts for businesses in all Australian major cities such as Brisbane, Sydney, and Melbourne, and regional area such as the Sunshine Coast.

We also prioritise excellent communication with both our clients and debtors, ensuring a smooth and positive experience for all parties involved. Our business debt recovery services are reliable and we provide a no collection, no commission policy, so you can trust us to get the job done with the information provided. Get in touch with us today to find out how we can help you recover your outstanding debts.

## Trusted Skip Tracing Services

## What Are Skip Tracing Services?

When a debtor goes missing and evades all attempts at contact, skip tracing is the next step in the debt collection process. This involves finding information on the person’s whereabouts through online database searches, social media searches, and other investigation techniques.

No matter the reason for their disappearance, performing a skip trace helps to ensure that those responsible for their obligations cannot avoid the consequences indefinitely. As a result, it is an important aspect of any successful debt collection strategy.

## Professional Skip Tracing Services

Our professional skip tracers operate Australia-wide. If you have debtors in different States or Territories in Australia, then you do not need to go anywhere else. Although our main office is in Queensland, we can operate Australia-wide, and have agents in every State and Territory. We strictly follow the Australian debt collection guidelines and tailor our debt collection processes to follow debt collection regulations and debt collection laws.

## Experienced Team of Skip Tracers

## Recover What Is Rightfully Yours

By conducting extensive searches, we can locate the debtor and then proceed with debt collection efforts. The seamless partnership between skip tracing and debt collection saves you time and hassle by offering everything under one roof. In addition, our experienced team is trained to handle skip tracing procedures in accordance with all applicable laws and regulations. With our high success rate and industry knowledge, let us help you recover what is rightfully yours – contact us for all your skip tracing needs.

## Why We Are the Leading Skip Tracers in Australia

## Our Skip Tracing Services

Our team of skip tracers’ job is to uncover the whereabouts of individuals who may be evading detection. This work often involves conducting investigations and searches through various databases.

With enough information, it is very unlikely for a person to leave no traces of their current location. With us, our tracing methods are extremely precise and effective in locating people and targets, without infringing on their privacy.

## Advance Receivables Management

#### A business can essentially lose everything with bad receivables management during the payment phase of the sales process.

[Most businesses fail because of either:](https://stonegatelegal.com.au/services/debt-recovery-lawyers/#collapse-c70abef687f05686beda)

[1\. Loss of capital; and](https://stonegatelegal.com.au/services/debt-recovery-lawyers/#collapse-092b264687f05686beda)

[2\. Loss of revenue / cashflow.](https://stonegatelegal.com.au/services/debt-recovery-lawyers/#collapse-eba8349687f05686beda)

As your accountant has probably said to you a number of times, cash is king. It’s true.

## What is the Benefit of Advance Receivables Management?

Advance receivables management directly helps your businesses profit because it reduces bad debt and increases cash flow. Your business will also have better liquidity for use for acquisitions or investments – growth and expansion or personal wealth creation.

Advance receivables management can boost your businesses professional image.

#### Advance receivables management involves a lot more than simply reminding customers to pay their invoices. It is also about attempting to identify the main reasons for that non-payment.

Advance receivables management is a process which includes:

### Conducting reference checks

### Doing credit checks and insolvency checks for new clients

### Investigating customers on google and social media

### Checking where and to whom the invoices are to be sent

### Finding out whether customers operate a payment run different you your payment terms

### Factoring the potential for payment delays

### Understanding why the debtor may not pay their invoices

### Investigating potential trade credit insurance options

### Tips for Good Accounts Receivable Management

Whether it is a Professional debt collection, an accounts receivables management company and even legal practices. We all see the same problems with bad debts every day.

### We have a number of tips for good accounts receivables management, they include:

- Have a proven and legally binding application process.

- Have clear and concise credit approval processes.

- Have effective billing and invoicing processes.

- Maintain accurate customer details and records.

- Call us for your accounts receivable process.

Cash is king! It is important that your accounts receivables processes reflect this.

### We also see that our client’s systems fail, which may not have failed had they utilized the following improvements:

- Assess your accounts receivable on a regular basis.

- Automate your accounts receivables processes.

- Invoice your customers / clients electronically where possible.

- Consider shortening payment terms to increase cash flow.

- Create a sound dispute resolution process with your invoices.

- Create a proactive aged debt collections process.

- Prioritise the credit management in your business.

- Reduce or eliminate all obstacles to accepting payments.

If this sounds like a headache, then let us do it for you.

Our comprehensive accounts receivable management services are here so that you can concentrate on running your business.

### Our Team

## Meet Our Commercial Litigation Team

![Wayne Davis - Lawyer - Stonegate Legal](<Base64-Image-Removed>)

## Legal Practice Director / Principal Solicitor

## Wayne Davis

Wayne Davis is the principal solicitor, legal practice director of the firm, and leads the litigation team.  Wayne has an LLB, and GDLP and is admitted to the Supreme Court of Queensland and the High Court of Australia.  Wayne is a debt recovery, defamation, litigation, and insolvency professional.

Wayne is dedicated to achieving the best possible outcomes, whether through strategic negotiation, alternative dispute resolution, or courtroom advocacy. Wayne understand that every case is unique and takes a proactive approach to ensure your rights and interests are protected at every stage of the process.

### Education & Certifications

LLB – Bachelor of Laws, Graduate Diploma of Legal Practice (GDLP)

### Personal Quote

Don’t believe everything you think.

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Lease Disputes](https://stonegatelegal.com.au/tag/commercial-lease-disputes/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/) [Debt Recovery/Collection](https://stonegatelegal.com.au/tag/debt-recovery-collection/) [Defamation Litigation](https://stonegatelegal.com.au/tag/defamation-litigation/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [Statutory Demands](https://stonegatelegal.com.au/tag/statutory-demands/) [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/) [Wills/Estate Litigation](https://stonegatelegal.com.au/tag/wills-estate-litigation/)

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## Law Graduate / Paralegal

## Laylah Toovey

Laylah completed her Bachelor of Laws with Honours at the University of the Sunshine Coast and is currently undertaking her graduate diploma of legal practice at the College of Law. I have worked with Stonegate Legal since 2021, and within this time, she acquired a broad range of knowledge and experience across a diverse range of matters.

Laylah’s approach is centered on understanding your unique circumstances, protecting your interests, and advocating for the best possible outcome. Whether you’re facing commercial disputes, debt disputes, contract issues, or other contentious matters, Laylah and the team are here to guide you every step of the way.

### Education & Certifications

Bachelor of Laws

### Personal Quote

I am dedicated to supporting our senior team members, and achieving positive results for our clients

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Debt Recovery/Collection](https://stonegatelegal.com.au/tag/debt-recovery-collection/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [Statutory Demands](https://stonegatelegal.com.au/tag/statutory-demands/) [Wills/Estate Litigation](https://stonegatelegal.com.au/tag/wills-estate-litigation/)

![Stacey Harvey Paralegal - Stonegate Legal](<Base64-Image-Removed>)

## Senior Paralegal

## Stacey Harvey

Stacey has been a part of the team at Stonegate Legal since 2022 but has worked in the industry for over 20 years, having extensive knowledge of the legal processes in Australia and specializing in debt recovery claims, default judgments, enforcement action, and bankruptcy.

Stacey spent a large portion of her career as a senior paralegal responsible for the performance and management of a team of paralegals and an administration department for many years.  During the first 18 years, she worked for one of Brisbane’s largest debt collection companies, where she managed large portfolios of debt for councils, schools, government departments, and insurance companies, along with debt purchased from various banks, utilities, and other credit providers.

### Education & Certifications

Justice of the Peace, Certificate III in Office Business Administration

### Personal Quote

Stay positive, work hard, make it happen.

## Areas of Interest

### [Commercial Lease Disputes](https://stonegatelegal.com.au/tag/commercial-lease-disputes/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Debt Recovery/Collection](https://stonegatelegal.com.au/tag/debt-recovery-collection/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [Statutory Demands](https://stonegatelegal.com.au/tag/statutory-demands/) [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/)

## Frequently Asked Questions

[What do debt recovery lawyers do?](https://stonegatelegal.com.au/services/debt-recovery-lawyers/#collapse-b0d504b687f0569a7adb)

Debt recovery solicitors recover debts legally through the Courts or QCAT. Debt recovery lawyers can advise and assist with all debt recovery, enforcement, and debt prevention matters.

[Can debt recovery lawyers take you to court?](https://stonegatelegal.com.au/services/debt-recovery-lawyers/#collapse-4e10eba687f0569a7adb)

Yes. Debt recovery lawyers can file legal proceedings against debtors on behalf of their creditor clients. If a debtor continues to not pay the debt, then a debt recovery lawyer can help their client obtain a money judgement from the Court.

[How much does a debt recovery lawyer cost?](https://stonegatelegal.com.au/services/debt-recovery-lawyers/#collapse-f591981687f0569a7adb)

It really depends on what type of matter it is, the facts of the matter, which Court it is in, how much the debt is, and a number of other factors. However, we offer a number of fixed-fee and scale-fee debt recovery services.

[Should I use a debt collector or a lawyer?](https://stonegatelegal.com.au/services/debt-recovery-lawyers/#collapse-de9d696687f0569a7adb)

It is really up to you. A debt collector can work up to a point, but they cannot commence legal action and usually have to refer that work to a lawyer. Debt recovery lawyers can do everything.

[What makes Stonegate Legal different from a debt collection agency?](https://stonegatelegal.com.au/services/debt-recovery-lawyers/#collapse-a5f8e89687f0569a7adb)

Stonegate Legal is a law firm that specialises in debt recovery. We offer personalised legal advice and representation, as well as a range of services including negotiation, court proceedings, debt settlement, and more. Our team of experienced lawyers are dedicated to helping clients achieve the best possible outcome.

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## Voidable Transactions Overview
[Skip to content](https://stonegatelegal.com.au/voidable-transactions-bankruptcy/#content)

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# What are Voidable Transactions in Bankruptcy?

[Discuss Your Case Today](https://stonegatelegal.com.au/contact/)

## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| December 10, 2017

## Article Summary

In this article, our [insolvency lawyers](https://stonegatelegal.com.au/services/insolvency/) provide an in-depth analysis of voidable transactions in bankruptcy, which are transactions made before a person becomes bankrupt that can be recovered by the bankruptcy trustee.

Under the Bankruptcy Act 1966, four main types of transactions can be voided:

1. undervalued transactions.
2. transfers to defeat creditors.
3. transactions where consideration is given to a third party; and
4. transactions giving preference to one creditor over others.

The article explains how each type of transaction can be identified, the conditions under which they can be voided, and the legal definitions and considerations involved.

Undervalued transactions occur when property is transferred for less than its market value.

Transfers to defeat creditors involve moving assets with the intent to keep them from creditors.

Transactions where consideration is given to a third party involve payments made to someone other than the transferor, often to avoid creditors.

Preferences occur when a debtor favours one creditor over others just before bankruptcy.

The article also discusses the defences against these claims, such as proving that market value consideration was given or that the transfer was not intended to defeat creditors. It highlights the importance of understanding these transactions to ensure fair treatment of all creditors and the proper administration of the bankrupt’s estate.

Table of Contents

[Toggle](https://stonegatelegal.com.au/voidable-transactions-bankruptcy/#)

![What are Voidable Transactions in Bankruptcy](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2017/12/What-are-Voidable-Transactions-in-Bankruptcy.png)Voidable transactions in bankruptcy are transactions made before the bankruptcy which can be recovered by the bankruptcy trustee.

If the bankrupt transferred assets, which the bankruptcy trustee judges to be property that would have formed part of the estate available to creditors, then these transactions can be voided, or reversed / undone by [bankruptcy lawyers](https://stonegatelegal.com.au/bankruptcy/).

This is sometimes known in liquidation and bankruptcy as “ _claw-back provisions_” or _“voidable transactions”._

The [_Bankruptcy Act 1966_ (Cth)](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/index.html) (“ **_Bankruptcy Act_**”) allows the bankruptcy trustee to void these transactions, or claw back the asset, meaning that the other party will have to transfer the asset back to the bankrupt’s estate, or pay money back to the bankrupt’s estate.

Our [insolvency lawyers](https://stonegatelegal.com.au/services/insolvency/) explain in more detail below.

## What are Voidable Transactions in bankruptcy?

In the _Bankruptcy Act_, there are four (4) transactions which can be voided by the bankruptcy trustee, these are:

1. **Undervalued transactions** – [section 120 of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s120.html); and/or
2. **Transfers to defeat creditors** – [section 121 of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s121.html); and/or
3. **Transactions where consideration given to a third party** – [section 121A of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s121a.html); and/or
4. **Transactions giving preference to one creditor over other creditors** – [section 122 of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s122.html).

The trustee is able to void the transactions above if he/she is able to do the following:

1. Identify the transaction and identify the transaction as a voidable transaction in bankruptcy;
2. Identify the other party to the transaction in order to get the property or money from them;
3. Identify when the transaction occurred to prove it falls within the legislative time limits; and
4. Ensure that the transaction was not protected property under the _Bankruptcy Act_.

These are similar to voidable company transactions in liquidation and winding up proceedings.

## Undervalue Transactions

![Voidable Transactions Undervalued transactions](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2017/12/Voidable-Transactions-Undervalued-transactions.png)

[Section 120 of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s120.html) says:

> _(1)  A transfer of property by a person who later becomes a bankrupt (the transferor) to another person (the transferee) is void against the trustee in the transferor’s bankruptcy if:_
>
> _(a)  the transfer took place in the period beginning 5 years before the commencement of the bankruptcy and ending on the date of the bankruptcy; and_
>
> _(b)  the transferee gave no consideration for the transfer or gave consideration of less value than the market value of the property._

Classically, this voidable transaction in bankruptcy would be the bankrupt’s share of the family home, [transferred to their partner](https://stonegatelegal.com.au/advancement-and-cummins-v-cummins/), for no consideration, or consideration less than the market value of the property at the time of the transfer.

The full court of the [Federal Court of Australia](http://www.fedcourt.gov.au/) in [_Official Trustee in Bankruptcy v Lopatinsky_ \[2003\] FCAFC 109](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCAFC/2003/109.html) said that:

> _… it would be inconsistent with the observations of Wilcox J and Branson J in [Mateo](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCAFC/2003/26.html) to proceed upon the basis that “consideration” could be something less than the ordinary legal and commercial understanding of that term. Indeed, it would be inconsistent with the statutory purpose of the section which is designed to protect creditors to hold that the [Parliament intended](https://www.legislation.gov.au/Details/C2004B00017) to enable a transferee to provide something less than the well-established legal definition of “ [consideration](https://www.australiancontractlaw.com/)“._

So, [consideration](https://stonegatelegal.com.au/breach-of-contract/) under this section must adhere to the legal definition of consideration, and cannot be past consideration – [_Official Trustee in Bankruptcy v Mateo_ \[2003\] FCAFC 26](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCAFC/2003/26.html).

In [_Sutherland v Brien_ \[1999\] NSWSC 155](http://classic.austlii.edu.au/au/cases/nsw/NSWSC/1999/155.html) the Court said:

> _It seems to me obvious that … the Court’s task is twofold: first, to identify as precisely as one can, the consideration (if any) which was in fact given … and secondly, if consideration was given, to determine whether the value of the consideration at the time of the transfers was less than the market value of the property transferred._

So, in determining if a transaction was an undervalue transaction pursuant to section [120 of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s120.html), and therefore a voidable transaction in bankruptcy, firstly there needs to be a determination as to whether legal _consideration_ was given; and if so, whether the value of that consideration was equal to the market value of the property transferred.

This is similar to [uncommercial transactions in liquidation](https://stonegatelegal.com.au/uncommercial-transactions-claims-and-how-to-defeat-them/) in company insolvency.

## Transfers to Defeat Creditors

![Voidable Transactions Transfers to defeat creditors](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2017/12/Voidable-Transactions-Transfers-to-defeat-creditors.png)

[Section 121 of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s121.html) says:

> _(1)  A transfer of property by a person who later becomes a bankrupt (the transferor) to another person (the transferee) is void against the trustee in the transferor’s bankruptcy if:_
>
> _(a)  the property would probably have become part of the transferor’s estate or would probably have been available to creditors if the property had not been transferred; and_
>
> _(b)  the transferor’s main purpose in making the transfer was:_
>
> _(i)  to prevent the transferred property from becoming divisible among the transferor’s creditors; or_
>
> _(ii)  to hinder or delay the process of making property available for division among the transferor’s creditors._

The main point to consider in relation to section 121 of the _Bankruptcy Act_ is the intention of the debtor.  This section states that a transaction can be void if the **main purpose** of the transfer was to attempt to defeat creditors.

The main purpose is determined by reasonable inference from all the circumstances surrounding the transfer, at the time of the transfer.

[Section 121(2) of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s121.html) says:

> _The transferor’s main purpose in making the transfer is taken to be the purpose described in paragraph (1)(b) if it can reasonably be inferred from all the circumstances that, at the time of the transfer, the transferor was, or was about to become, insolvent._

So, if the [bankrupt](https://stonegatelegal.com.au/bankruptcy/) was just about to become [insolvent](https://stonegatelegal.com.au/what-are-insolvent-transactions/), then the transfer of property is taken to be caught by section 121.  The trustee in bankruptcy can raise the legal presumption of insolvency if they can establish that the transferor:

1. Had not, in respect of that time, kept such books, accounts and records as are usual and proper in relation to the business carried on by the transferor and as sufficiently disclose the transferor’s business transactions and financial position; or
2. Having kept such books, accounts and records, has not preserved them.

However, some transactions are not able to be voided by the bankruptcy trustee, these are outlined at section [121(4) of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s121.html) and are “good faith” provisions, including:

1. The consideration is as valuable as the market value of the property; and
2. The transferee did not know, and could not reasonably have inferred, that the transferor’s main purpose was trying to defeat creditors; and
3. The transferee could not reasonably have inferred that, at the time of the transfer, the transferor was, or was about to become, insolvent.

Examples of transfer of property are:

1. The transfer of monies held in the bankrupts bank account to a spouse or family member; and/or
2. The transfer of the bankrupt’s interest in real property to a spouse, friend or family member; and/or
3. The transfer of other property such as shares, motor vehicles etc.

## Transactions where Consideration Given to a Third Party

![Voidable Transactions Transactions where consideration given to a third party](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2017/12/Voidable-Transactions-Transactions-where-consideration-given-to-a-third-party.png)

[Section 121A of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s121a.html) says:

This section applies if:

> _(a)  a person who later becomes a bankrupt (the transferor) transfers property to another person (the transferee); and_
>
> _(b)  the transferee gives some or all of the consideration for the transfer to a person (a third party) other than the transferor._

An example of this might be a husband and wife, where the wife is insolvent and likely to become bankrupt, transfers her interest in the matrimonial home for market value consideration to the husband; and the husband then pays that market value consideration to the wife’s sister instead of to the wife.

Section 121A allows the same right of recovery as against the third party as against the bankrupt, if they trigger sections 120 and 121 of the _Bankruptcy Act_.

## Voidable Transactions in Bankruptcy

![Avoidance of preferences in bankruptcy](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2017/12/Voidable-Transactions-Avoidance-of-preferences.png)

[Section 122 of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s122.html) says:

> _(1)  A transfer of property by a person who is insolvent (the debtor) in favour of a creditor is void against the trustee in the debtor’s bankruptcy if the transfer:_
>
> _(a)  had the effect of giving the creditor a preference, priority or advantage over other creditors; and_
>
> _(b)  was made in the period that relates to the debtor, as indicated in the following table._

![Avoidance of preferences table Bankruptcy Act](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2017/12/Voidable-Transactions-Avoidance-of-preferences-table-Bankruptcy-Act-e1512879504190.png)

A preference payment is the payment of monies from a debtor to a creditor in preference to other creditors of the debtor.

An example might be where the debtor makes the payment of a debt to a business owned by a family member, in an attempt to favour that family member over his/her other unsecured creditors.

In [_James v Commonwealth Bank of Australia_ \[2015\] FCA 582](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/2015/582.html) the Court said:

> _Although there appears to be a dearth of authority on the point, section 122(1) is directed at a situation of the pool of assets being available to creditors generally, being detrimentally affected by a transaction in favour of one creditor. Accordingly, in my view, what one has to do is to consider the situation of the creditors generally before the transaction, and then look at the situation afterwards and see whether the other creditors, that is the general creditors, have been disadvantaged._

The main point to consider is that the transaction must have a detrimental effect on the other creditors, in favour of one creditor.

In [_Sheahan v Carrier Air Conditioning Pty Ltd_ \[1997\] HCA 37](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/1997/37.html) the [High Court of Australia](http://www.hcourt.gov.au/) said:

> _To my mind, cases such as Richardson v The Commercial Banking Company of Sydney Ltd do focus consideration on the ultimate effect of the transaction with respect to the general creditors over and against the relevant creditor. Accordingly, in my view, if one can see that the position of the general creditors after the transaction was no worse than it was before the transaction then the transaction does not have the effect of giving a preference to one creditor over the others._

The above voidable transactions in bankruptcy give a brief understanding of how a bankruptcy trustee can attempt to void a transaction.

This is similar to [unfair preferences in liquidation](https://stonegatelegal.com.au/unfair-preference-claims-and-how-to-defeat-them/) in company insolvency.

However, there are defences to those claims that the transaction contravened the _Bankruptcy Act_, and is therefore voidable.

## Defences to Voidable Transactions in Bankruptcy

The defences to claims that transfers of property can be void, and voidable transactions are contained in the provisions themselves.

### Defences to Undervalued Transactions

As mentioned, a trustee in bankruptcy would need to prove that there was no legal consideration paid, or if it was paid that it was not equal to market value.

Therefore, a market value appraisal by a legitimate valuer prior to the transfer, followed by the transfer of consideration, equal to the market value, may be a complete defence to a claim pursuant to section 120 of the Bankruptcy Act.

Or, if the transfer happened outside of the legislative timeframes allowable, either four (4), five (5), or six (6) years, depending on the circumstances of the bankrupt.

### Defences to Transfers to Defeat Creditors

The main defence to a claim that a transfer of property was in an attempt to defeat creditors is by establishing that the intention of the transfer to defeat creditors was not the main purpose of the transfer.

Further, if it can be shown that the transferee acted in good faith and transferred market value legal consideration at the time of purchase, then any increase in the value of the property is protected.

### Defences to Transactions Giving Preference to one Creditor over other Creditors

As previously mentioned, giving evidence that the transaction pursuant to the claim does not affect the remaining creditors, may be a defence to the claim for unfair preferences.

## What Property Vests in the Bankruptcy Trustee?

Almost all of the bankrupt’s’ property will vest in the trustee, and is able to be realised to satisfy the creditors.  This includes:

1. Property of bankrupt as at the date of commencement;
2. All after acquired property;
3. Relation back assets;
4. After acquired income; and
5. Proceeds from Court action;

Further, all of the assets from successful voidable transactions in bankruptcy claims can be realised to satisfy creditors, including:

1. Undervalued transactions;
2. Transactions to defeat creditors;
3. Transactions with consideration to third parties; and
4. Unfair Preferences.

## FAQ on Voidable Transactions in Bankruptcy

This FAQ section addresses common questions about voidable transactions in bankruptcy, providing clear explanations and practical information.

Understanding these concepts is essential for both debtors and creditors involved in [bankruptcy proceedings](https://stonegatelegal.com.au/what-is-bankruptcy/).

### What are voidable transactions in bankruptcy?

Voidable transactions are transfers of property or payments made before a person becomes bankrupt that can be reversed by the bankruptcy trustee. These transactions are scrutinised because they may unfairly favour certain parties or reduce the assets available to creditors.

### Why are some transactions voidable in bankruptcy?

Transactions are voidable to ensure that all creditors are treated fairly and equitably. The bankruptcy trustee can recover assets that were transferred improperly to maximise the estate available for distribution among creditors.

### What is an undervalued transaction?

An undervalued transaction occurs when property is transferred for less than its market value within five years before bankruptcy. This type of transaction can be voided by the trustee if it is deemed to have been done to disadvantage creditors.

### What does it mean to transfer property to defeat creditors?

Transferring property to defeat creditors means moving assets with the intent to prevent them from becoming part of the bankrupt estate. Such transfers can be voided if it is shown that the main purpose was to hinder or delay creditors.

### Can transactions where consideration is given to a third party be voided?

Yes, if a bankrupt person transfers property to someone, and the consideration is paid to a third party, this transaction can be voided. This prevents the bankrupt from circumventing the intent of the Bankruptcy Act by funnelling assets indirectly.

### What are preference payments?

Preference payments are transactions where a debtor pays one creditor over others shortly before becoming bankrupt, giving that creditor an unfair advantage. These payments can be voided to ensure all creditors are treated equally.

### How does the bankruptcy trustee identify voidable transactions?

The trustee identifies voidable transactions by examining the bankrupt’s financial records and transactions leading up to the bankruptcy. They look for transfers that fall within the defined categories and time frames set out in the Bankruptcy Act.

### What is the time frame for voidable transactions?

The time frame varies depending on the type of transaction. For example, undervalued transactions can be voided if they occurred within five years before the bankruptcy, while preference payments are typically scrutinised within six months before bankruptcy.

### What is the significance of ‘market value’ in these transactions?

Market value is the fair value of the property at the time of transfer. Transactions made for less than market value can be voided because they potentially deprive creditors of the full value of the assets that should be available in the bankruptcy estate.

### What defences can be used against claims of voidable transactions?

Defences include proving that market value consideration was given, the transfer was made in good faith, or the transaction occurred outside the statutory time limits. Evidence supporting these claims can protect the transaction from being voided.

### How does intention affect the voidability of a transaction?

The intention of the debtor at the time of the transaction is crucial. If the main purpose of the transfer was to defeat creditors or hinder their claims, the transaction is likely to be voided.

### What happens if a transaction is voided?

If a transaction is voided, the transferred property or its value is returned to the bankruptcy estate. The trustee can then distribute these assets among the creditors according to the priorities set out in the Bankruptcy Act.

### Are there any transactions that are protected from being voided?

Certain transactions are protected, such as those made for fair market value in good faith, or those that occurred outside the relevant time periods. Additionally, payments for necessary living expenses or ordinary business transactions may also be protected.

### Can a voidable transaction involve personal property?

Yes, voidable transactions can involve personal property such as money, shares, or vehicles. Any transfer that meets the criteria set out in the Bankruptcy Act can potentially be voided, regardless of the type of property involved.

### Why is it important to understand voidable transactions?

Understanding voidable transactions helps debtors avoid making transfers that could be reversed and helps creditors identify transactions that might unfairly deplete the bankruptcy estate. This knowledge ensures fair treatment and maximises the assets available for distribution among creditors.

![Picture of Wayne Davis](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/desktop/optimized/rev-748d11d/secure.gravatar.com/avatar/5841d7da8b6c7d486226c9358f93fc5a.5b54ec283af918fb28f171190159c8892905cb00c7f8bf19a380e6224d11fa82)

#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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## Reduce Business Debts
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# 30 Tips to Reduce Bad Business Debts

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## NEWS & ARTICLES

- [By \\
Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| July 5, 2020

## Article Summary

Bad business debts and insufficient cash flow can severely impact a company’s operations.  As a business owner, it is crucial to constantly focus on minimising bad business debts and ensuring timely payment of overdue invoices.

This becomes even more essential during periods of financial uncertainty, like an impending recession or downturn. At Stonegate Legal we have devised a three (3) step process for managing bad debts in business.  These steps are:

1. Client management;
2. Credit management; and
3. Debtor management.

**Client management** relates to the steps that a business can take prior to the client / customer being offered trade credit.

**Credit management** relates to the steps that a business can take setting up and managing the trade credit.

**Debtor management** relates to the steps that a business can take with delinquent or bad debts when the customer defaults.

In this article, we will present you with 30 valuable tips to effectively prevent, and/or decrease your bad business debts and enhance your cash flow, allowing you to better prepare for Australia’s uncertain financial future.

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![How can I Avoid Bad Business Debts in Queensland](https://stonegatelegal.com.au/wp-content/uploads/2020/07/How-can-I-Avoid-Bad-Business-Debts-in-Queensland-300x287.png)Bad business debts and lack of sufficient cash flow can cripple a business.

As a business owner you should always be thinking about reducing bad business debts and getting those delinquent invoices paid.

This is even more vital in times of financial uncertainty such as before a recession or downturn.

This article will provide you with **30 tips** to reduce your bad business debts and increase your cash flow in preparation for the uncertain financial future in Australia.

As the old saying goes, “ _prevention is better than cure_”.  Or the old proverb says, “ _it is better and more useful to meet a problem in time than to seek a remedy after the damage is done_”.

In this complete guide our [debt recovery solicitors](https://stonegatelegal.com.au/services/debt-disputes/) will outline what you can do now to reduce bad debts in your business before incurring the debt, while the credit is active, and upon default.

But what is a bad business debt?

**WE CAN DRAFT OR AMEND NEW CREDIT APPLICATIONS**

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## What are Bad Business Debts?

A bad business debt is incurred when a business has provided goods and services to a customer / client, and that customer / client has not paid the invoice within your payment terms.

For example, if you have given seven (7) day terms, then that debt becomes a bad debt if it remains unpaid on day eight (8).

However, there are a number of steps that a business owner can take to reduce of minimise these bad business debts, increase cash flow, and increase profitability.

## How can I Avoid Bad Business Debts?

[Section 95A of the _Corporations Act 2001_ (Cth)](http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s95a.html) defined insolvency.  It says:

> _(1)  A person is solvent if, and only if, the person is able to pay all the person’s debts, as and when they become due and payable._
>
> _(2)  A person who is not solvent is insolvent._

Lack of cash flow can mean that a company is insolvent and runs the risk of being wound up in insolvency.

We have devised a three (3) step process for [managing bad debts in business](https://stonegatelegal.com.au/small-business-debt-recovery/).

These steps are:

1. Client management;
2. Credit management; and
3. Debtor management.

Client management relates to the steps that a business can take prior to the client / customer being offered trade credit.

Credit management relates to the steps that a business can take setting up and managing the trade credit.

Debtor management relates to the steps that a business can take with delinquent or bad debts when the customer defaults.

## Bad Business Debts – Client Management

There are a number of tips and things to consider during the client management stage.

These include:

1. Choose your clients / customers carefully;
2. Do a credit check and assess their creditworthiness;
3. Reference checks before you offer credit to new customers;
4. Investigate your customers on Google and social media;
5. Check where and to whom the invoices are to be sent;
6. Find out whether customers operate a payment run (monthly, 60 days, etc);
7. Factor the potential for payment delays into your cash flow forecast;
8. Investigate trade credit insurance options; and
9. Advise your clients about scam emails

These will be explained in more detail below.

### Choose your Clients / Customers Carefully

It is very important to choose your customers wisely.

One bad customer can create a huge amount of lost time and stress trying to recover the bad debt.

So much so that it is actually better for business if you do not have them as a customer.

If you take the time at the beginning to do some preliminary investigations, then it could save you a massive headache when experienced debtors inevitably default.

### Do a Credit Check and Assess their Creditworthiness

One way to check on your client is to do a credit check.

A credit check can be done with one of the credit reporting agencies such as [Equifax](https://www.equifax.com.au/) or [Illion](https://www.illion.com.au/).

Get a credit check for the company and also the director of the company to see if they have any defaults or judgments on their credit record.

Also, to be extra-careful you could do an ASIC historical [director search](https://stonegatelegal.com.au/30-tips-to-reduce-bad-business-debts/) to see if the director of the current company was (or is) the director of another company in liquidation or with a bad credit score.

### Reference Checks before you Offer Credit to New Customers

You should always obtain at least three (3) trade references for your customers – and actually call them and check up on them.

There is no point asking for references and then not calling them and asking them questions.

Ask the trade references if they are good payers, if they were ever late with payment, and if they would offer credit to them again in the future.

### Investigate your Customers on Google and Social Media

Spend 5 or 10 minutes [Googling](https://www.google.com.au/) the business / company / person and see what comes up.  It is surprising what you will find.

A lot of people take to the Internet or social media when they have not been paid by a debtor, so if they are bad payers then there could be a wealth of information there.

A search of the [ASIC Insolvency Notices website](https://insolvencynotices.asic.gov.au/) for any insolvency related events.

Also check the [Courts website](http://apps.courts.qld.gov.au/esearching/) for any current or historical proceedings that may need to be addressed.

Once you have all of this information, you can make an informed choice about taking them on as a customer.

### Check Where and to Whom the Invoices are to be Sent

One of the biggest excuses we hear is “_we didn’t receive the invoice_” which, after sending 9 times, becomes difficult to believe.

Get a number of different emails and people to send the invoice to.  This can include the director, the accounts person, even the accountant.

If they default, then send it to reception too.

### Find out Whether Customers Operate a Payment Run (monthly, 60 days, etc)

Ensure that you have familiarised yourself with the customers payment run.  They could simply have 30 or 60 days as a matter of internal policy.

Government agencies do this and although they will usually pay, it is worth understanding what their payment run terms are.

For example, if its 60 days, then you might want to think if you can wear that on your books.

Talk to your accountant about this.

### Factor the Potential for Payment Delays into your Cash Flow Forecast

While speaking with your accountant, it will be worth asking them about the potential for payment delays into your cash flow forecast.

A business owner must identify how much cash the business is going to get in from payments, interest, service fees, collection of bad debts, and other income, and when?

Identifying the risks early can inform you to be able to take measures if required.

Again, speak to your accountant about managing payment delays in your cash flow forecast.

### Investigate Trade Credit Insurance Options

Another option to mitigate risk is the option for obtaining trade credit insurance.

Trade credit insurance insures a business against your customer failing to pay your invoices, covering every invoice with that particular customer for the term of coverage.

Again, you should seek professional advice in relation to if trade credit insurance is right for your business.

### Advise your Clients about Scam Emails

There has been an increase in email scams in recent years.

These are sometimes called the business email compromise (“ **BEC**”) scam, or the CEO scam.

Basically, a hacker hacks the business, sending fake emails to the customer stating that they have changed bank accounts and that invoices are to be paid into a new account.  This being the account of the thief.

We are seeing this more and more in our [debt recovery](https://stonegatelegal.com.au/legal-debt-recovery-options-for-businesses/) practice.

It is vitally important that you include in your terms and conditions that any changes to bank accounts must be confirmed in writing, or the customer is liable for the debts.

**Moving Forward**

If you feel comfortable with taking the new client and providing them with credit, then there are a number of things that you can do to manage the credit.

## Bad Business Debts – Credit Management

There are a number of tips and things to consider during the credit management stage.

These include:

01. Enter into a written credit application;
02. Establish debt collection procedures;
03. Set realistic credit limits with the debtor;
04. Set your payment terms and penalties;
05. State your terms and conditions clearly on business documentation;
06. Invoice quickly and properly with sufficient detail;
07. Get sent / delivered receipts or use XERO / MYOB;
08. Give discounts or incentives for early payment;
09. Stay in touch with the debtor;
10. Approve additional credit extensions in advance;
11. Strict processes for payment and follow up;
12. Up to date systems and processes; and
13. Money upfront / cod for bad payers.

These will be explained in more detail below.

### Enter into a Written Credit Application

I cannot emphasise this enough.  Enter into a written credit application with the best clauses to protect you should the debtor default.

As a minimum these clauses should include:

1. Definition of default and breach;
2. Security for the debt;
3. Personal guarantees;
4. Legal & debt collection costs upon default; and
5. Default interest.

For more information of credit applications – Visit our [credit contract](https://stonegatelegal.com.au/debt-contract-credit-application/) page.

### Establish Debt Collection Procedures

It is vital that you establish debt collection procedures and accounts receivables processes.

These processes in the credit application will help you if and when the [customer defaults and does not pay their invoices](https://stonegatelegal.com.au/client-not-paying-invoice/).

Good debt collection processes established from the start of the relationship is vital if the relationship goes wrong.

### Set Realistic Credit Limits with the Debtor

To reduce the risk of bad debts it is important that you set realistic credit limits.

Setting credit limits that work for both you and your customer is a great way to minimise the amount of outstanding debt owed to the business upon default.

Minimise your bad debts by setting realistic credit limits, enforcing that limit, and not providing further goods and/or services until that limit has been paid down.

### Set your Payment Terms and Penalties

You can reduce bad business debts by setting your payment terms and enforcing them.

If the customer pays outside of these payment terms, then you should have strict penalties which should be applied upon default.

Setting these payment and penalty terms early and strictly enforcing them is key to reducing bad business debts.

### State your Terms and Conditions Clearly on Business Documentation

It is important that you state your terms and conditions clearly on all business documents.

State the payment terms on each invoice, and on your statements to that company.

If you enforce your terms with your customer a number of times, then it will be less likely that the customer will default.

### Invoice Quickly and Properly with Sufficient Detail

It is vital that you invoice quickly.  Invoice on the same day if possible, or the next day at the latest.

If you have a busy business then it might be difficult to keep on top of sending invoices quickly, but you must implement a procedure so that this happens.

It is also important that you particularise the details on the invoice correctly.  If the customer defaults, then you have ensured that there cannot be any confusion in relation to what the invoice was for.

This is especially important for issuing [building and construction payment claims](https://stonegatelegal.com.au/making-payment-claim-bifa-qld/), or when [issuing statutory demands](https://stonegatelegal.com.au/statutory-demand/).

### Get Sent / Delivered Receipts or use XERO / MYOB

If you are sending the invoices by email, then it is important that you get a read receipt and a delivery receipt.  These can be used as proof that the invoice was delivered and/or read by the customer.

A delivery receipt and a read receipt can be obtained in Outlook by doing the following:

- **Step 1** – From the email you are sending the invoice – choose “options”
- **Step 2** – Click inside the “request a delivery receipt” box with a tick
- **Step 3** – Click inside the “request a read receipt” box with a tick.

![delivery and read receipt from Outlook to recover bad debts](https://stonegatelegal.com.au/wp-content/uploads/2020/07/delivery-and-read-receipt-from-Outlook.png)

Once this has been done, you will get a receipt to show that the email has been delivered.

However, the customer will have to send a read receipt, which they generally do not do.

Alternatively, if you send your invoices from inside [MYOB](https://www.myob.com/au) or [XERO](https://www.xero.com/au/), then it tracks if the invoice has been delivered, opened, etc.

### Give Discounts or Incentives for Early Payment

You can also give discounts or other incentives to encourage early payment of invoices.

This can be a percentage discount off the total of the invoice, or incentivise the customer in another way, such as still receiving goods / services from the business.

A business can also provide disincentives for late payments to reduce bad debt such as penalty interest, or late fees.

### Stay in Touch with the Debtor

Communication is the key to an effective bad debt reduction strategy.

Most people will not mind if a customer is a few days late with payment as long as it is communicated correctly.

Contact the customer the day before the default and speak to them about paying the debt.  Can they pay?  If not, why not?  Have they already paid?

Having a good line of communication with your clients is a great way to keep on top of bad business debts.

### Approve Additional Credit Extensions in Advance

Sometimes a customer will be nearing their credit limit and then seek to get more goods / services on credit.

It is important that a business has systems, checks, and balances in place to ensure that (a) the customer cannot go over their credit limit; and (b) any increases to the credit limit are approved by management, or not.

In our practice we have seen cases where these systems were not in place and the customer was allowed to run up considerable debts, unbeknown to anyone at the business.

### Strict Processes for Payment and Follow Up

As part of the processes for managing credit with a customer, a business should ensure that strict processes for payment and follow up are implemented.

Perhaps a reminder set for 1 week before the due date; then 2 days before the due date; then the day before the due date.

Getting out in front of these bad debts will be the key to mitigating any bad business debts.

### Up to Date Systems and Processes

It is also important that you keep up to date systems and processes.  If you have identified a gap in a process, then change it.

Keep an ‘ _accounts receivable manual_’ for example, and keep changing, updating, and evolving these processes to make them tighter and tighter.

Also, consider utilising technology to better reduce of minimise bad business debts.  There are a number of different accounts receivables software on the market, and this could be a great investment for your business to minimise exposure to bad payers.

### Money Upfront / COD for Bad Payers

If you think that a customer will likely be a bad payer, then you can simply ask for payment upfront or cash on delivery (“ **COD**”) to start, before offering credit.

Alternatively, a business could structure a 50% upfront and 50% credit to begin with.

A business should not be afraid to offer an introductory period to a new credit customer, or an introductory 7-day payment terms, for example.  Let the customer prove themselves first.

However, although you can take every precaution to mitigate the risk of incurring bad business debts, it is still possible that you have a debtor who does not pay their invoices.

In that case, you will need to have some debtor management options.

## Bad Business Debts – Debtor Management

There are a number of [tips and things to consider](https://stonegatelegal.com.au/small-business-debt-collection-27-tips-and-faq/) during the debtor management stage.

These include:

1. Chase payment immediately a debt is overdue;
2. Follow your debt collection procedures;
3. Offer the debtor a cash discount for immediate payment;
4. Resolve any debt disputes quickly;
5. Reconsider the business terms with regular late payers; and
6. Use debt collection lawyers.

These will be explained in more detail below.

### Chase Payment Immediately when a Debt is Overdue

Notwithstanding all the attempts a business has made to stop the late payment, if a payment is late it is important that a business chases payment immediately when a debt is overdue.

The very next day after the due date for payment, the business should send a friendly overdue payment letter, followed by increasingly more demanding letters as time goes on.

If a business can quickly jump on bad debts, and keeps seeking to recover overdue payments, then this will likely encourage the debtor to pay.

### Follow your Debt Collection Procedures

A business should follow its debt collection procedures.

If the credit contract has a charging clause, then lodge a caveat.  If the credit contract has a PPSA clause, then seek to recover the collateral.

Send a [letter of demand](https://stonegatelegal.com.au/letter-of-demand/) to the customer and any of the personal guarantors.

By starting with the debt recovery process and procedure, it may encourage the debtor to pay rather than risk losing person assets or having to pay legal costs for legal action.

### Offer the Debtor a Cash Discount for Immediate Payment

Another thing to consider is compromising the debt and accepting a discount for immediate payment of an overdue debt.

If you are forced to commence legal action to recover this debt, then you will always lose money in legal costs.  Even if you obtain an indemnity costs order, it will still not compensate a business 100%.

With this in mind, a business should consider offering a discount for immediate payment.  This will increase cash flow and save on legal costs.

### Resolve any Debt Disputes Quickly

Sometimes a debtor will not pay because they dispute the goods / services.  This may be that the goods were not merchantable quality, or the services were not provided correctly.

As above, we always advise clients to try to resolve these debt disputes quickly, because the longer a dispute drags on, the more money you will spend on legal costs and the chances of resolving the dispute become less and less likely.

We would always recommend that you engage a lawyer to negotiate a settlement to a debt dispute.

### Reconsider the Business Terms with Regular Late Payers

If a customer continually pays late, then you should ensure that the credit application is able to be changed by the business.

A business can reconsider the business terms with regular late payers to ensure that the business is fully protected against bad business debts from this customer.

If the customer wants to continue with the commercial relationship, then they will enter into a new credit contract.

### Use Debt Collection Lawyers

We would always recommend that a business engage [debt recovery lawyers to resolve the debt dispute](https://stonegatelegal.com.au/services/debt-disputes/).

Contact us for advice and assistance in relation to reducing and minimising exposure to bad business debts.

**WE CAN DRAFT OR AMEND NEW CREDIT APPLICATIONS**

[CONTACT US TODAY & SPEAK TO A LAWYER](https://stonegatelegal.com.au/contact-stonegate-legal/)

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#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation.

With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice.

Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings.

Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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# Wayne Davis

Wayne Davis is the principal solicitor, legal practice director of the firm, and leads the litigation team.  Wayne has an LLB, and GDLP and is admitted to the Supreme Court of Queensland and the High Court of Australia.  Wayne is a debt recovery, defamation, litigation, and insolvency professional.

Wayne is dedicated to achieving the best possible outcomes, whether through strategic negotiation, alternative dispute resolution, or courtroom advocacy. Wayne understand that every case is unique and takes a proactive approach to ensure your rights and interests are protected at every stage of the process.

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- [07 5346 0366](tel:0753460366)

At Stonegate Legal, client satisfaction is our top priority. We are proud to have served hundreds of clients who have had positive experiences working with us.

Copyright © 2023 [**Stonegate Legal**](https://stonegatelegal.com.au/) Pty Ltd – All Rights Reserved – Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732) \| [Terms](https://stonegatelegal.com.au/terms-and-conditions/) \|  [Privacy](https://stonegatelegal.com.au/privacy-policy/) \| [Sitemaps](https://stonegatelegal.com.au/sitemap_index.xml) \| [\*Conditions Apply](https://stonegatelegal.com.au/terms-and-conditions/)

## Caterine Molini - Lawyer
[Skip to content](https://stonegatelegal.com.au/team-member/caterine-molini/#content)

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# Caterine Molini

Caterine holds a law degree and passed the bar exam in 2011, practicing as a lawyer in Brazil until 2018. She also completed a postgraduate qualification in environmental law. Caterine holds a Certificate IV and a Diploma in Leadership and Management from Australia.

With 12 years of experience in civil litigation, insurance, and building and construction, Caterine spent six years leading a team to negotiate major agreements with insurance companies. She worked closely with engineers to ensure construction projects met environmental regulations, and she advocated for clear contracts to prevent issues and avoid costly litigation.

She is excited to be working towards admission as a Solicitor in Australia.

Tagged [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/), [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/), [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/), [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/), [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/), [insurance disputes](https://stonegatelegal.com.au/tag/insurance-disputes/), [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/)

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## Litigation Services

- [Commercial Litigation](https://stonegatelegal.com.au/services/commercial-litigation/)
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- Office Hours

Monday – Friday

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- [07 3180 0143](tel:0731800143)

- Sunshine Coast - Main Office

[4/57-59 Mary Street,](https://maps.app.goo.gl/Suo6oYWeRohEDEBWA)

[Noosaville, QLD 4566](https://maps.app.goo.gl/Suo6oYWeRohEDEBWA)

- [07 5346 0366](tel:0753460366)

At Stonegate Legal, client satisfaction is our top priority. We are proud to have served hundreds of clients who have had positive experiences working with us.

Copyright © 2023 [**Stonegate Legal**](https://stonegatelegal.com.au/) Pty Ltd – All Rights Reserved – Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732) \| [Terms](https://stonegatelegal.com.au/terms-and-conditions/) \|  [Privacy](https://stonegatelegal.com.au/privacy-policy/) \| [Sitemaps](https://stonegatelegal.com.au/sitemap_index.xml) \| [\*Conditions Apply](https://stonegatelegal.com.au/terms-and-conditions/)

## Defamation Lawyers
[Skip to content](https://stonegatelegal.com.au/services/defamation-lawyers/#content)

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# Defamation Lawyers

Our legal professionals specialise in defamation law and the protection of your reputation from defamatory and damaging publications, either online or otherwise.

[Book A Free Consultation](https://stonegatelegal.com.au/services/defamation-lawyers/#book)

[Speak To Our Trusted Lawyers Today](tel:0731800143)

## Don’t Let Defamation Ruin Your Business or your life!

## Defamation Law

## Expert Defamation Lawyers

Defamation is a serious matter that can have a significant impact on a person’s reputation and business. At Stonegate Legal, we are well-versed in the complexities of defamation law and understand the importance of taking swift action to protect your interests. If you suspect that you have been the victim of defamatory comments or actions, it is crucial to seek legal advice as soon as possible from our professional libel and slander lawyers.

As expert defamation lawyers in Queensland, we have extensive experience in navigating the _Defamation Act 2005_(Qld) and can provide you with the guidance you need to pursue a defamation claim. We will work closely with you to understand the details of your situation and provide you with a clear understanding of your legal options. Our team will ensure that you are fully informed at every stage of the process, and we will work tirelessly to protect your rights and reputation.

## **Have You Been Defamed?**

_False accusations can ruin reputations. We help you set the record straight._

If someone has published false and harmful statements about you — whether online, in the media, or in person — you may have a strong claim for defamation. At Stonegate Legal, we act quickly to stop the spread, protect your reputation, and pursue fair compensation.

We regularly act for individuals, professionals, and small business owners across Queensland who have been targeted by:

- Defamatory Google reviews
- Facebook posts and community group threads
- Instagram or TikTok content falsely accusing misconduct
- Online harassment or smear campaigns
- False claims made to clients, employers, or the public

As a defamed party, we can help you:

- Assess whether the content is defamatory under Queensland law
- Draft and serve a legally compliant Concerns Notice
- Negotiate a public apology, removal, or compensation
- Apply for urgent injunctions to prevent further harm
- File court proceedings and claim damages for serious reputational loss

Time is critical. You have 12 months from the date of publication to bring a claim — don’t delay.

## **Been Accused of Defamation?**

_Don’t panic — we’ll protect your rights and defend your side of the story._

If you’ve received a Concerns Notice or been threatened with a defamation claim, it’s important to act fast and seek legal advice. At Stonegate Legal, we represent people and businesses who are accused of making defamatory statements — online or offline.

Defamation law in Australia is complex, and not all statements that cause offence are legally defamatory. We can help you understand your rights, protect your freedom of speech, and respond appropriately to minimise legal and financial risk.

As the respondent or defendant, we can help you:

- Review the claim and assess whether the statement is actually defamatory
- Advise on available defences such as truth, honest opinion, or public interest
- Prepare a response or Offer to Make Amends
- Defend the matter in court if required
- Respond to social media-related claims, including those involving deleted or anonymous content

You usually have 28 days to respond to a Concerns Notice — and just 14 days if further information is requested.

Acting quickly gives you more options and control.

[Discuss Your Case With A Defamation Lawyer](https://stonegatelegal.com.au/services/defamation-lawyers/#book)

## trusted defamation lawyers

### Time Limits in Defamation Claims – Why Acting Fast Is Critical

### 12-Month Time Limit to File a Defamation Claim

If you've been defamed — whether online, in print, or through spoken words — you generally have just **12 months from the date of publication** to file a defamation lawsuit in court. This time limit applies to most cases under the _Defamation Act 2005 (Qld)_ and is enforced strictly by the courts.

Even if the defamatory material is still online, the clock starts ticking from the date it was first published.

In some rare cases, this time limit can be extended — but only if the court believes it’s fair and reasonable to do so. Don’t rely on an extension. It’s always best to get legal advice as early as possible.

### 28 Days to Respond to a Concerns Notice

If you’ve received a **Concerns Notice**, it’s important to treat it with urgency and care. It sets out the alleged defamatory content, the harm caused, and gives you an opportunity to resolve the matter before court proceedings begin.

Under the _Defamation Act 2005 (Qld)_, you typically have **28 days to respond**. Failing to reply within this timeframe can significantly limit your legal options and increase the chances of the matter escalating to court. Ignoring a Concerns Notice — or delaying your response — can also lead to increased costs.

Responding properly may involve providing an **Offer to Make Amends**, requesting further particulars, or defending the claim outright.

### Responding to a Further Particulars Request – 14-Day Time Limit

If you’ve issued a Concerns Notice and the recipient requests **further particulars** — meaning more detail about the defamatory content or the harm claimed — you are generally required to provide this information within **14 days**.

This request is a formal part of the defamation process under the _Defamation Act 2005 (Qld)_ and is often used by the other party to clarify or assess the claim before deciding how to respond. Failing to reply within this timeframe may delay resolution or weaken your position. At Stonegate Legal, we assist clients in preparing timely and compliant responses to ensure the process continues smoothly and your rights remain protected.

### Fixed-Fee Pricing for Concerns Notices – Clarity from the Start

At Stonegate Legal, we believe that legal costs should never be a mystery. That’s why we offer **transparent, fixed-fee pricing** for one of the most important steps in a defamation claim — drafting and sending a legally compliant **Concerns Notice**.

[BOOK A 30 MINUTE FREE CONSULTATION](https://stonegatelegal.com.au/services/defamation-lawyers/#book)

### What You Get

For a set fee, our experienced defamation lawyers will review the facts of your case, prepare a tailored Concerns Notice under the Defamation Act 2005 (Qld), and handle its delivery to the offending party. This gives you a clear, professional starting point to resolve the issue quickly, without worrying about hidden fees or hourly rates.

### No Hidden Costs

Whether you're dealing with an online review, a social media post, or defamatory comments in the media, our fixed-fee service ensures you get expert support and peace of mind right from the beginning. Book a free initial consultation today to find out if your matter qualifies for our fixed-fee Concerns Notice package.

## Social Media & Online Defamation Lawyers – Protecting Your Digital Reputation

In today’s digital world, online defamation is one of the fastest-growing areas of legal risk. Whether it’s a false Google review, a defamatory Facebook post, or a misleading YouTube video, damaging content online spreads quickly — and can seriously harm your reputation or business.

At Stonegate Legal, we specialise in social media defamation cases across platforms like Facebook, Instagram, YouTube, Twitter (X), Google Reviews, Reddit, and blogs. We understand how viral content works, how to act fast to limit the harm, and how to enforce your legal rights under the _Defamation Act 2005 (Qld)_.

### The ‘Grapevine Effect’ – Why Online Defamation Is So Damaging

Online defamation spreads rapidly. A single post can be shared, liked, or reposted hundreds of times within minutes — reaching thousands and multiplying the harm. Courts call this the grapevine effect, and it’s why social media defamation is often more damaging than traditional forms like newspapers or verbal defamation (slander).

We’ve seen real cases where:

- A single false accusation on Facebook resulted in over $200,000 in damages
- An Instagram post calling someone a scammer led to loss of business and threats
- A Google review based on fiction cost a local business thousands in revenue

Social media moves fast — and so do we. Our team has helped clients:

- Remove false reviews from Google and Yelp
- Obtain urgent injunctions to stop defamatory posts
- Recover significant compensation from online defamation cases
- Respond effectively when falsely accused of defamation

### Common Types of Online Defamation We Handle

Online defamation can take many forms — and at Stonegate Legal, we’ve seen it all. From fake Google reviews to viral TikToks, defamatory content spreads fast and causes real-world harm.

Below is an expanded list of the most common types of digital defamation we handle, along with real-world style examples to help you identify what qualifies.

**Fake or Malicious Google Reviews**

False reviews left by people who were never customers — or who are intentionally trying to hurt your business.

**Defamatory Facebook Posts and Comments** Community pages, personal profiles, or business review sections on Facebook can all become platforms for false accusations.

**Instagram Posts, Stories, and Reels with Defamatory Claims** Instagram defamation often includes misleading captions, story “call-outs,” or edited screenshots targeting individuals or businesses.

**Defamatory YouTube or TikTok Videos** Videos can cause significant damage, especially when monetised or shared widely.

**Harassment, Cyberbullying & Online Abuse Disguised as ‘Opinion’** False and damaging statements made under the guise of “free speech” or “just my opinion” — including DMs, captions, or aggressive threads.

### Understanding Social Media Defamation: What Counts?

To bring a successful defamation claim, the content must be:

- False – it contains an untrue statement of fact
- Published – seen by at least one person other than you
- Identifying – directly or indirectly refers to you
- Damaging – causes harm to your reputation, income, or wellbeing

We help you assess your claim, gather evidence, and take swift legal action — often starting with a formal Concerns Notice, and escalating to court action or injunctions where needed.

### Claim A No Obligation Case Evaluation

### Discuss Your Case With A Trusted Defamation Lawyer

[Discuss Your Case Today](https://stonegatelegal.com.au/services/defamation-lawyers/#book)

[OR Call Now](tel:0731800143)

## The Defamation Process

At Stonegate Legal, we provide a transparent and structured approach to defamation law services, tailored to meet your unique legal needs. Whether you’ve been defamed or accused of defamation, our process ensures your matter is handled with precision from start to finish. Here’s how we guide you through every step:

**Initial Legal Consultation**

Our experienced defamation lawyers offer an in-depth initial consultation to assess your situation, determine the legal merits of your case, and explain your options under Queensland’s defamation laws. We identify the best strategy moving forward — whether you’re responding to a false allegation or taking action to protect your reputation.

**Drafting and Sending a Concerns Notice**

If you’re the aggrieved party, we will promptly prepare a legally compliant Concerns Notice under the Defamation Act 2005 (Qld). This document outlines the defamatory material, the harm caused, and your proposed remedy (e.g., apology, takedown, or compensation). Serving this notice is often a crucial step to resolve matters without court proceedings.

**Pre-Litigation Negotiation**

Once the concerns notice is delivered, we aim to resolve the matter swiftly through negotiation. Our legal team can negotiate retractions, public apologies, content removal, or financial settlement — all while protecting your legal rights and reputation.

**Commencing Court Action**

If the matter cannot be resolved amicably, we initiate court proceedings. We prepare and file all necessary documents, manage deadlines, and represent you in the relevant jurisdiction (typically the District or Supreme Court). We ensure every aspect of your defamation claim or defence is supported by strong evidence and legal arguments.

**Seeking Injunctions (Urgent Court Orders)**

In serious or time-sensitive cases, we can apply for an urgent injunction to prevent the further publication or distribution of defamatory material. Injunctions are powerful legal remedies that can stop reputational damage in its tracks.

**Claiming Compensation and Damages**

We pursue all available remedies under law, including general damages for reputational harm, special damages for economic loss, and aggravated damages where applicable. Our goal is to achieve a financial outcome that reflects the seriousness of the defamatory conduct.

**Post-Judgment Enforcement**

After a successful court outcome, we assist with enforcing judgments — whether it’s securing the payment of damages, compelling the publication of an apology, or ensuring a permanent injunction is upheld.

[Initial Legal Consultation](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-a7dfb96687f03ae68aa6)

We start by meeting with you to understand your situation. Whether you've been defamed or accused of defamation, we’ll explain how defamation law works in Queensland and give you honest advice on your legal options. This is where we start building the best strategy to protect your rights.

[Pre-action Considerations](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-c70abef687f03ae68aa6)

We begin with a confidential consultation to review your matter, assess whether defamation has occurred, and outline your legal rights under Queensland law. Whether you're defending your reputation or responding to a claim, we’ll help you understand the best strategy going forward.

[Defamation Assessment](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-5a4e4b7687f03ae68aa6)

Before taking any formal action, we review the facts of your case to confirm whether it meets the legal definition of defamation. We look at whether the statement was published, if it identifies you, and if it could harm your reputation. This helps us make sure your case has a strong foundation.

[Drafting & Sending a Concerns Notice](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-092b264687f03ae68aa6)

If you're the defamed party, we’ll prepare a formal **Concerns Notice** in line with the _Defamation Act 2005 (Qld)_. This document identifies the defamatory material, explains the harm caused, and requests a remedy such as an apology, takedown, or compensation. It's often the first and most important step toward resolution.

[Strategic Advice & Resolution Options](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-16e111d687f03ae68aa6)

Not every defamation case needs to go to court. We’ll talk you through all possible outcomes — from seeking a public apology to removing harmful content. Our goal is to resolve the matter quickly, cost-effectively, and in a way that protects your reputation.

[Pre-Litigation Negotiation](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-4a4eaca687f03ae68aa6)

Once the notice is issued, we engage with the other party to seek a prompt and fair outcome. This may involve negotiating a written apology, public retraction, or financial settlement — aiming to resolve the matter efficiently without going to court.

[Evidence Gathering & Documentation](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-c97ddf0687f03ae68aa6)

We help you collect all the necessary evidence to support your claim or defence. This might include screenshots, social media posts, emails, witness statements, or anything else that proves what was said and how it caused harm.

[Commencing Court Proceedings](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-eba8349687f03ae68aa6)

If negotiation fails, we act swiftly to initiate legal proceedings. Our team prepares all necessary documents, complies with court timelines, and advocates for you at every stage of the litigation — in either the District or Supreme Court depending on your case.

[Applying for Injunctions](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-b30326f687f03ae68aa6)

In urgent cases, we can apply for a **court-ordered injunction** to stop further publication of defamatory material. This is often critical where ongoing harm is likely — especially in online or viral content situations.

[Defamation Trial](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-370bdb1687f03ae68aa6)

If the matter proceeds to trial, both parties will present their evidence and arguments before a judge and/or jury. The burden of proof is on the plaintiff (the person making the claim) to prove that the statement was defamatory ns caused harm to their reputation.

[Remedies](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-da35b8a687f03ae68aa6)

If the plaintiff is successful in proving their case, the court may award damages (financial compensation) to compensate for the harm caused by the defamatory statement. The court may also order a retraction or apology and/or an injunction to prevent further publication of the defamatory statement.

[Claiming Damages & Compensation](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-08c397e687f03ae68aa6)

We seek full compensation for the harm you've suffered. This may include **general damages** for reputational loss, **special damages** for financial impact, and **aggravated damages** where the defamation was particularly severe or malicious.

[Post-Judgment Enforcement](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-8997c66687f03ae68aa6)

After a successful result, we ensure court orders are enforced. Whether it’s recovering damages, ensuring an apology is published, or enforcing an injunction, we stay with you until every legal requirement is met.

### What Our Clients Have To Say

At our Stonegate Legal, client satisfaction is our top priority. We are proud to have served hundreds of clients who have had positive experiences working with us.

Stonegate Legal assisted my business from a strong legal perspective, while highlighting valuable strategy. They have the perfect sized firm to help with all matters either big or small. Wayne is a rare expert in Debt Recovery and his knowledge is extensive.

We had tried for 6mths to get payment from one of our debtors - Damon and the Stonegate Legal team were able to secure full payment within 30days. Sincerely appreciate the efficiency and professionalism.

Stonegate Legal provided good advice, and got us the outcome we were looking for. They were easy to deal with and kept me well informed through the process letting me know the options available as well as their advice.

The entire team at Stonegate Legal have been exceptional to deal with making a difficult situation so much easier to deal with, very pleasant and efficient, I highly recommend them.

## defamation law firm qld

## Defences to defamation

[1\. Defence of justification](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-c70abef687f03ae7bb48)

This defence requires the defendant to prove that the defamatory statement is true.

[2\. Defence of contextual truth](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-092b264687f03ae7bb48)

This defence applies when the defendant can prove that the imputations made by the statement were substantially true.

[3\. Defence of absolute privilege](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-eba8349687f03ae7bb48)

This defence applies when defamation occurs in certain types of proceedings, such as court proceedings or parliamentary proceedings.

[4\. Defence for publication of public documents](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-ddcf901687f03ae7bb48)

This defence applies when the defendant can prove that the defamatory material was contained in a public document.

[5\. Defences of fair report of proceedings of public concern](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-478192d687f03ae7bb48)

This defence applies when the defendant can prove that the defamatory material was a fair and accurate report of a public meeting or court proceeding.

[6\. Defence of qualified privilege for provision of certain information](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-3f42c1d687f03ae7bb48)

This defence applies when the defendant can prove that the defamatory publication was made in response to an individual’s request for information or to protect their interests.

[7\. Defences of honest opinion](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-54c4c3b687f03ae7bb48)

This defence applies when the defendant can prove that the defamatory material was made in good faith and based on an honest opinion.

[8\. Defence of innocent dissemination](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-c60d5c3687f03ae7bb48)

This defence applies when the defendant can prove that they did not know the defamatory statement.

![Book a Free Consultation - Stonegate Legal Litigation Lawyers](<Base64-Image-Removed>)

### Request a Free Consultation

Don't let defamation ruin your life. Take action today by contacting us for a consultation. Together, we can stand up to false and damaging statements and protect your reputation from libel and slander.

[Contact Us Today](https://stonegatelegal.com.au/contact/)

### Our Team

## Meet Our Defamation Lawyers

![Wayne Davis - Lawyer - Stonegate Legal](<Base64-Image-Removed>)

## Legal Practice Director / Principal Solicitor

## Wayne Davis

Wayne Davis is the principal solicitor, legal practice director of the firm, and leads the litigation team.  Wayne has an LLB, and GDLP and is admitted to the Supreme Court of Queensland and the High Court of Australia.  Wayne is a debt recovery, defamation, litigation, and insolvency professional.

Wayne is dedicated to achieving the best possible outcomes, whether through strategic negotiation, alternative dispute resolution, or courtroom advocacy. Wayne understand that every case is unique and takes a proactive approach to ensure your rights and interests are protected at every stage of the process.

### Education & Certifications

LLB – Bachelor of Laws, Graduate Diploma of Legal Practice (GDLP)

### Personal Quote

Don’t believe everything you think.

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Lease Disputes](https://stonegatelegal.com.au/tag/commercial-lease-disputes/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/) [Debt Recovery/Collection](https://stonegatelegal.com.au/tag/debt-recovery-collection/) [Defamation Litigation](https://stonegatelegal.com.au/tag/defamation-litigation/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [Statutory Demands](https://stonegatelegal.com.au/tag/statutory-demands/) [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/) [Wills/Estate Litigation](https://stonegatelegal.com.au/tag/wills-estate-litigation/)

![Shania Bryan - Stonegate Legal](<Base64-Image-Removed>)

## Solicitor

## Shania Bryan

Shania is a solicitor at Stonegate Legal, based in Queensland. After nearly two years with the firm, Shania recently transitioned into her solicitor role following her admission to the Supreme Court of Queensland in December 2024. She holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP). Shania practices predominantly in defamation law and handles a majority of the defamation matters here at Stonegate Legal.

Her focus is advising and representing clients in disputes involving reputational harm, online publications, and media content. Shania works closely with individuals and businesses to navigate the intricacies of defamation claims and achieve effective resolutions.

### Education & Certifications

Bachelor of Laws (LLB) and Graduate Diploma of Legal Practice (GDLP)

### Personal Quote

Every experience is a chance to deepen my knowledge and contribute to our team’s success, fostering a culture of continuous learning and support

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Lease Disputes](https://stonegatelegal.com.au/tag/commercial-lease-disputes/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/) [Defamation Litigation](https://stonegatelegal.com.au/tag/defamation-litigation/) [Wills/Estate Litigation](https://stonegatelegal.com.au/tag/wills-estate-litigation/)

![](<Base64-Image-Removed>)

## Paralegal

## Maddison Payne

Maddi is an emerging legal professional currently undertaking a Bachelor of Laws with Honours at Queensland University of Technology (QUT), where she is committed to excelling both academically and professionally.

At the outset of her career, Maddi applies a methodical and research-oriented approach to all aspects of legal support, ensuring thorough case preparation and a deep understanding of legal procedures. Her dedication to both her studies and her work is reflected in her meticulous attention to detail and her drive for delivering high-quality results.

Maddi is committed to providing valuable and effective support to our senior legal team, leveraging her academic foundation and professional skills to assist on complex cases with accuracy and integrity. With a keen interest and focus for matters concerning defamation, corporate litigation, professional negligence, corporate disputes, and commercial litigation, she is driven to developing a comprehensive understanding of law that underpins her work as a paralegal and future prospects of becoming a lawyer.

### Education & Certifications

Bachelor of Laws LLB (Honours) (completing), Diploma of Business BSB (Communications & Media)

### Personal Quote

Keep your concentration here and now where it belongs. Be mindful of the future, but not at the expense of the moment.

## Areas of Interest

### [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/) [Defamation Litigation](https://stonegatelegal.com.au/tag/defamation-litigation/)

## Defamation Frequently Asked Questions

[What is defamation?](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-b0d504b687f03af4563c)

Defamation is a false statement made about someone or their business that causes harm to their reputation. It can be spoken (slander) or written (libel).

[How much can I sue for in a defamation case?](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-4e10eba687f03af4563c)

The amount of damages awarded in a defamation case depends on the nature and extent of the harm caused by the defamatory statement. The court may award both compensatory and punitive damages, depending on the circumstances.

[What do defamation lawyers do?](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-f591981687f03af4563c)

A defamation lawyer can provide advice on the merits of a claim, assist in the preparation and filing of court documents, and represent you in court. They can also advise you on strategies to prevent or reduce the harm caused by a defamatory statement. A defamation lawyer can help you determine whether to pursue legal action, and if so, how best to proceed.

[Will I need to go to court for a defamation case?](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-de9d696687f03af4563c)

It depends. Often, the matter can be resolved without going to court. However, if the matter cannot be resolved amicably, then it may need to proceed to court for a resolution.

[What is the time limit for filing a defamation claim?](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-881e487687f03af4563c)

The time limit for filing a defamation claim varies by jurisdiction. Generally, you must file the claim within 12 months of the statement being made. If you do not file within this time period, you may be prevented from pursuing legal action.

[What are the benefits of hiring a defamation lawyer?](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-1b623c7687f03af4563c)

Defamation lawyers can provide advice on the merits of a claim and strategies to help prevent or reduce the harm caused by a defamatory statement. They can also assist in the preparation and filing of court documents and represent you in court. Furthermore, they may also be able to negotiate a settlement without going to trial.

[What is the difference between defamation, libel and slander lawyers?](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-ab4e9a1687f03af4563c)

**Defamation** is a broad legal term that encompasses any false statement made about an individual, group, or business that damages their reputation. It aims to strike a balance between protecting reputations and ensuring freedom of speech. Defamation can occur in two forms: (verbal) **slander** and (written) **libel**, which differ primarily in how the defamatory statement is communicated.

[Can I sue someone for a bad Google review?](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-cfc1765687f03af4563c)

Yes — if the review is **false**, **defamatory**, and **damaging** to your reputation or business, you may have legal grounds to sue. We regularly act for businesses that have been targeted by fake or malicious reviews — especially those left by competitors, ex-employees, or anonymous users.

If the review accuses you of criminal behaviour, unethical conduct, or dishonesty (without proof), it may be considered defamatory. Even reviews that don’t name you directly can be defamatory if readers can clearly identify you or your business.

[What happens after I send a Concerns Notice?](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-f51f084687f03af4563c)

Once you serve a Concerns Notice under the _Defamation Act 2005 (Qld)_, the person or organisation you’re accusing has **28 days to respond**. They may:

- Issue an **apology**

- Remove or retract the defamatory content

- Offer a **settlement** or compensation

- **Deny** the claim or request further particulars


If they do nothing, or their response is unsatisfactory, you may proceed with legal action. In many cases, a well-drafted Concerns Notice is enough to resolve the matter without court proceedings.

At Stonegate Legal, we draft Concerns Notices that are legally compliant, persuasive, and aimed at achieving fast results.

[Is a public apology enough to resolve defamation?](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-1626985687f03af4563c)

Sometimes, yes — especially when reputational damage is limited or the apology is **prompt, sincere, and public**. An apology may be offered voluntarily or as part of a formal **Offer to Make Amends** under defamation law.

However, if you've suffered serious personal, professional, or financial harm, an apology alone may not be sufficient. You may be entitled to:

- **Damages** for reputational loss and emotional distress

- **Removal** of the defamatory content

- An agreement to stop further publication


Every case is different — and we’ll help you decide whether an apology is enough or whether further legal action is justified.

[What defences can someone use against a defamation claim?](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-eb95a61687f03af4563c)

The most common legal defences to defamation in Queensland include:

- **Truth / Justification** – the statement was substantially true

- **Honest opinion** – the statement was clearly an opinion, not presented as fact

- **Qualified privilege** – the publisher had a legal or moral duty to make the statement

- **Public interest defence** – the matter was of public concern and published responsibly

- **Triviality** – the statement was unlikely to cause serious harm


At Stonegate Legal, we carefully assess all potential defences if you're facing a defamation claim and use them strategically to protect your rights.

[Is there a time limit to bring a defamation claim?](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-f7de621687f03af4563c)

If your defamation claim is successful, you may be entitled to:

- **General damages** for reputational harm and emotional distress

- **Special damages** for lost income, business opportunities, or contracts

- **Aggravated damages** if the conduct was especially malicious or reckless

- **Injunctive relief** to stop further publication


We work to maximise your outcome while balancing the speed, cost, and stress of litigation.

[Does defamation apply to social media and messaging apps?](https://stonegatelegal.com.au/services/defamation-lawyers/#collapse-17f4a41687f03af4563c)

Absolutely. Australian defamation law applies to content posted on:

- **Facebook, Instagram, TikTok, YouTube, Twitter/X**

- **Google and review platforms**

- **WhatsApp, Messenger, Discord, and group chats**


Even private messages can be defamatory if they’re forwarded or shared with others.

### Learn More About Defamation

### Sending a Concerns Notice – Complete Guide

This article delves into the intricacies of defamation law, a legal framework established to protect individuals and certain organisations from damaging

[Read More](https://stonegatelegal.com.au/concerns-notice-in-defamation-complete-guide/)

News Article

### Serious Harm Threshold in Defamation

The amendment of the Defamation Act 2005 (Qld) in 2021 introduced a pivotal change in defamation law with the incorporation of the serious

[Read More](https://stonegatelegal.com.au/serious-harm-threshold-in-defamation/)

News Article

### Defamation Claim and Mixed Martial Arts – Case Note

On 16 October 2019, the defendant uploaded a video publicly on Facebook with a post the plaintiff alleged

[Read More](https://stonegatelegal.com.au/defamation-claim-and-mixed-martial-arts-case-note/)

News Article

### Defending a Defamation Claim in Queensland

It is usually relatively easy to make out a claim for defamation, all the plaintiff needs to show is: There was a publication; and The publication named a person

[Read More](https://stonegatelegal.com.au/defending-a-defamation-claim-in-queensland/)

News Article

### Defamation in Queensland

Defamation in Queensland means the publishing to persons, other than the person defamed, imputations to the effect of which is to lower the reputation

[Read More](https://stonegatelegal.com.au/defamation-in-queensland/)

News Article

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## Copyright in Tattoos
[Skip to content](https://stonegatelegal.com.au/who-owns-the-copyright-in-a-tattoo/#content)

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# Who Owns the Copyright in a Tattoo?

[Discuss Your Case Today](https://stonegatelegal.com.au/contact/)

## NEWS & ARTICLES

- [By \\
Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| June 12, 2021

## Article Summary

As with other types of artistic works, the owner of the copyright in a tattoo is the creator of the tattoo.  This is likely to be the tattoo artist.

If you are an employed tattooist working in a studio or shop, make sure that you have a written contract in place if you want to retain copyright in your artwork.

If a tattoo collector pays for a tattoo, then there is likely an implied license at law that the artist grants them to use the tattoo as a tattoo.

If the collector commercialises the artwork or seeks to make money from it (in marketing or advertising, or on t-shirts for example) then the tattoo artist may have rights to a share of those profits.

This is an emerging area of law in Australia, and so there are a lot of undecided issues.

Table of Contents

[Toggle](https://stonegatelegal.com.au/who-owns-the-copyright-in-a-tattoo/#)

![Who Owns the Copyright in a Tattoo litigation lawyers in Queensland](https://stonegatelegal.com.au/wp-content/uploads/2021/06/Who-Owns-the-Copyright-in-a-Tattoo-litigation-lawyers-in-Queensland-300x291.png)Copyright in a tattoo is a little more complicated than regular copyright because the canvas is someone else’s skin.

For copyright to apply to a tattoo it must be an original artwork; which has resulted from some skill and effort on behalf of the artist; and is not just copied.

There will likely be a license between the artist and the wearer to use that artistic work as it was intended (a tattoo on the skin).

But things get more complicated when the wearer commercialises or records their tattoo without permission.  This may give rise to copyright infringement.

In this article our [IP litigation lawyers](https://stonegatelegal.com.au/services/commercial-litigation/) will explain the rights of tattoo artists and tattoo wearers.

**Contact us for all issues relating to copyright in a tattoo and infringement advice and representation**

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## What is Copyright?

In Australia, copyright law is found in the [_Copyright Act 1968_ (Cth)](http://www5.austlii.edu.au/au/legis/cth/consol_act/ca1968133/index.html).

Just as the name suggests, it is the legal right (or a number of rights) to copy (or reproduce) any original creative material such as artistic works, computer programs, films, music, sound recordings, and a lot more.

It basically gives the creator of the creative material the right to control how that material is used.

Copyright does not protect ideas, techniques, styles, and/or concepts.

## Copyright in a Tattoo

Copyright subsists in all original artistic works.  There is no need for registration in Australia (like with trademarks for example).

Copyright protects all artistic works such as architectural plans, buildings, cartoons, craft work, drawings, maps, paintings, photographs, plans, sculpture, **and tattoos**.

However, the tattoo must be original and not generic such as tattoo flash or words like “mum” or the name of a partner.  Copyright may not exist in headlines, names, single words, slogans or titles either.  Copyright may not exist in images of people or people’s faces.

In Australia, for a tattoo to be original it means that the tattoo is not simply a copy.  It must have been created with skill and effort, and it has been created by a human author.

## Who Owns the Copyright in a Tattoo?

As with other types of artistic works, the owner of the copyright in a tattoo is the creator of the tattoo.

This is likely to be the tattoo artist.

However, this might not be the case.  In most cases, if a person is employed by the tattoo shop, then it might be the tattoo shop entity that is the owner of the copyright.

If you are a tattoo artist, it is important that there is a written employment agreement with a clause which deals with copyright ownership.

## Does the Tattoo Wearer not Own the Copyright in a Tattoo?

Unless there is an express agreement between the copyright owner and the tattoo wearer, the copyright will be owned by the creator of the tattoo (or their employer).

The wearer owns the tattoo but does not own the copyright in that tattoo.

There is an implied license between the copyright owner and the tattoo wearer to use that tattoo as a tattoo.

In [_Beck v Montana Constructions Pty Ltd_ \[1964\] NSWR 229](http://classic.austlii.edu.au/cgi-bin/LawCite?cit=%281964%29%20NSWR%20229), the Court said:

> _\[T\]he engagement for reward of a person to produce material of a nature which is capable of being the subject of copyright **implies a permission, or consent, or licence** in the person giving the engagement to use the material in the manner and for the purpose in which and for which it was contemplated between the parties that it would be used at the time of the engagement._

So, this means that if you pay money for a tattoo, then you have a license in law to use that copyrighted material as it was intended, as a tattoo.

However, this means that you do not have permission to use that tattoo however you please.

## Copyright Infringement for Tattoos

There are no Australian cases in relation to copyright [infringement](https://stonegatelegal.com.au/how-to-sue-a-company-queensland/) of tattoos.  However, there are a few cases from overseas.

It will almost always be where it has been commercialised and the copyright holder is not consulted or remunerated.

### Whitmill v. Warner Brothers Entertainment, Inc.

Probably the most famous case is S. Victor Whitmill v. Warner Brothers Entertainment, Inc. over the use of his copyrighted Mike Tyson face tattoo in the film The Hangover Part II.

Victor Whitmill, the tattoo artist who tattooed Mike Tyson’s face, sued Warner Brothers because they used the image in the Hangover movie.

The issue was that they were commercialising his work and making money from the movie which included his work without permission.

The matter settled out of Court for an undisclosed amount.

### Solid Oak Sketches v 2K Sports

2K Sports make sporting video games, including the NBA 2K series.  Solid Oak Sketches is a tattoo licensing company.

The characters of LeBron James, Eric Bledsoe, and Kenyon Martin were created including their real tattoos.  So, on behalf of the tattoo artists, Solid Oak Sketches brought a lawsuit for copyright infringement.

### Scott Allen v Electronic Arts Inc.

Another video game matter, American football player Ricky Williams’s tattooist Scott Allen sued Electronic Arts for the use of his copyrighted tattoo in various American football video games.

Scott Allen also sued Ricky Williams for a share of the profits that he earned from any use of the tattoo in the games.

This was also settled out of Court.

### Christopher Escobedo v THQ Inc.

Christopher Escobedo is the tattoo artist who tattooed the lion on UFC fighter Carlos Condit.  THQ designed the video game UFC Undisputed 3, which displayed the tattoo.

Christopher Escobedo sued THQ for copyright infringement for copying the tattoo in the video game without permission.

Escobedo argued that he granted Carlos Condit an implied license to display the tattoo, but he did not give permission for any reproduction of the tattoo.

The case was dismissed for failure to prosecute.

## Copyright in a Tattoo

There are a few things to take away from this article:

If you are an employed tattooist working in a studio or shop, make sure that you have a written contract in place if you want to [retain copyright](https://stonegatelegal.com.au/copyright-in-building-plans-after-termination-of-building-contract/) in your artwork.

If you are a tattoo studio / shop, think carefully about whether you want to own the copyright in your artists work, or if you want them to own it.

If a tattoo collector pays for a tattoo, then there is likely an implied license at law that the artist grants them to use the tattoo as a tattoo.

If the collector commercialises your artwork or seeks to make money from it (in marketing or advertising, or on t-shirts for example) then you may have rights to a share of those profits.

This is an emerging area of law in Australia, and so there are a lot of undecided issues.

**[Contact us](https://stonegatelegal.com.au/) for all issues relating to copyright in a tattoo and infringement advice and representation**

[REQUEST A FREE CASE EVALUATION](https://stonegatelegal.com.au/free-case-evaluation/)

**OR CALL: [1300 545 133](tel:1300545133) FOR A FREE PHONE CONSULTATION**

#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation.

With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice.

Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings.

Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

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## Defamation Legal Services
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# Accused or Defamed? Protect Your Reputation Today.

Australia’s Trusted Defamation Lawyers. Fast, Confidential Legal Advice You Can Rely On.

## Enquire Now

Get Confidentail Advice Now

## Defamation Law

## Expert Defamation Lawyers

Defamation is a serious matter that can have a significant impact on a person’s reputation and business. At Stonegate Legal, we are well-versed in the complexities of defamation law and understand the importance of taking swift action to protect your interests. If you suspect that you have been the victim of defamatory comments or actions, it is crucial to seek legal advice as soon as possible from our professional libel and slander lawyers.

As expert defamation lawyers in Queensland, we have extensive experience in navigating the Defamation Act 2005 (Qld) and can provide you with the guidance you need to pursue a defamation claim. We will work closely with you to understand the details of your situation and provide you with a clear understanding of your legal options. Our team will ensure that you are fully informed at every stage of the process, and we will work tirelessly to protect your rights and reputation.

## Don’t Let Defamation Ruin Your Business or your life!

## Watch the Video to Understand How Defamation is Explained.

Learn the basics of defamation, including what qualifies as a defamatory statement.

This video breaks it down with simple examples for better understanding.

## Have You Been Defamed?

False accusations can ruin reputations. We help you set the record straight.

If someone has published false and harmful statements about you — whether online, in the media, or in person — you may have a strong claim for defamation. At Stonegate Legal, we act quickly to stop the spread, protect your reputation, and pursue fair compensation.

**We regularly act for individuals, professionals, and small business owners across Queensland who have been targeted by:**

\> Defamatory Google reviews

\> Facebook posts and community group threads

\> Instagram or TikTok content falsely accusing misconduct

\> Online harassment or smear campaigns

\> False claims made to clients, employers, or the public

**As a defamed party, we can help you:**

\> Assess whether the content is defamatory under Queensland law

\> Draft and serve a legally compliant Concerns Notice

\> Negotiate a public apology, removal, or compensation

\> Apply for urgent injunctions to prevent further harm

\> File court proceedings and claim damages for serious reputational loss

Time is critical. You have 12 months from the date of publication to bring a claim — don’t delay.

![grp1](<Base64-Image-Removed>)

![grp2](<Base64-Image-Removed>)

## Been Accused of Defamation?

Don’t panic — we’ll protect your rights and defend your side of the story.

If you’ve received a Concerns Notice or been threatened with a defamation claim, it’s important to act fast and seek legal advice. At Stonegate Legal, we represent people and businesses who are accused of making defamatory statements — online or offline.

Defamation law in Australia is complex, and not all statements that cause offence are legally defamatory. We can help you understand your rights, protect your freedom of speech, and respond appropriately to minimise legal and financial risk.

**As the respondent or defendant, we can help you:**

\> Review the claim and assess whether the statement is actually

defamatory

\> Advise on available defences such as truth, honest opinion, or public

interest

\> Prepare a response or Offer to Make Amends

\> Defend the matter in court if required

\> Respond to social media-related claims, including those involving

deleted or anonymous content

You usually have 28 days to respond to a Concerns Notice — and just 14 days if further information is requested.

Acting quickly gives you more options and control.

[Discuss Your Case With A Defamation Lawyer](https://stonegatelegal.com.au/services/defamation-lawyers/)

## trusted defamation lawyers

## Time Limits in Defamation Claims – Why Acting Fast Is Critical

**12-Month** Time Limit to

File a Defamation Claim

If you’ve been defamed — whether online, in print, or through spoken words — you generally have just **12 months from the date of publication** to file a defamation lawsuit in court. This time limit applies to most cases under the Defamation Act 2005 (Qld) and is enforced strictly by the courts.

Even if the defamatory material is still online, the clock starts ticking from the date it was first published.

In some rare cases, this time limit can be extended — but only if the court believes it’s fair and reasonable to do so. Don’t rely on an extension. It’s always best to get legal advice as early as possible.

**28 Days** to Respond to a

Concerns Notice

If you’ve received a Concerns Notice, it’s important to treat it with urgency and care. It sets out the alleged defamatory content, the harm caused, and gives you an opportunity to resolve the matter before court proceedings begin.

Under the Defamation Act 2005 (Qld), you typically have **28 days to respond**. Failing to reply within this timeframe can significantly limit your legal options and increase the chances of the matter escalating to court. Ignoring a Concerns Notice — or delaying your response — can also lead to increased costs.

Responding properly may involve providing an Offer to Make Amends, requesting further particulars, or defending the claim outright.

Responding to a Further

Particulars Request –

**14-Day** Time Limit

If you’ve issued a Concerns Notice and the recipient requests further particulars — meaning more detail about the defamatory content or the harm claimed — you are generally required to provide this information within **14 days.**

This request is a formal part of the defamation process under the Defamation Act 2005 (Qld) and is often used by the other party to clarify or assess the claim before deciding how to respond. Failing to reply within this timeframe may delay resolution or weaken your position. At Stonegate Legal, we assist clients in preparing timely and compliant responses to ensure the process continues smoothly and your rights remain protected.

## Fixed-Fee Pricing for Concerns Notices – Clarity from the Start

Learn the basics of defamation, including what qualifies as a defamatory statement.

This video breaks it down with simple examples for better understanding.

![blub](<Base64-Image-Removed>)

### What You Get

For a set fee, our experienced defamation lawyers will review the facts of your case, prepare a tailored Concerns Notice under the Defamation Act 2005 (Qld), and handle its delivery to the offending party. This gives you a clear, professional starting point to resolve the issue quickly, without worrying about hidden fees or hourly rates.

![money-bag](<Base64-Image-Removed>)

### No Hidden Costs

Whether you're dealing with an online review, a social media post, or defamatory comments in the media, our fixed-fee service ensures you get expert support and peace of mind right from the beginning. Book a free initial consultation today to find out if your matter qualifies for our fixed-fee Concerns Notice package.

[BOOK A 30 MINUTE FREE CONSULTATION](https://stonegatelegal.com.au/book-a-free-consultation/)

## Social Media & Online Defamation Lawyers – Protecting Your Digital Reputation

In today’s digital world, online defamation is one of the fastest-growing areas of legal risk. Whether it’s a false Google review, a defamatory Facebook post, or a misleading YouTube video, damaging content online spreads quickly — and can seriously harm your reputation or business.

At Stonegate Legal, we specialise in social media defamation cases across platforms like Facebook, Instagram, YouTube, Twitter (X), Google Reviews, Reddit, and blogs. We understand how viral content works, how to act fast to limit the harm, and how to enforce your legal rights under the Defamation Act 2005 (Qld).

## The ‘Grapevine Effect’ – Why Online Defamation Is So Damaging

Online defamation spreads rapidly. A single post can be shared, liked, or reposted hundreds of times within minutes — reaching thousands and multiplying the harm. Courts call this the grapevine effect, and it’s why social media defamation is often more damaging than traditional forms like newspapers or verbal defamation (slander).

**We’ve seen real cases where:**

\> A single false accusation on Facebook resulted in over $200,000 in damages

\> An Instagram post calling someone a scammer led to loss of business and threats

\> A Google review based on fiction cost a local business thousands in revenue

**Social media moves fast — and so do we. Our team has helped clients:**

\> Remove false reviews from Google and Yelp

\> Obtain urgent injunctions to stop defamatory posts

\> Recover significant compensation from online defamation cases

\> Respond effectively when falsely accused of defamation

![grp3](<Base64-Image-Removed>)

![grp4](<Base64-Image-Removed>)

## Common Types of Online Defamation We Handle

Online defamation can take many forms — and at Stonegate Legal, we’ve seen it all. From fake Google reviews to viral TikToks, defamatory content spreads fast and causes real-world harm.

Below is an expanded list of the most common types of digital defamation we handle, along with real-world style examples to help you identify what qualifies.

**Fake or Malicious Google Reviews:**

False reviews left by people who were never customers — or who are intentionally trying to hurt your business.

**Defamatory Facebook Posts and Comments:**

Community pages, personal profiles, or business review sections on Facebook can all become platforms for false accusations.

**Instagram Posts, Stories, and Reels with Defamatory Claims:**

Instagram defamation often includes misleading captions, story “call-outs,” or edited screenshots targeting individuals or businesses.

**Defamatory YouTube or TikTok Videos:**

Videos can cause significant damage, especially when monetised or shared widely.

**Harassment, Cyberbullying & Online Abuse Disguised as ‘Opinion’:**

False and damaging statements made under the guise of “free speech” or “just my opinion” — including DMs, captions, or aggressive threads.

## Understanding Social Media Defamation: What Counts?

To bring a successful defamation claim, the content must be:

> **False** – it contains an untrue statement of fact

\> **Published** – seen by at least one person other than you

\> **Identifying** – directly or indirectly refers to you

\> **Damaging** – causes harm to your reputation, income, or wellbeing

We help you assess your claim, gather evidence, and take swift legal action — often starting with a formal Concerns Notice, and escalating to court action or injunctions where needed.

![grp5](<Base64-Image-Removed>)

## Claim A No Obligation Case Evaluation

### Discuss Your Case With A Trusted Defamation Lawyer

[Discuss Your Case Today](https://stonegatelegal.com.au/home-demo/#)

[Call Now](tel:1300%20545%20133)

## The Defamation Process

At Stonegate Legal, we provide a transparent and structured approach to defamation law services, tailored to meet your unique legal needs. Whether you’ve been defamed or accused of defamation, our process ensures your matter is handled with precision from start to finish. Here’s how we guide you through every step:

**Initial Legal Consultation**

Our experienced defamation lawyers offer an in-depth initial consultation to assess your situation, determine the legal merits of your case, and explain your options under Queensland’s defamation laws. We identify the best strategy moving forward — whether you’re responding to a false allegation or taking action to protect your reputation.

**Drafting and Sending a Concerns Notice**

If you’re the aggrieved party, we will promptly prepare a legally compliant Concerns Notice under the Defamation Act 2005 (Qld). This document outlines the defamatory material, the harm caused, and your proposed remedy (e.g., apology, takedown, or compensation). Serving this notice is often a crucial step to resolve matters without court proceedings.

**Pre-Litigation Negotiation**

Once the concerns notice is delivered, we aim to resolve the matter swiftly through negotiation. Our legal team can negotiate retractions, public apologies, content removal, or financial settlement — all while protecting your legal rights and reputation.

**Commencing Court Action**

If the matter cannot be resolved amicably, we initiate court proceedings. We prepare and file all necessary documents, manage deadlines, and represent you in the relevant jurisdiction (typically the District or Supreme Court). We ensure every aspect of your defamation claim or defence is supported by strong evidence and legal arguments.

**Seeking Injunctions (Urgent Court Orders)**

In serious or time-sensitive cases, we can apply for an urgent injunction to prevent the further publication or distribution of defamatory material. Injunctions are powerful legal remedies that can stop reputational damage in its tracks.

**Claiming Compensation and Damages**

We pursue all available remedies under law, including general damages for reputational harm, special damages for economic loss, and aggravated damages where applicable. Our goal is to achieve a financial outcome that reflects the seriousness of the defamatory conduct.

**Post-Judgment Enforcement**

After a successful court outcome, we assist with enforcing judgments — whether it’s securing the payment of damages, compelling the publication of an apology, or ensuring a permanent injunction is upheld.

[Initial Legal Consultation](https://stonegatelegal.com.au/home-demo/#collapse-a7dfb96687f03b39a429)

We start by meeting with you to understand your situation. Whether you've been defamed or accused of defamation, we’ll explain how defamation law works in Queensland and give you honest advice on your legal options. This is where we start building the best strategy to protect your rights.

[Pre-action Considerations](https://stonegatelegal.com.au/home-demo/#collapse-c70abef687f03b39a429)

We begin with a confidential consultation to review your matter, assess whether defamation has occurred, and outline your legal rights under Queensland law. Whether you're defending your reputation or responding to a claim, we’ll help you understand the best strategy going forward.

[Defamation Assessment](https://stonegatelegal.com.au/home-demo/#collapse-5a4e4b7687f03b39a429)

Before taking any formal action, we review the facts of your case to confirm whether it meets the legal definition of defamation. We look at whether the statement was published, if it identifies you, and if it could harm your reputation. This helps us make sure your case has a strong foundation.

[Drafting & Sending a Concerns Notice](https://stonegatelegal.com.au/home-demo/#collapse-092b264687f03b39a429)

If you're the defamed party, we’ll prepare a formal **Concerns Notice** in line with the _Defamation Act 2005 (Qld)_. This document identifies the defamatory material, explains the harm caused, and requests a remedy such as an apology, takedown, or compensation. It's often the first and most important step toward resolution.

[Strategic Advice & Resolution Options](https://stonegatelegal.com.au/home-demo/#collapse-16e111d687f03b39a429)

Not every defamation case needs to go to court. We’ll talk you through all possible outcomes — from seeking a public apology to removing harmful content. Our goal is to resolve the matter quickly, cost-effectively, and in a way that protects your reputation.

[Pre-Litigation Negotiation](https://stonegatelegal.com.au/home-demo/#collapse-4a4eaca687f03b39a429)

Once the notice is issued, we engage with the other party to seek a prompt and fair outcome. This may involve negotiating a written apology, public retraction, or financial settlement — aiming to resolve the matter efficiently without going to court.

[Evidence Gathering & Documentation](https://stonegatelegal.com.au/home-demo/#collapse-c97ddf0687f03b39a429)

We help you collect all the necessary evidence to support your claim or defence. This might include screenshots, social media posts, emails, witness statements, or anything else that proves what was said and how it caused harm.

[Commencing Court Proceedings](https://stonegatelegal.com.au/home-demo/#collapse-eba8349687f03b39a429)

If negotiation fails, we act swiftly to initiate legal proceedings. Our team prepares all necessary documents, complies with court timelines, and advocates for you at every stage of the litigation — in either the District or Supreme Court depending on your case.

[Applying for Injunctions](https://stonegatelegal.com.au/home-demo/#collapse-b30326f687f03b39a429)

In urgent cases, we can apply for a **court-ordered injunction** to stop further publication of defamatory material. This is often critical where ongoing harm is likely — especially in online or viral content situations.

[Defamation Trial](https://stonegatelegal.com.au/home-demo/#collapse-370bdb1687f03b39a429)

If the matter proceeds to trial, both parties will present their evidence and arguments before a judge and/or jury. The burden of proof is on the plaintiff (the person making the claim) to prove that the statement was defamatory ns caused harm to their reputation.

[Remedies](https://stonegatelegal.com.au/home-demo/#collapse-da35b8a687f03b39a429)

If the plaintiff is successful in proving their case, the court may award damages (financial compensation) to compensate for the harm caused by the defamatory statement. The court may also order a retraction or apology and/or an injunction to prevent further publication of the defamatory statement.

[Claiming Damages & Compensation](https://stonegatelegal.com.au/home-demo/#collapse-08c397e687f03b39a429)

We seek full compensation for the harm you've suffered. This may include **general damages** for reputational loss, **special damages** for financial impact, and **aggravated damages** where the defamation was particularly severe or malicious.

[Post-Judgment Enforcement](https://stonegatelegal.com.au/home-demo/#collapse-8997c66687f03b39a429)

After a successful result, we ensure court orders are enforced. Whether it’s recovering damages, ensuring an apology is published, or enforcing an injunction, we stay with you until every legal requirement is met.

## Testimonial

What Our Clients Have To Say

At our Stonegate Legal, client satisfaction is our top priority. We are proud to have served hundreds of clients who have had positive experiences working with us.

Stonegate Legal assisted my business from a strong legal perspective, while highlighting valuable strategy. They have the perfect sized firm to help with all matters either big or small. Wayne is a rare expert in Debt Recovery and his knowledge is extensive.

We had tried for 6mths to get payment from one of our debtors - Damon and the Stonegate Legal team were able to secure full payment within 30days. Sincerely appreciate the efficiency and professionalism.

Stonegate Legal provided good advice, and got us the outcome we were looking for. They were easy to deal with and kept me well informed through the process letting me know the options available as well as their advice.

The entire team at Stonegate Legal have been exceptional to deal with making a difficult situation so much easier to deal with, very pleasant and efficient, I highly recommend them.

## defamation law firm qld

## Defences to defamation

### Defence of justification

This defence requires the defendant to prove that the defamatory statement is true.

### Defence of contextual truth

This defence applies when the defendant can prove that the imputations made by the statement were substantially true.

### Defence of absolute privilege

This defence applies when defamation occurs in certain types of proceedings, such as court proceedings or parliamentary proceedings.

### Defence of justification

This defence requires the defendant to prove that the defamatory statement is true.

### Defences of fair report of proceedings of public concern

This defence applies when the defendant can prove that the defamatory material was a fair and accurate report of a public meeting or court proceeding.

### Defence of qualified privilege for provision of certain information

This defence applies when the defendant can prove that the imputations made by the statement were substantially true.

### Defences of honest opinion

This defence applies when the defendant can prove that the defamatory material was made in good faith and based on an honest opinion.

### Defence of innocent dissemination

This defence applies when the defendant can prove that they did not know the defamatory statement.

## Request a Free Consultation

Don’t let defamation ruin your life. Take action today by contacting us for a consultation. Together, we can stand up to false and damaging statements and protect your reputation from libel and slander.

[Contact Us Today](https://stonegatelegal.com.au/home-demo/#callnow)

## Our Team

## Meet Our Defamation Lawyers

![rect-box](<Base64-Image-Removed>)

![testi1](<Base64-Image-Removed>)

### Legal Practice Director / Principal Solicitor

Wayne Davis

Wayne Davis is the principal solicitor, legal practice director of the firm, and leads the litigation team. Wayne has an LLB, and GDLP and is admitted to the Supreme Court of Queensland and the High Court of Australia. Wayne is a debt recovery, litigation, and insolvency professional.

Wayne is dedicated to achieving the best possible outcomes, whether through strategic negotiation, alternative dispute resolution, or courtroom advocacy. Wayne understand that every case is unique and takes a proactive approach to ensure your rights and interests are protected at every stage of the process.

**Education & Certifications**

LLB – Bachelor of Laws

**Personal Quote**

Don’t believe everything you think.

**Areas of Interest**

Building and Construction ⦿ Civil/Personal Litigation ⦿ Commercial Lease Disputes Commercial Litigation ⦿ Corporations Disputes ⦿ Debt Recovery/Collection ⦿ Defamation Litigation ⦿ Insolvency Law ⦿ Statutory Demands ⦿ Tax Debt Disputes ⦿ Wills/Estate Litigation

![rect-box](<Base64-Image-Removed>)

![testi2](<Base64-Image-Removed>)

### Solicitor

Shania Bryan

Shania is a solicitor at Stonegate Legal, based in Queensland. After nearly two years with the firm, Shania recently transitioned into her solicitor role following her admission to the Supreme Court of Queensland in December 2024. She holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP). Shania practices predominantly in defamation law and handles a majority of the defamation matters here at Stonegate Legal.

Her focus is advising and representing clients in disputes involving reputational harm, online publications, and media content. Shania works closely with individuals and businesses to navigate the intricacies of defamation claims and achieve effective resolutions.

**Education & Certifications**

Bachelor of Laws (LLB) and Graduate Diploma of Legal Practice (GDLP)

**Personal Quote**

Every experience is a chance to deepen my knowledge and contribute to our team’s success, fostering a culture of continuous learning and support

**Areas of Interest**

Building and Construction ⦿ Civil/Personal Litigation ⦿ Commercial Lease Disputes ⦿ Commercial Litigation ⦿ Corporations Disputes ⦿ Defamation Litigation ⦿ Wills/Estate Litigation

## FAQ

## Defamation Frequently Asked Questions

[What is defamation?](https://stonegatelegal.com.au/home-demo/#collapse-b0d504b687f03b3daa18)

Defamation is a false statement made about someone or their business that causes harm to their reputation. It can be spoken (slander) or written (libel).

[How much can I sue for in a defamation case?](https://stonegatelegal.com.au/home-demo/#collapse-4e10eba687f03b3daa18)

The amount of damages awarded in a defamation case depends on the nature and extent of the harm caused by the defamatory statement. The court may award both compensatory and punitive damages, depending on the circumstances.

[What do defamation lawyers do?](https://stonegatelegal.com.au/home-demo/#collapse-f591981687f03b3daa18)

A defamation lawyer can provide advice on the merits of a claim, assist in the preparation and filing of court documents, and represent you in court. They can also advise you on strategies to prevent or reduce the harm caused by a defamatory statement. A defamation lawyer can help you determine whether to pursue legal action, and if so, how best to proceed.

[Will I need to go to court for a defamation case?](https://stonegatelegal.com.au/home-demo/#collapse-de9d696687f03b3daa18)

It depends. Often, the matter can be resolved without going to court. However, if the matter cannot be resolved amicably, then it may need to proceed to court for a resolution.

[What is the time limit for filing a defamation claim?](https://stonegatelegal.com.au/home-demo/#collapse-881e487687f03b3daa18)

The time limit for filing a defamation claim varies by jurisdiction. Generally, you must file the claim within 12 months of the statement being made. If you do not file within this time period, you may be prevented from pursuing legal action.

[What are the benefits of hiring a defamation lawyer?](https://stonegatelegal.com.au/home-demo/#collapse-1b623c7687f03b3daa18)

Defamation lawyers can provide advice on the merits of a claim and strategies to help prevent or reduce the harm caused by a defamatory statement. They can also assist in the preparation and filing of court documents and represent you in court. Furthermore, they may also be able to negotiate a settlement without going to trial.

[What is the difference between defamation, libel and slander lawyers?](https://stonegatelegal.com.au/home-demo/#collapse-ab4e9a1687f03b3daa18)

**Defamation** is a broad legal term that encompasses any false statement made about an individual, group, or business that damages their reputation. It aims to strike a balance between protecting reputations and ensuring freedom of speech. Defamation can occur in two forms: (verbal) **slander** and (written) **libel**, which differ primarily in how the defamatory statement is communicated.

[Can I sue someone for a bad Google review?](https://stonegatelegal.com.au/home-demo/#collapse-cfc1765687f03b3daa18)

Yes — if the review is **false**, **defamatory**, and **damaging** to your reputation or business, you may have legal grounds to sue. We regularly act for businesses that have been targeted by fake or malicious reviews — especially those left by competitors, ex-employees, or anonymous users.

If the review accuses you of criminal behaviour, unethical conduct, or dishonesty (without proof), it may be considered defamatory. Even reviews that don’t name you directly can be defamatory if readers can clearly identify you or your business.

[What happens after I send a Concerns Notice?](https://stonegatelegal.com.au/home-demo/#collapse-f51f084687f03b3daa18)

Once you serve a Concerns Notice under the _Defamation Act 2005 (Qld)_, the person or organisation you’re accusing has **28 days to respond**. They may:

- Issue an **apology**

- Remove or retract the defamatory content

- Offer a **settlement** or compensation

- **Deny** the claim or request further particulars


If they do nothing, or their response is unsatisfactory, you may proceed with legal action. In many cases, a well-drafted Concerns Notice is enough to resolve the matter without court proceedings.

At Stonegate Legal, we draft Concerns Notices that are legally compliant, persuasive, and aimed at achieving fast results.

[Is a public apology enough to resolve defamation?](https://stonegatelegal.com.au/home-demo/#collapse-1626985687f03b3daa18)

Sometimes, yes — especially when reputational damage is limited or the apology is **prompt, sincere, and public**. An apology may be offered voluntarily or as part of a formal **Offer to Make Amends** under defamation law.

However, if you've suffered serious personal, professional, or financial harm, an apology alone may not be sufficient. You may be entitled to:

- **Damages** for reputational loss and emotional distress

- **Removal** of the defamatory content

- An agreement to stop further publication


Every case is different — and we’ll help you decide whether an apology is enough or whether further legal action is justified.

[What defences can someone use against a defamation claim?](https://stonegatelegal.com.au/home-demo/#collapse-eb95a61687f03b3daa18)

The most common legal defences to defamation in Queensland include:

- **Truth / Justification** – the statement was substantially true

- **Honest opinion** – the statement was clearly an opinion, not presented as fact

- **Qualified privilege** – the publisher had a legal or moral duty to make the statement

- **Public interest defence** – the matter was of public concern and published responsibly

- **Triviality** – the statement was unlikely to cause serious harm


At Stonegate Legal, we carefully assess all potential defences if you're facing a defamation claim and use them strategically to protect your rights.

[Is there a time limit to bring a defamation claim?](https://stonegatelegal.com.au/home-demo/#collapse-f7de621687f03b3daa18)

If your defamation claim is successful, you may be entitled to:

- **General damages** for reputational harm and emotional distress

- **Special damages** for lost income, business opportunities, or contracts

- **Aggravated damages** if the conduct was especially malicious or reckless

- **Injunctive relief** to stop further publication


We work to maximise your outcome while balancing the speed, cost, and stress of litigation.

[Does defamation apply to social media and messaging apps?](https://stonegatelegal.com.au/home-demo/#collapse-17f4a41687f03b3daa18)

Absolutely. Australian defamation law applies to content posted on:

- **Facebook, Instagram, TikTok, YouTube, Twitter/X**

- **Google and review platforms**

- **WhatsApp, Messenger, Discord, and group chats**


Even private messages can be defamatory if they’re forwarded or shared with others.

### Learn More About Defamation

### Sending a Concerns Notice – Complete Guide

This article delves into the intricacies of defamation law, a legal framework established to protect individuals and certain organisations from damaging

[Read More](https://stonegatelegal.com.au/concerns-notice-in-defamation-complete-guide/)

News Article

### Serious Harm Threshold in Defamation

The amendment of the Defamation Act 2005 (Qld) in 2021 introduced a pivotal change in defamation law with the incorporation of the serious

[Read More](https://stonegatelegal.com.au/serious-harm-threshold-in-defamation/)

News Article

### Defamation Claim and Mixed Martial Arts – Case Note

On 16 October 2019, the defendant uploaded a video publicly on Facebook with a post the plaintiff alleged

[Read More](https://stonegatelegal.com.au/defamation-claim-and-mixed-martial-arts-case-note/)

News Article

### Defending a Defamation Claim in Queensland

It is usually relatively easy to make out a claim for defamation, all the plaintiff needs to show is: There was a publication; and The publication named a person

[Read More](https://stonegatelegal.com.au/defending-a-defamation-claim-in-queensland/)

News Article

### Defamation in Queensland

Defamation in Queensland means the publishing to persons, other than the person defamed, imputations to the effect of which is to lower the reputation

[Read More](https://stonegatelegal.com.au/defamation-in-queensland/)

News Article

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## Director-Related Transactions Guide
[Skip to content](https://stonegatelegal.com.au/unreasonable-director-related-transactions-and-how-to-defeat-them/#content)

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# Unreasonable Director-Related Transactions and How to Defeat Them

[Discuss Your Case Today](https://stonegatelegal.com.au/contact/)

## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| June 1, 2019

## Article Summary

This article delves into the specifics of unreasonable director-related transactions as outlined in section 588FDA of the _Corporations Act 2001_ (CTH). An unreasonable director-related transaction takes place when a company enters into a transaction, such as a payment or transfer, to a director, a close associate of a director, or for their benefit, and it is perceived that a reasonable person wouldn’t have agreed to such a transaction under the company’s circumstances.

Unreasonable director-related transactions are categorised as voidable transactions in cases of company insolvency. Other types of voidable transactions include unfair preferences, uncommercial transactions, insolvent transactions, unfair loans, and more. The main focus of this article is on unreasonable director-related transactions.

For a transaction to be labelled as an “ _unreasonable director-related transaction_” it must fulfill certain criteria, such as the type of transaction, the beneficiary of the transaction, and the expectation of a reasonable person in the company’s position.

Unlike other voidable transactions, there is no need for the unreasonable director-related transaction to have taken place when the company was insolvent. Therefore, the defence of possible insolvency is not available against such claims.

The article touches upon various sections of the _Corporations Act_ that provide clarity on terms such as “transaction by the company,” “director of the company,” “close associate of a director,” and the implications of “on behalf of” or “for the benefit of.” Court decisions help elucidate the definitions and scope of these terms.

The courts determine the reasonability of a transaction based on an objective test, considering the benefits to the company, detriment to the company, benefits to other parties involved, and other relevant matters. The timing of the transaction is also significant, with the evaluation taking place at the time the transaction was made, not when the obligation was incurred.

The onus to prove an unreasonable director-related transaction lies with the liquidator. Successfully defending against such claims necessitates a meticulous analysis of the transaction’s elements to ascertain if they match the criteria of an unreasonable director-related transaction.

Table of Contents

[Toggle](https://stonegatelegal.com.au/unreasonable-director-related-transactions-and-how-to-defeat-them/#)

![Unreasonable Director-Related Transactions and How to Defeat Them](<Base64-Image-Removed>)Unreasonable director-related transactions occur when:

1. There is a transaction of a company; and
2. The transaction is a payment, conveyance, transfer, disposition of property, the issue of securities, and/or the incurring of an obligation; and
3. The transaction is, or is to be, made to a director of the company, a close associate of a director, or a person on behalf of, or for the benefit of, a director or close associate; and
4. It may be expected that a reasonable person in the company’s circumstances would not have entered into the transaction.

Unreasonable director-related transactions claims are one of the types of voidable transactions in company insolvency outlined at [section 588FDA of the _Corporations Act 2001_ (CTH)](http://www8.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/ca2001172/s588fda.html) (“ **the Corporations Act**”).

There are a number of defences and exceptions to the above which may mean that a director does not have to repay hard-earned monies to the liquidator.

However, there is no requirement that the unreasonable director-related transaction occurred when the company was insolvent.  Unlike other voidable transactions, unreasonable director-related transactions do not require the transaction to be an insolvent transaction, and so the possible insolvency defence is not available to these types of claims.

In this article our [insolvency lawyers](https://stonegatelegal.com.au/services/insolvency/) explain in detail unreasonable director-related transactions claims under the voidable transaction regime and details the possible defences and exceptions to unreasonable director-related transactions claims.

**If you have been contacted by a liquidator in relation to unreasonable director-related transactions claims, you should contact an insolvency lawyer as soon as possible to attempt to defend the liquidator’s demand for money**

[GET A FREE FEE ESTIMATE TODAY](https://stonegatelegal.com.au/free-case-evaluation/)

**OR CALL: [1300 545 133](tel:1300545133) FOR A FREE PHONE CONSULTATION**

## What are Unreasonable Director-Related Transactions?

Unreasonable director-related transactions in company insolvency are transactions entered into by the company for the benefit of the director, or another person, which can be avoided and recovered by the liquidator of the company in liquidation.

[Voidable transactions](https://stonegatelegal.com.au/voidable-transactions-bankruptcy/) can include:

1. [588FA – Unfair preferences](https://stonegatelegal.com.au/unfair-preference-claims-and-how-to-defeat-them/);
2. [588FB – Uncommercial transactions](https://stonegatelegal.com.au/uncommercial-transactions-claims-and-how-to-defeat-them/);
3. [588FC – Insolvent transactions](https://stonegatelegal.com.au/what-are-insolvent-transactions/);
4. [588FD – Unfair loans to a company](https://stonegatelegal.com.au/what-are-unfair-loans-in-company-insolvency/); and
5. 588FDA – Unreasonable director-related transactions.

This article will focus on unreasonable director-related transactions.

## Unreasonable Director-Related Transactions

[Section 588FDA of the Corporations Act](http://www8.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/ca2001172/s588fda.html) says:

> _(1)  A transaction of a company is an unreasonable director-related transaction of the company if, and only if:_
>
> _(a)  the transaction is:_
>
> _(i)  a payment made by the company; or_
>
> _(ii)  a conveyance, transfer or other disposition by the company of property of the company; or_
>
> _(iii)  the issue of securities by the company; or_
>
> _(iv)  the incurring by the company of an obligation to make such a payment, disposition or issue; and_
>
> _(b)  the payment, disposition or issue is, or is to be, made to:_
>
> _(i)  a director of the company; or_
>
> _(ii)  a close associate of a director of the company; or_
>
> _(iii)  a person on behalf of, or for the benefit of, a person mentioned in subparagraph (i) or (ii); and_
>
> _(c)  it may be expected that a reasonable person in the company’s circumstances would not have entered into the transaction, having regard to:_
>
> _(i)  the benefits (if any) to the company of entering into the transaction; and_
>
> _(ii)  the detriment to the company of entering into the transaction; and_
>
> _(iii)  the respective benefits to other parties to the transaction of entering into it; and_
>
> _(iv)  any other relevant matter._

This section asks a number of questions, namely:

1. What is a transaction by the company; and
2. What is a close associate of a director of the company; and
3. What does on behalf of, or for the benefit of mean; and
4. What have the Courts said about the objective test.

We will attempt to answer these questions below.

### What is a Transaction by the Company?

Ordinarily, transactions are defined in [section 9 of the Corporations Act](http://www8.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/ca2001172/s9.html).  However, section 588FDA seems to limit the scope for unreasonable director-related transactions and says that the transaction must be:

1. A payment made by the company; or
2. A conveyance, transfer or other disposition by the company of property of the company; or
3. The issue of securities by the company; or
4. The incurring by the company of an obligation to make such a payment, disposition or issue.

The Courts have decided that a transaction by the company can include (but in no way limited to):

01. A gift of money or property;
02. An assignment of debt;
03. Forgiving a debt or debts;
04. Granting a mortgage or charge;
05. Granting a security;
06. Issuing shares in the company;
07. Relinquishment of rights;
08. The granting of an encumbrance;
09. The payment of company money; and
10. The transfer of real or personal company property.

Because there is no definition of most of the transactions in the Corporations Act, the words can also be given their ordinary meaning in most cases.  Dictionary definitions are a good starting point.

The transaction (payment, disposition or issue) is, or is to be, made to a director of the company; or a close associate of a director of the company; or a person on behalf of, or for the benefit of, a director or a close associate of a director of the company.

### What is a Director of a Company?

A director of the company can be found by obtaining a current or historical company extract from [ASIC](https://asic.gov.au/online-services/search-asics-registers/search-fees/).

A director is also defined in [section 9 of the Corporations Act](http://www8.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/ca2001172/s9.html) to mean:

> _“ **director** ” of a company or other body means:_
>
> _(a)  a person who:_
>
> _(i)  is appointed to the position of a director; or_
>
> _(ii)  is appointed to the position of an alternate director and is acting in that capacity;_
>
> _regardless of the name that is given to their position; and_
>
> _(b)  unless the contrary intention appears, a person who is not validly appointed as a director if:_
>
> _(i)  they act in the position of a director; or_
>
> _(ii)  the directors of the company or body are accustomed to act in accordance with the person’s instructions or wishes_

So, a director of a company can also be a shadow or defacto director, whether appointed or not.  But a liquidator would have to prove those things.

But what is a close associate of a director of the company?

### What is a Close Associate of a Director of the Company?

[Section 9 of the Corporations Act](http://www8.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/ca2001172/s9.html) defines close associate of a director:

> _“ **close associate**” of a director means:_
>
> _(a)  a relative of the director; or_
>
> _(b)  a relative of a spouse of the director._

[Section 9](http://www8.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/ca2001172/s9.html) then goes on to define relative:

> _“ **relative**” in relation to a person, means the spouse, parent or remoter lineal ancestor, child or remoter issue, or brother or sister of the person._

So, this could mean a husband, wife, defacto, mother, father, grandmother, grandfather, great grandmother, great grandfather, child, grandchild, great grandchild, stepchild, brother or sister – and possibly more.

What does on behalf of mean?

### What Does “on-behalf-of” Mean?

[Section 9](http://www8.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/ca2001172/s9.html) defines “on behalf of” to mean:

> _“ **on behalf of**” includes on the instructions of_

However, the cases seem to say that it was the intention of the section that the words “on behalf of” be broader than just on the instructions of.

The [Explanatory Memorandum](https://www.legislation.gov.au/Details/C2004B01125/Explanatory%20Memorandum/Text) of the _Corporations Amendment (Repayment of Directors’ Bonuses) Bill 2002_ says:

> _3.8. The recipients covered are directors of the company and close associates of directors.  It also includes a person where the transaction is made on behalf of, or for the benefit of, a director or close associate.  In Commonwealth statues, references to “person” include bodies corporate._

In [_Vasudevan & Ors v Becon Const & Anor_ \[2014\] VSCA 14](http://www8.austlii.edu.au/cgi-bin/viewdoc/au/cases/vic/VSCA/2014/14.html) Nettle JA (with Beach JA and McMillan AJA agreeing) said:

> _In the context of s 588FDA(1)(b)(iii), the requirement that a disposition be made ‘on behalf of’ a director requires something more than that it be effected on the instructions of the director. Arguably, the provenance of the section and the objectives which (according to the Explanatory Memorandum) it was designed to achieve, imply that a disposition to a person ‘on behalf of a director’ connotes a disposition which is of some benefit to the director. At the same time, however, I doubt that Parliament intended to confine the operation of s 588FDA to direct benefits or that the section should be so construed._

So seemingly, the case above says on behalf of must be of some benefit to a director, or close associate of a director.  But what does “for the benefit of” mean?

### What does “for the benefit of” Mean?

[Section 9 of the Corporations Act](http://www8.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/ca2001172/s9.html) defines benefit as:

> _“ **benefit**” means any benefit, whether by way of payment of cash or otherwise_

So, benefit means any benefit, thanks Corporations Act!

The [Oxford English Dictionary](https://en.oxforddictionaries.com/definition/benefit) defines benefit to mean:

> _An advantage or profit gained from something or to receive an advantage; profit_

In [_Vasudevan & Ors v Becon Const & Anor_ \[2014\] VSCA 14](http://www8.austlii.edu.au/cgi-bin/viewdoc/au/cases/vic/VSCA/2014/14.html) Nettle JA (with Beach JA and McMillan AJA agreeing) said:

> _The natural and ordinary meaning of a requirement that something be for ‘for the benefit of’ a person is that it be ‘for the advantage, profit or good’ of the person … the natural and ordinary meaning of ‘for the benefit of’ accords to the objective of the section of preventing directors stripping benefits out of companies to their own advantage._

The Court also said:

> _‘benefit’ includes both direct and indirect benefits and, prima facie, that accords with the apparent objective of the section._

So, this means an advantage, profit, or good, whether by way of cash or otherwise, whether or not it is a direct benefit or an indirect benefit.

Lastly, the transaction is only an unreasonable director-related transaction if it may be expected that a reasonable person in the company’s circumstances would not have entered into the transaction.  This posits an objective test, but what have the Courts said about this objective test?

## The Test for Unreasonable Director-Related Transactions

[Section 588FDA(1)(c) of the Corporations Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588fda.html) says:

> _(1)  A transaction of a company is an unreasonable director-related transaction of the company if, and only if:_
>
> _…_
>
> _(c)  it may be expected that a reasonable person in the company’s circumstances would not have entered into the transaction, having regard to:_
>
> _(i)  the benefits (if any) to the company of entering into the transaction; and_
>
> _(ii)  the detriment to the company of entering into the transaction; and_
>
> _(iii)  the respective benefits to other parties to the transaction of entering into it; and_
>
> _(iv)  any other relevant matter._

The criteria above is calculated in the same as uncommercial transactions claims.

**Read our article – [Uncommercial Transactions Claims and how to Defeat Them](https://stonegatelegal.com.au/uncommercial-transactions-claims-and-how-to-defeat-them/)**

[Section 588FDA(2) of the Corporations Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588fda.html) says:

> _(2)  To avoid doubt, if:_
>
> _(a)  the transaction is a payment, disposition or issue; and_
>
> _(b)  the transaction is entered into for the purpose of meeting an obligation the company has incurred;_
>
> _the test in paragraph (1)(c) applies to the transaction taking into account the circumstances as they exist at the time when the transaction is entered into (rather than as they existed at the time when the obligation was incurred)._

This means that the unreasonableness of a transaction must be assessed at the time when the transaction occurred, rather than the time the obligation which gave rise to the transfer occurred.

[_In the matter of Lawrence Waterhouse Pty Ltd (in liq) – Shaw v Minsden Pty Ltd_ \[2011\] NSWSC 964](http://www8.austlii.edu.au/cgi-bin/viewdoc/au/cases/nsw/NSWSC/2011/964.html) Ward J said:

> _A transfer … might be voidable under s 588FDA if it is unreasonable at the time it takes place, even if it was not unreasonable when the contractual obligation to transfer the land was incurred._

If the liquidator can prove the above, then they may have a right to make an unreasonable director-related transaction claim.

However, the burden of proof is on the liquidator.  In [_Crowe-Maxwell v Frost_ \[2016\] NSWCA 46](http://www8.austlii.edu.au/cgi-bin/viewdoc/au/cases/nsw/NSWCA/2016/46.html) Beazley P (Macfarlan and Gleeson JJA agreeing) said:

> _The onus of establishing that a transaction constitutes an unreasonable director-related transaction is on the party so alleging_

Subject to some exceptions, if they can prove that there was a transaction, and that the transaction was an unreasonable director-related transaction, then the courts may make an order about the voidable transaction pursuant to section [588FF of the Corporations Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588ff.html).

## Defences to Unreasonable Director-Related Transaction Claims

More difficult to defend than the other voidable transactions, unreasonable director-related transactions claims can be beaten by stepping through the elements of the claim and ensuring the it applies.

### Elements of an Unreasonable Director-Related Transactions Claim

As stated above, a transaction of a company is an unreasonable director-related transaction of the company if, and only if:

1. There is a transaction of a company; and
2. The transaction is a payment, conveyance, transfer, disposition of property, the issue of securities, and/or the incurring of an obligation; and
3. The transaction is, or is to be, made to a director of the company, a close associate of a director, or a person on behalf of, or for the benefit of, a director or close associate; and
4. It may be expected that a reasonable person in the company’s circumstances would not have entered into the transaction.

So, if the transaction is:

1. Not a transaction of a company; and
2. Not a payment, disposition or issue; and
3. Not made by a director or a close associate; or
4. Not made on behalf of, or for the benefit of, a director or a close associate; and
5. Not expected that a reasonable person in the company’s circumstances would not have entered into the transaction;

Then it might be successfully defended because the elements are not made out.

### Outside the Required Timeframe

A person may also defeat unreasonable director-related transactions claims if the transaction was entered into, or an act was done for the purposes of giving effect to the transaction during the 4 years ending on the relation-back day.

[Section 588FE(6A) of the Corporations Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588fe.html) says:

> _(6A) The transaction is voidable if:_
>
> _(a)  it is an unreasonable director-related transaction of the company; and_
>
> _(b)  it was entered into, or an act was done for the purposes of giving effect to it:_
>
> _(i)  during the 4 years ending on the relation-back day; or_
>
> _(ii)  after that day but on or before the day when the winding up began._

So, if the transaction was entered into, or an act was done for the purposes of giving effect to the transaction after 4 years ending on the relation-back day, then might be successfully defended.

### Insolvency is not Required

Unfortunately, the defences in relation to insolvency are not applicable to unreasonable director-related transactions claims because insolvency is not an element of the claim.

[_In the Matter of Lesvos Pty Ltd_ \[2012\] NSWSC 1288](http://www8.austlii.edu.au/cgi-bin/viewdoc/au/cases/nsw/NSWSC/2012/1288.html) Brereton J said:

> _As the plaintiff correctly submits, a liquidator claiming relief under s 588FDA is not required to establish insolvency, and defences such as good faith and reasonable grounds are not applicable._

### The Transaction was Reasonable

Another way to defend or mitigate the liquidator’s claim is to make submissions that a reasonable person in the company’s circumstances would have entered into the transaction.

Similar to the test in uncommercial transactions claims, the Courts have determined that the reasonable assessment is based on:

1. The totality of the company’s circumstances at the time of the transaction; and
2. What knowledge the director or directors of the company ought to have known; and
3. The purpose of the transaction at the time of the transaction; and
4. The business relationship of the parties at the time of the transaction.

In [_Cussen & Ors v Sultan & Ors_ \[2009\] NSWSC 1114](http://classic.austlii.edu.au/au/cases/nsw/NSWSC/2009/1114.html) Nicholas J said:

> _… the court will look at the totality of the business relationship between the parties, and to what the parties under their relationship intended to effect, and how their intention was effected, in part or in whole, by the impugned transaction._

So, with this objective approach, the section also requires consideration of the benefits and detriments to the parties to the transaction.

See our article on [uncommercial transactions claims here](https://stonegatelegal.com.au/uncommercial-transactions-claims-and-how-to-defeat-them/) for more.

## Mitigating the Liquidator’s Claim

If there are problems with successfully defending the liquidator’s unreasonable director-related transactions claims, a party may still attempt to mitigate exposure.

[Section 588FF(4) of the Corporations Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588ff.html) says:

> _(4)  If the transaction is a voidable transaction solely because it is an unreasonable director-related transaction, the court may make orders under subsection (1) only for the purpose of recovering for the benefit of the creditors of the company the difference between:_
>
> _(a)  the total value of the benefits provided by the company under the transaction; and_
>
> _(b)  the value (if any) that it may be expected that a reasonable person in the company’s circumstances would have provided having regard to the matters referred to in paragraph 588FDA(1)(c)._

For example, if the company disposes of property worth $500,000.00 for $300,000.00, then the difference between what was paid, and what a reasonable company should have been paid, is the amount payable.

**If you have been contacted by a liquidator in relation to unreasonable director-related transactions claims, you should contact an insolvency lawyer as soon as possible to attempt to defend the liquidator’s demand for money**

[GET A FREE FEE ESTIMATE TODAY](https://stonegatelegal.com.au/free-case-evaluation/)

**OR CALL: [1300 545 133](tel:1300545133) FOR A FREE PHONE CONSULTATION**

## FAQs on Unreasonable Director-Related Transactions

Navigating the intricacies of director-related transactions can be challenging, especially given the potential legal ramifications and complexities inherent in corporate governance.

This FAQ section aims to demystify the most common questions surrounding unreasonable director-related transactions, offering clear insights for both seasoned professionals and those new to the domain.

### What is an unreasonable director-related transaction?

An unreasonable director-related transaction occurs when a company enters into a transaction that benefits a director or someone closely associated with them, and a reasonable person in the company’s situation would not have entered into that transaction.

### Where can I find the legal details about these transactions?

Unreasonable director-related transactions are outlined in section 588FDA of the Corporations Act 2001 (CTH).

### Do these transactions always relate to when the company was insolvent?

No. Unlike other voidable transactions, there’s no requirement that the company was insolvent when the unreasonable director-related transaction occurred.

### What types of transactions can be considered under this category?

Payments made by the company, dispositions or issues of company property, conveyances, transfers, issue of securities, or the company incurring obligations for such activities can be considered under this category.

### Who can these transactions benefit?

They can benefit a director of the company, a close associate of a director, or a person acting on behalf or for the benefit of a director or their close associate.

### How do I know if someone is a director of a company?

You can obtain this information from a company extract from ASIC. Additionally, a director is not only someone officially appointed but can also be a shadow or de facto director based on their influence or actions.

### What constitutes a close associate of a director?

A close associate is defined as a relative of the director or a relative of the director’s spouse, which could include immediate family members, in-laws, and possibly more.

### How can one determine if a transaction was for the “benefit” of the director?

The term “benefit” is broad and means any advantage or profit, whether direct or indirect, gained from something.

### How is the “reasonableness” of a transaction assessed?

It’s based on the expectation of what a reasonable person in the company’s circumstances would have done. This considers the benefits to the company, the detriment to the company, the benefits to other parties involved in the transaction, and any other relevant matter.

### If I’m contacted by a liquidator about such a transaction, what should I do?

It’s recommended to contact an insolvency lawyer as soon as possible to defend against the liquidator’s demand for money.

### Are there any defences available against claims of unreasonable director-related transactions?

Yes. To defend, one has to prove that the transaction doesn’t fit all the defined criteria. For instance, proving it wasn’t a transaction of the company, or wasn’t for the benefit of a director or close associate, or would have been entered into by a reasonable person in the company’s circumstances.

### How can a company avoid entering into unreasonable director-related transactions?

Companies should maintain clear corporate governance standards, consult with legal professionals when engaging in transactions with directors or their close associates, and regularly audit transactions for fairness and market value.

### What are the potential repercussions for a director involved in such a transaction?

Directors involved in unreasonable director-related transactions may face legal action, financial penalties, and damage to their reputation. In severe cases, they could also be disqualified from acting as a director of a company.

### How long do liquidators have to pursue such claims?

Liquidators typically have a set period to commence action for voidable transactions, including unreasonable director-related transactions. This period can vary based on jurisdiction, so it’s essential to check local regulations or consult a legal professional.

### Is there any difference between a de facto director and an appointed director in terms of these transactions?

In terms of liability for unreasonable director-related transactions, both de facto and officially appointed directors can be held accountable. A de facto director is someone who acts in the capacity of a director without being formally appointed.

### If a transaction is deemed unreasonable, can it be reversed?

Yes, if a transaction is found to be unreasonable and voidable, it can be reversed, and the parties involved may be required to return any benefits they received.

### How do these regulations impact small businesses or start-ups?

Small businesses and start-ups, where directors often wear multiple hats and engage in transactions with the company, should be especially vigilant. Such transactions should be at arm’s length and in line with market values to avoid being deemed unreasonable.

### Are there any exceptions or exemptions to this rule?

The primary focus is on the reasonableness of the transaction. Certain transactions that might appear to benefit a director or associate could still be considered reasonable if they align with what a prudent person in the company’s situation would have done. Always consult with legal professionals for specific exceptions or nuances.

### What role do shareholders play in these transactions?

Shareholders are not directly involved in the decision-making of these transactions, but they might raise concerns or objections if they believe a transaction doesn’t serve the company’s best interests. Vigilant shareholders can act as a check and balance against potential misuse by directors.

### How common are claims regarding unreasonable director-related transactions?

The frequency of such claims varies based on corporate governance standards, industry practices, and legal enforcement. However, with increasing awareness and scrutiny of director-related transactions, it’s crucial for companies to be proactive in ensuring the fairness and reasonableness of all transactions.

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# Uncommercial Transactions Claims and how to Defeat Them

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- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| April 20, 2019

## Article Summary

Uncommercial transactions claims pertain to the realm of voidable transactions in company insolvency, as stipulated in section 588FB of the Corporations Act 2001 (CTH).

An uncommercial transaction occurs when:

1. There’s a company transaction.
2. The transaction involves another party or parties.
3. A reasonable person in the company’s position wouldn’t have entered the transaction, considering the pros and cons for both the company and the other party or parties.

There exist several defences and exceptions that can protect a third party from repaying money to a liquidator.

Voidable transactions in company insolvency are akin to those in bankruptcy. They refer to transactions between a company and a third party that can be nullified and reclaimed by the company’s liquidator when it’s being liquidated.

Various types of voidable transactions include:

1. 588FA – Unfair preferences.
2. 588FB – Uncommercial transactions.
3. 588FC – Insolvent transactions.
4. 588FD – Unfair loans to a company.
5. 588FDA – Unreasonable director-related transactions.

Specific criteria dictate which transactions can be avoided by the liquidator, including timing and relation-back days.

Uncommercial transactions are those where a reasonable individual in the company’s situation wouldn’t have engaged in the transaction, taking into account the benefits and detriments to both parties involved.

Courts have provided guidance on defining a “transaction of a company” versus a “transaction of the company”, highlighting the importance of the company’s involvement in the transaction.

The term “uncommercial” is broad and might cover undervalued transactions or ones where no compensation was provided. However, courts have also ruled that fully valued transactions can be uncommercial.

The Corporations Act adopts an objective test for uncommercial transactions. It assesses if a rational person in the company’s position would’ve entered the transaction, considering various factors like business relations and intentions.

Benefits are advantages or profits, either in cash or otherwise, while detriments are commercial harms or damages.

There are specific timeframes for uncommercial transactions claims, ranging from 2 years to 10 years, depending on the circumstances.

The “relation-back day” relates to specific dates linked to the winding-up process, most commonly the date of the winding up application.

“Related entities” encompass a variety of relations including corporate bodies, directors, members, and their relatives.

Examples of uncommercial transactions during liquidation encompass undervalued property transfers, debt forgiveness for no valid reason, and significant upfront payments for services that are beyond normal commercial practices.

If someone has received a communication from a liquidator about uncommercial transactions, they should promptly consult an insolvency lawyer to defend any potential financial demands from the liquidator.

Table of Contents

[Toggle](https://stonegatelegal.com.au/uncommercial-transactions-claims-and-how-to-defeat-them/#)

![Uncommercial transactions in company insolvency Queensland](<Base64-Image-Removed>)Uncommercial transactions claims are one of the types of voidable transactions in company insolvency and are outlined at section 588FB of the _Corporations Act 2001_ (CTH) (“ **the Corporations Act**”).

A transaction of a company is an uncommercial transaction when:

1. There is a transaction of a company; and
2. There is a transaction with another party (or parties); and
3. A reasonable person in the company’s circumstances would not have entered into the transaction having regard to;
4. The benefits and detriments to the company and the other party (or parties).

There are a number of defences and exceptions to uncommercial transactions claims which may mean that a third-party does not have to repay their hard-earned dollars to the liquidator.

In this article our [experienced insolvency lawyers](https://stonegatelegal.com.au/services/insolvency/) explain in detail uncommercial transactions claims under the voidable transaction regime in the Corporations Act and details the possible defences and exceptions to uncommercial transactions claims.

**If you have been contacted by a liquidator in relation to uncommercial transactions claims, you should contact an insolvency lawyer as soon as possible to attempt to defend the liquidator’s demand for money**

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## What are Voidable Transactions?

Similar to [voidable transactions in bankruptcy](https://stonegatelegal.com.au/voidable-transactions-bankruptcy/), a voidable transaction in company insolvency is a transaction entered into by the company and a third-party which can be avoided and recovered by the liquidator of the company in liquidation.

Voidable transactions can include:

1. [588FA – Unfair preferences](https://stonegatelegal.com.au/unfair-preference-claims-and-how-to-defeat-them/);
2. 588FB – Uncommercial transactions;
3. [588FC – Insolvent transactions](https://stonegatelegal.com.au/what-are-insolvent-transactions/);
4. [588FD – Unfair loans to a company](https://stonegatelegal.com.au/what-are-unfair-loans-in-company-insolvency/); and
5. [588FDA – Unreasonable director-related transactions](https://stonegatelegal.com.au/unreasonable-director-related-transactions-and-how-to-defeat-them/).

[Section 588FE of the Corporations Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588fe.html) outlines the criteria for a transaction able to be avoided by the liquidator.

1. There must be an insolvent transaction; and
2. The transaction was made, or an act was done for the purpose of giving effect to it:
1. During the 6 months ending on the relation-back day; or
2. It is also an uncommercial transaction – 2 years ending on the relation-back day; or
3. It is also a related entity of the company – 4 years ending on the relation-back day; or
4. The company became a party to the transaction for the purpose of defeating, delaying, or interfering with, the rights of any or all of its creditors – 10 years ending on the relation-back day.

Then, each of the voidable transactions have their own specific requirements.

[Section 9 of the Corporations Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html) defines a what transaction is.

[Section 91 of the Corporations Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s91.html) has a table which outlines the date of the relation-back day.

[Section 95A of the of the Corporations Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s95a.html) defines what solvent and insolvent mean.

[Section 588FC of the Corporations Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588fc.html) defines what an insolvent transaction means.

If you fall into the category outlined above, then this transaction could be a voidable transaction.

This article will focus on uncommercial transaction claims.

## What is an Uncommercial Transaction?

[Section 588FB of the Corporations Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588fb.html) says:

> _(1)  A transaction of a company is an uncommercial transaction of the company if, and only if, it may be expected that a reasonable person in the company’s circumstances would not have entered into the transaction, having regard to:_
>
> _(a)  the benefits (if any) to the company of entering into the transaction; and_
>
> _(b)  the detriment to the company of entering into the transaction; and_
>
> _(c)  the respective benefits to other parties to the transaction of entering into it; and_
>
> _(d)  any other relevant matter._
>
> _(2)  A transaction may be an uncommercial transaction of a company because of subsection (1):_
>
> _(a)  whether or not a creditor of the company is a party to the transaction; and_
>
> _(b)  even if the transaction is given effect to, or is required to be given effect to, because of an order of an Australian court or a direction by an agency._

So, as outlined above, an uncommercial transaction is:

1. A transaction of a company; and
2. A transaction with another party (or parties); and
3. A reasonable person in the company’s circumstances would not have entered into the transaction; having regard to
4. The benefits and detriments to the company and the other party (or parties).

This raises some further interesting points, namely:

1. What is a transaction of a company; and
2. What does uncommercial mean; and
3. How have the Courts decided the objective test of whether a reasonable person in the company’s circumstances would not have entered into the transaction; and
4. What are the benefits and detriments to the parties to the transaction.

### What is a Transaction of a Company?

The Court has distinguished a transaction “ **of a company**” from a transaction “ **of the company**”.

In [_Kalls Enterprises Pty Ltd (In Liquidation) & Ors v Baloglow & Anor_ \[2007\] NSWCA 191](http://classic.austlii.edu.au/au/cases/nsw/NSWCA/2007/191.html) Ipp J agreeing with Giles JA said:

> _… the question whether a transaction is a transaction of a company depends on the nature and extent of involvement of the company in the transaction. A transaction may be “of” more than one company or party. The mere fact that a company is a party to a contract or contracts that form part of the transaction does not necessarily make the transaction “of” that company. Whether a company is so bound up in the transaction that it is a transaction “of” the company is a question of judgment dependent on fact and degree._

Then Basten JA agreeing with Giles JA went on to say:

> _A transaction “of” a particular company can be said to involve something more than the concept of a company being “party to” a transaction. It involves a different perspective. A sale may involve three companies, a vendor, a purchaser and a financier. Each is “party to” the transaction, but in order to characterise the transaction for the purposes of Pt 5.7B, one needs to identify “of” which company it is a transaction, so as to assess benefits for, detriments to, insolvency of and winding up of, that company._

Therefore, it may be possible that a transaction **of the company** may not be a transaction **of a company**.

This determination will rely on the facts of each particular case.

This distinction may, if successfully argued, could enable a party to the transaction (or transactions) to defeat the liquidator’s claim.

A great discussion on these points can be found in [_McCann, in the matter of Walton Construction (Qld) Pty Ltd (In Liq) v QHT Investments Pty Ltd_ \[2018\] FCA 1986](http://classic.austlii.edu.au/au/cases/cth/FCA/2018/1986.html).

### What does Uncommercial Mean?

A good starting-point, is that 588FB of the Corporations Act is used to recover undervalued transactions, or transactions where no consideration has been paid.

However, the Courts have found that both undervalued transactions have not been uncommercial, and that payment of full consideration have been uncommercial.

The Explanatory Memorandum for the [_Corporate Law Reform Bill 1992_ (Cth)](http://classic.austlii.edu.au/au/legis/cth/bill_em/clrb1992235/memo_0.html) said that the uncommercial transactions provision was to prevent companies:

> _disposing of assets or other resources through transactions which resulted in the recipient receiving a gift or obtaining a bargain of such magnitude that it could not be explained by normal commercial practice._

In [_Liquidators’ Avoidance of Uncommercial Transactions_ (1996) 70 ALJ 390](https://www.austlii.edu.au/cgi-bin/LawCite?cit=%281996%29+70+ALJ+390) Professor Keay said:

> _While not dealing exclusively with undervalue, undervalue is at the heart of the section, that is, if the company received less than what is reasonable from the transaction the liquidator may attack it._

The elements of an uncommercial transaction have been outlined in case law as essentially:

1. The wording of the legislation – the benefits to the company; and the detriment to the company; and the respective benefits to other parties; and any other relevant matter – are to be determined on an objective basis; and
2. The objective determination must include the actual knowledge of the controller of the debtor company; and
3. The recipient received a gift or obtained a bargain of such magnitude that it could not be explained by normal commercial practice; and/or
4. The consideration lacks commercial quality.

For more on this see [_Capital Finance Australia Limited v Tolcher_ \[2007\] FCAFC 185](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCAFC/2007/185.html).

### Whether a reasonable person would not have entered into the transaction?

Obviously, section 588FB of the Corporations Act posits an objective test.

A transaction of a company is an uncommercial transaction of the company if, and only if, it may be expected that a reasonable person in the company’s circumstances would not have entered into the transaction.

The Courts have determined that the reasonable assessment is based on:

1. The totality of the company’s circumstances at the time of the transaction; and
2. What knowledge the director or directors of the company ought to have known; and
3. The purpose of the transaction at the time of the transaction; and
4. The business relationship of the parties at the time of the transaction.

In [_Cussen & Ors v Sultan & Ors_ \[2009\] NSWSC 1114](http://classic.austlii.edu.au/au/cases/nsw/NSWSC/2009/1114.html) Nicholas J said:

> _… the court will look at the totality of the business relationship between the parties, and to what the parties under their relationship intended to effect, and how their intention was effected, in part or in whole, by the impugned transaction._

So, with this objective approach, the section also requires consideration of the benefits and detriments to the parties to the transaction.

### What are the benefits and detriments to the parties to the transaction?

The main consideration in 588FB of the Corporations Act is the benefits and detriments of the company and the benefits for other parties to the uncommercial transaction.

#### What is a Benefit?

For an uncommercial transaction, [section 9 of the Corporations Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html) says:

> _“ **benefit**” means any benefit, whether by way of payment of cash or otherwise._

The dictionary defines benefit to mean:

> _an advantage or profit gained from something; or receive an advantage or profit; or bring advantage to._

So following the definitions above, a benefit pursuant to 588FB of the Corporations Act will be an advantage or profit whether by way of payment of cash or otherwise.

#### What is a Detriment?

Unlike benefit, detriment is not defined in the Corporations Act.

The dictionary defines detriment to mean:

> _the state of being harmed or damaged; or a cause of harm or damage._

So, a detriment pursuant to 588FB of the Corporations Act will be commercial harm or damage, or harm or damage that can be assessed on a commercial basis.

## Does the Liquidator have an uncommercial transaction claim?

If the elements above are reasonably arguable by a liquidator, then the liquidator may have an uncommercial transaction claim against the other party or parties.

If so, then the transaction must have occurred within strict timeframes.

### Timeframes for Uncommercial Transactions Claims

The timeframes for uncommercial transactions are:

1. Two (2) years – for an uncommercial transaction claim; or
2. Four (4) years – if the uncommercial transaction included a related party; or
3. Ten (10) years – if it was made defeat, delay, or interfere with, the rights of creditors.

The transaction is an uncommercial transaction of the company and it was entered into, or an act was done for the purpose of giving effect to it, during the 2 years ending on the relation-back day.

Alternatively, if the other party is also a related entity of the company, then the insolvent uncommercial transaction was entered into, or an act was done for the purpose of giving effect to it during the 4 years ending on the relation-back day.

Lastly, if the company became a party to the transaction for the purpose of defeating, delaying, or interfering with, the rights of any or all of its creditors then the insolvent transaction was entered into, or an act was done for the purpose of giving effect to it during the 10 years ending on the relation-back day.

These timeframes raise some interesting questions, namely:

1. What is the relation-back day?
2. What is a related entity?

### What is the Relation Back Day?

[Section 91 of the Corporations Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s91.html) includes a table which says the relation-back day is either:

1. The date of the filing of the winding up application; or
2. The date the company resolves that it be wound up voluntarily; or
3. The date that the deed of company arrangement was executed.

Most commonly, the date of the winding up application.

### What is a Related Entity in uncommercial Transactions Claims?

A related entity is defined at [section 9 of the Corporations Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html) and includes (but not limited to):

1. A body corporate that is related to the first-mentioned body; and/or
2. A director or member of the body or of a related body corporate; and/or
3. A relative of a spouse of such a director or member; and/or
4. A relative of such a director or member.

## Examples of an Uncommercial Transactions Claim in Liquidation

Some examples of uncommercial transaction claims in liquidation include claims for:

1. The transfer of property of an insolvent company, for undervalued consideration or no consideration, to a related party of the insolvent company; and/or
2. Payments made by a company to a related entity satisfying the related entities liabilities;
3. The forgiveness of debts by a company for no commercial reason; and/or
4. Extravagant upfront payments for services provided by another party being of such a magnitude rendering payments inexplicable in normal commercial practice; and/or
5. The granting of security thereby turning an unsecured loan into a secured loan with no further consideration or commercial advantage; and/or
6. The undervalue transfer of shares of a corporate trustee limiting the trustees right of indemnity against trust assets.

The liquidator’s job is to realise as many assets, and recover as much money, as it can to pay company creditors.

This is understandable from an unpaid creditor’s perspective.

However, if you are the party (or the director of the party) to which the uncommercial transaction claim is directed then it may not seem very fair at all.

However, there are a number of defences and exceptions to uncommercial transaction claims.

## Defences to Uncommercial Transactions Claims

There are defences to uncommercial transaction claims.  They include:

1. The person received no benefit because of the transaction; or
2. The party entered into the transaction in good faith; and
3. At the time of entering into the transaction a reasonable creditor did not know, or ought not to suspect that the company was insolvent.

[Section 588FG of the Corporations Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588fg.html) prescribes transaction which are not voidable as against certain persons.

If the claim is made against a person other than a party to the transaction, then it is a defence under [588FG(1)](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588fg.html) if:

1. The person received no benefit because of the transaction; or
2. If there was a benefit the person received the benefit in good faith; and
3. At the time when the person received the benefit the person had no reasonable grounds for suspecting that the company was insolvent at that time or would become insolvent; and
4. A reasonable person in the person’s circumstances would have had no such grounds for so suspecting.

If the claim is made against a creditor if the transaction is not an unfair loan to the company, or an unreasonable director-related transaction of the company, then it is a defence under [588FG(2)](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588fg.html) if:

1. The person became a party to the transaction in good faith; and
2. At the time when the person became such a party the person had no reasonable grounds for suspecting that the company was insolvent at that time or would become insolvent; and
3. A reasonable person in the person’s circumstances would have had no such grounds for so suspecting; and
4. The person has provided valuable consideration under the transaction or has changed his, her or its position in reliance on the transaction.

Probably the most important of the above is proving that a creditor did not know, or ought to have known, that the company in liquidation was insolvent at the time of the transaction.

However, as well as the defences 588FG of the Corporations Act, the liquidator must ensure that the elements of the uncommercial transaction are made out.

## Elements of an Uncommercial Transactions

As outlined above, for a claim to be an uncommercial transaction claim, the liquidator must prove the elements of the uncommercial transaction.  These include:

1. There is a transaction of a company; and
2. There is a transaction with another party (or parties); and
3. A reasonable person in the company’s circumstances would not have entered into the transaction having regard to;
4. The benefits and detriments to the company and the other party (or parties).

If we can sufficiently argue that one or more of these elements cannot be made out, then the liquidator’s claim should fail.

For example, we can attempt to argue that:

1. There was no transaction as defined by the act; and/or
2. The transaction was not a transaction of a company; and/or
3. You were not a party to the transaction; and/or
4. It is reasonable that the company would have entered into the transaction; and/or
5. The balance of benefits and detriments to the company and the other party (or parties) swings in favour of the person whom the claim is made.

**If you have been contacted by a liquidator in relation to uncommercial transactions claims, you should contact an insolvency lawyer as soon as possible to attempt to defend the liquidator’s demand for money**

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## FAQ on Uncommercial Transactions Claims in Company Insolvency

Navigating the complexities of insolvency laws and understanding the intricacies of transaction claims can often be challenging.

This section is designed to provide clear answers to some of the most commonly asked questions about this topic.

Whether you’re a business owner, a creditor, or simply someone trying to grasp the concept, our aim is to simplify and demystify the subject for you.

### What are uncommercial transaction claims?

Uncommercial transaction claims refer to a type of voidable transaction in company insolvency. They occur when a company’s transaction doesn’t make commercial sense; specifically, if a reasonable person wouldn’t have entered the transaction based on its benefits and detriments to both parties.

### Where are uncommercial transaction claims defined?

They are defined in section 588FB of the Corporations Act 2001 (CTH).

### What is a voidable transaction in company insolvency?

A voidable transaction is one that the company has entered with a third party which can be nullified and recovered by the company’s liquidator when it’s in liquidation.

### Are there different types of voidable transactions?

Yes. Some examples include unfair preferences, uncommercial transactions, insolvent transactions, unfair loans to a company, and unreasonable director-related transactions.

### When can a transaction be avoided by a liquidator?

Transactions can be avoided under certain conditions. For instance, if it was an insolvent transaction made during specific timeframes (6 months, 2 years, 4 years, or even 10 years), based on the circumstances surrounding it.

### How does the Corporations Act define an uncommercial transaction?

An uncommercial transaction happens when a company’s transaction with another party wouldn’t have been entered into by a reasonable person considering the benefits and detriments to both parties involved.

### How do courts determine what constitutes a transaction “of a company”?

The nature and extent of a company’s involvement in the transaction are considered. A transaction can be associated with multiple parties or companies, but its linkage to a particular company depends on how deeply intertwined the company is with the transaction.

### What is the meaning of “uncommercial”?

While the term primarily addresses undervalued transactions or those without any consideration, it essentially covers any transaction that is so much of a bargain or gift that it deviates from standard commercial practice.

### Are there timeframes for uncommercial transaction claims?

Yes. The claims must be made within 2 years for general uncommercial transactions, 4 years if it involves a related party, and 10 years if the transaction aimed to undermine the rights of creditors.

### What is the “relation-back day”?

It’s a date referenced in the Corporations Act which can be the date of the winding up application, the date a company chooses to wind up voluntarily, or when a deed of company arrangement gets executed.

### Who is considered a related entity in uncommercial transaction claims?

The Corporations Act defines related entities to include bodies corporate related to the main body, its directors or members, or their relatives.

### Why do liquidators pursue uncommercial transaction claims?

Liquidators aim to recover as much money and assets as possible to pay off the company’s creditors. Pursuing uncommercial transactions can help maximize the funds available for distribution to creditors.

### If contacted by a liquidator about an uncommercial transaction claim, what should I do?

You should immediately seek advice from an insolvency lawyer to understand your rights and possibly defend against the liquidator’s demand for money.

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# Client not Paying Invoice? How to Recover the Debt

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## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| January 14, 2018

## Article Summary

If you have a client not paying invoice or invoices then there are a few things you can do:

1. Attempt to contact your client / customer and send reminder letters;
2. Send a letter of demand;
3. Commence legal proceedings;
4. Enforce your money order or judgment.

If the debt dispute cannot be resolved with negotiation then you will need to commence legal action to get an enforceable money order / judgment.

Once you have a judgment or an enforceable money order, there are a number of different enforcement options, they are commenced by:

1. Summoning the debtor to an enforcement hearing;
2. Apply to the Court for a number of different enforcement warrants;
3. Serve the debtor company with a statutory demand; and/or
4. Serve the personal debtor with a bankruptcy notice.

This article explains the above in a lot more detail below.

Table of Contents

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![client not paying invoice in queensland debt recovery lawyers](<Base64-Image-Removed>)Do you have a client not paying invoice or invoices?

If a customer refuses to pay an invoice or invoices, this could be a sign that they are not solvent.

If this is the case then it is important that you act quickly to recover the debt from this client.

If the debtor becomes bankrupt or goes into liquidation, and there is nothing payable, then you might lose the opportunity to recover that unpaid invoice.

Our [debt recovery lawyers](https://stonegatelegal.com.au/services/debt-disputes/) explains what to do when someone owes you money and refuses to pay an invoice.

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[GET A FREE FEE ESTIMATE TODAY](https://stonegatelegal.com.au/free-case-evaluation/)

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## Client not Paying Invoice

If you have a customer refusing to pay for work done, or services provided, then you may have to start your debt recovery process.

Your debt recovery process should look something like this:

1. Attempt to contact your client / customer and send reminder letters;
2. Send a [letter of demand](https://stonegatelegal.com.au/letter-of-demand/);
3. Commence [legal proceedings](https://stonegatelegal.com.au/services/debt-disputes/);
4. Enforce your money order or [judgment](https://stonegatelegal.com.au/enforcing-a-judgment/).

This article will break each of these steps down for you.

## The Warning Signs – Client not Paying Invoice

Firstly, it is important to notice the warning signs of a customer who might not pay the invoice when it becomes due and payable, they are:

1. The debtor might ask for cash discounts;
2. The debtor asks you for extensions in time – however some bigger clients (Govt departments for example) might need 30 or 60 days terms, as is their company policy;
3. The debtor wants to pay by cheque;
4. You hear that this debtor owes money to other business – this can occur a lot with a head contractor under a building contract, and its [subcontractors](https://stonegatelegal.com.au/subcontractors-charge-construction-debt/);
5. You have only received part-payments as against the debt, $50 here, $100 there;
6. Your debtor continually gives you excuses – “we’re waiting for a big contract to pay us” or “we’ve had problems with our accounting software” for example.

Of course, these things might be true!  However, in our experience these excuses are usually stalling tactics because your customer cannot afford to pay your invoice.  Further warning signs include a change in the customer’s behaviour, namely:

1. The debtor does not answer their phone and/or does not return your phone call;
2. The debtor starts becoming more aggressive, starts disputing the invoice some weeks or months after the work was completed; or
3. The debtor starts praising you without reason – possibly in an attempt to curry favour before they ask you for more time to pay;
4. The business premises are closed during business hours; and
5. The debtor rescheduled appointments or agreed payment dates.

Other excuses we see is that clients / customers feign personal problems or attempt to blame others for their inability to pay an invoice, such as:

1. The debtor claims to have marital problems; and/or health problems; and/or numerous other problems which they allege to be affecting their cash flow; or
2. The debtor claims that they are waiting to be paid for a “big job” or words to the same effect, and they have limited cash flow until they pay.

Sometimes however there are no warning signs at all.  If you have a client not paying invoice, or more than one invoice, then you will have to try to get your money from them.

## Attempt to Contact your Client / Customer and Send Reminder Letters

![unpaid invoices legal rights](<Base64-Image-Removed>)Before you engage a professional [debt recovery lawyer](https://stonegatelegal.com.au/debt-recovery-lawyer/), you should exhaust all avenues yourself first.

The general rule-of-thumb is:

1. Two (2) weeks overdue – Send polite reminder letters or emails – remember that they might be having genuine short term cash flow problems and you might want to retain them as a client in the future;
2. Two (2) to four (4) weeks overdue – Make personal contact by phone, address why your client not paying invoice – make a fixed time and date in which this invoice will be paid;
3. Four (4) to six (6) weeks overdue – Persistent following up with the client, strictly adhering to the time and date previously agreed to.

**TIP** – In these early stages, we give debtors an “ _out_”.  That is, we give them an excuse.  Something like, “ _you have not returned our client’s emails, maybe they have gone into your junk folder by mistake_”.

We do this so as not to embarrass the debtor during this initial contact, but now they know that the lawyers are involved.

The debtor can pretend it was just an accident, they save face and pay the invoice.  There is an old saying – “ _you catch more flies with honey than you do with vinegar_”.

In these early stages, unless you are getting rude, and uncooperative correspondence from your debtor, it is best to try to encourage debtors to pay.  Other options you can use to maximise your chances of recovery in these initial stages are:

1. Agree to set up recurring payments in a payment plan – get this in writing and signed by the debtor;
2. Be proactive with recovering this debt, set tasks in outlook, follow up as much as you are allowed in your State or Territory;
3. Contact the debtor as soon as they have missed payment – the more quickly you can jump on a client not paying invoice, the better chance you have of being successful.

However, in most cases the debtor is not having genuine cash flow problems, they are not genuinely embarrassed about not paying.  In these cases, you will have to take the next step, and send the debtor an official letter of demand.

## Send a Letter of Demand to Client not Paying Invoice

A [letter of demand](https://stonegatelegal.com.au/letter-of-demand/), or overdue payment letter for a client not paying invoice, states how much is owed, what for, and when the invoice needs to be paid.

It may also include a warning that you will consider legal action if the debt is not paid by a particular date.

We have written extensively about letter of demand on this site, read about our letter of demand here.

If you do not get any luck with a final notice or an official letter of demand then it is time to commence legal action to recover payment from a client not paying invoice or invoices.

## Commence Legal Proceedings

In Queensland, you have two main options to sue a client not paying invoice or invoices.  They are:

1. Commence proceedings in the [Queensland Civil and Administrative Tribunal (QCAT)](http://www.qcat.qld.gov.au/); or
2. Commence proceedings in the [Court with jurisdiction](http://www.courts.qld.gov.au/).

### Commence proceedings in QCAT

[QCAT](http://www.qcat.qld.gov.au/) has a minor civil dispute jurisdiction in relation to minor debt claims.

If you have a debt of up to $25,000.00 then you can commence proceedings in QCAT.

The advantages of commencing proceedings in QCAT are:

1. It is a lot less expensive than commencing in the [Court](http://www.courts.qld.gov.au/);
2. The process can be a lot quicker than the Court;
3. QCAT is designed for self-represented people.

The disadvantages of commencing proceedings in QCAT are:

1. The minor debt jurisdiction is mostly a no costs jurisdiction.  This means that you will generally not be able to recover your costs save for a few designated items;
2. Legal representatives do not have an automatic right of appearance.  This means that if you want debt recovery solicitors to appear at a QCAT hearing, you will need the leave of the tribunal, which is not always given;
3. The minor debt jurisdiction is capped at $25,000.00.

### Commence Proceedings in the Court

Alternatively, if you do not have the time to commence proceedings yourself, or you do not want to risk having to appear at the hearing unrepresented by a debt recovery solicitor, or your debt is for more than $25,000.00, or you don’t want to risk getting a non-typical result (as can happen in QCAT), then you should instruct a debt recovery lawyer to commence proceedings in the Court with jurisdiction.

The jurisdiction of the [Courts](http://www.courts.qld.gov.au/) are:

1. [Magistrates Court](http://www.courts.qld.gov.au/courts/magistrates-court) can hear claims of up to $150,000.00;
2. [District Court](http://www.courts.qld.gov.au/courts/district-court) can hear claims of up to $750,000.00;
3. [Supreme Court](http://www.courts.qld.gov.au/courts/supreme-court) can hear claims of over $750,000.00;

The advantages of commencing proceedings in the Court are:

1. It is a legal process, with judicial officers who understand the law.  It is less likely that you will get a non-typical result (as can happen in QCAT);
2. You can use debt recovery solicitors and barristers to maximise your chances of successfully obtaining your desired outcome;
3. You are able to claim costs, either standard costs or indemnity costs of commencing the proceeding.

The disadvantages of commencing proceedings in the Court are:

1. It is more expensive than [QCAT](http://www.qcat.qld.gov.au/);
2. It can take longer to reach your desired outcome.

Whatever you decide, whether you decide you commence proceedings to recover money from a client not paying invoice in QCAT or the Court, the desired outcome would be to get an enforceable money order.

## Getting a Judgment or Enforceable Money Order

There are a few different way in which you can get an enforceable money order.

Firstly, if you file a claim in the Court and serve it on the debtor, and the debtor does not file and serve a defence within twenty eight (28) days, then you can request that the Court give [judgment in default](https://stonegatelegal.com.au/enforcing-a-judgment/).

Secondly, if you file a claim in the Court and serve it on the debtor, and the debtor files a defence that has no prospects of success, then you may apply for summary judgment.

Lastly, if you file a claim in the Court and serve it on the debtor, and the debtor does defend the claim with some prima facie defence, then you may have to have a settlement conference, or a trial.

However the matter unfolds, the desired outcome of legal proceedings is to get an enforceable money order from the Court.

[Rule 793 of the _Uniform Civil Procedure Rules 1999_ (QLD)](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s793.html) (“ _**UCPR**_“) says:

> _“enforceable money order” , of a court, means:_
>
> _(a) a money order of the court; or_
>
> _(b) a money order of another court or tribunal filed or registered under an Act in the court for enforcement._

This means that if you get a judgment / money order in the Court, or you have registered your QCAT decision in the Court, and your debtor still refuses to pay, then you can commence enforcement proceedings to enforce the money order.

## Enforce your Money Order or Judgment

Once you have a judgment or an enforceable money order, there are a number of different enforcement options, they are commenced by:

1. Summoning the debtor to an [enforcement hearing](http://www.courts.qld.gov.au/going-to-court/money-disputes/enforcement-hearings);
2. Apply to the Court for a number of different [enforcement warrants](http://www.courts.qld.gov.au/going-to-court/money-disputes/enforcement-warrants);
3. Serve the debtor company with a [statutory demand](https://stonegatelegal.com.au/statutory-demand/); and/or
4. Serve the personal debtor with a [bankruptcy notice](https://stonegatelegal.com.au/bankruptcy/).

### Summoning the Debtor to an Enforcement Hearing

![customer refusing to pay for work done](<Base64-Image-Removed>)An [enforcement hearing](https://stonegatelegal.com.au/enforcement-hearing-statement-financial-position/) is an information gathering exercise in an attempt to uncover financial details of the debtor.

The debtor will have to complete a [Form 71 – Statement of Financial Position](http://www.courts.qld.gov.au/__data/assets/word_doc/0005/88421/form-071-statement-of-financial-position.doc) which is a complete ledger of the debtor’s assets and liabilities.

If the debtor does not provide you with this document within fourteen (14) days, or does not complete the document to your satisfaction, then you can apply to summon the debtor to appear at an enforcement hearing.

At the [enforcement hearing](https://stonegatelegal.com.au/enforcement-hearing-statement-financial-position/) the debtor can be questioned about their assets and liabilities, and examined in relation to its/his/her ability to pay.

You can force the debtor to provide you with documents and information in relation to:

1. Any assets including any real property, and personal property, and cars/boats/motorcycles, or any other property that can be seized and sold;
2. Any business or personal bank accounts;
3. Any debts that they owe, or that is/are owed to them;
4. Any income, and where the income comes from;
5. Any means of paying their debt to you – ability to borrow; or
6. Any other relevant information about their financial position.

If the debtor does not attend the enforcement hearing when summoned, you can ask the Court to issue an arrest warrant, where the debtor can be arrested and brought before the Court to attend the enforcement hearing.

If the hearing uncovers anything of value, which would satisfy the debt then you can apply for an enforcement warrant.

### Apply to the Court for Enforcement Warrants

There are a number of different enforcement warrants you can use, depending on the circumstances of your particular matter, they are:

1. Enforcement [Warrants for Seizure and Sale of Property](https://stonegatelegal.com.au/warrant-for-seizure-and-sale-of-property/);
2. Enforcement Warrants for [Redirection of Debts](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s828.html);
3. Enforcement [Warrants for Redirection of Earnings](https://stonegatelegal.com.au/enforcement-warrant-for-redirection-of-earnings/); and
4. Order for Payment of [Order Debt by Instalments](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s868.html).

For example, if the debtor has unencumbered real property or personal property, then you can apply to the Court for a warrant for seizure and sale.

If you get it, the [bailiff](https://www.google.com.au/search?q=bailiff) will attend at the address and repossess a car for example, then auction the vehicle to realise cash to pay the debtor’s debt to you.

If the debtor that you contracted with is a company (Pty Ltd), then you can enforce the judgment by serving the debtor with a [statutory demand](https://stonegatelegal.com.au/statutory-demand/).

### Serve the Debtor Company with a Statutory Demand

[![can i refuse to pay an invoice](<Base64-Image-Removed>)Serving a debtor with a statutory demand](https://stonegatelegal.com.au/statutory-demand-complete-guide/) is the first step in [winding a company](https://stonegatelegal.com.au/winding-up-a-company-that-owes-you-money/) up in insolvency.

A correctly drafted demand, correctly served, gives the debtor twenty one (21) days in which to pay the debt, or made payment arrangements suitable to the debtor, or apply to set the demand aside.

Failure to do so and the debtor company is presumed to be insolvent.  It is based upon the legal presumption of insolvency that you can apply to wind up the debtor company.

Whether you decide to wind the debtor company up or not, a statutory demand is a good way to start a dialogue with the debtor.  Especially if your debt is with a building and company for example, as the QBCC Act says that an insolvency could make the company an excluded company, and the directors, excluded individuals, for three (3) years.

At this stage, a debtor company may take steps to avoid being wound up, and may actually acknowledge their debt to you.

#### Choose a Statutory Demand Qld Services Below

| | |
| --- | --- |
| **STATUTORY DEMAND** | **SETTING ASIDE** |
| [Issuing Statutory Demands](https://stonegatelegal.com.au/statutory-demand/) | [Setting Aside Statutory Demands](https://stonegatelegal.com.au/setting-aside-statutory-demand/) |

### Serve the Debtor with a Bankruptcy Notice

Serving the debtor with a bankruptcy notice is the first step toward bankruptcy.

As with a statutory demand, [serving a debtor](https://stonegatelegal.com.au/substituted-service-of-a-creditors-petition/) (who is a natural person) with a bankruptcy notice gives them twenty one (21) days in which pay the debt, or make arrangements with you to pay the debt.

Failure to do so means that they have committed an act of bankruptcy, and a creditor is then able to present a creditor’s petition.

## Preventing Bad Debt from Occurring

Moving forward, if you can prevent bad debts from occurring in the first place, then you can save yourself a lot of time and money.  Some steps that you can do include:

1. Get paid for work upfront and/or take a deposit or progress payment;
2. Send the invoices right away as soon as the work has been done; or
3. Make the payment terms strictly cash on delivery (COD) and take a swipe of a card as security for the payment;
4. Talk to other business and see if they have had any bad dealings with this particular debtor, or pay the few dollars needed for a full credit check before offering credit.

This is not always possible, we understand that.  However, a correctly worded [contract or terms and conditions](https://stonegatelegal.com.au/debt-contract-credit-application/) in a credit application may help you recover your losses if you do have to commence proceedings.

## Increase your Chances of Getting a Successful Outcome

Don’t do any work or provide any goods to a company unless you have a legally enforceable contract in place.  This contract should clearly identify the following:

1. Payment Terms – Outline the total amount of days after being issued with the invoice that payment is to be made by.  Strictly 14 or 30 day terms are usual.
2. Payment Method – How the invoice can be paid, bank account details, EFTPOS details or bank cheque details, for example.
3. A Quote Outlining Goods and/or Services – take the time to be thorough with your quoting.  In contract law, this is usually your offer to be accepted. This will form part of the contract.

It is also advisable to have legally enforceable clauses in the event of a default, such as:

1. Default interest at an enforceable rate;
2. Costs on the indemnity basis for a default – this will help you in an application for costs;
3. Security for the debt – either a charging clause if allowable, and/or a charge under the Personal Property Securities Act (“PPSA”);
4. Director’s / Personal guarantees – this means you can sue the directors personally as well as the company.

If you have a client not paying invoice then the process to recover those funds are outlined above.

## Client not Paying Invoice Frequently Asked Questions

### How long can you be chased for a debt in Queensland?

[Section 10 of the _Limitation of Actions Act 1974_ (QLD)](https://www.legislation.qld.gov.au/view/pdf/2017-03-01/act-1974-075) says:

> _The following actions shall not be brought after the expiration of 6 years from the date on which the cause of action arose … an action founded on simple contract or quasi-contract_

However, [section 35(3) of the _Limitation of Actions Act 1974_ (QLD)](https://www.legislation.qld.gov.au/view/pdf/2017-03-01/act-1974-075) says:

> _Where a right of action has accrued to recover a debt or other liquidated pecuniary claim … and the person liable or accountable therefore acknowledges the claim or makes a payment in respect thereof, the right shall be deemed to have accrued on and not before the date of the acknowledgment or the last payment._

This means that the limitation period for being chased for a debt in Queensland is six (6) years from when the cause of action arose, unless the debtor makes a payment or acknowledges the debt.  If that happens then the six (6) year period starts again.

Read [How Long can a Debt be Chased in Australia?](https://stonegatelegal.com.au/how-long-can-debt-chased-australia/)

### What happens if you ignore a debt recovery lawyer?

If you ignore any calls for the repayment of debts then the action mentioned can be made against you.  Further, in some cases the debt may become part of your credit file and may affect your ability to get credit in the future.

If legal proceedings are commenced against you, and you continue to do nothing, then there is a real possibility that you will be made bankrupt or wound up in insolvency.

### What happens after a default judgment?

After the creditor is given judgment, they can commence enforcement proceedings against you.

Those enforcement proceedings can include an enforcement warrant or bankruptcy or could result in a debtor company being wound up.

### What should I do if a customer refuses to pay an invoice?

If a customer doesn’t pay an invoice, you can take several steps. Start by attempting to contact the customer and sending reminder letters or emails. If that doesn’t work, consider sending a formal letter of demand. If the debt remains unresolved, you might need to initiate legal proceedings or enforcement options.

### Can I take legal action if a customer doesn’t pay my invoice?

Yes, if a customer doesn’t pay your invoice, you can take legal action to recover the debt. This could involve initiating proceedings in a relevant court or tribunal, depending on the amount of the debt.

### What happens if I don’t pay an invoice for services rendered?

If you don’t pay an invoice for services rendered, the business or individual owed the payment might take legal action against you to recover the debt. This could result in enforcement measures such as seizing assets, redirection of debts, or bankruptcy proceedings.

### Is an unpaid invoice legally binding?

Yes, an unpaid invoice is typically considered a legally binding debt. If you have received goods or services and haven’t paid for them, the business providing those goods or services has the right to seek payment through legal means.

### What are the consequences of not paying an invoice?

Not paying an invoice can lead to legal action, including enforcement proceedings and potential bankruptcy. It can also damage your credit history and business relationships.

### Can I refuse to pay an invoice if I have issues with the service provided?

If you have legitimate concerns about the service provided, it’s important to communicate with the business to address those concerns. However, outright refusing to pay an invoice without addressing the issue could lead to legal action.

### How do I recover payment from a client who hasn’t paid an invoice?

If a client hasn’t paid an invoice, you can start by attempting to communicate and send reminders. If this doesn’t work, consider sending a formal letter of demand. If the debt remains unpaid, you might need to consider legal action to recover the amount owed.

### Can I take legal action for non-payment of invoices in small claims court?

Yes, you can take legal action for non-payment of invoices in small claims court. This can be an effective way to recover smaller debts without incurring the higher costs associated with larger court proceedings.

### What options do I have if a company won’t pay my invoice?

If a company refuses to pay your invoice, you can follow the steps mentioned in the article. Attempt to contact the company, send reminder letters, and consider legal action if necessary.

### How can I prevent bad debts from occurring in my business?

To prevent bad debts, consider requesting upfront payments, sending invoices promptly, and having clear payment terms and agreements. You can also conduct credit checks and communicate openly with your clients.

### What happens if a client refuses to pay for work done?

If a client refuses to pay for work done, you should follow a debt recovery process. Begin with communication and reminder letters. If necessary, send a formal letter of demand. If the debt remains unpaid, you might need to consider legal action to recover the owed amount.

### Can a customer be taken to court for not paying an invoice?

Yes, you can take a customer to court if they don’t pay an invoice. Legal action might involve initiating proceedings in a relevant court or tribunal to recover the outstanding debt.

### What steps can I take if a business is not paying my invoice?

If a business isn’t paying your invoice, start by contacting them and sending reminders. If this doesn’t work, consider sending a formal letter of demand. If necessary, you can initiate legal proceedings to recover the unpaid amount.

### What should I do if someone doesn’t pay me for a service I provided?

If someone doesn’t pay you for a service you provided, you can take steps to recover the payment. Start by attempting communication and sending reminders. If needed, send a letter of demand, and consider legal action if the debt remains unresolved.

### Can I refuse to pay an invoice if I’m dissatisfied with the work?

If you’re dissatisfied with the work, it’s important to address your concerns with the business. Refusing to pay without attempting to resolve the issue could lead to legal consequences.

### How long do I have to pursue legal action for unpaid invoices?

The time frame to pursue legal action for unpaid invoices can vary. In Queensland, for example, the Limitation of Actions Act allows actions for debt recovery within six years from the date the cause of action arose. Acknowledgment or payment by the debtor could reset the clock.

### What is a letter of demand, and when should I use it?

A letter of demand is a formal request for payment sent to a debtor. It outlines the amount owed, the reason for the debt, and a deadline for payment. It’s used when attempts at communication and reminders have been unsuccessful.

### What enforcement options are available for unpaid invoices?

There are several enforcement options for unpaid invoices, including summoning the debtor to an enforcement hearing, applying for enforcement warrants, serving a debtor company with a statutory demand, or serving a personal debtor with a bankruptcy notice.

### Can I take legal action against a client who refuses to pay for services rendered?

Yes, you can take legal action against a client who refuses to pay for services rendered. This might involve pursuing a court judgment to recover the unpaid amount.

### What happens if I don’t pay an invoice even after receiving a final notice?

If you don’t pay an invoice after receiving a final notice or letter of demand, the business may initiate legal action to recover the debt. This can lead to enforcement measures and potential legal consequences.

### What actions can I take if a client refuses to pay me for services rendered in Australia?

If a client in Australia refuses to pay for services rendered, you can follow a debt recovery process. Begin with communication and reminder letters. If necessary, escalate to a formal letter of demand and consider legal action if the debt remains unpaid.

### Can I take legal action if a customer doesn’t pay for goods or services they received?

Yes, you can take legal action if a customer doesn’t pay for goods or services they received. Legal steps may include sending letters of demand and initiating court proceedings to recover the outstanding debt.

### What happens if a customer doesn’t want to pay for a service provided?

If a customer doesn’t want to pay for a service provided, it’s important to communicate openly to understand their concerns. Addressing issues promptly can prevent further disputes and potential legal action.

### How do I recover payment from a client who hasn’t paid for products or services?

To recover payment from a client who hasn’t paid for products or services, begin by sending reminders and a formal letter of demand if needed. If the debt remains unresolved, consider legal action and enforcement measures.

### What are the steps for serving a debtor company with a statutory demand?

Serving a debtor company with a statutory demand is the first step towards winding up the company due to insolvency. It involves issuing a formal demand for payment, and if the debtor company doesn’t respond within a set period, legal action can be taken to wind up the company.

### Can legal action be taken if a client doesn’t pay even after an enforcement hearing?

Yes, if a client doesn’t pay even after an enforcement hearing, further legal action can be taken. Depending on the circumstances, enforcement warrants or other measures might be pursued to recover the debt.

### What are the potential consequences of not paying an invoice after legal action?

Not paying an invoice after legal action can lead to enforcement measures, including seizure of assets or bankruptcy. Additionally, your credit history and business reputation could be negatively affected.

### Can I dispute an invoice legally if I believe it’s incorrect?

Yes, you can dispute an invoice legally if you believe it’s incorrect. Contact the business and provide details of the dispute. It’s essential to communicate openly to resolve the issue and avoid potential legal action.

### What should I do if a company won’t pay my invoice and I’m a small business owner?

If a company won’t pay your invoice and you’re a small business owner, follow the debt recovery process outlined in the article. Attempt communication, send reminders, and consider legal action if necessary.

### Can a client be held responsible if they refuse to pay for services they received?

Yes, a client can be held responsible if they refuse to pay for services they received. If attempts at resolution fail, legal action might be necessary to recover the owed payment.

**DEDICATED FOCUS – FIXED & SCALE FEES – PROVEN RESULTS**

[GET A FREE FEE ESTIMATE TODAY](https://stonegatelegal.com.au/free-case-evaluation/)

**OR CALL: [1300 545 133](tel:1300545133) FOR A PHONE CONSULTATION**

![Picture of Wayne Davis](<Base64-Image-Removed>)

#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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#### [Statutory Demands in Construction – Complete Guide](https://stonegatelegal.com.au/statutory-demands-in-construction-complete-guide/)

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#### [Can You Serve a Statutory Demand by Email in Australia?](https://stonegatelegal.com.au/can-you-serve-a-statutory-demand-by-email-in-australia/)

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Copyright © 2023 [**Stonegate Legal**](https://stonegatelegal.com.au/) Pty Ltd – All Rights Reserved – Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732) \| [Terms](https://stonegatelegal.com.au/terms-and-conditions/) \|  [Privacy](https://stonegatelegal.com.au/privacy-policy/) \| [Sitemaps](https://stonegatelegal.com.au/sitemap_index.xml) \| [\*Conditions Apply](https://stonegatelegal.com.au/terms-and-conditions/)

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# Letter Of Demand

Stonegate Legal can help you by drafting a professional and effective letter of demand for money owed to you. This letter is an important step in attempting to resolve your debt recovery matter without investing the time and expense into commercial litigation or alternative dispute resolution.

[Download Letter Of Demand Template](https://stonegatelegal.com.au/letter-of-demand/#elementor-action%3Aaction%3Dpopup%3Aopen%26settings%3DeyJpZCI6IjE0MDQzIiwidG9nZ2xlIjpmYWxzZX0%3D)

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### Effective Debt Recovery Starts with a Letter of Demand

## Letter of Demand Lawyer

## What is a Letter of Demand?

When trying to recover a debt, sending a demand letter is a crucial first step before resorting to legal action. This letter includes details such as the amount owed, the reason for it, and the deadline for payment.

It may also contain a warning of potential legal consequences if the debt remains unpaid. The letter’s title, _“Letter of Demand,”_ emphasises the seriousness of the situation and serves as a warning for payment recovery.

In [Queensland Courts](https://www.courts.qld.gov.au/), it is advisable to send an open demand letter and a without prejudice letter of offer before initiating legal action. Our service can assist in drafting and sending these letters for a fixed fee, sending a strong message to the debtor that the creditor is committed to recovering the debt and will not write it off.

[Download Letter Of Demand Template](https://stonegatelegal.com.au/letter-of-demand/#elementor-action%3Aaction%3Dpopup%3Aopen%26settings%3DeyJpZCI6IjE0MDQzIiwidG9nZ2xlIjpmYWxzZX0%3D)

## Queensland Litigation & Dispute Lawyers

## Make Informed Decisions with Stonegate Legal

## Extensive Experience & Legal Knowledge

Our [debt recovery lawyers](https://stonegatelegal.com.au/services/debt-disputes/) have extensive experience in the field of debt recovery and understand the legal system. We can provide you with comprehensive advice on the most effective methods to recover your debt.

## Respectful & Professional Service

We understand that our clients may be dealing with difficult and stressful situations. Our lawyers will always provide respectful and professional service to ensure that your case is handled quickly, efficiently, and effectively.

## Tailored Solutions

Every debt recovery case is unique and requires an individual approach. Our lawyers will tailor a solution specific to your needs to ensure that you receive the best possible outcome.

## Letter Of Demand Lawyers QLD

### What To Include In Your Letter of Demand

[Does it include accurate information?](https://stonegatelegal.com.au/letter-of-demand/#collapse-c70abef687f05970546f)

When writing a letter to a debtor, it is crucial to ensure that no details are left out, as the debtor should not be able to claim that the letter is inaccurate or that there is a legitimate disagreement regarding its contents.

Additionally, it is essential to accurately identify the debtor in the letter, addressing it to the precise entity with whom you contracted or the entity that is truly responsible for the debt.

[Does the amount claimed include any extras?](https://stonegatelegal.com.au/letter-of-demand/#collapse-092b264687f05970546f)

To receive additional monetary benefits such as default interest or legal costs, it is important to make sure that your contract or terms and conditions allow for these claims. It is essential to review your contractual terms to determine if there are any provisions that allow for these claims.

[Does the letter of demand foreshadow legal action?](https://stonegatelegal.com.au/letter-of-demand/#collapse-eba8349687f05970546f)

In the request, it is necessary to include a brief statement regarding the lawful recourse available in case the debtor fails to make the payment.

The legal measures that can be taken may vary based on the amount owed and the party involved. It is crucial to avoid making any false claims or indicating any legal action that cannot be pursued under the law.

[Is it Businesslike?](https://stonegatelegal.com.au/letter-of-demand/#collapse-ddcf901687f05970546f)

A commercial document is what a demand represents. It is important to maintain a professional tone in a demand letter, even if the unpaid debts may feel like a personal matter, especially when you have had a positive relationship with the debtor in the past.

The letter should not be intimidating or threatening in any way and should only contain factual information related to the business at hand.

[Have you signed and dated the letter of demand?](https://stonegatelegal.com.au/letter-of-demand/#collapse-478192d687f05970546f)

It is important to make sure that the demand is dated on the same day it is sent and to remember to sign it. No information should be left out when fulfilling these requirements.

[Have you attached copies of and supporting documents?](https://stonegatelegal.com.au/letter-of-demand/#collapse-3f42c1d687f05970546f)

If necessary, all pertinent documents such as invoices, initial and follow-up notices for overdue payments, and any relevant correspondence via email, fax, or mail, as well as any agreements or guarantees from directors should be included.

![sgl](<Base64-Image-Removed>)

### Letter Of Demand Template

Take the first step towards debt recovery by downloading our free letter of demand template today. With Stonegate Legal's expertise at your fingertips, you can feel confident in your ability to recover what you're owed.

[Download Now](https://stonegatelegal.com.au/letter-of-demand/#elementor-action%3Aaction%3Dpopup%3Aopen%26settings%3DeyJpZCI6IjE0MDQzIiwidG9nZ2xlIjpmYWxzZX0%3D)

## Require A Letter of Demand?

We can draft and send your letter of demand fora fixed fee.  Alternatively, If you do not want to engage a lawyer yet, then download our letter of demand template and checklist.

[Download Template](https://stonegatelegal.com.au/letter-of-demand/#elementor-action%3Aaction%3Dpopup%3Aopen%26settings%3DeyJpZCI6IjE0MDQzIiwidG9nZ2xlIjpmYWxzZX0%3D)

[OR Call Now](tel:1300545133)

### Letter Of Demand Services

### Maximise Your Chances with a Drafted Letter of Demand from Stonegate Legal

If you want to send a letter regarding debt recovery, it’s better to get a fixed fee letter from a lawyer on their law firm letterhead instead of drafting it yourself or using a debt collector’s letter.

Our lawyers can draft a letter with a thorough understanding of the law and make legally enforceable claims. It’s important to engage a solicitor who specialises in debt recovery matters to ensure the best chance of success in court and to secure your costs. Spending a little now on a lawyer’s fee could make a big difference in getting paid and avoiding debt write-off.

![Man and Woman Leaning on Table Staring at White Board on Top of Table Having a Meeting](<Base64-Image-Removed>)

## Frequently Asked Questions

[What is a Letter of Demand?](https://stonegatelegal.com.au/letter-of-demand/#collapse-b0d504b687f05971727f)

A letter of demand is a demand for payment from a debtor or defendant. It is usually the first step in a legal dispute case. A letter of demand will outline the breaches of the law, foreshadow the legal action and consequences of not paying.

[What should I include in my letter of demand?](https://stonegatelegal.com.au/letter-of-demand/#collapse-4e10eba687f05971727f)

A letter of demand should include the basis of the contract / agreement, the factual background, the breaches of the agreement or the law, foreshadow the proposed legal action that you intend of taking, and the consequences of their actions. You should also include a time for compliance.

[How should I send my letter of demand?](https://stonegatelegal.com.au/letter-of-demand/#collapse-f591981687f05971727f)

It depends on the relationship between the parties. You can send by email, mail, express post, or you can engage a process server or field agent to hand deliver the letter.

[Can you ignore a demand letter?](https://stonegatelegal.com.au/letter-of-demand/#collapse-41ca6da687f05971727f)

Strictly speaking, yes. A letter of demand is simply a letter demanding that you do something. However, there will likely be serious consequences if you do not attempt to resolve the dispute. It is vital that you speak to a lawyer immediately upon receiving the letter.

[Can anyone write a letter of demand?](https://stonegatelegal.com.au/letter-of-demand/#collapse-e59eab1687f05971727f)

Yes. We even have a free letter of demand template on our website for you to draft and send your own letter of demand. However, a letter of demand from a lawyer will likely have more impact and may yield better results.

[When should I send a letter of demand?](https://stonegatelegal.com.au/letter-of-demand/#collapse-37fd65a687f05971727f)

If the letter of demand relates to a debt, then it should be sent as soon as the default happens, or the negotiations break down. The sooner you send the letter of demand the more likely you will be to recover the debt. The longer a debt is outstanding, the less likely it is to recover.

[What is the purpose of sending a letter of demand?](https://stonegatelegal.com.au/letter-of-demand/#collapse-0ecef68687f05971727f)

The purpose of sending a letter of demand is to put the debtor / defendant on notice that they are in breach, they are required to do something to remedy that breach, and that you intend to take legal steps to enforce your rights if they do not remedy the breach.

### Download A Demand Letter Template Now

Click the link below for a sample demand letter for money owed.  This demand template is just a free guide and should not be used in place of legal advice.  The sample letter format below is for informational purposes only and may not be relevant in your particular circumstances.  To be sure, let our lawyers draft it for you for a very reasonable fixed legal fee.

[Download Template](https://stonegatelegal.com.au/letter-of-demand/#elementor-action%3Aaction%3Dpopup%3Aopen%26settings%3DeyJpZCI6IjE0MDQzIiwidG9nZ2xlIjpmYWxzZX0%3D)

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At Stonegate Legal, client satisfaction is our top priority. We are proud to have served hundreds of clients who have had positive experiences working with us.

Copyright © 2023 [**Stonegate Legal**](https://stonegatelegal.com.au/) Pty Ltd – All Rights Reserved – Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732) \| [Terms](https://stonegatelegal.com.au/terms-and-conditions/) \|  [Privacy](https://stonegatelegal.com.au/privacy-policy/) \| [Sitemaps](https://stonegatelegal.com.au/sitemap_index.xml) \| [\*Conditions Apply](https://stonegatelegal.com.au/terms-and-conditions/)

## Letter Of Demand Template

If you do not want to engage a lawyer yet, then download our letter of demand template and checklist today!

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## Our Services

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Commercial Litigation

### [Statutory Demands in Construction – Complete Guide](https://stonegatelegal.com.au/statutory-demands-in-construction-complete-guide/)

Statutory Demands in Construction Statutory Demands in Construction – The risk of delayed or unpaid invoices is a persistent operational concern in the Australian construction

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Wayne Davis 12/07/2025

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### [Damages in Defamation Claims – Complete Guide](https://stonegatelegal.com.au/damages-in-defamation-claims-complete-guide/)

Damages in Defamation Claims Damages in defamation claims are monetary awards intended to compensate a plaintiff for harm to their reputation caused by a defamatory

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### [Extrinsic Evidence and the Parol Evidence Rule](https://stonegatelegal.com.au/extrinsic-evidence-and-the-parol-evidence-rule/)

Extrinsic Evidence and the Parol Evidence Rule Extrinsic evidence and the parol evidence rule in contract interpretation are fundamental to Australian contract law. When parties

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## Commencing Legal Proceedings
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# Commence Proceedings on a Person or Company

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## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| January 21, 2017

## Article Summary

In this article, our **[commercial litigation lawyers](https://stonegatelegal.com.au/services/commercial-litigation/)** outline the key methods for initiating legal proceedings against a person or company in Queensland, Australia. It highlights three primary avenues for action:

1. **Queensland Civil Administrative Tribunal (QCAT)**: Suitable for disputes involving fixed sums of up to $25,000, offering a cost-effective platform. Proceedings involve filing the necessary paperwork, serving it on the respondent, and possibly resolving the matter through mediation.
2. **Court with Jurisdiction**: Depending on the debt amount:
- Up to $150,000: Magistrates Court
- $150,000 to $750,000: District Court
- Over $750,000: Supreme Court

The process includes filing a Claim and Statement of Claim, serving it on the debtor, and potentially obtaining a default judgment if the debtor does not defend the claim.
3. **Statutory Demand**: Applicable for corporate debtors owing over $4,000. This step is usually recommended post-judgment, as pre-judgment demands can be set aside if there is a dispute about the debt or other valid reasons.

This article emphasises careful documentation and proper filing to ensure success in these proceedings, offering professional legal assistance to navigate these complexities effectively.

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![Commence Proceedings on a Person or Company Stonegate Legal](<Base64-Image-Removed>)Do you need to commence proceedings in Court or Tribunal?  There are three (3) main options to commence proceedings against a defendant:

1. Commence proceedings in the _Queensland Civil Administrative Tribunal_ (“QCAT”); and
2. Commence Proceedings in the Court with jurisdiction for [civil litigation](https://stonegatelegal.com.au/services/civil-litigation/) or [commercial litigation](https://stonegatelegal.com.au/services/commercial-litigation/); or
3. Serve a [statutory demand](https://stonegatelegal.com.au/statutory-demand/).

The purpose of commencing proceedings is to use legal remedies to recover the outstanding sum and/or to recover damages.

This article explains how to commence proceedings against a person or a company.

## Commence proceedings in the Queensland Civil Administrative Tribunal (“QCAT”)

[QCAT](http://www.qcat.qld.gov.au/about-qcat/contact-us) was established to ensure that people in Queensland have the ability to commence [small civil claims](https://stonegatelegal.com.au/small-claims-lawyers/), without having to pay costs which outweigh the benefit.

[QCAT](http://www.qcat.qld.gov.au/about-qcat/contact-us) has jurisdiction to hear debt disputes related to a fixed or agreed sum of money, valued up to and including $25,000.

Once the paperwork is completed and filed it is then served on the debtor.  When served with the stamped documents, the other party (called the respondent) may file a response.

If the debtor does not file a response then you may be awarded a decision in default, where the member at [QCAT](http://www.qcat.qld.gov.au/about-qcat/contact-us) orders the debtor to pay.

If the debtor does file a response, then all parties will then receive a notice to attend mediation including the date, time and location of mediation. The aim of mediation is to get all parties to reach an agreement.

It is vital that you submit your paperwork correctly and provide detailed supporting documentation.  We can guide you through completing your paperwork and collecting the supporting documentation.

[QCAT](http://www.qcat.qld.gov.au/about-qcat/contact-us) Filing fees are as follows:

| | |
| --- | --- |
| **Applications or referrals under:** | **Application fee** |
| **No amount claimed** | $111.30 |
| **Not more than $1,000** | $90.10 |
| **More than $1,000 but not more than $10,000** | $153.70 |
| **More than $10,000** | $379.50 |

However, these fees change so best to check out their website – [https://www.qcat.qld.gov.au/resources/fees-and-allowances](https://www.qcat.qld.gov.au/resources/fees-and-allowances)

### Step-by-Step Guide to Filing a Claim in QCAT

[Filing a claim in the Queensland Civil and Administrative Tribunal](https://stonegatelegal.com.au/qcat-applications/) (QCAT) is designed to be a straightforward and cost-effective process for resolving disputes under $25,000. The claimant, referred to as the “Applicant,” must ensure their claim is for a liquidated amount and complete the necessary documentation.

After filing, the claim is served on the “Respondent” either personally (for individuals) or via mail to the registered office (for companies). The Respondent has 28 days to either settle the debt or file a Form 7 Response.

If a Response is filed, QCAT schedules a mediation session where both parties discuss the matter with a mediator. Legal representation is generally not permitted during these sessions, emphasizing a self-representation approach to resolve the dispute amicably.

If mediation fails, the matter proceeds to a formal hearing where QCAT evaluates the claim and issues a decision.

In cases where the Respondent does not respond within 28 days, the Applicant can apply for a default decision. However, QCAT decisions are not enforceable judgments; to enforce a decision, the Applicant must have it registered as a judgment in the Magistrates Court.

This step allows for further enforcement actions like bankruptcy proceedings or enforcement warrants.

While QCAT offers an accessible and economical alternative to the Magistrates Court, Applicants must actively participate in hearings and address any disputes raised, as delays can occur if Respondents contest the claim.

## Commence Proceedings in the Court with Jurisdiction

Depending on the debt amount owing, you can start proceedings in the Magistrates Court, District Court or the Supreme Court.

The monetary jurisdictions are set out below:

| | |
| --- | --- |
| **Monetary Limit (amount of debt)** | **Court with Jurisdiction** |
| Up to $150,000.00 | Magistrates Court |
| $150,00.01 to $750,000.00 | District Court |
| Over $750,000.01 | Supreme Court |

In Queensland, [an action for debt recovery](https://stonegatelegal.com.au/legal-proceedings-for-debt-recovery/) is usually started by Claim.  A Claim and Statement of Claim is drafted, filed in the registry of the Court with jurisdiction, sealed (stamped with the Court’s seal) and then you will need to serve the debtor with a copy of the Clam.

Once the debtor is deemed served, they will have twenty eight (28) days in which to file and serve a Notice of Intention to Defend and a Defence.  If they do not file and serve a Notice of Intention to Defend and a Defence then you can apply for default judgment.

Providing the debtor has not defended the claim, [we can apply for default judgment](https://stonegatelegal.com.au/setting-aside-default-judgment/).  After you receive judgment in your favour, you have the ability to enforce that judgment against the debtor or debtors. We advise using [debt recovery solicitors](https://stonegatelegal.com.au/debt-recovery-solicitors/).

### Step-by-Step Guide to Filing a Claim in Court in Queensland

The litigation process in Queensland begins with the plaintiff filing a Claim and Statement of Claim in the court registry, detailing their demands and the facts supporting their case. These documents must be carefully drafted, as they form the foundation of the case.

Once served, the defendant has 28 days to file a Notice of Intention to Defend and submit a Defence, outlining their response to the plaintiff’s allegations.

The plaintiff may file a Reply to the Defence within 14 days, further clarifying their position.

The next stage is disclosure, where both parties share all relevant documents, either electronically or physically, ensuring transparency.

Before proceeding to trial, mediation offers a platform for negotiation and potential settlement under the guidance of legal representatives or a court order.

If the case remains unresolved, it moves to trial or hearing, where both parties present evidence and arguments before a judge or magistrate.

A judgment is then delivered based on the evidence and legal principles. This structured process underscores the importance of precision, organization, and expert legal support for an effective litigation strategy.

## Serve a Statutory Demand

If the debtor is a company, and the debt is more than $4,000.00 then you can serve the debtor with a [statutory demand](https://stonegatelegal.com.au/statutory-demand/).  In most cases, we would not recommend this until after you receive a judgment from a Court with jurisdiction.  The reason for this is that pre-judgment [statutory demand can easily be set aside](https://stonegatelegal.com.au/setting-aside-statutory-demand-complete-guide/).  All a company needs to do is show that:

1. There is a genuine dispute about the existence or amount of a debt; and/or
2. That the company has an offsetting claim; and/or
3. Because of a defect in the demand, substantial injustice will be caused unless the demand is set aside; and/or
4. There is some other reason why the demand should be [set aside](https://stonegatelegal.com.au/how-to-set-aside-a-default-judgment/).

Providing the debtor has not defended the claim, we can apply for default judgment.  After you receive judgment in your favour, you have the ability to [enforce that judgment](https://stonegatelegal.com.au/enforce-a-decision-from-qcat/) against the debtor or debtors.

## Understanding Your Legal Options in Queensland

Navigating legal disputes in Queensland requires understanding your options and choosing the most suitable course of action. Before initiating court proceedings, it is critical to evaluate whether you have a valid cause of action, the necessary standing, and sufficient evidence to support your case.

Additionally, ensure that your claim falls within the relevant limitation period, as failing to comply with these time limits can jeopardize your case.

[Alternative Dispute Resolution](https://stonegatelegal.com.au/alternative-dispute-resolution/) (ADR) methods, such as mediation, offer a cost-effective and less adversarial alternative to litigation, allowing parties to settle disputes amicably and avoid prolonged legal battles.

If court proceedings become necessary, the process typically involves filing a claim or application with detailed pleadings that outline the dispute’s core facts.

Depending on the nature and complexity of the case, pre-trial steps like disclosure and interlocutory applications may be required. Settlement offers can be made at any stage to expedite resolution, but parties must prepare thoroughly for trial if the dispute remains unresolved.

Understanding these procedural elements and potential outcomes is essential for effectively navigating the legal system and ensuring the best possible resolution.

## FAQs About Commencing Proceedings Against a Person or Company in Queensland

Navigating the legal process to commence proceedings against a person or company in Queensland can be complex and daunting.

This FAQ section provides clear and concise answers to common questions, helping you better understand your options, rights, and the steps involved in resolving disputes effectively.

### What is the purpose of commencing legal proceedings?

Legal proceedings aim to recover unpaid debts or damages through court or tribunal intervention. This process provides a formal avenue to resolve disputes and enforce legal rights. It often involves steps like filing claims, mediation, and possibly trial. Seeking legal advice ensures that proceedings are carried out correctly.

### What is QCAT, and when should I use it?

The Queensland Civil Administrative Tribunal (QCAT) is a cost-effective option for disputes involving sums up to $25,000. It handles small claims efficiently through a less formal mediation process. Parties represent themselves in QCAT, with legal representation generally not permitted. Mediation aims to achieve amicable resolutions before advancing to a hearing.

### What are the monetary limits for Queensland courts?

The Magistrates Court handles claims up to $150,000, while the District Court addresses cases between $150,001 and $750,000. For amounts exceeding $750,000, the matter is taken to the Supreme Court. Each court has its own procedural requirements, making legal guidance valuable.

### What is the process for filing a claim in QCAT?

The claimant must submit paperwork detailing the dispute and serve it on the respondent. The respondent has 28 days to settle the debt or respond. If mediation fails, the claim proceeds to a hearing where QCAT decides the outcome. Claims require proper documentation and adherence to tribunal rules.

### Can QCAT decisions be enforced directly?

No, QCAT decisions must be registered as a judgment in the Magistrates Court before enforcement. Once registered, enforcement actions like bankruptcy proceedings or writs of execution can be taken. This additional step makes enforcement legally binding. Professional assistance can streamline this process.

### What is a statutory demand, and when is it used?

A statutory demand is used to recover debts over $4,000 owed by a company. It is typically issued after obtaining a court judgment, as pre-judgment demands can be challenged. It forces the debtor to either pay the debt or risk insolvency proceedings. Proper drafting of the demand is critical to avoid disputes.

### What happens if the respondent does not respond to a claim?

If no response is filed within 28 days, the claimant can apply for a default decision or judgment. This outcome favours the claimant without requiring further hearings. The decision can then be registered for enforcement. Ensuring the correct service of the claim is essential for this process.

### What is involved in mediation?

Mediation is a facilitated negotiation aimed at resolving disputes amicably. A neutral mediator guides the parties in reaching a mutually acceptable agreement. It is less formal than court proceedings and often more cost-effective. Successful mediation avoids the need for a trial.

### Can a company dispute a statutory demand?

Yes, a company can challenge a statutory demand by demonstrating a genuine dispute or claiming an offsetting amount. Additionally, defects in the demand or substantial injustice can serve as grounds for setting it aside. Legal advice is crucial to counter or defend such claims effectively.

### What are the risks of litigation?

Litigation can involve significant time, costs, and uncertainty. Losing a case may result in an adverse costs order, requiring the losing party to pay the winner’s legal fees. Alternative dispute resolution methods like mediation can mitigate these risks. A careful assessment of the case’s merits is advisable.

### Can I recover my legal costs?

In Queensland, the general rule is that the losing party pays the winner’s legal costs. However, not all costs are recoverable, and the extent depends on the court or tribunal’s discretion. QCAT offers a lower-cost alternative but may not allow for comprehensive cost recovery. Consult legal counsel for clarity on costs.

### What are the requirements for serving a claim?

Claims must be served personally for individuals or via registered post to the registered office for companies. Proper service ensures the respondent is aware of the proceedings. Incorrect service can delay or nullify the process. Compliance with service rules is crucial for the claim’s validity.

### How is evidence handled in court proceedings?

Both parties must disclose all relevant documents to support their case. This transparency ensures fair proceedings and allows both sides to prepare adequately. Electronic disclosure is increasingly common to streamline processes. Proper documentation strengthens the case significantly.

### What are the benefits of alternative dispute resolution?

Alternative dispute resolution, such as mediation, saves time, costs, and stress compared to litigation. It fosters cooperative resolution, preserving relationships between parties. Courts often encourage or mandate ADR before trial. Exploring these avenues can yield favourable outcomes without prolonged legal battles.

### When should I seek legal advice for litigation?

Legal advice is essential when considering complex or high-value claims. An experienced lawyer ensures compliance with procedural rules, improves case presentation, and mitigates risks. Early legal guidance can clarify options like mediation, court claims, or statutory demands. Professional support enhances the chances of a successful resolution.

![Picture of Wayne Davis](<Base64-Image-Removed>)

#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

## NEWS & ARTICLES

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#### [Statutory Demands in Construction – Complete Guide](https://stonegatelegal.com.au/statutory-demands-in-construction-complete-guide/)

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#### [Damages in Defamation Claims – Complete Guide](https://stonegatelegal.com.au/damages-in-defamation-claims-complete-guide/)

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#### [Extrinsic Evidence and the Parol Evidence Rule](https://stonegatelegal.com.au/extrinsic-evidence-and-the-parol-evidence-rule/)

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#### [Can You Serve a Statutory Demand by Email in Australia?](https://stonegatelegal.com.au/can-you-serve-a-statutory-demand-by-email-in-australia/)

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## Credit Application Assistance
[Skip to content](https://stonegatelegal.com.au/debt-contract-credit-application/#content)

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# Contract & Credit Application

Stonegate Legal can assist your business by providing legal services to establish a credit application process and draft legally enforceable contracts for credit agreements with customers.

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## Legal Assistance for Credit Applications and Contracts

## Debt Contract Application

## How Stonegate Legal Can Help Your Business

If your business offers credit to customers, it’s essential to have a robust credit application process and legally enforceable contracts in place to protect your financial interests.

[Stonegate Legal](https://stonegatelegal.com.au/) provides legal assistance to establish credit application processes and draft contracts for credit agreements that are legally binding in the event of default. With extensive experience in debt recovery and credit enforcement, Stonegate Legal can help your business navigate the legal complexities of credit agreements and ensure that your contracts comply with relevant legislation.

By engaging the services of Stonegate Legal, your business can benefit from the peace of mind that comes with knowing that you have the necessary legal documentation in place to protect your interests.

[Contact Us Today](https://stonegatelegal.com.au/contact/)

## Credit Applications

## Credit Application Process

[Know who your customer is](https://stonegatelegal.com.au/debt-contract-credit-application/#collapse-c70abef687f03676e401)

Knowing your customer is of utmost importance. If your customer is an individual or a sole trader, it is recommended to conduct an ABN search to verify the provided details and confirm the ABN's active status.

In the case of a business name, it is advised to perform a business name search to reveal the legal entity behind the business, which could be a company.

If your customer is a company, then an [ASIC](https://asic.gov.au/) search should be carried out to obtain a current or historical extract, which will show the directors, company secretary, shareholders, and officeholders' addresses.

[Do a credit check](https://stonegatelegal.com.au/debt-contract-credit-application/#collapse-092b264687f03676e401)

After identifying the right entity, several reporting agencies can offer credit reports that reveal any payment defaults and legal measures taken to recover outstanding debts. It is advisable to conduct credit checks on the directors of a company as well.

[Ask for trade references](https://stonegatelegal.com.au/debt-contract-credit-application/#collapse-eba8349687f03676e401)

It is a typical practice to request trade references. Inquiring about two (2) or three (3) trade references from the customer can provide valuable insight into their past behaviour as a trade debtor. It is a reliable method to assess their creditworthiness.

[Perform other searches](https://stonegatelegal.com.au/debt-contract-credit-application/#collapse-ddcf901687f03676e401)

It is highly recommended to conduct additional searches in addition to the one mentioned earlier. A basic Google search can yield valuable information, and using quotation marks around the customer's name followed by a relevant keyword can improve the search results. In case the customer is a company, obtaining a recent extract from ASIC can provide significant insights about the company.

![sgl](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/04/sgl.jpg)

### Request a Free Consultation

Ready to establish a strong credit application process and legally enforceable contracts for your business? Contact Stonegate Legal today to discuss your needs and how we can help.

[Contact Us Today](https://stonegatelegal.com.au/contact/)

## Discuss You Case With A Trusted Lawyer

Let us be your strongest partner and trustworthy advisors. We can take you through the complex legal system while always protecting your best interests. Make the wise decision and join forces with us now.

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## Establishing a Credit Contract

Stonegate Legal can assist in drafting a balanced credit contract that safeguards the rights of the creditor. Our experienced lawyers can provide guidance on which clauses should be included in the credit contract to ensure its fairness and protect the creditor.

We will work with you to create a tailored credit contract that meets your business needs while complying with relevant legislation.

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No Obligation Case Evaluation

[Defining Default & Breach of Contract](https://stonegatelegal.com.au/debt-contract-credit-application/#collapse-c70abef687f03677c060)

In a credit contract, it is crucial to provide a clear explanation of the consequences of default and breach. Failure to comply with payment terms may be considered a breach, while default may occur seven days after the notice of breach is sent. It is imperative to accurately define these terms and other related concepts.

[Security for the Debt](https://stonegatelegal.com.au/debt-contract-credit-application/#collapse-092b264687f03677c060)

When drafting a credit agreement, it is essential to clearly outline the repercussions of failing to meet payment obligations, as this could be classified as a breach of contract.

Additionally, a default may be declared after the lapse of seven days following the delivery of a notice of breach. It is vital to accurately define these terms and other associated concepts.

[Personal Guarantees](https://stonegatelegal.com.au/debt-contract-credit-application/#collapse-eba8349687f03677c060)

When dealing with a customer who is a company, it is necessary to request personal or director's guarantees. This is because although a company may face insolvency, its directors could still possess enough funds to fulfil payment obligations.

Thus, it is crucial to have the directors personally assure the payment obligations of the company to ensure that if the company fails to pay the debt, the recovery can still be made from the directors directly.

[Legal & Debt Collection Costs Upon Default](https://stonegatelegal.com.au/debt-contract-credit-application/#collapse-c70abef687f03677d795)

If a contract does not specify or if a court does not award legal costs at the conclusion of a trial, a debtor is not legally required to pay for the expenses incurred in recovering a debt.

To recover as much of the legal fees as possible, a contract that explicitly permits the inclusion of legal and debt collection costs in the total debt amount is a smart option.

This provision also serves as a strong motivator for the debtor to pay their dues promptly, as they may face the burden of substantial legal fees on top of their debt.

[Default Interest](https://stonegatelegal.com.au/debt-contract-credit-application/#collapse-092b264687f03677d795)

Incorporating a default interest rate for all unpaid amounts is crucial when drafting a credit agreement. It enables the creditor to charge a higher interest rate on overdue payments.

However, it's essential to be cautious while drafting this clause to ensure it isn't considered a penalty and removed from the contract.

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# Our Team

Learn more about our experienced and dedicated lawyers who are committed to providing exceptional legal representation for wide range of disputes and conflicts.

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## OUR TEAM

## Meet Our Litigation Team

![Wayne Davis - Lawyer - Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/06/wayne.avif)

## Legal Practice Director / Principal Solicitor

## Wayne Davis

Wayne Davis is the principal solicitor, legal practice director of the firm, and leads the litigation team.  Wayne has an LLB, and GDLP and is admitted to the Supreme Court of Queensland and the High Court of Australia.  Wayne is a debt recovery, defamation, litigation, and insolvency professional.

Wayne is dedicated to achieving the best possible outcomes, whether through strategic negotiation, alternative dispute resolution, or courtroom advocacy. Wayne understand that every case is unique and takes a proactive approach to ensure your rights and interests are protected at every stage of the process.

### Education & Certifications

LLB – Bachelor of Laws, Graduate Diploma of Legal Practice (GDLP)

### Personal Quote

Don’t believe everything you think.

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/), [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/), [Commercial Lease Disputes](https://stonegatelegal.com.au/tag/commercial-lease-disputes/), [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/), [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/), [Debt Recovery/Collection](https://stonegatelegal.com.au/tag/debt-recovery-collection/), [Defamation Litigation](https://stonegatelegal.com.au/tag/defamation-litigation/), [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/), [Statutory Demands](https://stonegatelegal.com.au/tag/statutory-demands/), [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/), [Wills/Estate Litigation](https://stonegatelegal.com.au/tag/wills-estate-litigation/)

![Shania Bryan - Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/06/shania.avif)

## Solicitor

## Shania Bryan

Shania is a solicitor at Stonegate Legal, based in Queensland. After nearly two years with the firm, Shania recently transitioned into her solicitor role following her admission to the Supreme Court of Queensland in December 2024. She holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP). Shania practices predominantly in defamation law and handles a majority of the defamation matters here at Stonegate Legal.

Her focus is advising and representing clients in disputes involving reputational harm, online publications, and media content. Shania works closely with individuals and businesses to navigate the intricacies of defamation claims and achieve effective resolutions.

### Education & Certifications

Bachelor of Laws (LLB) and Graduate Diploma of Legal Practice (GDLP)

### Personal Quote

Every experience is a chance to deepen my knowledge and contribute to our team’s success, fostering a culture of continuous learning and support

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/), [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/), [Commercial Lease Disputes](https://stonegatelegal.com.au/tag/commercial-lease-disputes/), [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/), [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/), [Defamation Litigation](https://stonegatelegal.com.au/tag/defamation-litigation/), [Wills/Estate Litigation](https://stonegatelegal.com.au/tag/wills-estate-litigation/)

![Kirsty Walker - Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/12/Kirsty-Walker-Stonegate-Legal-scaled-1-1024x1024.jpg)

## Solicitor

## Kirsty Walker

Kirsty has come into the legal profession later in life, having been a primary school teacher for 24 years. Her interest in the law stemmed from running a small construction company. After self-representing against debtors, she came to value the ability of the law to assist contractors in David and Goliath situations. Kirsty is admitted to the Supreme Court of Queensland and the High Court of Australia.

### Education & Certifications

Bachelor of Law (First Class Honours), Graduate Diploma Legal Practice, Bachelor of Criminology, and Justice Bachelor of Education (Primary), Certificate IV Small Business Management

### Personal Quote

Always pray to have eyes that see the best, a heart that forgives the worst, a mind that forgets the bad, and a soul that never loses faith.

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/), [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/), [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/), [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/), [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/)

![Laylah Toovey - Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/06/laylah.avif)

## Law Graduate / Paralegal

## Laylah Toovey

Laylah completed her Bachelor of Laws with Honours at the University of the Sunshine Coast and is currently undertaking her graduate diploma of legal practice at the College of Law. I have worked with Stonegate Legal since 2021, and within this time, she acquired a broad range of knowledge and experience across a diverse range of matters.

Laylah’s approach is centered on understanding your unique circumstances, protecting your interests, and advocating for the best possible outcome. Whether you’re facing commercial disputes, debt disputes, contract issues, or other contentious matters, Laylah and the team are here to guide you every step of the way.

### Education & Certifications

Bachelor of Laws

### Personal Quote

I am dedicated to supporting our senior team members, and achieving positive results for our clients

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/), [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/), [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/), [Debt Recovery/Collection](https://stonegatelegal.com.au/tag/debt-recovery-collection/), [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/), [Statutory Demands](https://stonegatelegal.com.au/tag/statutory-demands/), [Wills/Estate Litigation](https://stonegatelegal.com.au/tag/wills-estate-litigation/)

![Stacey Harvey Paralegal - Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/06/20250624-Stonegate-Legal-13-1024x1024.jpg)

## Senior Paralegal

## Stacey Harvey

Stacey has been a part of the team at Stonegate Legal since 2022 but has worked in the industry for over 20 years, having extensive knowledge of the legal processes in Australia and specializing in debt recovery claims, default judgments, enforcement action, and bankruptcy.

Stacey spent a large portion of her career as a senior paralegal responsible for the performance and management of a team of paralegals and an administration department for many years.  During the first 18 years, she worked for one of Brisbane’s largest debt collection companies, where she managed large portfolios of debt for councils, schools, government departments, and insurance companies, along with debt purchased from various banks, utilities, and other credit providers.

### Education & Certifications

Justice of the Peace, Certificate III in Office Business Administration

### Personal Quote

Stay positive, work hard, make it happen.

## Areas of Interest

### [Commercial Lease Disputes](https://stonegatelegal.com.au/tag/commercial-lease-disputes/), [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/), [Debt Recovery/Collection](https://stonegatelegal.com.au/tag/debt-recovery-collection/), [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/), [Statutory Demands](https://stonegatelegal.com.au/tag/statutory-demands/), [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/)

![Caterine Molini - Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/06/20241210-Stonegate-Legal-101-1-scaled-1-1024x1024.jpg)

## Law Graduate / Paralegal

## Caterine Molini

Caterine holds a law degree and passed the bar exam in 2011, practicing as a lawyer in Brazil until 2018. She also completed a postgraduate qualification in environmental law. Caterine holds a Certificate IV and a Diploma in Leadership and Management from Australia.

With 12 years of experience in civil litigation, insurance, and building and construction, Caterine spent six years leading a team to negotiate major agreements with insurance companies. She worked closely with engineers to ensure construction projects met environmental regulations, and she advocated for clear contracts to prevent issues and avoid costly litigation.

She is excited to be working towards admission as a Solicitor in Australia.

### Education & Certifications

Bachelor of Law (Brazil)

### Personal Quote

You are the size of your dreams. Dream big. Play smart, not hard.

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/), [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/), [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/), [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/), [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/), [insurance disputes](https://stonegatelegal.com.au/tag/insurance-disputes/), [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/)

![Bridgette Nulley - Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/06/bridgette.avif)

## Receptionist

## Bridgette Nulley

Bridgette has been serving as a receptionist at Stonegate Legal since 2023. Leveraging her administrative and customer service background, her primary objective is to craft a positive and seamless client experience from start to finish.

Beyond her front desk responsibilities, she finds fulfillment in supporting our legal team, ensuring they can concentrate on achieving optimal outcomes for all our clients’ matters.

From the moment you contact our office, Bridgette & our reception team are here to make your experience seamless and stress-free. They are skilled at managing inquiries, scheduling appointments, and creating a welcoming environment for all our clients.

### Personal Quote

When we strive to become better than we are, everything around us becomes better too.

![Chantelle Gill - Receptionist and Paralegal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/06/20250624-Stonegate-Legal-59-1024x1024.jpg)

## Paralegal / Receptionist

## Chantelle Gill

Chantelle is a paralegal and receptionist at Stonegate Legal. She supports the legal team and ensures the smooth operation of the office.

Chantelle’s role as a paralegal, is to assist solicitors by conducting legal research, preparing, and organising documents, and managing case files. Her work helps streamline legal processes and ensures that matters are handled efficiently and thoroughly.

As a receptionist, Chantelle draws on her strong customer service and administrative skills to provide reliable front-line support to clients and colleagues. She takes pride in creating a professional and welcoming environment, contributing to a positive client experience from the moment they walk through the door.

Chantelle’s strong organisational skills allow to effectively manage multiple tasks and priorities, enabling the Stonegate Legal team to focus on achieving the best outcomes for our clients.

### Education & Certifications

Diploma of Crime and Justice, Justice of the Peace (Qualified)

### Personal Quote

Live every day to the fullest

![](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/06/20250624-Stonegate-Legal-3-1024x1024.jpg)

## Office Manager / Accounts

## Chrissy Davis

Chrissy has over 25 years of experience in customer service and prides herself on exceeding customer expectations and being highly organised. She enjoys working in our Sunshine Coast office and learning something new daily.

Behind the scenes, Chrissy & our support staff work diligently to keep the wheels turning. From preparing documents to coordinating schedules, their attention to detail and commitment to excellence ensures our lawyers have everything they need to focus on your case.

### Personal Quote

Every day is different I love that whatever I do today while, sometimes “automated” , can be very interesting and something I have never done before. Every day I try to remember to be grateful for my life and remember to pay it forward where I can.

![](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2025/06/20250624-Stonegate-Legal-40-1024x1024.jpg)

## Paralegal

## Maddison Payne

Maddi is an emerging legal professional currently undertaking a Bachelor of Laws with Honours at Queensland University of Technology (QUT), where she is committed to excelling both academically and professionally.

At the outset of her career, Maddi applies a methodical and research-oriented approach to all aspects of legal support, ensuring thorough case preparation and a deep understanding of legal procedures. Her dedication to both her studies and her work is reflected in her meticulous attention to detail and her drive for delivering high-quality results.

Maddi is committed to providing valuable and effective support to our senior legal team, leveraging her academic foundation and professional skills to assist on complex cases with accuracy and integrity. With a keen interest and focus for matters concerning defamation, corporate litigation, professional negligence, corporate disputes, and commercial litigation, she is driven to developing a comprehensive understanding of law that underpins her work as a paralegal and future prospects of becoming a lawyer.

### Education & Certifications

Bachelor of Laws LLB (Honours) (completing), Diploma of Business BSB (Communications & Media)

### Personal Quote

Keep your concentration here and now where it belongs. Be mindful of the future, but not at the expense of the moment.

## Areas of Interest

### [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/), [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/), [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/), [Defamation Litigation](https://stonegatelegal.com.au/tag/defamation-litigation/)

## Litigation & Dispute Resolution

## Discuss Your Case Today

You’ll get a no-fee, no-obligation 30 minute consultation.

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## Quick Links

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Individual liability limited by a scheme approved under professional standards legislation.

## Litigation Services

- [Commercial Litigation](https://stonegatelegal.com.au/services/commercial-litigation/)
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- [Debt Recovery Lawyers](https://stonegatelegal.com.au/services/debt-recovery-lawyers/)
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- [Statutory Demands](https://stonegatelegal.com.au/statutory-demand/)
- [Bankruptcy Lawyers](https://stonegatelegal.com.au/bankruptcy/)
- [Drafting Credit Contracts](https://stonegatelegal.com.au/debt-contract-credit-application/)

- Office Hours

Monday – Friday

8:30 AM – 5:00 PM

- Brisbane City

[Level 10/ 95 North Quay,](https://maps.app.goo.gl/YdLbTuKmnziFrQDv5)

[Brisbane City, QLD 4000](https://maps.app.goo.gl/YdLbTuKmnziFrQDv5) – (appointment only)

- [07 3180 0143](tel:0731800143)

- Sunshine Coast - Main Office

[4/57-59 Mary Street,](https://maps.app.goo.gl/Suo6oYWeRohEDEBWA)

[Noosaville, QLD 4566](https://maps.app.goo.gl/Suo6oYWeRohEDEBWA)

- [07 5346 0366](tel:0753460366)

At Stonegate Legal, client satisfaction is our top priority. We are proud to have served hundreds of clients who have had positive experiences working with us.

Copyright © 2023 [**Stonegate Legal**](https://stonegatelegal.com.au/) Pty Ltd – All Rights Reserved – Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732) \| [Terms](https://stonegatelegal.com.au/terms-and-conditions/) \|  [Privacy](https://stonegatelegal.com.au/privacy-policy/) \| [Sitemaps](https://stonegatelegal.com.au/sitemap_index.xml) \| [\*Conditions Apply](https://stonegatelegal.com.au/terms-and-conditions/)

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[Insolvency Law](https://stonegatelegal.com.au/services/insolvency/)

[Statutory Demands](https://stonegatelegal.com.au/statutory-demand/)

## [News & Blogs](https://stonegatelegal.com.au/news-articles/)

## [Contact Us](https://stonegatelegal.com.au/contact/)

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## Laylah Toovey - Legal Expert
[Skip to content](https://stonegatelegal.com.au/team-member/laylah-toovey/#content)

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[1300 545 133](tel:1300%20545%20133)

[Contact Us](https://stonegatelegal.com.au/contact/)

# Laylah Toovey

Laylah completed her Bachelor of Laws with Honours at the University of the Sunshine Coast and is currently undertaking her graduate diploma of legal practice at the College of Law. I have worked with Stonegate Legal since 2021, and within this time, she acquired a broad range of knowledge and experience across a diverse range of matters.

Laylah’s approach is centered on understanding your unique circumstances, protecting your interests, and advocating for the best possible outcome. Whether you’re facing commercial disputes, debt disputes, contract issues, or other contentious matters, Laylah and the team are here to guide you every step of the way.

Tagged [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/), [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/), [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/), [Debt Recovery/Collection](https://stonegatelegal.com.au/tag/debt-recovery-collection/), [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/), [Statutory Demands](https://stonegatelegal.com.au/tag/statutory-demands/), [Wills/Estate Litigation](https://stonegatelegal.com.au/tag/wills-estate-litigation/)

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## Quick Links

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Individual liability limited by a scheme approved under professional standards legislation.

## Litigation Services

- [Commercial Litigation](https://stonegatelegal.com.au/services/commercial-litigation/)
- [Building & Construction Disputes](https://stonegatelegal.com.au/services/building-and-construction-lawyers/)
- [Debt Recovery Lawyers](https://stonegatelegal.com.au/services/debt-recovery-lawyers/)
- [Civil / PersonalLitigation](https://stonegatelegal.com.au/services/civil-litigation/)
- [Tax Debt Disputes](https://stonegatelegal.com.au/services/tax-debt-lawyers/)
- [Corporations Disputes](https://stonegatelegal.com.au/services/corporations-dispute-lawyer/)
- [Body Corporate Debt Recovery](https://stonegatelegal.com.au/services/body-corporate-debt-recovery/)
- [Commercial Lease Disputes](https://stonegatelegal.com.au/services/commercial-lease-disputes/)
- [Defamation Litigation](https://stonegatelegal.com.au/services/defamation-lawyers/)
- [Wills & Estates Litigation](https://stonegatelegal.com.au/services/estate-litigation-lawyers/)
- [Insolvency Lawyers](https://stonegatelegal.com.au/services/insolvency/)
- [Letters of Demand](https://stonegatelegal.com.au/letter-of-demand/)
- [Statutory Demands](https://stonegatelegal.com.au/statutory-demand/)
- [Bankruptcy Lawyers](https://stonegatelegal.com.au/bankruptcy/)
- [Drafting Credit Contracts](https://stonegatelegal.com.au/debt-contract-credit-application/)

- Office Hours

Monday – Friday

8:30 AM – 5:00 PM

- Brisbane City

[Level 10/ 95 North Quay,](https://maps.app.goo.gl/YdLbTuKmnziFrQDv5)

[Brisbane City, QLD 4000](https://maps.app.goo.gl/YdLbTuKmnziFrQDv5) – (appointment only)

- [07 3180 0143](tel:0731800143)

- Sunshine Coast - Main Office

[4/57-59 Mary Street,](https://maps.app.goo.gl/Suo6oYWeRohEDEBWA)

[Noosaville, QLD 4566](https://maps.app.goo.gl/Suo6oYWeRohEDEBWA)

- [07 5346 0366](tel:0753460366)

At Stonegate Legal, client satisfaction is our top priority. We are proud to have served hundreds of clients who have had positive experiences working with us.

Copyright © 2023 [**Stonegate Legal**](https://stonegatelegal.com.au/) Pty Ltd – All Rights Reserved – Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732) \| [Terms](https://stonegatelegal.com.au/terms-and-conditions/) \|  [Privacy](https://stonegatelegal.com.au/privacy-policy/) \| [Sitemaps](https://stonegatelegal.com.au/sitemap_index.xml) \| [\*Conditions Apply](https://stonegatelegal.com.au/terms-and-conditions/)

## Copyright in Building Plans
[Skip to content](https://stonegatelegal.com.au/copyright-in-building-plans-after-termination-of-building-contract/#content)

[![Stonegate Legal Logo](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/Group-39.png)](https://stonegatelegal.com.au/)

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[Contact Us](https://stonegatelegal.com.au/contact/)

# Copyright in Building Plans after Termination of Building Contract

[Discuss Your Case Today](https://stonegatelegal.com.au/contact/)

## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| August 14, 2022

## Article Summary

Express License – If you have an express term in your contract in relation to copyright in building plans which allows for a license for a fee, then as long as you pay this fee you can use the building plans, even if the builder gets grumpy and says that you cannot.

Implied License – If you do not have an express term in your contract in relation to copyright in building plans, then you will have an implied license to use the building plans, so long as you have paid the builder a fee for the building plans.

Scope of License – The scope of an implied license is limited to the house you were wanting to build, on the land you wanted to build on, substantially in accordance with the residential building contract.

Express Prohibition – If there is an express term in your contract in relation to copyright in building plans which states that you cannot have a license or any right to use the building plans after termination, then it is unlikely that you will have a legal right, and you might be subject to copyright infringement proceedings.

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![Copyright in Building Plans after Termination of the Building Contract](<Base64-Image-Removed>)What happens to the copyright in building plans after termination of the residential building contract?

A question that we get asked a lot is if an owner can use the building plans after termination of the residential building contract.

In most building contracts, the copyright remains with the builder or building company after termination.  A building contract will usually have a clause which says something like:

> _Where the builder creates the plans, the owner agrees that the builder retains copyright in those plans.  The builder may grant a licence to the owner to use those plans._

We see less reputable builders saying things like “ _we retain copyright_” or “ _you are not allowed to use our plans_”, or words to that effect.  But this may not be true.

So, what does copyright mean, and does a license to use those plans exist after termination of the residential building contract?

Stonegate Legal were involved in a matter like this – [_DSGN Kartell Pty Ltd v Pathmaperuma; DSGN Kartell Pty Ltd v Hennig Bros Construction Pty Ltd; DSGN Kartell Pty Ltd v Craig Russell Stranger_ \[2020\] QCAT 211](https://www.queenslandjudgments.com.au/caselaw/qcat/2020/211) where we acted for owners in a failed claim by DSGN Kartell Pty Ltd to claim copyright infringement in QCAT’s building and construction jurisdiction.

In this article our [building and construction lawyers](https://stonegatelegal.com.au/services/building-and-construction-lawyers/) explain copyright, and the case law around licensing and the use of building plans.

**Contact our building and construction lawyers for advice and assistance on express or implied copyright in building plans after the termination of the residential building contract**

[CONTACT A CONSTRUCTION LAWYER TODAY](https://stonegatelegal.com.au/contact-stonegate-legal/)

**OR CALL: [1300 545 133](tel:1300545133) FOR A FREE PHONE CONSULTATION**

## What is Copyright?

This article is not really about copyright per se, but a brief definition may be required to put the rest of the article into context.

Very simply put, copyright is a collection of legal rights that a person has over artistic or creative works such as computer programs, books, films, music, sound recordings, text, and of course building & architectural plans.

The main right which subsists in copyright is the “right” to controls who can “copy” or reproduce their artistic works, who can use the copyrighted material.

[Copyright protection in Australia](https://stonegatelegal.com.au/who-owns-the-copyright-in-a-tattoo/) is automatic and exists as soon as the works are created (written down, recorded, etc). There is no need to register copyright as you would say a trademark.

Copyright law in Australia is prescribed by the [_Copyright Act_ 1968](http://www5.austlii.edu.au/au/legis/cth/consol_act/ca1968133/).

## What is a Copyright License?

A copyright license is one way that a copyright owner grants permission for the artistic works to be used and commercialised.

A good example of this would be [Netflix](https://www.netflix.com/au/).  Netflix is a streaming service and does not own the copyright to a lot of the movies/tv shows on their service.  They license the protected material from the copyright owners.

There are different types of licences can allow a person to use material that is protected by copyright, which includes the following:

1. A copyright licence granted by the t’s & c’s on a website.
2. A copyright license for open-source content.
3. A direct copyright licence.
4. A license for commercial use of copyright.
5. A statutory copyright licence.

In most residential building and construction contracts there will be a clause in relation to the ownership of copyright and the licensing rights.

A license in copyright is essentially the permission or consent to use artistic works (drawings and building plans) in which copyright exists.

In [_Computermate Products (Aust) Pty Ltd v Ozi-Soft Pty Ltd_ (1988) 20 FCR 46](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/1988/383.html), Sheppard, Spender and Gummow JJ said:

> _the expression “without the licence of the owner of the copyright” in s. 37 was simply a reference to the absence of the owner’s “consent” or “permission” or “licence” as interchangeable terms._

In [_Hardingham v RP Data Pty Limited_ \[2019\] FCA 2075](http://classic.austlii.edu.au/au/cases/cth/FCA/2019/2075.html), Thawley J considered the authorities in relation to copyright licenses and said:

> _A licence of copyright might be granted expressly. It might be granted wholly in writing, wholly orally, or partly in writing and partly orally … A licence might also be implied into a contract which is otherwise in writing or oral. The implication might arise in a number of ways. It might arise by implication from what was expressly agreed or from the nature of the contract as expressed in the words of the contract or from usage or from considerations of business efficacy._

However, these will apply when the contract is alive and on-foot.  But what does the law say about the copyright after the [termination of the residential building contract](https://stonegatelegal.com.au/terminating-a-residential-building-contract-in-queensland/)?

## Copyright in Building Plans after Termination

In relation to the copyright in building plans and architectural plans, there are few things to consider:

1. What does the contract say about copyright in building plans?
2. What does the legislation say about copyright in building plans?
3. What do the cases say about copyright in building plans?

This article will discuss each of those issues in turn.

### What does the contract say about copyright in building plans?

In most building contracts there will be a clause which talks about licensing of the plans.

This can include something along the lines of:

> _The owner and the builder agree that the price for a copyright licence is 5% of the contract price. The contract price includes the copyright licence fee._
>
> _If the owner uses the plans without the builder’s consent, the owner must pay to the builder the licence fee above._

Therefore, the license fee is included in your residential building contract and represents a certain percentage of the building price in the contract.

It is important to check the contract before terminating if you want to use the plans with another builder.  You may have to pay for the right to use those plans.

But what does the legislation say about copyright in building plans?

### What does the legislation say about copyright in building plans?

The terms “ _artistic work_” and “ _drawing_” are defined in [section 10 of the _Copyright Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca1968133/s10.html).

An artistic work is defined as:

> _“Artistic work” means (a) a painting, sculpture, **drawing**, engraving or photograph, whether the work is of artistic quality or not_

Drawing is defined as:

> _“Drawing” includes a diagram, map, chart or **plan**._

[Section 32 of the _Copyright Act_](http://www5.austlii.edu.au/au/legis/cth/consol_act/ca1968133/s32.html) says that copyright exists in unpublished artistic works:

> _(1)  Subject to this Act, copyright subsists in an original literary, dramatic, musical or artistic work that is unpublished and of which the author:_
>
> _(a)  was a qualified person at the time when the work was made; or_
>
> _(b)  if the making of the work extended over a period–was a qualified person for a substantial part of that period._

So, the Copyright Act does include building plans as artistic works, and whether published or unpublished, copyright exists in those plans.

So, what do the cases say about copyright in building plans?

### What do the cases say about copyright in building plans?

A good starting point is the New South Wales Supreme Court case of [_Beck v Montana Constructions Pty Ltd_ \[1964-5\] NSWR 229](https://nswlr.com.au/view-pdf/1964-5-NSWR-229), where the Jacobs J said:

> _\[T\]he engagement for reward of a person to produce material of a nature which is capable of being the subject of copyright implies a permission, or consent, or licence in the person giving the engagement to use the material in the manner and for the purpose in which and for which it was contemplated between the parties that it would be used at the time of the engagement._

In conclusion, Jacobs J said:

> _There then remains the question whether there should be any implied right to transfer it and here I think that it must inevitably be implied that the owner, having commissioned the sketch plan and having obtained the right to use it for the purpose of erecting on that site a building in substantial accordance with it, should have the right to transfer it to a new owner of the land … I so conclude and in the circumstances of this case and without considering the question of what would happen if there were no agreement for transfer to the new owner, I conclude that there was, on such evidence as there is before me, a collateral agreement to transfer the plans._

This case seems to say that building plans can be used if they have been paid for.

So, the builder may still retain the copyright in the building or architectural plans, but there is an implied license in law to use those plans if they have been paid for.

In [_Acohs Pty Ltd v R.A. Bashford Consulting Pty Ltd & Ors_ \[1997\] FCA 352](http://classic.austlii.edu.au/au/cases/cth/FCA/1997/352.html)

> _A “licence” in the statutory context of ss.36, 37 and 38 means no more than “permission” or “consent”, which for the purpose of those sections need not result from a formal grant, but may be an express or implied term of a contract or be implied by conduct_

In the English Queens Bench decision of _Blair v Osborne & Tomkins \[1971\] 2 QB 78_, Lord Denning MR (with whom Widgery and Megaw JJ agreed) said:

> _… when the owner of a building plot employs an architect to prepare plans for a house on that site, the architect impliedly promises that, in return for his fee, he will give a licence to the owner to use the plans for the building on that site. The copyright remains in the architect, so that he can stop anyone else copying his plans or making a house from them; but he cannot stop the owner who employed him, from doing work on that very site in accordance with the plans. If the owner employs a builder or another architect, the implied licence extends so as to enable them to make copies of the plans and to use them for that very building on that site: but for no other purpose._

This case seems to say that building plans can be used by another builder or architect if they have been paid for, and they are used for exactly the same purpose.

The implied license seems to extend to any successor in title.

[_Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd \[2006\] HCA 55_](http://classic.austlii.edu.au/au/cases/cth/HCA/2006/55.html) is a High Court case which involved the use of an architects plans by a successor in title, and the architect claimed copyright infringement.  The High Court said:

> _By reference to the reasons of Jacobs J in Beck v Montana Constructions Pty Ltd and the reasoning of the English Court of Appeal in Blair v Osborne & Tomkins, the parties agreed that where an architect is engaged to prepare plans and drawings which are the subject of copyright, and is paid a professional fee to do so, if the fee would normally be taken to cover the use of the plans and drawings for the purpose of constructing a building in substantial accordance with them, the commissioner of the plans and drawings (or a successor in title) will have an implied licence to use the plans and drawings for that purpose._

The cases above are authority for the fact that even after the [termination of a residential building contract](https://stonegatelegal.com.au/terminating-a-residential-building-contract-in-queensland/), there is an implied license for the owner and the owner’s new builder to use the plans in accordance with what the plans are supposed to be used for.

But what is the scope of that implied license?

## Scope of the Implied License to use Building Plans

The scope of the implied license is limited to substantially the same design, for the same purpose, at on the same land.

This essentially means that an owner will be able to build the house that they wanted, where they wanted, and can use the building plans to do so.

In _[Acohs Pty Ltd v R.A. Bashford Consulting Pty Ltd & Ors \[1997\] FCA 352](http://classic.austlii.edu.au/au/cases/cth/FCA/1997/352.html)_

> _When that principle is applied in the present case it seems to me to be inevitable that one should conclude that the payment for sketch plans includes a permission or consent to use those sketch plans for the purpose for which they were brought into existence, namely, for the purpose of building a building in substantial accordance with them and for the purpose of preparing any necessary drawings as part of the task of building the building._

In summary of the above:

1. There can be an express clause in the contract which allows for a license to use the copyright for a fee. Pay that fee and an owner has a license to use the building plans.
2. In the absence of an express clause in the residential building contract, there can be an implied license to use the copyright so long as a fee has been paid for those building plans.

What about if there is an express term in the [residential building contract](https://stonegatelegal.com.au/building-construction-debt-recovery/) excluding any license upon termination of the contract?

## Express Exclusion Clauses in the Contract

An implied term of a residential building contract must not contradict an express term in the building contract.

In the [High Court of Australia](https://www.hcourt.gov.au/) case of _[Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337](http://www8.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/HCA/1982/24.html)_, Mason J outlined at \[9\] the conditions necessary for implying a term into a contract (including a residential building contract):

> _The conditions necessary to ground the implication of a term were summarized by the majority in [B.P. Refinery (Westernport) Pty. Ltd. v. Hastings Shire Council \[1977\] HCA 40](https://www.hcourt.gov.au/assets/publications/judgments/1977/071--B.P._REFINERY_(WESTERNPORT)_PTY._LIMITED_v_PRESIDENT,_COUNCILLORS_AND_RATEPAYERS_OF_THE_SHIRE_OF--(1994)_180_CLR_266.html); (1977) 52 ALJR 20, at p 26 : “(1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that ‘it goes without saying’; (4) it must be capable of clear expression; (5) **it must not contradict any express term of the contract**.”_

In [_Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd_ \[1986\] HCA 14](https://www.hcourt.gov.au/assets/publications/judgments/1986/013--CON-STAN_INDUSTRIES_OF_AUSTRALIA_PTY._LTD._v._NORWICH_WINTERTHUR_INSURANCE_(AUSTRALIA)_LTD.--(1986)_160_CLR_226.html), Gibbs C.J., Mason, Wilson, Brennan and Dawson JJ. said at \[8\]:

> _A term will not be implied into a contract on the basis of custom where it is contrary to the express terms of the agreement._

This issue was addressed in relation to copyright in a building contract in the very recent case of _[Building Corporation WA Pty Ltd -v- Marshall \[No 2\] \[2022\] WASC 140](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/wa/WASC/2022/140.html)_ where Tottle J was asked to decide if an implied license existed in the face of an express term.  Tottle J concluded at \[71\]:

> _The matters to which I have referred are sufficient to resolve the first issue in the plaintiff’s favour but I would add that, in my view, the inclusion in the Contour and Conceptual Design Agreement of the words ‘Copyright of Designs will remain the property of Giorgi Exclusive Homes design fee to be credited against Building Contract’, is sufficient to negate the licence. A reasonable person reading these words would not draw a distinction between an assignment of copyright and a licence of copyright. Rather a reasonable person would understand them to mean that the Contour and Conceptual Design Agreement did not confer a right to use the Design Concept Plan to build a house unless and until they executed a building contract. This point is reinforced when the position in respect of the design is compared with the position in relation to the site survey which is to remain the property of the client in the event that they do not proceed to a building contract._

The Court found that there was no implied license as it would contradict the express terms of the contract.

However, it is worth pointing out that every case is different and a different case may turn on a different factual matrix and be decided in another way.

## Copyright in Building Plans after Termination

So, in relation to the above article:

**Express License** – If you have an express term in your contract in relation to copyright in building plans which allows for a license for a fee, then as long as you pay this fee you can use the building plans, even if the builder gets grumpy and says that you cannot.

**Implied License** – If you do not have an express term in your contract in relation to copyright in building plans, then you will have an implied license to use the building plans, so long as you have paid the builder a fee for the building plans.

**Scope of License** – The scope of an implied license is limited to the house you were wanting to build, on the land you wanted to build on, substantially in accordance with the residential building contract.

**Express Prohibition** – If there is an express term in your contract in relation to copyright in building plans which states that you cannot have a license or any right to use the building plans after termination, then it is unlikely that you will have a legal right, and you might be subject to copyright infringement proceedings.

**Tip** – let the builder keep the deposit, or a share of the deposit after termination, and this may be the price of the license to use the building plans.  However, every matter is different and so it is important to check with a legal practitioner if this applies in your particular case.

**Contact our [building and construction lawyers](https://stonegatelegal.com.au/) for advice and assistance on express or implied copyright in building plans after the termination of the residential building contract**

[CONTACT A CONSTRUCTION LAWYER TODAY](https://stonegatelegal.com.au/contact-stonegate-legal/)

**OR CALL: [1300 545 133](tel:1300545133) FOR A FREE PHONE CONSULTATION**

## Copyright in Building Plans FAQ

We get asked regularly about whether an owner can use the ‘old’ builders’ plans with their ‘new’ builder.  There are a few frequently asked questions:

### What is a Copyright License?

A copyright license is one way that a copyright owner grants permission for the artistic works to be used and commercialised. A license in copyright is essentially the permission or consent to use artistic works (drawings and building plans) in which copyright exists.

### What is Copyright?

Very simply put, copyright is a collection of legal rights that a person has over artistic or creative works such as computer programs, books, films, music, sound recordings, text, and of course building & architectural plans.

### Is there an implied license to use building plans after termination?

Yes. If you do not have an express term in your contract in relation to copyright in building plans, then you will have an implied license to use the building plans, so long as you have paid the builder a fee for the building plans.

### What is the scope of an implied copyright license?

The scope of an implied license is limited to the house you were wanting to build, on the land you wanted to build on, substantially in accordance with the residential building contract.

### Is there an implied license if my contract says no?

If there is an express term in your contract in relation to copyright in building plans which states that you cannot have a license or any right to use the building plans after termination, then it is unlikely that you will have a legal right, and you might be subject to copyright infringement proceedings.

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# Building and Construction Lawyers in Queensland

If you require the services of a building and construction lawyer in Queensland, Stonegate Legal are the experts to contact for legal assistance.

[Book Your Free Consultation](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#book)

[Speak To Our Trusted Lawyers Today](tel:1300545133)

### Don't Let Legal Issues Bring Your Construction Project to a Halt

## Building & Construction Law

### Legal Guidance for Your Building and Construction Needs

At Stonegate Legal, we are building and construction lawyers who specialise in building and construction law, providing expert legal advice to ensure a smooth project for all parties involved. Whether you’re a builder, developer, owner, or investor, we understand the complexities of the construction industry and will guide you through all legal matters. Our team of construction law experts handles all aspects of construction law, from resolving contract disputes to navigating zoning regulations.

We provide comprehensive legal advice to ensure your project complies with all regulatory requirements and is completed within budget and on time. Trust Stonegate Legal to help you build success.

![About Stonegate Legal - Our Litigation Team](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/07/our-team.png)

## Trusted Building & Construction Lawyers

When there is a disagreement regarding a contract for building and construction work in Queensland, it is referred to as a building and construction dispute. This type of contract pertains to an agreement or understanding for the completion of building projects. Ensure you use the best construction contract dispute lawyers.

[Building Work Can Include:](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-c70abef687f038f7d608)

1. The erection or construction of a house or building;
2. Renovations, alterations, extensions, improvements or repairs to a house or building;
3. The provision of lighting, heating, ventilation, air-conditioning, water supply, sewerage or drainage;
4. Any site work (including the construction of retaining structures);
5. The demolition, removal or location of a house or building;
6. The preparation of plans or specifications for the performance of building work;
7. Contract administration in relation to the construction of a building designed by the person;
8. Fire protection work or carrying out a completed building inspection.

![sgl](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/04/sgl.jpg)

[Construction Work Can Include:](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-c70abef687f038f7f40c)

1. Walls, roadworks, powerlines, telecommunication apparatus, aircraft runways, docks and harbours, railways, inland waterways, pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for land drainage or coast protection;
2. Heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply, fire protection, security and communications systems;
3. The external or internal cleaning of buildings
4. Site clearance, earthmoving, excavation, tunnelling and boring; and the laying of foundations; and the erection, maintenance or dismantling of scaffolding; and the prefabrication of components to form part of any building, structure or works, whether carried out on-site or off-site; and site restoration, landscaping and the provision of roadways; and
5. The painting or decorating of the internal or external surfaces of any building, structure or works.

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### Discuss Your Case With A Trusted Construction Lawyer

Let us be your strongest partner and trustworthy advisors. We can take you through the complex legal system while always protecting your best interests, providing legal help for construction disputes. Make the wise decision and join forces with us now

[Discuss Your Case Today](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#book)

[OR Call Now](tel:1300545133)

## Building & Construction Lawyers

### Serving a Diverse Range of Clients in the Industry

Our clients include a diverse range of individuals and entities involved in the building and construction industry, such as homeowners, builders, labourers, plumbers, electrical contractors, subcontractors, trade contractors, bodies corporate, engineers, architects, draftspersons, surveyors, quantity surveyors, mine workers, home investors, developers, and manufacturers/suppliers of construction materials. Our construction dispute resolution lawyers service all of Queensland, Brisbane, and Sunshine Coast.

[Discuss Your Case Today](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#book)

No Obligation Case Evaluation

[Claims for or Against Third Parties](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-d6a57d1687f038f8eb56)

In a construction contract, claims may not only be related to the parties involved, but also to third parties. These third parties may include architects, electricians, engineers, quantity surveyors, building certifiers, pest inspectors, liquidators, bankruptcy trustees, and suppliers or manufacturers of building materials. Regardless of the party involved in a building and construction dispute, there are various methods to resolve the matter, such as alternative dispute resolution or court proceedings including QCAT and all courts.

[Claims For or Against Builders & Homeowners](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-c70abef687f038f8eb56)

When it comes to residential building contracts, there are several ways in which things can go awry. Our services cater to both homeowners and builders who find themselves embroiled in disputes related to residential building. These disputes can pertain to a variety of issues such as defective building work, delay, contract breaches, debt recovery, negligence, defects liability periods, retentions, non-completion of work or claims against unlicensed builders.

We are equipped to represent our clients in [QCAT](https://www.qcat.qld.gov.au/), the Magistrates Court, the District Court, and/or the Supreme Court in Queensland. If you are a builder or homeowner involved in a residential building dispute, do not hesitate to get in touch with our building and construction lawyers.

[Claims for or Against Contractors and Subcontractors](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-092b264687f038f8eb56)

In both commercial and residential building contracts, conflicts can arise between contractors and subcontractors. We provide legal assistance to both parties involved in such disputes. These may include payment claims, payment schedules, subcontractor charges claims, termination or suspension of construction contracts, enforcing payment against individuals and companies, enforcing or setting aside adjudication decisions, debt recovery claims, breaches of contracts or subcontracts, defects liability periods and retention money, seeking injunctive relief from the court, issuing and setting aside statutory demands.

[Making and/or Defending Adjudication Applications](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-eba8349687f038f8eb56)

In the building and construction industry, an adjudication application is an efficient method of debt recovery without the need for costly court proceedings. The adjudicator can make a decision within approximately ten weeks of receiving the BIFA payment claim. When registered in court, the adjudication certificate can be enforced as a money order and is equivalent to a court judgment. While an adjudication application can save time and money, it is important to follow the strict procedures.

[Drafting and Serving Subcontractors’ Charges](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-dd7c2e3687f038f8eb56)

The Building Industry Fairness (Security of Payment) Act 2017 (Qld) enables subcontractors to claim the payment owed to them by contractors. This provision is intended to safeguard the subcontractor's payment in case they do not receive it. Moreover, it elevates the subcontractor to the position of a secured creditor if the contractor goes bankrupt. The process is intricate and must be executed accurately to be valid. Therefore, it is advisable to consult our specialised construction lawyers promptly.

[Alternative Dispute Resolution](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-092b264687f038f90c65)

When it comes to disputes in the building and construction industry, there are several methods of alternative dispute resolution (ADR) that can be implemented to try and settle the issue. The main purpose of ADR is to avoid the expenses and time-consuming process of going to court. Some of the ADR options that can be utilised include arbitration, adjudication, expert determination, conciliation, and mediation.

[Court Proceedings (QCAT and Queensland Courts)](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-eba8349687f038f90c65)

In Queensland, building disputes can be heard by QCAT and the State Courts. The monetary jurisdiction of the State Courts is divided among three categories. The Queensland Magistrates Court can hear cases up to $150,000. The Queensland District Court can hear cases ranging from $150,000 to $750,000. The Queensland Supreme Court has jurisdiction over cases exceeding $750,000. QCAT's building disputes jurisdiction does not have any monetary jurisdiction. However, claimants must fulfil certain jurisdictional requirements, failure to do so can result in the dismissal of the case. It is advisable to hire an expert building and construction dispute lawyer to make your claim. Additionally, a building and construction lawyer can provide guidance on legislative and compliance issues.

[Reviewing and Advising on Home and Commercial Building Contracts](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-d7217ff687f038f90c65)

Our services include providing comprehensive guidance on building and construction contracts before they are signed. This ensures that clients have a clear understanding of the potential risks and liabilities they may encounter under the agreement. We are skilled in advising and supporting clients in negotiating building and construction contracts, including those that are standard forms such as ABIC, Australian Standard, FIDIC, HIA, Master Builders, and the QBCC. Additionally, we can help identify and assess risks and liabilities and recommend strategies to mitigate them. For peace of mind, it is advisable to seek the assistance of a building and construction lawyer who can provide written advice on your building contract.

[Licensing and Matters Arising from the QBCC](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-2a2e957687f038f90c65)

Our legal services also cater to builders and contractors in need of guidance and support with licensing problems, QBCC infringement notices, and appeals for QBCC decisions. Various types of infringement notices could be served, such as those related to illegal construction work, unlicensed contractor complaints, advertising offences, failure to pay for home warranty insurance, fit and proper issues, as well as subcontract and commercial building contract breaches. We offer advice and assistance to our clients during both the QBCC and QCAT review process for any unreasonable decisions made by the QBCC. This includes decisions related to substandard rectification or completion work, unprofessional conduct by a building certifier, the issuance of directives to repair faulty construction work, and denial of a license application.

[Insolvency](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-4722274687f038f90c65)

We provide guidance, cost effective advice and support to building and construction firms facing [insolvency](https://stonegatelegal.com.au/services/insolvency/) in Queensland. Our services encompass advising and aiding the company, its directors, and creditors on various aspects such as the liquidation process, issues with liquidators or administrators, potential risks for directors, secretaries, and influential individuals, the QBCC's involvement in the liquidation, and any claims of voidable transactions against third parties, directors, or creditors.

### How To Handle Building & Construction Disputes

At Stonegate Legal, we offer inclusive legal guidance, ensuring that your project adheres to all necessary regulations while staying within your budget and meeting deadlines. Count on us to assist you in constructing a pathway to success.

It is crucial to seek legal representation from specialised litigation lawyers who have expertise in this area.

## Construction & Building Lawyers QLD

## Meet Our Building & Construction Team

![Wayne Davis - Lawyer - Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/06/wayne.avif)

## Legal Practice Director / Principal Solicitor

## Wayne Davis

Wayne Davis is the principal solicitor, legal practice director of the firm, and leads the litigation team.  Wayne has an LLB, and GDLP and is admitted to the Supreme Court of Queensland and the High Court of Australia.  Wayne is a debt recovery, defamation, litigation, and insolvency professional.

Wayne is dedicated to achieving the best possible outcomes, whether through strategic negotiation, alternative dispute resolution, or courtroom advocacy. Wayne understand that every case is unique and takes a proactive approach to ensure your rights and interests are protected at every stage of the process.

### Education & Certifications

LLB – Bachelor of Laws, Graduate Diploma of Legal Practice (GDLP)

### Personal Quote

Don’t believe everything you think.

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Lease Disputes](https://stonegatelegal.com.au/tag/commercial-lease-disputes/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/) [Debt Recovery/Collection](https://stonegatelegal.com.au/tag/debt-recovery-collection/) [Defamation Litigation](https://stonegatelegal.com.au/tag/defamation-litigation/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [Statutory Demands](https://stonegatelegal.com.au/tag/statutory-demands/) [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/) [Wills/Estate Litigation](https://stonegatelegal.com.au/tag/wills-estate-litigation/)

![Shania Bryan - Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/06/shania.avif)

## Solicitor

## Shania Bryan

Shania is a solicitor at Stonegate Legal, based in Queensland. After nearly two years with the firm, Shania recently transitioned into her solicitor role following her admission to the Supreme Court of Queensland in December 2024. She holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP). Shania practices predominantly in defamation law and handles a majority of the defamation matters here at Stonegate Legal.

Her focus is advising and representing clients in disputes involving reputational harm, online publications, and media content. Shania works closely with individuals and businesses to navigate the intricacies of defamation claims and achieve effective resolutions.

### Education & Certifications

Bachelor of Laws (LLB) and Graduate Diploma of Legal Practice (GDLP)

### Personal Quote

Every experience is a chance to deepen my knowledge and contribute to our team’s success, fostering a culture of continuous learning and support

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Lease Disputes](https://stonegatelegal.com.au/tag/commercial-lease-disputes/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/) [Defamation Litigation](https://stonegatelegal.com.au/tag/defamation-litigation/) [Wills/Estate Litigation](https://stonegatelegal.com.au/tag/wills-estate-litigation/)

![Kirsty Walker - Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/12/Kirsty-Walker-Stonegate-Legal-scaled-1-1024x1024.jpg)

## Solicitor

## Kirsty Walker

Kirsty has come into the legal profession later in life, having been a primary school teacher for 24 years. Her interest in the law stemmed from running a small construction company. After self-representing against debtors, she came to value the ability of the law to assist contractors in David and Goliath situations. Kirsty is admitted to the Supreme Court of Queensland and the High Court of Australia.

### Education & Certifications

Bachelor of Law (First Class Honours), Graduate Diploma Legal Practice, Bachelor of Criminology, and Justice Bachelor of Education (Primary), Certificate IV Small Business Management

### Personal Quote

Always pray to have eyes that see the best, a heart that forgives the worst, a mind that forgets the bad, and a soul that never loses faith.

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/)

![Laylah Toovey - Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/06/laylah.avif)

## Law Graduate / Paralegal

## Laylah Toovey

Laylah completed her Bachelor of Laws with Honours at the University of the Sunshine Coast and is currently undertaking her graduate diploma of legal practice at the College of Law. I have worked with Stonegate Legal since 2021, and within this time, she acquired a broad range of knowledge and experience across a diverse range of matters.

Laylah’s approach is centered on understanding your unique circumstances, protecting your interests, and advocating for the best possible outcome. Whether you’re facing commercial disputes, debt disputes, contract issues, or other contentious matters, Laylah and the team are here to guide you every step of the way.

### Education & Certifications

Bachelor of Laws

### Personal Quote

I am dedicated to supporting our senior team members, and achieving positive results for our clients

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Debt Recovery/Collection](https://stonegatelegal.com.au/tag/debt-recovery-collection/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [Statutory Demands](https://stonegatelegal.com.au/tag/statutory-demands/) [Wills/Estate Litigation](https://stonegatelegal.com.au/tag/wills-estate-litigation/)

![Stacey Harvey Paralegal - Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/06/20250624-Stonegate-Legal-13-1024x1024.jpg)

## Senior Paralegal

## Stacey Harvey

Stacey has been a part of the team at Stonegate Legal since 2022 but has worked in the industry for over 20 years, having extensive knowledge of the legal processes in Australia and specializing in debt recovery claims, default judgments, enforcement action, and bankruptcy.

Stacey spent a large portion of her career as a senior paralegal responsible for the performance and management of a team of paralegals and an administration department for many years.  During the first 18 years, she worked for one of Brisbane’s largest debt collection companies, where she managed large portfolios of debt for councils, schools, government departments, and insurance companies, along with debt purchased from various banks, utilities, and other credit providers.

### Education & Certifications

Justice of the Peace, Certificate III in Office Business Administration

### Personal Quote

Stay positive, work hard, make it happen.

## Areas of Interest

### [Commercial Lease Disputes](https://stonegatelegal.com.au/tag/commercial-lease-disputes/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Debt Recovery/Collection](https://stonegatelegal.com.au/tag/debt-recovery-collection/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [Statutory Demands](https://stonegatelegal.com.au/tag/statutory-demands/) [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/)

![Caterine Molini - Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/06/20241210-Stonegate-Legal-101-1-scaled-1-1024x1024.jpg)

## Law Graduate / Paralegal

## Caterine Molini

Caterine holds a law degree and passed the bar exam in 2011, practicing as a lawyer in Brazil until 2018. She also completed a postgraduate qualification in environmental law. Caterine holds a Certificate IV and a Diploma in Leadership and Management from Australia.

With 12 years of experience in civil litigation, insurance, and building and construction, Caterine spent six years leading a team to negotiate major agreements with insurance companies. She worked closely with engineers to ensure construction projects met environmental regulations, and she advocated for clear contracts to prevent issues and avoid costly litigation.

She is excited to be working towards admission as a Solicitor in Australia.

### Education & Certifications

Bachelor of Law (Brazil)

### Personal Quote

You are the size of your dreams. Dream big. Play smart, not hard.

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [insurance disputes](https://stonegatelegal.com.au/tag/insurance-disputes/) [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/)

## Building And Construction Lawyers - FAQ

[What legal issues can arise in building and construction projects?](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-1b6203e687f0390285b0)

Legal issues in building and construction projects can involve contract disputes, zoning regulations, liens, workers' compensation claims, and more. If a dispute arises between parties on a project, it is important to seek legal advice as soon as possible. Our experienced team of building and construction lawyers will provide expert advice to ensure the dispute is resolved in an effective and timely manner. We will also guide all applicable laws and regulations, ensuring that your project complies with all relevant rules.

[What are the common causes of construction disputes?](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-63ce377687f0390285b0)

Construction disputes can arise for a variety of reasons, including delays in the project, errors in the design or workmanship, changes to the scope of work, and more. Disagreements between parties regarding payment or contract terms can also lead to disputes. It is important to work with an experienced building and construction lawyer when such disagreements arise, as they will be able to provide expert advice and guidance on how best to resolve the dispute.

[What construction law advice is available for subcontractors?](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-01ee78f687f0390285b0)

Subcontractors can seek legal advice on payment disputes, contract terms, and security of payment claims to protect their rights under Australian law. A construction lawyer can help ensure subcontractors receive fair payment by enforcing contractual obligations and applying for adjudication if necessary. They can also provide guidance on subcontractor charges, licensing requirements, and compliance with QBCC regulations. Understanding legal protections can prevent financial risks and unfair treatment by contractors.

[How can residential construction lawyers help homeowners?](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-6112a27687f0390285b0)

Residential construction lawyers assist homeowners with legal issues arising from building or renovating homes, including contract disputes, defective workmanship, and delayed completion. They review and negotiate building contracts to protect homeowners from unfair terms and ensure compliance with relevant building laws. If a dispute arises, they can engage in negotiation, mediation, or court action to enforce the homeowner’s rights. Their services provide legal protection and peace of mind for homeowners dealing with builders and contractors.

[What is the role of building dispute lawyers?](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-263f131687f0390285b0)

Building dispute lawyers help resolve conflicts related to construction projects, including contract breaches, defective work, and unpaid invoices. They represent homeowners, builders, and subcontractors in negotiations, adjudications, and court proceedings to enforce contractual rights. These lawyers also provide legal advice on compliance with Australian building regulations and industry standards. Their primary focus is to achieve cost-effective dispute resolution while protecting their client’s interests.

[What do construction law solicitors do?](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-c5e72b0687f0390285b0)

Construction law solicitors provide legal guidance on contracts, disputes, compliance, and risk management within the building industry. They assist clients in understanding their rights and obligations under Australian construction laws and regulations. If disputes arise, they help negotiate settlements, prepare adjudication applications, or represent clients in litigation. Their expertise ensures that builders, contractors, and property owners comply with legal requirements while protecting their financial and contractual interests.

[How do I take legal action against a builder in Queensland?](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-bf38f2a687f0390285b0)

To take legal action against a builder in Queensland, you should first attempt negotiation or mediation to resolve the issue. If that fails, you may lodge a complaint with the Queensland Building and Construction Commission (QBCC), which can order rectifications or take disciplinary action. For contract breaches or financial losses, legal proceedings may be initiated in QCAT (Queensland Civil and Administrative Tribunal) or court, depending on the dispute’s value. Seeking legal advice early can improve your chances of a successful claim and minimise delays.

[Who are the best construction lawyers in Brisbane?](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-07f068a687f0390285b0)

The best construction lawyers in Brisbane are those with extensive experience in building disputes, contract law, and construction litigation. A reputable law firm should have a track record of successfully resolving construction disputes through mediation, adjudication, or court action. Look for firms with strong client testimonials and expertise in Queensland’s construction laws, including the QBCC Act and the Security of Payment legislation. Consulting a well-regarded construction lawyer can provide valuable legal guidance tailored to your situation.

[What should I do if a builder breaches a contract?](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-7026859687f0390285b0)

If a builder breaches a contract, the first step is to review the contract terms and gather evidence of the breach. Communicating with the builder and attempting to resolve the issue amicably can sometimes prevent legal disputes. If negotiations fail, legal options include lodging a complaint with the QBCC, seeking mediation, or pursuing a legal claim in QCAT or court. Consulting a construction lawyer can help determine the best course of action to protect your rights.

[Can a building and construction lawyer help with resolving payment disputes?](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-50f7155687f039029922)

Yes, our experienced team of building and construction lawyers can help to resolve payment disputes. We will review the contracts and applicable laws to ensure that all parties are abiding by their obligations. We will also provide advice on any legal remedies available to help resolve the dispute, such as filing a lien or taking other legal action. Our team of experts will work with you every step of the way to ensure that your interests are protected.

[What do construction dispute resolution lawyers do?](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-94f80ce687f039029922)

Construction dispute resolution lawyers help resolve conflicts between parties involved in building projects, including contractors, homeowners, and developers. They specialise in alternative dispute resolution (ADR) methods such as mediation, arbitration, and adjudication to avoid costly litigation. If necessary, they can also represent clients in court proceedings to enforce contract terms or recover financial losses. Their goal is to provide strategic legal advice to achieve a fair and efficient resolution for all parties involved.

[What do commercial construction lawyers specialise in?](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-cbb2c01687f039029922)

Commercial construction lawyers handle legal matters related to large-scale construction projects, including drafting and reviewing contracts, resolving disputes, and ensuring regulatory compliance. They assist property developers, contractors, and subcontractors in navigating complex legal issues such as contract breaches, payment disputes, and project delays. These lawyers also provide advice on risk management, insurance claims, and legal obligations under Australian construction laws. Their expertise helps businesses avoid costly litigation and maintain smooth project execution.

[How do I resolve a contract dispute with my builder?](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-6b43c11687f039029922)

The first step in resolving a contract dispute with your builder is to review the terms of the contract and identify any breaches. Open communication and negotiation can often lead to an amicable resolution without legal intervention. If this fails, alternative dispute resolution methods such as mediation or adjudication may help settle the dispute quickly. As a last resort, legal action in a Queensland court may be necessary to enforce your rights and seek compensation.

[What are the legal rights of homeowners in construction disputes?](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-03e8635687f039029922)

Homeowners have the right to expect their building project to be completed according to the contract, Australian building codes, and consumer protection laws. If a dispute arises, they can seek remedies for defective work, delays, or contract breaches through negotiation or legal action. Queensland’s QBCC (Queensland Building and Construction Commission) provides additional protections and dispute resolution services for homeowners. Legal advice from a construction lawyer can help homeowners understand their rights and the best course of action.

[How can I get legal help for unpaid construction invoices?](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-ea80cb0687f039029922)

If a builder or contractor has not received payment for completed work, they can issue a payment claim under the Building Industry Fairness (Security of Payment) Act 2017 (Qld). Legal action may involve sending a formal demand letter, lodging an adjudication application, or pursuing court action to recover the debt. A construction lawyer can assist in enforcing contractual payment terms and ensuring compliance with relevant legislation. Prompt legal advice can help secure payment and prevent financial losses.

[Why should I hire construction lawyers in Brisbane?](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-0be30ef687f039029922)

Construction lawyers in Brisbane provide specialised legal advice on building contracts, disputes, and regulatory compliance. They assist clients in resolving conflicts with builders, contractors, and developers through negotiation, adjudication, or court proceedings. Having a local lawyer familiar with Queensland’s construction laws and the QBCC can be beneficial for navigating legal challenges. Engaging an expert lawyer early can prevent costly disputes and ensure legal protection throughout a construction project.

[What does a Sunshine Coast construction law firm offer?](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-01046ef687f039029922)

A construction law firm on the Sunshine Coast provides legal services for builders, developers, subcontractors, and homeowners dealing with building disputes and contracts. Their expertise includes contract drafting, dispute resolution, debt recovery, and regulatory compliance. These firms assist clients with mediation, adjudication, and court representation to protect their legal and financial interests. Working with a local law firm ensures a better understanding of Queensland-specific building regulations.

[What legal help is available for builders in Queensland?](https://stonegatelegal.com.au/services/building-and-construction-lawyers/#collapse-baef376687f039029922)

Builders in Queensland can access legal assistance for contract negotiations, dispute resolution, and regulatory compliance. A construction lawyer can help resolve payment disputes, licensing issues, and QBCC infringements while protecting the builder’s interests. They also provide guidance on handling contract terminations, defect claims, and security of payment applications. Seeking legal advice early can prevent costly legal battles and ensure compliance with construction laws.

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## Wage Theft Claims
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# Wage Theft – Underpayment of Wages

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## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| November 7, 2019

## Article Summary

This article explains wage theft, which refers to employers not paying their employees their legal entitlements, such as award rates, penalty rates, wages, and overtime.

If you experience wage theft, you can take legal action in various courts, including the Federal Court and Magistrates Court, to seek redress.

The process involves negotiation, reporting to the Fair Work Ombudsman, mediation, conciliation, and ultimately filing a claim in court.

The article also highlights different forms of wage theft, such as incorrect hourly rates, cash-in-hand payments, unpaid overtime and penalty rates, illegal cash-back schemes, non-agreed wage deductions, illegal phoenixing, sham contracting arrangements, and non-payment of superannuation.

It concludes by emphasising the importance of accurately calculating the owed amount and pursuing a legal resolution to recover unpaid wages.

If you have been a victim of wage theft, then please read the article below.

Table of Contents

[Toggle](https://stonegatelegal.com.au/wage-theft-underpayment-of-wages/#)

![Wage Theft and the Underpayment of Wages in Queensland lawyer](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2019/11/Wage-Theft-and-the-Underpayment-of-Wages-in-Queensland-lawyer-300x275.png)Wage theft is the non-payment of your legal entitlements by your employer, including award rates, penalty rates, wages, and overtime.

If your employer has stolen your wages then you may have a claim in the Federal Court, Federal Circuit Court, the District Court, or the Magistrates Court.

You can seek an order from your employer and also any person involved in the contravention.

There are processes that should be followed in different situations, and include negotiation, reporting to the Fair Work Ombudsman, mediation, conciliation, and filing a claim in Court.

In this article our experienced [litigation solicitors](https://stonegatelegal.com.au/services/civil-litigation/) will explain the requirements and the process of making a claim for wage theft below.

**If you have not been paid your legal entitlements by your employer, including award rates, penalty rates, wages, and overtime – then you might have a wage theft claim against the employer**

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## What is Wage Theft?

The term wage theft can take a number of different forms, including:

1. Not being paid the correct hourly rates;
2. Illegal cash-back contracts;
3. Being paid cash-in-hand or off-the-books;
4. Non-agreed deductions from wages;
5. Unpaid overtime and penalty rates;
6. Illegal phoenixing;
7. Sham contracting arrangements; and
8. Non-payment superannuation.

We will detail these in more detail below.

### Not Being Paid the Correct Hourly Rates

Probably the most common form of wage theft is not being paid the correct hourly rates.

For the most part, minimum hourly rates are prescribed by the relevant modern award.  If you are not being paid the correct amount, then your employer is [stealing your wages](https://stonegatelegal.com.au/unpaid-wages-and-the-fair-entitlements-guarantee/) and you will have a claim.

Modern awards include all the information you need to understand your entitlements including information in relation to:

- Types of employment and termination of employment;
- Classifications and minimum wage rates;
- Hours of work and related matters;
- Leave and public holidays; and
- Industry specific provisions.

The modern award defines the type of work classification and the minimum pay amount in relation to that classification.

Another common form of wage theft is an employer paying an employee at a level 2 rate, when the employee is doing level 4 work.  If your employer is doing this then they are stealing your wages and you may have a claim.

Click to go to the list of [Modern Awards here](https://www.fwc.gov.au/awards-and-agreements/awards/modern-awards/modern-awards-list)

Another way that an employer can steal an employee’s wages is by paying cash-in-hand.

### Being Paid Cash-in-hand or Off-the-books

Although a seemingly good prospect, getting paid cash-in-hand or off-the-books can also result in wage theft.

Being paid cash-in-hand or off-the-books may mean that your employer is not paying superannuation, leave entitlements, and other entitlements, etc.

Also, because the non-payment of tax seems enticing, the employer may also pay you less than the minimum wage.

It is possible to be paid in cash, that’s not the problem, but the employer must still pay all of your entitlements and provide you with a payslip.

Being paid cash-in-hand or off-the-books can result in wage theft and you may have a claim.

### Unpaid Overtime

Your Modern Award will provide for the amount of hours a full-time employee has to work per week and overtime rate of pay for hours worked outside of ordinary time.

These rates of pay are usually around 150% to 200% – aka time-and-a-half to double-time.

If your employer has not paid any overtime rates, then this is wage theft and you may have a claim.

### Unpaid Penalty Rates

Also, your Modern Award will provide for the penalty rate that the employee is entitled for working on the weekend or on a public holiday.

These rates are usually between 125% to 250% – aka time-and-a-quarter to double-time-and-a-half.

If your employer has not paid any penalty rates, then this is wage theft and you may have a claim.

Find your penalty rate amount in your [Modern Award here](https://calculate.fairwork.gov.au/findyouraward).

### Illegal Cash-Back Schemes

In some instances, an employer may make an employee give back a percentage of their wages.  This is sometimes known as a “ _Cash-back scheme_”.

If this happens, then that money is treated like back-pay and can be claimed from the employer.

If your employer is making an employee pay “cash-back” then this is wage theft and the employee may have a claim.

### Non-Agreed Deductions from Wages

An employer and an employee can agree that certain deductions can be made from the employee’s wages.  An employer can only deduct money if:

1. The employee agrees in writing; and
2. It’s principally for the benefit of the employee; and
3. It’s allowed by a law, a court order, the Fair Work Commission, a modern award, or registered agreement.

Any deductions that are not agreed or are not for the benefit of the employee are wage theft and the employee may have a claim.

### Illegal Phoenixing

Phoenixing is a term used to describe the act of transferring business assets to another company, continuing to trade in the new company, and leaving debts and liabilities in the old company – including employee wages and entitlements.

Usually, the old company will go into liquidation with a very slim chance of getting any money.

If your employer does this then this is wage theft and the employee may have a claim.

An employee may be entitled to the Governments Fair Entitlements Guarantee (“ **FEG**”).

Click to learn more about the FEG here.

### Sham Contracting Arrangements

A sham contract is when an employer tries to disguise an employment relationship with a contractor relationship, and incorrectly classifies an employee as an independent contractor.

An employer may try to pay an employee as a contractor so that the employee will lose their entitlements, including superannuation and leave entitlements.

Whether someone is an employee, or a contractor depends on a number of different complex factors and is usually determined by the Court.

However, if an employee is a party to a sham contract then this may be wage theft and the employee may have a claim.

### Non-payment of Superannuation

Unfortunately, another common form of theft (albeit, not wages per se) is the non-payment of superannuation.

Most employment relationships require the employer to contribute a minimum of 9.5% of your wages into a superannuation account.

Every dollar that goes into superannuation now will be worth a lot more by retirement age, so it is very important that an employer pays this entitlement.

If your employer has not paid, or underpaid, your superannuation then the employee may have a claim.

## Can I Make a Claim for Wage Theft?

If you fit into any of the categories above, then it is likely that you will be able to make a claim against your employer for unpaid wages and entitlements.

Obviously, each claim is different and will depend on the particular work, the Modern Award, and the employment contract.

## Making a Claim for Wage Theft

The starting point for any claim for wage theft is [section 45 of the _Fair Work Act 2009_ (CTH)](http://classic.austlii.edu.au/au/legis/cth/consol_act/fwa2009114/s45.html) (“FWA”).

[Section 45 of the FWA](http://classic.austlii.edu.au/au/legis/cth/consol_act/fwa2009114/s45.html) says:

> _A person must not contravene a term of a modern award_

A modern award sets out the minimum employment terms and conditions.

These minimum employment terms and conditions include:

1. Wages and pay;
2. Employment allowances;
3. Staff breaks – duration and time;
4. The hours of work;
5. Any overtime payable; and
6. Any penalty rates payable.

**Note**: Section 45 of the FWA is a civil remedy provision.

[Section 539 of the FWA](http://classic.austlii.edu.au/au/legis/cth/consol_act/fwa2009114/s539.html) outlines the Civil remedy provision, the person, the Courts, and the maximum penalty.

The table in subsection (2) of this section says that a breach of [section 45 of the FWA](http://classic.austlii.edu.au/au/legis/cth/consol_act/fwa2009114/s45.html) applies to an employee and an employer (amongst others).

It also defines the Courts which have jurisdiction as the Federal Court; the Federal Circuit Court; and an eligible State or Territory court.

## The Wage Theft Process

The process for making a wage theft claim for unpaid entitlements is:

1. Work out exactly what the employee is owed;
2. Try to negotiate with the employer to reach a settlement;
3. Report the employer to the Fair Work Ombudsman (“ **FWO**”);
4. Commence legal action in the Court with jurisdiction;
5. Sometimes the Court will order mediation or conciliation;
6. Obtain a judgment against the employer;
7. Enforce the judgment.

This is an over-simplification of the process, but this is essentially what an employee will need to do.

We will explain the process in more detail below.

### Work out Exactly what the Employee is Owed

It is important to work out exactly how much money the employee is owed.

Correctly calculate the exact amount (or as reasonably close as possible).  This will include:

1. The minimum rate of pay calculated at the correct level;
2. Any allowances allowable;
3. Any leave loading that has accrued;
4. Any leave payments that have not been paid;
5. Any overtime that has not been paid;
6. Payment of the correct penalty rates;
7. Any additional tax and superannuation; and
8. Any entitlements in the award, employment contract or other agreement.

Once the employee has a figure calculated, it is best practice to approach the employer, or engage a solicitor to approach the employer, to attempt to reach a settlement.

### Negotiate with the Employer to Reach a Settlement

Most good lawyers will attempt to resolve wage theft claims without going to Court.  Going to Court can be stressful and costly for both parties, so there is a real incentive to try to reach an agreement by negotiation.

Litigation lawyers are skilful negotiators, and it is well worth engaging a litigation lawyer to negotiate on your behalf.  Reaching a settlement will involve a compromise by both parties.

Read our article here about [Settling Litigation Early](https://stonegatelegal.com.au/settling-litigation-early-calderbank-offers/).

If the employer is being unreasonable and refusing to settle, then the employee can refer the matter to the [Fair Work Ombudsman](https://www.fairwork.gov.au/) (“ **FWO**”).

### Report this Employer to the Fair Work Ombudsman

The Fair Work Ombudsman is there to provide help and assistance in relation to:

1. Wage theft – disputes relating to pay, penalty rates, any loadings and allowances;
2. Ending employment – giving notice, employees final pay and redundancy packages;
3. Leave entitlements including annual leave, sick leave, maternity leave and parental leave;
4. Any sham contracting arrangements; and
5. Anything covered by an award, enterprise agreement or other registered agreement.

The FWO will then attempt to resolve the dispute with the employer by negotiation in an attempt to reach a settlement.

If no settlement can be reached informally, then the FWO can refer the matter to a mediation.

A mediation is usually a telephone conference where the employee and the employer work with a skilled mediator to help the parties in dispute to come to a reasonable agreement to resolve the wage theft dispute.

This mediation can last up to two (2) hours.

If the parties agree on a resolution, then that agreement can be documented by way of a formal agreement.

The mediator may assist by drafting a deed of settlement outlining the terms of the agreement, time for compliance, and anything else of concern.

If the matter does not settle at the mediation, then the employee must take legal action to recover the unpaid wages.

### Commence Legal Action in the Court with Jurisdiction

Legal action for wage theft can be broken down into two (2) separate parts, namely:

1. Claims under $20,000.00; and
2. Claims over $20,000.00.

### Small Wage Theft Claims Under $20,000.00

A claim under $20,000 is called a small claim.

[Section 548 of the _Fair Work Act 2009_ (CTH)](http://classic.austlii.edu.au/au/legis/cth/consol_act/fwa2009114/s548.html) (“ **FWA**”) confers jurisdiction on the Magistrates Court or the Federal Circuit Court if it relates to an amount that an employer was required to pay to, or on behalf of, an employee; and it is for an amount of $20,000 or less.

There are advantages and disadvantages in commencing action in this small claims jurisdiction.

Basically, the court is not bound by any rules of evidence and procedure and may act in an informal manner; and without regard to legal forms and technicalities.  This makes the process easier.

However, a party to small claims proceedings may be represented in the proceedings by a lawyer only with the leave of the court.  This means that if leave is not given, then the employee may have to appear on their own.

In Queensland this small claim in commenced in the Magistrates Court by way of [Employment Claim](https://www.courts.qld.gov.au/__data/assets/word_doc/0006/87855/ucpr-f-2a-employment-claim-mags-court.doc).

Queensland Industrial Relations Commission (QIRC) for a compulsory conciliation hearing in the first instance.

Once claim is filed, the Court will refer the matter to the Queensland Industrial Relations Commission (“ **QIRC**”) for a compulsory conciliation hearing.  If the matter does not resolve by way of conciliation, then the proceeding will progress.

In the Federal Circuit Court a small claim is commenced by way of [Form 5 – Small claim under the Fair Work Act 2009](https://www.fcfcoa.gov.au/resources/forms).

We strongly advise seeking legal advice before filing the small claim.

However, just because the amount is less than $20,000.00 that allows an employee to proceed as a small claim, but it does not compel an employee to.  An employee can commence as if it were a claim over $20,000.00.

### Wage Theft Claims Over $20,000.00

Claims over $20,000.00 can be commenced in the Federal Court, the Federal Circuit Court, or an eligible State or Territory court.

[Section 543(1) of the FWA](http://classic.austlii.edu.au/au/legis/cth/consol_act/fwa2009114/s545.html) says:

> _The Federal Court or the Federal Circuit Court may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision._

[Section 543(2) of the FWA](http://classic.austlii.edu.au/au/legis/cth/consol_act/fwa2009114/s545.html) says:

> _Without limiting subsection (1), orders the Federal Court or Federal Circuit Court may make include the following:_
>
> _(a)  an order granting an injunction, or interim injunction, to prevent, stop or remedy the effects of a contravention;_
>
> _(b)  an order awarding compensation for loss that a person has suffered because of the contravention;_
>
> _(c)  an order for reinstatement of a person._

[Section 545(3) of the FWA](http://classic.austlii.edu.au/au/legis/cth/consol_act/fwa2009114/s545.html) says:

> _An eligible State or Territory court may order an employer to pay an amount to, or on behalf of, an employee of the employer if the court is satisfied that:_
>
> _(a) the employer was required to pay the amount under the FWA or a fair work instrument; and_
>
> _(b) the employer has contravened a civil remedy provision by failing to pay the amount._

Remember section 45 of the FWA is a civil remedy provision.

Therefore, the Federal Court, and the Federal Circuit Court have jurisdiction to make an order awarding compensation for loss that an employee has suffered because of the contravention of section 45 of the FWA, or the contravene of a term of a modern award.

Further, eligible Queensland State Courts also have jurisdiction to hear claims for wage theft and can make an order the employer to pay an amount to the employee for unpaid wages.

But what is an eligible State or Territory court?

### Eligible State Courts for Wage Theft Claims

[Section 12 of the FWA](http://classic.austlii.edu.au/au/legis/cth/consol_act/fwa2009114/s12.html#eligible_state_or_territory_court) defines “ **eligible State or Territory court**” to mean one of the following courts:

> _(a) a District, County or Local Court;_
>
> _(b) a Magistrates Court;_

So, for a proceeding for unpaid wages, the matter can be commenced as a general claim in the Magistrates Court and the District Court.

### Jurisdiction of the State Courts

The State Courts have a monetary jurisdiction in the following amounts:

1. The Magistrates Court – up to $150,000.00;
2. The District Court – from $150,000.00 to $750,000.00.

It would not be usual for an employee to be owed more than $750,000.00 in stolen wages.

## Is the Business Owner Liable for the Wage Theft?

Yes.  The director of the company or the any person involved in the contravention can be personally liable for the contravention.

[Section 550(1) of the FWA](http://classic.austlii.edu.au/au/legis/cth/consol_act/fwa2009114/s550.html) says:

> _A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision._

It then goes on to define what being “ **involved in a contravention**” means.  [Section 550(2)](http://classic.austlii.edu.au/au/legis/cth/consol_act/fwa2009114/s550.html) says:

> _A person is involved in a contravention of a civil remedy provision if, and only if, the person:_
>
> _(a)  has aided, abetted, counselled or procured the contravention; or_
>
> _(b)  has induced the contravention, whether by threats or promises or otherwise; or_
>
> _(c)  has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or_
>
> _(d)  has conspired with others to effect the contravention._

In [_Fair Work Ombudsman v Quincolli Pty Ltd & Anor_ \[2011\] FMCA 139](http://classic.austlii.edu.au/au/cases/cth/FMCA/2011/139.html) Driver FM said:

> _The authorities show that in order for a person to have accessorial liability under … 550 of the Fair Work Act, he or she must be a knowing participant or in other words:_
>
> _a. must have knowledge of the essential facts constituting the contravention;_
>
> _b. must be knowingly concerned in the contravention;_
>
> _c. must be an intentional participant in the contravention based on actual not constructive knowledge of the essential facts constituting the contravention – although constructive knowledge may be sufficient under s.728(2)(c) in cases of wilful blindness; and_
>
> _d. need not know that the matters in question constituted a contravention._

So, if these things can be proven, then the employee may obtain judgment against the person (or people) involved in the contravention.

Once an employee commences legal action in the Courts against the company, the business, and against a person involved in the contravention, the objective is to obtain from the Court a judgment or enforceable money order against them.

Once you are given judgment, and the debtors still do not pay, you can enforce that order over the property of the enforcement debtors.

## Enforce the Wage Theft Judgment

This website has a lot of information of enforcement.

If you have judgment on a company, then you can:

1. Enforce with an enforcement warrant; or
2. Serve a statutory demand.

If you have a judgment against a person, then you can:

1. Enforce with an enforcement warrant; or
2. Serve a bankruptcy notice.

Read the articles below in relation to enforcement of money orders.

- [Enforcement Hearing & Statement of Financial Position](https://stonegatelegal.com.au/enforcement-hearing-statement-financial-position/)
- [Enforcement Warrant for Redirection of Debts](https://stonegatelegal.com.au/enforcement-warrant-redirection-debts/)
- [Enforcement Warrant for Redirection of Earnings](https://stonegatelegal.com.au/enforcement-warrant-for-redirection-of-earnings/)
- [Enforcement Warrant for Seizure and Sale of Property](https://stonegatelegal.com.au/warrant-for-seizure-and-sale-of-property/)
- [Enforce a QCAT Decision](https://stonegatelegal.com.au/enforce-qcat-decision/)
- [Enforcing a Judgment](https://stonegatelegal.com.au/enforcing-a-judgment/)
- [Bankruptcy](https://stonegatelegal.com.au/bankruptcy/)
- [Statutory Demand](https://stonegatelegal.com.au/statutory-demand/)
- [Statutory Demand – Complete Guide](https://stonegatelegal.com.au/statutory-demand-complete-guide/)
- [How to Draft a Statutory Demand – Form 509H](https://stonegatelegal.com.au/how-to-draft-a-statutory-demand-form-509h/)

## Moving Forward – Wage Theft

Employees have a right to claim their wages for up to 6 years after the amount became due and payable.  This is the limitation period and it cannot be extended.

If you have a claim for wage theft, or unpaid entitlements then contact us today.

**If you have not been paid your legal entitlements by your employer, including award rates, penalty rates, wages, and overtime – then you might have a wage theft claim against the employer**

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## FAQs on Wage Theft

Wage theft is an unfortunate reality in employment, where workers are not paid their rightful entitlements by employers.

This collection of frequently asked questions (FAQs) aims to provide clarity on the concept of wage theft and guide individuals on the steps to address this issue.

Whether you’re dealing with unpaid wages, incorrect pay rates, or other related concerns, these answers will help you navigate the complexities of wage theft and take appropriate action to safeguard your rights as an employee.

### What is wage theft?

Wage theft is the non-payment of legal entitlements by your employer, including award rates, penalty rates, wages, and overtime.

### How can I address wage theft by my employer?

You can take legal action against your employer by filing a claim in various courts, such as the Federal Court, Federal Circuit Court, District Court, or Magistrates Court.

### What steps should I follow when dealing with wage theft?

The process includes negotiation, reporting the issue to the Fair Work Ombudsman, mediation, conciliation, and, if necessary, filing a claim in court.

### Can I make a claim for wage theft if my employer doesn’t pay the correct hourly rates?

Yes, if you are not being paid the correct amount according to the relevant modern award, your employer may be engaging in wage theft, and you can make a claim.

### What if my employer pays me in cash-in-hand or off-the-books?

Being paid cash-in-hand or off-the-books may still constitute wage theft if your employer fails to pay superannuation, leave entitlements, and other benefits. You can make a claim in such cases.

### Is unpaid overtime considered wage theft?

Yes, if your employer fails to pay overtime rates as specified in your Modern Award, it can be classified as wage theft, and you may have a claim.

### What about unpaid penalty rates for working on weekends or holidays?

Unpaid penalty rates for working on weekends or public holidays are also considered wage theft, and you can file a claim.

### What are illegal cash-back schemes in wage theft?

Illegal cash-back schemes involve employers making employees give back a percentage of their wages. This is a form of wage theft, and affected employees can claim these amounts.

### Can my employer make unauthorized deductions from my wages?

No, an employer can only deduct money from your wages if you agree in writing, and it’s for your benefit, allowed by law, court order, the Fair Work Commission, a modern award, or a registered agreement. Unauthorized deductions may be considered wage theft.

### What is phoenixing in wage theft?

Phoenixing refers to transferring business assets to another company to avoid liabilities, including employee wages. If your employer engages in phoenixing, it constitutes wage theft, and you may have a claim.

### What are sham contracting arrangements in wage theft?

Sham contracting occurs when an employer wrongly classifies an employee as an independent contractor to avoid providing entitlements. If you’re subject to a sham contract, it may be wage theft, and you can make a claim.

### Can non-payment of superannuation be considered wage theft?

Yes, non-payment or underpayment of superannuation by your employer is a form of wage theft, and you may have a claim.

### How do I calculate the amount I’m owed for wage theft?

You should accurately calculate the owed amount, including minimum pay rates, allowances, leave loading, unpaid leave, unpaid overtime, penalty rates, taxes, superannuation, and any other entitlements specified in the award, employment contract, or agreement.

### What should I do if my employer refuses to negotiate or settle my wage theft claim?

If negotiations fail, report the matter to the Fair Work Ombudsman for assistance in reaching a settlement.

### What happens if a settlement cannot be reached through negotiation or mediation?

If a settlement cannot be reached informally, you may need to commence legal action in court to recover your unpaid wages.

### Can I take legal action for wage theft for amounts under $20,000?

Yes, for claims under $20,000, you can file a small claim in courts like the Magistrates Court or Federal Circuit Court.

### How can I take legal action for wage theft for amounts over $20,000?

Claims over $20,000 can be filed in the Federal Court, Federal Circuit Court, or eligible State or Territory courts.

### Can I hold the business owner personally liable for wage theft?

Yes, the director of the company or anyone involved in the wage theft can be held personally liable for the contravention.

### What are the consequences for those involved in wage theft?

Involved parties may face injunctions, compensation orders, and reinstatement orders, as well as potential personal liability.

### How long do I have to make a claim for wage theft?

You have up to 6 years to make a claim for wage theft from the time the amount became due and payable. This is the limitation period, and it cannot be extended.

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**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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## Bankruptcy Lawyers Guide
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# Bankruptcy Lawyers 101 – Complete Guide

[Discuss Your Case Today](https://stonegatelegal.com.au/contact/)

## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| March 31, 2018

## Article Summary

The article provides a comprehensive overview of bankruptcy law, focusing on the role and responsibilities of bankruptcy lawyers.

It covers the legal framework, including what constitutes bankruptcy, debtor’s and creditor’s petitions, and various types of personal insolvency agreements such as Part IX and Part X.

he guide also explores alternatives to bankruptcy, how bankruptcy lawyers can assist both creditors and debtors, and the specifics of proceeding with bankruptcy claims in court.

It’s a detailed resource for understanding the processes and legal options available in personal insolvency situations.

Here are some key points from the article on bankruptcy lawyers:

- **Bankruptcy Basics**: Explains the concept of bankruptcy, including voluntary and involuntary petitions.
- **Role of Bankruptcy Lawyers**: Describes how these lawyers assist clients in understanding and navigating bankruptcy laws.
- **Debtor and Creditor Representation**: Details the services offered to both debtors seeking relief and creditors needing to claim debts.
- **Alternatives to Bankruptcy**: Discusses options like debt agreements and personal insolvency agreements to avoid formal bankruptcy.
- **Legal Process and Documentation**: Outlines the necessary legal procedures and documents involved in filing for bankruptcy.

For more information please contact our [bankruptcy lawyers](https://stonegatelegal.com.au/bankruptcy/).

Table of Contents

[Toggle](https://stonegatelegal.com.au/bankruptcy-lawyers-101-complete-guide/#)

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## Bankruptcy Lawyers 101 – Complete Guide

Bankruptcy lawyers, or personal insolvency lawyers, can help a number of different parties to a bankruptcy proceeding.

If a party is not able to pay their debts when they are due and payable, they are legally insolvent.

If a person cannot raise the money needed to pay those debts then they can be made bankrupt.

During this process there will be:

1. **Creditors** – the person / company who is owed the debt;
2. **Debtors** – the person who owes the debt and is unable to pay the debt; and
3. **Trustee** – an entity appointed to manage the bankrupt’s financial affairs.

Bankruptcy lawyers work for creditors, trustees, and debtors.

Our [insolvency lawyers](https://stonegatelegal.com.au/services/insolvency/) explain in this article exactly what bankruptcy lawyers do.

## What do Bankruptcy Lawyers Do?

Debt recovery and bankruptcy lawyers are able to give advice and assistance in all personal debt matters, from pre-bankruptcy advice to post bankruptcy advice.  This includes (but is not limited to):

01. Advice and assistance in relation to drafting or signing debt agreements, such as car financing agreements, home loan, agreements, mortgages, etc;
02. Advice and assistance in relation to all pre-bankruptcy proceedings, including advising on your rights, risks and liabilities;
03. Drafting lawyers letters of demand to a debtor foreshadowing bankruptcy action if the debtor does not attempt to pay their debts;
04. Drafting, filing and service of a bankruptcy notice on behalf of a creditor;
05. Advice and assistance with a debtor’s risks, rights, and liabilities when a debtor is served with a bankruptcy notice;
06. Advice and assistance with the validity of a bankruptcy notice, and the steps needed when attempting to resist a bankruptcy notice;
07. Advice and assistance on a creditors eligibility to present a creditor’s petition to the [Federal Circuit and Family Court of Australia](https://www.fcfcoa.gov.au/);
08. Drafting, filing, and serving a creditor’s petition and all of the supporting documents needed in the bankruptcy proceeding;
09. Advice and assistance on a debtors eligibility to present a debtor’s petition to AFSA;
10. Drafting, filing, and serving a debtor’s petition and all of the supporting documents needed for AFSA;
11. Working with the trustee to realise assets of the bankrupt, including voidable transactions in bankruptcy, and all claims from trustees in bankruptcy;
12. Assistance in the negotiation of personal debt settlement agreements, personal [insolvency agreements](https://stonegatelegal.com.au/what-is-a-part-x-personal-insolvency-agreement/), and personal debt agreements;
13. Advice and assistance relating to a bankrupts rights and obligations during the bankruptcy;
14. Advice and assistance relating to a bankrupts rights and obligations after the bankruptcy;
15. Advice and assistance on how to secure an early release from bankruptcy; and
16. Advice and assistance in the [Federal Circuit and Family Court of Australia](https://www.fcfcoa.gov.au/) with defending or resisting bankruptcy proceedings.

## What is Bankruptcy?

Bankruptcy occurs when a debtor is unable to pay their debts.

It can initiated by a debtor using a debtor’s petition, or a creditor after receiving a judgment debt using a creditor’s petition.

In either case, a bankruptcy trustee is appointed to manage the financial affairs of the bankrupt and realise assets and property of the bankrupt, to satisfy the debts to the creditors.

A bankruptcy lawyer can help you with your debtor’s petition, help you enforce your judgment debt with a creditor’s petition, and assist the bankruptcy trustee with the bankruptcy.

## What is a Debtor’s Petition?

[Section 55 of the _Bankruptcy Act 1964_ (Cth)](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s55.html) (“ _**Bankruptcy Act**_”) says:

> _Subject to this section, a debtor may present to the Official Receiver a petition against himself or herself._

[Section 5 of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s5.html#official_receiver) says:

> _“Official Receiver” includes a person acting as an Official Receiver._

The official receiver is an appointment under statute.  On behalf of the Official Receiver, the [Australian Financial Security Authority](https://www.afsa.gov.au/) (“ _**AFSA**_”) operates the day-to-day administration of bankruptcies, such as issuing bankruptcy notices, deciding debtor’s petitions, etc.

To petition for your own bankruptcy, a debtor must file a [debtor’s petition](https://www.afsa.gov.au/) and a statement of affairs with the Official Receiver.

If the debtor’s petition is accepted then the debtor has the option of appointing a [registered trustee](https://www.afsa.gov.au/practitioners/registered-trustee) for the administration of the debtor’s estate, however creditors can change the trustee later.

### Rejection of a Debtor’s Petition

[Section 55(3) of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s55.html) also prescribes ways in the Official Receiver may reject a debtor’s petition, including if:

1. The petition does not comply substantially with the approved form; or
2. The petition is not accompanied by a statement of affairs; or
3. The Official Receiver thinks that the statement of affairs accompanying the petition is inadequate.
4. It appears from the information in the statement of affairs (and any additional information supplied by the debtor) that, if the debtor did not become a bankrupt, the debtor would be likely (either immediately or within a reasonable time) to be able to pay all the debts specified in the statement of affairs; and more.

If you are having financial problems and you are having trouble meeting your debts when they become due and payable, then contact our bankruptcy lawyers for advice and assistance with a debtor’s petition.

## What is a Creditor’s Petition?

![Federal Circuit Court Brisbane bankruptcy court](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2018/03/Federal-Circuit-Court-Brisbane-bankruptcy-court.png)A creditor’s petition is an application to the [Federal Circuit and Family Court of Australia](https://www.fcfcoa.gov.au/) from a creditor applicant, to a debtor respondent, asking the Court for a sequestration order, making the debtor bankrupt.

A creditor or the creditor’s bankruptcy lawyer must follow these steps:

1. You must get a judgment from a Court over $10,000.00
2. Apply to [AFSA](https://www.afsa.gov.au/) for a bankruptcy notice;
3. Serve the bankruptcy notice and the judgment on the debtor;
4. The debtor commits an act of bankruptcy;
5. Present a creditor’s petition and supporting material to the [Federal Circuit and Family Court of Australia](https://www.fcfcoa.gov.au/);
6. Serve the creditor’s petition and supporting material on the judgment debtor;
7. Prepare your final affidavits (affidavit of debt & affidavit of search);
8. If all is good, and the application is unopposed, the Court will make the sequestration order.

### Judgment from a Court over $10,000.00

[Section 41 of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s41.html) says:

> _An Official Receiver may issue a bankruptcy notice on the application of a creditor who has obtained against a debtor:_
>
> _(a)  a final judgment or final order that:_
>
> _(i)  is of the kind described in paragraph 40(1)(g); and_
>
> _(ii)  is for an amount of at least $10,000; or_
>
> _(b)  2 or more final judgments or final orders that:_
>
> _(i)  are of the kind described in paragraph 40(1)(g); and_
>
> _(ii)  taken together are for an amount of at least $10,000._

This means that you must have a judgment or final order of $10,000.00 or more, or two (2) or more judgments which total $10,000.00 or more to apply to [AFSA](https://www.afsa.gov.au/) for a bankruptcy notice.

### Apply to AFSA for a Bankruptcy Notice

![Australian Financial Security Authority](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2018/03/Australian-Financial-Security-Authority.jpg)If you have a judgment from the Court which meets the requirement of [section 41](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s41.html) above, then you can [apply online](https://www.afsa.gov.au/online-services/creditors-bankruptcy-notices) on the [AFSA](https://www.afsa.gov.au/) website for a bankruptcy notice.

You have to be registered with [AFSA](https://www.afsa.gov.au/) to apply.

It is very important that the bankruptcy notice is completed correctly.  One of the ways in which a bankruptcy notice can be set-aside is if it is defective.

We strongly recommend getting a bankruptcy lawyer to complete the drafting of the bankruptcy notice.

The cost of issuing a bankruptcy notice from [AFSA](https://www.afsa.gov.au/) is $470.00.

### Serve the Bankruptcy Notice on the Debtor

Once you have a completed bankruptcy notice, you will need to serve the bankruptcy notice on the judgment debtor.  You will have [6 months](http://classic.austlii.edu.au/au/legis/cth/consol_reg/br1996251/s4.02a.html) commencing on the date of issue of the bankruptcy notice.

A bankruptcy notice is not an originating process, but is a document, and so ordinary service is fine.

Section 102 of the _Bankruptcy Regulations 2021_ (Cth) (“ _**the Regulations**_”) allows a document to be served on a debtor in the following ways:

> (1) Unless the contrary intention appears, if a document is required or permitted by the Act or this instrument to be given or sent to, or served on, a person (other than the Inspector-General, the Official Receiver or the Official Trustee), the document may be:
>
> (a) sent by a courier service to the person at the address of the person last known to the person serving the document; or
>
> (b) left, in an envelope or similar packaging marked with the person’s name and any relevant document exchange number, at a document exchange where the person maintains a document exchange facility.
>
> Note: See also section 28A of the Acts Interpretation Act 1901 .
>
> (2) In the absence of proof to the contrary, the document is taken to have been received by, or served on, the person when the document would, in the due course of business practice, be delivered to that address or document exchange.

If the debtor does not comply with the bankruptcy notice and so commits an act of bankruptcy, you will need to file an affidavit of service of the bankruptcy notice, so ensure that you keep evidence of service to annex to the affidavit.

We have a very detailed article – [Can you Still Serve a Bankruptcy Notice by Email?](https://stonegatelegal.com.au/can-you-still-serve-a-bankruptcy-notice-by-email/)

If in doubt, bankruptcy lawyers can do this for you.

### Act of Bankruptcy

A [bankruptcy notice](https://www.afsa.gov.au/online-services/creditors-bankruptcy-notices) requires a debtor to comply with the notice.  If the debtor fails to comply with the bankruptcy notice within 21 days from being served, then they have committed an act of bankruptcy.

[Section 40(1)(g) of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s40.html) says:

> _(1)  A debtor commits an act of bankruptcy in each of the following cases:_
>
> _… (g)  if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not:_
>
> _(i)  where the notice was served in Australia–within the time specified in the notice; or_
>
> _(ii)  where the notice was served elsewhere–within the time fixed for the purpose by the order giving leave to effect the service;_
>
> _comply with the requirements of the notice or satisfy the Court that he or she has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counterclaim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained._

There are a number of other acts of bankruptcy, so it is worth reading all of [section 40](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s40.html).

If the debtor commits an act of bankruptcy, then you have six (6) months to present the creditor’s petition to the [Federal Circuit and Family Court of Australia](https://www.fcfcoa.gov.au/) of Australia.

### Present a Creditor’s Petition to the Court

[Section 43 of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s43.html) says:

> _Subject to this Act, where a debtor has committed an act of bankruptcy … the Court may, on a petition presented by a creditor, make a sequestration order against the estate of the debtor._

A creditor’s petition is an originating process and will need to be drafted correctly.

To commence proceedings, the creditor will need to draft and file the following documents:

1. Creditor’s petition; and
2. Affidavit of service of the bankruptcy notice; and
3. Affidavit of search; and
4. Consent to act as trustee.

These are all complicated legal documents and will need to be completed correctly.  We strongly recommend engaging bankruptcy lawyers to draft and file these documents.

Once drafted and filed with the [Federal Court’s eLodgment system](http://www.fedcourt.gov.au/online-services/elodgment), you will be given sealed versions of the documents from the Court, with the return date for the hearing.

You will also need to pay the following [filing fees](https://www.fcfcoa.gov.au/gfl/gfl-fees):

1. A corporate applicant (if you are suing in your company name) will cost **$4,425.00**; or
2. If you are suing in your personal name **$1,845.00**.

Those sealed versions are to then be served on the debtor.

### Serve the Creditor’s Petition on the Debtor

Personal service in the [Federal Court](http://www.federalcircuitcourt.gov.au/) jurisdiction is called “ _Service by Hand_”.

Rule 4.05 of the _Federal Court (Bankruptcy) Rules 2016_ (Cth) (“ _**the Rules**_”):

> _Unless the Court otherwise orders, at least 5 days before the date fixed for the hearing of a creditor’s petition, the applicant creditor must serve on the respondent debtor:_
>
> _(a) the creditor’s petition; and_
>
> _(b) a copy of the affidavit, or affidavits, verifying the petition required by subsection 47(1) of the Bankruptcy Act; and_
>
> _(c) if applicable, a copy of the affidavits relating to the petition required by rule 4.04; and_
>
> _(d) a copy of any consent to act as trustee of the debtor’s estate filed under section 156A of the Bankruptcy Act._

Once served, an affidavit of service of the creditor’s petition must be drafted and filed.

If you cannot personally serve the debtor by hand, then you may need to make an application for substituted service.  Read our article on [substituted service of a creditor’s petition](https://stonegatelegal.com.au/substituted-service-of-a-creditors-petition/) here.

### The Court will Make the Sequestration Order

After you prepare and file your final affidavits, ensure that everything is drafted and filed correctly, and the debtor does not oppose the petition, it is likely that Court will make the sequestration order forcing the debtor into bankruptcy.

If you are unable to set this aside, then you may be able to [annul your bankruptcy](https://stonegatelegal.com.au/bankruptcy-annulment-ending-your-bankruptcy-early/).

## Alternatives to Bankruptcy for Debtors

Bankruptcy lawyers can offer advice and assistance regarding alternatives to presenting a debtor’s petition. There are a number of alternatives to consider before filing for bankruptcy, including:

1. Informal debt agreements; or
2. Formal Part IX Debt Agreements; or
3. Part X Personal Insolvency Agreements.

## Alternatives to Bankruptcy for Creditors

Bankruptcy lawyers can offer advice and assistance regarding alternatives to presenting a creditor’s petition to the [Federal Circuit and Family Court of Australia](https://www.fcfcoa.gov.au/).

There are a number of alternatives that the debtor may want you to consider before presenting your petition, including:

1. Informal debt agreements; or
2. Enforcement through the Queensland Courts; or
3. Formal Part IX Debt Agreements; or
4. Part X Personal Insolvency Agreements.

### Informal Debt Agreements by Bankruptcy Lawyers

Bankruptcy lawyers can attempt to negotiate an informal debt agreement, usually in the form of a deed of settlement.

At this point however, a creditor may have had months, or even years, of broken promises to pay and protracted litigation, making it difficult to negotiate.

A debtor will need to negotiate for something more than simply a promise to pay.  A creditor may consider a deed simply another agreement which the debtor will not honour.

It is likely that a debtor will need to leverage something else to attempt to get a creditor to agree, security for the judgment debt, interest on repayments, and/or payment of costs, for example.

A qualified bankruptcy lawyer will be able to negotiate a good deal in an attempt to avoid enforcement proceedings, including bankruptcy proceedings.

### Enforcement through the Queensland Courts

At this point, the creditor has been forced to get a judgment against the debtor, and all of the associated costs that were incurred because of it.  From a creditor’s perspective, it may be understandable that they do not want to risk a further breach, or non-payment.

If an informal agreement cannot be reached, a creditor and/or a debtor might want to consider consenting to an enforcement warrant as an alternative to bankruptcy.

A [warrant for redirection of earnings](https://stonegatelegal.com.au/enforcement-warrant-for-redirection-of-earnings/), or a warrant for [redirection of debts](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s839.html), or an order [authorising payment by instalments](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s868.html), for example.

A creditor may also consider other enforcement warrants, such as a warrant for [seizure and sale of property](https://stonegatelegal.com.au/warrant-for-seizure-and-sale-of-property/) which includes “all real and personal property”.  A debt recovery / bankruptcy lawyer will be able to advise and assist in relation to enforcement through the Queensland Courts, and enforcement warrants.

## Part IX Debt Agreements

A Part IX (Part 9) Debt Agreement is an agreement between a debtor and creditors to repay the debt or debts to the creditor.

As the name suggests, a Part IX Debt Agreement is an agreement pursuant to Part IX (Part 9) of the [_Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s185.html).

The debtor must give a written proposal, and a statement of the debtor’s affairs with the proposal, to [AFSA](https://www.afsa.gov.au/) for repayment of debts to the creditors.

Once a compliant proposal is accepted by [AFSA](https://www.afsa.gov.au/) it is then provided to the creditors so that all of the creditors can vote on the proposal.

If the majority of the creditors vote to agree to the proposal, then the Part IX agreement is accepted.

Pursuant to [section 185 of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s185f.html), this then means that upon acceptance of the Part IX agreement, a creditor cannot apply for enforcement of, or enforce, a remedy against the debtor’s person or property in respect of a frozen debt; and an enforcement officer must not take action, or further action, to execute, or sell property under, any process issued by a court to enforce payment of a frozen debt owed by the debtor.

### Basic Eligibility for Part IX Agreement

To be eligible for a Part IX debt agreement you will need to satisfy the following:

1. You must be insolvent – meaning that you are unable to pay your debts when they become due and payable;
2. You must not have been bankrupt; or had a Part IX debt agreement; or had a Part X personal insolvency agreement; within the last ten (10) years;
3. You must have unsecured debts of less than the [threshold amount](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s185c.html#threshold_amount) which is currently **$140,012.60** – See [here](https://www.afsa.gov.au/insolvency/how-we-can-help/indexed-amounts-0);
4. You cannot have assets which are more than the [threshold amount](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s185c.html#threshold_amount) which is currently **$280,025.20** – See [here](https://www.afsa.gov.au/insolvency/how-we-can-help/indexed-amounts-0); and
5. You cannot earn more after-tax income for the next 12 months to be than the [threshold amount](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s185c.html#threshold_amount) which is currently **$105,009.45** – See [here](https://www.afsa.gov.au/insolvency/how-we-can-help/indexed-amounts-0).

### What does a Part IX Debt Agreement mean for me?

Although this debt agreement can be a good alternative to bankruptcy, it comes with a price.

Firstly, proposing a Part IX Debt Agreement is an act of bankruptcy.

[Section 40(1)(h) of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s40.html) says:

> _(1)  A debtor commits an act of bankruptcy in each of the following cases:_
>
> _(ha)  if the debtor gives the Official Receiver a debt agreement proposal;_
>
> _(hb)  if a debt agreement proposal given by the debtor to the Official Receiver is accepted by the debtor’s creditors;_
>
> _(hc)  if the debtor breaches a debt agreement;_
>
> _(hd)  if a debt agreement to which the debtor was a party (as a debtor) is terminated under section 185P, 185Q or 185QA;_

An act of bankruptcy, like non-compliance with a bankruptcy notice, allows the creditors to present a petition to the [Federal Circuit and Family Court of Australia](https://www.fcfcoa.gov.au/).

A Part IX debt agreement is registered on the [National Personal Insolvency Index](https://www.afsa.gov.au/online-services/bankruptcy-register-search/npii), a search of which will show your name, which may affect your credit rating and your ability to borrow.

A Part IX Debt Agreement will only cover unsecured debts, a secured creditor can still attempt to realise their security interest.

If you trade under a business name, being a name that is not your name, you have to disclose the Part IX Debt Agreement to all other people that you are in business with.

## Part X Personal Insolvency Agreements

![PART X PERSONAL INSOLVENCY AGREEMENTS](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2018/03/PART-X-PERSONAL-INSOLVENCY-AGREEMENTS.png)A Part X (Part 10) Personal Insolvency Agreement is another agreement between a debtor and creditors to repay the debt or debts to the creditors.

As the name suggests, a Part X Personal Insolvency Agreement is an agreement pursuant to Part X (Part 10) of the [_Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s187.html).

[Section 188 of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s188.html) says that a debtor may sign an authority naming and authorising a registered trustee, a bankruptcy solicitor or the Official Trustee to call a meeting of the debtor’s creditors and to take control of the debtor’s property.

A Part X Personal Insolvency Agreement is similar to bankruptcy in a number of ways, except that it allows the debtor more control over how the trustee deals with the assets, property, etc. and how it is to be distributed to creditors.

### Basic Eligibility for Part X Personal Insolvency Agreement

There are less eligibility requirements for a [Part X Personal Insolvency Agreement](https://stonegatelegal.com.au/what-is-a-part-x-personal-insolvency-agreement/).  To be eligible, you simply need:

1. To be insolvent – meaning not able to pay your debts when they become due and payable;
2. To be present in, or reside in Australia or have a connection to Australia;
3. To have not proposed a Part X Personal Insolvency Agreement in the previous six (6) months.

### What does a Part X Personal Insolvency Agreement mean for me?

Although a Part X Personal Insolvency Agreement can be a good alternative to bankruptcy, it comes with a price, and it is a harsher price than a debt agreement.

Firstly, entering into a Part X Personal Insolvency Agreement is an act of bankruptcy.

[Section 40(1)(l)(m) of the _Bankruptcy Act_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s40.html) says:

> _(1)    A debtor commits an act of bankruptcy in each of the following cases:_
>
> _(l)  if, having been required by a special resolution of a meeting of his or her creditors so called to execute a personal insolvency agreement or to present a debtor’s petition, he or she fails, without sufficient cause:_
>
> _(i)  to comply with the requirements of this Act as to the execution of the agreement by him or her; or_
>
> _(ii)  to present a debtor’s petition within the time specified in the resolution;_
>
> _as the case may be;_
>
> _(m)  if a personal insolvency agreement executed by him or her under Part X is:_
>
> _(i)  set aside by the Court; or_
>
> _(ii)  terminated;_

An act of bankruptcy, like non-compliance with a bankruptcy notice, allows the creditors to present a petition to the [Federal Circuit and Family Court of Australia](https://www.fcfcoa.gov.au/).

A Part X Personal Insolvency Agreement is registered on the [National Personal Insolvency Index](https://www.afsa.gov.au/online-services/bankruptcy-register-search/npii) forever, a search of which will show your name, which may affect your credit rating and your ability to borrow, and a default will appear on your credit file.

A Part X Personal Insolvency Agreement means that you will not be able to have any dealings with your assets (house or real property) without the consent of the trustee.

A Part X Personal Insolvency Agreement does not allow you to be the director of a company, and so if you are currently the director of a company (a trustee company of a self-managed-superannuation-fund, for example) then you will have to appoint another director.

## What can Bankruptcy Lawyers do for me?

Bankruptcy Lawyers can do everything mentioned above and more.

If you are a debtor having difficulty paying your debts, or you are a creditor having difficulty getting paid from a debtor, then you should contact a debt recovery / bankruptcy lawyer.

## Bankruptcy Lawyers FAQ

Navigating the complexities of bankruptcy in Australia can be challenging. Here are some frequently asked questions and answers that provide clarity on the role of bankruptcy lawyers, the process, and the implications for both debtors and creditors.

### What is a bankruptcy lawyer?

A bankruptcy lawyer is a legal professional who specialises in insolvency law, primarily focusing on assisting individuals and companies to either recover from financial hardship or process claims against entities that have declared bankruptcy. They guide clients through legal proceedings, help in filing bankruptcy, and offer advice on alternatives to bankruptcy, such as debt agreements or personal insolvency agreements.

### When should I consult a bankruptcy lawyer?

You should consult a bankruptcy lawyer when facing financial difficulties that might require legal resolution, such as when debts become unmanageable, before declaring bankruptcy, or if you are a creditor whose debtor has declared bankruptcy. These lawyers can provide strategic advice on both the implications of declaring bankruptcy and the alternatives available.

### What are the alternatives to bankruptcy?

Alternatives to bankruptcy include debt agreements, personal insolvency agreements, and informal arrangements. These options are often considered before formal bankruptcy and involve negotiations with creditors to arrange payment plans or settle debts at an amount less than the total debts owed, potentially allowing the debtor to avoid the full impact of bankruptcy.

### What is a Part IX Debt Agreement?

A Part IX Debt Agreement is a form of debt arrangement under the Bankruptcy Act that allows individuals facing financial difficulty to reach a legally binding agreement with their creditors to settle debts. This agreement enables debtors to pay back what they can afford over a period of time, avoiding the harsher consequences of full bankruptcy.

### What does the bankruptcy process involve?

The bankruptcy process involves several steps including the filing of a debtor’s petition or a creditor’s application, assessment of the debtor’s financial affairs, and the appointment of a trustee. This trustee then manages the debtor’s estate to resolve debts by liquidating assets and distributing the proceeds among creditors according to legal priorities.

### How long does bankruptcy last?

In Australia, bankruptcy typically lasts for three years and one day from the day it is declared, unless extended by the court. During this period, the person’s financial affairs are controlled by a trustee, and they are subject to certain restrictions, such as not being able to travel overseas without permission from the trustee.

### Can bankruptcy be annulled?

Yes, bankruptcy can be annulled if the bankrupt person pays off all their debts or enters into a composition or arrangement with creditors, which is accepted and fully complied with. Annulling bankruptcy can remove the legal declaration of bankruptcy and its associated restrictions.

### What are the consequences of declaring bankruptcy?

Declaring bankruptcy has significant financial and legal consequences, including damage to credit ratings, loss of assets, restrictions on employment in certain fields, and the inability to act as a company director. It can also affect the debtor’s ability to travel internationally and obtain certain types of loans.

### Can a bankrupt individual travel overseas?

A bankrupt individual may travel overseas but must first obtain permission from their trustee. The trustee may refuse permission based on various factors, including the risk of non-return. If permitted, the individual often needs to meet specific conditions laid out by the trustee.

### How can a bankruptcy lawyer help a creditor?

A bankruptcy lawyer can assist creditors by ensuring that they navigate the bankruptcy process efficiently to recover owed debts. This includes filing proofs of debt, attending creditors’ meetings, and advising on the legal ramifications of the debtor’s bankruptcy and potential recovery avenues.

![Picture of Wayne Davis](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/desktop/optimized/rev-748d11d/secure.gravatar.com/avatar/5841d7da8b6c7d486226c9358f93fc5a.5b54ec283af918fb28f171190159c8892905cb00c7f8bf19a380e6224d11fa82)

#### Wayne Davis

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**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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## Doctrine of Laches Overview
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# What is the Doctrine of Laches?

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- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| August 5, 2023

## Article Summary

Equity separates what is morally right and wrong (in the eyes of Australian law) from what is legally right and wrong.

When you make an equitable claim, you claim to the court under the principle of equity (as distinct from a legal claim).

A defence to an equitable claim is the doctrine of laches.  The Doctrine of Laches is based on the idea that if a plaintiff unjustifiably waits too long before initiating legal action, and this delay causes prejudice to the defendant, the plaintiff may be barred from pursuing their claim.

The doctrine of laches is an equitable defence that asserts that if a plaintiff unreasonably delays initiating legal action, and this delay causes prejudice to the defendant, the plaintiff may be barred from pursuing their claim.

Australian courts consider several factors when applying the Doctrine of Laches. These may include the length of the delay, the reason for the delay, whether the defendant suffered any prejudice due to the delay, and whether the plaintiff had a valid excuse for not bringing the claim sooner.

This article discussed the doctrine of laches in more detail.

Table of Contents

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The doctrine of laches is a crucial legal principle known for its emphasis on “ _unreasonable delay_.” This doctrine is an integral part of the broader concept of equity, which aims to uphold fairness and justice in legal proceedings.

The doctrine of laches serves as a tool used by Australian courts to determine whether a plaintiff’s delay in bringing a legal claim has been unreasonable and, if so, whether that delay should bar the plaintiff from obtaining the remedy or relief sought.

The doctrine of laches comes into play when a plaintiff has waited an unreasonable amount of time before pursuing their claim. The key element here is that the delay must have caused prejudice to the defendant in some way. For instance, it may have made it challenging for the defendant to gather evidence, locate witnesses, or defend themselves effectively.

When a defendant raises the defence of laches, they essentially argue that the plaintiff’s delay has unfairly prejudiced them, making it unjust for the court to grant the requested remedy. In such cases, the court closely examines the circumstances and considers various factors, including the length of the delay, the reasons behind the delay, the extent of prejudice suffered by the defendant, and the overall equities involved.

In this article, [our litigation team](https://stonegatelegal.com.au/services/civil-litigation/) explain equitable claims, and the doctrine of laches in more detail.

## What is an Equitable Claim?

An important question that you will need to understand when discussing the doctrine of laches is what is an [equitable claim](https://stonegatelegal.com.au/oppression-claims-in-shareholder-and-director-disputes/) and how does it relate to this doctrine?

Equity separates what is morally right and wrong (in the eyes of Australian law) from what is legally right and wrong.

Say, for example, you perform large amounts of building work under the premise that you will be paid, but without a contract. [If they refuse to pay](https://stonegatelegal.com.au/how-to-improve-your-debt-recovery-prospects/) and the law cannot prove that they ever agreed to make payments for the work in question, equity can be applied, and you can be paid for your work.

Although it cannot be proven that their not paying you for the work is legally wrong, it can be decided by the court that it is ethically wrong. Equity is used when the law is too rigid for an outcome that is fair to be effectively applied.

When you make an equitable claim, you claim to the court under the principle of equity!

## The Doctrine of Laches – What is Delay?

When discussing the doctrine of laches, delay is a key feature in determining if it can be applied. As we have discussed, equity is different from the law in its flexibility and, like law, has the key goal of analysing and applying a fair outcome to the matter.

This being said, not everyone will be successful when making an equitable claim, as not all circumstances suit and sometimes a fair outcome will not be the claim that is being made.

Therefore, there must be [defences in place](https://stonegatelegal.com.au/summary-judgment-application-in-qld/) to protect those that have had equitable claims filed against them in a circumstance where it may not be fair. This is where the doctrine of laches can be applied.

In [civil law](https://stonegatelegal.com.au/litigation-lawyers-sunshine-coast/), you will have a set period of time to make a claim for it to be seen as reasonable and permitted. This will vary depending on the claim and the circumstances surrounding the claim. This is mirrored in equity and equitable claims.

You must claim within a set period in order for it to be reasonable when discussing equity also! However, as equity does not rely on legislation like laws do, so the doctrine of laches is used to apply this requirement.

If someone employs the defence of laches, they are stating that the other party has taken an [unreasonable amount of time](https://stonegatelegal.com.au/unreasonable-director-related-transactions-and-how-to-defeat-them/) to make a claim and that this is not fair, as circumstances have changed since.

Of course, the plaintiff has time to consider their options and discuss with a lawyer, so the claim does not have to be made immediately after the [violation of rights](https://stonegatelegal.com.au/builder-gone-bust-in-queensland-everything-you-need-to-know/) has taken place. Furthermore, any reasonable causes for delay will be considered by the court, such as illness or personal tragedy.

## What is Prejudice in the Doctrine of Laches?

In the previous point, we discussed the fact that a plaintiff cannot make an equitable claim after an unreasonably long period under the doctrine of laches. But why is this the case? What purpose does this serve to ensure a fair and equitable outcome is reached?

Well, having a period where it is reasonable to make a claim prevents the defendant or the person the claim has been made against, from [prejudice](https://stonegatelegal.com.au/deceit-and-fraudulent-misrepresentation-what-you-need-to-know/). Prejudice is the term used when discussing laches for harm or disadvantage that the defendant has suffered as a result of the delay in the plaintiff applying their rights.

This is a key factor in deciding if the defence of laches can be applied or not, as there is not a strict value on the period that a claim must be made for. When the delay is particularly extended, it becomes much easier for prejudice to be inferred.

## The Doctrine of Laches – Determining Relief

When discussing whether or not relief will be provided for equitable claims, the doctrine of laches and delay in the context of laches will be considered heavily.

Just for some understanding, relief is what a party is seeking when they are making an equitable claim. In order for relief to be provided, the party should make their claim in a period that is suitable to the matter and the circumstances.

However, more evidence that simply a delay is needed to prevent the other party from claiming relief for the injustice in question. It must be found that the consequences of the delay make it that it is now unfair to provide relief.

The nature of the delay, as well as the damage done to the defendant as a result of the delay, will be considered when determining if relief should be granted.

## Change in Circumstances and the Doctrine of Laches

After significant time lapses after the violation of the rights in question in the equitable claim, chances are that the circumstances surrounding the matter have changed.

When applying the doctrine of laches, one of the key themes that must be applied is prejudice as a result of a change in circumstances. This means that the circumstances surrounding the matter have changed to an extent that it would no longer be fair to the defending party to apply for relief.

Therefore, changing circumstances is key to determining if the defence of laches is valid, as if it cannot be suggested that the delay has resulted in changing circumstances that would create an unfair outcome if the claim was granted, it will not be allowed.

## Exceptions to the Availability of Equitable Defences

The defences that we have discussed in the article are referred to as equitable defences and, like equitable claims, they ensure a fair outcome in matters of equity. However, there are some exceptions to equitable defences, meaning that some circumstances warrant the defence to be not permitted even if it can be suggested to be true.

An example of this is when the plaintiff has been influenced by fraudulent behaviour or misrepresentation in order for the proceedings to be delayed. If this can be proven, the defence of laches cannot be applied, as illegal or unfair behaviour was put in place to cause the delay.

Furthermore, if the plaintiff has been prevented through any other means of the defendant’s behaviour, the defendant cannot make a defence based on laches.

It also cannot apply in circumstances where there is a statutory right for the plaintiff to bring forward their complaint and initiate proceedings.

### Case Study – _Macquarie Units Pty Ltd v Sunchen Pty Ltd_ \[2023\] NSWCA 116

In the case of _[Macquarie Units Pty Ltd v Sunchen Pty Ltd](https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/nsw/NSWCA/2023/116.html)_, the defence of laches can be seen in action and as a valid defence in court.

In this matter, the respondents, Sunchen Pty Ltd, brought forward the defence of laches against an equitable claim made by the plaintiff, Macquarie Units Pty Ltd. They believed that the period of time that it took for the plaintiffs to make their claim was unreasonable, resulting in a change in circumstance that would cause prejudice if the claim to relief was granted.

The Court (Meagher JA, White and Brereton JJA agreeing) recognises that the defence of laches was valid and that there had been an unreasonable period between the violation of rights and the claim being made.  It was, therefore, decided that the claim was invalid and would result in prejudice, leading to a dismissal of the case.

This case is an example of the doctrine of laches being used to protect someone’s rights and ensure a [fair outcome is allowed](https://stonegatelegal.com.au/frustration-of-contract-force-majeure-clauses/).

## The Doctrine of Laches FAQ

In this frequently asked questions section, we aim to provide you with clear and concise answers to all your questions related to laches.

### What is the doctrine of laches in Australia?

In Australia, the Doctrine of Laches is an equitable principle that deals with the unreasonable delay in bringing a legal claim. It is based on the idea that if a plaintiff unjustifiably waits too long before initiating legal action, and this delay causes prejudice to the defendant, the plaintiff may be barred from pursuing their claim.

### What is the difference between laches and equitable estoppel?

Laches is a defence used to bar a legal claim due to an unreasonable delay in bringing the claim. Equitable estoppel, on the other hand, is a legal doctrine that prevents a person from asserting their legal rights or claiming a right they previously waived or denied, if another person has relied on that waiver or denial to their detriment.

### What is the Doctrine of Laches in the context of Australian law?

The Doctrine of Laches is an equitable defence in Australian law that deals with the unreasonable delay in bringing a legal claim. It asserts that if a plaintiff unreasonably delays initiating legal action, and this delay causes prejudice to the defendant, the plaintiff may be barred from pursuing their claim.

### How does the Doctrine of Laches affect my legal claim in Australia?

If you, as a plaintiff, delay in filing your legal claim and the delay prejudices the defendant, the court may apply the Doctrine of Laches. As a consequence, the court could refuse to hear your case, as it would be considered unfair to the defendant to address a claim after an unreasonable lapse of time.

### What factors do Australian courts consider when applying the Doctrine of Laches?

Australian courts consider several factors when applying the Doctrine of Laches. These may include the length of the delay, the reason for the delay, whether the defendant suffered any prejudice due to the delay, and whether the plaintiff had a valid excuse for not bringing the claim sooner.

### Is there a specific time limit that defines “unreasonable delay” under the Doctrine of Laches in Australia?

No, there is no fixed time limit that constitutes “unreasonable delay.” The determination of reasonableness depends on the circumstances of each case. Courts will assess the specific facts, nature of the claim, and any explanations provided by the plaintiff to decide whether the delay was unjustified.

### Can the Doctrine of Laches be used as a defence in any legal claim in Australia?

The Doctrine of Laches is typically used in cases where equitable remedies are sought, rather than those seeking purely monetary damages. It is commonly applied in matters involving trusts, property, or injunctions. However, its applicability may vary based on the specific circumstances of each case, and consulting with a legal professional is essential to understand its potential impact on your claim.

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#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

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## Adjudication Response Guide
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# How to Draft an Adjudication Response in Queensland

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## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| November 13, 2019

## Article Summary

The article provides guidance on drafting and serving an adjudication response in Queensland for construction-related disputes. When served with an adjudication application, a respondent must follow specific steps:

01. Respondents must have given a payment schedule in response to a payment claim to be eligible to provide an adjudication response.
02. It’s crucial to be aware of the timeframes for submitting the response. The response should be given to the adjudicator within 10 business days of receiving the application or 7 business days after the adjudicator’s acceptance, or 15/12 business days for complex claims.
03. The adjudication response must be in writing and include submissions relevant to the response, focusing on the reasons previously stated in the payment schedule. “New reasons” not in the schedule are not allowed.
04. Respondents can raise statutory requirements related to the payment claim, construction contract validity, time limits, and other jurisdictional matters.
05. Detailed evidence supporting the payment schedule, expert reports, statutory declarations, and relevant particulars should be included in the response.
06. The response must be submitted to the adjudicator within the required timeframe and a copy given to the claimant within two business days.
07. Service methods can include personal delivery, registered post, email, or other agreed-upon means.
08. The adjudicator may request further submissions, a conference, or inspections before making a decision.
09. The adjudicator must decide the case within a set timeframe, determining the payment amount, interest, and fees. The decision is provided in writing and includes reasons.
10. If the decision is favourable, the claimant can register the adjudication certificate and enforce the decision as a court judgment. It is recommended to seek legal advice promptly to ensure the best defence against an adjudication application.

This article will explain adjudication responses in a lot more detail below.

Table of Contents

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![How to Draft an Adjudication Response in Queensland](<Base64-Image-Removed>)If you want to know how to draft and serve an adjudication response, then this article will provide you with useful information.

If you have been served with an adjudication application in Queensland, then you need to file and serve an adjudication response.

A respondent will need to do the following:

1. Identify the eligibility to give an adjudication response;
2. Immediately confirm the critical dates for submitting the response;
3. Understand how and where to submit the adjudication response;
4. Confirm if there are any jurisdictional issues which will need to be considered;
5. Understand if the payment claim includes items not allowed to be claimed;
6. Understand what is and is not allowed to be included in the adjudication response.
7. Prepare detailed submissions and evidence to support the payment schedule; and
8. Understand how to serve the adjudication response before time runs out.

If the respondent does not act within the required time, then the adjudicator may decide in favour of the claimant.

The claimant may then register the adjudication certificate and enforce the decision as if it were a judgment of the Court.

Contact us for advice and assistance with [Building and Construction Disputes](https://stonegatelegal.com.au/services/building-and-construction-disputes/)

**It is vital that you act quickly to draft and serve an adjudication response.  To ensure that you give yourself the best chance, you should contact a lawyer immediately**

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## Eligibility to give an Adjudication Response

A condition precedent for eligibility to respond to an adjudication application if the giving of a payment schedule after being given a payment claim.

[Section 82(2)](http://classic.austlii.edu.au/au/legis/qld/consol_act/bifopa2017514/s82.html) of the _Building Industry Fairness (Security of Payment) Act 2017_ (Qld) (“ **BIFA**”) says:

> _… The respondent must not give an adjudication response if the respondent failed to give the claimant a payment schedule as required under section 76._

If a respondent did not give a payment schedule in answer to the payment claim, then a respondent will not be entitled to give an adjudication response.

## What is an Adjudication Response?

[Section 82(1)](http://classic.austlii.edu.au/au/legis/qld/consol_act/bifopa2017514/s82.html) of BIFA says:

> _After being given notice of an adjudicator’s acceptance of an adjudication application under section 81, the respondent may give the adjudicator a response to the adjudication application (the “adjudication response”)._

So, an adjudication response is a response to the adjudication application.

There are a number of things to consider when drafting and serving an adjudication response, namely:

1. Identify the critical dates; and
2. Know how to give the adjudication response;
3. Consider what can be included in the response and what cannot;
4. Consider any jurisdictional issues;
5. Prepare submissions;
6. Collate all of the evidence required; and
7. Submit and serve the adjudication response in the correct time.

These issues will be explained in more detail below.

### Identify the Critical Dates

There are strict timeframes in which to file an adjudication response.

The adjudication response must be given to the adjudicator the later of 10 business days after receiving the application; or 7 business days after receiving the adjudicators acceptance.

For a complex claim, 15 business days or 12 business days respectively.

[Section 83 of BIFA](http://classic.austlii.edu.au/au/legis/qld/consol_act/bifopa2017514/s83.html) says:

> _(1) If responding to a standard payment claim, the respondent must give the adjudicator the adjudication response within the later of the following periods to end—_
>
> _(a) 10 business days after receiving a copy of the adjudication application;_
>
> _(b) 7 business days after receiving notice of the adjudicator’s acceptance of the adjudication application._
>
> _(2) If responding to a complex payment claim, the respondent must give the adjudicator the adjudication response within the later of the following to end—_
>
> _(a) 15 business days after receiving a copy of the adjudication application;_
>
> _(b) 12 business days after receiving notice of the adjudicator’s acceptance of the adjudication application._

### What does it mean to “Receive” the Documents?

The time starts running from the date of “ _receiving_” the above documents.  But what does “ _receiving_” mean in this context?

In [_CMF Projects Pty Ltd v Masic Pty Ltd & Ors_ \[2014\] QSC 209](http://classic.austlii.edu.au/au/cases/qld/QSC/2014/209.html) Daubney J said at \[25\]:

> _… there is a distinction in BCIPA (now BIFA) between the notions of “service” and “receipt” of documents. The word “receive” … has been considered on numerous occasions … That subsection relevantly provides that an adjudication application must be made “within 10 business days after the claimant receives the payment schedule”. It seems now to be clear enough on the authorities that the word “receive” connotes that, whilst the document in question need not come to the attention of a particular person within the relevant office, it nevertheless does actually need to have arrived at, and thereby been received’, at the recipient’s registered office, or place of business, and be there during normal office hours._

So, the time for the adjudication response starts running from the time that the above documents arrived at the recipient’s registered office, or place of business, and be there during normal office hours.

Care should be taken when assessing the time the document was delivered and the time it was received.

For example, it could have been delivered yesterday afternoon, but only retrieved from the post box today.

### The Form of the Adjudication Response

[Section 82(3) of BIFA](http://classic.austlii.edu.au/au/legis/qld/consol_act/bifopa2017514/s82.html) says:

> _The adjudication response—_
>
> _(a) must be in writing; and_
>
> _(b) must identify the adjudication application to which it relates; and_
>
> _(c) may include the submissions relevant to the response the respondent chooses to include._

However, the respondent is restricted to only include reasons that were included in the payment schedule.

Failure to articulate reasons in the schedule may mean that the respondent will be unable to include them in the adjudication response.

[Section 82(4) of BIFA](http://classic.austlii.edu.au/au/legis/qld/consol_act/bifopa2017514/s82.html) says:

> _However, the adjudication response must not include any reasons (“new reasons”) for withholding payment that were not included in the payment schedule when given to the claimant._

### What are “new reasons”?

In [_John Holland Pty Ltd v Walz Marine Services Pty Ltd & Ors_ \[2011\] QSC 39](http://classic.austlii.edu.au/au/cases/qld/QSC/2011/39.html) Margaret Wilson J said at \[27\]:

> _… the issues to be decided by the adjudicator are defined in the payment claim and the payment schedule. The respondent must state its reasons for wholly or partially withholding payment in the payment schedule. While the parties may make submissions in support of their respective positions in the adjudication application and the adjudication response respectively, the respondent cannot use the adjudication response as a vehicle to advance reasons for withholding payment which it failed to include in its payment schedule._

There are a number of cases on this point and it has been enforced reasonably strictly to prevent unfairness.

In [_Wiggins Island Coal Export Terminal Pty Ltd v Monadelphous Engineering Pty Ltd & Ors_ \[2015\] QSC 307](http://classic.austlii.edu.au/au/cases/qld/QSC/2015/307.html) Philip McMurdo J said at \[55\]:

> _The evident intent of \[the section\] is to prevent the unfairness to a claimant which could follow from a respondent being allowed to contest its alleged liability for a reason which it had not advanced ahead of the adjudication application._

However, an adjudication response can do more than simply mirror the payment schedule.

In [_Tqm v Dasein_ \[2004\] NSWSC 1216](http://classic.austlii.edu.au/au/cases/nsw/NSWSC/2004/1216.html) McDougall J said at \[30\]:

> _… it would be open to a respondent to argue, either in greater detail or with perhaps more supporting evidence, reasons that had been advanced. If it were intended that an adjudication response should do no more than mirror, word for word, a payment schedule, then there is little point to the ability … for a respondent to lodge an adjudication response._

So, an adjudication cannot raise new issues, but can elaborate, provide greater detail, and provide supporting evidence to support the reasons contained in the payment schedule.

### What can be Included in the Response

The adjudication response can include the following (amongst others):

1. An expert report supporting the respondent’s payment schedule;
2. Particulars and evidence (statutory declarations) in support of the submissions;
3. Particulars and evidence in relation to why the payment (or part of the payment) was withheld, (including offsetting claims);
4. Particulars and evidence identifying any non-contractual matters raised in the payment claim that should not be taken into account by the adjudicator; and
5. Particulars and evidence bringing attention to any jurisdictional issues.

An adjudication response can include information in relation to jurisdictional issues not contained in the payment schedule.

### Jurisdictional Issues for Adjudication Response

The adjudication response can ask the adjudicator to consider the statutory requirements of BIFA, the payment claim and the adjudication application, namely:

1. Identify the reference date to which the payment claim applies;
2. Identify if the claim relates to an applicable construction contract;
3. Identify if the payment claim is valid;
4. Correct identification of the construction work and/or related goods or services; and
5. Have all of the time limits been correctly complied with.

If any of the above can be answered in the negative, then the adjudicator may not have jurisdiction to decide the claim.

Once all of the arguments and any jurisdictional issues have been identified; the respondent has prepared their Adjudication Response Submissions and collated all of their evidence, it is time to submit the adjudication response.

## How to give the Adjudication Response

An adjudication response in Queensland must be submitted to the adjudicator within the timeframe above, and a copy of the response given to the claimant within two (2) business days.

The adjudicator is appointed by the Registrar and will have provided a copy of the adjudicator’s acceptance of the adjudication application, including contact details.

Once the adjudication response is given to the adjudicator, the response must be given to the claimant within two (2) business days.

[Section 83(6) of BIFA](http://classic.austlii.edu.au/au/legis/qld/consol_act/bifopa2017514/s83.html) says:

> _If the respondent gives the adjudicator an adjudication response under this section, the respondent must give a copy of the response to the claimant not more than 2 business days after giving the response to the adjudicator._

### Service of the Adjudication Response

[Section 102(1) of BIFA](http://classic.austlii.edu.au/au/legis/qld/consol_act/bifopa2017514/s102.html) says:

> _A notice or other document that, under this chapter, is authorised or required to be given to a person may be given to the person in the way, if any, provided under the relevant construction contract._

Service is not limited to provisions of the construction contract however, [section 39(1) of the _Acts Interpretation Act 1954_ (CTH)](http://classic.austlii.edu.au/au/legis/qld/consol_act/aia1954230/s39.html) also applies to service of an adjudication response, which says:

> _If an Act requires or permits a document to be served on a person, the document may be served—_
>
> _(a) on an individual—_
>
> _(i) by delivering it to the person personally; or_
>
> _(ii) by leaving it at, or by sending it by post, telex, facsimile or similar facility to, the address of the place of residence or business of the person last known to the person serving the document; or_
>
> _(b) on a body corporate – by leaving it at, or sending it by post, telex, facsimile or similar facility to, the head office, a registered office or a principal office of the body corporate._

The expression “ _similar facility_” has been held to mean email.  In [_Penfold Projects Pty Ltd v Securcorp Limited_ \[2011\] QDC 77](http://classic.austlii.edu.au/au/cases/qld/QDC/2011/77.html) Irwin DCJ said at \[232\]:

> _In my view in context, “or similar facility” is wide enough to extend to email. As such I consider s 103(2) of the BCIPA envisages email service of notices_

So, the same principles would apply as in [_CMF Projects Pty Ltd v Masic Pty Ltd & Ors_ \[2014\] QSC 209](http://classic.austlii.edu.au/au/cases/qld/QSC/2014/209.html) in that the adjudication response should be given to the claimant at the claimants registered office, or place of business, or place of residence, and be there during normal office hours.

A Respondent might also consider personal service and facsimile or email too, if the files are not too large.

Once served, the adjudicator can do a number of things.

## Adjudication Procedures

Once the adjudication response is given to the adjudicator and served on the claimant, the adjudication can do a number of things, namely:

1. Ask for further written submissions;
2. Call for a conference between the parties; and
3. Carry out an inspection of any matter to which the claim relates.

If the adjudicator does not do any of the above, or request an extension of time, then they will need to decide.

## The Adjudication Decision

The adjudicator must decide:

1. Whether they have jurisdiction and whether the application is frivolous or vexatious;
2. The amount of the progress payment, if any, to be paid by the respondent to the claimant;
3. The date on which any amount became or becomes payable;
4. The rate of interest payable on any amount; and
5. The fee and the percentage that each party is required to pay.

Further, the adjudicator’s decision must:

1. Be in writing; and
2. Include the reasons for the decision.

The adjudicator must decide the above within a strict timeframe.

### Time Limits for Making the Adjudication Decision

The adjudicator must decide the adjudication in either 10 business days, or 15 business days for a complex claim.

[Section 85(1) of BIFA](http://classic.austlii.edu.au/au/legis/qld/consol_act/bifopa2017514/s85.html) says:

> _(1) Subject to section 86, an adjudicator must decide an adjudication application no later than—_
>
> _(a) for a standard payment claim—10 business days after the response date; or_
>
> _(b) for a complex payment claim—15 business days after the response date._

The “ _response date_” is the day on which the adjudicator receives the response; or (if no response is given) the last day on which the respondent could give the adjudicator an adjudication response.

[Section 86 of BIFA](http://classic.austlii.edu.au/au/legis/qld/consol_act/bifopa2017514/s86.html) says that the adjudicator can request an extension of time for deciding adjudication application.

However, the claimant and the respondent must agree in writing.

Upon payment of fees, the adjudicator will provide a copy of the decision and reasons to the Registrar, the claimant and the respondent.

## What Happens Next?

If everything goes right, then the adjudicator will decide that the amount payable is the amount contained in the payment schedule.

A good building and construction debt recovery lawyer will give you the best chance to defend an adjudication application and defeat an unfair payment claim.

## Further Reading

- [Making a Payment Claim – BIFA (QLD)](https://stonegatelegal.com.au/making-payment-claim-bifa-qld/)
- [How to Make an Adjudication Application in Queensland](https://stonegatelegal.com.au/make-adjudication-application-queensland/)

**It is vital that you act quickly to draft and serve an adjudication response.  To ensure that you give yourself the best chance, you should contact a lawyer immediately**

[GET A FREE FEE ESTIMATE TODAY](https://stonegatelegal.com.au/free-case-evaluation/)

**OR CALL: [1300 545 133](tel:1300545133) FOR A PHONE CONSULTATION**

## Frequently Asked Questions (FAQs) about Adjudication Responses

Navigating the world of construction disputes and the adjudication process can be complex and overwhelming. Whether you’re a claimant seeking resolution or a respondent preparing a response, understanding the ins and outs of adjudication is essential for protecting your interests.

In this FAQ section, we provide clear answers to common questions about adjudication responses in Queensland. From the basics of the process to the role of adjudicators and the importance of legal assistance, we aim to provide you with valuable insights to help you navigate this intricate landscape effectively.

### What is an adjudication response?

An adjudication response, also known as an adjudication reply, is a written reply submitted by a respondent in response to an adjudication application. It presents arguments, evidence, and submissions related to the payment claim made by the claimant in a construction dispute.

### What is the adjudication process in Queensland?

The adjudication process in Queensland involves several steps:

- A claimant serves an adjudication application.
- The respondent drafts and serves an adjudication response.
- The adjudicator reviews both the application and response, potentially requesting further information.
- The adjudicator makes a decision on the dispute, including the amount payable, interest, and fees.

### How can adjudication lawyers assist in the process?

Adjudication lawyers, legal professionals with expertise in construction disputes, can guide you through drafting a strong adjudication response, ensuring compliance with legal requirements, identifying jurisdictional issues, and presenting compelling arguments and evidence to protect your interests.

### What is an adjudication application?

An adjudication application is a formal request made by a claimant in a construction dispute seeking a resolution regarding a payment claim. It initiates the adjudication process.

### What does “adjudicator” mean?

An adjudicator is a qualified individual appointed to review adjudication applications and responses. They make informed decisions based on the presented evidence, arguments, and applicable laws.

### What does “adjudication date” mean?

The “adjudication date” refers to the deadline by which an adjudicator must make a decision on the adjudication application. It’s a crucial timeframe within which the adjudicator must evaluate the arguments and evidence and provide a decision.

### How can I draft a strong adjudication response?

To draft a strong adjudication response, follow these steps:

- Identify critical dates for response submission.
- Understand the content and limitations of the response.
- Present arguments that were included in your payment schedule.
- Provide detailed evidence, expert reports, and statutory declarations to support your position.
- Address jurisdictional issues if applicable.
- Comply with service requirements, delivering the response to the adjudicator and claimant within specified timeframes.

### What happens if I fail to submit an adjudication response?

If you do not submit an adjudication response within the required timeframe, the adjudicator may decide in favor of the claimant based solely on their application. This could result in an unfavourable decision against you.

### Can I include new reasons in my adjudication response that were not in my payment schedule?

No, you cannot include “new reasons” for withholding payment that were not included in your original payment schedule. Your adjudication response should elaborate, provide more detail, and offer supporting evidence for the reasons stated in the schedule.

### How can I serve my adjudication response?

You can serve your adjudication response through methods such as personal delivery, registered post, email, or other agreed-upon means. Ensure that the response is given to the adjudicator within the specified timeframe and a copy is provided to the claimant within two business days.

### What if the adjudicator requests further information or a conference?

If the adjudicator needs more information or believes a conference would be helpful, you should cooperate and provide the requested information promptly. This helps ensure that the adjudicator has a comprehensive understanding of the dispute.

### What does the adjudicator consider when making a decision?

The adjudicator considers various factors, including:

1. Jurisdictional matters: Validity of the claim, reference date, compliance with time limits, etc.
2. Arguments and evidence presented in both the application and response.
3. Statutory requirements under the Building Industry Fairness (Security of Payment) Act 2017 (Qld).
4. Legal principles and relevant case law.

### Can I challenge the adjudicator’s decision?

If you believe the adjudicator’s decision is incorrect or unjust, you may have options for challenging it. Seeking legal advice is recommended to understand the feasibility and process for challenging the decision.

### How can Stonegate Legal help me with my adjudication response?

Stonegate Legal’s adjudication lawyers have extensive experience in handling construction disputes and adjudication processes. They can assist you in drafting a strong response, navigating legal complexities, and increasing your chances of a favourable outcome.

### What’s the significance of acting quickly in this process?

Acting promptly is crucial because strict timeframes apply throughout the adjudication process. Failing to adhere to deadlines could result in unfavourable decisions. Contacting an adjudication lawyer promptly can help you understand the timeline and take appropriate actions.

![Picture of Wayne Davis](<Base64-Image-Removed>)

#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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## Litigation Services

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At Stonegate Legal, client satisfaction is our top priority. We are proud to have served hundreds of clients who have had positive experiences working with us.

Copyright © 2023 [**Stonegate Legal**](https://stonegatelegal.com.au/) Pty Ltd – All Rights Reserved – Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732) \| [Terms](https://stonegatelegal.com.au/terms-and-conditions/) \|  [Privacy](https://stonegatelegal.com.au/privacy-policy/) \| [Sitemaps](https://stonegatelegal.com.au/sitemap_index.xml) \| [\*Conditions Apply](https://stonegatelegal.com.au/terms-and-conditions/)

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# Terms and Conditions

Terms and Conditions

Terms and Conditions for use of this website being https://stonegatelegal.com.au/ (“ **The Website**“).

This website is the website for Stonegate Legal Pty Ltd ACN 636 805 742.

## Governing Law and Jurisdiction

By using The Website, you accept these terms and conditions in full. If you register, or use an online form or contract services from The Website, you to expressly agree to these terms and conditions.

The Stonegate Legal Pty Ltd terms and conditions are governed by the laws of Queensland and any and all disputes which may arise between a client and Stonegate Legal Pty Ltd will be heard in the Courts of Queensland.

## Information on The Website – Terms and Conditions

The information contained in The Website was current at the time of publication and is for general information purposes only. Stonegate Legal Pty Ltd make no warranty as to their accuracy and strongly advise that you seek legal advice. All legal matters are different and a qualified legal professional will be able to tailor advice in relation to your own personal circumstances.

Please [contact us](https://stonegatelegal.com.au/contact-debt-recovery-qld/) for qualified legal advice, or search for a legal professional on the Queensland Law Society [website](http://www.qls.com.au/for_the_community/find_a_solicitor).

### Instant Quote Form

By completing and submitting any form on The Website you consent to be contacted by Stonegate Legal Pty Ltd or our partners in relation to your matter.

## Collecting Information

The information we collect will be in accordance with our [privacy policy](https://stonegatelegal.com.au/privacy-policy/).

## Appropriate Terms and Conditions information

Most of the legal information on The Website pertains to the laws associated with Queensland, or Australian law. However, this is not always the case. Do not believe that any certain item of legal information pertains to any particular legal system.

For all of the reasons, you should never rely upon any information on The Website, and we advise that you seek professional legal advice before embarking upon any action (or omitting to take any action) which includes or may have legal implications.

## Exclusion of warranties, representations and also guarantees

Stonegate Legal Pty Ltd do not warrant, represent or guarantee:

1. the accuracy from the information published for The Website;
2. the completeness from the information published for The Website;
3. that the data published on The Website is up-to-date;
4. or the information on The Website can be placed on achieve any certain result.

## Limits and exclusions associated with liability

Nothing in these conditions will: (a) limit or exclude our or your liability with regard to death or compensation for injuries resulting from carelessness; (b) limit or perhaps exclude our or your liability with regard to fraud or bogus misrepresentation; (c) limit some of our or your liabilities at all that may not be not permitted under relevant law; or (d) exclude some of our or your own liabilities that may not be excluded under relevant law.

To the extent how The Website and the data and services on The Website are provided free-of-charge:

1. We will not be liable in value of any losses arising away from any event or events beyond your reasonable control.
2. We are not liable to you in respect of any business losses.
3. We are not liable to you in respect of any decrease of or damage to profits, income, or anticipated financial savings.
4. We will not be liable to you in value of any decrease of use or creation. We will not be liable to you in value of any decrease of management time or office time.
5. We are not liable to you in respect of any decrease of business, contracts, business oriented opportunities or goodwill.
6. We are not liable to you in respect of any burning or corruption associated with any data, data source or software.
7. We are not liable to you in respect of any particular, indirect or debt recovery loss or damage.
8. We will not be liable to you in value of any losses arising away from any acts or omissions of any hosting services provider, payment services provider or other alternative services provider.

## Site availability

From time to time The Website terms and conditions or features of the website will be unavailable. Such unavailability may be the result of defects from the website hosting, timetabled or emergency upkeep procedures, or failures of alternative service providers. We don’t commit to being sure that The Website or terms and conditions will be available at any particular time. Additionally, we do not guarantee that The Website will continue to be published.

## Interactive attributes

The Website uses interactive features of which allow users to get in touch with us and our partner law firm. You acknowledge that, because of this limited nature associated with such communication, any legal assistance you might receive using such facility will probably be incomplete and could be misleading. Any legal assistance you might receive using such facility does not constitute legal services and accordingly should not be relied upon. No solicitor-client relationship should be created through the use of The Website.

## Our Partners

In addition to protecting Stonegate Legal Pty Ltd and it is members and staff members, the limitations associated with liability in these terms and conditions shall protect the following persons in value of any claims manufactured by any Stonegate Legal Pty Ltd customer or perhaps any user on The Website: (a) any Stonegate Legal Pty Ltd law practice partner; (b) any dealer of any appropriate document or documents offered on The Website; (c) any dealer of other legal content offered on The Website; and (d) any officer, employee, partner or member of any person known as in sub-paragraphs (a) to (c). For this avoidance of doubt, this Section will not affect this terms of any solicitor-client relationship expressly agreed and also entered into between a web site user and any law practice.

## Licence to make use of The Website

Unless in any other case stated, we or your licencors own this intellectual property rights from The Website and material on The Website. Subject to this Terms and Conditions and licence below, each one of these intellectual property rights are reserved.

You could view, download with regard to caching purposes solely, and print pages from The Website on your own personal use, subject to the restrictions determined below and somewhere else in these terms and conditions of use. You mustn’t: (a) republish material using The Website (including republication with another website); (b) market, rent or sub-license material from The Website; (c) show any material from The Website in community; (d) reproduce, identical, copy or in any other case exploit material with The Website for any commercial purpose; (e) edit or otherwise modify any material on The Website; or (f) redistribute material using The Website, except for content specifically and expressly offered for redistribution (such while our newsletter).

Where content is specifically offered for redistribution, it could only be redistributed within your organisation. This is a strict Term of Stonegate Legal Pty Ltd.

You may access our Feed by following this instruction on The Website. By accessing our Feed you accept these terms and conditions. Subject to your own acceptance of these terms and conditions, and notwithstanding the restrictions determined above, we grant to you a non-exclusive non-transferable non-sub-licensable licence to produce our RSS feed in unmodified style on any non-commercial website owned and handled by you. It is a condition of this licence that you include a credit for us and hyperlink to The Website on each website page where the Feed is published (in such form even as may specify every once in a while, or if we don’t specify any certain form, in an acceptable form). We may revoke this licence whenever they want, by giving your own written notice associated with revocation.

## Suitable use

You must not use The Website in ways that causes, or might cause, damage to The Website or impairment from the availability or accessibility from The Website; or at all which is illegal, illegal, fraudulent or harmful, or connected with any unlawful, against the law, fraudulent or dangerous purpose or activity. You must not use The Website to copy, retail, host, transmit, mail, use, publish or deliver any material which is made of (or is related to) any malware, computer virus, Trojan’s horse, worm, keystroke logger, rootkit or other malicious software applications. You must not conduct any methodical or automated info recovery activities (including without having limitation scraping, info mining, data extraction and also data harvesting) on or with regards to The Website without having our express published consent. You should never use The Website to transmit or send unsolicited business oriented communication. You should never use The Website for just about any purposes related to marketing without our express written agreement.

## Free 30 Minute Consultation

If you take advantage of the free 30 minute consultation then you agree that this does not constitute legal advice, and in general information only.

The content of the telephone consultation is intended only to provide a general summary of information to you. It is not intended to be comprehensive nor does it constitute legal advice. We would need to be instructed formally, and enter into a formal written costs agreement with our firm, and take proper instructions / read the documents – before we can provide legal advice. It is important that you do not act on the general information provided during the free consultation without obtaining proper legal advice from us or another legal practitioner.

There are often important (and short) timeframes involved in legal matters. A law firm cannot advise you about your matter or time critical steps relating to this dispute until they are formally engaged to act for you. If you miss any time-critical dates then you may lose your legal rights.

## Restricted admittance

Access to certain parts of The Website is fixed. We reserve the right to restrict having access to other areas of The Website, or in fact The Website, at our convenience. If we provide you with or you generate a password to help you access restricted parts of The Website or perhaps other content or perhaps services, you need to make sure that that password is kept confidential. You must notify us in writing immediately if you notice any unauthorised use of your account or password. You have the effect of any activity with The Website arising away from any failure to keep your password confidential, and may be held chargeable for any losses arising from such a problem. You must not use any other person’s user identification and password to get into The Website. We may disable your account on The Website at our sole discretion without warning or explanation. We reserve all rights in relation to this.

## Third party websites Terms and Conditions

The Website includes hyperlinks to other websites possessed and operated through third parties. These links are not recommendations. We haven’t any control over this contents of alternative websites, and you agree that we accept no responsibility for the use or for any loss or damage which could arise from your use of them.

## Licence to make use of free templates

You must credit Stonegate Legal Pty Ltd on all templates and derivatives thereof (in the form specified on this relevant template). Furthermore, you must add a visible hyperlink to https://stonegatelegal.com.au/ on any website the place where a derivative is published. Subject to this particular, you are engaged to determine: (i) the circumstance and link text for your hyperlink; and (ii) this page on online world. https://stonegatelegal.com.au/ to which the hyperlink points.

You mustn’t republish any design in amended style, or publish derivatives of a template including any footnotes or brackets appearing from the templates. You have no rights to market or distribute this templates or derivatives thereof as well as to license to others any rights from the templates or derivatives.

You acknowledge that we do not provide any legal services to you relating to the templates, and Stonegate Legal Pty Ltd will not be liable in respect of your use of the templates. We don’t warrant the templates comprehensiveness or precision; nor do we not plan to ensure that this templates remain available or that they’re kept up-to-date. The disclaimers of liability determined in any of these conditions apply in full with regards to our free templates.

You acknowledge and consent to subscribing to a newsletter if you download any of our free templates.

## Prices, payments Terms and Conditions

The charges will be as specified on The Website from time to time. We may change the charges at our sole discretion by posting the charges on The Website. If you do not wish to pay charges at the new level, the your remedy is to terminate the membership according to the terms. All charges are exclusive of GST.

Professional services are generally priced on The Website.

## More limitations of the liability

The disclaimers of liability outlined in any of these terms and conditions apply in regards to member services.

## Indemnity

You hereby indemnify Stonegate Legal Pty Ltd and any associated party and undertake to keep us indemnified next to any losses, loss, costs, liabilities and bills (including without restriction legal expenses and also any amounts compensated by us to a third party in settlement of an claim or dispute) sustained or suffered arising from any breach through you of any provision of these terms and conditions, or arising from any claim that you have breached any supply of these terms and conditions.

## Breaches of these terms and conditions

Without prejudice to our other rights, if you breach these terms and conditions of use at all, or if we reasonably suspect that you have breached these terms and conditions of use at all, we may: (a) send you more than one formal warnings; (b) temporarily suspend your having access to The Website; (c) permanently restrict you from accessing The Website; (d) block computers with your IP address from accessing The Website; (e) contact your online services provider and request they block your having access to The Website; (f) bring court proceedings against an individual for breach of contract or otherwise; (g) suspend and/or erase your account with The Website; and/or (h) erase and/or edit any or all of your current content.

Where we postpone or prohibit or block your having access to The Website or a component of The Website, you must not take any activity to circumvent such suspension or prohibition or perhaps blocking (including without having limitation creating and/or having a different account).

## Intellectual Property

Stonegate Legal Pty Ltd and also our logo are trademarks belonging to us. We give absolutely no permission for using these trademarks, and such use may constitute an infringement of our rights. The other listed and unregistered trademarks on The Website include the property of their own respective owners. Except stated otherwise, we do not endorse and so are not affiliated with from any of the holders of such rights and thus we cannot allow any licence to exercise such rights.

## Variance

We may revise these terms and conditions from time-to-time. Revised terms and conditions will apply to using The Website from the date of the publication from the revised terms and conditions on The Website.

## Assignment

You hereby agree that people may not transfer, sub-contract or otherwise deal with any or our rights and/or requirements under these conditions. You may certainly not transfer, sub-contract or otherwise cope with your rights and/or requirements under these conditions without obtaining your prior written agreement.

## Severability

If any of these terms and conditions is determined through any court or other competent authority to be unlawful and/or unenforceable, the remainder provisions will continue in effect.

### Exclusion of alternative rights

Subject to this preceding paragraph, these terms and conditions are for the benefit of you, and are not meant to benefit any alternative or be enforceable by any alternative. The exercise individuals and your rights with regards to these terms and conditions is just not subject to this consent of any alternative.

## Entire understanding

Subject these terms and conditions, together with our privacy, constitute the overall agreement between an individual and us with regards to your use of The Website, and supersede almost all previous agreements in respect of your use of The Website.

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## Quick Links

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Individual liability limited by a scheme approved under professional standards legislation.

## Litigation Services

- [Commercial Litigation](https://stonegatelegal.com.au/services/commercial-litigation/)
- [Building & Construction Disputes](https://stonegatelegal.com.au/services/building-and-construction-lawyers/)
- [Debt Recovery Lawyers](https://stonegatelegal.com.au/services/debt-recovery-lawyers/)
- [Civil / PersonalLitigation](https://stonegatelegal.com.au/services/civil-litigation/)
- [Tax Debt Disputes](https://stonegatelegal.com.au/services/tax-debt-lawyers/)
- [Corporations Disputes](https://stonegatelegal.com.au/services/corporations-dispute-lawyer/)
- [Body Corporate Debt Recovery](https://stonegatelegal.com.au/services/body-corporate-debt-recovery/)
- [Commercial Lease Disputes](https://stonegatelegal.com.au/services/commercial-lease-disputes/)
- [Defamation Litigation](https://stonegatelegal.com.au/services/defamation-lawyers/)
- [Wills & Estates Litigation](https://stonegatelegal.com.au/services/estate-litigation-lawyers/)
- [Insolvency Lawyers](https://stonegatelegal.com.au/services/insolvency/)
- [Letters of Demand](https://stonegatelegal.com.au/letter-of-demand/)
- [Statutory Demands](https://stonegatelegal.com.au/statutory-demand/)
- [Bankruptcy Lawyers](https://stonegatelegal.com.au/bankruptcy/)
- [Drafting Credit Contracts](https://stonegatelegal.com.au/debt-contract-credit-application/)

- Office Hours

Monday – Friday

8:30 AM – 5:00 PM

- Brisbane City

[Level 10/ 95 North Quay,](https://maps.app.goo.gl/YdLbTuKmnziFrQDv5)

[Brisbane City, QLD 4000](https://maps.app.goo.gl/YdLbTuKmnziFrQDv5) – (appointment only)

- [07 3180 0143](tel:0731800143)

- Sunshine Coast - Main Office

[4/57-59 Mary Street,](https://maps.app.goo.gl/Suo6oYWeRohEDEBWA)

[Noosaville, QLD 4566](https://maps.app.goo.gl/Suo6oYWeRohEDEBWA)

- [07 5346 0366](tel:0753460366)

At Stonegate Legal, client satisfaction is our top priority. We are proud to have served hundreds of clients who have had positive experiences working with us.

Copyright © 2023 [**Stonegate Legal**](https://stonegatelegal.com.au/) Pty Ltd – All Rights Reserved – Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732) \| [Terms](https://stonegatelegal.com.au/terms-and-conditions/) \|  [Privacy](https://stonegatelegal.com.au/privacy-policy/) \| [Sitemaps](https://stonegatelegal.com.au/sitemap_index.xml) \| [\*Conditions Apply](https://stonegatelegal.com.au/terms-and-conditions/)

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## [Home](https://stonegatelegal.com.au/)

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[Tax Debt Disputes](https://stonegatelegal.com.au/services/tax-debt-lawyers/)

[Civil / Personal Disputes](https://stonegatelegal.com.au/services/civil-litigation/)

[Defamation Litigations](https://stonegatelegal.com.au/services/defamation-lawyers/)

[Wills / Estate Litigation](https://stonegatelegal.com.au/services/estate-litigation-lawyers/)

[Insolvency Law](https://stonegatelegal.com.au/services/insolvency/)

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## [News & Blogs](https://stonegatelegal.com.au/news-articles/)

## [Contact Us](https://stonegatelegal.com.au/contact/)

1300 545 133

No Fee, No Obligation Case Evaluation

## Setting Aside Default Decisions
[Skip to content](https://stonegatelegal.com.au/setting-aside-default-decision-qcat/#content)

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[Contact Us](https://stonegatelegal.com.au/contact/)

# Setting Aside a Default Decision in QCAT

[Discuss Your Case Today](https://stonegatelegal.com.au/contact/)

## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| December 30, 2017

## Article Summary

In this article, our [debt collection lawyers](https://stonegatelegal.com.au/services/debt-recovery-lawyers/) provide a detailed guide on the process and considerations for setting aside a default decision in the Queensland Civil and Administrative Tribunal (QCAT).

When a respondent fails to file a response to a claim, a default decision can be issued against them. To set aside this decision, the respondent must apply to the tribunal and demonstrate several factors:

1. a prima facie defence on the merits.
2. a good reason for the failure to file a response.
3. any delay in bringing the application.
4. potential prejudice to the applicant; and
5. the respondent’s conduct and good faith in the proceedings.

Key considerations include proving a prima facie defence, showing that the failure to respond was not due to wilful disregard of the tribunal’s process, and ensuring that there is no undue delay in filing the application.

The article highlights the importance of demonstrating that the respondent was unaware of the importance of the documents or did not receive them properly.

It also covers the procedural aspects of filing an application to set aside a default decision, including the necessary forms and evidence required. The overarching theme is to balance fairness and efficiency in handling minor civil disputes, aligning with QCAT’s objectives of accessibility, fairness, and economy.

Table of Contents

[Toggle](https://stonegatelegal.com.au/setting-aside-default-decision-qcat/#)

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Setting aside a default decision in QCAT is not as easy as you might think!

The Court will need to be persuaded of some or all of the following:

1. Whether the respondent has raised a defence on the merits;
2. Whether or not there is a good reason for the respondent’s failure to file a response;
3. Any delay in bringing the application;
4. Whether the applicant would be severely prejudiced if the judgment was set aside, in a way which could not be adequately compensated by, say, costs.
5. The respondent’s conduct in the proceedings before and after judgment; and
6. The respondent’s good faith.

If you need to set aside a default QCAT decision, then this article will give the information needed.

## Setting Aside a Default Decision in QCAT

Section [51](http://classic.austlii.edu.au/au/legis/qld/consol_act/qcaata2009428/s51.html) of the _Q_ _ueensland Civil and Administrative Tribunal Act 2009_ (QLD) (“ _**QCAT Act**_“) says:

> _The tribunal, on application by the respondent, may set aside or amend a decision by default on terms, including terms about costs and the giving of security, the tribunal considers appropriate._

The starting point for an application setting aside a default decision in [QCAT](http://www.qcat.qld.gov.au/) is [_Garland and Anor v Butler McDermott Lawyers_ \[2011\] QCATA 151](http://classic.austlii.edu.au/au/cases/qld/QCATA/2011/151.html) where Justice Alan Wilson, President said:

> _[Section 51](http://classic.austlii.edu.au/au/legis/qld/consol_act/qcaata2009428/s51.html) is in very similar terms to [Rule 290 of the Uniform Civil Procedure Rules 1999](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s290.html).  Decisions on [rule 290](http://classic.austlii.edu.au/cgi-bin/sinosrch.cgi/au?method=boolean&rank=on&query=ucpr1999305%20s290) show that, among the factors relevant to the discretion arising under it are whether or not there is a good reason for the respondent’s failure to file a response; any delay in bringing the application; the respondent’s conduct in the proceedings before and after judgment; the respondent’s good faith; whether the respondent has raised a defence on the merits; and whether the applicant would be severely prejudiced if the judgment was set aside, in a way which could not be adequately compensated by, say, costs._

The factors to consider when setting aside a default decision in [QCAT](https://stonegatelegal.com.au/qcat-applications/) are:

1. Whether the respondent has raised a defence on the merits;
2. Whether or not there is a good reason for the respondent’s failure to file a response;
3. Any delay in bringing the application;
4. Whether the applicant would be severely prejudiced if the [judgment was set aside](https://stonegatelegal.com.au/how-to-set-aside-a-default-judgment/), in a way which could not be adequately compensated by, say, costs.
5. The respondent’s conduct [in the proceedings](https://stonegatelegal.com.au/commence-proceedings-person-company/) before and after judgment; and
6. The respondent’s good faith.

This article will explore these factors in more detail, or click for [QCAT Applications](https://stonegatelegal.com.au/qcat-applications/).

## Whether the respondent has raised a defence on the merits

Arguably the most important factor that a [QCAT](http://www.qcat.qld.gov.au/) Member will consider in [an application](https://stonegatelegal.com.au/non-publication-order-in-qcat/) setting aside a default decision in QCAT, is whether the applicant has raised a defence on the merits.

In [_National Mutual Life Association of Australasia Ltd v Oasis Developments Pty Ltd_ \[1983\] 2 QD R 441](https://stonegatelegal.com.au/wp-content/uploads/2017/12/NATIONAL_MUTUAL_LIFE_ASSOCIATION_OF_AUSTRALA.pdf) McPherson J said:

> _to set aside a judgment obtained against him in default of appearance is required to show by affidavit a defence on the merits, that is a “prima facie” or “substantial” defence … it will not be often that a defendant who has an apparently good ground of defence will be refused the opportunity of defending, even though a lengthy interval of time had elapsed in making his application provided no irreparable prejudice is thereby done to the plaintiff._

In [_Loanright Pty Ltd & Anor v Schollick_ \[2017\] QDC 178](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QDC/2017/178.html) when discussing this point the Court said:

> _The evidence put before this Court … is not just imprecise or vague, but is inexplicably lacking in support from direct evidence, when such evidence, if it existed, would appear to be available to the applicant. That is an important consideration, when the applicant is seeking an exercise of discretion to set aside a validly entered judgment by default._

### What does Prima Facie Mean?

[_Butterworths Legal Dictionary_](http://www.austlii.edu.au/austlii/guide/current/20030315--7.html)(Third Edition) defines _Prima Facie_ as:

> _Latin – at first sight; on the face of it._

A person who wants the Tribunal to set aside a regularly entered decision in default will be required to put evidence before the Tribunal of a genuine prima facie defence on the merits.

### Evidence of a Prima Facie Defence

_[Subsections 28(3)(b) and (e) of the QCAT Act](http://classic.austlii.edu.au/au/legis/qld/consol_act/qcaata2009428/s28.html)_ says that the Tribunal is not bound by the rules of evidence but must ensure, so far as practicable, that all relevant material is disclosed to it.

In [_Hamilton Roofing (Aust) Pty Ltd v Crocker & Build Restore Pty Ltd_ \[2014\] QCAT 211](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCAT/2014/211.html) Adjudicator Trueman said when discussing a prima facie defence:

> _… any alleged defence \[the respondent\] might have does not appear to be supported by the limited evidence attached to the submission or the court file._

Although no evidence is expressly stated in either the [_QCAT Act_](https://www.legislation.qld.gov.au/view/pdf/inforce/current/act-2009-023), the [_QCAT Regulations_](http://classic.austlii.edu.au//au/legis/qld/consol_reg/qcaatr2019519/), or the [QCAT Rules](http://www.qcat.qld.gov.au/__data/assets/pdf_file/0014/304520/QldCivAdTrRu09.pdf) – [**Form 55**](http://www.qcat.qld.gov.au/__data/assets/pdf_file/0004/165469/form-55-app-to-set-aside-default-decision.pdf), being the approved form for an application setting aside a default decision in QCAT, says:

> _Explain here why you want QCAT to set aside or amend the default decision.  You should include here the reasons why you did not file a response to the original application that started the proceeding.  You should also include details about what your proposed response would be if QCAT did set aside the decision.  Your application may be refused if you do not include the information requested._

The salient information requested in the form are:

1. Reasons why you did not file a response; and
2. Details about what your proposed response would be.

This is consistent with what was said by Justice Alan Wilson, President, in [_Garland and Anor v Butler McDermott Lawyers \[2011\] QCATA 151_](http://classic.austlii.edu.au/au/cases/qld/QCATA/2011/151.html).

Failure to include this information, and to produce evidence in support of this information, and the application may be refused by the Tribunal.  Conversely, evidence which contradicts the information supplied by the debtor, could be used to defend the application setting aside a default decision in QCAT.

## Whether or not there is a good reason for the respondent’s failure to file a response

A lot of the time, a debtor will allege that they were not served, or were not correctly served, or “ _had no idea_” that a claim or application was on-foot.

An affidavit of service will usually successfully prove that the debtor was served.  However, this is not always the case.

In [_Ryan v Wehi_ \[2011\] QCAT 376](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCAT/2011/376.html)  the applicants an affidavit of service of the application was filed by an employee of the applicant’s solicitors deposing to the fact that he had sent a copy of the application by post to the respondents at their address.  Kerrie O’Callaghan, Senior Member set aside a default decision because as Ms O’Callaghan said:

> I was satisfied after hearing from the respondents at the directions that they did not receive a copy of the application although it was posted to their address. In view of the history of the matter I found it extremely unlikely that they would ignore an application if they had in fact received it.

Conversely, in [_Secure Investing Pty Ltd v Rees_ \[2012\] QCATA 28](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCATA/2012/28.html) Justice Alan Wilson, President said:

> _In the absence of any legally persuasive evidence that the application was not properly served, Secure Investing Pty Ltd has failed to show any basis upon which it is entitled to obtain leave to appeal … If Secure Investing Pty Ltd wishes to set aside the default judgement, it should bring the correct application … supported by evidence showing that the address in Mr Rees original application was wrong – e.g., ASIC records._

The distinction in the above two cases is personal service on a person, and personal service on a company, which should be noted.

### Contumelious Disregard of the Process of the Court

Grand displays are also not uncommon.  Debtor’s will often refuse to accept documents, and sometimes tear them up or throw them away.

Atkinson J observed in [_Yankee Doodles P/L v Blemvale P/L_ \[1999\] QSC 134](http://classic.austlii.edu.au/au/cases/qld/QSC/1999/134.html) that:

> _The defendant must demonstrate ‘a very compelling reason’ for the failure to appear and that the criterion of a satisfactory explanation for failure to appear will be satisfied unless the failure to appear was in contumelious disregard of the process of the court._

**Anecdotally**, our process server managed to personally serve the director of a debtor company with a creditor’s statutory demand, when he was wheeling his bins out to the curb.  Our process server identified the director of the debtor company and handed him the statutory demand stating what the documents were.  The debtor then proceeded to open the lid of the bin and throw the documents inside.

### Did not Know that the Documents were Important

In the [QCAT Appeal jurisdiction](http://www.qcat.qld.gov.au/qcat-decisions/appealing-a-qcat-decision) in the matter of [_Cockrell v Mackey t/as Tablelands Premium Property_ \[2014\] QCATA 136](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCATA/2014/136.html) Justice Thomas, President considered the fact that the respondent tore up the application when served.  Justice Thomas, President said:

> _Mr Cockrell failed to file a response because he tore up the copy of the application when it was served on him. Mr Cockrell’s lawyers submitted to the learned Magistrate that Mr Cockrell would have taken the time to reply to the application if he had known that it was a court document. That is not a credible excuse._

In [_Telco Australia Limited v Favell & Anor_ \[2002\] QSC 208](http://classic.austlii.edu.au/au/cases/qld/QSC/2002/208.html) Holmes J considered the argument from the debtor that the debtor “ _did not realise the ramifications in failing to provide instructions (to his solicitor)_”.  Holmes J said:

> _I do not think that the applicant’s assertion that he “did not realise the ramifications in failing to provide instructions” provides, by any stretch of the imagination, a satisfactory explanation of his failure to defend. Mr Hack SC for the respondent submitted that that lack of any satisfactory explanation should, per se, be fatal to the application. As I indicated in argument, while that factor may be a powerful consideration in deciding whether judgment should be set aside, I doubt that it alone can be determinative, where, as here, there is no extreme delay and no suggestion of prejudice to the respondent. It is appropriate, in my view, to consider the applicant’s arguments as to the merits of his proposed defence._

Holmes J concluded, after considering if there was a good reason for the delay, and if there was a prima facie defence available:

> _… having regard to the absence of any satisfactory explanation for the delay in defending and the lack of any convincing case for the defence … the judgment should not be set aside. The application is dismissed._

If you can prove service, and prove that the debtor simply decided to do nothing with the documents, then you might be able to satisfy the tribunal that there is no good reason for the failure to file a response, however, this decision is discretionary, and to be read together with the other reasons from [_Garland and Anor v Butler McDermott Lawyers_ \[2011\] QCATA 151](http://classic.austlii.edu.au/au/cases/qld/QCATA/2011/151.html).

## Any Delay in Bringing the Application

In [_Gatton & Laidley Real Estate v Hayes Views Pty Ltd_ \[2017\] QCAT 108](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCAT/2017/108.html) quoting the High Court of Australia in [_Aon Risk Services Australia Limited v Australian National University_ \[2009\] HCA 27](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/2009/27.html) Adjudicator Anna Walsh said:

> _Two other factors may also influence the nature of the discretion: the first is the emphasis, in the QCAT Act, on requirements that the Tribunal act quickly, and with as little formality and technicality as is consistent with a fair and proper consideration of the issues before it.  The second is the decision of the High Court in AON v ANU in which the Court said that questions of delay, and cost for society in general, are to be regarded as important considerations in the exercise of a court’s discretion to excuse procedural failings._

As previously mentioned in [_Ryan v Wehi_ \[2011\] QCAT 376](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCAT/2011/376.html) above, Kerrie O’Callaghan, Senior Member set aside the decision in default.  Part of the ratio for the decision was that:

> _The respondents did not delay once they were aware that judgment had been entered. They made contact with the Tribunal and sought advice as to the appropriate method to deal with the decision which they wished to oppose._

Conversely, where no explanation for a delay is given, the decision to set aside a regularly entered decision may still be given.  In [_Blair v Harbrew Pty Ltd_ \[2013\] QCATA 19](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCATA/2013/19.html) Justice Alan Wilson, President said:

> _Even though Mr and Ms Blair have not explained the delay, I accept that the exercise of the discretion in s 51 of the QCAT Act favoured setting aside the default decision._

In [_Paradise Produce NT Pty Ltd v Arnolds Fibreglass Repairs Pty Ltd_ \[2010\] QCATA 32](http://classic.austlii.edu.au/au/cases/qld/QCATA/2010/32.html) the President in the [QCAT Appeal jurisdiction](https://stonegatelegal.com.au/appealing-a-qcat-decision/) said:

> _\[The Debtor\] has simply failed to explain how or why it did not appear or deliver a response, or the delay in seeking to set the judgment aside … The application for leave … addresses none of these matters. Even so, for the reasons explored earlier, there is nothing in the applicant’s material which is even moderately persuasive that it can rely upon any of these factors; and, again, there is nothing to suggest the decision by default was not regularly obtained. For these reasons, the application for leave to appeal should be refused._

So again, the case law considers any relevant factual matters in relation to the factors setting aside a default decision in QCAT as per [_Garland and Anor v Butler McDermott Lawyers_ \[2011\] QCATA 151](http://classic.austlii.edu.au/au/cases/qld/QCATA/2011/151.html) with delay in bringing the application to set aside a default decision an “ _important consideration in the exercise of a court’s discretion to excuse procedural failings_” but not in itself determinative.

## Whether the applicant would be severely prejudiced

In [_Rosing v Ben Shemesh_ \[1960\] VicRp 28](http://classic.austlii.edu.au/au/cases/vic/VicRp/1960/28.html) the Full Court of the Supreme Court of Victoria said:

> _delay in itself would not be important, but delay prejudicing the other party, or delay enabling rights of third parties to intervene, would be material._

This case was then cited in [_National Mutual Life Association of Australasia Ltd v Oasis Developments Pty Ltd_ \[1983\] 2 QD R 441](https://stonegatelegal.com.au/wp-content/uploads/2017/12/NATIONAL_MUTUAL_LIFE_ASSOCIATION_OF_AUSTRALA.pdf) along with [_Atwood v Chichester_ (1878) 3 Q.B.D. 722](http://www.austlii.edu.au/cgi-bin/LawCite?cit=%281878%29%203%20QBD%20722?query=%223%20QBD%20722%22) amongst others as precedent for prejudice to the plaintiff / creditor / applicant.  They said:

> _It is not often that a defendant who has an apparently good ground of defence would be refused the opportunity of defending, even though a lengthy interval of time had elapsed provided that no irreparable prejudice is thereby done to the plaintiff_

Following this, in [_Crime and Misconduct Commission v Chapman & Anor_ \[2011\] QCAT 229](http://classic.austlii.edu.au/au/cases/qld/QCAT/2011/229.html) Mr James Thomas AM QC, Member said:

> _… the discretion is not to be trammelled, and exercises of this nature must be determined case by case according to recognised principles._

In [_Cockrell v Mackey t/as Tablelands Premium Property_ \[2014\] QCATA 136](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCATA/2014/136.html) Justice Thomas, President said:

> _In deciding whether to set aside a decision by default, the tribunal should consider … delay in filing a response, the reasons for the delay, and whether there is an arguable defence. The latter of those has been suggested to be the more important factor, however, risk of prejudice to the other party will also be considered._

Justice Thomas, President then went on to set aside the decision in default and said:

> _It is regrettable that Ms Mackey will be put to the inconvenience of a hearing, particularly given Mr Cockrell’s cavalier approach to the dispute, but she has suffered no real prejudice._

In [_Loanright Pty Ltd & Anor v Schollick_ \[2017\] QDC 178](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QDC/2017/178.html) Long SC DCJ said:

> _This application proceeded upon general consensus as to the applicable principles. Although it is necessary to have regard to whether or not there is any satisfactory explanation for the failure to defend and/or whether there has been delay in bringing the application, which considerations may particularly give rise to further considerations of prejudice to the respondent and such as might go beyond compensation in terms of costs_

So, if an award of costs cannot compensate a party for any prejudice that party might have suffered, or is likely to suffer by the granting of the application to set the decision by default aside, then it is an important factor in the matrix of the other factors and considerations.

## The Respondent’s Conduct in the Proceedings Before and After Judgment & the Respondent’s Good Faith

![decision by default in Queensland QCAT](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2017/12/decision-by-default-in-Queensland-QCAT.jpg)The case law is reasonably silent on the type of “conduct” or type of “good faith” with may be considered in an application setting aside a default decision in QCAT.

As the decision in [_Garland and Anor v Butler McDermott Lawyers_ \[2011\] QCATA 151](http://classic.austlii.edu.au/au/cases/qld/QCATA/2011/151.html) says that “ _[Section 51](http://classic.austlii.edu.au/au/legis/qld/consol_act/qcaata2009428/s51.html)_ is in very similar terms to [_Rule 290 of the Uniform Civil Procedure Rules 1999_](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s290.html)”.  However, the [decisions under rule 290](http://classic.austlii.edu.au/cgi-bin/sinosrch.cgi/au?method=boolean&rank=on&query=ucpr1999305%20s290) focus primarily on”

1. Whether or not the defendant has given a satisfactory explanation for its failure to appear; and/or
2. Whether or not there has been any delay in making the application; and/or
3. Whether or not the defendant has a prima facie defence on the merits to the claim on which the judgment is founded.

Debt recovery and insolvency professionals can certainly understand the types of conduct and lack of good faith that this decision refers to.  We see this type of conduct every day:

1. Debtors moving house or interstate and attempting to disappear;
2. No address for service or a purposefully incorrect address for service;
3. Attempting to “ _negotiate_” with the debtor and defaulting numerous times again and again;
4. And so on… all the while the costs for the creditor continue to go up and up.

### Other Considerations when Setting Aside a Default Decision in QCAT

[_Section 3 of the QCAT Act_](http://classic.austlii.edu.au/au/legis/qld/consol_act/qcaata2009428/s3.html) says:

> _The objects of this Act are … (b) to have the tribunal deal with matters in a way that is accessible, fair, just, economical, informal and quick_

This section should also be a consideration when setting aside a default decision in [QCAT](http://www.qcat.qld.gov.au/) or objecting to setting aside a default decision in QCAT.

In [_Secure Investing Pty Ltd v Rees_ \[2012\] QCATA 28](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCATA/2012/28.html) Justice Alan Wilson, President said:

> _… Section 51 of the QCAT Act … should be construed in light of requirements in the QCAT Act that the Tribunal must exercise its jurisdiction with as little formality and technicality as is consistent with the fair and proper consideration of the issues before it._

In [_Durrand and Anor v Karaolis and Anor_ \[2012\] QCATA 182](http://classic.austlii.edu.au/au/cases/qld/QCATA/2012/182.html) Justice Alan Wilson, President said:

The Queensland Parliament has made it clear, in the QCAT Act that so far as possible [minor debt disputes](https://stonegatelegal.com.au/small-claims-lawyers/) of this kind are to be resolved by a simple procedure which is speedy, inexpensive and final.

### Other Cases to Read

1. [_Brewster t/a PRD Nationwide v de Abaitua_ \[2010\] QCATA 25](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCATA/2010/25.html);
2. [_Corry v Skobla_ \[2011\] QCATA 101](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCATA/2011/101.html);
3. [_Danes v Sulman_ \[2012\] QCATA 81](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCATA/2012/81.html);
4. [_Johnson v Unicom Santronic Importers and Wholesalers_ \[2011\] QCATA 39](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCATA/2011/39.html);
5. [_Kitchen v Lloyd_ \[2010\] QCATA 102](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCATA/2010/102.html);
6. [_London v Oliver_ \[2013\] QCAT 529](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCAT/2013/529.html); and
7. [_MVP Investments Australia Pty Ltd v Van Rooy_ \[2010\] QCATA 35](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCATA/2010/35.html).

## FAQ on Setting Aside a Default Decision in QCAT

This FAQ section provides concise answers to common questions about setting aside a default decision in the Queensland Civil and Administrative Tribunal (QCAT).

It covers the essential aspects and procedural requirements to help you understand and navigate this legal process effectively.

### What is a default decision in QCAT?

A default decision in QCAT is issued when a respondent fails to file a response to an application within the specified time frame. This means the tribunal may decide the case in favour of the applicant without a hearing.

### What are the grounds for setting aside a default decision?

Grounds for setting aside a default decision include having a prima facie defence, a valid reason for not responding, minimal delay in filing the application, and ensuring no severe prejudice to the applicant. The respondent’s conduct and good faith in the proceedings are also considered.

### What does ‘prima facie defence’ mean?

A prima facie defence means a defence that appears valid at first sight. It indicates that the respondent has a substantial argument that could potentially succeed if given the opportunity to present it in a hearing.

### How can I prove a prima facie defence?

To prove a prima facie defence, you need to provide detailed evidence supporting your defence. This includes documents, witness statements, and any other relevant materials that substantiate your claim.

### What constitutes a ‘good reason’ for not filing a response?

A good reason for not filing a response might include not being properly served with the application, not understanding the importance of the documents, or experiencing circumstances beyond your control, such as illness or miscommunication.

### How does delay impact the application to set aside a default decision?

Delay can negatively impact your application if it is excessive and unexplained. Prompt action is crucial, as the tribunal will consider whether the delay has caused prejudice to the applicant.

### What is considered severe prejudice to the applicant?

Severe prejudice occurs if setting aside the default decision would significantly harm the applicant’s position, such as causing irreparable financial harm or complicating the enforcement of the original decision. The tribunal weighs this against the reasons for the respondent’s delay.

### How does the tribunal assess the respondent’s conduct and good faith?

The tribunal evaluates whether the respondent acted responsibly and in good faith before and after the default decision. This includes efforts to engage with the process and any attempts to rectify the situation promptly.

### What is the process for applying to set aside a default decision in QCAT?

To apply, you must file Form 55, providing reasons for not responding and detailing your proposed defence. Include supporting evidence, such as affidavits and relevant documents, to strengthen your application.

### Can an affidavit of service affect my application?

Yes, an affidavit of service can demonstrate whether the respondent was properly served. If service was inadequate or the respondent genuinely did not receive the documents, this can support the application to set aside the decision.

### What role does the QCAT Act play in setting aside a default decision?

Section 51 of the QCAT Act allows the tribunal to set aside or amend a default decision if it considers the terms, including costs and security, appropriate. The act emphasises fairness, accessibility, and minimal formality in proceedings.

### How does QCAT’s approach to formality and technicality affect the application?

QCAT aims to handle matters with as little formality and technicality as possible while ensuring fair consideration of issues. This approach can make it easier for parties to navigate the process without extensive legal expertise.

### What if the respondent’s failure to respond was intentional?

If the failure to respond was due to wilful disregard of the tribunal’s process, it may be challenging to set aside the default decision. The tribunal considers whether the respondent’s actions were intentional and whether they acted in bad faith.

### Can costs be recovered if a default decision is set aside?

If a default decision is set aside, the tribunal may order terms about costs and the giving of security. This means that the respondent might be required to cover some of the applicant’s costs incurred due to the default decision.

### What should I do if my application to set aside a default decision is denied?

If your application is denied, you may consider seeking legal advice to explore further options. This could include appealing the decision or addressing any issues highlighted by the tribunal in your application.

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#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

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## Buyer Beware Principle
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# Caveat Emptor – Buyer Beware and Exceptions

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- [By \\
Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| August 20, 2023

## Article Summary

“Caveat Emptor,” is a Latin term meaning “let the buyer beware,” in the context of consumer law and sales.

This article explains that Caveat Emptor places the responsibility on buyers to be aware of the risks associated with a purchase and understand that they buy at their own risk, particularly when purchasing from private individuals.

The principle does not apply to sellers in the business of selling, as consumer protection laws often come into play in those cases.

Under Caveat Emptor, buyers are responsible for inspecting products and assessing their quality before purchase.

Sellers generally do not have an obligation to disclose defects, unless required by law.

The article also mentions the concept of “due diligence,” where buyers conduct thorough research and inspection before making a purchase.

Exceptions to Caveat Emptor include cases of fraud, deceit, misrepresentation, and the Australian Consumer Law (ACL).

Fraudulent practices, intentional misrepresentation, and breaches of consumer protection laws can nullify the Caveat Emptor principle.

The article highlights that the ACL provides consumer protections, including guarantees, warranties, and regulations related to various aspects of goods and services.

While sellers generally have no positive duty to disclose all information about a product, they must not engage in misleading or deceptive conduct.

Table of Contents

[Toggle](https://stonegatelegal.com.au/caveat-emptor-buyer-beware-and-exceptions/#)

**![buyer beware in Queensland - caveat emptor - consumer lawyers](https://stonegatelegal.com.au/wp-content/uploads/2023/08/buyer-beware-in-Queensland-caveat-emptor-consumer-lawyers-300x280.png)Caveat emptor**, a Latin term that translates to English as “ _let the buyer beware_”, is a key concept in consumer law and sales that describes the rules surrounding purchasing and selling products from private people and the responsibilities of the buyer.

Caveat emptor does not apply to a seller who is in the business of selling – for example, caveat emptor will apply if you bought a car from Facebook Marketplace from a private individual, but it will not apply if you bought a car from a car yard (as the ACL will apply).

Under caveat emptor, individuals must recognise the potential dangers of making a purchase and understand that they are doing so at their own risk. A seller can sell something in whatever condition they please.

If problems occur with the product after the sale has taken place, that is not the issue of the seller and is the responsibility of the buyer to manage. If there is an issue at the time of sale that the buyer is unaware of and realises it to be so after the sale has already taken place, the seller cannot be held responsible.

Under this principle, buyers are advised to ensure that they thoroughly check or research the product and the business before purchasing to ensure that it is not faulty or potentially insufficient in any way.

The principle of caveat emptor can sometimes be seen in legal contracts as a type of disclaimer to buyers to ensure that they understand that, once the purchase has taken place, any deficiencies with the property are entirely their responsibility.

In this article, our [civil litigation lawyers](https://stonegatelegal.com.au/services/civil-litigation/) explain the notion of caveat emptor, and the few exceptions.

## History of Caveat Emptor

Caveat emptor originated in law in a court case that occurred in England in 1603, which is referred to as the _[Chandelor v Lopus](https://stonegatelegal.com.au/wp-content/uploads/2023/08/Chandelor-v-Lopus-1603-79-ER-3.pdf)_ case. In this matter, a man purchased a stone that he believed to be a bezoar stone, a stone that is formed within an animal’s intestines and is believed to have magical healing properties, for £100.

The man later realised that the stone did not have the healing properties that caused him to purchase it and asked the seller for his money back. When the seller denied the man his money, the man sued the seller.

The court decided that the seller did not make warranties that the stone was a bezoar stone, stating that:

> _And all the justices and Barons (except Anderson) held, that for this cause it was error: for the bare affirmation that it was a bezar-stone, without warranting it to be so, is no cause of action: and although he knew it to be no bezar-stone it is not material; for everyone in selling his wares will affirm that his wares are good, or the horse which he sells is sound; yet if he does not warrant them to be so, it is no cause of action, and the warranty ought to be made at the same time of the sale._

The key legal question before the court was whether the seller, Lopus, could be held liable for the misrepresentation and the defective product.

The court ruled in favour of the defendant, Lopus, holding that the principle of caveat emptor applied. This meant that the buyer, Chandelor, was responsible for thoroughly inspecting the item before purchasing it, and the seller was not obligated to provide any warranties or guarantees about the product’s quality or authenticity.

The court’s decision established the principle that under the doctrine of caveat emptor, the seller’s duty to disclose information about a product’s defects or qualities was limited. It was the buyer’s responsibility to exercise due diligence and assess the product’s condition and authenticity before making a purchase.

This ruling reinforced the idea that buyers should be cautious and well-informed when entering into transactions.

## Legal Implications

As a key legal principle in transactions and sales, caveat emptor must have legal implications of some sort.

So, what are they and how do they affect buyers and sellers alike?

### Limits Seller Liability

One of the key legal implications of caveat emptor is that the liability of sellers is limited in various senses.

In most circumstances under caveat emptor, the seller is not required by law to disclose any defects with the product, provided they could be discovered by a reasonable person’s inspection.

This allows sellers to sell products in the condition of their choosing and places the responsibility of checking for and finding defects on the buyer before purchasing the item.

### Emphasises Inspection

Another key legal implication of caveat emptor is that it emphasises the importance of inspection by buyers.

As stated in this previous section, by limiting the liability of the buyer, caveat emptor allows sellers to not disclose defects to a certain extent.

This means that the importance of inspection by buyers is emphasised to ensure that the products they are purchasing are in acceptable condition and without major defects before they make the transaction.

### Sales “As-is”

Another key legal implication of caveat emptor is that it relates to sales “as-is” purchases. “As-is” purchases occur when a seller decides to sell a product in the condition that it is in without warranty or repair.

With caveat emptor, more sales of this type can take place without the seller facing legal consequences for selling a product that is defective in some way.

## Due Diligence

Caveat emptor places all of the responsibility of ensuring that a product that they are purchasing is not faulty onto the buyer.

However, how does a buyer ensure that a product is not faulty under this legal concept in order to protect themselves from scams and faulty products? Due diligence is how!

Due diligence occurs when a buyer conducts an extensive and comprehensive review and quality check of a product before committing to making a purchase.

Sometimes on purchases that are especially large or expensive, buyers will hire the assistance of professionals to ensure that all grounds are covered.

When someone properly engages in due diligence, they have systematically analysed all elements of a product that they are interested in purchasing to mitigate risk and ensure that it is in a condition that they are happy to purchase it in.

In the context of caveat emptor, this process will prevent buyers from buying products that are defective and will fulfil their responsibility to ensure that they are happy with a product before its purchase.

## Exceptions to Caveat Emptor

While caveat emptor applies to a vast majority of sales, there are some exceptions to the rule. These include fraud, deceit, misrepresentation, and the Australian Consumer Law.  We will explain these in a little more detail below.

## Exception to Caveat Emptor – Fraud

Another example of an exception to the rule of caveat emptor is in circumstances of [fraud](https://stonegatelegal.com.au/deceit-and-fraudulent-misrepresentation-what-you-need-to-know/). If the consent of the party for the sale or the sale itself was obtained under fraudulent circumstances, and where deliberate attempts to deceive or mislead parties for personal gain undermine the buyer’s ability to make informed decisions, caveat emptor may not apply.

In instances where consent for a sale or the sale itself is achieved through fraudulent means, the caveat emptor principle may not apply, highlighting the necessity for seller accountability in ensuring transparent and honest transactions.

The recognition of fraud as an exception to caveat emptor also signifies a broader shift toward consumer-centricity in legal thought. As commerce becomes more interconnected, this exception aligns with the ideals of transparency and trust, and it guards against exploitation of information asymmetry.

The legal landscape acknowledges that the buyer’s duty to exercise caution can be compromised in cases of fraud, prompting legal intervention to maintain equitable outcomes.

Ultimately, this exception encapsulates a delicate balance between buyer autonomy and the pursuit of just and ethical outcomes in the realm of commercial exchanges.

## Exception to Caveat Emptor – Deceit

The [tort of deceit](https://stonegatelegal.com.au/deceit-and-fraudulent-misrepresentation-what-you-need-to-know/) can also be considered as an exception to the principle of caveat emptor in certain circumstances.

The tort of deceit involves intentional misrepresentation or concealment of material facts by one party to induce another party into making a decision that they would not have otherwise made.

In cases where a seller engages in deceitful practices, such as intentionally providing false information about a product’s quality or condition, the principle of buyer beware becomes inadequate to address the situation.

Instead, the legal framework recognises that the seller’s deliberate deception supersedes the buyer’s responsibility to inspect and evaluate the product. As a result, the tort of deceit allows buyers to seek legal remedies for the harm caused by the seller’s fraudulent conduct, thereby serving as a significant exception to the traditional caveat emptor principle.

## Exception to Caveat Emptor – Misrepresentation

Another example of an exception to the rule of caveat emptor is when the sale of the product was obtained under misrepresentation. Misrepresentation in sales occurs when the seller of the product makes false claims or other types of representation about the product.

If the product has been misrepresented by the seller, caveat emptor will not apply, and you will be able to return the product or take legal action if necessary.

Misrepresentation constitutes a substantial departure from the principle of caveat emptor, offering a vital exception to safeguard buyers from deceptive practices. When a seller engages in misrepresentation, they manipulate information to induce a buyer’s decision in their favour.

False claims, inaccurate descriptions, or misleading representations about a product can lead a buyer to make a purchase based on distorted premises. In such cases, the traditional buyer beware principle becomes untenable, as the buyer’s reliance on the seller’s deceptive assertions undermines their ability to exercise prudent judgment.

Consequently, the legal system recognises that misrepresentation [breaches](https://stonegatelegal.com.au/breach-of-directors-duties-in-australia/) the foundation of equitable transactions and allows buyers to seek remedies such as returning the product or pursuing legal action.

By acknowledging this exception, the law aims to foster an environment of transparency, honesty, and fair dealing, upholding the integrity of buyer-seller relationships in commercial transactions.

## Exception to Caveat Emptor – Australian Consumer Law

In Australia, like in many jurisdictions, the principle of “Caveat Emptor” (buyer beware) has been subject to various exceptions due to evolving consumer protection laws and judicial decisions.   These exceptions reflect the recognition that buyers (in trade or commerce) should have some degree of protection against unfair practices and fraudulent transactions.

In Australia, the [Australian Consumer Law](https://consumer.gov.au/) (ACL), being [schedule 2 of _Competition and Consumer Act 2010_ (Cth)](https://www.legislation.gov.au/Details/C2023C00043) offers a number of consumer protections, including:

01. **Bait Advertising** – Advertising a product at a certain price and then refusing to sell it or substituting it with a more expensive product is considered deceptive conduct.
02. Consumer Guarantees – The ACL establishes consumer guarantees that provide certain minimum standards for the quality, fitness for purpose, and other aspects of goods and services. These guarantees cannot be excluded or modified by contractual terms.
03. **Express and Implied Warranties** – The ACL implies warranties into consumer contracts, such as the warranty that goods are of acceptable quality and fit for their intended purpose. Sellers cannot exclude or limit these warranties.
04. **Extended Warranty Regulations** – Regulations govern extended warranties, ensuring that consumers are informed about the terms, benefits, and limitations of extended warranty offers.
05. **Lemon Laws** – Specific protections exist for faulty vehicles under state and territory legislation, allowing buyers to seek remedies if they purchase a defective car.
06. **Misleading or Deceptive Conduct** – sellers are prohibited from engaging in misleading or deceptive conduct in trade or commerce. This means that sellers cannot provide false or misleading information about products or services.
07. **Negligent Misstatement** – If a seller negligently provides false information that a buyer relies upon, the seller might be liable for the consequences.
08. **Non-Disclosure** – Sellers must not fail to disclose information that is necessary for consumers to make an informed decision about a product or service.
09. **Real Estate Disclosures** – In real estate transactions, sellers are required to disclose certain information about the property’s condition, including defects and potential issues.
10. **Remedies and Refunds** – Consumers have the right to seek remedies such as repairs, replacements, [and refunds](https://stonegatelegal.com.au/how-to-improve-your-debt-recovery-prospects/) for products or services that do not meet consumer guarantees.
11. **Unconscionable Conduct** – The ACL prohibits unconscionable conduct in consumer transactions. Sellers must not take advantage of a consumer’s vulnerability, lack of knowledge, or special disability.

However, as stated in the opening paragraph, the ACL does not apply to private transactions between individuals, but only applies to business who sell the goods or services on a commercial basis, or “ _in trade or commerce_”.

## No Positive Duty to Disclose

It is important to note that there is generally no positive legal duty for sellers to disclose all information about a product to buyers. Private sellers are not obligated to proactively reveal all aspects, qualities, or defects of the product unless specifically required by law or regulations.

However, if a seller does choose to provide information about a product, it must be accurate and not mislead or deceive the buyer. Additionally, in specific circumstances, there may be implied warranties or guarantees attached to products, which could lead to seller liability if the product does not meet those expectations.

In conclusion, while there is generally no broad positive duty for sellers to disclose all information to buyers in Australia, legal obligations, and consumer protection laws, such as the prohibition of misleading conduct, can shape the boundaries of seller responsibility.

Buyers should be aware of their rights under the relevant laws and exercise due diligence when making purchases, while sellers should ensure that any information provided is accurate and not misleading.

## Caveat Emptor FAQ

To shed light on the intricacies of Caveat Emptor and its implications, we’ve compiled a set of frequently asked questions (FAQs) and answers. These FAQs delve into the core principles of Caveat Emptor, its exceptions, and how it interacts with buyer rights and seller responsibilities in various contexts.

Whether you’re a buyer seeking to safeguard your interests or a seller aiming to navigate the legal landscape, these FAQs will provide valuable insights into the buyer beware doctrine.

### What does “Caveat Emptor” mean?

“Caveat Emptor” is a Latin term meaning “let the buyer beware.” It’s a concept in consumer law and sales that places the responsibility on buyers to recognise the risks associated with a purchase and understand that they buy at their own risk, particularly when buying from private individuals.

### Does Caveat Emptor apply to all sellers?

No, Caveat Emptor does not apply to sellers who are in the business of selling. For instance, if you buy a car from a private individual, Caveat Emptor applies, but if you buy a car from a car dealership, consumer protection laws like the Australian Consumer Law (ACL) apply.

### What is the main principle of Caveat Emptor?

The main principle of Caveat Emptor is that buyers are responsible for inspecting products and assessing their quality and condition before making a purchase. Sellers are generally not obligated to disclose defects unless required by law or regulations.

### Can sellers be held responsible for defects under Caveat Emptor?

Generally, sellers are not held responsible for defects under Caveat Emptor. If problems arise after the sale, it’s the buyer’s responsibility to address them. However, there are exceptions to this principle, such as cases involving fraud, deceit, and misrepresentation.

### What is “due diligence” in the context of Caveat Emptor?

“Due diligence” refers to the comprehensive review and quality check a buyer should conduct before making a purchase. It involves thorough research and inspection of the product to ensure its quality and suitability. Buyers may even hire professionals for large or important purchases.

### Are there exceptions to the Caveat Emptor principle?

Yes, there are exceptions. Some exceptions include fraud, deceit, misrepresentation, and the Australian Consumer Law (ACL). For example, if a seller engages in deliberate deception, misrepresentation, or violates consumer protection laws, the Caveat Emptor principle may not apply.

![Picture of Wayne Davis](https://secure.gravatar.com/avatar/5b54ec283af918fb28f171190159c8892905cb00c7f8bf19a380e6224d11fa82?s=300&d=mm&r=g)

#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation.

With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice.

Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings.

Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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## Debt Assignment Guide
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# Debt Assignment in Queensland – A Complete Guide

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## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| September 17, 2023

## Article Summary

A debt assignment is an agreement where a debt, along with all its associated legal rights and responsibilities, is transferred from the original creditor to a third-party purchaser. Once verified, the third party, now termed the assignee, becomes the official owner of the debt and has the right to collect it.

A “chose in action” or a “thing in action” is a legal term referring to a personal or proprietary right in intangible personal property, enforceable through litigation. This is different from “chose in possession”, or a “thing in possession” which refers to tangible items one can physically possess, like a book or car.

The legislation in Queensland, specifically the _Property Law Act 1974_ (Qld), provides for assignments of things in action.

An absolute debt assignment refers to the unconditional transfer of property or rights, ensuring the original owner retains no interest. The assignment should be complete for clarity between the debtor and the new creditor.

Before the new creditor can collect the debt, a formal notice must be issued to the debtor. This ensures the debtor knows they have a new creditor. Requirements for a valid notice include it being in writing, signed by the assignor, and containing clear identification of the assignor, assignee, and the debt.

The responsibility of ensuring a valid notice falls on the assignee. Several guidelines and legal cases have highlighted the importance of serving the notice in a manner that is most likely to bring it to the debtor’s attention. This could involve registered post or personal delivery.

Once the debt is effectively assigned and the debtor notified, the assignee can collect the debt and undertake any necessary legal actions. Often, debts that are assigned come with their own challenges, as many are sold precisely because they are problematic.

Legal avenues like court proceedings, enforcement warrants, or bankruptcy can be pursued. Challenges may arise due to misunderstandings by the debtor, disputes about the validity of the assignment, or challenges proving effective delivery of the notice to the debtor.

Table of Contents

[Toggle](https://stonegatelegal.com.au/debt-assignment-in-queensland-a-complete-guide/#)

Are you a creditor in Queensland who is struggling with debt assignment and is looking for a way to effectively manage the assignment of their debts?

Dealing with debt can sometimes be a lot for creditors to manage. Between the multiple debts that their business will likely manage and potential problem debtors who don’t seem to want to pay their debt, debts can sometimes spiral out of control!

If this is the case for you or your business, it may be time to consider assigning your debt.

The assignment of a debt occurs when the creditor of a debt sells their debt to a third-party buyer. This process can be complicated to understand, so it is important that you perform due diligence and research before engaging in this process.

Typically seen with banks and credit card companies, creditors will sometimes package their debts into debt books or tranches and sell them, rather than collecting them.

In this article our **[debt recovery lawyers](https://stonegatelegal.com.au/services/debt-recovery-lawyers/)** will discuss the basics of debt assignment in Queensland so that you, as a creditor, can better understand this process.

## What is a Debt Assignment?

The first question that is to be asked about debt assignment is what it is and how it works?

A debt assignment is an agreement that [transfers a debt](https://stonegatelegal.com.au/uncommercial-transactions-claims-and-how-to-defeat-them/), and all of the legal rights and responsibilities associated with it, from the creditor to a third-party purchaser.

This provides the third party with the right to collect the debt, while the creditor can no longer engage in the [debt recovery](https://stonegatelegal.com.au/debt-recovery-solicitors/) process with the debt assigned.

Once an assignment of debt is verified, the rights will be transferred to the assignee and they will be the official owner of the debt, meaning that they can collect the debt for the money it is worth.

## Chose in Action (Thing in Action)

The right to recover a debt is a “thing in action” or a “chose in action”.

A “chose in action” (often referred to as a “thing in action”) is a legal term that denotes a personal right without possession, or a proprietary right in personal property that is intangible and not in one’s possession, but enforceable through litigation.

Common examples of choses in action include debts, shares in a company, and other rights to receive something or have something done.

Contrast this with “chose in possession” which refers to something tangible that one can physically possess, like a book, a car, or money.

The phrase “chose in action” originates from old French and the term “chose” means “thing”.

In Queensland, the assignments of things in action are provided for in legislation, particularly at [section 199 of the _Property Law Act 1974_ (Qld)](http://classic.austlii.edu.au/au/legis/qld/consol_act/pla1974179/s199.html) (“ **the PLA**”).

## Section 199 of the Property Law Act

Section 199(1) of the [_PLA_](http://classic.austlii.edu.au/au/legis/qld/consol_act/pla1974179/s199.html) states:

> _(1) Any absolute assignment by writing under the hand of the assignor (not purporting to be by way of charge only) of any debt or other legal thing in action, of which express notice in writing has been given to the debtor, trustee or other person from whom the assignor would have been entitled to claim such debt or thing in action, is effectual in law (subject to equities having priority over the right of the assignee) to pass and transfer from the date of such notice—_
>
> _(a) the legal right to such debt or thing in action; and_
>
> _(b) all legal and other remedies for the same; and_
>
> _(c) the power to give a good discharge for the same without the concurrence of the assignor._

This part of the section means that a the right to recover a debt (being a thing in action) can be legally assigned. This assignment must be absolute and the debtor should receive a written notice, and obtaining the debtor’s consent for this assignment is not mandatory.

Section 199(2) of the [_PLA_](http://classic.austlii.edu.au/au/legis/qld/consol_act/pla1974179/s199.html) states:

> _(2) If the debtor, trustee or other person liable in respect of such debt or thing in action has notice—_
>
> _(a) that the assignment is disputed by the assignor or any person claiming under the assignor; or_
>
> _(b) of any other opposing or conflicting claims to such debt or thing in action;_
>
> _the debtor may, if the debtor thinks fit, either call upon the persons making claim to the debt or other thing in action to interplead concerning the same, or pay the debt or other thing in action into court under and in conformity with the provisions of the Act s relating to relief of trustees._

This part of the section says that if the debtor knows of disputes or conflicting claims regarding the assignment, they can either request claimants to clarify their stance or deposit the owed amount in court as per the Act’s guidelines.

These subsections raise some further questions, namely:

1. What is an “ _absolute debt assignment_” at law?
2. What is a notice of debt assignment?

We will discuss these in further detail below.

## What is an “Absolute Debt Assignment” at Law?

Absolute debt assignment refers to an unconditional transfer of property or rights, leaving no interest for the original owner.

Typically, it lets a creditor transfer their right to collect a debt to a third party. The debt assignment must be complete and without conditions for the benefit of both the debtor, who knows whom to pay, and the third party, who can legally claim the debt.

In [_Durham Brothers v Robertson_ \[1898\] 1 QB 765](http://www.commonlii.org/uk/cases/UKLawRpKQB/1898/61.html), it was held that the document was not “an absolute assignment (not purporting to be by way of charge only)” and that the plaintiffs could not recover in the action. This was held because it was a charge. The Court said:

> _The document purports on the face of it to assign the debt, and it is not the less an absolute assignment because it contains, like any other mortgage, provisions that shew that it is only a security, and that there is a right to redeem. It is clear on the authorities that a mortgage with a power of redemption is an absolute assignment within the section._

In [_Clyne v Deputy Federal Commissioner of Taxation_ (1981) 150 CLR 1](http://classic.austlii.edu.au/au/cases/cth/HCA/1981/40.html), Mason J said at \[24\]:

> _An “absolute assignment” in the section signifies one which is unconditional._

In [_Austino Wentworthville Pty Limited v Metroland Australia Limited_ \[2013\] NSWCA 59](http://classic.austlii.edu.au/au/cases/nsw/NSWCA/2013/59.html), Barrett JA said at \[62\], summarising the relevant principles emerging from the cases:

> _An “absolute” assignment is one that is unconditional and does not attempt to affect part only of the chose in action._
>
> _The fact that an assignment otherwise absolute is accompanied by an express proviso for redemption, an implied right of redemption or the creation of a trust in respect of future proceeds does not deprive it of its absolute character._
>
> _An assignment by way of charge is one the effect of which is to give a right of payment out of the subject matter assigned without outright transfer of that subject matter. Such an assignment occurs when, for example, there is a transfer of a right to be paid out of a particular fund or of so much of a debt as is sufficient to satisfy a future indebtedness._
>
> _The character of the assignment must be ascertained from the terms and effect of the instrument, according to the construction of it as a whole._

So, to ascertain if the assignment is an absolute assignment, reference must be made to the contract (or deed of assignment), its terms and conditions, and read in the proper context.

Another requirement for an assigned debt to be valid is that the assignee must send a notice to the debtor.

## What is a Notice of Debt Assignment?

Before the debt will be able to be collected by the new creditor, a notice of debt assignment must first be issued to the debtor. But what is this and what does it mean?

A notice of debt assignment is a formal notice that is issued to the debtor when a debt is assigned to a new creditor. The new creditor, or the assignee, must issue this notice to the debtor at their last recorded or known home address.

As a debtor, it is a sudden change to have a new creditor to whom they are making payments.

There may have to be a process of them switching details and making financial or legal arrangements to begin to make payments or to manage the debt in any other way of their choosing.

They should be provided the time to understand that they now have a new creditor, as this will likely be an unexpected change, and deal with their debt in the way that they choose, as they may have had previous arrangements or discussions with their initial creditor.

The purpose of the notice is to provide the debtor with this new information and to ensure that they begin making debt payments to the new creditor, rather than continuing to pay the previous creditor.

In [_Walter and Sullivan Ltd v J Murphy and Sons Ltd_ \[1955\] 1 All ER 853](http://classic.austlii.edu.au/cgi-bin/LawCite?cit=%5B1955%5D+2+QB+584&party1=&party2=&court=&juris=&article=&author=&year1=&year2=&synonyms=on&filter=on&cases-cited=&legis-cited=&section=), the court held that the following are the requirements of a valid notice of an assignment of a debt:

1. The notice must be in writing.
2. The notice must be signed by the assignor.
3. The notice must identify the assignor and the assignee.
4. The notice must identify the debt that is being assigned.

In [_Mango Boulevard Pty Ltd & Anor v Mio Art Pty Ltd & Ors_ \[2016\] QCA 148](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCA/2016/148.html), Fraser JA said at \[34\] citing the relevant authorities:

> _… to constitute valid notice, there must be some kind of formal notification by the assignee, or possibly by the assignor on his behalf, to the debtor in order to achieve the object described in the Walter & Sullivan case. This view is also consistent with the decision of the Court of Appeal in Talcott v John Lewis & Co Ltd \[1940\] 3 All ER 592, where it was held that a notice stamped by a creditor on his invoice stating that the invoice should be transferred and payment made to the assignee, was ineffective, both because it was insufficiently plain in its wording, and because it was not a notice sent by the assignee to the debtor._

Therefore, we would suggest that at a minimum, the written notice of debt assignment should include:

1. A notice that it is an assignment of debt.
2. The name and details of the assignor of the debt (old creditor).
3. As many particulars of the original debt to enable the debtor to identify the debt to which the notice relates.
4. All of the details of the assignee of the debt (new creditor).
5. Direction to pay the debt to the assignee and the new payment details.
6. Full particulars of the original debt amount, plus and costs and interest incurred.
7. How the debtor can discharge the debt by payment.
8. The assignment must be signed by the assignor.

It is important to note that the assignment does not need to be in any particular format.  However, it is advisable to have a lawyer draft the assignment to ensure that it is valid and enforceable.

After you have a valid assignment contract or deed of debt assignment signed; and you have a valid notice of assignment drafted, you must now give the notice of debt assignment to the debtor.

## Proper Service of the Notice of Assignment of Debt

The notice must be valid, and it is the responsibility of the assignee to ensure that the notice is valid. The notice of assignment must be absolute and in writing, and the new creditor (or old creditor) must ensure that the notice is delivered properly to the debtor.

[Section 347 of the _Property Law Act 1974_ (Qld)](http://classic.austlii.edu.au/au/legis/qld/consol_act/pla1974179/s347.html) sets out the general rules for serving notices under the Act.  A notice may be served on a person:

1. By delivering it personally to the person.
2. By leaving it at the person’s usual place of abode or business.
3. By posting it as a letter addressed to the person at their usual place of abode or business.

If the person is unknown or absent from the State, the notice may be served in such manner as directed by the court.

The [_Act_](http://classic.austlii.edu.au/au/legis/qld/consol_act/pla1974179/s347.html) also provides that a notice posted as a letter shall be deemed to have been served, unless the contrary is shown, at the time when by the ordinary course of post the notice would be delivered.

In [_Anning v Anning_ (1907) 4 CLR 1049](http://classic.austlii.edu.au/au/cases/cth/ArgusLawRp/1907/53.html), Griffith CJ said of the then equivalent of s 199(1) that:

> _The section does not say by whom the notice is to be given, but it is, I think, clear that it may be given either by the assignor or the assignee._

In [_Grayprop Pty Ltd v Maharaj International Pty Ltd_ \[2001\] QSC 387](http://classic.austlii.edu.au/au/cases/qld/QSC/2001/387.html), it was held that the posting of a notice to a post office box did not comply with [s.347](http://classic.austlii.edu.au/au/legis/qld/consol_act/pla1974179/s347.html) so as to attract the deeming provisions in that section relating to receipt of the notice. In that case Philippides J referred to [_David Sarikaya v Victorian Workcover Authority_ \[1997\] FCA 1372](http://classic.austlii.edu.au/au/cases/cth/FCA/1997/1372.html), where Black CJ held:

> _… a post office box is not, in my view, the “address of a place” at which a document may be “left” for a person. The ordinary notion of “post office box” is of a container at a post office into which mail that has been duly posted is placed by postal authorities for retrieval by or on behalf of the holder of the box. Whether or not such a box is, in this context, the “address of a place”, it is not the address of a place at which a document may be “left” by way of service._

In [_Walter and Sullivan Ltd v J Murphy and Sons Ltd_ \[1955\] 1 All ER 853](http://classic.austlii.edu.au/cgi-bin/LawCite?cit=%5B1955%5D+2+QB+584&party1=&party2=&court=&juris=&article=&author=&year1=&year2=&synonyms=on&filter=on&cases-cited=&legis-cited=&section=), the court held that notice of an assignment of a debt must be given to a debtor in a way that is reasonably likely to bring it to their attention.

In the case, the assignor had given the debtor notice of the assignment by sending a letter to their registered office. However, the debtor had moved office and the letter was never received.

The court held that the notice was not valid because it had not been given in a way that was reasonably likely to bring it to the debtor’s attention.

Therefore, some takeaways re. service include:

1. To give valid notice of an assignment of a debt, the notice must be given to the debtor in a way that is reasonably likely to bring it to their attention.
2. This may involve sending the notice by registered post or delivering it in person.
3. It is not enough to simply send the notice to the debtor’s registered office if the debtor has moved office and the notice is not received.

## Enforcing an Assigned Debt

The debt has been assigned effectively and the notice has been delivered to the debtor. Now what?

The assignee is now entitled to [collect the debt](https://stonegatelegal.com.au/debt-collection-lawyers-10-tips-and-tricks/) and to take any collection or [legal action](https://stonegatelegal.com.au/legal-proceedings-for-debt-recovery/) of their choosing.

As debts that are assigned are often somewhat problematic, as many sell problematic debts, [legal action](https://stonegatelegal.com.au/legal-debt-recovery-options-for-businesses/) may be the choice that many take.

Commencing court proceedings and receiving and enforcing a judgement are some of the recovery options that assignees will have in the legal regard, such as enforcement warrants, [bankruptcy](https://stonegatelegal.com.au/what-is-a-bankruptcy-notice/), and issuing a [statutory demand / winding up](https://stonegatelegal.com.au/how-to-draft-a-statutory-demand-form-509h/).

The recovery of an assigned debt can often raise several issues for assignees in the initial stages. There are several factors and occurrences that may cause these issues to arise, including:

1. Misunderstanding of the debt assignment process by debtors, resulting in confusion or refusal to pay, as they do not understand that they are paying their debt or the same debt as before.
2. As we have discussed, a debt assignment must be legal and valid. The debtor may raise a dispute regarding the validity of the assignment of debt, regardless of whether proper procedure was followed or not.
3. You must be able to prove that the notice of assignment was effectively validly provided to the debtor. If you have failed to keep proper records of the formation and delivery of the notice, you may struggle to prove that it was both valid and provided.
4. If the debtor had previously arranged any kind of understanding with the assignor, they may be able to take action against you for not fulfilling the arrangement, even if you were not notified about it before the sale. This, however, may constitute a [breach of contract](https://stonegatelegal.com.au/breach-of-contract/) by the assignor, so you may be able to take action of your own if this turns out to be the case.

## Benefits of Debt Assignment

There are several benefits for all parties involved in the assignment of debt, including;

**For the Assignor:**

The assignor, or the individual or party that is assigning the debt to a new creditor, benefits in several ways and circumstances by selling the debt.

For one, they will have an increased cash flow by being paid a larger piece of the debt in one payment, rather than smaller payments over an extended period, which can help them get their finances back on track or invest in their business.

They will also no longer have the risk of a debt, which may be unable to be collected due to insolvency or other reasons, mitigating risk from their business.

Furthermore, the time and resources spent dealing with the debt will no longer be required, freeing up their business resources for alternative use.

**For the Assignee:**

The assignee, or the new creditor of the debt, will also be privy to several benefits from the assignment of debt process.

As a [debt purchaser](https://debtbuyer.com.au/), the chances are they will have access to resources or be experienced [debt collectors](https://www.advancedebtcollection.com.au/debt-collectors/) who have the time and resources to focus on [debt collection](https://stonegatelegal.com.au/small-business-debt-collection-27-tips-and-faq/), increasing their chances of being paid.

They will also pay less than the debt is worth for the rights to collect it, leaving room for a large profit margin.

## What to Consider in Debt Assignment

While there are many benefits that may be reaped from a debt assignment on either side of the matter, there are also some considerations that should be made.  They include;

**For the Assignor:**

The assignor of the debt should consider if this process is the right one for them and their business. After all, if the debt was collected regularly, they would collect more money over time, rather than being paid a larger amount of the debt immediately but not the full amount at any point in time.

The suitability of assigning a debt is something that can only be decided based on the specific circumstances of the matter and of the assignor’s business, so they should take the time to consider.

If the assignor wishes to maintain a relationship with this debtor for any reason, they should also consider notifying the debtor separately.

**For the Assignee:**

The assignee of the debt has several considerations to make, also regarding the suitability of this process for them. They will be taking on the responsibility of collecting a debt, which can take time and resources, so this must be feasible for them to commit to.

They are also accepting the risk of not being paid the debt at all or receiving only a small amount of it, so this must be a consideration made.

There is also a process that must be followed once the debt has been assigned, as discussed, so this should be considered as something that must be completed.

## Limitation Dates for Assigned Debts

An assignee of debt must ensure that they are within the limitations of actions acts for each State and Territory to legally commence recovery of the debt.

The purpose of limitations of actions acts is to limit the delay for creditors to take action against a debtor for outstanding monies.

The limitation period for a contract debt is six (6) years in Queensland, calculated from the point of breach.

Where an assignee has been assigned a debt, the point of breach will commence from the date the debt was assigned to the assignee.

However, in some circumstances, where a debtor acknowledges the debt or makes a payment in respect of the debt, the point of breach starts from the date of acknowledgement or the last payment made by the debtor.

## Common Mistakes to Avoid when Assigning Debt

There are a few things that you should avoid when assigning your debt. These include:

1. **Not having a written agreement**: It is important to have a written agreement in place when assigning debt. This agreement should clearly identify the debt being assigned, the assignor, the assignee, and the terms of the assignment.
2. **Not notifying the debtor**: The debtor must be notified of the assignment in writing. This notice should be given to the debtor before they make any payments to the assignor.
3. **Assigning debt that is not assignable**: Not all debts can be assigned. For example, debts that are personal in nature, such as claims for defamation or assault, cannot be assigned.
4. **Failing to comply with the applicable laws and regulations**: There are specific laws and regulations that govern the assignment of debt. It is important to comply with these laws and regulations to ensure that the assignment is valid.

Here are some additional tips to avoid common mistakes when assigning debt:

1. **Have a lawyer review the assignment agreement**: A lawyer can help you to draft an assignment agreement that is valid and enforceable.
2. **Use a registered post to send the notice of assignment to the debtor**: This will help to ensure that the debtor receives the notice and that there is a record of the notice being sent.
3. **Keep a copy of all documentation related to the assignment**: This includes the assignment agreement, the notice of assignment, and any other relevant documents.

If you have any questions about assigning debt, you should consult with a lawyer asap.

## FAQ on Debt Assignment in Queensland

Navigating the intricacies of debt assignment can be complex, given its multifaceted nature and the legal implications involved.

Whether you’re an assignor looking to transfer the rights to a debt or an assignee aiming to comprehend the dynamics of your new responsibility, it’s crucial to understand the entire spectrum of the process.

### What is a Debt Assignment?

A debt assignment is a legal transfer of a creditor’s right to collect a debt to a third party, known as the assignee. Once assigned, the original creditor can no longer engage in the [debt recovery](https://stonegatelegal.com.au/debt-recovery-services-in-queensland/) process.

### What is a “Chose in Action”?

A “chose in action” refers to a legal right without possession, like debts or shares in a company. It contrasts with “chose in possession,” which refers to tangible items like a car or book.

### What does Section 199 of the Property Law Act 1974 (Qld) discuss?

It provides the legal framework for the assignment of things in action in Queensland, specifying that for a debt assignment to be valid, a written notice must be given to the debtor.

### Do I need the debtor’s consent to assign the debt?

No, the debtor’s consent isn’t mandatory. However, they should receive a written notice of the debt assignment.

### What is an “Absolute Debt Assignment” at law?

It refers to an unconditional transfer of rights, meaning the original owner retains no interest. This transfer allows the third party (assignee) to legally claim the debt.

### What should a Notice of Debt Assignment include?

It should provide details about the original creditor, the assignee, specifics of the debt, payment instructions, legal implications, and the dates of assignment and notice.

### Why is the notice important?

It’s a legal requirement for the assignment to be effective, ensures clear communication with the debtor, protects the assignee’s rights, and prevents potential disputes.

### What is a Notice of Debt Assignment?

A Notice of Debt Assignment is a formal document sent to a debtor informing them that their debt has been [transferred to a new creditor](https://stonegatelegal.com.au/unreasonable-director-related-transactions-and-how-to-defeat-them/) (assignee). This notice ensures the debtor makes payments to the new creditor rather than the original one.

### Why is a notice of assignment of debt necessary?

It allows the debtor to understand and adapt to the unexpected change in the party to whom they owe money. It also gives them time to arrange their finances or change any existing agreements made with the original creditor.

### What are the requirements for a valid Notice of Debt Assignment?

Based on legal precedents for a Notice of Debt Assignment to be valid it must be in writing; It should be signed by the original creditor (assignor); and it should identify both the assignor and the assignee; and the specific debt being assigned must be detailed.

### What should be included in a well-drafted Notice of Debt Assignment?

A well-drafted Notice of Debt Assignment should include a statement clarifying it as an assignment of debt; details of the assignor (original creditor) and the assignee (new creditor); comprehensive information on the original debt, including any additional costs and interest; instructions on how to make payments to the new creditor; the method to finalise the debt payment; and the signature of the assignor.

### How should the notice be served to the debtor?

For effective service, the notice should be personally delivered to the debtor; or left at their usual residence or place of business; or posted as a letter to their regular address. However, precautions should be taken regarding post office boxes as they might not comply with certain legal provisions.

### What are the implications if the notice isn’t properly served?

A notice must be delivered in a manner that makes it likely to come to the debtor’s attention. Improper delivery can render the notice invalid. For instance, merely sending it to a moved office or a post office box might not suffice.

### Does the format of the assignment need to be specific?

No, there isn’t a mandatory format. However, having a lawyer draft the notice ensures its validity and enforceability.

### Who can issue the Notice of Debt Assignment?

Either the assignor or the assignee can issue the notice.

### What does it mean when a debt is assigned?

When a debt is assigned, it means the original creditor (assignor) has transferred their rights to collect the debt to a new creditor (assignee). This transfer requires a formal notice to be given to the debtor.

### After a debt has been assigned, who is responsible for collecting it?

The assignee, or the new creditor, is now responsible for collecting the debt. They can choose any legal collection method, which might include court proceedings.

### What issues might arise after the assignment of a debt?

Issues can arise from misunderstandings by the debtor, challenges to the validity of the assignment, lack of proper documentation to prove the notice was provided, or previous agreements with the assignor that were not known by the assignee.

### How does the assignor benefit from assigning a debt?

Assignors can benefit from an immediate influx of cash, reduction in the risk of non-collection, and a decrease in time and resources spent on collection efforts.

### How does the assignee benefit from purchasing an assigned debt?

Assignees typically purchase debts at a reduced rate, giving them a chance for a higher profit margin upon collection. Additionally, experienced debt collectors might have the resources and expertise to effectively recover debts?

### Are there any considerations to be made before assigning or accepting a debt?

Yes. Assignors should evaluate if debt assignment is suitable for their business situation and consider notifying the debtor separately. Assignees must weigh the commitment of resources against the potential risk of non-collection and ensure they understand and follow the necessary post-assignment processes.

### Is there a time limit for the assignee to take action on a debt?

Yes. The limitation period for a contract debt is typically six years from the point of breach. However, this might vary if the debtor acknowledges the debt or makes a payment.

### Are there common mistakes made during debt assignments?

Some common pitfalls include not having a written agreement, failing to notify the debtor, assigning non-assignable debts, and not adhering to relevant laws and regulations.

### How can I ensure that the assignment process goes smoothly?

It’s advisable to consult with a lawyer, use registered post for notices, and keep thorough documentation of every step in the process.

### Can all debts be assigned?

No. Some debts, especially those personal in nature like claims for defamation or assault, cannot be assigned. Always check the nature of the debt and legal stipulations before proceeding.

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#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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# Winding Up Applications

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- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

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![Winding up a company in Australia](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2017/06/Liquidation-of-a-company-in-Australia.png)Winding up company in insolvency may be the only option available to you, either as:

- an enforcing creditor; or
- a defaulting debtor.

When you wind up a company’s financial matters to facilitate an orderly dismantling of the company’s structure, this is called liquidation.

During this Australian debt recovery process the assets of the company are distributed to creditors and any investigations into the company are conducted.

This occurs because the company is presumed to be insolvent (can’t pay debts) or the company members want to end the existence of the company.

When the company members have a resolution it’s called voluntary liquidation. This means that it’s not forced by the courts on the company, but that the members decide that it should go forward on their own.

**Making a winding up application may be the only way to recover your debts from an insolvent company.  Our dedicated lawyers can offer advice and assistance in the winding up procedure.**

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## The Most Common Reason for Winding Up

One of the most common reasons that we attempt to wind-up a debtor company in liquidation is failure of the company to follow the directions on a [statutory demand](https://stonegatelegal.com.au/statutory-demand/).

If the company does not pay the demanded sum in a statutory demand, compound for the debt, or apply to [set the demand aside](https://stonegatelegal.com.au/setting-aside-statutory-demand/),  or apply to [set aside the judgment](https://stonegatelegal.com.au/setting-aside-default-judgment/), then the company is presumed to be insolvent.

Then, while the company is presumed to be insolvent, the creditor can apply to the [Federal Court](http://www.fedcourt.gov.au/) or [Supreme Court](http://www.courts.qld.gov.au/courts/supreme-court) to wind the company up in liquidation.

There are a number of other steps that have to be taken:

1. Failure to comply with statutory demand;
2. Draft, file, and serve winding up application and affidavit in support;
3. Get the [liquidator’s consent](https://svpartners.com.au/contact/sunshine-coast/), and file in the Court;
4. Draft and serve an affidavit of service of originating process;
5. Complete and file the lodgment of Notice with [ASIC](http://asic.gov.au/);
6. File and serve the affidavit of lodgement of notice at ASIC;
7. Advertise the notice on the [ASIC Insolvency Notices](https://insolvencynotices.asic.gov.au/) website;
8. Draft, and file the affidavit/memorandum of publication of notice of application;
9. Attend at the hearing.

## Why is Winding Up Chosen?

The only way to take care of the affairs of a company and end the existence of the company is through the insolvency process.

This is different than just paying the debts and selling the assets of the company because the structure of the company would still be in place in this case.

### How is an Insolvent Company Wound Up?

When a voluntary insolvency occurs, the members have a resolution and the company’s affairs are taken care of.

There is usually a meeting of the members or through a notice of resolution where there’s no need for any formal meeting.

If the members decide to wind up the company, they [pick a liquidator](https://en.wikipedia.org/wiki/Liquidator_(law)). Creditors may have a right to change any liquidator at any first meeting of the creditors.

The Voluntary Administration provisions of the [Corporations Act](http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s459e.html) may also start a voluntary liquidation. The members may resolve to place the company into administration, then the creditors will resolve for a liquidation to occur.

## Winding up a Company in Liquidation

The court may also wind up a company. This is usually done when one or more creditors apply for an order in the [Federal Court](http://www.fedcourt.gov.au/) or [Supreme Court](http://www.courts.qld.gov.au/courts/supreme-court) to wind up the debtor company.

The creditor needs to prove to the [court](http://www.fedcourt.gov.au/) that the company can’t pay debts and is [insolvent](http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s95a.html).

Members such as directors or shareholders of the company may also need to prove insolvency to the court if there are any disputes or it may occur for other reasons. Once it’s wound up by the [court](http://www.fedcourt.gov.au/) it’s official.

### How to Prove That A Company Is Insolvent

In most cases a company is wound up on a voluntary basis since it can’t pay debts.

If a company can’t pay debts once they are due even if there are assets in surplus, but the company can’t liquidate those assets on a timely basis this causes an insolvency.

The directors of the company usually decide that the company is insolvent because debts that need to be paid can’t be paid for.

### Are solvent companies ever wound up?

Yes, in some cases solvent companies are wound up.

This is done by the members through a Members Voluntary Winding Up. The court may also do this if members or directors apply for an application for this to occur.

It usually happens when there’s some sort of conflict within the leadership of the company and the interested parties can’t resolve that conflict. The company may also not be able to agree to appoint a liquidator to deal with the wind up.

### Moving Forward

If you suspect that a company is insolvent then it is important to act quickly.

The debtor company may be attempting to transfer assets out of the company or take steps to defeat creditors.

Further, if the debtor is deemed to be trading insolvent then the liquidator may be able to realise the personal assets of the director(s) of the debtor company.

So, the sooner that the company is wound-up, the sooner the liquidator can provide a date of insolvency for the debtor company.

Stonegate Legal are commercial litigation, debt recovery and insolvency solicitors.  If a debtor company owes you money and can not pay, then they may be insolvent. Contact us today for a free chat about your matter.

**Making a winding up application may be the only way to recover your debts from an insolvent company.  Our dedicated lawyers can offer advice and assistance in the winding up procedure.**

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## Substituted Service Queensland
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# Substituted Service in Queensland

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## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| September 12, 2015

## Article Summary

If a defendant is attempting to avoid service, or you are unable to get them served, the Court can order that they be served in another way. This is called substituted service.

To be successful in a substituted service application, the plaintiff / applicant must show:

1. It is impracticable to serve the documents in the usual way; and
2. Using the substituted method, the document must come to the knowledge of the defendant.

So, for service to be impracticable it must be reasonably shown that service is not realistic, impossible, not practicable, and that the party has been unable to get the documents served, as required by the UCPR.

An application for substituted service must also provide evidence that the documents (and therefore the proceeding) will likely come to the knowledge and/or attention of the defendant/respondent.

If you need an order for substituted service in Queensland, then contact our lawyers to discuss an application for substituted service.

Table of Contents

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![Substituted service in Queensland litigation lawyers in Qld Noosa and Brisbane](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2015/09/Substituted-service-in-Queensland-litigation-lawyers-in-Qld-Noosa-and-Brisbane-300x300.png)Substituted service in Queensland is ordered when it is impracticable to serve a document in a way required by the _Uniform Civil Procedure Rules 1999_ (QLD) (“ _**UCPR**_”).

Substituted service in Queensland is usually used when a person who needs to be served take evasive measures to ensure that they are not served with documents in [civil litigation](https://stonegatelegal.com.au/services/civil-litigation/) or [commercial litigation](https://stonegatelegal.com.au/services/commercial-litigation/).

In these circumstances it is necessary for a Court to make an order for service to be substituted or substituting another way of serving the document.

There are some threshold issues which need to be met:

1. It must be shown that it is impracticable to serve the documents as prescribed by the rules; and
2. It must be shown that the method of service proposed would be effective in bringing the proceedings to the attention of those to be so served.

In this article our [litigation and dispute resolution lawyers](https://stonegatelegal.com.au/services/commercial-litigation/) will discuss how the Courts have interpreted these things regarding substituted service in Queensland, and what a party to a proceeding must show to be given an order for substituted service.  Note, this does not apply [in QCAT](https://stonegatelegal.com.au/qcat-applications/).

**If a defendant is attempting to avoid service, or you are unable to get them served, the Court can order that they be served in another way. Contact our lawyers to discuss an application for substituted service in Queensland**

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## Substituted Service in Queensland

Substituted service in Queensland is prescribed by [rule 116](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s116.html) of the UCPR which says:

> _(1)    If, for any reason, it is impracticable to serve a document in a way required under this chapter, the court may make an order substituting another way of serving the document._
>
> _(2)    The court may, in the order, specify the steps to be taken, instead of service, for bringing the document to the attention of the person to be served._
>
> _(3)    The court may, in the order, specify that the document is to be taken to have been served on the happening of a specified event or at the end of a specified time._
>
> _(4)    The court may make an order under this rule even though the person to be served is not in Queensland or was not in Queensland when the proceeding started._

### Impracticable to Serve the Documents

[Rule 116(1)](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s116.html) means that the applicant must show that it is impracticable to serve the documents in the usual way under the UCPR.

The Oxford Dictionary defines “ _**impracticable**_” to mean:

> _(of a course of action) impossible in practice to do or carry out_

In [_O’Neil v Acott_ (1988) 59 NTR 1](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/nt/NTSC/1988/68.html) Asche CJ said:

> _So, interpreted, there seems nothing to differentiate between the phrase “unable to effect prompt personal service” and the phrase “impracticable to serve”_

In [_Foxe v Brown_ \[1984\] HCA 69](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/1984/69.html) the High Court of Australia said:

> _\[The\] standard … is one of reasonableness so as to show a practical impossibility of personal service_

In [_Ricegrowers Co-Operative Limited and Seatide Pty Limited v ABC Containerline Nv, Med Containerline Antwerp Nv, Maritime Carriers Luxembourg SA and Den Norske Bank (Luxemborg) SA_ \[1996\] FCA 1663](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/1996/1663.html) Tamberlin J said:

> _The expression “not practicable” is in my view essentially identical in meaning to the term “impractical”_

So, for service to be impracticable it must be reasonably shown that service is not realistic, impossible, not practicable, and that the party has been unable to get the documents served, as required by the UCPR.

But how does the party ( [by their lawyers](https://stonegatelegal.com.au/small-claims-lawyers/)) show that to the Court in an application for substituted service in Queensland?

## Reasonable Effort to Serve the Respondent

In [_Foxe v Brown_ \[1984\] HCA 69](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/1984/69.html) the High Court of Australia said:

> _In general, for an order for service to be substituted to be made under the Uniform Civil Procedure Rules it must be shown (a) that the plaintiff, using reasonable effort, is unable to effect personal service; and (b) that the method of substituted service requested is one which is likely to cause the writ to come to the knowledge of the defendant._

So, the two-pronged test in _Foxe v Brown_ says that it must be shown:

1. That the plaintiff, using reasonable effort, is unable to effect personal service; and
2. That the method of substituted service requested is one which is likely to cause the writ to come to the knowledge of the defendant.

I will discuss these issues in relation to substituted service in Queensland further below.

## Reasonable Effort to Effect Service

The first part of the test is that the person serving the documents must make reasonable effort to serve the process or document as required by the UCPR.

In [_Kendell v Sweeney & Ors_ \[2002\] QSC 404](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QSC/2002/404.html) Wilson J refused to make an order for substituted service because no attempts made to serve the parties:

> _It may well be that the method of service proposed would be effective in bringing the proceeding to the attention of those respondents. However, that it not enough to justify the making of an order for substituted service. It must first be shown that it is impracticable to serve the documents in a way required by chapter 4 of the UCPR. This has not been shown – indeed, there does not appear to have been any attempt to serve the respondents in the usual way. In these circumstances I refuse to make orders for substituted service._

_Kendell v Sweeney & Ors_ was cited as correct in [_Embrey v Smart_ \[2014\] QCA 75](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCA/2014/75.html) where Applegarth J with Muir and Morrison JJA agreeing said:

> _Proof that there had been attempts to serve a party personally may be part of proof that “at the date on which the application for substituted service is made, the plaintiff, using reasonable effort, is unable to serve the defendant personally” or, in terms of r 116(1), that it is “impracticable” to serve the party personally._

In [_Ricegrowers Co-Operative Limited and Seatide Pty Limited v ABC Containerline Nv, Med Containerline Antwerp Nv, Maritime Carriers Luxembourg SA and Den Norske Bank (Luxemborg) SA_ \[1996\] FCA 1663](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/1996/1663.html) Tamberlin J said:

> _In order to establish impracticality some attempt, at least, should be made to effect service in accordance with the Rules._

In [_Foxe v Brown_ \[1984\] HCA 69](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/1984/69.html) Mason J said:

> _In the circumstances of the present case I am satisfied that reasonable efforts were made to serve the defendant. The evidence discloses repeated attempts by the plaintiff and his solicitors to locate the defendant._

This means that there is High Court and superior Queensland Court authority which says that there must be some reasonable attempts at service made to be successful in an application for substituted service in Queensland.

You could also try to make an [application for informal service](https://stonegatelegal.com.au/informal-service-of-court-documents-in-queensland/).

## Example of a Successful Application

In [_Suncorp Metway Ltd v Agnew_ \[2015\] QSC 195](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QSC/2015/195.html) the applicant had taken the following steps:

01. Conducted property searches which reveal that the respondent’s address was the address in Boondall Queensland 4034;
02. Engaged agents to effect personal service of the Claim and Statement of Claim on the respondent.
03. Attempted service at the respondent’s address on ten separate occasions;
04. The process server noticed that there was current mail addressed to the respondent in the mailbox;
05. The process server also spoke with a female neighbour who confirmed that a man named “Wayne” lived at the address;
06. Conducted a search on the Australian Securities and Investments Commission database;
07. Made inquiries whether rates notices of the property were sent to the property addressed to the respondent.
08. The searches confirm the address of the respondent obtained on the title search of the property;
09. The agents and solicitors have attempted to contact the respondent on a telephone number which went to a voice message for “Wayne”; and
10. Yellow Pages list a person by the name of “W Agnew” in Boondall with a pest control business under that number.

In this matter the application for substituted service in Queensland was successful and an order for substituted service was made.  Jackson J said:

> _In my view, the applicant has sufficiently demonstrated that the requirement of personal service under r 105 UCPR should be dispensed with. It follows that substituted service should be ordered in the terms as provided in the applicant’s application_

## Document must come to the Knowledge of the Defendant

As well as making reasonable attempts to serve the party to be served, an application for substituted service must also provide evidence that the documents (and therefore [the proceeding](https://stonegatelegal.com.au/commence-proceedings-person-company/)) will likely come to the knowledge and/or attention of the defendant/respondent.

It was said by Judge Dorney, in an application for substituted service in Queensland, in [_Queensland Construction and Engineer Proprietary Limited and Wagner_ \[2011\] QDC 171](http://classic.austlii.edu.au/au/cases/qld/QDC/2011/171.html), relying on the decision of  [_Miscamble v Phillips & Hoeflich_ (No. 2) \[1936\] St R Qd 272](http://classic.austlii.edu.au/cgi-bin/LawCite?cit=%5b1936%5d%20St%20R%20Qd%20272) that:

> _\[T\]he primary object of substituted service is to bring to the knowledge of the person in respect of whom substituted service is sought the whole proceedings_

The Court must be satisfied that the documents will come to the attention of the person who is being served.

Below are some examples of successful applications where the Court was satisfied that the documents will come to the attention of the party.

### Substituted Service by Prepaid Post

In [_ANZ Banking Group Ltd v Smalley & Anor_ \[2012\] QDC 80](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QDC/2012/80.html) the defendants were the registered owners of a property, but did not live there.  Evidence was given (and corroborated) that although the defendants did not live there, they did stay there from time-to-time. Judge Robin QC said:

> _Paragraph two authorises the ordinary arrangement of sending the claim and statement of claim, together with a copy of the court’s order, by prepaid registered post to the address of the mortgaged premises._

In [_Perpetual Ltd v. Latham & Anor_ \[2015\] QSC 190](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QSC/2015/190.html) the Court was provided with evidence that the first defendant was likely living at the address, but was avoiding service.  Jackson J said:

> _I find that it is more probable than not that if the documents are served by post they will come to the attention of the first defendant … Accordingly, in my view, it is appropriate that the requirements for personal service pursuant to r 105 of the UCPR be dispensed with … sealed copies of the claim and statement of claim together with a sealed copy of this order should be served on the first defendant by post._

### Substituted Service on Property Managers

In in an application for substituted service in Queensland, in [_Salter v Towler_ \[2012\] QDC 77](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QDC/2012/77.html) the defendant lived inside a gated closed community.  It was ordered that service be effected by ordinary prepaid post to the defendant at the address.

Also, because the property management company acknowledged that the defendant was still residing there, copies be forwarded by ordinary prepaid post to the property manager of the address.

### Substituted Service on Terms of Mortgage Documents

In [_Westpac Banking Corporation v Stanley_ \[2016\] QDC 70](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QDC/2016/70.html) and [_RHG Mortgage Corporation (Formerly Rams Mortgage Corporation Limited) v Pang & Anor_ \[2012\] QDC 58](http://classic.austlii.edu.au/au/cases/qld/QDC/2012/58.html) the respective Courts relied on terms of the mortgage documents which authorised the giving of communications by post to the last address made known to the plaintiff.

To ensure that the defendants in both of the above cases were made aware of the proceeding, text messages were also ordered to the respective defendants, making them aware of the document.

### Substituted Service on a Solicitor

In an application for substituted service in Queensland, in  [_Ask Funding Ltd v Ligi Lee Chiu_\[2011\] QDC 148](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QDC/2011/148.html) the Court order that service upon the defendant’s solicitors, even though the solicitors did not have instructions to accept service.

The same order was made in [_Capital Finance Australia Limited v Brand_ \[2009\] QDC 35](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QDC/2009/35.html) where the solicitor admitted that they acted for the defendant and said that they will not be seeking those instructions.

In [_Bellino v Douglas_ \[2013\] QDC 333](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QDC/2013/333.html) the person to be served was a solicitor who the Court decided had “ _deliberately, avoided service of the third party notice and third party claim_”.  The plaintiff’s solicitor had spoken to the third party’s assistant who said that she would bring the documents to the attention of the third party (solicitor) and there was an acknowledgement by an email of receipt of the third-party notice and third-party claim. In deciding this application Samios DCJ said:

> _Therefore, I am satisfied that the means identified in this application to bring to the third party’s attention the third-party notice and third-party claim are proper in all these circumstances … Therefore, I am satisfied that there should be an order as per the draft which contains the proposals to bring the proceedings to the attention of the third party._

### Substituted Service on Defendants Parents

In [_Australia and New Zealand Banking Group Limited v Woodman_ \[2010\] QDC 440](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QDC/2010/440.html) the Court considered if it is likely that the documents would be brought to the attention of the respondent if copies are posted to his parents.  Reid DCJ said:

> _From the facts placed before me, I agree that personal service is both impracticable and will likely to be brought to the attention of the Respondent if service is affected in the proposed way._

## Unsuccessful Substituted Service in Queensland

There have also been a number of unsuccessful applications to the Court for an order for substituted service in Queensland.

In [_Bunnings Group Limited v Lockwood & Anor_ \[2014\] QDC 94](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QDC/2014/94.html) the Court decided in an application for substituted service in Queensland that there was no evidence to support the threshold issue to make reasonable effort to serve the process or document as required by the UCPR, being no actual attempts at the defendants address (only by telephone), nor at the defendant’s workplace, which was known to the plaintiff.

In their application the defendant used the word “ **_impractical_**” not “ **_impracticable_**” to which Horneman-Wren SC DCJ said:

> _The applicant has failed to establish the impracticability of personal service. Indeed, its submissions appear to proceed on the basis of an incorrect test of impracticality, rather than impracticability … The application for substituted service must be refused._

In [_Permanent Custodians Limited v. Massey_ \[2009\] QSC 4](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QSC/2009/4.html) the Court discussed whether to grant the order for substituted service by email only.  Wilson J said:

> _Even if I were going to make an order for substituted service by email … there should be more than one mode of substituted service specified – for example, service at an email address or addresses and service by post to the defendant at his last known residential address and or to the defendant c/- his solicitor at the solicitor’s address … In the circumstances the application should be dismissed._

Contrasting [_ANZ Banking Group Ltd v Smalley & Anor_ \[2012\] QDC 80](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QDC/2012/80.html) above, in [_ING Bank (Australia) Limited v Clark_ \[2014\] QDC 74](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QDC/2014/74.html) the Court dismissed an application for substituted service on a tenant living at the address of a defendant.  In this case the person living at the address could not provide any contact details of the defendant, but stated that the defendant did stay there a few times per year.  When asked if the documents would “get their way to the defendant” the tenant said “eventually”.  In the decision Horneman-Wren SC DCJ said:

> _In my view, that the proceeding may come to the defendant’s knowledge “eventually” upon his return to the Morgan Place address from Western Australia (or from wherever the defendant is) at some unknown time in the future does not meet the primary object of substituted service … I dismiss the application_

## Substituted Service in Queensland

Gathering as much information about the person to be served will ensure that the application for substituted service in Queensland is successful. The things to try include:

1. Enabling other people to bring it to the person’s attention making them aware;
2. Enabling other people to speak to the person’s assistant/family/friends making them aware;
3. Send an email with a delivered receipt as acknowledgement of the claim;
4. Get the process server to speak to neighbours to ascertain who is living at the address for service;
5. Ask the process server to check is anything in plain view at the address make it known that the person to be served is at the address for service;
6. Search ASIC and online databases, such as the electoral role and directories;
7. Try to ascertain if the rates notices are addressed to the person to be served;
8. Telephone the person at the address and/or mobile numbers to ascertain if that is in fact the person living at the address for service.

It is also necessary to prove to the Court that the proposed method of substituted service would bring the document to the attention of the person to be served.  Thorough searches and investigation should be undertaken and annexed to the affidavit in support.

Somewhat similar, this process can be followed in relation to the [substituted service of a creditors petition](https://stonegatelegal.com.au/substituted-service-of-a-creditors-petition/) and potentially a [winding up application](https://stonegatelegal.com.au/winding-up-order-how-wind-up-company/).

**If a defendant is attempting to avoid service, or you are unable to get them served, the Court can order that they be served in another way. Contact our lawyers to discuss an application for substituted service in Queensland**

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## Substituted Service FAQ

We get asked some questions in relation to substituted service in Qld.  We have outlined some of the most frequently asked questions below.

### What is substituted service?

Substituted service in Queensland is usually used when a person who needs to be served take evasive measures to ensure that they are not served with documents in civil litigation or commercial litigation proceedings.  In these circumstances it is necessary for a Court to make an order for service to be substituted or substituting another way of serving the document.

### How do I apply for substitute service Qld?

A person will need to make an application and will be required to prove the following threshold issues which need to be met:

1. It must be shown that it is impracticable to serve the documents as prescribed by the rules; and
2. It must be shown that the method of service proposed would be effective in bringing the proceedings to the attention of those to be so served.

### What happens after substituted service?

After substituted service is ordered a plaintiff/applicant must serve the documents strictly in accordance with the substituted service order.

Once the documents have been served in that way, the defendant/respondent is taken to have been served.

### What happens if you avoid being served court papers Australia?

If you avoid being served court papers Australia a plaintiff/application can make an application for an order for substituted service.

This substituted service order is an order allowing the person to serve the documents in a different way than prescribed in the rules/legislation.

### Can someone else accept served papers?

Yes, but only in the Magistrates Court.  [Rule 111(1) of the UCPR](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s111.html) states that All documents in a Magistrates Court proceeding, including a document required by these rules to be served on a person personally, may, unless the court otherwise orders, be served under part 4.  Part 4 is ordinary service, and rule [112(1)(a) of the UCPR](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s112.html) says that if these rules do not require personal service of a document, the following are ways by which the document may be served on the person to be served … (a) leaving it with someone who is apparently an adult living at the relevant address.

### What does it mean if you’ve been served?

Being served means that you have been given documents in accordance with the rules of your state or territory.  If you have been “served” then it means that you have officially received the documents.  It is very serious and so if you have been handed Court documents, it is vital that you seek legal advice as soon as possible.

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#### Wayne Davis

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## Deceit and Fraud
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# Deceit and Fraudulent Misrepresentation in Australia

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- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| May 13, 2023

## Article Summary

The tort of deceit and fraudulent misrepresentation are very much two (2) sides of the same coin.

The tort of deceit and fraudulent misrepresentation arise when a person makes an intentionally false representation, knowingly or recklessly, to another person, to which that person relied, causing damage and loss.

The case law presently shows that in a majority (if not all) of the cases of deceit or fraudulent misrepresentation, the parties have entered into a contract of a commercial nature with the other and subsequently, the deceit or fraudulent misrepresentation is made with the intent to obtain a benefit whilst causing the other party detriment.

If a party can prove deceit and/or fraudulent misrepresentation then that party may be able to seek damages and the recission of the contract.

However, a finding of fraud is a serious one such that strict evidentiary requirements must be met and must be clearly proven, albeit on the balance of probabilities.  The Briginshaw principle states that when serious allegations are made, the evidence must be of a sufficiently convincing nature to satisfy the court to a high degree of probability.

This article will explain in a lot more detail.

Table of Contents

[Toggle](https://stonegatelegal.com.au/deceit-and-fraudulent-misrepresentation-what-you-need-to-know/#)

![Deceit and Fraudulent Misrepresentation lawyers in Queensland](<Base64-Image-Removed>)The tort of deceit and fraudulent misrepresentation in relation to commercial contract can allow the innocent party to rescind the contract and seek damages.

The elements of deceit and fraudulent misrepresentation are very similar in that there must be:

1. A false statement of fact conveyed from one party to another.
2. There must be knowledge of the falsity, or reckless indifference as to the truth or falsity of the statement.
3. The innocent party must have relied on that statement to their detriment.
4. These false statement must have caused loss and damage.

If the innocent party can prove the above to a sufficient degree, then they have some legal remedies open to them.

In this article our [Sunshine Coast litigation lawyers](https://stonegatelegal.com.au/services/commercial-litigation/) will explain the law of deceit and fraudulent misrepresentation in more detail.

**If you are the victim of deceit and/or fraudulent misrepresentation then it is vital that you get suitably qualified legal advice by profession commercial litigation solicitor.**

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## The Tort of Deceit

A tort refers to a civil wrong or an infringement that causes harm or injury to another person or their property, causing loss or damages.

The tort of deceit arises when a person makes an intentionally [false representation](https://stonegatelegal.com.au/services/defamation-lawyers/), knowingly or recklessly, to another person, to which that person relied, causing damage and loss.

The elements of the tort of deceit were summarised by Gummow, Kirby and Crennan JJ in _[Magill v Magill \[2006\] HCA 51](http://classic.austlii.edu.au/au/cases/cth/HCA/2006/51.html)_ at \[114\] where they said:

> _The modern tort of deceit will be established where a plaintiff can show five elements: first, that the defendant made a false representation; secondly, that the defendant made the representation with the knowledge that it was false, or that the defendant was reckless or careless as to whether the representation was false or not; thirdly, that the defendant made the representation with the intention that it be relied upon by the plaintiff; fourthly, that the plaintiff acted in reliance on the false representation; and fifthly, that the plaintiff suffered damage which was caused by reliance on the false representation. Generally, the elements of the tort have been found to exist in cases which concern pecuniary loss flowing from a false inducement and the need to satisfy each element has always been strictly enforced, because fraud is such a serious allegation._

Magill has been followed in [numerous further cases](http://classic.austlii.edu.au/cgi-bin/LawCite?cit=%282006%29+226+CLR+551&party1=&party2=&court=&juris=&article=&author=&year1=&year2=&synonyms=on&filter=on&cases-cited=&legis-cited=&section=).

## Elements of the Tort of Deceit

Following the case of Magill above, for a person to be successful in an action for deceit, the plaintiff must prove the following five (5) elements:

1. **False Representation** – The defendant must have made a false representation, which includes statements, actions, or even silence when there is a duty to speak.
2. **Knowledge of Falsity** – The defendant must have known that the representation was false or was reckless as to its truth.
3. **Intention to Deceive** – The defendant must have intended to deceive the plaintiff, knowing that the false representation could lead to the plaintiff’s reliance on it.
4. **Reliance** – The plaintiff must have reasonably relied on the false representation, acting upon it to their detriment.
5. **Damage or Loss** – The plaintiff must have suffered some form of harm or loss as a result of their reliance on the false representation.

We will explain these in more detail below.

### There must be a False Representation

There must be a representation made, and that representation must be false.

A representation is typically considered to be a statement of fact, whether it is communicated orally or in writing.

However, there are certain circumstances where conduct itself can be viewed as a representation. For example:

1. The reading on the car’s odometer (indicating mileage usage).
2. Smiles, winks, head shakes, and nods.
3. Dressing in a particular way to suggest you are something other than the truth.

The statement of fact must be false. A statement can be considered false when it does not align with the actual facts or reality.

It means that the description, representation, or understanding of a particular situation or condition is inaccurate or untrue.

The dictionary defines misrepresentation as:

> _the act of giving false information about something or someone, often in order to get an advantage._

The dictionary defines false as:

> _not true but made to seem true in order to deceive people._

So, as well as making a false representation, the plaintiff must also lead evidence that defendant/s had knowledge of the falsity.

### The Defendant must have Knowledge of Falsity

A misrepresentation is considered fraudulent when the person making it either does not believe it to be true or shows a reckless indifference to its truthfulness.

To establish a claim of fraud, it is necessary to prove that the individual making the statement acted dishonestly or with a disregard for whether the information provided was accurate or not.

In _[Derry v Peek \[1889\] UKHL 1](http://www.bailii.org/uk/cases/UKHL/1889/1.html)_, The Lords were citing Cotton L.J. in _Arkwright v. Newbould_ 17 Ch D 320 which was adopted by Lord Blackburn in _Smith v. Chadwick_ 9 App Cas 193 when they said:

> _What in my opinion is a correct statement of the law is this, that where a man makes a statement to be acted upon by others which is false, and which is known by him to be false, or is made by him recklessly, or without care whether it is true or false, that is, without any reasonable ground for believing it to be true, he is liable in an action of deceit at the suit of anyone to whom it was addressed or anyone of the class to whom it was addressed and who was materially induced by the misstatement to do an act to his prejudice._

In Queensland, _[Derry v Peek](http://www.bailii.org/uk/cases/UKHL/1889/1.html)_ was discussed in _[BM Farage P/L as trustee for Farage Discretionary Family Trust v QBSA \[2003\] QCCTB 11](http://classic.austlii.edu.au/au/cases/qld/QCCTB/2003/11.html)_ in relation to misrepresentations in a [building and construction dispute](https://stonegatelegal.com.au/services/building-and-construction-lawyers/), where Member Ms J McVeigh in said at \[49\]:

> _The starting point is the well-known case of Derry v Peek \[1889\] UKHL 1; (1889) 14 App Cas 337. The House of Lords ruled that fraud is proved when it is shown that a false representation has been made knowingly or without belief in its truth, or recklessly without caring whether it be true or false._

If you can find evidence or knowledge or reckless indifference, then a plaintiff must also prove that the defendant expected the plaintiff to rely on that misrepresentation.

In _[Cargill Australia Ltd v Viterra Malt Pty Ltd (No 28) \[2022\] VSC 13](http://classic.austlii.edu.au/au/cases/vic/VSC/2022/13.html)_, Elliott J discussed the elements of deceit in-depth, and said at \[3229\] with reference to relevant authority:

> _… the defendant made the representation with the knowledge that the representation was false, or was “recklessly, careless” as to whether the representation was false or not. Recklessness is a state of mind established by showing an “indifference to \[the\] truth or falsity” of the representation. It has alternatively been expressed as the absence of genuine or honest belief in the truth of the statement as it was intended to be understood. Recklessness requires the defendant to have been aware of a risk that the statement was untrue or false and to have consciously disregarded that risk. The second element may also be established where a defendant wilfully shuts her or his eyes to what would result from further enquiry as to the truth or falsity of the statement._

### There must be an Intention to Deceive

In relation to the tort of deceit, an essential element is the requirement of an intention to deceive.

This means that the person responsible for the deceitful conduct must have had a deliberate purpose to mislead or trick another party, or a class of persons to which that party belongs.

To establish the intention to deceive, the plaintiff must attempt to demonstrate that the defendant knowingly made false representations or engaged in deceptive acts with the specific aim of inducing the plaintiff (or a class of persons to which the plaintiff belongs) to rely on those representations to their detriment.

The intention to deceive goes beyond mere negligence or innocent mistake. It involves a conscious and deliberate effort to manipulate, mislead, or create a false impression.

Proving the intention to deceive can be challenging, as it requires the claimant to provide evidence or demonstrate circumstances that reasonably infer the defendant’s state of mind.

This can be accomplished through various means, such as showing a pattern of deceptive behaviour, establishing a motive for deception, or presenting direct evidence of the defendant’s knowledge and intent to mislead.

In _[Magill v Magill \[2006\] HCA 51](http://classic.austlii.edu.au/au/cases/cth/HCA/2006/51.html)_ the Court said at \[131\]:

> _In a commercial context, it has been stated that once an intention to induce a person to rely on a false statement has been made out, motive is irrelevant. However, motive may be relevant to proof of intention._

Once proven, the plaintiff must also show that they acted in reliance on that misrepresentation.

### The Plaintiff acted in Reliance on that Misrepresentation

For the next element, the plaintiff must show that have reasonably relied on the false representation, acting upon it to their detriment.

In _[Cargill Australia Ltd v Viterra Malt Pty Ltd (No 28) \[2022\] VSC 13](http://classic.austlii.edu.au/au/cases/vic/VSC/2022/13.html)_, Elliott J discussed the elements of deceit that a plaintiff must prove in that case, and said at \[3234\] with reference to relevant authority:

> _… the plaintiff acted in reliance on the false representation. The representation need not be the sole cause of the plaintiff’s actions; it is sufficient that the representation played some part, even if only a minor part. This is the case even if another reason for the plaintiff’s actions was the plaintiff’s own mistake or carelessness. Further, if the representation is made to induce the other party to enter into a contract, and the other party does enter into the contract, an inference arises (which may be rebutted) that the other party was induced to do so by the representation._

These authorities show that:

1. The representation need not be the sole cause of the plaintiff’s actions.
2. It is sufficient if the representation only played a minor part.
3. It is sufficient if another reason was the plaintiff’s own mistake or carelessness.
4. There is an inference that the other party was induced to enter into a contract by the representation.

## The Deceitful Representation Caused Damage or Loss

In relation to the tort of deceit in Australia, the element of damage or loss signifies that the plaintiff must have experienced actual harm or suffered a loss due to their reliance on the false representation made by the defendant.

This element establishes a causal link between the defendant’s deceitful conduct and the resulting harm suffered by the plaintiff.

In _[Cargill Australia Ltd v Viterra Malt Pty Ltd (No 28) \[2022\] VSC 13](http://classic.austlii.edu.au/au/cases/vic/VSC/2022/13.html)_, Elliott J discussed the elements of deceit in-depth, and said at \[3235\] with reference to relevant authority:

> _… the plaintiff suffered damage, which was caused by reliance on the false representation. Generally speaking, a causal connection is established if the plaintiff would not have sustained the loss if not for the defendant’s wrongful conduct. However, satisfaction of the “but for” test is not always necessary, or sufficient, to show causation. The “but for” test results must be tempered by value judgments and policy considerations, and ultimately determined with a common-sense approach._

The authorities show that:

1. The damage was caused by reliance on the false representation.
2. A causal connection is established if the plaintiff would not have sustained the loss if not for the defendant’s false representation.
3. Satisfaction of the “but for” test is not always necessary, or sufficient.
4. The “but for” test results must be tempered by value judgments and policy considerations.
5. The dispute must be determined with a common-sense approach.

Therefore, if you can prove that (a) there was a false representation; and (b) the defendant had knowledge of falsity; and (c) had the intention to deceive the plaintiff; and (d) the plaintiff acted in reliance of that representation; (e) which caused damage or loss – then you may have a claim in deceit.

You may also have a claim for fraudulent misrepresentation.

## Fraudulent Misrepresentation

Fraudulent misrepresentation refers to a deliberate false statement made with the intention of inducing someone to enter into a contract.

While it is not considered a contractual term and cannot be treated as a breach of contract, if a party enters into a contract based on reliance on a fraudulent misrepresentation, there are remedies and relief available.

The elements of misrepresentation are:

1. The statement is a positive misrepresentation of fact.
2. The statement is false.
3. The statement induced entry into the contract.

A statement by a person is considered fraudulent if it is made with knowledge of its falsehood, lack of belief in its truthfulness, or indifference towards its accuracy.

In other words, if a person knowingly makes a false statement, without genuinely believing in its truth or without concern for its veracity, it can be categorised as fraudulent misrepresentation.

The law surrounding these elements are essentially the same as above.

## What is the Difference Between Deceit and Fraudulent Misrepresentation?

In Australia, fraudulent misrepresentation and the tort of deceit share similarities but also have distinct characteristics, including:

1. The elements and standard of proof.
2. The legal consequences.
3. The scope of wrongful conduct.

We will explain these in more detail below.

### Elements and Standard of Proof

While both fraudulent misrepresentation and the tort of deceit require proving false representation, knowledge of falsity, intent to deceive, reliance, and resulting harm or loss, the standard of proof may differ.

The tort of deceit often requires a higher standard of proof, such as establishing the defendant’s dishonesty or fraudulent intent, to succeed in a claim.

### Legal Consequences

The legal consequences and remedies available may also differ.

Under the tort of deceit, the injured party may seek damages specifically for the intentional deceitful conduct, including punitive damages to punish the wrongdoer.

In fraudulent misrepresentation, the remedies sought may depend on the specific circumstances and can include compensatory damages, rescission, or other appropriate relief.

### Scope of Wrongful Conduct

Fraudulent misrepresentation is a broader term that encompasses various forms of fraudulent conduct, including deceit.

Alternatively, the tort of deceit specifically refers to the intentional act of deceiving another party, requiring proof of specific elements related to intentional deceitful conduct.

It’s important to note that while these differences exist, the specific application and interpretation of fraudulent misrepresentation and the tort of deceit may vary based on individual cases and the jurisdiction within Australia.

## Matters to be Specifically Pleaded

Rule 150 of the _Uniform Civil Procedure Rules 1999_ (Qld) (“ **the UCPR**”) outlines the specific matters that must be pleaded in legal proceedings, although these examples are not exhaustive.

The underlying principle is that all relevant facts that are essential to prevent any element of surprise must be included in the pleadings.

[Rule 150(1)(f)](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s150.html) of the _UCPR_ says:

> _Without limiting rule 149, the following matters must be specifically pleaded … (f) fraud._

[Rule 150(1)(j)](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s150.html) of the _UCPR_ says:

> _Without limiting rule 149, the following matters must be specifically pleaded … (j) misrepresentation._

Therefore, in relation to these causes of action, they must be specifically pleaded in accordance with rule 150 of the UCPR.

## Deceit and Fraudulent Misrepresentation are Very Serious

The finding of fraud is a serious one such that strict evidentiary requirements must be met and must be clearly proven, albeit on the balance of probabilities.

In _[Briginshaw v Briginshaw (1938) 60 CLR 336](http://classic.austlii.edu.au/au/cases/cth/HCA/1938/34.html),_ Dixon J made the often-quoted statement which has become known as the “Briginshaw Principle”, as follows:

> _The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters “reasonable satisfaction” should not be produced by inexact proofs, indefinite testimony, or indirect inferences. Everyone must feel that, when, for instance, the issue is on which of two dates an admitted occurrence took place, a satisfactory conclusion may be reached on materials of a kind that would not satisfy any sound and prudent judgment if the question was whether some act had been done involving grave moral delinquency._

The Briginshaw principle essentially states that when serious allegations are made, the evidence must be of a sufficiently convincing nature to satisfy the court to a high degree of probability.

This principle ensures that the gravity of the allegations matches the strength of the evidence needed for a finding in favour of the party making the allegations.

There is also a discussion on this issue in _[Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd \[1992\] HCA 66](http://classic.austlii.edu.au/au/cases/cth/HCA/1992/66.html)_ where the High Court states that “ _clear or cogent or strict proof_“ is necessary.

## Misleading and Deceptive Conduct in Australia

[Misleading and deceptive conduct](https://stonegatelegal.com.au/misleading-deceptive-conduct/) refers to a legal concept that prohibits individuals or businesses from engaging in actions that are likely to mislead or deceive consumers or other parties in trade or commerce.

Section 18(1) of [Schedule 2 of the _Competition and Consumer Act 2010_ (Cth)](http://classic.austlii.edu.au/au/legis/cth/consol_act/caca2010265/sch2.html) states:

> _A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive._

The word (in trade or commerce) applies to commercial activities, such as advertising, marketing, product descriptions, pricing, representations about goods or services, and any other statements or actions that may create a false impression or lead to misunderstanding.

The prohibition on misleading and deceptive conduct aims to promote fair and transparent business practices, protect consumers from false or misleading information, and maintain the integrity of the marketplace.

Remedies for breaches of this provision may include compensation for affected parties, injunctions, corrective advertising, and civil penalties.

The difference between deceit & fraudulent misrepresentation and misleading and deceptive conduct under the ACL, is the [commercial](https://stonegatelegal.com.au/services/corporations-dispute-lawyer/) element of “in trade or commerce”.

**If you are the victim of deceit and/or fraudulent misrepresentation then it is vital that you get suitably qualified legal advice by profession commercial litigation solicitor.**

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## Deceit and Fraudulent Misrepresentation FAQ

Deceit and fraudulent misrepresentation are important areas of civil law that deal with situations where false representations or intentional deception lead to harm or loss for the affected parties. Understanding these concepts is crucial for individuals, businesses, and legal professionals involved in contractual agreements, negotiations, or any circumstances where truthful information and trust are essential.

This FAQ section seeks to clarify key aspects of deceit and fraudulent misrepresentation.

### Can silence amount to a misrepresentation?

Generally, silence is not a misrepresentation, subject to some exceptions. For example, if a person sells engines to a car manufacturer, the party selling the engines could well found liable for fraudulent misrepresentation, if the seller failed to disclose that the engines were not new, despite the manufacturer’s reasonable expectation that they would be – _Bristow v Moffat-Virtue (Qld) Pty Ltd_ \[1962\] Qd R 377.

### Can conduct be misrepresentation?

Yes, conduct can be misrepresentation – for example, the reading on the car’s odometer (indicating mileage usage), and smiles, winks, head shakes, and nods can all be misrepresentation by conduct.

### What makes a misrepresentation fraudulent?

A statement by a person is considered fraudulent if it is made with knowledge of its falsehood, lack of belief in its truthfulness, or indifference towards its accuracy.  In other words, if a person knowingly makes a false statement, without genuinely believing in its truth or without concern for its veracity, it can be categorised as fraudulent misrepresentation.

### What is the law of misrepresentation in Australia?

Fraudulent misrepresentation refers to a deliberate false statement made with the intention of inducing someone to enter into a contract.  While it is not considered a contractual term and cannot be treated as a breach of contract, if a party enters into a contract based on reliance on a fraudulent misrepresentation, there are remedies and relief available.

### How do you prove misrepresentation?

The finding of fraud is a serious one such that strict evidentiary requirements must be met and must be clearly proven, albeit on the balance of probabilities.  The Briginshaw principle essentially states that when serious allegations are made, the evidence must be of a sufficiently convincing nature to satisfy the court to a high degree of probability.  This principle ensures that the gravity of the allegations matches the strength of the evidence needed for a finding in favour of the party making the allegations.

### What is misleading and deceptive conduct Australia?

Misleading and deceptive conduct refers to a legal concept that prohibits individuals or businesses from engaging in actions that are likely to mislead or deceive consumers or other parties in trade or commerce. Section 18(1) of [Schedule 2 of the _Competition and Consumer Act 2010_ (Cth)](http://classic.austlii.edu.au/au/legis/cth/consol_act/caca2010265/sch2.html) states: _A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive._

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## ATO Garnishee Notice Guide
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# ATO Garnishee Notice – \#1 Complete Guide

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## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| January 16, 2022

## Article Summary

A garnishee notice is a tool used by the ATO to recover tax debts from a tax debtor.

A garnishee notice can be issued for:

1. A tax debt; and/or
2. A judgment given on a tax debt; and/or
3. The ATO’s costs of obtaining judgment on a tax debt.

If a third party has been served with a garnishee notice, then the tax debtor must act quickly to avoid that debt being paid.

The tax debtor can take some steps to defend the garnishee notice, but the defences are usually very difficult to be successful.

A tax debtor may be able negotiate a payment plan in exchange for the garnishee being withdrawn.

Most importantly, act quickly and get qualified legal advice as soon as possible.

Table of Contents

[Toggle](https://stonegatelegal.com.au/ato-garnishee-notice-1-complete-guide/#)

![ATO Garnishee Notice Complete Guide Australia tax lawyers](<Base64-Image-Removed>)A garnishee notice is a notice issued by the Australian Taxation Office (“ **the ATO**”) to a third-party of a tax debtor, directing any monies held on behalf of the tax debtor be transferred to them.

ATO garnishee notices can very often be embarrassing to the taxpayer and can sometimes damage the business as it can force third parties into the business’s financial issues.

This garnishee notice may also cause significant cashflow issues for the business.

The ATO can send a garnishee notice to a number of different third parties. For individual tax debtors, the ATO can possibly send a garnishee notice to:

1. A person who owes the tax debtor money from the sale of real property.
2. The tax debtor’s employer or head contractor.
3. The tax debtor’s financial institutions including banks and building societies.

For business tax debtor’s, the ATO can possibly send a garnishee notice to:

1. The tax debtor’s business financial institution, bank, or building society.
2. The tax debtor’s business suppliers of merchant card facilities.
3. The tax debtor’s business trade debtors.

In this article, our [Queensland tax debt lawyers](https://stonegatelegal.com.au/services/tax-debt-lawyers/) explain the basics of resolving tax debt disputes with the ATO.

**If an ATO garnishee notice has been issued, then contact our litigation and dispute resolution lawyers to discuss**

[CONTACT A LITIGATION LAWYER TODAY](https://stonegatelegal.com.au/contact-stonegate-legal/)

**OR CALL: [1300 545 133](tel:1300545133) FOR A FREE PHONE CONSULTATION**

## What is a garnishee notice?

As above, a garnishee notice is a tool used by the [ATO](https://www.ato.gov.au/) to [recover tax debts from a tax debtor](https://stonegatelegal.com.au/resolving-tax-debts-ato-tax-disputes/).

The authority is given to the ATO by section [260-5 of schedule 1 of the TAA](http://classic.austlii.edu.au/au/legis/cth/consol_act/taa1953269/sch1.html). Section 260-5(1) says:

> _(1)  This Subdivision applies if any of the following amounts (the debt) is payable to the Commonwealth by an entity (the debtor) (whether or not the debt has become due and payable):_
>
> _(a)  an amount of a \* tax-related liability;_
>
> _(b)  a judgment debt for a \* tax-related liability;_
>
> _(c)  costs for such a judgment debt;_
>
> _(d)  an amount that a court has ordered the debtor to pay to the Commissioner following the debtor’s conviction for an offence against a \* taxation law._

So, garnishee notice can be issued for:

1. A tax debt; and/or
2. A judgment given on a tax debt; and/or
3. The ATO’s costs of obtaining judgment on a tax debt.

[Section 260-5(2) of the TAA](http://classic.austlii.edu.au/au/legis/cth/consol_act/taa1953269/sch1.html) then goes on to say:

> _The Commissioner may give a written notice to an entity (the third party) under this section if the third party owes or may later owe money to the debtor._

This section of the TAA authorises the ATO to serve a written garnishee notice on any third party, if that third party owed money to the tax debtor.

[Section 260-5(3) of the TAA](http://classic.austlii.edu.au/au/legis/cth/consol_act/taa1953269/sch1.html) then goes on to say:

> _(3)  The third party is taken to owe money (the available money) to the debtor if the third party:_
>
> _(a)  is an entity by whom the money is due or accruing to the debtor; or_
>
> _(b)  holds the money for or on account of the debtor; or_
>
> _(c)  holds the money on account of some other entity for payment to the debtor; or_
>
> _(d)  has authority from some other entity to pay the money to the debtor._
>
> _The third party is so taken to owe the money to the debtor even if:_
>
> _(e)  the money is not due, or is not so held, or payable under the authority, unless a condition is fulfilled; and_
>
> _(f)  the condition has not been fulfilled._

The ATO garnishee notice will require the third party to pay the alleged amount of the tax debt immediately after issuance; or within a specified time after the amount of the available money concerned becomes an amount owing to the debtor.

These two types of garnishee notices are called:

1. Point in time notices; and
2. Continuing notices.

We will explain the difference in more detail below.

**Have you been issued with a director penalty notice? Read our [director penalty notice article here](https://stonegatelegal.com.au/director-penalty-notice-complete-guide-for-directors/).**

### Point in Time ATO Garnishee Notice

Point in time notices are notices which demand a single one-off payment.

For example, the tax debtor’s bank must pay the full tax debt, or a certain percentage, from the specified account of the tax debtor, whichever is less.

This is given authority by [260-5(4)(a) of the TAA](http://classic.austlii.edu.au/au/legis/cth/consol_act/taa1953269/sch1.html) which says:

> _(4)  A notice under this section must:_
>
> _(a)  require the third party to pay to the Commissioner the lesser of, or a specified amount not exceeding the lesser of:_
>
> _(i)  the debt; or_
>
> _(ii)  the available money_

[Section 260-5(4)(a) of schedule 1 of the TAA](http://classic.austlii.edu.au/au/legis/cth/consol_act/taa1953269/sch1.html) authorises the single payment from the third party of the tax debtor.

There are also continuing garnishee notices.

### Continuing ATO Garnishee Notice

Continuing notices are notices which demand continuous payments from the third party.

For example, the tax debtor’s bank must pay an amount of money in the bank account, as well as any future deposits.

This is given authority by [260-5(4)(b) of schedule 1 of the TAA](http://classic.austlii.edu.au/au/legis/cth/consol_act/taa1953269/sch1.html) which says:

> _(4)  A notice under this section must:_
>
> _(b)  if there will be amounts of the available money from time to time–require the third party to pay to the Commissioner a specified amount, or a specified percentage, of each amount of the available money, until the debt is satisfied._

Section 260-5(4)(b) authorises the continuing payments from the third party of the tax debtor.

As you can see, the ATO’s legal power to issue a garnishee notice are powers given to the ATO pursuant to section 260-5 of schedule 1 of the [_Taxation Administration Act 1953_ (Cth)](http://classic.austlii.edu.au/au/legis/cth/consol_act/taa1953269/index.html).

The ATO may issue a garnishee notice to various third parties.

![ATO Garnishee Notice Australia](<Base64-Image-Removed>)

## What is the Third Party Required to Do?

When issued with a garnishee notice, the third party has a certain time frame to comply with the notice.

The third party must comply with the garnishee notice, or they face serious penalties. If they do comply then it is deemed to have been made with the tax debtor’s consent.

If the third-party does not comply with the garnishee notice, then this is a criminal offence. The penalty for non-payment by the third party are:

1. A fine (20 penalty units); and
2. Liability to pay the amount of the garnishee notice.

As you can see, the conditions are onerous for the third party, and they must pay of face the punishment above. If you are unsure then it is vital you get advice from a [tax dispute lawyer](https://stonegatelegal.com.au/services/commercial-litigation/).

## Who Can the ATO Issue Garnishee Notices To?

The [ATO](https://www.ato.gov.au/) can issue a garnishee notice to the following:

1. A contractor who owes money to a tax debtor, and other trade debtors.
2. An employer who owes money to a tax debtor.
3. Banks, financial institutions and [building](https://stonegatelegal.com.au/copyright-in-building-plans-after-termination-of-building-contract/) societies where the tax debtor has accounts.
4. People involved in the sale of land or property from a tax debtor such as purchasers, real estate agents and solicitors.
5. Solicitors or accountants holding funds in trust on behalf of a tax debtor.
6. An Australian company in which a tax debtor is a shareholder; and
7. The suppliers of merchant card facilities.

The ATO’s reach is long, and the issuance of a garnishee notice on any one of these may cause devastating and long-lasting damage to the taxpayer’s business and business relationships.

It is very important that you seek advice as soon as you receive a garnishee notice.

## Why have the ATO Issued a Garnishee Notice?

Why has a garnishee notice been issued? A garnishee notice will be issued by the ATO against the tax debtor in the following circumstances:

1. The tax debtor does not pay a tax obligation and fails to take reasonable steps with the ATO to resolve this dispute.
2. The tax debtor has repeatedly defaulted on it agreed ATO taxation payment plans.
3. The tax debtor has shown that they are not willing to work with the ATO to resolve the dispute.
4. The tax debtor seems to be engaging in illegal phoenix activities.
5. The tax department has detected deliberate and ongoing avoidance in relation to an ATO tax audit.

Basically, don’t stick your head in the sand! If you owe tax to the ATO, just work with them to organise repayments.

## What does the ATO Consider when Issuing Garnishee Notices?

The ATO will consider a number of things when deciding whether to issue a garnishee notice.

These will include (inter alia) the tax debtor’s financial position, and whether the tax debtor will be at risk of providing for their family, or business.

The ATO [Practice Statement Law Administration 2011/18 says at 108](https://www.ato.gov.au/law/view/document?DocID=PSR/PS201118/NAT/ATO/00001&PiT=99991231235958#P108):

The [ATO](https://www.ato.gov.au/) will consider the following when deciding whether to issue a garnishee notice:

1. the likely implications on the tax debtor’s ability to provide for a family or maintain the viability of a business should the notice be issued.
2. the tax debtor’s financial position and circumstances and the steps the tax debtor has taken to pay the debt in the shortest possible time frame;
3. whether the revenue is placed at risk because of the tax debtor’s actions (ie paying other creditors in preference to the ATO); and
4. any other debts that the tax debtor owes.

So, the ATO should avail itself of the information required above before it was to issue a garnishee notice. If one is issued, are there any defences to an ATO garnishee notice?

## Defences to an ATO Garnishee Notice

There are several things that a tax debtor can do to try to stop the third party from making the payment to the ATO. These include:

1. Confirming that all of the formal requirements of the garnishee notice are included.
2. If the garnishee notice is issued on a judgment, check if there is a stay of enforcement of the judgment, or appeal available to the tax debtor.
3. If the funds are held in a self-managed superannuation fund account, held in a joint account, or held in foreign currency.
4. If the garnishee notice has been issued by the ATO for an improper purpose or in bad faith.

However, these defences are not strong defences and are risky applications to make and be successful.

It is always good to check with your [tax debts lawyer](https://stonegatelegal.com.au/resolving-tax-debts-ato-tax-disputes/).

You could also try mitigating the deductions the third party has to pay by:

1. If the garnishee notice is against your employer, you can resign.
2. If the garnishee notice is against your bank, you can change banks.

Alternatively, the underlying tax assessment the ATO has sent may also be challenged in Court proceedings. The Federal Court has jurisdiction to review tax assessments.

Defending tax debts can be difficult because of the general rule that a tax assessment is conclusive evidence:

1. Of the amount of tax payable, interest owing and penalties; and
2. That the taxation itself assessment was properly made by the ATO.

This means that the taxpayer may still have to pay the entire assessed amount to the ATO, even if there is a genuine dispute about part of the tax liability.

If you get a notice that the objection to the tax assessment was not successful, and you file an appeal in the AAT or the Court, then you may still be required to pay the entire amount of the tax assessment.

Because of this, it can be very difficult to defend tax debt proceedings in Court.

However, the ATO may agree to withdraw garnishee notices.

## Will the ATO agree to Withdraw the ATO Garnishee Notice?

The [ATO](https://www.ato.gov.au/) may agree to withdraw or amend a garnishee notice in certain situations.

The ATO [Practice Statement Law Administration 2011/18 says at 109](https://www.ato.gov.au/law/view/document?DocID=PSR/PS201118/NAT/ATO/00001&PiT=99991231235958#P109) states:

> _The Commissioner will consider any reasonable request from a tax debtor to either withdraw or vary the requirements of a garnishee notice, provided the tax debtor makes suitable alternative arrangements for payment._

If the ATO can see that a tax debtor is actually trying to resolve their tax debts, they may agree to withdraw the garnishee notice.

This will usually mean that the tax debtor is prepared to enter into a payment plan for the payment of the tax debt.

### What is an ATO Payment Plan?

An [ATO payment plan](https://www.ato.gov.au/general/paying-the-ato/help-with-paying/) is an agreement between the tax debtor and the tax office which allows the tax debtor to pay the outstanding tax in instalments.

There are usually some conditions attached, such as being up to date with all other tax obligations, and/or the plan being for no longer that 12 months.

If the tax debtor and the ATO agrees to the payment plan, then the ATO may withdraw the garnishee notice.

A garnishee notice will usually have a person of contact at the ATO. If you want to arrange a payment it is vital that you contact that person, or the ATO, before the third party is required to make the payment.

An experienced negotiator may also be able to reduce your tax debt liability by negotiating for the reduction of the added interest and penalties.

### What Type of Payment Plan Should I Enter?

There are a number of different payment plans that a tax debtor can enter into, based on the circumstances of your particular situation.

Some ATO payment plans may last for three (3) months, and some ATO payment plans may last for over two (2) years, or more. Most are for up to 12 months.

Some ATO payment plans may require an upfront payment before making monthly repayments, and some ATO payment plans may not require any upfront payments.

The type of payment arrangement that a tax debtor can negotiate with the ATO depends on several different factors, such as:

- The amount of the debt owed to the ATO.
- The amount of money a tax debtor can afford to pay.
- Whether the tax debtor is able to provide security to the ATO (mortgage, for example); and
- The tax debtor’s compliance history with the ATO.

The best way to mitigate risk, is to avoid being given a garnishee notice in the first place.

## How to Avoid Being Issued with a Garnishee Notice?

I realise that if you are reading this on our website, you or your client has likely already been served with an ATO garnishee notice.

However, there are a number of things that a taxpayer can do to avoid any ATO adverse action:

3. Do not ignore the warnings from the ATO.
4. Act quickly to get the alleged tax debt resolved.
5. Negotiate a payment plan with the ATO.
6. If you cannot pay, then appoint a liquidator or bankruptcy trustee.
7. Get professional accounting and legal advice.

The best advice is not burying your head in the sand.

If the ATO claim you have a tax liability, then you should attempt to do something. Do not just do nothing and hope you get some more money in the future.

### The ATO is a Secured Creditor Because of the Garnishee Notice

Care should be taken with ATO garnishee notices because once issued, the ATO becomes a secured creditor by way of a statutory charge over the monies held by the third party.

In [_Hansen Yuncken Pty Ltd v. Ian James Ericson trading as Flea’s Concreting & Anor_ \[2012\] QSC 51](http://classic.austlii.edu.au/au/cases/qld/QSC/2012/51.html), McMurdo J said at \[35\]:

> _It must be accepted then that the service of a s 260-5 notice confers upon the Commissioner what has been described as a statutory charge over the relevant debt. But that is not sufficient to dispose of the present contest, because it is a charge in a limited sense and, in particular, it is not a charge which provides the Commissioner with a proprietary interest in the subject debt._

Again, this gives the ATO advantages, so if it can be withdraw then the tax debtor will be in a better position.

## Conclusion on ATO Garnishee Notices

If a third party has been served with a garnishee notice, then the tax debtor must act quickly to avoid that debt being paid.

The tax debtor can take some steps to defend the garnishee notice, but the defences are usually very difficult to be successful.

A tax debtor may be able negotiate a payment plan in exchange for the garnishee being withdrawn.

Most importantly, act quickly and get qualified legal advice as soon as possible.

**If an ATO garnishee notice has been issued, then contact our litigation and dispute resolution lawyers to discuss**

[CONTACT A LITIGATION LAWYER TODAY](https://stonegatelegal.com.au/contact-stonegate-legal/)

**OR CALL: [1300 545 133](tel:1300545133) FOR A FREE PHONE CONSULTATION**

## Garnishee Notice Frequently Asked Questions FAQ

We get asked questions in relation to garnishee notices. We have selected a few of the most commonly asked questions below.

### How much can the ATO garnishee?

The entire amount of the overdue tax assessment can be collected. However, the ATO will not take more that 30% of any wages or salaries garnished.

### How do I know if a notice has been sent by the ATO?

If the ATO sends a garnishee notice to a third party, they are also obliged to send a copy to the tax debtor. Section 260-5(6) of schedule 1 of the Tax Administration Act says, “The Commissioner must send a copy of the notice to the debtor”.

### What should I do if I receive a notice?

If you are a third party, then you must pay the amount requested before the expiration of the payment period, or you may get a fine or be liable for the debt.

If you are a tax debtor then you must act quickly, and you may be able to get the garnishee notice withdrawn in exchange for a payment plan.

### When can the ATO issue a garnishee notice?

If there is a tax debt liability, and the tax debtor has:

1. Failed to take reasonable steps to resolve this; or
2. Repeated defaults on payment plans; or
3. Unwillingness to work with the ATO; or
4. Illegal phoenix activity; or
5. Deliberate and ongoing avoidance.

### Can the ATO issue a garnishee notice if the company is in external administration?

The ATO cannot issue a garnishee notice once the company is in liquidation ( [_Bell Group Limited (in liq) v DCT_ \[2015\] FCA 1056](http://classic.austlii.edu.au/au/cases/cth/FCA/2015/1056.html)).

The third party may still be liable if the garnishee notice was issued prior to the company going into liquidation.

However, the Garnishee Notice creates a statutory charge over the monies held by the third party to the ATO, making the ATO a secured creditor.

### Who receives a garnishee notice?

Both the tax debtor and the third party will receive the notice.

The third parties include a contractor, employer, banks, financial institutions and building societies, purchasers of real property, real estate agents, solicitors, accountants, a company in which a tax debtor is a shareholder; and suppliers of merchant card facilities.

### What happens after I receive a notice?

If you are a third party, you must pay the amount contained in the ATO garnishee notice.

If you are the tax debtor, you must attempt to either defend the garnishee notice on technical grounds or negotiate a payment plan with the ATO in exchange for it to be withdrawn.

### How can I challenge a garnishee notice?

You can challenge the garnishee notice on the following grounds:

1. Ensuring that all of the formal requirements of the garnishee notice are included; or
2. Obtain a stay of enforcement of the judgment debt; or
3. Ensure the funds are not held in a joint account or held in foreign currency; or
4. Check if notice has been issued for an improper purpose or in bad faith.

**If an ATO garnishee notice has been issued, then [contact our litigation and dispute resolution lawyers](https://stonegatelegal.com.au/) to discuss**

[CONTACT A LITIGATION LAWYER TODAY](https://stonegatelegal.com.au/contact-stonegate-legal/)

**OR CALL: [1300 545 133](tel:1300545133) FOR A FREE PHONE CONSULTATION**

![Picture of Wayne Davis](<Base64-Image-Removed>)

#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

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## Statutory Demand Lawyers
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# Statutory Demand Lawyers

At Stonegate Legal, we understand that dealing with a statutory demand can be overwhelming for individuals and businesses. We provide legal assistance and advice to clients facing statutory demands, whether it’s issuing or setting aside a demand.

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## What is Statutory Demand?

## Issuing & Setting Aside A Statutory Demand

## Dealing With Statutory Demand

A statutory demand is a legal document that requires a debtor to pay an outstanding debt within 21 days. The document can be served either by post or personally by the creditor, and must include details of the amount of debt, who it is owed to and how it can be paid. If the debtor does not comply with the demand, then the creditor may take legal action against them in court.

At [Stonegate Legal](https://stonegatelegal.com.au/), our statutory demand lawyers understand that dealing with a statutory demand can be daunting for those on the receiving end. We provide our clients with detailed advice on their options when facing a statutory demand, including issuing or setting aside a demand.

Our statutory demand lawyers have extensive experience in dealing with all aspects of statutory demands, from issuing them to representing clients in court proceedings if necessary. Our experienced solicitors will provide you with support throughout the process and ensure that your rights are protected at all times.

[Meet The Team](https://stonegatelegal.com.au/the-stonegate-legal-team/)

### Issuing a Statutory Demand

A creditor can issue a statutory demand to recover an outstanding debt. The demand must include details of the debt’s amount, who it is owed to, and how it can be paid. The debtor must pay the debt within 21 days, or the creditor may take legal action against them in court.

At Stonegate Legal, our statutory demand lawyers have extensive experience in dealing with all aspects of issuing a statutory demand. Our statutory demand lawyers will provide our clients with detailed advice on their options and ensure that their rights are protected throughout the process.

### Setting Aside a Statutory Demand

If a debtor wishes to dispute a statutory demand, they may apply to set it aside in court. This means that the demand will no longer be legally enforceable and the creditor will not be able to take legal action against them until further notice.

Our statutory demand lawyers understand that dealing with a statutory demand can be overwhelming for individuals and businesses alike. We provide our clients with detailed advice on their options when facing a statutory demand, including setting aside a demand if necessary. Our experienced solicitors will provide you with support throughout the process and ensure that your rights are protected at all times.

![Statutory Demand lawyers in Queensland and throughout Australia](https://stonegatelegal.com.au/wp-content/uploads/2025/05/20231207-Stonegate-Legal-165-scaled.jpg)

### Request Your Free Consultation

If you require assistance with issuing or setting aside a statutory demand, our team of lawyers is available to provide you with the necessary aid.

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### Chat With A Statutory Demand Lawyer

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## Providing Support with Every Step of the Way

At Stonegate Legal, we understand that dealing with a statutory demand can be a difficult process. Whether it is issuing or setting aside a demand, you can count on us to be there for you.

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### Issuing a Demand

[Drafting & Serving a Statutory Demand](https://stonegatelegal.com.au/statutory-demand/#collapse-c70abef687f071683818)

Under [Section 9](http://www8.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/ca2001172/s9.html) of the Corporations Act 2001 (Cth), a company must pay $4,000 if it owes a debt of more than $2,000. To demand payment for debts greater than $4,000, a specific form (509h) must be used with accurate information to avoid challenges by the debtor in court. Liquidation is not easily ordered by courts, so attention to detail is essential in the process.

[Evidence Needed to Accompany the Statutory Demand](https://stonegatelegal.com.au/statutory-demand/#collapse-092b264687f071683818)

When creating a statutory demand, section [459E](http://www8.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/ca2001172/s459e.html) subsection (3) requires that an affidavit be included unless the debt is a judgment debt. The affidavit must confirm that the company owes the [debt](https://stonegatelegal.com.au/services/tax-debt-lawyers/) or debts and comply with the rules. It is crucial to ensure that the affidavit is drafted accurately and follows the regulations. If not, the demand may be invalidated.

[Serving your Demand for Payment](https://stonegatelegal.com.au/statutory-demand/#collapse-eba8349687f071683818)

After fulfilling all the requirements, the next step is to serve the demand. As per section 109X of the Corporations Act 2001 (Cth), a document can be served on a company in various ways. These include leaving it at the registered office or posting it to the company's registered office. Alternatively, a copy can be delivered personally to a director of the company residing in Australia or an external Territory. It is crucial to ensure that the demand is served correctly and documented in an affidavit of service to avoid any legal consequences. The company's registered office address can be found in the Australian Securities and Investments Commission (ASIC) company extract. To ensure effective debt recovery, it is recommended to follow both options mentioned in section 1.

### Setting Aside a Demand

[Formal Defects](https://stonegatelegal.com.au/statutory-demand/#collapse-c70abef687f07168821b)

If the statutory demand has formal defects in its form, it can be invalidated by a court order. The prescribed form for such demands is outlined in schedule 2 of the Corporations Regulations 2001 (Cth) as statutory demand form 509h. The Corporations Act 2001 (Cth) outlines in section 459J(1)(a) that a demand can be set aside if there is a defect in the demand that will cause substantial injustice if not addressed. This issue of substantial injustice is the threshold for determining whether or not the demand should be set aside. Many cases in Australia and Queensland have discussed the process of setting aside a statutory demand based on formal defects in the demand.

[Genuine Dispute](https://stonegatelegal.com.au/statutory-demand/#collapse-092b264687f07168821b)

According to Section 459H(1)(a) of the Corporations Act 2001 (Cth), it is possible to set aside a statutory demand without a judgment if there is a genuine dispute about the existence or amount of a debt. However, you must provide affidavit evidence to support your claim that there is indeed a dispute about the debt's existence or amount. Once the affidavit is submitted, you must follow the rules for setting aside the demand. More information on this can be found below.

[Offsetting Claim](https://stonegatelegal.com.au/statutory-demand/#collapse-eba8349687f07168821b)

In accordance with Section 459H(1)(b) of the Corporations Act 2001 (Cth), a statutory demand can be put on hold if there is an offsetting claim. An offsetting claim is a legitimate counterclaim, set-off or cross-demand that the company has against the person or company issuing the demand, even if it is not related to the same transaction or circumstances as the debt in question. If the offsetting claim reduces the total amount of the demand to below the statutory minimum, it can be used to set aside the demand.

[Setting Aside Statutory Demand](https://stonegatelegal.com.au/statutory-demand/#collapse-d7217ff687f07168821b)

If a company receives a statutory demand, it has the option to request the Court to nullify it. However, this application must be made within 21 days of the demand being served. To make a valid application, the company must file an affidavit supporting the application and serve copies of the application and affidavit on the person who served the demand within the 21-day period. Failure to meet this deadline will result in a presumption of [insolvency](https://stonegatelegal.com.au/services/insolvency/) for three months and the creditor may apply to wind up the company during this period. This presumption shifts the burden of proof, similar to the presumption of innocence in criminal law.

### Our Team

## Meet Our Statutory Demand Team

![Wayne Davis - Lawyer - Stonegate Legal](https://stonegatelegal.com.au/wp-content/uploads/2024/06/wayne.avif)

## Legal Practice Director / Principal Solicitor

## Wayne Davis

Wayne Davis is the principal solicitor, legal practice director of the firm, and leads the litigation team.  Wayne has an LLB, and GDLP and is admitted to the Supreme Court of Queensland and the High Court of Australia.  Wayne is a debt recovery, defamation, litigation, and insolvency professional.

Wayne is dedicated to achieving the best possible outcomes, whether through strategic negotiation, alternative dispute resolution, or courtroom advocacy. Wayne understand that every case is unique and takes a proactive approach to ensure your rights and interests are protected at every stage of the process.

### Education & Certifications

LLB – Bachelor of Laws, Graduate Diploma of Legal Practice (GDLP)

### Personal Quote

Don’t believe everything you think.

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Lease Disputes](https://stonegatelegal.com.au/tag/commercial-lease-disputes/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/) [Debt Recovery/Collection](https://stonegatelegal.com.au/tag/debt-recovery-collection/) [Defamation Litigation](https://stonegatelegal.com.au/tag/defamation-litigation/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [Statutory Demands](https://stonegatelegal.com.au/tag/statutory-demands/) [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/) [Wills/Estate Litigation](https://stonegatelegal.com.au/tag/wills-estate-litigation/)

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## Law Graduate / Paralegal

## Laylah Toovey

Laylah completed her Bachelor of Laws with Honours at the University of the Sunshine Coast and is currently undertaking her graduate diploma of legal practice at the College of Law. I have worked with Stonegate Legal since 2021, and within this time, she acquired a broad range of knowledge and experience across a diverse range of matters.

Laylah’s approach is centered on understanding your unique circumstances, protecting your interests, and advocating for the best possible outcome. Whether you’re facing commercial disputes, debt disputes, contract issues, or other contentious matters, Laylah and the team are here to guide you every step of the way.

### Education & Certifications

Bachelor of Laws

### Personal Quote

I am dedicated to supporting our senior team members, and achieving positive results for our clients

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Debt Recovery/Collection](https://stonegatelegal.com.au/tag/debt-recovery-collection/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [Statutory Demands](https://stonegatelegal.com.au/tag/statutory-demands/) [Wills/Estate Litigation](https://stonegatelegal.com.au/tag/wills-estate-litigation/)

![Stacey Harvey Paralegal - Stonegate Legal](https://stonegatelegal.com.au/wp-content/uploads/2024/06/20250624-Stonegate-Legal-13-1024x1024.jpg)

## Senior Paralegal

## Stacey Harvey

Stacey has been a part of the team at Stonegate Legal since 2022 but has worked in the industry for over 20 years, having extensive knowledge of the legal processes in Australia and specializing in debt recovery claims, default judgments, enforcement action, and bankruptcy.

Stacey spent a large portion of her career as a senior paralegal responsible for the performance and management of a team of paralegals and an administration department for many years.  During the first 18 years, she worked for one of Brisbane’s largest debt collection companies, where she managed large portfolios of debt for councils, schools, government departments, and insurance companies, along with debt purchased from various banks, utilities, and other credit providers.

### Education & Certifications

Justice of the Peace, Certificate III in Office Business Administration

### Personal Quote

Stay positive, work hard, make it happen.

## Areas of Interest

### [Commercial Lease Disputes](https://stonegatelegal.com.au/tag/commercial-lease-disputes/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Debt Recovery/Collection](https://stonegatelegal.com.au/tag/debt-recovery-collection/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [Statutory Demands](https://stonegatelegal.com.au/tag/statutory-demands/) [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/)

## Statutory Demand FAQ with Answers

## What is a statutory demand in Australia?

A statutory demand is a formal request by a creditor requiring a company to pay an outstanding debt over $4,000 within 21 days. It’s issued under the Corporations Act 2001 (Cth) and, if ignored, may lead to a presumption of insolvency and legal action to wind up the company.

## Who can issue a statutory demand?

A statutory demand can be issued by any creditor owed more than $4,000 by a company. The debt must be due and payable, and the demand must comply with strict legal formatting and service requirements outlined in the Corporations Act 2001 (Cth).

## How long does a company have to respond to a statutory demand?

A company has 21 days from the date of service to either pay the debt, reach an agreement, or apply to set the demand aside in court. Failing to act within this period may result in the company being presumed insolvent.


## What is an offsetting claim?

An offsetting claim is a genuine counterclaim or set-off the debtor company has against the creditor, even if unrelated to the original debt. If it reduces the amount owed below the statutory minimum, it can be grounds to set aside the demand.

## What form is used to issue a statutory demand?

Statutory demand Form 509H must be used when issuing a demand. It must contain specific information, including the debt amount, creditor details, and an affidavit if the debt is not a judgment debt. Incorrect use can render the demand invalid.

## Can a creditor issue a statutory demand for a personal debt?

No, statutory demands are strictly for debts owed by companies, not individuals. Creditors seeking payment from individuals must use other legal avenues such as court proceedings or bankruptcy notices.

## Can a company defend against a statutory demand?

A company can defend against a statutory demand by filing an application to set it aside within 21 days, supported by an affidavit. Valid defences include genuine disputes, offsetting claims, or procedural errors.

## What happens after a statutory demand is served?

Once served, the company has 21 days to comply. Options include paying the debt, negotiating, or filing to set aside the demand. If no action is taken, insolvency is presumed, enabling a winding-up application by the creditor.

## Does a statutory demand affect credit ratings?

A statutory demand does not automatically affect credit ratings. However, if ignored and legal proceedings commence, including winding-up applications, it can significantly damage the company’s creditworthiness and reputation.

## Why engage a lawyer for a statutory demand?

Statutory demands involve strict legal requirements and short deadlines. Errors or delays can result in severe consequences. Engaging an experienced lawyer ensures correct procedure, advice on setting aside demands, and representation in court if necessary.

## What happens if a statutory demand is ignored?

If a company ignores a statutory demand, the creditor can apply to the court to wind up the company. The company is presumed insolvent, and a liquidator may be appointed to take control of the business and distribute its assets.

## Can a statutory demand be set aside?

Yes, a company can apply to set aside a statutory demand if there's a genuine dispute about the debt, a valid offsetting claim, or a formal defect causing substantial injustice. The application must be filed within 21 days of service.

## What is a ‘genuine dispute’ in a statutory demand case?

A genuine dispute exists if there is a real, not spurious, disagreement about the existence or amount of the debt. It must be supported by evidence in an affidavit and is grounds to apply to set aside the demand under section 459H.

## How must a statutory demand be served?

Under section 109X of the Corporations Act 2001, a statutory demand must be served by post, personal delivery to the registered office, or handed to a director in Australia. Proper service must be evidenced by an affidavit of service.

## What is the statutory minimum for a statutory demand?

As of current legislation, the minimum debt for issuing a statutory demand is $4,000. The amount must be due and payable, and if reduced by dispute or offsetting claim below this threshold, the demand can be invalidated.

## Can a statutory demand be withdrawn?

Yes, a creditor can withdraw a statutory demand voluntarily before expiry of the 21-day response period. This is usually done by written notice and may form part of negotiated settlements between creditor and debtor.

## What if a statutory demand contains an error?

A statutory demand with formal defects may be set aside if it causes substantial injustice. Courts consider errors in the form, amount, or supporting documents serious enough to invalidate the demand under section 459J.

## Is an affidavit always required with a statutory demand?

An affidavit is required if the debt is not a judgment debt. It must state that the debt is due and payable and must comply with all legal requirements. Omission or inaccuracy can render the demand defective.

## What legal consequences follow a statutory demand?

If not complied with, a statutory demand leads to a presumption of insolvency. This allows the creditor to apply for the company's winding up, potentially resulting in liquidation and the appointment of a liquidator.

## Can multiple debts be included in one statutory demand?

Yes, a statutory demand may include more than one debt, provided the total exceeds $4,000 and all debts are due and payable. Each debt must be detailed clearly, and supported by appropriate documentation or an affidavit.

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## Debt Recovery Services
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# Debt Recovery Services in Queensland

[Discuss Your Case Today](https://stonegatelegal.com.au/contact/)

## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| February 14, 2021

## Article Summary

Informal debt collection services can include:

1. Friendly reminders by email, text message, written reminders, telephone and face-to-face
2. Informal negotiations to reach the desired outcome
3. Issuing a lawyer’s letter of demand
4. Searches – PPSR, Title Searches, Skip location searches, and ASIC searches
5. Making field calls to the debtor

After the informal services, there are a number of formal debt recovery services, which include:

1. Issue legal proceedings in Court.
2. Making QCAT applications.
3. Issuing a statutory demand.
4. Lodgment of caveats on the debtor’s property.
5. Obtaining judgments in legal proceedings.
6. Subcontractor’s charges and payment claims.
7. Issuing subcontractors charges.
8. Process serving and repossession.
9. Alternative Dispute Resolution.

If a creditor successfully obtains a judgment or enforceable money order in relation to this debt, and the debtor still refuses to pay, then a creditor will have to start enforcement proceedings. This can include:

1. Enforcement warrants
2. Winding up companies in insolvency
3. Bankruptcy of people

This article explains this in a lot more detail.

Table of Contents

[Toggle](https://stonegatelegal.com.au/debt-recovery-services-in-queensland/#)

![Debt Recovery Services in Queensland noosaville and Brisbane debt lawyers](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2021/02/Debt-Recovery-Services-in-Queensland-noosaville-and-Brisbane-debt-lawyers-300x286.png)Debt recovery services in Queensland can vary depending on a number of different factors.

[Debt recovery](https://stonegatelegal.com.au/services/debt-disputes/) services can range from informal services, all the way through to formal Court or insolvency proceedings.

Initially, before a creditor starts looking for debt recovery services from a debt recovery lawyer, they must first know the following information:

1. Find out who controls the debtor business; then
2. Get legal advice about that debtor; then
3. A creditor can choose a type of [debt collection service](https://www.advancedebtcollection.com.au/debt-collectors/) then need.

Traditionally, if a debt cannot be recovered informally by negotiation, then the creditor will have to seek an order from the Courts.

This order can then be enforced in a number of different ways.

This article will explain the debt recovery process and provide details about the different debt recovery services that are available.

**We recover all commercial debts.  Contact our debt recovery lawyers today for a free 30-minute consultation to see how our debt recovery services can help you.**

[CONTACT OUR DEBT RECOVERY LAWYERS](https://stonegatelegal.com.au/contact-stonegate-legal/)

**OR CALL: [1300 545 133](tel:1300545133) FOR A FREE PHONE CONSULTATION**

## Debt Recovery Services

There are a number of different informal and formal [debt recovery](https://stonegatelegal.com.au/debt-recovery-sunshine-coast/) services.

These services usually follow the same process, informal services first, followed by formal services, followed by [enforcement](https://stonegatelegal.com.au/enforcing-a-judgment/) services.  We will explain these below.

The informal debt collection services can include:

1. Friendly reminders by email, text message, written reminders, telephone and face-to-face
2. Informal negotiations to reach the desired outcome
3. Issuing a lawyer’s letter of demand
4. Searches – PPSR, Title Searches, Skip location searches, and ASIC searches
5. Making field calls to the debtor

After the informal services, there are a number of formal debt recovery services, which include:

1. Issue legal proceedings in Court.
2. Making QCAT applications.
3. Issuing a statutory demand.
4. Lodgment of caveats on the debtor’s property.
5. Obtaining judgments in legal proceedings.
6. Subcontractor’s charges and payment claims.
7. Issuing subcontractors charges.
8. Process serving and repossession.
9. Alternative Dispute Resolution.

If a creditor successfully obtains a judgment or enforceable money order in relation to this debt, and the debtor still refuses to pay, then a creditor will have to start enforcement proceedings.

Enforcement can include enforcing Court judgments and QCAT decisions by:

1. Enforcement hearings/oral examination of debtors
2. Enforcement warrants
3. Winding up companies in insolvency
4. Bankruptcy of people
5. Enforcement of security interest

This article will explain these different types of debt recovery services below.

## Informal Debt Recovery Services

In my personal view, [litigation lawyers](https://stonegatelegal.com.au/services/commercial-litigation/) are more often negotiation lawyers.

If a matter can be settled informally by negotiation or [alternative dispute resolution](https://stonegatelegal.com.au/alternative-dispute-resolution/), then in most cases it probably should.

We will explain the informal [debt collection](https://stonegatelegal.com.au/services/debt-disputes/) services in more detail below.

### Friendly Reminders by email, text message, written reminders, and telephone calls

Firstly, a creditor or a [debt recovery lawyer](https://stonegatelegal.com.au/debt-recovery-lawyers-in-queensland/) can send friendly reminders to the debtor.

There might be a genuine reason why payment has not made, and they might just need to enter a payment plan or something similar.

Send emails and get delivery receipts.  Ensure that you have evidence that the invoices and the reminder emails have been sent, as this may help you later.

The debtor might just need some more time, this is quite common.

You can send a friendly reminder first, followed by an overdue reminder, followed by a final notice until ultimately you will need to send a formal letter of demand.

### Informal Negotiations to Reach the Desired Outcome

The debtor might be expressing dissatisfaction with the goods and/or services, and this is the reason for non-payment or underpayment.

Sometimes the works can be defective, or the goods and/or services are not 100%.

If this is the case, then you might need to negotiate a [settlement](https://stonegatelegal.com.au/settling-litigation-early-calderbank-offers/) with the debtor to reach an outcome that both parties are happy with.

Litigation lawyers are skilled negotiators and form a large part of the debt recovery services that we provide.

If negotiations fail, then you will need to send a formal letter of demand from a [debt recovery lawyer](https://stonegatelegal.com.au/debt-recovery-solicitors-how-can-they-help-you/).

### Issuing a Lawyer’s Letter of Demand

A [lawyer’s letter of demand](https://stonegatelegal.com.au/letter-of-demand/) is an important initial step in a debt recovery proceeding being a final demand letter before legal action.

A lawyer’s letter of demand letter, or overdue payment letter, states how much is owed, what for and when the invoice needs to be paid.  It will also usually enclose the unpaid invoices.

It may also include a warning that you will consider legal action if the debt is not paid by a particular date, and what that legal action will look like, and the costs associated with that legal action.

If the letter of demand still falls on stubborn or deaf ears, then there are still some things that can be done before commencing legal action.  A debt recovery lawyer can also provide the following searches.

### Searches – PPSR, Title Searches, Skip Location Searches, and ASIC Searches

Further informal debt recovery services can include conducting searches.

Searches are conducted for a number of reasons, but mainly to gather further information about the debtor, and to inform the creditor about any associated risk.

**PPSR** – A search of the [Personal Property Securities Register](https://www.ppsr.gov.au/) (“ **PPSR**”) will show any registered security interests that the debtor (grantor) has against his/her/its personal property.

**Title Searches** – A search of the [titles office online database](https://www.dnrme.qld.gov.au/qld/housing/property-search#page=search) will show if the debtor owns any real property in Queensland.  A creditor can search by address of the property, or by lot on plan number.

**Skip Location Searches** – A skip location search, or a [skip trace](https://en.wikipedia.org/wiki/Skiptrace) is a search to find debtors who are trying not to be found.  This is important when commencing legal action to ensure that the debtor can be personally served with the documents.

**ASIC Searches** – The [Australian Securities and Investments Commission](https://asicconnect.asic.gov.au/) (“ **ASIC**”) have an online database that a creditor can search to find out the officers and members of a company.  This is useful to find the address of the registered office of the company, but also the names, addresses and dates of birth of its officers.

### Making Field Calls to the Debtor

A field call is performed by a [licensed agent](https://www.qld.gov.au/law/laws-regulated-industries-and-accountability/queensland-laws-and-regulations/regulated-industries-and-licensing/regulated-industries-licensing-and-legislation/debt-collecting-and-process-serving-industry-regulation/get-a-debt-collector-and-process-server-licence-or-registration/apply-for-a-field-agent-licence).  A licensed agent can make a visit to the debtor at their work or home and make a demand for money.

The benefits of having a licensed field agent make a field call are:

1. A demand for full payment can be made in person.
2. A field call will confirm the whereabouts of the debtor.
3. A payment plan can be made then & there in person.
4. It shows that you will not be giving up on recovering the debt.
5. The agent can explain the consequences of non-payment.

Having an agent make a field call is a great debt recovery service and can yield great results.

However, some experienced debtors will not pay unless you commence formal debt recovery services.

## Formal Debt Recovery Services

If all informal avenues fail, or the debtor is just not attempting to settle this dispute, then a creditor will have to engage in more formal debt recovery services.

We will explain the formal debt recovery services below.

### Issue Legal Proceedings in Court

A debt recovery action in the court is brought by claim and statement of claim.

The cause of action will likely be debt or breach of contract.

The different state courts have different jurisdictional limits:

1. The [Magistrates Court](https://www.courts.qld.gov.au/courts/magistrates-court) can hear debt claims up to $150,000.00.
2. The [District Court](https://www.courts.qld.gov.au/courts/district-court) can hear debt claims from $150,000.01 to $750,000.00.
3. The [Supreme Court](https://www.courts.qld.gov.au/courts/supreme-court) can hear debt claims over $750,000.00.

The debt recovery services that a debt recovery lawyer can provide include – drafting the claim and statement of claim; filing in the court with jurisdiction; service of the claim and statement of claim; drafting the affidavit of service; and advising on the above.

Once served, the debtor will have 28 days to draft, file, and serve a notice of intention to defend and a defence.

The objective of filing legal proceedings in the court is to obtain a judgment or enforceable money order which can be enforced over the property of the defendant.

### Making QCAT Applications

Similar to the court, the [Queensland Civil and Administrative Tribunal](https://www.qcat.qld.gov.au/matter-types/debt-disputes) (“ **QCAT**”) is essentially the ‘ _small claims_’ court in Queensland.

QCAT has jurisdiction to hear debt claims up to $25,000.00.

The claim is started by application.  A copy of the minor debt application is here – [Minor Debt Form](https://stonegatelegal.com.au/debt-recovery-services-in-queensland/).

Alternatively, you can file online – Online Factsheet.

The pros of commencing proceedings in QCAT are:

1. It is less expensive than commencing in the Court.
2. The process can be a quicker than the commencing in Court.
3. QCAT is designed for self-represented people.

The cons of commencing proceedings in QCAT are:

1. The minor debt jurisdiction is mostly a no costs jurisdiction. This means that you will not be able to recover your costs save for a few designated items.
2. Legal representatives do not have an automatic right of appearance. This means that if you want a debt recovery lawyer to appear at a QCAT hearing, you will need the leave of the tribunal, which is not always given.

Alternatively, if the debtor is a company, it is unable to pay its debts when they fall due, and there is no genuine dispute about the debt, then a creditor can issue a statutory demand.

### Issuing a Statutory Demand

If the insolvent debtor company has assets, then you can serve that company with a [statutory demand for payment](https://stonegatelegal.com.au/statutory-demand/).

Failure to comply with a statutory demand raises the legal presumption that the company is insolvent.

If the debtor company does not do what is required in the demand within 21 days, then they are presumed to be insolvent and you can take steps to wind it up in insolvency.

Once served, the debtor company will have 21 days to do any of the following:

1. Pay the amount claimed;
2. Secure or compound for the debt;
3. Make an application to the Court setting aside the demand.

They can also request that the statutory demand be withdrawn.

If they pay, or reasonably secure or compound (enter into an arrangement to pay) for the debt, then the statutory demand is satisfied.

If they have grounds to set the demand aside, then before making the application, they may simply request that the demand be withdrawn.

Based on the strength of their application to set the demand aside, we can offer you legal advice if this happens as part of our debt recovery services.

If they ask that you withdraw the demand, and you do not, then you may be liable to pay their costs of the application to set the demand aside if they are successful.

Lastly, they have four (4) main grounds for setting aside the statutory demand, they are:

1. There is a genuine dispute as to the existence or amount of the debt; and/or
2. They have a genuine offsetting claim; and/or
3. There is a defect in the demand which is likely to cause substantial injustice; and/or
4. Some other reason.

The bar for setting aside a statutory demand is quite low.

All that a debtor needs to do is prove to that any of the above exist, and the demand will likely be set aside.

If you have a caveatable interest, then a creditor can also lodge a caveat on the title of the debtor’s real property.

Read our [complete guide to statutory demands](https://stonegatelegal.com.au/statutory-demand-complete-guide/).

### Lodgment of Caveats on the Debtor’s Property

A caveat is a formal notice lodged on the title of a debtor’s real property.

A caveat stops anybody from having any dealings with the real property the subject of the caveat.

Judgments do not automatically give a right to lodge a caveat (a caveatable interest).

A caveatable interest can arise from a debt directly related to an equitable interest in the real property in question or can be given in a contract by way of a charging clause.

The effect of a caveat is that the debtor property owner cannot sell or deal with the real property while the caveat is on title.

Read the [Land title Practice Manual on Caveats](https://stonegatelegal.com.au/debt-recovery-services-in-queensland/).

### Obtaining Judgments in Legal Proceedings

There are three (3) ways to obtain judgment against the debtor:

1. Judgment after a trial.
2. Default judgment.
3. [Summary judgment](https://stonegatelegal.com.au/summary-judgment-application-in-qld/).

**Default judgment** – If the debtor does not file a defence within the requisite time then you can apply for a judgment in default.  This will be judgment for the full amount, plus costs, plus interest.

**Summary Judgment** – If the debtor does file a defence, but there is no defence to this matter then you can apply for a summary judgment if the court is satisfied that:

1. the defendant has no real prospect of successfully defending all or a part of the plaintiff’s claim; and
2. there is no need for a trial of the claim or the part of the claim.

Summary judgment is a lot harder to get and will only be given in the clearest of cases.

**Judgment after Trial** – obviously, if the matter goes all the way to a trial, and you are successful, then the debtor / defendant will be ordered to pay an amount plus costs and interest.

The purpose of obtaining a judgment is to then [enforce that judgment over the property of the debtor](https://stonegatelegal.com.au/enforcing-a-judgment/).

### Payment Claims & Adjudication

There is legislation which covers debt disputes arising from [building and construction industry debts](https://stonegatelegal.com.au/services/building-and-construction-lawyers/).

If you have an eligible construction contract for work defined as construction work, or the provision of related goods and services, then you might have a right to a progress payment.

Once a payment claim has been made, the debtor has to serve a payment schedule.  If they do not, or the amount is different to the payment claim, then the creditor can make an adjudication application.

An adjudication application is a way to quickly recover debts without the cost of commencing Court action.

From the date of service of the payment claim, the adjudicator can have a decision to the adjudication application in around ten (10) weeks and will issue an adjudication certificate.

Once registered in the Court, the adjudication certificate becomes an enforceable money order in the Court and can be enforced as if it were a judgment of that Court.

Read our article – [Making a Payment Claim – BIFA (QLD)](https://stonegatelegal.com.au/making-payment-claim-bifa-qld/) for more information.

### Issuing Subcontractor’s Charges

A [subcontractor’s charge](https://stonegatelegal.com.au/subcontractors-charge-construction-debt/) is a charge on money payable to the contractor (by a head contractor, developer, homeowner, etc).

A subcontractor can charge those funds if he/she has not been paid by the contractor, and the head contractor, developer, homeowner, etc must not pay those funds to the contractor.

This raises the subcontractor to a secured creditor and allows the subcontractor to commence legal action to release those funds to the subcontractor.

It is a great way of securing funds and puts a creditor subcontractor in a better position to get paid.

Read our article – [Subcontractors’ Charges](https://stonegatelegal.com.au/subcontractors-charge-construction-debt/) for more information.

### Process Serving and Repossession

A [court bailiff](https://www.qld.gov.au/law/court/court-services/enforce-a-court-order-and-disputes-about-money/service-fees) is usually the person to go to when we require process serving and repossession services.

**Process serving** – This is the act of serving the originating process (claim or application) on the defendant or respondent personally.

**Repossession** – As most people know, a person who is unable to pay for goods is at risk of having those goods repossessed.  This can happen by court order, under the [_Personal Property Securities Act 2009_ (Cth)](http://classic.austlii.edu.au/au/legis/cth/consol_act/ppsa2009356/), or by enforcement warrant after judgment.

### Alternative Dispute Resolution

There are a several different [alternative dispute resolution](https://stonegatelegal.com.au/alternative-dispute-resolution/) methods including adjudication, arbitration, conciliation, expert determination, mediation, and/or negotiation.

#### Arbitration

The parties pick an independent person called the arbitrator who essentially acts as the judge. The arbitrator will decide the case and this decision is legally binding and final for all parties involved.

#### Conciliation

This is similar to mediation. There’s an independent person called the conciliator that helps the parties involved in a dispute work out issues so there’s a resolution to the dispute.

#### Mediation

The mediator is an independent person (usually a barrister) who helps the parties work out the issues in a dispute and tries to find a solution that everyone can agree to.

The purpose of the mediation is to reach a settlement of the dispute which will be put into a deed of settlement.

#### Negotiation

A negotiation will usually be the most cost-effective way of resolving debt disputes.  We can negotiate on your behalf, both on an open and without prejudice basis.

The Queensland Law Society has great information on [alternative dispute resolution](https://www.qls.com.au/For_the_community/Alternative_Dispute_Resolution).

As stated above, the purpose of the formal proceedings is to obtain a judgment which is legally enforceable against the debtor defendant.

## Legal Enforcement Services

When a creditor obtains an enforceable money order and the judgment debtor still refuses to pay, then the creditor will have to enforce that money order against the property of the debtor.

There are a number of different legal enforcement services, which we will explain in more detail below.

### Enforcement Hearings/Oral Examination of Debtors

Another debt recovery service that a debt recovery lawyer can assist with is [enforcement hearings](https://stonegatelegal.com.au/enforcement-hearing-statement-financial-position/).

If a creditor (judgment creditor) has received an enforceable money order wants to enforce the judgment, then the judgment creditor is expected to have a certain level of proof or evidence of the requirements for the warrant.

Usually, a judgment creditor will not know this information.  A judgment creditor will rely on the content of the statement of financial position, and what is said and provided at the enforcement hearing / oral examination of the judgment debtor.

Once the judgment creditor has the requisite information then they can ask the court to exercise its discretion and issue an enforcement warrant.

### Enforcement Warrants

Another debt recovery service that a debt recovery lawyer can assist with is obtaining enforcement warrants from the Court.

There are a number of different types of enforcement warrant or enforcement orders that can be made by the Court.  These enforcement warrants include:

1. [Enforcement warrants for seizure and sale of property](https://stonegatelegal.com.au/warrant-for-seizure-and-sale-of-property/).
2. [Enforcement warrants for redirection of debts](https://stonegatelegal.com.au/enforcement-warrant-redirection-debts/).
3. Regular redirections from financial institutions.
4. [Enforcement warrants for redirection of earnings](https://stonegatelegal.com.au/enforcement-warrant-redirection-debts/).
5. Order for payment of order debt by instalments.
6. Enforcement warrants for charging orders.
7. Enforcement warrants for appointment of a receiver.

Different warrants will apply in different circumstances, and not all will apply in all situations.

Once you have the information needed for the Court to exercise its discretion to issue a warrant, then a judgment creditor can make the application.

However, if the judgment debtor is a company, then they can also use the insolvency process to enforce the judgment debt.

### Winding up Companies in Insolvency

Another debt recovery service that a debt recovery lawyer can assist with is [winding up an insolvent company](https://stonegatelegal.com.au/winding-up-applications/).

The judgment debtor can issue a [statutory demand](https://stonegatelegal.com.au/how-to-draft-a-statutory-demand-form-509h/) supported by a judgment rather than an affidavit.

The winding-up process is an originating application in the [Federal Court](https://www.fedcourt.gov.au/) or [Supreme Court](https://www.courts.qld.gov.au/courts/supreme-court).

A judgment creditor will need to file an application, affidavit of service of the statutory demand, and a further supporting affidavit:

1. Containing details of the failure of the company to comply with the Statutory Demand.
2. Stating whether and, if so, to what extent the debt, or each of the debts, to which the Statutory Demand relates is still due and payable at the date when the affidavit is made.
3. Annexing a copy of the ASIC search of the company.

Once filed and sealed with the Federal Court seal, the documents will need to be served on the debtor company. Other steps to be taken include (amongst others):

1. Notification to ASIC of the winding-up application.
2. Obtaining consent of a Liquidator.
3. Publishing a notice of the ASIC Insolvency Notices website.

Once served, they can attempt to defend the winding-up action.

A debtor company can oppose a winding-up application of the following grounds:

1. Solvency – the debtor company will need to [prove solvency](https://stonegatelegal.com.au/%ef%bb%bfrebutting-presumption-insolvency/). The Courts have called this process “ _an onerous task and likely to be an expensive process for the company_”.
2. The Court may take into account the views of other creditors and whether those creditors oppose the application when deciding whether or not to exercise its discretion to make a winding up order.
3. The statutory demand, or service of the statutory demand, was deficient.
4. Where creditors have a better prospect of payment without winding up.

However, in a lot of cases the Court has found that it is in the public interest to wind-up an insolvent company.

### Bankruptcy of People

Another debt recovery service that a debt recovery lawyer can assist with is [bankruptcy](https://stonegatelegal.com.au/bankruptcy/).

If the judgment debtor is a person, then they can also use the [bankruptcy process](https://stonegatelegal.com.au/bankruptcy-lawyers-101-complete-guide/) to enforce the judgment debt.

If a judgment creditor wants to make a judgment debtor bankrupt, then there are some threshold steps that must be met:

1. The judgment debtor must be a natural (human) person.
2. The judgment debtor must have a judgment or order from the Court of $10,000.00 or more.
3. The judgment debtor must apply for a bankruptcy notice from [AFSA](https://www.afsa.gov.au/).
4. The judgment debtor must serve the notice on the judgment debtor.
5. The judgment debtor must file a creditor’s petition with the [Federal Circuit Court](http://www.federalcircuitcourt.gov.au/wps/wcm/connect/fccweb/home).
6. Then, if everything is done correctly, the judgment debtor will be given a sequestration order from the Court.

The bankrupt’s property (except exempt property) vests in the bankruptcy trustee and can be sold to pay the bankrupt’s creditors.

### Enforcement of Security Interest

Further debt recovery services that a debt recovery lawyer can assist with is with the enforcement of security interests.

As above, a security interest can be a charge (PPSA or caveat for example), a mortgage, or a lien.

A debt recovery lawyer can help you enforce your security interest by whatever means are available at law or in equity.

Debt recovery lawyers also provide a number of other debt recovery services.

## Other Debt Recovery Services

Remember that old saying “ _prevention is better than cure_”?  Some well-prepared legal documents can assist a creditor greatly in relation to the recovery of debts.

Debt recovery lawyers will also offer legal services in relation to:

1. Reviewing and [preparing credit agreements](https://stonegatelegal.com.au/debt-contract-credit-application/).
2. Reviewing and preparing terms and conditions.
3. Reviewing and preparing guarantees.

Contact a debt recovery lawyer for more on these debt recovery services.

## Types of Industries who need Debt Recovery Services

Essentially, [any business can incur a bad debt](https://stonegatelegal.com.au/legal-debt-recovery-options-for-businesses/).  It would be a unique business model that did not have an unpaid invoice at some time in the life of the business.

However, there are several industries which seem to incur more debts than others, they include:

01. Wholesalers and manufacturers.
02. Construction, tradespeople, contractors & subcontractors.
03. Medical providers, doctors, and hospitals.
04. Commercial businesses offering trade credit.
05. Body corporate schemes & [body corporate](https://stonegatelegal.com.au/body-corporate-debt-recovery/) management.
06. Education providers, schools, and universities.
07. Hardware businesses that offer trade credit to the construction industry.
08. Rental or hiring companies – yellow goods, white goods, vehicles, etc.
09. Unpaid commercial rent – lessor / lessee.
10. Professional services – lawyers / accountants.
11. Financial and insurance services.
12. Any Queensland small business that has unpaid invoices.

**We recover all commercial debts.  Contact our debt recovery lawyers today for a free 30-minute consultation to see how our debt recovery services can help you.**

[CONTACT OUR DEBT RECOVERY LAWYERS](https://stonegatelegal.com.au/contact-stonegate-legal/)

**OR CALL: [1300 545 133](tel:1300545133) FOR A FREE PHONE CONSULTATION**

## Debt Recovery Services FAQ

We get asked a lot of the same questions in relation to debt recovery services.

### How do you collect unpaid debt?

Unpaid debt can be collected by a debt collector or by a debt recovery lawyer in the court or in the minor debt tribunal.

### What kinds of people or businesses can use debt recovery services?

[Any business that offers credit terms](https://stonegatelegal.com.au/small-business-debt-recovery/) will sometimes have bad debts.  These businesses will use the services of a debt collection lawyer.

### Does an unpaid debt ever go away?

In NSW, the debt is extinguished, however in the rest of Australia the debt never goes away, it is just legally unrecoverable after the limitation date.

### How long can you legally be chased with debt recovery services?

Six (6) years in all states and territories in Australia except the Northern Territory which is three (3) years.

**We recover all [commercial debts](https://stonegatelegal.com.au/commercial-debt-recovery/).  Contact our debt recovery lawyers today for a free 30-minute consultation to see how our debt recovery services can help you.**

[CONTACT OUR DEBT RECOVERY LAWYERS](https://stonegatelegal.com.au/contact-stonegate-legal/)

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#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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#### [Statutory Demands in Construction – Complete Guide](https://stonegatelegal.com.au/statutory-demands-in-construction-complete-guide/)

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#### [Damages in Defamation Claims – Complete Guide](https://stonegatelegal.com.au/damages-in-defamation-claims-complete-guide/)

[![Extrinsic Evidence and the Parol Evidence Rule in Australia. Litigation lawyers](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2025/06/Extrinsic-Evidence-and-the-Parol-Evidence-Rule-in-Australia.-Litigation-lawyers.png)](https://stonegatelegal.com.au/extrinsic-evidence-and-the-parol-evidence-rule/)

#### [Extrinsic Evidence and the Parol Evidence Rule](https://stonegatelegal.com.au/extrinsic-evidence-and-the-parol-evidence-rule/)

[![Can You Serve a Statutory Demand by Email in Australia - Stat demand lawyer](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2025/06/Can-You-Serve-a-Statutory-Demand-by-Email-in-Australia-Stat-demand-lawyer.png)](https://stonegatelegal.com.au/can-you-serve-a-statutory-demand-by-email-in-australia/)

#### [Can You Serve a Statutory Demand by Email in Australia?](https://stonegatelegal.com.au/can-you-serve-a-statutory-demand-by-email-in-australia/)

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#### [QCAT Building Disputes in Queensland – Complete Guide](https://stonegatelegal.com.au/qcat-building-disputes-in-queensland-complete-guide/)

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#### [Who Can Sue for Defamation in Australia?](https://stonegatelegal.com.au/who-can-sue-for-defamation-in-australia/)

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# Insolvency Lawyers

Our team of skilled litigators offer professional guidance on personal and commercial insolvency and bankruptcy matters to clients in Queensland. No detail is left out in our expert advice.

[Book A Consultation](https://stonegatelegal.com.au/services/insolvency/#book)

[Speak To Our Trusted Lawyers Today](tel:1300545133)

### Helping You Navigate Financial Challenges

## Personal & Corporate Insolvency

### Protecting Your Interests and Preserving Your Assets

We understand that the process of insolvency is a difficult and complex one. That’s why our insolvency practitioners provide clients with a comprehensive assessment of their individual or business situation to determine the best course of action.

Our experienced lawyers work closely with clients to ensure that all options are explored and that the most appropriate solution is identified. We also provide advice on restructuring, asset protection and debt management. We strive to ensure that our clients receive the best possible outcome from thier insolvency or [bankruptcy](https://stonegatelegal.com.au/bankruptcy/) proceedings.

[Contact Us Today](https://stonegatelegal.com.au/contact/)

### How We Can Support You

### We Act For Creditor & Debtors In All Insolvency Matters

Our team of experienced lawyers will guide you through the process of insolvency with the utmost care and attention to ensure that all legal requirements are met. We understand that every situation is unique and we tailor our advice to meet your individual needs. We are committed to providing our clients with a comprehensive service that takes into account their individual circumstances. We provide clear and concise advice on the options available and aim to ensure a positive outcome for our clients in any insolvency matter.

### We Act For & Against Liquidators and Bankruptcy Trustees

Our team of experienced insolvency lawyers can provide advice on all aspects of liquidation, bankruptcy and restructuring. We understand the intricacies of insolvency law and are committed to providing our clients with the best possible outcome in any matter. We take the time to understand our clients’ individual circumstances and provide tailored advice that is tailored to their needs.

### We Can Provide Advice & Assistance In Insolvency Law

Our expertise lies in providing guidance and support in the various aspects of insolvency law including, but not limited to, bankruptcy and personal insolvency, issuance of bankruptcy notices and statutory demands, setting aside statutory demands, breach of directors’ responsibilities, uncommercial transactions claims, unfair preference claims, voidable transactions, [deeds of company arrangement](https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/deed-of-company-arrangement-for-creditors/#:~:text=What%20is%20a%20deed%20of%20company%20arrangement%3F,the%20company%20enters%20voluntary%20administration.) (DOCA), and winding up applications. As professionals, we ensure that no information is left out while offering our services.

![Help with Litigation](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/06/help-with-litigation.avif)

### Strategic Solutions for Individuals & Businesses

We provide strategic solutions for individuals and businesses facing financial distress. We understand that each situation is unique and we strive to identify the best solution for our clients.

[Discuss Your Case Today](https://stonegatelegal.com.au/services/insolvency/#book)

No Obligation Case Evaluation

[Issuing Bankruptcy Notices](https://stonegatelegal.com.au/services/insolvency/#collapse-c70abef687f04971a704)

After obtaining a final judgment against a debtor, a creditor can enforce it by issuing a bankruptcy notice to the debtor. The notice provides the debtor with three options: pay the debt, agree to pay it, or apply to [set aside](https://stonegatelegal.com.au/set-aside-a-bankruptcy-notice/) the notice within 21 days. If the debtor fails to take any of these actions, they will be considered to have committed an "act of bankruptcy." As a result, the creditor can present a petition to the Federal Circuit Court. We provide professional guidance to both creditors and debtors on how to apply for or challenge a bankruptcy notice.

[Issuing Statutory Demands](https://stonegatelegal.com.au/services/insolvency/#collapse-092b264687f04971a704)

When a debtor company that is not able to pay its debts owes $2,000.00 or more, a creditor can send them a creditor's [statutory demand](https://stonegatelegal.com.au/statutory-demand/). If the debtor company fails to pay or make a deal within 21 days, it will be considered insolvent. This presumption of insolvency can be used by the creditor to apply for a winding-up order to liquidate the debtor company. As experts in statutory demand-related matters, we represent creditors in such cases.

[Setting Aside Statutory Demands](https://stonegatelegal.com.au/services/insolvency/#collapse-eba8349687f04971a704)

In order to set aside a statutory demand, several factors may come into play. These include a legitimate disagreement between the company and the respondent regarding the debt in question, the debtor company has an offsetting claim, a defect in the demand that would cause significant unfairness if not addressed, or any other valid reason. Our professional services provide prompt guidance and support to clients who have received a creditor's statutory demand and require assistance in applying to have it set aside.

[Insolvency Restructuring & Asset Protection](https://stonegatelegal.com.au/services/insolvency/#collapse-81681b7687f04971a704)

We collaborate closely with insolvency accountants to aid clients in restructuring their business and personal financial matters. Our services help clients isolate potential risks and safeguard their assets. Our approach is professional and tailored to meet the unique needs of each client.

[Breach of Directors' Duties](https://stonegatelegal.com.au/services/insolvency/#collapse-7417300687f04971a704)

When a director fails to fulfil their duties, severe consequences may follow, ranging from a prohibition to hold directorial positions in any company, to substantial monetary fines reaching $200,000, personal responsibility to repay the debts of the company, and in extreme cases, even [imprisonment](https://asic.gov.au/for-business/running-a-company/company-officeholder-duties/your-company-and-the-law/). Directors must avoid breaching their duties, which encompasses not engaging in insolvent trading practices.

[Insolvency Uncommercial Transactions](https://stonegatelegal.com.au/services/insolvency/#collapse-b23acf6687f04971a704)

According to the definition, a transaction of a company is categorised as uncommercial when the company engages in a transaction with another party but a reasonable person in the company's situation would not have agreed to the transaction considering the advantages and disadvantages to both parties. To counter a liquidator's claim of uncommercial transactions, various strategies can be employed. We provide guidance and support in all cases of voidable transaction claims.

[Unfair Preference Claims](https://stonegatelegal.com.au/services/insolvency/#collapse-092b264687f04971bbd7)

When a company transacts with an unsecured creditor while being insolvent and the creditor gets more than they would have received if they had claimed the debt in a winding up of the company, it is considered an unfair preference. In such a scenario, a liquidator may have the right to retrieve the funds from the creditor. Our professional services include providing urgent advice and help to creditors who receive an unfair preference letter from the liquidator. Additionally, we collaborate with liquidators to recover money from creditors.

[Voidable Transactions in Company Insolvency](https://stonegatelegal.com.au/services/insolvency/#collapse-eba8349687f04971bbd7)

In addition to the previously mentioned voidable transactions during company insolvency, there are additional opportunities for the liquidator to recoup funds from third parties. These include transactions conducted while the company was insolvent, unfair loans granted to the company, and transactions related to a director that were deemed unreasonable. Our services include providing guidance and support to individuals who have received demand letters from the liquidator in an effort to challenge the liquidator's claim to recover funds. Additionally, we represent liquidators in their efforts to recover voidable transactions from third parties. Our approach is professional and aimed at achieving the best possible outcome for our clients.

[Voidable Transactions in Bankruptcy](https://stonegatelegal.com.au/services/insolvency/#collapse-ccb3a48687f04971bbd7)

The Bankruptcy Act outlines four types of transactions that can be cancelled by the bankruptcy trustee, including undervalued transactions, transfers designed to evade creditors, transactions involving a third party, and those which give preference to one creditor over others. The trustee has the authority to nullify these transactions and return the assets or funds to the bankrupt's estate. As professionals, we represent both creditors who have received a demand from a bankruptcy trustee and trustees seeking to recover property and money for the bankrupt's estate.

[Deed of Company Arrangement ("DOCA")](https://stonegatelegal.com.au/services/insolvency/#collapse-989a67a687f04971bbd7)

A deed of company arrangement, commonly known as DOCA, is a legally binding agreement between a financially distressed company and its creditors. The purpose of a DOCA is to govern the management of the company and ensure that it can continue to operate while providing better returns to creditors than if it goes into liquidation. Both debtors and creditors need to consider the advantages and risks involved in entering into a DOCA or voting for it. We provide professional advice and guidance to both debtors and creditors regarding DOCAs.

[Winding Up Applications](https://stonegatelegal.com.au/services/insolvency/#collapse-9a64639687f04971bbd7)

When a debtor fails to comply with a creditor's legal demand and is presumed to be insolvent, the creditor can seek a court order to wind up the debtor's company. To effectively obtain this order, a series of actions must be taken. Our team provides expert guidance and support in navigating the winding-up process. We represent both creditors seeking winding-up orders and debtors contesting such applications. Our professional services ensure that all parties receive the best possible legal advice and representation.

## Corporate & Personal Insolvency

### Trusted Insolvency Professionals

At [Stonegate Legal](https://stonegatelegal.com.au/), our team of experienced insolvency lawyers understand the intricacies and challenges of both corporate and personal insolvency. We provide comprehensive advice and assistance to individuals and companies who find themselves in financial difficulty, as well as to creditors and other stakeholders involved in the insolvency process.

Whether you are a debtor seeking to manage your financial situation, a creditor looking to recover debts owed to you, or an interested party seeking to navigate the complex legal landscape of insolvency, our lawyers have the expertise and knowledge to guide you through the process.

[View Our Video Library](https://www.youtube.com/@stonegatelegal)

## Trusted Insolvency Practitioners & Lawyers QLD

## Meet Our Insolvency Team

![Wayne Davis - Lawyer - Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/06/wayne.avif)

## Legal Practice Director / Principal Solicitor

## Wayne Davis

Wayne Davis is the principal solicitor, legal practice director of the firm, and leads the litigation team.  Wayne has an LLB, and GDLP and is admitted to the Supreme Court of Queensland and the High Court of Australia.  Wayne is a debt recovery, defamation, litigation, and insolvency professional.

Wayne is dedicated to achieving the best possible outcomes, whether through strategic negotiation, alternative dispute resolution, or courtroom advocacy. Wayne understand that every case is unique and takes a proactive approach to ensure your rights and interests are protected at every stage of the process.

### Education & Certifications

LLB – Bachelor of Laws, Graduate Diploma of Legal Practice (GDLP)

### Personal Quote

Don’t believe everything you think.

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Lease Disputes](https://stonegatelegal.com.au/tag/commercial-lease-disputes/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/) [Debt Recovery/Collection](https://stonegatelegal.com.au/tag/debt-recovery-collection/) [Defamation Litigation](https://stonegatelegal.com.au/tag/defamation-litigation/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [Statutory Demands](https://stonegatelegal.com.au/tag/statutory-demands/) [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/) [Wills/Estate Litigation](https://stonegatelegal.com.au/tag/wills-estate-litigation/)

![Kirsty Walker - Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/12/Kirsty-Walker-Stonegate-Legal-scaled-1-1024x1024.jpg)

## Solicitor

## Kirsty Walker

Kirsty has come into the legal profession later in life, having been a primary school teacher for 24 years. Her interest in the law stemmed from running a small construction company. After self-representing against debtors, she came to value the ability of the law to assist contractors in David and Goliath situations. Kirsty is admitted to the Supreme Court of Queensland and the High Court of Australia.

### Education & Certifications

Bachelor of Law (First Class Honours), Graduate Diploma Legal Practice, Bachelor of Criminology, and Justice Bachelor of Education (Primary), Certificate IV Small Business Management

### Personal Quote

Always pray to have eyes that see the best, a heart that forgives the worst, a mind that forgets the bad, and a soul that never loses faith.

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/)

![Laylah Toovey - Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/06/laylah.avif)

## Law Graduate / Paralegal

## Laylah Toovey

Laylah completed her Bachelor of Laws with Honours at the University of the Sunshine Coast and is currently undertaking her graduate diploma of legal practice at the College of Law. I have worked with Stonegate Legal since 2021, and within this time, she acquired a broad range of knowledge and experience across a diverse range of matters.

Laylah’s approach is centered on understanding your unique circumstances, protecting your interests, and advocating for the best possible outcome. Whether you’re facing commercial disputes, debt disputes, contract issues, or other contentious matters, Laylah and the team are here to guide you every step of the way.

### Education & Certifications

Bachelor of Laws

### Personal Quote

I am dedicated to supporting our senior team members, and achieving positive results for our clients

## Areas of Interest

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Stacey spent a large portion of her career as a senior paralegal responsible for the performance and management of a team of paralegals and an administration department for many years.  During the first 18 years, she worked for one of Brisbane’s largest debt collection companies, where she managed large portfolios of debt for councils, schools, government departments, and insurance companies, along with debt purchased from various banks, utilities, and other credit providers.

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[What is the difference between insolvency and bankruptcy?](https://stonegatelegal.com.au/services/insolvency/#collapse-b0d504b687f049792553)

Insolvency is a term used to describe a company or individual's inability to pay their debts when they become due. Bankruptcy is the legal process of relieving an insolvent individual or company of its debts. It is generally considered to be a last resort for debtors and requires court involvement.

[What are the different types of insolvency?](https://stonegatelegal.com.au/services/insolvency/#collapse-4e10eba687f049792553)

The two main types of insolvency are corporate insolvency and personal insolvency. Corporate insolvency applies to companies and other business entities, while personal insolvency applies to individuals. Each type has its own set of processes, rules, and regulations that must be followed.

[What is debt restructuring?](https://stonegatelegal.com.au/services/insolvency/#collapse-f591981687f049792553)

Debt restructuring is a process used to renegotiate the terms of a loan or debt agreement. This can involve reducing the amount of debt owed, extending the repayment period, or changing the interest rate. Debt restructuring is often used by companies and individuals in financial difficulty as a way to manage their debts and avoid insolvency.

[What happens to my assets in insolvency?](https://stonegatelegal.com.au/services/insolvency/#collapse-de9d696687f049792553)

The assets of a company or individual in insolvency will usually be sold to repay creditors. The proceeds are then distributed among the creditors according to their priority. In some cases, assets may be retained by the debtor in order to help them rebuild their financial position.

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## Loan Repayable on Demand
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# When is a Loan Repayable on Demand?

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## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| December 17, 2017

## Article Summary

A loan is considered “repayable on demand” under two circumstances:

1. When no repayment time is specified, implying a legal obligation to repay on demand.
2. When the involved parties explicitly state the loan is to be repaid upon demand.

By default, any loan without a specified repayment term or date is understood to be repayable on demand, qualifying it as an “ _immediate debt_” in legal contexts.

One of the primary legal implications of a loan that is repayable on demand is that the statute of limitations begins from the date the money was loaned.

This means that, unless an exception applies, legal action for the recovery of the debt must be initiated within a specific timeframe (e.g., six years in Queensland).

To reset or extend this statute of limitations period, the creditor must obtain a written acknowledgment of the debt from the debtor, or a payment must be made towards the debt. Without these actions, once the limitation period expires, the debt becomes legally unable to be recovered.

However, if you do not do these things, and six (6) years have passed since the day you made the loan, then you may be statute barred from commencing legal action to recover the debt.

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![When is a When is a <yoastmark class=](<Base64-Image-Removed>)Do you have a loan repayable on demand?

A loan is repayable on demand when:

1. There is no time for repayment specified (and so the obligation to repay on demand is implied at law); or
2. The parties actually express the obligation to repay on demand or request (I.e. It is an express term).

Unless the parties expressly (or, less often impliedly) agree to another arrangement, a loan with no repayment terms, or loan agreement with no repayment date, is a loan that is repayable on demand and becomes an “ _immediate debt_” or a loan repayable on demand in [debt recovery proceedings](https://stonegatelegal.com.au/services/debt-recovery-lawyers/).

This article will explain when a loan is repayable on demand.

**If you have loaned money which needs to be recovered then contact our commercial litigation and [debt dispute lawyers](https://stonegatelegal.com.au/services/debt-recovery-lawyers/)**

## Loan Repayable on Demand

In [_Young v Queensland Trustees Ltd_ (1956) 99 CLR 560](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/1956/51.html) the High Court held that in Australia:

> _A loan of money payable on request creates an immediate debt_

This comes from a long line of precedents in relation to a loan repayable on demand, going back hundreds of years.

In [_Collins v Benning_ (1701) 12 Mod Rep 444](http://www.worldlii.org/int/cases/EngR/1796/1555.pdf) the Court decided that:

> _If the promise were for a collateral thing, which would create no debt till demand, it might be so; but here it is an indebitatus assumpsit, which shews a debt at the time of the promise, therefore the plea is good._

In [_Norton v. Ellam_ \[1837\] EngR 183](http://www.worldlii.org/int/cases/EngR/1837/183.pdf) Parke B said:

> _Where money is lent, simply, it is not denied that the statute begins to run from the time of lending._

[_Re Brown’s Estate_ \[1893\] 2 Ch 300](http://www.austlii.edu.au/cgi-bin/LawCite?cit=%5B1893%5D+2+Ch+300&party1=&party2=&court=&juris=&article=&author=&year1=&year2=&synonyms=on&filter=on&cases-cited=&legis-cited=&section=) where Chitty J said:

> _The law is quite settled that, with regard to a promissory note payable on demand, no demand is necessary before bringing an action… \[W\]here there is a present debt and a promise to pay on demand, the demand is not considered to be a condition precedent to the bringing of the action._

**Note** – It is well worth reading these cases on a loan repayable on demand, and the evolution of the law of [_indebitatus assumpsit_](http://classic.austlii.edu.au/au/journals/ResJud/1954/14.pdf), the [Statute of Frauds](http://www.british-history.ac.uk/statutes-realm/vol5/pp839-842), and how this influenced the common law in Australia – if you’re into that kind of thing (like I am)!

The main issue with a [loan](https://stonegatelegal.com.au/debt-recovery-of-loans-between-family-members/) repayable on demand, which gives right to an immediate debt, is that the [statute of limitations begins to run](https://stonegatelegal.com.au/how-long-can-debt-chased-australia/) from the date that the [borrower receives the money](https://stonegatelegal.com.au/what-are-unfair-loans-in-company-insolvency/).

In [_Ogilvie v Adams_ \[1981\] VR 1041](http://www.austlii.edu.au/au/cases/vic/VicRp/1981/92.html) the Court said:

> _The common law has always regarded the fact of indebtedness as a continuing detention by the debtor of the creditor’s money, and this whether the creditor brought an action of debt or an action in indebitatis assumpsit. Therefore if A lends money to B, then instantly B is detaining A’s money. In order to prevent a cause of action for recovery arising in A instantaneously on paying the money, the parties must expressly contract out of that situation by words clearly inconsistent with that situation._

This case was cited in the Victorian case of [_VL Finance Pty Ltd v Legudi_ \[2003\] VSC 57](http://classic.austlii.edu.au/au/cases/vic/VSC/2003/57.html) where loans were made to directors by a creditor company by book entry without any written instrument, and was ruled that is was a loan repayable on demand.

## Example of a Loan Repayable on Demand

If a friend lends a friend an amount of $10,000.00 with no written contract or [repayment terms](https://stonegatelegal.com.au/what-are-insolvent-transactions/), as it is simply a “gentleman’s agreement” between best friends; then the cause of action accrues from the time that the loan is made, being that it instantly becomes a loan repayable on demand.

If the debtor does not make any payments toward the debt; or the debtor does not acknowledge the debt in any way; then the [_Limitation of Actions Act 1974_ (QLD)](https://www.legislation.qld.gov.au/view/html/inforce/current/act-1974-075) says that the debt is [statute barred](https://stonegatelegal.com.au/how-to-collect-statute-barred-debts/), or unable to be [legally recovered](https://stonegatelegal.com.au/statutory-demand-complete-guide/), after six (6) years.

## Limitation of Actions Act 1974 (QLD)

Section 10 of the [_Limitation of Actions Act 1974_ (QLD)](https://www.legislation.qld.gov.au/view/html/inforce/current/act-1974-075) says that:

> _(1)The following actions shall not be brought after the expiration of 6 years from the date on which the cause of action arose:_
>
> _(a) … an action founded on simple contract or quasi-contract …_

This cause of action should also be read with section 35(3) of the [_Limitation of Actions Act 1974_ (QLD)](https://www.legislation.qld.gov.au/view/html/inforce/current/act-1974-075) which says that:

> _Where a right of action has accrued to recover a debt or other liquidated pecuniary claim … or to a share or interest therein and the person liable or accountable therefor acknowledges the claim or makes a payment in respect thereof, the right shall be deemed to have accrued on and not before the date of the acknowledgment or the last payment._

Section 36 of the [_Limitation of Actions Act 1974_ (QLD)](https://www.legislation.qld.gov.au/view/html/inforce/current/act-1974-075) says:

> _(1) Every acknowledgment referred to in section 35 shall be in writing and signed by the person making the acknowledgment._
>
> _(2) Any acknowledgment or payment may be made by the agent of the person by whom it is required to be made under section 35 and shall be made to the person or to an agent of the person whose title or claim is being acknowledged or, as the case may be, in respect of whose claim the payment is being made._

## What does this mean for a Loan repayable on Demand?

A cause of action for a loan repayable on demand begins to accrue from the date the money was advanced or loaned.

The limitation of action on a debt under a contract or quasi-contract is six (6) years from when the cause of action arose.

However, if the creditor can get written acknowledgement of the debt, signed by the debtor, or a payment made as against the debt, then the six (6) year limitation period for a loan repayable on demand begins to accrue again.

## What is an Acknowledgement of the Debt?

In [_Stage Club Ltd v Millers Hotels Pty Ltd_ \[1981\] HCA 71](http://classic.austlii.edu.au/au/cases/cth/HCA/1981/71.html) the High Court of Australia said:

> _Where the claim is for payment of a debt, an acknowledgment, to be sufficient, must recognize the present existence of the debt._

Gibbs CJ then respectfully agreed with the statement of Kerr J in [_Surrendra Overseas Ltd v Government of Sri Lanka_ \[1977\] 1 WLR 565](http://www.lawcite.org/cgi-bin/LawCite?cit=%5B1977%5D+1+WLR+565&party1=&party2=&court=&juris=&article=&author=&year1=&year2=&synonyms=on&filter=on&cases-cited=&legis-cited=&section=) who said that:

> _To acknowledge a claim, as a matter of ordinary English, signifies an admission that it is due. There is no acknowledgment of a debt unless there is an admission that there is a debt . . . outstanding and unpaid._

So, a payment made; or a written signed acknowledgement that there is at the time of the acknowledgement, an existing debt, which remains outstanding and unpaid; is an acknowledgement of the debt.

## A Cause of Action for Restitution

In relation to a loan repayable on demand, a cause of action for restitution will also accrue from the date of the advance of the loan because if there is to be a point at which [unjust enrichment](https://stonegatelegal.com.au/recovering-money-paid-by-mistake/) arises it will almost invariably be when the money was advanced.

This is because restitution will only be relevant if there is no contract covering the advance (quasi-contract) but, for example, money was paid out under circumstances where there is a failure of consideration, or some other category that traditionally supports the “unjust” element of the restitution claim.

In [_Pavey & Matthews Pty Ltd v Paul_ (1987) 162 CLR 221](http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/1987/5.html) the High Court said:

> _Indebitatus assumpsit and debt were both actions founded on the debt; in the cases where the debt arose out of a contract, the actions were not founded on the contract. The debt, though arising from the contract, was itself a cause of action._

The High Court then went on to say:

> _An action to recover money due on an executed contract may be distinguished from an action to enforce a promise to pay contained in the contract – the point of distinction being the debt to which the contract gives rise – but the debt is nevertheless a cause of action arising out of the contract._

It can’t be the case that the restitution claims arises because a valid law prevents the courts from enforcing the underlying contract.  The “injustice” in that case would be the policy behind the limitations period, which the Courts will not find to be a relevant category of injustice.

## What does this mean for Debt Recovery in Queensland?

Firstly, in relation to a loan repayable on demand, never lend anyone money without a written agreement!

However, if you already have, then ensure that they agree to your repayment terms.

If there is no obligation for a time for repayment, “ _pay me back when you get back on your feet_” for example, then the time for making a claim in Court starts running from the time to make the loan or advance to the debtor.

Therefore, you will only have six (6) years from when you lent the money to the debtor to make a claim in the Court.

If the six (6) year limitation period is getting close, you should do one of the following:

1. Attempt to get the debtor to acknowledge the existence of the debt in writing, stating that the debt remains outstanding and remains unpaid; or
2. If you cannot get the debtor to agree to acknowledge the debt, then attempt to get a repayment from the debtor as against the debt.

If you can do either of these things then the six (6) year limitation period may recommence.

However, if you do not do these things, and six (6) years have passed since the day you made the loan, then you may be statute barred from commencing legal action to recover the debt.

## When is a Loan Repayable on Demand – FAQ

Navigating the complexities of financial agreements can be daunting, especially when terms like “repayable on demand” come into play.

Whether you’re a creditor trying to understand your rights or a debtor aiming to comprehend your obligations, our FAQ section on Loans Repayable on Demand aims to clarify these intricacies.

Here, we delve into the legal nuances, established precedents, and practical implications of such loans in the Australian context.

Read on to gain a clearer understanding of when and how these loans should be repaid, backed by the wisdom of legal precedents and expert advice.

### What does “repayable on demand” mean for a loan?

A loan is considered “repayable on demand” when either:

1. No specific repayment time is indicated, meaning the obligation to repay on demand is implied by law.
2. The loan agreement explicitly states the obligation to repay upon request.

### Is a loan with no repayment date automatically repayable on demand?

Yes. If a loan lacks explicit repayment terms or a specified date of repayment, it is legally considered as repayable on demand. It then becomes an “immediate debt” or may be treated as such in debt recovery proceedings.

### What legal precedents exist concerning loans repayable on demand in Australia?

Several significant cases in Australian law have dealt with this topic, including:

- _Young v Queensland Trustees Ltd_ (1956)
- _Collins v Benning_ (1701)
- _Norton v. Ellam_ \[1837\]
- _Re Brown’s Estate_ \[1893\]

### When does the statute of limitations start for a loan repayable on demand?

The statute of limitations begins on the date the borrower receives the money. This means creditors have a limited timeframe, typically six years, from the loan’s inception to initiate legal proceedings for recovery.

### Can the statute of limitations be reset or extended?

Yes. If the debtor provides a written acknowledgment of the debt, signed by them, or makes a payment against the debt, the six-year limitation period restarts from the date of acknowledgment or payment.

### How is “acknowledgment of the debt” defined?

An acknowledgment of a debt for a loan repayable on demand must recognize the ongoing existence of that debt. This means either a payment made towards the debt or a signed written confirmation that, at the time of the acknowledgment, an existing debt remains outstanding and unpaid.

### What happens if I make a loan repayable on demand without a written agreement?

While it’s always recommended to have a written agreement, if you don’t, and there’s no specified repayment timeframe (like “pay me back when you can”), then the clock for legal action begins ticking from the loan’s issuance date. You’ll typically have six years to initiate a claim in Court.

### How can I protect my rights as a creditor?

To safeguard your rights in relation to a loan repayable on demand, consider:

1. Ensuring you have a written agreement before lending money.
2. Attempting to obtain written acknowledgment of the debt from the debtor, emphasizing that the debt remains unpaid.
3. Trying to receive some form of repayment towards the debt before the end of the six-year limitation.

### What if the six-year period is about to expire?

If you’re nearing the end of the limitation period:

1. Aim to get the debtor to acknowledge the debt in writing.
2. If that’s not possible, strive to obtain a repayment.
3. Doing either can reset the limitation period.

### What if the six-year period has already expired?

If six years have lapsed since you granted the loan repayable on demand and you haven’t taken action, you may be legally barred from initiating legal proceedings to recover the debt.

### What should I do if I need to recover loaned money?

If you find yourself in a situation where you need to recover a loan repayable on demand, consider seeking assistance from commercial litigation or debt dispute lawyers familiar with the laws in your jurisdiction.

**If you have loaned money which needs to be recovered then contact our commercial litigation and [debt dispute lawyers](https://stonegatelegal.com.au/services/debt-recovery-lawyers/)**

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![Picture of Wayne Davis](<Base64-Image-Removed>)

#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

## NEWS & ARTICLES

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[![Statutory Demands in Construction - building and construction lawyers](<Base64-Image-Removed>)](https://stonegatelegal.com.au/statutory-demands-in-construction-complete-guide/)

#### [Statutory Demands in Construction – Complete Guide](https://stonegatelegal.com.au/statutory-demands-in-construction-complete-guide/)

[![Damages in Defamation Claims - Defamation lawyers in Australia](<Base64-Image-Removed>)](https://stonegatelegal.com.au/damages-in-defamation-claims-complete-guide/)

#### [Damages in Defamation Claims – Complete Guide](https://stonegatelegal.com.au/damages-in-defamation-claims-complete-guide/)

[![Extrinsic Evidence and the Parol Evidence Rule in Australia. Litigation lawyers](<Base64-Image-Removed>)](https://stonegatelegal.com.au/extrinsic-evidence-and-the-parol-evidence-rule/)

#### [Extrinsic Evidence and the Parol Evidence Rule](https://stonegatelegal.com.au/extrinsic-evidence-and-the-parol-evidence-rule/)

[![Can You Serve a Statutory Demand by Email in Australia - Stat demand lawyer](<Base64-Image-Removed>)](https://stonegatelegal.com.au/can-you-serve-a-statutory-demand-by-email-in-australia/)

#### [Can You Serve a Statutory Demand by Email in Australia?](https://stonegatelegal.com.au/can-you-serve-a-statutory-demand-by-email-in-australia/)

[![QCAT Building Disputes in Queensland - Complete Guide - construction lawyer Sunshine Coast](<Base64-Image-Removed>)](https://stonegatelegal.com.au/qcat-building-disputes-in-queensland-complete-guide/)

#### [QCAT Building Disputes in Queensland – Complete Guide](https://stonegatelegal.com.au/qcat-building-disputes-in-queensland-complete-guide/)

[![Who Can Sue for Defamation in Australia - defamation lawyers in Queensland](<Base64-Image-Removed>)](https://stonegatelegal.com.au/who-can-sue-for-defamation-in-australia/)

#### [Who Can Sue for Defamation in Australia?](https://stonegatelegal.com.au/who-can-sue-for-defamation-in-australia/)

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## Litigation Services

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## Civil Litigation Services
[Skip to content](https://stonegatelegal.com.au/services/civil-litigation/#content)

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# Civil Litigation

Stonegate Legal offers expert assistance to clients facing civil litigation conflicts. Our skilled litigators have a proven track record in managing complex civil cases and providing exceptional legal counsel.

[Book A Consultation](https://stonegatelegal.com.au/services/civil-litigation/#book)

[Speak To Our Trusted Lawyers Today](https://stonegatelegal.com.au/contact/)

### Your Trusted Partner For Civil Litigation Solutions

## Civil Litigation Lawyers QLD

### Resolving Civil Disputes with Professionalism & Expertise

In the legal system, civil litigation often arises due to issues such as property damage, [defamation](https://stonegatelegal.com.au/services/defamation-lawyers/), negligence, insurance disputes, nuisance, trespass, administrative appeals, and more. This term encompasses a wide variety of disputes, and our team utilises various strategies to resolve them in a timely and cost-effective manner.

For those seeking [commercial litigation](https://stonegatelegal.com.au/services/commercial-litigation/), we recommend visiting our commercial disputes page. Our approach to civil litigation is professional and geared towards achieving optimal outcomes for our clients.

[Contact Us Today](https://stonegatelegal.com.au/contact/)

## Types of Civil Litigation

### We Can Offer Advice & Assistance In The Following Areas of Civil Law:

[1\. Property damage](https://stonegatelegal.com.au/services/civil-litigation/#collapse-c70abef687f01a2180a1)

If your property is damaged due to someone else's negligence or intentional act, we can help.

[2\. Defamation](https://stonegatelegal.com.au/services/civil-litigation/#collapse-092b264687f01a2180a1)

We can help you file a defamation suit to recover damages for reputational harm caused by false statements or actions.

[3\. Negligence](https://stonegatelegal.com.au/services/civil-litigation/#collapse-eba8349687f01a2180a1)

We can assist you in exploring legal options in case of injury or damage caused by someone's negligence.

[4\. Insurance disputes](https://stonegatelegal.com.au/services/civil-litigation/#collapse-ddcf901687f01a2180a1)

We can provide legal advice and representation to help you resolve any conflicts that may arise regarding insurance coverage.

[5\. Estate litigation](https://stonegatelegal.com.au/services/civil-litigation/#collapse-478192d687f01a2180a1)

We can provide guidance and representation for [estate disputes](https://stonegatelegal.com.au/services/estate-litigation-lawyers/), including will contests, probate litigation, trust disputes, and more.

[6\. Nuisance & Trespass](https://stonegatelegal.com.au/services/civil-litigation/#collapse-3f42c1d687f01a2180a1)

We can guide if you have experienced interference with your enjoyment of your land or property due to another person's negligence or unreasonable behaviour.

[7\. Administrative reviews / appeals](https://stonegatelegal.com.au/services/civil-litigation/#collapse-7db03e5687f01a2180a1)

We can provide legal advice to help you navigate the process of appealing a decision made by an administrative body.

![sgl](<Base64-Image-Removed>)

### Request a Free Consultation

Are you in the midst of a legal dispute and seeking justice? Don't wait any longer to take action! Our experienced civil litigation lawyers are here to help you navigate the complex legal system and fight for your rights.

[Contact Us Today](https://stonegatelegal.com.au/contact/)

### Don’t Face Your Legal Battle Alone

Trust us to be your fierce advocates and trusted advisors, navigating the complex legal landscape while keeping your best interests at the forefront. Make the smart choice and partner with us today.

[Discuss Your Case Today](https://stonegatelegal.com.au/services/civil-litigation/#book)

[OR Call Now](tel:0731800143)

### Here To Represent You In Legal Proceedings

At [Stonegate Legal](https://stonegatelegal.com.au/), we understand that civil disputes can be a stressful and complex process. With our experienced legal team on your side, you can rest assured that you have the best possible chance of achieving a successful outcome.

We offer clear, straightforward advice and guidance tailored to your specific needs. We also provide representation in legal proceedings when required. Our team is passionate about helping our clients overcome their legal challenges and achieve their desired outcomes.

[Contact The Team Today](https://stonegatelegal.com.au/contact/)

No Obligation Case Evaluation

![bank](<Base64-Image-Removed>)

### Property Damage

When someone causes damage to your property, whether it be intentional or due to negligence, you have the right to take legal action. This can involve filing a civil litigation case to seek a court order for the responsible party to cover the costs of repairs or replacement.

![bank](<Base64-Image-Removed>)

### Civil Litigation – Defamation

Defamation refers to the harm caused to a person's reputation or a business with less than ten employees. To take legal action against defamation, the plaintiff needs to fulfil three requirements. There should be a publication. Secondly, the publication should name the person personally or give a strong implication. Lastly, the publication should be defamatory.

![bank](<Base64-Image-Removed>)

### Insurance Disputes

There are times when insurance companies may decline to provide coverage for a policy in questionable situations, such as incorrectly calculated or applied premiums, non-disclosure of a product, or denial of a claim. In addition, breaches of confidentiality or privacy may also occur.

![bank](<Base64-Image-Removed>)

### Civil Litigation – Negligence

Negligence can be defined as the failure to take reasonable precautions to prevent harm or loss to others. To establish negligence, four essential factors must be proven: that there is a duty of care owed; secondly, that this duty of care has been breached; thirdly, that the damage or loss incurred was reasonably foreseeable; and finally, that the damage was caused by the breach of the duty of care.

![bank](<Base64-Image-Removed>)

### Estate Litigation

In case you have not been provided with sufficient provisions in a will, you may consider filing a family provision claim to secure your share or a larger share from your deceased family member's estate. This application can be made to the court, where you can present your case for proper maintenance and support.

![bank](<Base64-Image-Removed>)

### Nuisance & Trespass

If you find yourself in the midst of a dispute with your neighbour, it can be a highly stressful situation, and it can impact your ability to enjoy your property. In case you have not been able to find a resolution through QCAT or a good behaviour order, you can consider taking legal action for nuisance and trespass.

## Civil Litigation Lawyers

## Meet Our Civil Litigation Team

![Wayne Davis - Lawyer - Stonegate Legal](<Base64-Image-Removed>)

## Legal Practice Director / Principal Solicitor

## Wayne Davis

Wayne Davis is the principal solicitor, legal practice director of the firm, and leads the litigation team.  Wayne has an LLB, and GDLP and is admitted to the Supreme Court of Queensland and the High Court of Australia.  Wayne is a debt recovery, defamation, litigation, and insolvency professional.

Wayne is dedicated to achieving the best possible outcomes, whether through strategic negotiation, alternative dispute resolution, or courtroom advocacy. Wayne understand that every case is unique and takes a proactive approach to ensure your rights and interests are protected at every stage of the process.

### Education & Certifications

LLB – Bachelor of Laws, Graduate Diploma of Legal Practice (GDLP)

### Personal Quote

Don’t believe everything you think.

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Lease Disputes](https://stonegatelegal.com.au/tag/commercial-lease-disputes/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/) [Debt Recovery/Collection](https://stonegatelegal.com.au/tag/debt-recovery-collection/) [Defamation Litigation](https://stonegatelegal.com.au/tag/defamation-litigation/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [Statutory Demands](https://stonegatelegal.com.au/tag/statutory-demands/) [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/) [Wills/Estate Litigation](https://stonegatelegal.com.au/tag/wills-estate-litigation/)

![Shania Bryan - Stonegate Legal](<Base64-Image-Removed>)

## Solicitor

## Shania Bryan

Shania is a solicitor at Stonegate Legal, based in Queensland. After nearly two years with the firm, Shania recently transitioned into her solicitor role following her admission to the Supreme Court of Queensland in December 2024. She holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP). Shania practices predominantly in defamation law and handles a majority of the defamation matters here at Stonegate Legal.

Her focus is advising and representing clients in disputes involving reputational harm, online publications, and media content. Shania works closely with individuals and businesses to navigate the intricacies of defamation claims and achieve effective resolutions.

### Education & Certifications

Bachelor of Laws (LLB) and Graduate Diploma of Legal Practice (GDLP)

### Personal Quote

Every experience is a chance to deepen my knowledge and contribute to our team’s success, fostering a culture of continuous learning and support

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Lease Disputes](https://stonegatelegal.com.au/tag/commercial-lease-disputes/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/) [Defamation Litigation](https://stonegatelegal.com.au/tag/defamation-litigation/) [Wills/Estate Litigation](https://stonegatelegal.com.au/tag/wills-estate-litigation/)

![Kirsty Walker - Stonegate Legal](<Base64-Image-Removed>)

## Solicitor

## Kirsty Walker

Kirsty has come into the legal profession later in life, having been a primary school teacher for 24 years. Her interest in the law stemmed from running a small construction company. After self-representing against debtors, she came to value the ability of the law to assist contractors in David and Goliath situations. Kirsty is admitted to the Supreme Court of Queensland and the High Court of Australia.

### Education & Certifications

Bachelor of Law (First Class Honours), Graduate Diploma Legal Practice, Bachelor of Criminology, and Justice Bachelor of Education (Primary), Certificate IV Small Business Management

### Personal Quote

Always pray to have eyes that see the best, a heart that forgives the worst, a mind that forgets the bad, and a soul that never loses faith.

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/)

![Laylah Toovey - Stonegate Legal](<Base64-Image-Removed>)

## Law Graduate / Paralegal

## Laylah Toovey

Laylah completed her Bachelor of Laws with Honours at the University of the Sunshine Coast and is currently undertaking her graduate diploma of legal practice at the College of Law. I have worked with Stonegate Legal since 2021, and within this time, she acquired a broad range of knowledge and experience across a diverse range of matters.

Laylah’s approach is centered on understanding your unique circumstances, protecting your interests, and advocating for the best possible outcome. Whether you’re facing commercial disputes, debt disputes, contract issues, or other contentious matters, Laylah and the team are here to guide you every step of the way.

### Education & Certifications

Bachelor of Laws

### Personal Quote

I am dedicated to supporting our senior team members, and achieving positive results for our clients

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Debt Recovery/Collection](https://stonegatelegal.com.au/tag/debt-recovery-collection/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [Statutory Demands](https://stonegatelegal.com.au/tag/statutory-demands/) [Wills/Estate Litigation](https://stonegatelegal.com.au/tag/wills-estate-litigation/)

![Caterine Molini - Stonegate Legal](<Base64-Image-Removed>)

## Law Graduate / Paralegal

## Caterine Molini

Caterine holds a law degree and passed the bar exam in 2011, practicing as a lawyer in Brazil until 2018. She also completed a postgraduate qualification in environmental law. Caterine holds a Certificate IV and a Diploma in Leadership and Management from Australia.

With 12 years of experience in civil litigation, insurance, and building and construction, Caterine spent six years leading a team to negotiate major agreements with insurance companies. She worked closely with engineers to ensure construction projects met environmental regulations, and she advocated for clear contracts to prevent issues and avoid costly litigation.

She is excited to be working towards admission as a Solicitor in Australia.

### Education & Certifications

Bachelor of Law (Brazil)

### Personal Quote

You are the size of your dreams. Dream big. Play smart, not hard.

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [insurance disputes](https://stonegatelegal.com.au/tag/insurance-disputes/) [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/)

![](<Base64-Image-Removed>)

## Paralegal

## Maddison Payne

Maddi is an emerging legal professional currently undertaking a Bachelor of Laws with Honours at Queensland University of Technology (QUT), where she is committed to excelling both academically and professionally.

At the outset of her career, Maddi applies a methodical and research-oriented approach to all aspects of legal support, ensuring thorough case preparation and a deep understanding of legal procedures. Her dedication to both her studies and her work is reflected in her meticulous attention to detail and her drive for delivering high-quality results.

Maddi is committed to providing valuable and effective support to our senior legal team, leveraging her academic foundation and professional skills to assist on complex cases with accuracy and integrity. With a keen interest and focus for matters concerning defamation, corporate litigation, professional negligence, corporate disputes, and commercial litigation, she is driven to developing a comprehensive understanding of law that underpins her work as a paralegal and future prospects of becoming a lawyer.

### Education & Certifications

Bachelor of Laws LLB (Honours) (completing), Diploma of Business BSB (Communications & Media)

### Personal Quote

Keep your concentration here and now where it belongs. Be mindful of the future, but not at the expense of the moment.

## Areas of Interest

### [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/) [Defamation Litigation](https://stonegatelegal.com.au/tag/defamation-litigation/)

## Frequently Asked Questions

[How do I know if I have a strong case for civil litigation?](https://stonegatelegal.com.au/services/civil-litigation/#collapse-b0d504b687f01a3d8d83)

The strength of your case will depend on the facts and circumstances of your situation. It is important to speak with an experienced lawyer who can review the relevant laws, advise you on the strengths and weaknesses of your case, and provide guidance on how best to proceed.

Our legal team is well-versed in civil litigation matters and can help you understand the legal process. We will also provide you with an honest assessment of whether or not it is in your best interest to pursue a claim.

[Can I represent myself in civil litigation or do I need a lawyer?](https://stonegatelegal.com.au/services/civil-litigation/#collapse-4e10eba687f01a3d8d83)

It is possible to represent yourself in civil litigation, however, it is not recommended. Civil litigation can be a complex and lengthy process, and some many legal rules and procedures need to be followed.

An experienced lawyer will be able to provide you with the best advice and guidance throughout the process. They will also be able to assist you in gathering evidence, preparing legal documents, negotiating settlements, and representing you in court if necessary.

[What is the difference between criminal law and civil law?](https://stonegatelegal.com.au/services/civil-litigation/#collapse-f591981687f01a3d8d83)

[Criminal law](https://en.wikipedia.org/wiki/Criminal_law) deals with cases in which the government prosecutes a person or group of people for committing an offence. In criminal cases, the punishment is typically jail time, fines, or both. Civil law, on the other hand, involves disputes between two private parties and is typically used to seek monetary damages or injunctions.

While criminal cases are heard in a criminal court, civil cases are heard in a civil court or through mediation or arbitration. Additionally, criminal cases have a higher burden of proof than civil cases.

[Can I sue someone for emotional distress in civil litigation?](https://stonegatelegal.com.au/services/civil-litigation/#collapse-de9d696687f01a3d8d83)

Yes, in certain circumstances it is possible to sue someone for emotional distress in civil litigation.

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## Insolvent Transactions Explained
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# What are Insolvent Transactions?

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## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| April 22, 2019

## Article Summary

The article discusses the concept of insolvent transactions, an important element to be proven by a liquidator in cases of unfair preference or uncommercial transaction claims.

Insolvent transactions have various elements:

1. There’s a company transaction.
2. The transaction is either an unfair preference or uncommercial.
3. The company becomes insolvent due to the transaction or an act giving effect to it.

Voidable transactions in company insolvency refer to transactions between the company and a third party that can be avoided and recovered during liquidation. The _Corporations Act_ provides criteria for such transactions, which include unfair preferences, uncommercial transactions, and others.

For a transaction to be voidable, it must meet the timeline requirements detailed in section _588FE of the Corporations Act_.

Insolvent transactions, as defined by section _588FC of the Corporations Act_, require that a transaction is an unfair preference or an uncommercial transaction and either the company is insolvent during the transaction or becomes insolvent because of it.

The concept of a “transaction” is broad. The _Corporations Act_ provides examples like a conveyance, transfer, guarantee, loan, etc., but it’s not limited to these examples. The article also discusses the distinction between a transaction “ _of a company_” versus “ _of the company_“, highlighting court interpretations.

Lastly, the article covers specific types of transactions, such as unfair preferences and uncommercial transactions, and delves into the notion of “ _giving effect to the transaction_” explaining various court decisions that have dealt with this point.

Table of Contents

[Toggle](https://stonegatelegal.com.au/what-are-insolvent-transactions/#)

![insolvent transactions corporations act voidable in Queensland](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2019/04/insolvent-transactions-corporations-act-voidable-in-Queensland-300x282.png)Insolvent transactions are one of the elements the liquidator will need to prove if there is an unfair preference claim or an uncommercial transaction claim.

The elements of insolvent transactions are:

1. There must be a transaction of a company;
2. The transaction is an unfair preference or an uncommercial transaction;
3. The transaction is entered into; or an act has given effect to the transaction, when the company is insolvent; or
4. The company becomes insolvent because the transaction is entered into; or an act giving effect to the transaction has been made.

If a liquidator is unable to prove that the transactions which form an unfair preference or an uncommercial transaction claim are insolvent transactions, then its claim will fail.

In this article our [insolvency lawyers](https://stonegatelegal.com.au/services/insolvency/) explain insolvent voidable transactions in more detail.

**If you have been contacted by a liquidator in relation insolvent transactions claims, you should contact an insolvency lawyer as soon as possible to attempt to defend the liquidator’s demand for money**

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## What are Voidable Insolvent Transactions?

A [voidable transaction](https://stonegatelegal.com.au/voidable-transactions-bankruptcy/) in company insolvency is a transaction entered into by the company and a third-party which can be avoided and recovered by the liquidator of the company in liquidation.

Voidable transactions can include:

1. [588FA – Unfair preferences](https://stonegatelegal.com.au/unfair-preference-claims-and-how-to-defeat-them/);
2. [588FB – Uncommercial transactions](https://stonegatelegal.com.au/uncommercial-transactions-claims-and-how-to-defeat-them/);
3. 588FC – Insolvent transactions;
4. [588FD – Unfair loans to a company](https://stonegatelegal.com.au/what-are-unfair-loans-in-company-insolvency/); and
5. [588FDA – Unreasonable director-related transactions](https://stonegatelegal.com.au/unreasonable-director-related-transactions-and-how-to-defeat-them/).

[Section 588FE of the Corporations Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588fe.html) outlines the criteria for a transaction able to be avoided by the liquidator.

1. There must be an insolvent transaction; and
2. The transaction was made, or an act was done for the purpose of giving effect to it:
3. During the 6 months ending on the relation-back day; or
4. It is also an uncommercial transaction – 2 years ending on the relation-back day; or
5. It is also a related entity of the company – 4 years ending on the relation-back day; or
6. The company became a party to the transaction for the purpose of defeating, delaying, or interfering with, the rights of any or all of its creditors – 10 years ending on the relation-back day.

Then, each of the voidable transactions have their own specific requirements.

If you fall into the category outlined above, then this transaction could be a voidable transaction.  But what is an insolvent transaction?

## Insolvent Transactions

[Section 588FC of the Corporations Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588fc.html) says:

> _A transaction of a company is an insolvent transaction of the company if, and only if, it is an unfair preference given by the company, or an uncommercial transaction of the company, and:_
>
> _(a)  any of the following happens at a time when the company is insolvent:_
>
> _(i)  the transaction is entered into; or_
>
> _(ii)  an act is done, or an omission is made, for the purpose of giving effect to the transaction; or_
>
> _(b)  the company becomes insolvent because of, or because of matters including:_
>
> _(i)  entering into the transaction; or_
>
> _(ii)  a person doing an act, or making an omission, for the purpose of giving effect to the transaction._

So, as outlined above, the elements of insolvent transactions are:

1. There must be a transaction of a company;
2. The transaction is an unfair preference or an uncommercial transaction;
3. The transaction is entered into; or an act has given effect to the transaction, when the company is insolvent; or
4. The company becomes insolvent because the transaction is entered into; or an act giving effect to the transaction has been made.

To assess if the transaction was an insolvent transaction, section 588FC of the Corporations Act asks a number of questions, namely:

1. What is a transaction?
2. What is a transaction of a company?
3. Is the transaction an unfair preference or an uncommercial transaction?
4. When does a person do an act, or an omission, for the purpose of giving effect to the transaction?
5. When is the company insolvent?

This article will explain these in more detail below.

## What is a Transaction?

A transaction for this section of the Corporations Act includes:

1. A conveyance, transfer or other disposition of property;
2. A guarantee;
3. A loan;
4. A payment made;
5. A release or waiver;
6. A security interest granted in property; and
7. An obligation incurred;

A transaction can also include a transaction that has been completed or given effect to, or that has terminated.

[Section 9 of the Corporations Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html) outlines these transactions, but also expressly states that they are by way of example (but without limitation).  So, it is therefore likely that a transaction not on this list may also be ruled to be a transaction.

[Section 1371 of the Corporations Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s1371.html#made) defines the word “made” to mean:

> _“ **made**” includes issued, given or published_

So, what can be a transaction is very broad, and not limited to what is included in the Corporations Act.

But what is a transaction of a company?

## What are Insolvent Transactions of a Company?

The Court has distinguished a transaction “ **of a company**” from a transaction “ **of the company**”.

In [_Kalls Enterprises Pty Ltd (In Liquidation) & Ors v Baloglow & Anor_ \[2007\] NSWCA 191](http://classic.austlii.edu.au/au/cases/nsw/NSWCA/2007/191.html) Giles JA said:

> _… the words “of the company” add something. As well as being a transaction to which the company is party … the transaction must warrant the description of a transaction of the company._

Ipp J agreeing with Giles JA said:

> _… the question whether a transaction is a transaction of a company depends on the nature and extent of involvement of the company in the transaction. A transaction may be “of” more than one company or party. The mere fact that a company is a party to a contract or contracts that form part of the transaction does not necessarily make the transaction “of” that company. Whether a company is so bound up in the transaction that it is a transaction “of” the company is a question of judgment dependent on fact and degree._

Then Basten JA agreeing with Giles JA went on to say:

> _A transaction “of” a particular company can be said to involve something more than the concept of a company being “party to” a transaction. It involves a different perspective. A sale may involve three companies, a vendor, a purchaser and a financier. Each is “party to” the transaction, but in order to characterise the transaction for the purposes of Pt 5.7B, one needs to identify “of” which company it is a transaction, so as to assess benefits for, detriments to, insolvency of and winding up of, that company._

Therefore, it may be possible that a transaction of the company may not be a transaction of a company.

This distinction may, if successfully argued, could enable a party to the transaction (or transactions) to defeat the liquidator’s claim.

A great discussion on these points can be found in [_McCann, in the matter of Walton Construction (Qld) Pty Ltd (In Liq) v QHT Investments Pty Ltd_ \[2018\] FCA 1986](http://classic.austlii.edu.au/au/cases/cth/FCA/2018/1986.html).

The transaction of a company must also be an unfair preference or an uncommercial transaction.

### Are the Insolvent Transactions also Unfair Preferences?

[Section 588FA of the Corporations Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588fa.html) gives the liquidator the power to avoid certain preference payments made by the company to an unsecured creditor of the company.

An unfair preference occurs when:

1. There is a transaction between the company and an unsecured creditor; and
2. The transaction occurred while the company was insolvent; and
3. The transaction results in the creditor receiving more than the creditor would receive from the company if the creditor were to prove for the debt in a winding up of the company.
4. If this happens, then a liquidator may be entitled to recover those funds from the creditor.

There are a number of defences and exceptions to the above.

**Read our article – [Unfair Preference Claims and how to Defeat Them](https://stonegatelegal.com.au/unfair-preference-claims-and-how-to-defeat-them/)**

### Are the Insolvent Transactions also Uncommercial Transactions?

[Section 588FB of the Corporations Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588fb.html) gives the liquidator the power to avoid certain uncommercial transactions made by the company to another party.

A transaction of a company is an uncommercial transaction when:

1. There is a transaction of a company; and
2. There is a transaction with another party (or parties); and
3. A reasonable person in the company’s circumstances would not have entered into the transaction having regard to;
4. The benefits and detriments to the company and the other party (or parties).

There are a number of defences and exceptions to uncommercial transactions claims.

**Read our article – [Uncommercial Transactions Claims and how to Defeat Them](https://stonegatelegal.com.au/uncommercial-transactions-claims-and-how-to-defeat-them/)**

## What is Giving Effect to the Transaction?

As well as entering into the transaction, an insolvent transaction also includes an act done, or an omission made, for the purpose of giving effect to the transaction.  But what does giving effect to the transaction mean?

In [_Re Legend International Holdings Inc (in liq)_ \[2018\] VSC 789](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/vic/VSC/2018/789.html) the Supreme Court of Victoria discussed the few authorities on this point.

In [_Demondrille Nominees Pty Ltd v Kevin R Shirlaw and Cornelis Holdings Pty Ltd (in liquidation); Kevin R Shirlaw v Cornelis Holdings Pty Ltd (in liquidation) and Demondrille Nominees Pty Ltd_ \[1997\] FCA 1220](http://classic.austlii.edu.au/au/cases/cth/FCA/1997/1220.html) (“ **Demondrille**”) the relevant transaction was an agreement for sale of real property.

Cornelis Holdings Pty Ltd was a property development company and entered into a contract to sell a property to Demondrille.

The contract stated that a deposit of $120,000 had been paid.  This amount had not been paid but was accounting for a debt owing to Demondrille from a company related to Cornelis.

After Cornelis became insolvent, the parties entered into a deed of recession rescinding the sale contract upon repayment of $120,000 to Demondrille.

In their judgment Foster, Lindgren and Madgwick JJ said:

> _… the acts of Cornelis and Demondrille in entering into the deed in fact ‘gave effect’ … to the ‘transaction’ constituted by the agreement, because it gave effect to the ‘credit’ in favour of Demondrille which the agreement created._

In [_Lewis (as liquidator of Doran Constructions Pty Ltd (in liq) & v Doran & Ors_ \[2005\] NSWCA 243](http://classic.austlii.edu.au/au/cases/nsw/NSWCA/2005/243.html) the Court considered if a resolution of a board of directors and journal entries, relating to debt restructuring agreements between a number of related companies, gave effect to a transaction.

In the judgment of Giles JA, with Hodgson JA and McColl JA agreeing, he said:

> _I consider it sufficient that posting the journal entries was doing what had been agreed should be done, maybe sufficient even if the resolution(s) had not stipulated the method of payment. Attaching legal significance, in the present context, to an act done for the purpose of giving effect to a transaction seems to have been intended to catch an agreement entry into which was an uncommercial transaction if the company was insolvent when the agreement was performed._

In [_International Cat Manufacturing Pty Ltd (in liq) & Anor v Rodrick & Ors_ \[2013\] QSC 91](http://classic.austlii.edu.au/au/cases/qld/QSC/2013/91.html) the Court considered whether payments made while the company was insolvent, gave effect to a charge created while the company was not insolvent.

In his judgment Philip McMurdo J said:

> _… the payment must have had a purpose of giving effect to the creation of the charge. None of these payments was made in order that the creation of the charge would have its legal effect. Rather each payment was made simply for the purpose of reducing the debt to Nu-Log. By contrast, the registration of a charge could be considered an act done for the purpose of making effective the creation of the charge._

In [_Cashflow Finance v WestpacCOD Factors v Cashflow FinanceStar v Kylon P/LCOD Factors v Walters_ \[1999\] NSWSC 671](http://classic.austlii.edu.au/au/cases/nsw/NSWSC/1999/671.html) the Court considered whether certain payments made by cheque were for the purpose of giving effect to previous transactions.

In the judgment, Einstein J said:

> _At the time that Mr Walters caused each of the cheques pursuant to which the WUPs were made to be drawn on Cashflow’s bank account, and paid to CODFA (or Burkett), and banked into the account of CODFA (or Burkett), an act was done (by Mr Walters) for the purpose of giving effect to the transactions. I accept that at each of those times, Cashflow was insolvent. I accept that this establishes each of them as an insolvent transaction within section 588FC(a)(ii) … Cashflow became insolvent because of (or because of matters including) a person (Mr Walters) doing an act for the purpose of giving effect to the transaction. I accept that at each time Walters did such an act, Cashflow was insolvent. I accept that this establishes each of the WUPs as an insolvent transaction within section 588FC(b)(ii)._

In [_Diana Denise Newman as liquidator of Riverview Heights Pty Ltd (In Liq) v Coropean Pty Ltd_ \[2002\] WASC 79](http://classic.austlii.edu.au/au/cases/wa/WASC/2002/79.html) the Court considered whether payments made by a related entity forming part of a continuing business relationship means that there was an act done for the purpose of giving effect to a transaction.

In the judgment Master Sanderson said:

> _I am satisfied that the payments made to the respondent by the Company were part of a continuing business relationship under s 588FA. That means there was only one transaction under s 588FA(1), but the fact that as part of this one transaction there were payments made during the four years ending on the relation-back day means that there was an act done for the purpose of giving effect to the transaction during that four-year period._

In looking at the above cases, they seem to have a similar theme – whether there is an act done, or an omission made (after the date of insolvency), for the purpose of giving effect to transaction (prior to the date of insolvency) is in-itself a transaction.

An easy to understand example might be when a solvent company gives a security interest, the company becomes insolvent when the secured party causes the security interest to crystallise.

But what are the time-frames for an insolvent transaction?

**If you have been contacted by a liquidator in relation insolvent transactions claims, you should contact an insolvency lawyer as soon as possible to attempt to defend the liquidator’s demand for money**

**DEDICATED TEAM – FAST ACTING – PROVEN RESULTS**

[GET A FREE FEE ESTIMATE TODAY](https://stonegatelegal.com.au/free-case-evaluation/)

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## When is the Company Insolvent?

A transaction is voidable if the company is deemed to be insolvent.  There are different requirements for when a company is deemed to be insolvent depending on the circumstances of the transaction.

These time-frames are outlined at section [588FE of the Corporations Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588fe.html).

### Unfair Preference Claims

An unfair preference claim is normally voidable (if not a related entity) for six (6) months.

Section 588FE(2) says:

> _The transaction is voidable if:_
>
> _(a)  it is an insolvent transaction of the company; and_
>
> _(b)  it was entered into, or an act was done for the purpose of giving effect to it:_
>
> _(i)  during the 6 months ending on the relation-back day; or_
>
> _(ii)  after that day but on or before the day when the winding up began._

### Uncommercial Transaction Claims

An uncommercial transaction is usually voidable (if not a related entity) for two (2) years.

Section 588FE(3) says:

> _The transaction is voidable if:_
>
> _(a)  it is an insolvent transaction, and also an uncommercial transaction, of the company; and_
>
> _(b)  it was entered into, or an act was done for the purpose of giving effect to it, during the 2 years ending on the relation-back day._

### Related Entity of the Company

If a party to the transaction is a related entity, the transaction is voidable for four (4) years.

Section 588FE(4) says:

> _The transaction is voidable if:_
>
> _(a)  it is an insolvent transaction of the company; and_
>
> _(b)  a related entity of the company is a party to it; and_
>
> _(c)  it was entered into, or an act was done for the purpose of giving effect to it, during the 4 years ending on the relation-back day._

### Attempting to Defeat Creditors

If the transaction was done for the purpose of defeating, delaying, or interfering with the rights of any or all of its creditors, then the transaction is voidable for ten (10) years.

Section 588FE(5) says:

> _The transaction is voidable if:_
>
> _(a)  it is an insolvent transaction of the company; and_
>
> _(b)  the company became a party to the transaction for the purpose, or for purposes including the purpose, of defeating, delaying, or interfering with, the rights of any or all of its creditors on a winding up of the company; and_
>
> _(c)  the transaction was entered into, or an act done was for the purpose of giving effect to the transaction, during the 10 years ending on the relation-back day._

### Unfair Loans

An unfair loan is voidable at any time.  Section 588FE(6) says:

> _The transaction is voidable if it is an unfair loan to the company made at any time on or before the day when the winding up began._

### Unreasonable Director-Related Transaction

An unreasonable director-related transaction, the transaction is voidable for four (4) years.

Section 588(6A) says:

> _The transaction is voidable if:_
>
> _(a)  it is an unreasonable director-related transaction of the company; and_
>
> _(b)  it was entered into, or an act was done for the purposes of giving effect to it:_
>
> _(i)  during the 4 years ending on the relation-back day; or_
>
> _(ii)  after that day but on or before the day when the winding up began._

### Company Under Administration

If the company was under administration prior to the liquidation, then the relation back day commences:

1. When the company made the special resolution that it be wound up voluntarily; or
2. When the Court made the order that the company be wound up.

### Deed of Company Arrangement

If the company was subject to a deed of company arrangement prior to the liquidation, then the relation back day commences:

1. When the company made the special resolution that it be wound up voluntarily; or
2. When the Court made the order that the company be wound up.

This does not apply if the transaction, or the act done for the purpose of giving effect to it, was not entered into, or done, on behalf of the company by, or under the authority of:

1. The administrator of the deed; or
2. The administrator of the company.

## Relation Back Day – Insolvent Transactions

The date for calculating the above relies on when the relation-back day is said to have been.

For example, for an order winding up the company in liquidation, the relation-back day is the date of filing the application in the Court.

There are a number of other possible scenarios at [section 91 of the Corporations Act](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s91.html).

It is very important that this date is calculated correctly.

**If you have been contacted by a liquidator in relation insolvent transactions claims, you should contact an insolvency lawyer as soon as possible to attempt to defend the liquidator’s demand for money**

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## FAQs: Understanding Insolvent Transactions

This FAQ section provides a concise and comprehensive set of frequently asked questions about insolvent transactions, designed to shed light on its definition, implications, and the legal frameworks surrounding it.

Whether you’re a business owner, an investor, or simply someone keen to enhance their knowledge, this FAQ will serve as a foundational guide. Let’s delve deeper into the intricacies of insolvent transactions.

### What are insolvent transactions?

Insolvent transactions refer to transactions made by a company that either occur when the company is insolvent or cause the company to become insolvent. They involve unfair preferences or uncommercial transactions.

### If a liquidator cannot prove a transaction is an insolvent transaction, what happens?

If a liquidator cannot establish that a transaction is an insolvent transaction, then their claim against it will fail.

### What are voidable insolvent transactions?

A voidable transaction in company insolvency is one that a liquidator can avoid and recover. They can include unfair preferences, uncommercial transactions, insolvent transactions, unfair loans, and unreasonable director-related transactions.

### What criteria does the Corporations Act set for a voidable transaction?

According to Section 588FE of the Corporations Act, a transaction must be an insolvent transaction, and it must have been made or acted upon for certain time frames depending on the type of transaction.

### How does the Corporations Act define an “insolvent transaction”?

Section 588FC of the Corporations Act says a transaction is insolvent if it’s an unfair preference or uncommercial transaction, and it either happens when the company is insolvent or causes the company to become insolvent.

### What is considered a “transaction” according to the Corporations Act?

A transaction includes conveyances, transfers, guarantees, loans, payments, releases, waivers, security interests, obligations, and more. Transactions can be completed, given effect to, or terminated.

### How is the term “transaction of a company” distinguished from “transaction of the company”?

A transaction “of a company” involves the company’s involvement in the transaction, while a transaction “of the company” emphasizes the transaction being characteristic of that company’s dealings.

### What is an “unfair preference” as per the Corporations Act?

An unfair preference involves a transaction between an insolvent company and an unsecured creditor, resulting in the creditor receiving more than they would have in a winding up of the company.

### What constitutes an “uncommercial transaction”?

A transaction is considered uncommercial when a reasonable person wouldn’t have entered into the transaction, considering the benefits and detriments to the involved parties.

### What does “giving effect to the transaction” mean?

This refers to actions or omissions made to realize or implement a transaction. It involves understanding if an act was done, or an omission made, for the purpose of executing a transaction.

### Can you provide a simple example of an insolvent transaction?

A company, while solvent, gives a security interest. Later, the company becomes insolvent when the party holding the security interest acts to enforce or crystallize it.

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#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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# Body Corporate Debt Recovery Lawyer

Stonegate Legal offers body corporate debt recovery lawyers to assist in the collection of unpaid levies and contributions in Queensland. Our experienced body corporate lawyers can provide guidance on the legal processes involved in debt recovery and represent your body corporate in negotiations or litigation.

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### Get the Unpaid Levies Your Body Corporate is Owed

## Body Corporate Lawyers

## What Is Body Corporate Debt Recovery in Queensland?

When lot owners fail to pay their levies and contributions, body corporate debt recovery becomes necessary. As professional debt recovery lawyers, we understand the complexities of the debt collection process for unpaid levies.

At Stonegate Legal, we offer a range of fee options to ensure that our clients receive the best legal advice at a fee structure that suits them best. Our fee options include fixed fees, capped fees, and deferred fees.

Dealing with body corporate debt recovery can be a daunting task, but our team of experts are here to help. Let us handle the complicated legal procedures involved in the process, while you focus on what matters most.

[Start Collecting Your Debts Today](https://stonegatelegal.com.au/contact/)

## Debt Recovery Body Corporate Lawyers QLD

## The Body Corporate Debt Recovery Process

[Sending a letter of demand](https://stonegatelegal.com.au/services/body-corporate-debt-recovery/#collapse-c70abef687f03733355c)

When it comes to recovering body corporate debts, a lawyer's [letter of demand](https://stonegatelegal.com.au/letter-of-demand/) serves as an effective initial step. This is because it conveys a strong message that the body corporate is committed to pursuing unpaid levies, which may prompt the delinquent lot owner to take action.

Additionally, the letter will outline the potential consequences of failing to settle the debt and may indicate that legal action is imminent. If the debtor pays promptly, the matter can be resolved quickly and with minimal fuss. However, failure to pay may result in the need for the body corporate to initiate legal proceedings to recover the outstanding levies.

[Commencing legal action](https://stonegatelegal.com.au/services/body-corporate-debt-recovery/#collapse-092b264687f03733355c)

To recover a debt, legal action can be started in either the Court or QCAT. However, as legal professionals, we suggest initiating the action in the Magistrates Court rather than QCAT.

For body corporate debt recovery, a claim and statement of claim are filed in the Magistrates Court. After the solicitor drafts the claim and statement, it is submitted to the Court and stamped with its seal. A copy of the sealed claim is then delivered to the debtor.

[Service of the originating process](https://stonegatelegal.com.au/services/body-corporate-debt-recovery/#collapse-eba8349687f03733355c)

When serving a lot owner who is a natural person, it is necessary to provide them with a copy of the claim and statement of claim in person.

In the Magistrates Court, there may be some alternate options available for service. Bodies corporate are obligated to maintain records of the lot owner's address. If the body corporate fails to keep an address for service, the residential or business address last notified to the body corporate will serve as the address for service for the lot owner.

For lot owners who are corporations, the claim and statement of claim must be sent via prepaid post to the registered office address obtained from the current extract with ASIC. After service, lot owners have 28 days to file a notice of intention to defend and defence.

[Default judgment or summary judgment](https://stonegatelegal.com.au/services/body-corporate-debt-recovery/#collapse-ddcf901687f03733355c)

If the defendant fails to submit a defence within 28 days, the body corporate can request a default judgment from the court, which will include the full amount of the claim, legal expenses, and interest. If the defendant chooses to dispute the claim, the body corporate may apply for a [summary judgment](https://stonegatelegal.com.au/summary-judgment-application-in-qld/) under [rule 292](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s292.html) of the Uniform Civil Procedure Rules 1999 (Qld), which allows the court to grant judgment to the plaintiff if the defendant has no chance of successfully defending the claim and there is no need for a trial.

Given the limited options for defending a body corporate debt recovery claim, summary judgment is likely to be granted upon request. The purpose of initiating legal proceedings is to obtain a judgment that can be enforced.

[Enforcement of the judgment](https://stonegatelegal.com.au/services/body-corporate-debt-recovery/#collapse-478192d687f03733355c)

The property of a judgment debtor can be subjected to enforcement of a judgment by a judgment creditor. This can be carried out either through insolvency in Federal Courts or via an enforcement warrant in State courts.

![sgl](<Base64-Image-Removed>)

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## Discuss Your Case With A Trusted Body Corporate Lawyer

Let us be your strongest partner and trustworthy advisors. We can take you through the complex legal system while always protecting your best interests. Make the wise decision and join forces with us now

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## Body Corporate Debt Recovery QLD

### Expert Legal Assistance for Resolving Body Corporate Disputes

At Stonegate Legal, we understand the complexities of body corporate debt recovery and are here to help you. Our experienced team of body corporate debt recovery lawyers can provide you with comprehensive legal advice and support throughout the entire debt recovery process.

We can assist you in drafting effective demand letters, filing court proceedings if necessary, and enforcing judgments to recover unpaid levies. Our goal is to help you recover the money owed to your body corporate as quickly and efficiently as possible.

![unknown person using laptop](<Base64-Image-Removed>)

## Queensland Body Corporate Lawyers

### Make Informed Decisions with Stonegate Legal

### Extensive Experience & Legal Knowledge

Our team of lawyers in debt recovery possesses vast knowledge and expertise in the field of debt recovery and have a profound understanding of the legal system. They can offer you a free initial consultation on the best strategies to retrieve your debt.

### Respectful & Professional Service

We acknowledge that our clients might be facing challenging and tense circumstances. Our lawyers are committed to delivering courteous and expert assistance to ensure that your matter is resolved promptly, competently, and successfully.

### Tailored Solutions

Each case involving debt recovery is distinct and requires a customised approach. Our team will create a solution that is tailored to your requirements to guarantee that you achieve the most favourable result. No information will be overlooked during this process.

## Frequently Asked Questions

[What is a levy in body corporate?](https://stonegatelegal.com.au/services/body-corporate-debt-recovery/#collapse-d0f8c47687f03734690c)

A levy in a body corporate refers to the amount of money each lot owner is required to pay to fund the ongoing expenses and future capital expenses of the body corporate. These levies are determined by the body corporate's budget and are used to cover costs such as maintenance, insurance, and other shared expenses. In Queensland, there are typically two types of levies: administrative fund levies (for day-to-day operational costs) and sinking fund levies (for future capital expenses).

[How do we recover unpaid body corporate levies?](https://stonegatelegal.com.au/services/body-corporate-debt-recovery/#collapse-a73c29e687f03734690c)

In Queensland, if a lot owner fails to pay their levies, the body corporate can take action to recover the unpaid amounts. The process usually involves sending reminder notices to the lot owner. If the levies remain unpaid after the reminder notices, the body corporate can engage a solicitor or debt collection agency to recover the debt. The body corporate can also initiate legal proceedings in a court or tribunal to recover the unpaid levies, along with any interest and costs associated with the recovery process.

[Can the Body Corporate charge interest on late levies?](https://stonegatelegal.com.au/services/body-corporate-debt-recovery/#collapse-db86c93687f03734690c)

Yes, in Queensland, the body corporate has the authority to charge interest on overdue levies. The rate of interest and the conditions under which it can be charged are typically outlined in the body corporate's by-laws or in the Body Corporate and Community Management Act.

[How does the Body Corporate offer discounts on levies?](https://stonegatelegal.com.au/services/body-corporate-debt-recovery/#collapse-bef02a5687f03734690c)

The body corporate can offer discounts to lot owners who pay their levies by a certain date. This is usually done as an incentive for early payment. The conditions and amount of the discount are determined by the body corporate committee and should be clearly communicated to all lot owners.

[Can the Body Corporate waive levies for lot owners?](https://stonegatelegal.com.au/services/body-corporate-debt-recovery/#collapse-c69d82a687f03734690c)

It's uncommon for a body corporate to waive levies entirely, as these funds are essential for the operation and maintenance of the property. However, in exceptional circumstances, the body corporate committee may consider requests for a waiver or reduction in levies on a case-by-case basis. Any decision to waive or reduce levies would typically require a resolution at a general meeting.

[When should I hire a body corporate debt recovery lawyer?](https://stonegatelegal.com.au/services/body-corporate-debt-recovery/#collapse-b0d504b687f03734690c)

The most important time to hire a body corporate debt recovery lawyer is when you are faced with a situation in which an owner or tenant of the building has not paid their outstanding debts. It is important to seek legal advice as soon as possible, as the longer the debt remains outstanding, the more difficult it can be to recover.

[Can a body corporate debt recovery lawyer help me recover unpaid levies?](https://stonegatelegal.com.au/services/body-corporate-debt-recovery/#collapse-f591981687f03734690c)

Yes, a body corporate debt recovery lawyer can help you recover unpaid levies from owners or occupiers of units within a strata or community title scheme. Stonegate Legal's body corporate debt recovery lawyers are experienced in dealing with issues related to unpaid levies and can provide legal advice and representation throughout the debt recovery process.

[What are the different types of enforcement warrants?](https://stonegatelegal.com.au/services/body-corporate-debt-recovery/#collapse-4e10eba687f03734690c)

Various types of enforcement warrants exist, including warrants for the seizure and sale of property, redirection of debts, earnings, and regular redirections from financial institutions.

Additionally, there are orders for payment of debts by instalments, enforcement warrants for charging orders, and for the appointment of a receiver. It is important to note that not all enforcement warrants are applicable in every situation. However, if the debtor's real property needs to be seized and sold, the enforcement warrant for seizure and sale is the obvious choice. In cases where an enforcement warrant is not appropriate, a body corporate may consider bankruptcy or winding up processes in the Federal Courts.

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## Contract Law Essentials
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# Contract Law 101 – The Essential Elements

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## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| October 8, 2023

## Article Summary

Contract law is a set of rules that govern agreements between parties. A contract is a legally binding agreement between two or more parties.

Key terms in contract law:

1. **Offer**: A proposal to enter into a contract.
2. **Acceptance**: An agreement to enter into a contract on the terms offered.
3. **Consideration**: Something of value that is exchanged between the parties to a contract.
4. **Capacity**: The ability to enter into a legally binding contract.
5. **Legality**: The contract must be for a legal purpose.

Other important concepts in contract law:

1. **Intention to create legal relations**: The parties must intend to be legally bound by the contract.
2. **Meeting of the minds**: The parties must agree on the terms of the contract.
3. **Ability to follow through**: The parties must be able to perform their obligations under the contract.
4. **Warranties**: Promises or assurances made by one party to the contract to the other party about the quality, condition, or performance of the goods or services being sold or provided.
5. **Intermediate (innominate) terms**: Terms that fall somewhere between the categories of conditions and warranties.

Breach of contract happens when a party fails to perform their obligations under the contract.

Remedies for breach of contract:

1. **Damages**: Financial compensation for the losses suffered by the innocent party.
2. [**Specific performance**](https://stonegatelegal.com.au/contract-law-101-specific-performance/): An order from the court that requires the breaching party to perform their obligations under the contract.
3. **Termination**: The right of the innocent party to cancel the contract.

It is important to seek legal advice if you have any questions about contract law or if you are involved in a dispute over a contract.

Table of Contents

[Toggle](https://stonegatelegal.com.au/contract-law-101-the-essential-elements/#)

The Essential Elements of a Contract are the elements of a contract that are so fundamental, that if any of them are substantially missing, the document may not be a contract at all.

Are you someone that is looking to engage in or create a contract, but don’t really know what to include or what should be included?

If so, you may be feeling a little overwhelmed or stressed that you might miss an important contractual element. Contracts are serious documents.

If you are thinking of signing a contract, it is important that you are educated and able to successfully analyse the contract to make sure that it is up to standard.

Even if you have a lawyer do this for you, you are the person signing at the end of the day and are the only person that is fully aware of what it is that you need from it. This is why it is important to have knowledge of your own so that you are an active part of the contract that you are signing!

This is especially important if you are the party that is creating the contract, as it is your responsibility to ensure that everything is included.

This article the [commercial litigation lawyers](https://stonegatelegal.com.au/services/commercial-litigation/) at Stonegate Legal will discuss the basics of contracts and contract law and what the standard contract should include so that you are aware of what you are signing or creating and what it should include.

## What is a Contract?

The first and most important step in understanding what you should include in a contract is understanding what a contract is. A contract, in its simplest form, is an agreement made between two or more individuals or groups.

It follows certain terms and conditions that are required to be met in order for the contract to be legally binding. All participants in the contract, whether it be between businesses or individuals, are referred to as parties.

A contract will generally involve an exchange of some kind. This will generally be some kind of goods or services in exchange for monetary payment.

Many consider a contract to be a document, but this is not always the case. Many contracts are formalised on paper or are signed by the parties in some other way. This document can act as a way of making the agreement concrete or enforceable by law, reminding the parties of the terms of the contract, and can make sure the agreement is easily accessible and revisable.

However, there are other ways that a contract may be formed. The parties may simply have a conversation and come to a verbal agreement, meaning it has been said but not written. For example, if you agree to mow a neighbour’s lawn for $10, chances are that you are not going to present them with a written contract and will instead just go off of a verbal agreement.

Contracts of this sort are harder to prove if they are not followed through with, however, which is why matters involving larger amounts of money are generally written in some way.

## What is an Offer?

The first step that must be taken during the formation of a contract is an offer which must be made by one party to another. To make an offer is the first step in making a deal, where the parties enter a mutually beneficial exchange of goods, services, or assets generally for payment or something in trade.

An example of an offer may be presenting a specific amount of money in exchange for an item or product. The party that presents the offer is known as the offeror and the party that receives the offer is known as the offeree.

When one thinks of an offer, one may think of an official meeting or a contract. These are common ways that an offer will be made, especially those regarding large amounts of money or official matters. There are, however, several ways that an offer can be made.

For example, when shopping, you make an offer when you bring the product to the counter and offer your money for it! However an offer is made, it is important that it is clear and communicated between parties to avoid issues further on in the formation process.

When discussing making an offer regarding forming a contract, it is important to acknowledge the principle of invitation to treat.

An invitation to treat is simply described as an offer to make an offer. A price tag on a product is considered an invitation to treat, as it provides an opportunity for a [consumer](https://stonegatelegal.com.au/caveat-emptor-buyer-beware-and-exceptions/) to offer something in exchange for the item. There is no attempt to make a legally binding agreement, a key element of forming a contract that will be discussed further, and it does not constitute an offer unless acted upon by another party.

The lines are occasionally blurred between the two, an issue that the following precedent aims to resolve.

### Case Study – Carlill v Carbolic Smoke Ball Co

[_Carlill v Carbolic Smoke Ball Co_](https://www.bailii.org/ew/cases/EWCA/Civ/1892/1.html) is a key case when discussing making an offer or an invitation to treat. In this matter, Carbolic Smoke Ball Co released an advertisement, offering £100 to any party that contracted the flu after using the product they offer, the Carbolic Smoke Ball, which they claimed to be a cure for influenza.

Carlill purchased and used the smoke ball and subsequently contracted the flu. She wrote to the company requesting the money discussed in the advertisement and was unsuccessful in claiming it. Upon bringing the company to court, they claimed that they had made an invitation to treat and, due to the lack of contact made regarding an offer by Carlill, they were not required to pay.

The court decided that the company had made an offer, not an invitation to treat, that could be accepted universally, provided the terms of the advertisement were fulfilled. This case established a precedent in contractual law that advertisements containing terms that, when fulfilled, state a reward are unilateral offers that can be accepted by any party, provided the advertisement doesn’t specify.

## What is an Acceptance?

Once the offer is made, the next step is for it to be accepted. This agreement must be without variation and final in order to move forward with the contract formation process.

Acceptance will generally occur when it is verbally communicated by the offeree to the offeror that they accept the terms of the offer and are willing to take it. However, this is not the only way that an offer can be accepted!

An offer can also be accepted implicitly. This will occur, for example, when one party delivers a product and the other pays for it. Although there may not have been an explicit conversation, or any conversation at all, between the parties, it is implied that both parties have accepted the terms of the contract through their actions, rather than their words.

When an offer is made, the offeree has several options regarding how they will respond to the offer once it is made. They may:

1. Accept the offer: Wholly agree to the terms of the offer.
2. Make a counteroffer: Alter the terms of the offer, which must then be accepted by the initial offeror. This process is sometimes referred to as negotiation.
3. Reject the offer: Wholly refuse the terms of the offer.
4. Discuss the offer further to help come to a conclusion: Neither deny, agree to, or offer a counteroffer to the initial offer, but instead engage in further conversation to better understand the offer.

## What is Consideration in a Contract?

Once an agreement has been made regarding the formation of a contract, it is time to move on to the next step, consideration. Consideration is the value in exchange for a promise made by another party.

Butterworths Concise Australian Legal Dictionary defines consideration as:

> _The price, detriment, or forbearance given as value for a promise_

Also defined as:

> _Expressed in terms of benefit and detriment, a valuable consideration may consist either in some right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss, or some responsibility given suffered or undertaken by the other._

Also defined as:

> _A contract is generally binding if the promise is supported by consideration_

So, consideration is essentially the value exchanged between the parties to a contract.

An example of consideration is when someone pays for an item in a shop in exchange for the promise of wholly owning that item. Consideration may be doing something, like fulfilling a promise or taking an action that was agreed upon. This may be performing agreed-upon work or making a payment.

Here is a list of things other than money that can be used as consideration in a contract:

1. **Goods**: Any type of physical property, such as a car, house, or piece of jewellery.
2. **Services**: Any type of work or labour performed, such as painting a house, fixing a car, or providing legal advice.
3. **Promises**: A promise to do something in the future, such as to pay money, deliver goods, or perform services.
4. **Forbearance**: Giving up a legal right or claim, such as agreeing not to sue someone.
5. **Transfers of property**: Giving up ownership of something, such as a car, house, or intellectual property.

Here are some examples of how these types of consideration can be used in contracts:

1. A contract for the sale of a house, where the buyer agrees to transfer money to the seller in exchange for the seller transferring ownership of the house.
2. A contract for the provision of legal services, where the client agrees to pay the lawyer a fee in exchange for the lawyer representing them in court.
3. A contract for the construction of a new building, where the owner agrees to pay the contractor a sum of money in exchange for the [contractor building](https://stonegatelegal.com.au/copyright-in-building-plans-after-termination-of-building-contract/) the building according to the agreed-upon specifications.
4. A contract to modify an existing employment contract, where the employee agrees to work longer hours in exchange for the employer agreeing to give them a raise.

It is important to note that consideration must be something of value to both parties to the contract. For example, a promise to do something that you are already legally obligated to do is not valid consideration.

Additionally, consideration must be something that is actually bargained for. For example, if you promise to give someone a gift, that is not valid consideration for a contract.

Consideration is considered to be a price that is paid. However, price is used in more of a broad sense than may be thought. Price is determined in a contract under the benefit/detriment rule.

This means that one party experiences some kind of ‘detriment’, monetary or otherwise, in exchange for the benefit from the contract that they will receive. However, the price of the contract is not considered by the court, as long as it is present, as different agreements will vary on prices. It can be anything that is stipulated by both parties in the agreement.

The consideration must not be illegal or otherwise unlawful. It must also be plausible, possible, and reasonable to be carried out.

The consideration must also have been established before an action in the agreement is carried out. For example, if someone mows a lawn and afterwards the owner offers them $10 for their time, they will have no legal right to the $10.

## Intention to Create Legal Relations

Another essential element in the formation of an enforceable contract is the intention to create legal relations. In order for a contract to be valid, there must be an intention to create legal relations with the contract by all parties.

This means that each party involved in the contract is accepting the terms and providing consideration with the intention for the contract to be enforceable by the law. It is not necessary for this intention to always be openly and directly stated but is generally implied by the actions and conduct of the parties.

If any party that is involved in the contract expresses that the contract will not affect the legal relations of the parties or will not have legal standing otherwise, a valid contract may not be created. However, if one party has withheld that they do not wish to be legally bound, and it would be reasonably observed by their conduct that they do, then the contract will be valid and considered legally binding.

There are several types of intentions to create legal relations that will each be considered differently by a court, including:

1. Commercial Relations
2. Domestic Relations

### Commercial Relations

Commercial relations, relating to sales between two separate parties, is generally presumed to have been legally binding unless otherwise rebutted.

### Domestic Relations

Some domestic relations, or relations between some family members, are generally not presumed to be legally binding unless explicitly specified. For example, [loaning a family member](https://stonegatelegal.com.au/debt-recovery-of-loans-between-family-members/), such as one’s child, will be considered in court to be a gift unless there is explicit evidence that suggests otherwise. This principle is referred to as the presumption of advancement.

The main case in Australia in relation to “intention to create legal relations” in contract law is _[Ermogenous v Greek Orthodox Community of SA Inc \[2002\] 209 CLR 95](http://classic.austlii.edu.au/au/cases/cth/HCA/2002/8.html)_.

In this case, the High Court of Australia held that the intention to create legal relations is a subjective question. This means that the court will look at the actual intentions of the parties to the contract, rather than making any presumptions about their intentions.

The court also held that the intention to create legal relations is not necessarily presumed in all cases. For example, the court may find that there is no intention to create legal relations in cases involving family or social agreements.

The _[Ermogenous](http://classic.austlii.edu.au/au/cases/cth/HCA/2002/8.html)_ case has been followed in subsequent cases, and it is now the leading authority on the intention to create legal relations in Australian contract law.

Here are some examples of situations where the courts have found that there was no intention to create legal relations:

1. An agreement between friends to go on holiday together.
2. An agreement between husband and wife to share household chores.
3. An agreement between parents and children to help out around the house in exchange for pocket money.

In these cases, the courts have found that the parties were not intending to create a legally binding contract, but rather were simply making social or domestic arrangements.

However, it is important to note that the intention to create legal relations is a question of fact in each case. This means that the courts will look at all of the circumstances of the case, including the words and conduct of the parties, to determine whether or not they intended to create a legally binding contract.

## Capacity to Contract

Another key element of forming a valid contract is that all parties must have the legal capacity to enter into a legal agreement such as a contract.

Legal capacity is described as the ability to make a legally binding agreement, sue another person, and generally make decisions regarding the law in other senses. In the world of contracting, the ability to make a legally binding agreement is the most applicable, although all may be relevant, depending on the agreement.

The main case in Australia in relation to “capacity” in contract law is _[Blomley v Ryan (1954) 99 CLR 362](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/1956/81.html)_.  In this case, the High Court of Australia held that a person has capacity to contract if they understand the nature of the contract and the consequences of entering into it. The court also held that it is the burden of the party seeking to avoid the contract to prove that the other party lacked capacity.

The _[Blomley](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/HCA/1956/81.html)_ case has been followed in subsequent cases, and it is now the leading authority on capacity in Australian contract law.  Here are some examples of people who may lack capacity to contract:

1. Minors (people under the age of 18).
2. People with mental illness.
3. People who are intoxicated or under the influence of drugs.
4. People who are unconscious.
5. People who are an undischarged bankrupt.

If a person lacks capacity to contract, any contract they enter into is voidable. This means that the other party to the contract can choose to either uphold the contract or avoid it.

To prove that a person lacked capacity to contract, the other party to the contract must show that the person did not understand the nature of the contract or the consequences of entering into it. This can be done by providing evidence of the person’s mental state at the time the contract was formed.

If the court finds that a person lacked capacity to contract, the contract will be voidable. This means that the other party to the contract can choose to either uphold the contract or avoid it. If the other party chooses to avoid the contract, they must return any goods or money they have received under the contract.

When regarding children, or those under the age of 18, they do not have the capacity to enter into a contract without parental guidance and permission in many circumstances. While under 18, their parents or carers are responsible for their well-being, both in the long and short term and will enter into contracts regarding education and other facets of life in their place.

There are some circumstances where they will have the ability to understand the consequences of their actions and will, therefore, be allowed to enter into legally binding agreements on their own.

When discussing adults and their capacity to enter into a legally binding agreement, it will depend on the legal circumstances of the person. Those with a mental illness or an intellectual disability may have an affected ability to consider the consequences of a contract and will, therefore, be deemed without legal capacity in several circumstances.

## Other Elements of a Contract

Now that you know what a contract is, and the essential elements of a contract, it is time to consider what a contract should include. There are several other elements that you should be sure to include in a contract when you form one.  These elements include:

1. Compliance with any legal formalities.
2. Correct identification of the parties to the contract.
3. Meeting of the minds.
4. The ability to follow through with the contract.
5. The legality of the contract.

We will explain these in a little more detail below.

### Compliance with any Legal Formalities

Usually, you don’t need to write a contract down for it to be binding – it can be something you’ve agreed upon by just talking. But if things go wrong, proving what was agreed upon without a written note can be difficult. This is what we usually understand about making contracts.

However, there are some special types of agreements that must be written down and signed to avoid fraud and protect people. One of these old rules, coming from the UK in 1677, called the “ _[Statute of Frauds](https://www.legislation.gov.uk/aep/Cha2/29/3/contents)_,” tells us that certain contracts, especially ones about selling land, need to be written down to be legally binding.  For example:

1. **Contracts for Buying or Selling Land**: Agreements to buy, sell, or otherwise deal with land usually must be written and signed.
2. **Guarantee Contracts**: When someone promises to cover another person’s [debt](https://stonegatelegal.com.au/debt-assignment-in-queensland-a-complete-guide/) if they can’t pay it, that promise often needs to be in writing.
3. **Consumer Credit Contracts**: Agreements that involve providing credit to consumers usually have specific formal requirements to protect the consumer.
4. **Leases**: In many jurisdictions, if you’re renting something (like a house or apartment) for over a year, the lease agreement should be in writing.
5. **Marriage Contracts**: Prenuptial agreements and other contracts related to marriage often have to be written and signed.
6. **Settlement Agreements**: Agreements that resolve disputes (like settling Court litigation) might have to be documented formally.

Different places might have different rules about contracts. For instance, in Tasmania and Western Australia, there are rules that say if you’re buying something that’s worth a lot of money, you need to have a written note about the deal, otherwise it might not be considered solid.

And what if the contract isn’t written down when it should be? Well, the deal isn’t completely void – it’s not like it never happened. But it is a lot more difficult to be enforced in court, which means if someone doesn’t keep their promise, you can’t use that contract to make them.

In some cases, if you’ve partially kept your side of a promise and spent money because of it, courts might help you out even if the contract wasn’t written, using something called “part performance.” But this depends a lot on what you’ve done and whether it clearly relates to the promise that was made.

So, in summary, while many deals or contracts can just be spoken, some need to be written down to be enforced, and even within that, different places might have different requirements about what needs to be written and when.  As a general rule, get a contract in writing.

### Correct Identification of the Parties to the Contract

Correct identification of the parties is an important element of any legal or financial matter. It is the process of ensuring that identities are known to all parties and are discussed in the contract.

As we have spoken about, a contract is between two or more parties. The parties will both be looking for something from the contract, meaning that it is mutually beneficial in some way. For example, when you engage in a contract in which you pay someone to build your house, they receive money, and you receive the house.

However, this would not work, of course, if the parties do not know each other or what they are doing for the other. This is where identification comes in.

As an individual, you should include your full name, contact details, full address, and trading number.

As a business, you should include the full legal name of the business, address, and other details used to identify you.

If a dispute arises, this information can be used to find the other party and discuss or take them to court if it comes to that.

Here are some other tips for correctly identifying the parties to a contract:

1. Be aware of the potential for fraud. For example, someone may try to impersonate a real person or company in order to enter into a contract. If you are unsure about the identity of the other party to the contract, you can ask them to provide identification.
2. If it is a company, do a [company search](https://asicconnect.asic.gov.au/). If it is a business, then do an [ABN search](https://abr.business.gov.au/).
3. If the parties to the contract are acting through agents, make sure that the agents have authority to enter into the contract on behalf of their principals.
4. Make sure that the parties to the contract are clearly identified in the contract itself.

### Meeting of the Minds

Meeting of the minds is a legal term used in contract law to describe the mutual understanding and agreement between two or more parties to the terms of a contract. It is a subjective test, meaning that the court will look at the actual intentions of the parties, rather than making any presumptions about their intentions.

In order for a contract to be valid, there must be a meeting of the minds on all of the essential elements of the contract, including the offer, acceptance, consideration, capacity, and legality. If there is no meeting of the minds on any of these elements, the contract may be void or unenforceable.

An example of a case where there would be no meeting of the minds is if one of the parties to the contract is mistaken about the terms of the contract. For example, if a buyer mistakes the identity of the seller, or if a buyer mistakes the quantity of goods being sold, there would be no meeting of the minds on the essential elements of the contract.

If there is any doubt about whether or not there has been a meeting of the minds, it is important to seek legal advice. A lawyer can help you to draft a contract that clearly sets out the terms of the agreement and to ensure that all of the parties understand and agree to those terms.

### Ability to Follow Through

Another important element of a contract that must be met in order for the contract to ensure that there is no breach, is the ability to follow through. To be involved in a contract, you must have the physical, financial, and mental capacity to follow through with it. This will be assessed once it is found that both parties have a mutual understanding of the contract and what it entails in the meeting of the minds.

If a party lacks the ability to follow through on their contractual obligations, they may be in breach of contract. This can give the other party to the contract the right to terminate the contract and seek damages.

There are a number of factors that can affect a party’s ability to follow through on their contractual obligations, including:

1. **Financial resources**: Does the party have the necessary financial resources to complete the contract?
2. **Skills and expertise**: Does the party have the necessary skills and expertise to complete the contract?
3. **Material resources**: Does the party have the necessary material resources (e.g., equipment, materials, labour) to complete the contract?
4. **Government permits and approvals**: Does the party have the necessary government permits and approvals to complete the contract?
5. **Unforeseen events**: Can the party reasonably be expected to follow through on their contractual obligations in the event of unforeseen events (e.g., natural disasters, strikes, etc.)?

It is important to note that the ability to follow through is not always a black-and-white issue. In some cases, a party may be able to follow through on their contractual obligations, but it may take them longer than originally anticipated. In other cases, a party may have the ability to follow through on their contractual obligations, but they may be unwilling to do so for financial or other reasons.

If you are concerned about a party’s ability to follow through on their contractual obligations, you should take steps to protect yourself. This may include:

1. Conducting due diligence on the other party: This may involve reviewing their financial records, speaking with their references, and visiting their place of business.
2. Obtaining a performance bond: This is a type of insurance that guarantees that the other party will perform their contractual obligations.
3. Including a termination clause in the contract: This will give you the right to terminate the contract if the other party breaches their obligations.

If you are unsure about whether or not a party has the ability to follow through on their contractual obligations, you should seek legal advice. A lawyer can help you to assess the risks involved and to take steps to protect yourself.

### Legality of the Contract

Another important element of a contract that must be met is legality.

Illegality within contract law relate to agreements involving criminal actions, activities forbidden by statute, or behaviours opposing public policy. There are varying degrees and scenarios involving illegality, some being straightforward (e.g., contracts involving harm to others) and others more nuanced (e.g., contracts involving minor legal transgressions like speeding). Despite the growth of laws and regulations, minor offenses usually do not make contracts unenforceable.

There are various types of Illegality in a contract, including:

1. Common Law Illegality
2. Statutory Illegality

#### Common Law Illegality

Involves a wider scope of activities, including contracts that may be prejudicial to justice, encourage corruption, adversely affect marital status, promote sexual immorality, or impose restraint of trade.

The designation of these contracts and defining what is ‘contrary to public policy’ is influenced by jurisdiction-specific morality. For instance, cases like A v Hayden (1984) and Wilkinson v Osborne \[1915\] provide insights into common law illegality related to administration of justice and corruption, respectively.

#### Statutory Illegality

Encompasses contracts prohibited or made void by specific statutes, such as those directly forbidden, aimed at illegal purposes, performed illegally, or those with certain [unfair terms](https://stonegatelegal.com.au/price-increase-clauses-in-building-contracts-are-they-unfair/).

#### Consequences and Exceptions

Contracts tainted with illegality are typically deemed void or unenforceable, contingent on the illegality’s nature and the relevant statutory provisions.

Exceptions and alternates, like severing the illegal terms to enforce the rest of the agreement, exist, especially when a party might be unaware of the illegality.

Moreover, a contract may be considered unenforceable instead of void in cases where illegality is incidental, permitting the transfer of proprietary interests despite the unlawful behaviour.

## Terms of a Contract

Contracts are important documents. Not only do they formalise agreements, but they lay out the rights and responsibilities of each party so that the agreement can be continually followed and be effective for all parties.

If you are to be involved in a contract or are looking to learn more about it for any reason, a key element that must be understood is the terms of a contract.

## What are the Terms of a Contract?

When considering a contract and how it can be followed, the key element one will observe is the terms of the agreement that are set out in the agreement.

A term on a contract is any provision or part that forms the overall agreement in the agreement. It is a word or phrase that, when provided the context of the contract, applies to an official agreement, and influences the actions of either or both parties.

They establish the rights and responsibilities of each party in an agreement so that the exchange can be officially decided upon and continually followed. They are crucial to a functioning and valid contract, so the terms must be adequately discussed and clearly established.

## Types of Terms in a Contract

When considering the terms of a contract, there are several different types that will have a different influence on the agreement and the parties involved.

There are three key types of terms of a contract, which are:

1. Conditions
2. Warranties
3. Intermediate terms

We will explain these in more detail below.

### Conditions (Essential Terms)

The first type of term that may be included in a contract is a condition. A condition is an essential requirement that one or all of the parties must abide by. If the essential condition is not met or is breached, by one of the parties, all other parties will generally be allowed to terminate the agreement entirely.

When considering whether a term is a condition, an essential term, or not has been cited by the High Court in [Associated Newspapers Ltd v Bancks \[1951\] HCA 24](http://classic.austlii.edu.au/cgi-bin/LawCite?cit=%5B1951%5D+HCA+24&party1=&party2=&court=&juris=&article=&author=&year1=&year2=&synonyms=on&filter=on&cases-cited=&legis-cited=&section=) from [Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632](http://classic.austlii.edu.au/au/cases/cth/HCA/1938/66.html), which formed the test of essentiality. It states:

> _The test of essentiality is whether it appears from the general nature of the contract considered as a whole, or from some particular term or terms, that the promise is of such importance to the promisee that he would not have entered into the contract unless he had been assured of a strict or a substantial performance of the promise, as the case may be, and that this ought to have been apparent to the promisor . . . If the innocent party would not have entered into the contract unless assured of a strict and literal performance of the promise, he may, in general, treat himself as discharged upon any breach of the promise, however slight._

### Warranties

Another type of term that may be included in a contract is a warranty. A warranty is a promise made about the quality, performance, or condition of a product or object, generally over a specified period.

If a warranty is not met, contrary to a condition, the parties will often not be permitted to terminate the contract but will instead be allowed to claim damages for this breach.

Warranties can be express or implied.

Express warranties are clearly stated in the agreement, either verbally or in writing. For example, a car dealer might offer an express warranty that a car is free from defects for one year.

Implied warranties are not explicitly stated in the agreement but are implied by law. For example, there is an implied warranty that goods sold by a merchant are fit for the ordinary purposes for which they are used.

Warranties are important because they give buyers peace of mind knowing that the goods or services they are purchasing are of a certain quality. If a warranty is breached, the buyer may be entitled to remedies such as repair, replacement, or refund.

Here are some examples of warranties in contract law:

1. A car dealer might warrant that a car is free from defects for one year.
2. A builder might warrant that a new home will be free from defects in workmanship and materials for five years.
3. A manufacturer of a new appliance might warrant that the appliance will be free from defects in materials and workmanship for two years.
4. A seller of a used car might warrant that the car is free from any liens or encumbrances.
5. A service provider might warrant that their services will be performed in a timely and professional manner.

### Intermediate (innominate) Term

If a term on a contract cannot be considered to be a condition or a warranty, it will be referred to as an intermediate term. In the case of an intermediate breach, the permitted penalty or course of action taken by the injured party will generally depend.

The effect of a breach of an intermediate term depends on the seriousness of the breach. If the breach is serious enough to deprive the innocent party of the substantial benefit of the contract, then the innocent party has the right to terminate the agreement. Otherwise, the innocent party is only entitled to damages for the breach.

Whether or not a breach of an intermediate term is serious enough to allow the innocent party to terminate the contract is a question of fact that will be decided by the court on a case-by-case basis. The court will consider all of the circumstances of the case, including the nature of the contract, the importance of the term that was breached, and the impact of the breach on the innocent party.

Here are some examples of intermediate terms:

1. A delivery date for goods may be an intermediate term in a contract for the sale of goods. If the goods are delivered late, the innocent party may be entitled to damages, but they may not be able to terminate the contract unless the delay is so serious that it deprives them of the substantial benefit of the contract.
2. A quality standard for goods may be an intermediate term in a contract for the sale of goods. If the goods do not meet the quality standard, the innocent party may be entitled to damages, but they may not be able to terminate the contract unless the defect is so serious that it deprives them of the substantial benefit of the contract.
3. A performance standard for services may be an intermediate term in a contract for the provision of services. If the services do not meet the performance standard, the innocent party may be entitled to damages, but they may not be able to terminate the contract unless the defect is so serious that it deprives them of the substantial benefit of the contract.

## Classification of Terms

When considering the terms of a contract, they may be classified into two key categories; express terms and implied terms. Both have a key role in the formation and fulfilment of a contract, so it is important that there is an understanding of both.

### Express Terms

Express terms are the terms that the parties have actively articulated and recorded prior to the conclusion of the formation process. These are the terms that are most often thought of when discussing the terms of a contract.

There are several ways that an express term can be identified from a contract. The most common and obvious way is from the contract itself, where express terms are often recorded or written.

They may also be included in several less apparent manners, such as through:

1. **Pre-Contractual Statements**: These are statements, verbal or otherwise, that have been made before the signing or creation of the contract but may have been a key influencing factor in the agreement made. For example, say that a party was selling a car that they claimed to be new. Upon the sale of the car, the buyer discovered that it had been used and was, therefore, not a new car. This may be considered to be a misrepresentation by the court and lead to the termination of the contract in some circumstances.
2. **Terms Displayed**: Terms displayed are terms that may have not been directly discussed by the parties but were included in displays such as advertisements or tickets. For these to be considered express terms on a contract, however, they must have been displayed prior to the signing of the contract.

### Implied Terms

Implied terms or implied terms are the terms that were not directly articulated by the parties but are otherwise implied. There are four manners in which a term can be implied in a contract.

#### Implied In Fact

Terms that are implied by fact are terms that the court decides to include to ensure that a contract reflects the true intentions of the parties involved. They are often the terms that parties do not even consider expressing explicitly as they are expected to be included by common sense.

For example, if you purchase a food item from a shop, it should go without saying that the item is edible. In order for a term to be implied by fact, it must be reasonable and not benefit one party and burden another.

It must also not contradict any other terms in the contract. If you purchase a car and it is expressed that the car does not work and needs to be repaired, it cannot be implied in fact that the car should have worked.

#### Implied By Law

Terms that are implied by law are those that legislation or law state must be fulfilled. It does not have to be explicitly stated in a contract that the law will be followed, as this is expected of the reasonable person.

An example of a type of contract where terms may be implied by law are service contract. If a party hires another to complete a service, it is implied by law that they must not act negligently and complete their service with due care and skill.

#### Implied By Custom

Terms that are implied by custom are terms that other contracts in the same industry or context can be presumed to include.

They are considered to be under the standard practice of their industry. To prove that a term is implied by custom, one must provide evidence that the custom exists in the industry.

#### Implied As a result of Past Dealing

Terms that are implied as a result of past dealing are terms that are assumed due to similar contracts formed between the same parties in a reasonable space of time.

The dealings between the parties must be regular and have included the terms in the past contracts.

## Common Contract Terms

In order to understand what the terms of a contract are and how they may be included in a contract, it can be useful to see how they may be used and the terms that are commonly included in contracts. Some terms that are often seen in contracts include:

### Confidentiality

Confidentiality is a common term that may be included in a contract. When any two parties enter into an agreement, it is not rare that a confidential agreement that is not to be shared will be exchanged. Confidentiality terms are terms that prevent a party from sharing private or sensitive information about the other party/parties with others. These terms are especially relevant in business contracts, as stakes are particularly high regarding reputation.

### Termination

Another common term that is often included in contract agreements is termination. Termination terms lay out the circumstances in which all parties will be permitted to terminate the contract. There are some circumstances, especially in business, when it can be more financially beneficial for the contract to cease to continue.

### Force Majeure

Another common term that is often included in contract agreements is force majeure or greater force. Force majeure terms are in place to prevent parties from damages from forces out of the control of the contract or the parties. This may refer to natural disasters or, as increasingly relevant in the modern day, global pandemics, such as COVID-19.

### Dispute & Breach

Another common term that is often included in contract agreements is dispute agreements. Dispute terms aim to prevent issues or confusion from arising if a dispute is to take place between the parties for any reason. They will usually lay out how the parties are to act and how the process of dispute resolution will run.

Read our article on Breach of Contract – [**Breach of Contract in Australia**](https://stonegatelegal.com.au/breach-of-contract/)

### Damages

Another common term that is often included in contract agreements is damages regarding breaches. Terms relating to damages lay out the compensation or damages that will be received by the victim party if a breach of contract occurs.

## Contract Law 101 – FAQ

Contracts, governed by their terms, establish a clear roadmap by detailing obligations, rights, and expectations. Unpacking these pivotal aspects can certainly bring forth numerous questions about conditions, warranties, intermediate terms, express terms, implied terms, and common contract terms like confidentiality, termination, force majeure, and more.

In these Frequently Asked Questions (FAQs), we dive into these intricate details, aiming to provide a clearer understanding of the myriad components embedded within contractual terms and their substantial impacts on agreements.

### What are the basics of Australian contract law?

Australian contract law is largely based on the common law principles derived from the UK legal system, ensuring that agreements are fairly upheld and any breaches appropriately addressed. The fundamental elements include an offer, acceptance, intention to create legal relations, consideration, legal capacity, and legality of purpose. The law oversees how contracts are formed, executed, and how breaches are handled, ensuring that parties can legally transact and any disputes can be lawfully resolved.

### Is a signed contract legally binding Australia?

Yes, a signed contract is generally legally binding in Australia, provided it meets the essential elements of a valid contract: offer and acceptance, intention to create legal relations, and consideration. Both parties must comprehend the terms and voluntarily agree to them. However, certain circumstances, such as duress, undue influence, or misrepresentation, can invalidate a contract.

### How do you prove a breach of contract in Australia?

In Australian law, to prove a breach of contract, one typically needs to establish that:

1. A valid, binding contract existed.
2. The claiming party fulfilled their obligations.
3. The alleged party failed to fulfill their contractual obligations (breach).
4. The breach caused damage or loss to the claiming party.
5. Evidence, such as the contract itself, communication records, or witness testimonies, are usually leveraged to substantiate these points in court.

### What is the most common breach of contract?

The most common breach of contract globally, not just in Australia, often involves:

1. Non-payment: One party [does not pay a debt](https://stonegatelegal.com.au/debt-recovery-of-loans-between-family-members/) as agreed.
2. Late delivery: Goods or services are not delivered within the agreed timeframe.
3. Substandard quality: Goods or services provided are not of the agreed quality or standard.
4. Non-delivery: Goods or services are not delivered at all.
5. Misrepresentation: Providing false information to secure agreement.

Each type of breach can have varying legal consequences depending on jurisdiction and the specifics of the contract itself.

### What constitutes a contract?

A contract is fundamentally an agreement between two or more parties (individuals or entities) that outlines certain terms and conditions to be met. It typically involves an exchange, such as goods or services for monetary payment. Contracts may be verbal or written, although written contracts are advisable for clarity and legal enforceability.

### Why is understanding the elements of a contract important?

Understanding the essential elements is crucial to ensure that the contract is legally valid and binds all parties to the agreed-upon terms. It’s also vital for safeguarding one’s interests, responsibilities, and ensuring that the agreement is fair and equitable.

### What are the primary stages in forming a contract?

The key stages include:

1. Offer: One party presents terms for an agreement.
2. Acceptance: The other party agrees to the stated terms without variation.
3. Consideration: Something of value is exchanged between the parties.

### How does an offer differ from an invitation to treat?

An offer represents a clear intention to be bound by terms upon acceptance. In contrast, an invitation to treat invites others to make offers but does not itself constitute an offer. Examples include product price tags or advertisements which invite consumers to make a purchase offer.

### What is “consideration” in the context of a contract?

Consideration refers to something of value exchanged between the parties, such as money, goods, services, promises, or any act of forbearance. It must be present and agreed upon for a contract to be legally binding. The item of value must be lawful, plausible, and established before actions in the agreement are executed.

### What forms of consideration are valid in a contract?

Consideration can take various forms, including money, goods, services, promises, transfers of property, and forbearance. It’s essentially a mutual exchange where both parties give and receive something of acknowledged value.

### How can an offer be accepted in a contract?

An offer can be accepted either explicitly through verbal or written communication or implicitly through actions that indicate agreement to the terms (e.g., delivering a product and paying for it). The acceptance must be unambiguous, final, and without variation from the initial offer.

### Can a contract be valid if it’s not written?

Yes, verbal contracts can be valid, although they are often harder to enforce legally due to the lack of physical evidence. For clarity and legal protection, especially in agreements involving substantial exchanges, a written contract is highly recommended.

### How does a counteroffer work in a contractual agreement?

A counteroffer involves the offeree making alterations to the initial offer’s terms. The original offeror must then accept these modified terms for a contract to be formed. This back-and-forth can also be seen as a negotiation process between the two parties.

### Are there any circumstances where consideration is not required for a contract to be valid?

Typically, consideration is an essential element. However, in some jurisdictions or specific contract types (like deeds or unilateral contracts), consideration might not be strictly necessary. Always consult with a legal professional to understand local laws and exceptions.

### What does “intention to create legal relations” mean in contract law?

“Intention to create legal relations” refers to the commitment of all parties involved in a contract to be legally bound by its terms. For a contract to be valid, every party must show, through actions or implied conduct, that they agree to the terms and intend for the contract to be enforceable by law. This intention is often analyzed subjectively by courts, considering the actual intentions and conduct of the parties involved.

### How is “intention to create legal relations” treated differently in commercial and domestic relations?

In commercial relations, there is generally a presumption that the parties intend to create legal relations unless proven otherwise. These are usually interactions between separate entities, like sales or business deals. On the other hand, in domestic relations, which involve agreements among family members, there is often a presumption against an intention to create legal relations unless explicitly stated. For instance, loans among family members might be considered gifts unless there’s clear evidence showing an intention for it to be a loan.

### What is the significance of the Ermogenous case in Australian contract law?

The Ermogenous v Greek Orthodox Community of SA Inc case is pivotal in Australian contract law as it clarified that the intention to create legal relations is a subjective matter. It emphasized that courts should explore the actual intentions of the contracting parties rather than operating on presumptions about their intentions. Moreover, it established that this intention is not universally presumed and must be discerned from the actions, words, and overall context of the agreement.

### What does “capacity to contract” entail and why is it vital in contract law?

“Capacity to contract” refers to an individual’s legal and mental ability to enter into a contract, understanding its nature and consequences. This concept is crucial because if a party lacks the capacity to comprehend the agreement, it may be deemed voidable, safeguarding those unable to fully understand or consent to the agreement. The person must understand the contract’s nature and the repercussions of entering into it, and this applies to various scenarios including dealings with minors, mentally impaired individuals, or people under substance influence.

### How are minors and adults with mental impairments treated concerning their capacity to contract?

Minors, typically under the age of 18, and adults with mental impairments may have limited or no capacity to contract depending on the jurisdiction and specific circumstances. For minors, contracts are often voidable and may require parental consent or oversight. For adults with mental impairments, their capacity to understand the agreement and its consequences is crucial. If they lack this understanding, they might not have the legal capacity to contract, making any agreements they enter into voidable, depending on proof of their mental state at the time of contract formation.

### What is the importance of compliance with legal formalities in contracts?

Compliance with legal formalities, such as having a written and signed document, is crucial in contracts to ensure that they are binding and enforceable. While verbal agreements can be valid, written contracts are easier to prove in court, particularly concerning agreements related to land sales, guarantees, consumer credit, leases, marriage, and settlements. Specific types of contracts are mandated to be in written form by law, like those covered under the “Statute of Frauds.”

### Why is the correct identification of the parties critical in a contract?

Proper identification of the parties in a contract ensures that all entities entering the agreement are accurately known and verifiable. This involves providing clear and precise details such as full names, addresses, and contact details for individuals, and legal business names, addresses, and trading numbers for businesses. Correct identification is vital for enforcing the agreement, resolving disputes, and taking legal actions when necessary, ensuring that all obligations are met by the intended parties.

### What does “meeting of the minds” mean in the context of contracts?

“Meeting of the minds,” or “mutual assent,” refers to the agreement and shared understanding among all parties involved concerning the terms and elements of the contract, including offer, acceptance, and consideration. It implies that all parties have a unified intention and understanding regarding the contract’s obligations and outcomes. If any party is mistaken about crucial contract aspects, there may not be a genuine meeting of the minds, possibly making the agreement void or unenforceable.

### How does the ability to follow through affect the validity of a contract?

The ability to follow through implies that all parties entering into a contract must possess the physical, financial, and mental capacities to fulfill the outlined obligations. Assessing the ability to perform obligations, like having financial resources, skills, expertise, material resources, and obtaining relevant permits, is essential to avoid breaches. If a party cannot fulfill their contractual duties, it may lead to contract termination and potential legal action for damages.

### How does legality impact the enforceability of a contract?

For a contract to be enforceable, it must be legal, meaning that it should not involve any activities or terms that are illegal, against public policy, or forbidden by statute. Contracts involving common law or statutory illegality, such as agreements that induce corruption, adversely affect marital status, or impose restraint of trade, are typically considered void or unenforceable. However, exceptions exist, like when illegal terms can be severed from the agreement, or when one party is unaware of the illegality.

### What is a contract term?

A contract term is a provision or part that forms the overall agreement in a contract. It establishes the rights and responsibilities of each party involved in the agreement, influencing their actions and ensuring that the agreement is followed effectively.

### What are the key types of terms in a contract?

The key types of terms in a contract are:

1. Conditions: Essential terms that, if breached, may allow for the [contract to be terminated](https://stonegatelegal.com.au/terminating-a-residential-building-contract-in-queensland/).
2. Warranties: Promises regarding the quality, performance, or condition of a product or service.
3. Intermediate terms: Terms that are neither conditions nor warranties, and their breach allows different remedies based on the seriousness of the breach.

### What is the difference between express and implied terms in a contract?

Express terms are explicitly articulated and recorded by the parties during the agreement formation. Implied terms, on the other hand, are not expressly stated but are assumed to be included, either by fact, law, custom, or past dealing, to uphold the true intentions of the parties or adhere to established practices or legal requirements.

### What is a confidentiality term in a contract?

A confidentiality term in a contract prohibits parties from sharing private or sensitive information about each other with external entities. This is commonly used to protect the privacy and proprietary information of the involved parties.

### How does a warranty term work in a contract?

A warranty term in a contract provides assurances about the quality, performance, or condition of a product or service, often for a specified period. If a warranty is breached, remedies such as repair, replacement, or damages might be available to the aggrieved party, though termination of the contract is usually not an option.

### What is meant by the termination term in a contract?

A termination term specifies the conditions under which the parties may end the contract. It outlines what constitutes a breach and what does not, what the penalties for breach will be, and in what scenarios the agreement can be ended without penalty.

### What does force majeure mean in the context of contract terms?

Force majeure refers to unforeseeable and unavoidable events, such as natural disasters or global pandemics, that prevent parties from fulfilling their contractual obligations. Contract terms related to force majeure specify that parties are exempt from liabilities for damages in such scenarios.

### How do implied terms by custom work in an agreement?

Terms that are implied by custom refer to those that are commonly accepted in a particular industry or context even if they are not explicitly stated in the agreement. They are assumed to be part of the agreement due to being a standard practice in the relevant industry.

### What is an intermediate term in a contract, and how is a breach of it handled?

An intermediate term is neither a condition nor a warranty. The actions and remedies available in the case of its breach depend on the seriousness of the breach. If the breach is severe enough to deprive the innocent party of a substantial benefit, they might be entitled to terminate the agreement, otherwise, they may seek damages.

### How are dispute and breach terms used in an agreement?

Dispute and breach terms in a contract outline how parties should proceed in the event of disagreements or violations of the agreement. They provide a framework for resolving disputes and may specify penalties or remedies in the case of breaches, ensuring that all parties have a clear understanding of the consequences and recourse available.

![Picture of Wayne Davis](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/desktop/optimized/rev-748d11d/secure.gravatar.com/avatar/5841d7da8b6c7d486226c9358f93fc5a.5b54ec283af918fb28f171190159c8892905cb00c7f8bf19a380e6224d11fa82)

#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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# How to Improve your Debt Recovery Prospects

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## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| September 9, 2018

## Article Summary

The article outlines strategies to enhance debt recovery prospects, focusing on legal protections through contract clauses in Queensland. Here’s a detailed summary:

### Key Points

1. **Importance of Proper Contract Drafting**: For businesses offering trade credit, it’s crucial to have well-drafted contract clauses that aid in debt recovery, potentially making you a secured creditor, especially in insolvency scenarios.
2. **Charging Clause**: This clause requires a debtor to secure their debt with an equitable interest in property, such as real estate. It grants the creditor the status of an equitable mortgagee, thereby prioritising their claims in insolvency situations over unsecured creditors.
3. **Director’s or Personal Guarantee and PPSA Charging Clause**: These clauses allow creditors to hold directors personally liable for business debts and secure claims against personal property, significantly enhancing debt recovery chances.
4. **Default Terms**: These terms can include provisions for default interest, recovery of legal costs on an indemnity basis, and debt collection costs, which ensure that creditors can reclaim a significant portion of their expenditures incurred in debt recovery.

### Practical Applications

- **Caveat Lodgment**: A charging clause allows creditors to lodge a caveat on the debtor’s property, which prevents the debtor from transferring ownership until the debt is settled.
- **Legal Enforcements**: The creditor might negotiate the private sale of the debtor’s property, with settlement involving a bank cheque for the outstanding sum, or they might use a court order to maintain a strong negotiating position.

### Impact of Insolvency

- **Secured vs. Unsecured Creditors**: Secured creditors, thanks to clauses like the charging clause, retain the ability to enforce their security interests even during the debtor’s insolvency, unlike unsecured creditors who face significant limitations under insolvency laws.

### Conclusion

In this article, our [debt recovery lawyers](https://stonegatelegal.com.au/services/debt-recovery-lawyers/) emphasise the necessity of having specific legal clauses in credit contracts to ensure a robust debt recovery process. It suggests that by preparing and using the legal tools available, businesses can significantly improve their ability to recover debts and protect their financial interests against default and insolvency.

This comprehensive guide serves as a valuable resource for businesses and legal professionals dealing with commercial debt recovery.

Table of Contents

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## Improve your Debt Recovery Prospects

A [debt recovery lawyer](https://stonegatelegal.com.au/services/debt-disputes/) can offer advice and assistance with all commercial disputes and [legal debt recovery](https://stonegatelegal.com.au/legal-action-to-recover-debt-by-an-agent/), including how to improve your debt recovery prospects.

Debt Recovery can be a time consuming but necessary part of running a business in Queensland.

> **_By failing to prepare, you are preparing to fail – Benjamin Franklin_**

Debt recovery in Queensland can be made a lot easier with specially drafted contract clauses.

If you run a business that offers trade credit to your customers, then it is vital that you have properly drafted contract clauses in relation to the recovery of debt.

A properly drafted credit contract by aqualified debt recovery lawyer can assist with the debt recovery process and can even elevate you to the status of a secured creditor. This is especially helpful in the event of insolvency.

Some must-have clauses in your credit contract include:

1. A charging clause;
2. A director’s or personal guarantee;
3. PPSA charging clause; and
4. Default terms.

## Improve your Debt Recovery Prospects – Charging Clause

A charging clause requires the debtor to secure the debt with an equitable interest in property (most likely Real Property or Land). This equitable interest is created from the charge and makes the creditor an equitable mortgagee, elevating the creditor to the status of a secured creditor.

This charge is a charge over company property (if any) but can also be a charge over the director’s personal property.

A charge over property is essentially a guarantee that in the event of a default, the creditor’s equitable interest in the debtor’s real property is realised and the debtor can take steps to satisfy the debt as equitable mortgagee.

### Charging Clause Example

There is a lot of case law on this subject, and the wording of the charging clause may vary, however a typical charging clause example will read something like:

> _By entering into this credit agreement, you agree to charge in favour of XXXX, all your estate and interests in any land which you have or may later acquire, with payment of all monies that you owe to XXXX, presently or into the future._

The main advantage in having a charging clause in the credit agreement or contract is that a charge over real property has a higher priority in insolvency than an unsecured director’s guarantee.

Effectively this makes the caveat holder (or equitable mortgagee) a secured creditor.

### Lodge a Caveat over the Debtors Property

A properly worded charging clause over the property of the company or the director(s) of the company allows for the creditor to lodge a caveat over the property of the company or the director(s).

Only a person with a caveatable interest can lodge a caveat in Queensland, an equitable mortgage or charge is a caveatable interest.

In Queensland, a caveator has three (3) months or fourteen (14) days after being served with a notice pursuant to [section 126 of the _Land Title Act 1994_ (Qld)](http://classic.austlii.edu.au/au/legis/qld/consol_act/lta1994109/s126.html) to [start a proceeding in a court](https://stonegatelegal.com.au/legal-proceedings-for-debt-recovery/) of competent jurisdiction to establish the interest claimed under the caveat.  Section 126 says:

> _A caveatee of a caveat to which this section applies may serve on the caveator a notice requiring the caveator to start a proceeding in a court of competent jurisdiction to establish the interest claimed under the caveat._

This means that the creditor company (caveator) has the legislated timeframe to apply to the Court for an order establishing the caveatable interest.

During this time, the effect of the caveat is such that the debtor cannot sell or transfer their interest in the land until such time as the caveat is removed.  Contact our [debt recovery lawyers](https://stonegatelegal.com.au/debt-recovery-lawyers-in-queensland/) to discuss lodging a caveat.

## Improve your Debt Recovery Prospects – Enforcement

There are a number of different ways that a creditor can recover their debts by [enforcing the judgment](https://stonegatelegal.com.au/summary-judgment-application-in-qld/) from this point in matters of debt recovery.

The creditor may agree that the debtor may privately sell the real property and have a bank cheque for the outstanding sum at settlement (in exchange for an executed release of caveat).

Alternatively, a creditor with a correctly lodged caveat with an order of the Court is in a fantastic [negotiating position](https://stonegatelegal.com.au/settling-litigation-early-calderbank-offers/), and may wish to enter into some other arrangement secured by the caveat, and the threat of selling their family home.

Try reading this article on [Caveat Emptor – Buyer Beware](https://stonegatelegal.com.au/caveat-emptor-buyer-beware-and-exceptions/)

Another great clause to include in your credit application or contract is a director’s guarantee.

## Improve your Debt Recovery Prospects with Director’s Guarantees

Essentially, a company (the creditor) enters into a contract with another company (the debtor) and the director(s) of the debtor company personally guarantees the outstanding debts owed by the debtor company (the guarantor), making the debt recovery process easier.

This means that if the company does not meet its obligations, then you are able to recover from the company and the personal guarantors of the company.

In a number of cases, the company that you are trading with may simply be trading as a small business with no real assets.  In this instance it is best to secure the obligation of the company with the personal assets of the director(s).

However, you might also be able to use a [_Personal Property Securities Act 2009_ (Cth)](http://classic.austlii.edu.au/au/legis/cth/consol_act/ppsa2009356/index.html) (“ _**PPSA**_”) to secure your property by lodging a charge on the Personal Property Securities Register (“ _**PPSR**_”).

## Improve your Debt Recovery Prospects with PPSA Charging Clause

The PPSA is legislation about security over personal property.  Similar to how a caveat attaches to real property, a security interest, registered on the PPSR, creates a security interest and attaches to personal property (other than real property).

A typical example would be a car finance company lodging a charge on the PPSR over the car to which the finance relates, as security for the loan.

So, if you provide goods on credit, then a PPSR charging clause allows you to charge those goods until payment for those goods has been made.

The PPSA allows a creditor in this situation to seize the goods (Collateral).  [Section 123(1) of the _Personal Property Securities Act 2009_ (Cth)](http://classic.austlii.edu.au/au/legis/cth/consol_act/ppsa2009356/s123.html) says:

> _A secured party may seize collateral, by any method permitted by law, if the debtor is in default under the security agreement._

## Can you Recover your Legal Costs?

There is no legal right to recovery of your debt collection and legal costs, unless awarded by the Court or tribunal, prescribed by legislation, or unless allowed for in your credit contract.

Carefully worded default clauses in your credit contract may allow you to recover most of your legal and debt collection costs including the cost of a debt recovery lawyer.

Some examples of some good default clauses would be:

1. **Default Interest** – allowing you to claim a higher rate of interest on all outstanding debts;
2. **Legal Costs** – allowing you to recover all reasonably incurred legal costs on the indemnity basis;
3. **Debt Collection** – allowing you to recover all non-legal costs in relation to debt collection;

Please [speak to our lawyers](https://stonegatelegal.com.au/contact-debt-recovery-qld/) in relation to your debt recovery clauses in your credit contract.

## What is a Typical Debt Recovery Scenario?

A typical debt recovery in Queensland scenario might look something like this:

1. The creditor and debtor companies enter into a contract to provide goods and services on credit, with the directors of the company guaranteeing the debts of the company by signing a charge over their personal real property as a security for the debt;
2. The debtor company defaults on the debt;
3. A demand can be made to the debtor company and the director of the debtor company under the director’s guarantee, and a caveat lodged over the director’s real property.

## The Effect of Insolvency as an Unsecured Creditor

If the debtor company goes into [liquidation](https://stonegatelegal.com.au/winding-up-applications/), the creditor can usually no longer commence or sustain proceedings against the debtor company for the payment of the unpaid and unsecured debt. This then triggers the director’s guarantee.

If the director of the debtor company has guaranteed the debts of the company, then the action may be brought the director as guarantor. If the director of the debtor becomes bankrupt, the creditor can usually no longer commence or sustain proceedings against the debtor director as guarantor of the unpaid and unsecured debt.

Without charging clauses in the contract, the creditor is effectively an unsecured creditor and will have to get in the queue behind other creditors with priority, and wait for a dividend (if any) from the liquidated estate of the company and/or the bankrupt estate of the director.

An unsecured creditor will not be able to commence or continue with legal action against an insolvent company pursuant to [section 471B of the _Corporations Act 2001_ (CTH)](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s471b.html) which says:

> _While a company is being wound up in insolvency or by the Court, or a provisional liquidator of a company is acting, a person cannot begin or proceed with:_
>
> _(a)  a proceeding in a court against the company or in relation to property of the company; or_
>
> _(b)  enforcement process in relation to such property;_
>
> _except with the leave of the Court and in accordance with such terms (if any) as the Court imposes._

## The Effect of Insolvency as a Secured Creditor

With a charging clause and a caveat, the debtor company will be a secured creditor and will usually have priority over unsecured creditors.

Alternatively, if the debtor company goes into [liquidation](https://stonegatelegal.com.au/winding-up-a-company-that-owes-you-money/), then a creditor who has an interest secured by a charge at the commencement of the liquidation, and has elevated themselves to the status of a secured creditor, can take advantage of [section 471C _Corporations Act 2001_ (CTH)](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s471c.html) which says:

> _Nothing in section 471B affects a secured creditor’s right to realise or otherwise deal with the security interest._

In [_MSI (Holdings) Pty Ltd v Mainstreet International Group Ltd_ \[2013\] QCA 27](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCA/2013/27.html) Gotterson JA with whom White JA and Applegarth J agreed said:

> _The expression “security interest” is defined in s51A to have a meaning which includes a charge._

[Section 9 of the _Corporations Act 2001_ (CTH)](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html) defines “charge” as:

> _“charge” means a charge created in any way and includes a mortgage and an agreement to give or execute a charge or mortgage, whether on demand or otherwise._

So a charge is a security interest, and as such section 471B does not apply to the security interest, and the secured creditor is allowed to realise that interest, even in the event of insolvency.

Further, if you have carefully drafted contract clauses relating to the default by the debtor, then you may be able to recover most of your debt collection fees, and legal fees.

## Improve your Debt Recovery Prospects – Construction

Improving debt recovery prospects in [construction debts](https://stonegatelegal.com.au/building-construction-debt-recovery/) with a subcontractor’s charge under the [_Building Industry Fairness (Security of Payment) Act 2017_](https://www.legislation.qld.gov.au/view/pdf/inforce/current/act-2017-043)(BIFA) in Queensland, Australia, involves several key steps that leverage legal mechanisms to enhance a subcontractor’s ability to collect due payments:

1. **Issue a Notice of Claim**: Subcontractors must serve a Notice of Claim to the person or entity obligated to pay the contractor. This notice should accurately detail the work done and the amount owed. This initial step is crucial as it establishes the legal basis for the subcontractor’s claim.
2. **Correct Identification of Parties**: It’s essential to accurately identify and involve the correct parties in the notice, including the subcontractor, contractor, and the superior contractor (or project owner). Misidentification can invalidate the claim.
3. **Certification by a Qualified Person**: The details of the work performed by the subcontractor must be certified by a qualified person, such as a registered architect or engineer. This adds credibility to the claim and ensures compliance with regulatory requirements.
4. **Adherence to Strict Time Limits**: The Notice of Claim must be served within specific time limits, generally within three months after the practical completion of the work for ongoing contracts, or within three months after the expiration of the defects liability period for retention money.
5. **Ensure Proper Documentation and Procedures**: Utilizing the approved forms (like FORM S122 for the Notice of Claim) and following the prescribed procedures in BIFA enhances the effectiveness of the claim. Failure to comply with procedural requirements may result in the loss of secured interest.
6. **Engage Legal Assistance**: Given the complexities and strict procedural requirements, engaging a solicitor to assist with the Notice of Claim and any subsequent legal processes is highly recommended to ensure that all legal bases are covered.

By following these steps, by [issuing a subcontractor’s charge](https://stonegatelegal.com.au/builders-subcontractors-charge-get-paid-protect-yourself/), a subcontractor can significantly improve their prospects of recovering debts, particularly in situations where the contractor may be experiencing financial instability or facing insolvency.

This process not only secures the subcontractor’s financial interests but also ensures they have a priority over other creditors in recovering funds.

## Improve your Debt Recovery Prospects – FAQ

Welcome to our FAQ section where you can find detailed answers about improving your debt recovery prospects.

Discover essential information on legal clauses, creditor rights, and effective strategies to enhance your business’s financial security.

### What is a charging clause?

A charging clause in a credit contract requires a debtor to secure their debt with an equitable interest in property, such as real estate. This makes the creditor an equitable mortgagee and elevates their status to that of a secured creditor, providing them with greater security in debt recovery.

### How does a director’s guarantee work?

A director’s guarantee involves the directors of a debtor company personally guaranteeing the company’s debts. This means if the company fails to meet its obligations, creditors can pursue recovery from both the company and the personal assets of the directors.

### What is a PPSA charging clause?

A Personal Property Securities Act (PPSA) charging clause allows a creditor to secure an interest over the debtor’s personal property, which does not include real estate. This security interest is registered on the Personal Property Securities Register (PPSR) and can include goods provided on credit.

### What are the benefits of having a charging clause in a credit agreement?

Having a charging clause gives a creditor a higher priority in the event of the debtor’s insolvency, as it establishes a secured interest over real property. This can be more advantageous than an unsecured director’s guarantee in insolvency scenarios.

### How does lodging a caveat work?

When a charging clause is used, a creditor can lodge a caveat on the debtor’s property. This legal notice prevents the debtor from selling or transferring the property until the debt is resolved or the caveat is removed, securing the creditor’s interest.

### What is the process to lodge a caveat in Queensland?

In Queensland, a creditor with a caveatable interest from a charging clause can lodge a caveat against the debtor’s property. The debtor then has a specific period, defined by law, to challenge the caveat in court or resolve the debt.

### What happens if a debtor company goes into liquidation?

If a debtor company goes into liquidation, secured creditors with a charging clause can continue to enforce their security interests. In contrast, unsecured creditors may be unable to commence or continue legal actions for debt recovery.

### Can legal costs be recovered in debt recovery proceedings?

Yes, if the credit contract includes clauses for the recovery of legal and debt collection costs, creditors may be able to recover these expenses from the debtor as part of the debt recovery process.

### What is a default interest clause?

A default interest clause in a credit agreement allows a creditor to charge a higher rate of interest on outstanding debts after a default occurs, increasing the overall recoverable amount from the debtor.

### What is the effect of a guarantee to improve your debt recovery prospects?

A director’s personal guarantee increases the likelihood of debt recovery by holding the director personally responsible for the company’s debts, providing an additional avenue for recovery if the company lacks sufficient assets.

### How does the Personal Property Securities Register (PPSR) assist in debt recovery?

The PPSR allows creditors to register their security interests over personal property, ensuring their priority over other unsecured creditors and enhancing their ability to seize and sell the collateral if the debtor defaults.

### What legal protections exist for secured creditors during insolvency?

Secured creditors are protected under insolvency laws, allowing them to realise or deal with their security interests despite the debtor’s insolvency status, unlike unsecured creditors who face significant restrictions.

### What is the significance of a PPSA charging clause in a credit contract?

A PPSA charging clause is crucial for creditors providing goods on credit as it enables them to register a security interest over the goods, enhancing their ability to recover the goods or their value if the debtor defaults.

### What should be included in a credit contract to Improve your Debt Recovery Prospects?

A credit contract should include charging clauses, personal or directors’ guarantees, PPSA charging clauses, and detailed default terms, including provisions for recovering legal and debt collection costs.

### Why is it important to seek legal advice when drafting debt recovery clauses?

Debt recovery laws and regulations can be complex, and improper drafting of clauses can lead to unenforceable terms or legal challenges. Legal advice ensures that the clauses are legally sound, tailored to specific business needs, and enforceable in court.

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#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

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## Unpaid Rent Arrears Guide
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# Unpaid Rent Arrears in Queensland

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## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| January 3, 2019

## Article Summary

This article discusses the significant impact of unpaid rent arrears on landlords, particularly in residential tenancies. It addresses a common misconception that all landlords are wealthy property tycoons, highlighting that many are small investors owning just one property.

The article emphasises the financial strain unpaid rent can place on these landlords, who have their own bills and mortgages to pay.

The legal framework governing unpaid rental arrears and residential tenancy issues in Queensland is outlined, referencing the _Residential Tenancies and Rooming Accommodation Act 2008_ (QLD) and the _Residential Tenancies and Rooming Accommodation Regulation 2009_ (QLD).

The article, written by [Queensland debt recovery lawyers](https://stonegatelegal.com.au/services/debt-recovery-lawyers/), aims to explain the process of debt recovery for unpaid rent arrears and the eviction of tenants for non-payment.

Key points include the definition of residential premises and tenancy agreements under the Act, and the steps landlords must take when a tenant fails to pay rent.

These steps involve issuing a notice to remedy the breach, followed by a notice to leave for an unremedied breach if the tenant fails to pay within the stipulated time.

The article also covers the importance of correctly serving notices and the timelines for compliance, emphasising the difference between the issuance and delivery of notices.

For cases where tenants fail to vacate the property, the article explains the process of making an urgent application to the _Queensland Civil and Administrative Tribunal_ ( **QCAT**) for a termination order, a money order for unpaid rent, a warrant of possession, and compensation for failure to leave.

The enforcement of money decisions and the challenges in recovering rent arrears, such as locating the debtor tenant or dealing with tenants who do not own property or have a job, are also discussed.

The article is a comprehensive guide for landlords in Queensland dealing with unpaid rent arrears, providing legal insights and practical advice on handling such situations.

Table of Contents

[Toggle](https://stonegatelegal.com.au/unpaid-rent-arrears-queensland/#)

![Rent Arrears Debt Recovery for Unpaid Rent in Queensland](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2019/01/Rent-Arrears-Debt-Recovery-for-Unpaid-Rent-in-Queensland.png)Unpaid rent arrears in residential property can have a serious impact on landlords’ cash flow.

The popular misconception is that landlords are all wealthy property tycoons – but this is simply not true.

A vast majority of investors are small investors who own only one (1) investment property.

Landlords and owners have bills to pay, a mortgage to pay, perhaps property manager or property agent commissions to pay.

Unpaid rental arrears and other residential tenancy problems in Queensland is governed by:

1. _Residential Tenancies and Rooming Accommodation Act 2008_ (QLD) (“ _**Act**_”); and
2. _Residential Tenancies and Rooming Accommodation Regulation 2009_ (QLD) (“ _**Regs**_”).

In this article our [Queensland debt recovery lawyers](https://stonegatelegal.com.au/services/debt-disputes/) will explain the process of debt recovery for unpaid rent arrears and the [eviction of a bad tenant](https://stonegatelegal.com.au/evicting-tenant-not-paying-rent/) for unpaid rent.

**Rent arrears can have a huge impact on cash flow.  If you have tenants who owe unpaid rent then contact us immediately.  Our lawyers provide expert help with rent arrears and eviction of tenants**

**FOCUSED – DEDICATED TEAM – PROVEN RESULTS**

[GET A FREE FEE ESTIMATE TODAY](https://stonegatelegal.com.au/free-case-evaluation/)

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## Unpaid Rent Arrears – Residential Tenancy

[Section 10](http://classic.austlii.edu.au/au/legis/qld/consol_act/rtaraa2008420/s10.html) of the Act says:

> _“ **Residential premises**” are premises used, or intended to be used, as a place of residence or mainly as a place of residence._

[Section 11](http://classic.austlii.edu.au/au/legis/qld/consol_act/rtaraa2008420/s11.html) of the Act says:

> _“ **Residential tenancy**” is the right to occupy residential premises under a residential tenancy agreement._

[Section 12](http://classic.austlii.edu.au/au/legis/qld/consol_act/rtaraa2008420/s12.html) of the Act says:

> _A “ **Residential tenancy agreement**” is an agreement under which a person gives to someone else a right to occupy residential premises as a residence._

A residential tenancy agreement can be wholly or partly in writing, wholly or partly oral, and wholly or partly implied – or any combination of these.

So, best case scenario is that you have an [RTA Tenancy Agreement](https://www.rta.qld.gov.au/Forms-and-publications/forms/forms-for-general-tenancies/general-tenancy-agreement-form-18a), but any document which says “ _Residential Tenancy Agreement_” will usually suffice.

However, in our experience we see all kinds of informal agreements.  If you are a landlord who has an informal agreement and you are unsure if it is a residential tenancy agreement, then you should contact us to see if it is an agreement to which the Act applies.

## Breach for Non-Payment of Rent

If the tenant has not paid rent for seven (7) days, then the landlord must give the tenant a notice to remedy the tenants breach.

The prescribed form for a notice to remedy the tenants breach is a [Form 11](https://www.rta.qld.gov.au/Forms-and-publications/Forms/Forms-for-general-tenancies/Notice-to-remedy-breach-Form-11).

[Section 325](http://classic.austlii.edu.au/au/legis/qld/consol_act/rtaraa2008420/s325.html) of the Act prescribes the requirements of the notice to remedy the tenants breach:

> _The approved form must provide for the notice (a) to be signed by or for the party giving the notice; and (b) to include particulars of the breach; and (c) to state the day by which the party to whom the notice is directed is required to remedy the breach._

The tenant will then have a minimum of seven (7) days to remedy the breach.  [Section 328(1)](http://classic.austlii.edu.au/au/legis/qld/consol_act/rtaraa2008420/s328.html) of the Act says:

> _The allowed remedy period for a notice to remedy breach must not end earlier than 7 days after the notice is given._

If the tenant fails to pay the rent in this time, then the landlord can give the tenant a notice to leave for unremedied breach.

## Notice to Leave for Unremedied Breach

If the tenant does not pay the rent by the time stipulated in the notice to remedy breach, then the next step is to issue a notice to leave for unremedied breach.

The prescribed form for a notice to leave for unremedied breach is a [Form 12](https://www.rta.qld.gov.au/Forms-and-publications/Forms/Forms-for-general-tenancies/Notice-to-leave-Form-12).

The [Form 12](https://www.rta.qld.gov.au/Forms-and-publications/Forms/Forms-for-general-tenancies/Notice-to-leave-Form-12) must be issued after the date the tenant had to remedy the breach (pay the rent arrears).

[Section 326](http://classic.austlii.edu.au/au/legis/qld/consol_act/rtaraa2008420/s326.html) of the Act prescribes the requirements of the notice to leave for unremedied breach, and includes that the notice must:

> _Be in the approved form; and be signed by or for the lessor; and identify the premises; and require the tenant to hand over vacant possession of the premises to the lessor on the day stated in the notice; and state the ground on which the notice is given; and give particulars of the ground on which the notice is given._

The notice to leave for unremedied breach must also state that information about the tenant’s rights and obligations is contained in the agreement; and that the landlord may apply to QCAT for a termination order without giving the tenant any further notice.

The notice to leave for unremedied breach must give the tenant a prescribed time to leave – for rent arrears the amount of notice is seven (7) days.

[Section 329(2)(a)](http://classic.austlii.edu.au/au/legis/qld/consol_act/rtaraa2008420/s329.html) of the Act says:

> _The handover day for a notice to leave given by the lessor must not be earlier than – if the notice is given because of an unremedied breach and the breach is a failure to pay rent – 7 days after the notice is given._

If the tenant fails to leave then the landlord must make an urgent application to the [Queensland Civil and Administrative Tribunal](https://www.qcat.qld.gov.au/matter-types/residential-tenancy-disputes) (“ _**QCAT**_”) for an order terminating the tenancy and issue a warrant of possession.

The date on which the tenant must leave is called the “ _**handover day**_”.

[Schedule 2](http://classic.austlii.edu.au/au/legis/qld/consol_act/rtaraa2008420/sch2.html) of the Act says:

> _“ **Handover day**” for premises, means the day stated in a notice to leave … as the day vacant possession of the premises is required to be … handed over to the lessor._

### Serving the Notices by Post

[Clause 44(3) of the RTA General Tenancy Agreement](https://www.rta.qld.gov.au/sites/default/files/media/Forms/Forms%20for%20general%20tenancies/RTA-general-tenancy-agreement-form18a.pdf) says that:

> _A notice may be given to a party to this agreement or the … by giving it to the party or agent personally; or if an address for service for the party or agent is stated in this agreement, then by leaving it at the address, or sending it by prepaid post as a letter to the address._

Notices may also be given by facsimile or by email depending on the individual tenancy agreement.

If there is no stipulated address for service for the debtor tenant, the tenant’s address for service is taken to be the address of the rental property.

**TIP** – We suggest sending the notice by express post.  This will provide the landlord with a time and date that the notice was delivered (and therefore given) to the debtor tenant.

## Time for Compliance with Notice

The time that a debtor tenant has to comply with notices given pursuant to the Act, including the notice to remedy breach and the notice to leave, must be from the date that the notice is given.

The date that the notice is given is different from the date that the notice is issued!

Time for delivery by Australia Post must be accounted-for in the time for compliance.

In [_Marsellos Pike Real Estate v Bate_ \[2014\] QCATA 316](http://classic.austlii.edu.au/au/cases/qld/QCATA/2014/316.html) Senior Member Stilgoe OAM was required to decide on appeal if the correct time had been given in a notice to remedy breach, and if the tribunal had the power to waive compliance with the provisions of the Act.

The appeal jurisdiction of QCAT decided:

> _Section 328 of the \[Act\] states that the period for remedying a breach of tenancy must not end earlier than seven days after it is given … ‘issued’ is not the same as ‘given’._

This means that the time starts from the date of delivery, and not the date of issuance.

This is important because the notice to remedy breach requires a date for the tenant to remedy the breach to be included in the form.

**TIP** – As well as sending by express post, we suggest giving the tenant a few days extra for compliance with the notice.

For example, if you post the notice by express post on 1st of the month – the notice will likely be delivered on 2nd of the month – the date for compliance is therefore by 9th of the month.

We suggest giving them until 11th or 12th of the month – just in case.

Or, if the tenancy agreement allows for it, facsimile or email on the same day.  If you do email, then request a delivery receipt and a read receipt.

The appeal jurisdiction of QCAT also decided:

> _QCAT has no discretion to waive the requirement of seven days’ notice. The learned Adjudicator pointed out that notice period in s 328(1) of the Act is mandatory. Section 349 does not allow the tribunal to cure defects in a notice to remedy breach, only a notice to leave._

It is very important that the notices are completed and served correctly, or it could cause fatal problems down-the-line.

## Urgent Application to QCAT

If you have ticked all of the boxes above, and the debtor tenants do not leave the property, then you are able to make an urgent application to QCAT.

The Act defines an application as an urgent application if the application is because of a failure to leave the property.

[Section 415(1)(a)](http://classic.austlii.edu.au/au/legis/qld/consol_act/rtaraa2008420/s415.html) of the Act says:

> _An application to a tribunal is an “urgent application” if it is an application for a termination order made because of – a failure to leave._

The prescribed form for an urgent application is a [QCAT Form 2](https://www.qcat.qld.gov.au/__data/assets/pdf_file/0018/100854/form-02-app-mcd-res-tenancy-dispute.pdf) – Application for minor civil dispute – residential tenancy dispute.

You will need to file and serve the application on the debtor tenant.

Both parties are required to attend at the hearing of the application and a decision will be made by a member of the tribunal.

The decisions that can be made for rent arrears include:

1. Termination Order;
2. Money Order for the Unpaid Rent;
3. Warrant of Possession; and
4. Compensation for Failure to Leave.

For more information of QCAT applications, see [QCAT Applications](https://stonegatelegal.com.au/qcat-applications/).

### Termination Order

A termination order is an order terminating the residential tenancy.

[Section 293(1)](http://classic.austlii.edu.au/au/legis/qld/consol_act/rtaraa2008420/s293.html) of the Act says:

> _The lessor may apply to a tribunal for a termination order because – (a) the lessor gave a notice to leave the premises to the tenant; and (b) the tenant failed to hand over vacant possession of the premises to the lessor on the handover day._

[Section 293(2)](http://classic.austlii.edu.au/au/legis/qld/consol_act/rtaraa2008420/s293.html) of the Act says:

> _An application under this section must be made within 2 weeks after the handover day._

The application for a termination order must be made within **two (2) weeks** of the handover day.

If the tribunal makes an order terminating the tenancy, then the tenancy is over.

### Money Order for the Unpaid Rent

As well as a termination order, the tribunal can make an order that the tenant pays to the landlord the amount of the unpaid rent arrears.

By that time, then rent arrears might be around two (2) or three (3) months’ rent.

If the tenant still refuses to pay the amount of the QCAT decision, then the landlord may attempt to enforce the monetary amount in the Magistrates Court (more below).

If the tribunal makes a termination order, then it also must issue a warrant of possession.

Alternatively, you might consider using a [debt collector to collect unpaid rent](https://www.advancedebtcollection.com.au/debt-collection-articles/collecting-unpaid-rent-debt-collection-eviction/).

### Warrant of Possession

[Section 351](http://classic.austlii.edu.au/au/legis/qld/consol_act/rtaraa2008420/s351.html) of the Act says:

> _A warrant of possession must (a) authorise a police officer, or a stated authorised person, to enter the premises and give possession of the premises to the person in whose favour the termination order was made_

A warrant of possession allows the landlord or the landlords agent to attend at the property and forcibly evict the tenant with the police if required.

The landlord or the landlords agent can then change the locks and look for new tenants.

### Compensation for Failure to Leave

If the tenant remains in possession after the handover day and forces a landlord to execute the warrant for possession, then the landlord is entitled to claim compensation for any loss or expense and an occupation fee equal to the amount of rent that would have been payable.

[Section 358](http://classic.austlii.edu.au/au/legis/qld/consol_act/rtaraa2008420/s358.html) of the Act says:

> _If a tenant fails to hand over vacant possession of premises after a termination order is made by a tribunal, the lessor is entitled to receive from the tenant (a) compensation for any loss or expense incurred by the lessor by the failure; and (b) an occupation fee equal to the amount of rent that would have been payable by the tenant for the premises for the period the tenant remains in possession after termination of the agreement._

The landlord might be able to claim reasonable losses and expenses including:

1. Rent arrears;
2. Interest on the outstanding rent arrears;
3. Cleaning costs;
4. Repair costs;
5. Pest control fees; and
6. Filing fee for the application.

This section is to be read with the landlord’s duty to mitigate their losses pursuant to [section 362 of the Act](http://classic.austlii.edu.au/au/legis/qld/consol_act/rtaraa2008420/s362.html) which says:

> _The lessor … must take all reasonable steps to mitigate the loss or expense; and is not entitled to receive compensation for any loss or expense that could have been avoided by taking the steps._

So, if a landlord has managed to get the tenant out of the property and has mitigated their reasonable losses & expenses (by getting new and better tenants for example), then all that might be left to do is to enforce the money decision of the tribunal.

### Enforcement of a Money Decision

A decision in QCAT is enforced in the Court by registering a copy of the decision in the Magistrates Court, making it an enforceable money order.

[Rule 793](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s793.html) of the _Uniform Civil Procedure Rules 1999_ (QLD) (“ _**the UCPR**_”) says:

> _“ **enforceable money order**” of a court, means (a) a money order of the court; or (b) a money order of another court or tribunal filed or registered under an Act in the court for enforcement._

[Section 131](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s131.html) of the QCAT Act says:

> _A person may enforce the final decision by filing in the registry of a court of competent jurisdiction (a) a copy of the decision that the principal registrar has certified to be a true copy; and (b) the person’s affidavit about the amount not paid under the decision._

Once registered you have the choice of a number of different enforcement options.

Please read our content on [enforcement of a registered QCAT decision here](https://stonegatelegal.com.au/enforce-qcat-decision/).

[![Unpaid Rent in Queensland flow chart. The process of eviction](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2019/01/Unpaid-Rent-in-Queensland-flow-chart.-The-process-of-eviction.png)](https://stonegatelegal.com.au/unpaid-rent-arrears-queensland/unpaid-rent-in-queensland-flow-chart-the-process-of-eviction/)

**Rent arrears can have a huge impact on cash flow.  If you have tenants who owe unpaid rent then contact us immediately.  Our lawyers provide expert help with rent arrears and eviction of tenants**

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## Problems with the Recovery of Rent Arrears

There are a number of different unique problems which occur when attempting to recover debts relating to unpaid rent or rent arrears.

### Where is the Debtor Tenant?

One of the main problems encountered by landlords and/or their agents is that the debtors will often move and not provide a forwarding address.

Any of the available enforcement options will at some point need a process or a document to be personally served or served by pre-paid post.

If the debtor has left no forwarding address, then it may be difficult and/or expensive to try to find them.

### Does the Debtor Tenant own any Property?

The fact that the debtor is renting probably means that they do not own any real property.

This is not always the case, the debtor tenant might have a rental investment property, but it is more likely than not that they do not own any real property.

Seizure and sale of property is a great way to enforce a debt for rent arrears against a debtor tenant.

### Does the Debtor Tenant have a Job?

In some cases, the debtor tenant might not have a job and may have been getting rental assistance from the Government.

If the debtor tenant is not working, then it will be even harder to enforce a judgment against the debtor because a warrant for redirection of earnings will not be available.

### The Debtor Tenant is a Person?

Because the debtor tenant is a natural person then the statutory demand process and winding-up / liquidation options are unavailable in the recovery of rent arrears.

## Rent Arrears FAQ

This section attempts to answer the most commonly asked questions regarding the termination of a residential tenancy and the recovery of unpaid rent arrears.

### What happens if your tenant stops paying rent in Queensland?

When a tenant in Queensland stops paying rent, the landlord must first issue a ‘Notice to Remedy Breach’ (Form 11) if the rent is overdue by 7 days. This notice gives the tenant a minimum of 7 days to pay the outstanding rent.

If the tenant fails to remedy the breach within this period, the landlord can then issue a ‘Notice to Leave for Unremedied Breach’ (Form 12), providing the tenant 7 days to vacate the premises.

If the tenant still doesn’t leave, the landlord can apply to the Queensland Civil and Administrative Tribunal (QCAT) for a termination order and a warrant of possession. This legal process ensures that landlords follow a fair procedure, respecting tenants’ rights while addressing rent arrears.

### How long does it take to evict a tenant for non-payment of rent?

The eviction process for non-payment of rent in Queensland can vary in duration, depending on several factors. Initially, a tenant must be 7 days in arrears before a ‘Notice to Remedy Breach’ can be issued, which gives them another 7 days to pay.

If unresolved, a ‘Notice to Leave’ is issued, providing an additional 7 days. If the tenant still doesn’t vacate, the landlord must apply to QCAT for a termination order, which can take several weeks to process.

In total, the process can take from a few weeks to several months, depending on the tribunal’s schedule and any complications that may arise.

### How do I evict a tenant for non-payment of rent without a lease?

Evicting a tenant without a formal lease in Queensland still requires adherence to the _Residential Tenancies and Rooming Accommodation Act 2008_. Even in the absence of a written lease, a tenancy agreement, whether verbal or implied, is recognised by law.

The process begins with issuing a ‘Notice to Remedy Breach’ for rent arrears, followed by a ‘Notice to Leave’ if the breach isn’t remedied. It’s crucial to document all communications and actions taken for legal compliance.

If the tenant fails to vacate, you may need to apply to QCAT for a termination order. It’s advisable to seek legal advice in such situations to ensure all actions are legally sound and the rights of both parties are respected.

### Can I withdraw the notice if the tenant pays the rent arrears?

Yes, you can withdraw the notice if the tenant pays the rent arrears.  [Section 333(1)](http://classic.austlii.edu.au/au/legis/qld/consol_act/rtaraa2008420/s333.html) of the Act says:

> _The lessor may withdraw a notice to leave for an unremedied breach given by the lessor if the tenant remedies the breach._

If you have had a reasonable relationship with the tenant until the breach, and the tenant remedies the breach before the expiration of the notice to leave, then the landlord can withdraw the notice and the tenancy continues as if the notice to leave had not been given.

### The Tenant is claiming that the house was not fit to live in

It is common for a debtor tenant with rent arrears to make counterclaims against a landlord.  The test of whether a house is fit for the tenant to live in is determined by a reasonableness standard test.

In [_Fine v Geier_ \[2003\] QSC 73](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QSC/2003/73.html), Wilson J said:

> _Questions of fitness for habitation and repair are to be judged against a standard of reasonableness having regard to the age, character and locality of the residential premises and to the effect of a default on the state or condition of the premises as a whole_

In [_Gray v Queensland Housing Commission_ \[2004\] QSC 276](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QSC/2004/276.html), Chesterman J said:

> _“…\[N\]ot every defect… will condemn a house as unfit. It is to be deemed to be unfit for human habitation if and only if it is so far defective…that it is not reasonably suitable for occupation in that condition…”._

So, unless the property is not reasonably suitable for occupation, or a landlord has failed to do what was required of them under the Act, then the landlord should be able to still claim for unpaid rent arrears.

### What to do if tenant stops paying rent?

If the tenant stops paying rent, then the landlord needs to take the following steps:

1. Issue a notice to remedy breach;
2. Issue a notice to leave;
3. Application to QCAT for termination order;
4. If they do not leave, execute the warrant of possession;
5. Enforce the monetary decision in the Magistrates Court.

### How long can a tenant not pay rent before eviction?

An estimate of minimum time frames are:

1. Seven (7) days unpaid rent allows for a notice to remedy breach;
2. One (1) day to serve the notice to remedy breach by express post;
3. Seven (7) days after giving notice for the tenant to remedy breach by paying rent arrears;
4. One (1) day to send notice to leave for unremedied breach by express post;
5. Seven (7) days for the tenant to leave;
6. If they do not leave, then approximately twenty-eight (28) days to get an urgent application in QCAT;
7. A further twenty-eight (28) days for the execution of a warrant of possession.

So best-case scenario, the tenants can be out in up to twenty-three (23) days.

The worst-case scenario, the tenant will be out in around seventy-nine (79) days or 11 weeks.

### Does landlord have to accept late rent?

If the tenant pays the rent arrears within the time in the notice to remedy breach, then the landlord has to accept the rent.

If the tenant pays the rent after the notice to leave, the landlord does not have to withdraw the notice.  However, if the tenant disputes the notice then it will have to be shown that the issuance of the notice is reasonable in the circumstances.

### Can a landlord sue for unpaid rent?

A landlord can sue for unpaid rent.

If the tenant remains in possession after the handover day and forces a landlord to execute the warrant for possession, then [Section 358](http://classic.austlii.edu.au/au/legis/qld/consol_act/rtaraa2008420/s358.html) of the Act says that the landlord is entitled to claim an “ _**occupation fee**_” being equal to the amount of rent that would have been payable.

### Can a landlord garnish wages for unpaid rent?

A landlord can only apply for an enforcement warrant for redirection of earnings after QCAT has made a money order, and that money order is registered in the Magistrates Court.

See our article about applying for an [enforcement warrant for redirection of earnings](https://stonegatelegal.com.au/enforcement-warrant-for-redirection-of-earnings/).

### How long does a landlord have to claim damages?

[Section 293(2)](http://classic.austlii.edu.au/au/legis/qld/consol_act/rtaraa2008420/s293.html) of the Act says that an application under this section must be made within 2 weeks after the handover day.

If an application is made outside of this time then QCAT does not have jurisdiction to hear the application.

In [_Bergin v Department of Housing and Public Works_ \[2013\] QCATA 190](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QCATA/2013/190.html) the QCAT appeal jurisdiction discussed whether QCAT had jurisdiction to (a) provide relief from the procedural requirements of section [293(2)](http://classic.austlii.edu.au/au/legis/qld/consol_act/rtaraa2008420/s293.html), and (b) if QCAT has jurisdiction after the two (2) week period.

Dr J R Forbes, Member held that QCAT could not extend the time and so QCAT does not have jurisdiction to hear an application if filed outside of the two (2) week time frame.  Dr J R Forbes said:

> _\[T\]he Adjudicator … inadvertently fell into legal error by purporting to exercise jurisdiction he did not possess. Consequently, leave to appeal … must be granted, the appeal allowed, and the order terminating the tenancy set aside._

### Can a landlord charge a tenant for damages?

Yes. If the tenant has caused damage to the property other than fair and reasonable wear-and-tear, then the landlord is entitled to recover the cost of repair or replacement from the tenant.

### Does a landlord have to prove damages?

Yes. Although the tribunal is not bound by the same rules of evidence as the Courts, it is good to rule-of-thumb to provide the tribunal with independent evidence to prove your claim.

If you are claiming that something needs to be replaced rather than repaired, provide an independent report from an expert (or someone who knows about that thing).

If you are claiming some monetary amount for damages, then provide the tribunal with a couple of different quotes from independent sources.

This way the tribunal has something more to formulate their monetary decision on than just the word of the landlord.

**Rent arrears can have a huge impact on cash flow.  If you have tenants who owe unpaid rent then contact us immediately.  Our lawyers provide expert help with rent arrears and eviction of tenants**

**FOCUSED – DEDICATED TEAM – PROVEN RESULTS**

[GET A FREE FEE ESTIMATE TODAY](https://stonegatelegal.com.au/free-case-evaluation/)

**OR CALL: [1300 545 133](tel:1300545133) AND SPEAK TO OUR LAWYERS**

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#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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## Recovering Mistaken Payments
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# Recovering Money Paid by Mistake

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## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| October 4, 2020

## Article Summary

The most common reason for money paid by mistake is money accidentally paid into the incorrect bank account.

However, if the bank account is unknown, the banks will evoke privacy and refuse to provide the payer with any details so that we can attempt to collect these funds.

Rule 208C(2)(b) of the _Uniform Civil Procedure Rules 1999_ (Qld) allows a mistaken payer to obtain orders from the Court to ascertain the identity or whereabouts of a prospective defendant—this is sometimes called preliminary disclosure.

After you find out the identity of the incorrect payee through preliminary disclosure, you can commence legal action to recover that mistaken payment.

The Courts have decided that monies paid by mistake into the wrong bank account give rise to a prima facie obligation to make restitution to the payer.  Recovering money paid by mistake is a claim in restitution for unjust enrichment because of mistake.

Overall, there are three (3) components of an unjust enrichment case, they are:

1. The enrichment and
2. The enrichment being obtained at the plaintiff’s expense and
3. The enrichment is unjust.

This article explains this process in a lot more detail.

Table of Contents

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![Recovering Money Paid by Mistake litigation lawyers in Queensland](<Base64-Image-Removed>)Recovering money paid by mistake is a claim in restitution for unjust enrichment because of mistake.

If you have accidentally paid the wrong person, paid into the wrong bank account, overpaid an invoice, etc., then you may have a claim.

Overall, there are three (3) components of an unjust enrichment case, they are:

1. The enrichment and
2. The enrichment being obtained at the plaintiff’s expense and
3. The enrichment is unjust.

If a payer makes a mistaken payment to a payee, there are some defences to a restitution claim for unjust enrichment.

Suppose you are a payer of money by mistake or the payee of money by mistake. In that case, our [debt recovery lawyers](https://stonegatelegal.com.au/services/debt-disputes/) explain the causes of action and any possible defences in this article.

## Recovering Money Paid by Mistake

The Courts have decided that monies paid by mistake give rise to a prima facie obligation to make restitution to the payer.

In _[ANZ Group Ltd v Westpac Banking Corporation \[1988\] HCA 17](http://classic.austlii.edu.au/au/cases/cth/HCA/1988/17.html)_, the joint decision of Mason CJ, Wilson, Deane, Toohey and Gaudron JJ said:

> _\[R\]eceipt of a payment which has been made under a fundamental mistake is one of the categories of case in which the facts give rise to a prima facie obligation to make restitution, in the sense of compensation for the benefit of unjust enrichment, to the person who has sustained the countervailing detriment._

The essential elements for a restitution claim for unjust enrichment because of money paid by mistake are as follows:

1. There must have been a payment to the payee (enrichment), and
2. The Payment must have been at the detriment of the payer and
3. The Payment must be unjust.

I will explain these in more detail below.

### There must have been a Payment to the Payee.

Obviously, for an action in restitution for a mistaken payment, there must have been a payment from the payer that enriched the payee.

The payment must also be at the payer’s detriment.

### The Payment must have been at the Detriment of the Payer

When recovering money paid by mistake, another basis of the unjust enrichment is that the payee has suffered a detriment. This means that the money paid must be from the payer’s funds.

In _[Roxborough v Rothmans of Pall Mall Australia Ltd \[2001\] HCA 68](http://classic.austlii.edu.au/au/cases/cth/HCA/2001/68.html),_ the High Court of Australia discussed passing the tax obligation to their clients. Gleeson CJ and Gaudron and Hayne JJ said:

> _It is clear that, in a direct and immediate sense, the payments were made by the appellants, out of their own funds, to the respondent_

If the payer makes a payment to the payee from his/her/its funds, which enriches the payee to the detriment of the payer, then the enrichment must also be unjust.

The unjust factor is the third element when recovering money paid by mistake.

### The Payment must be Unjust.

This article will not deal with all unjust factors in law. It will simply focus on the unjust factors related to recovering money paid by mistake.

The unjust factor when recovering money paid by mistake is “ _mistake_“.

In _[Citibank Limited v Department of Public Works and Services \[2001\] NSWSC 1066](http://classic.austlii.edu.au/au/cases/nsw/NSWSC/2001/1066.html)_, Newman AJ said:

> _… once a payment has been made to another by mistake there is a prima facie obligation on the part of the person receiving that payment to make restitution_.

So, the prima facie obligation rests on the fact that the payer’s Payment due to a mistake makes the payee’s enrichment unjust.

The mistake can be either in fact or in law. This was decided in _[David Securities Pty Ltd v Commonwealth Bank of Australia \[1992\] HCA 48](http://classic.austlii.edu.au/au/cases/cth/HCA/1992/48.html)_ in which Mason CJ, Deane, Toohey, Gaudron and McHugh JJ said:

> _When a defendant receives a payment which he has no right to receive and which the plaintiff has paid to him by mistake, the injustice of the defendant’s enrichment does not depend on the nature of the mistake that caused the payment to be made. Whether the plaintiff made a mistake of law or a mistake of fact, the defendant, having no right to receive the payment, is unjustly enriched by its receipt_.

So, the receipt of money from a payer to the payee that the payee has no right to, paid by mistake, law, or fact, unjustly enriches the payee.

## Examples of Money Paid by Mistake

The types of things which allow recovering money paid by mistake can include:

1. Money paid into the incorrect bank account or
2. Money paid under a contract that was not due and payable or
3. Mistaken overpayments – money had and received.

If these things have happened by mistake, to the detriment of the payer, enriching the payee, then the payer can make a claim in restitution against the payee, subject to any defences.

## Defences to a Claim Recovering Money Paid by Mistake

As the cases above illustrate, there is a prima facie right to restitution about recovering money paid by mistake. This essentially acts the same way as a legal presumption.

Therefore, the onus is on the payee defendant to raise any legal defences open to them.

In _[Barclays Bank Ltd v W J Simms Son and Cooke (Southern) Ltd \[1979\] 3 All ER 522](https://en.wikipedia.org/wiki/Barclays_Bank_Ltd_v_W_J_Simms,_Son_and_Cooke_(Southern)_Ltd),_ Lord Goff J stated:

> _If a person pays money to another under a mistake of fact which causes him to make the payment, he is prima facie entitled to recover it as money paid under a mistake of fact.  His claim may however fail if (a) the payer intends that the payee shall have the money at all events, whether the fact be true or false, or is deemed in law so to intend; or (b) the payment is made for good consideration, in particular if the money is paid to discharge, and does discharge, a debt owed to the payee (or a principal on whose behalf he is authorised to receive the payment) by the payer or by a third party by whom he is authorised to discharge the debt; or (c) the payee has changed his position in good faith, or is deemed in law to have done so._

The only two (2) considered in this article are:

1. The Payment is made for reasonable consideration and
2. The payee has changed his/her/its position.

I will discuss these in more detail below.

### The Payment is Made for Good Consideration

Consideration is defined in Butterworths Concise Australian Legal Dictionary as:

> _The price, detriment, or forbearance given as value for the promise._

In contract law, consideration must flow from both sides and is the value exchanged. Commonly, it is money in exchange for goods and/or services.

Therefore, if the payee defendant has given consideration for the money paid by the payer plaintiff, then it would not be unjust for the defendant to keep it or part of it.

This defence is most commonly raised when money is paid under a contract that was not due and payable. As with all contractual interpretations, the term must be read with the contract.

The other arguable defence is the change of position defence.

### The Payee has Changed His/Her/Its Position.

The basis for the change of position defence is that the payee defendant has received the money in good faith and has changed its position based on the receipt of the money paid by mistake.

In _Lipkin Gorman v Karpnel Ltd \[1991\] AC 548_, the House of Lords said:

> _… the defence is available to a person whose position has so changed that it would be inequitable in all circumstances to require him to make restitution, or alternatively to make restitution in full._

This was seemingly accepted in Australia in _[David Securities Pty Ltd v Commonwealth Bank of Australia \[1992\] HCA 48](http://classic.austlii.edu.au/au/cases/cth/HCA/1992/48.html)_ in which Mason CJ, Deane, Toohey, Gaudron and McHugh JJ said:

> _If we accept the principle that payments made under a mistake of law should be prima facie recoverable, in the same way as payments made under a mistake of fact, a defence of change of position is necessary to ensure that enrichment of the recipient of the payment is prevented only in circumstances where it would be unjust._

The change of position defence essentially means that a right to restitution may be denied if it would cause a greater injustice to the payee defendant, who acted to his/her/its detriment on the faith of the receipt, than the injustice suffered by the payer plaintiff.

The elements of the defence can be made out if:

1. The payee is no longer enriched, and
2. The payee has acted to their/its detriment on the faith of the receipt or
3. Because the enrichment has been taken away from them in circumstances beyond their control and
4. The recipient’s position changed as a result of the enrichment and
5. It would be more unjust to require the recipient to make restitution.

## Recovering Money Paid into the Wrong Bank Account

The most common reason for money being paid by mistake is money accidentally paid into the incorrect bank account.

It is extremely difficult to recover money paid by mistake into the wrong bank account if the payee does not want to give it back because the bank will usually not assist.

The bank may try to contact the account holder, but banks do not have the power to return the funds if they have already been transferred.

Further, the banks will evoke privacy by refusing to provide the payer with any details so that we can attempt to collect these funds.

This ultimately leaves you with no money, no (or very little) assistance from the bank, and no idea who to sue to recover these funds. We can help!

[Rule 208C(2)(b) of the _Uniform Civil Procedure Rules 1999_ (Qld)](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s208c.html) allows a mistaken payer to obtain orders from the Court to ascertain the identity or whereabouts of a prospective defendant—this is sometimes called preliminary disclosure.

### Preliminary Disclosure to Find a Debtor

[Rule 208C(2)(b)](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s208c.html) states:

> _(2) The court may order that the other person:_
>
> _(b) produce to the applicant a document or thing relating to the identity or whereabouts of the prospective defendant as directed by the order._

This Court order allows you to seek an order ordering the bank to provide the identity or whereabouts of the mistaken payee. The bank will then have to give the mistaken payer with information such as (but not limited to):

1. The residential addresses and mailing addresses for the holder or holders of the Account.
2. Contact phone numbers for the holder or holders of the Account and
3. email addresses for the holder or holders of the Account.

### Example of an Order for Preliminary Discovery

We successfully obtained orders for preliminary discovery, which enabled us to recover a significant amount of money for clients who had inadvertently paid money into the wrong bank account. The Typical order would be:

> _The order of the court is that pursuant to rule 208C(2)(b) of the Uniform Civil Procedure Rules 1999 (Qld):_
>
> _1\. By 4:00pm on a date seven days after the entry of orders for discovery, the respondent make discovery to the applicant of the following documents in relation to the \[BANK\] account (BSB: 000-000 Account: 000 000 00) which received $XXXXXX on or about \[DATE\] from \[PAYER\] account number ending XXXX held in the name of the applicant, \[PAYER NAME\]:_
>
> _(a) a document or record showing the name of the holder or holders of the Account and persons authorised to [operate and transact](https://stonegatelegal.com.au/uncommercial-transactions-claims-and-how-to-defeat-them/) on the Account for the period 1 November 2021 to the date of these orders;_
>
> _(b) a document or record which discloses the following information for the period 1 November 2021 to the date of these orders:_
>
> _(i) the residential addresses and mailing addresses for the holder or holders of the Account and any persons authorised to operate the Account;_
>
> _(ii) contact phone numbers for the holder or holders of the Account and any persons authorised to operate the Account; and_
>
> _(iii) email addresses for the holder or holders of the Account and any persons authorised to operate the Account;_
>
> _2\. There be no order as to costs._

The application should be accompanied by an affidavit with evidence of all the steps taken by the payer and the bank to recover these funds and the final notice from the bank that the payee will not return the funds and that they can do nothing else.

It is common that the bank, as a defendant, will not consent to or oppose these orders or similar orders. Therefore, this type of order can be made in chambers without the need for an oral hearing.

Once the orders are made, serve them on the bank. The bank will provide you with the payee’s details, and you can start the process of recovery and [enforcement](https://stonegatelegal.com.au/enforcement-hearing-statement-financial-position/).

## Recovering Money Paid by Mistake

Recovering money by mistake in restitution for unjust enrichment is complicated. We strongly advise seeking [qualified legal advice](https://stonegatelegal.com.au/debt-recovery-lawyers-10-tips-and-tricks/).

If you are a mistaken payer of money, contact us about the causes of action and commencing legal action in Court.

If you are the payee of money by mistake, contact us about any possible defences, such as valuable consideration or a change of position.

## Money Paid by Mistake FAQ

In situations where money has been mistakenly paid, the process of recovering the funds can be complex and nuanced. This FAQ section addresses common questions surrounding the legal avenues available and steps you can take to recover your money.

Firstly, when dealing with the bank:

### What is a mistaken internet payment?

A mistaken internet payment occurs when you transfer money to the wrong account due to an error in entering the account or BSB number. In this case, the payment goes to an unintended recipient. The ePayments Code, administered by the Australian Securities and Investments Commission (ASIC), provides a framework to help consumers recover their money in such situations. Note, however, that the Code does not apply to small businesses.

### What if I transfer money to the wrong account?

If you’ve made a mistaken payment, contact your bank or credit union immediately. They will reach out to the unintended recipient’s bank to try to retrieve the funds. The success of this recovery process depends on how quickly you report the error:

- Within 10 business days: The money will be returned to your account.
- Between 10 business days and 7 months: The recipient’s bank will freeze the funds. The unintended recipient has 10 business days to prove their entitlement to the funds. If they cannot, the money is returned to you.
- After 7 months: The funds can only be recovered if the unintended recipient agrees.
- If the money has already been withdrawn by the unintended recipient, their bank is obligated to make reasonable efforts to recover the funds, possibly through negotiations.

### What if money is incorrectly transferred into my account?

If money is mistakenly sent to your account, notify your bank, which will attempt to return the funds to the sender. It’s important that you do not spend or withdraw the money, as it legally belongs to the sender, and you will be required to return it.

### What if I make a mistake using BPAY?

BPAY payments are not covered under the ePayments Code, as BPAY uses a different system for resolving errors. If you make a mistake with BPAY, contact your bank or credit union to explore recovery options.

### What if I paid the correct person, but they didn’t deliver the goods or services?

If you sent money to the intended recipient but they failed to deliver the agreed goods or services, this is not considered a mistaken payment. Since you authorized the transaction, your bank cannot retrieve the funds. However, you may be able to file a claim if the website where the transaction occurred offers a buyer protection policy.

### What if someone transfers money from my account without my consent?

If a transaction occurs without your authorization, it is classified as an unauthorized transaction rather than a mistaken payment. The ePayments Code also governs the process for addressing unauthorized transactions. If you suspect unauthorized activity, contact your bank immediately.

Recovering the money by legal means because the banks are no help:

### Can you recover money paid by mistake?

Recovering money paid by mistake is a claim for restitution for unjust enrichment caused by the mistake. If they do not repay, you will have to sue for restitution.

### What is unjust enrichment?

Overall, there are three (3) components for an unjust enrichment case, they are (1) The enrichment; and (2) The enrichment being obtained at the plaintiff’s expense; and (3) The enrichment being unjust (because of mistake).

### Are there any defences to money paid by mistake?

The only two (2) primary defences considered in this article are: (1) The Payment is made for good consideration, and (2) The payee has changed his/her/its position.

### How do I recover money paid into the wrong bank account?

Try with the bank first. If you don’t succeed, you can apply to the Supreme Court under Rule 208C(2)(b) of the UCPR for preliminary disclosure. This is the only way to find the payee/defendant.

### What is an order for preliminary disclosure?

Several orders are included, including an order to produce to the applicant a document or thing relating to the identity or whereabouts of the prospective defendant as directed by the order.

### What type of things can I discover?

This Court order allows you to seek an order ordering the bank to provide the identity or whereabouts of the [mistaken payee](https://stonegatelegal.com.au/debt-recovery-lawyers-in-queensland/). The bank will then have to give the mistaken payer with information such as (but not limited to):

1. The residential addresses and mailing addresses for the holder or holders of the bank account.
2. Contact phone numbers and
3. email addresses for the holder or holders of the bank account.

### If someone deposits money in Accountunt, can they take it back?

If someone deposits money into your bank account, they can return it. They can sue you in restitution for unjust enrichment because of mistaken Payment.

### What happens if you receive money by mistake?

If you receive money by mistake, you might have an obligation to make restitution for unjust enrichment. The person who made the mistaken Payment could potentially seek to recover the money from you. However, there are some defences, so contact a lawyer immediately.

### What happens if someone accidentally transfers you money?

If someone accidentally transfers money to you, they could try to recover the money through legal means, claiming unjust enrichment due to the mistake. However, there are some defences, so contact a lawyer immediately.

### What happens if you transfer money to the wroAccountunt?

If you transfer money to the wroAccountunt, you might have legal recourse to recover the funds, claiming unjust enrichment due to the mistake. However, the process can be challenging, especially if the recipient doesn’t want to return the money.

### What happens if you pay someone by mistake?

If you pay someone by mistake, you may have a claim for unjust enrichment and could seek to recover the Payment. The person who received the money might need to return it.

### What should you do if you paid money into the wroAccountunt?

If you paid money into the wroAccountunt, you should try to work with the bank to resolve the issue. If that doesn’t work, you might consider seeking legal assistance. You could apply for a court order to obtain information about the account holder.

### How to recover money paid by mistake?

You might need to pursue a legal claim for unjust enrichment to recover money paid by mistake. It is advised to consult with legal professionals to understand the specific steps and defences involved.

### How do you get money back if paid to the wroAccountunt?

If you paid money to the wroAccountunt, you should contact your bank immediately and explain the situation. Legal action might be necessary if the recipient doesn’t return the money willingly.

### How do you recover money sent to the wroAccountunt?

You might need to follow legal procedures to recover money sent to the wroAccountunt. This could involve seeking court orders for preliminary disclosure to identify the recipient and potentially pursuing a claim for unjust enrichment.

### How do I get back money from a bank transfer?

If you need money from a bank transfer, especially if it was sent to the wroAccountunt, you should contact your bank as soon as possible. If the recipient refuses to return the money, legal action might be necessary to recover it.

**If you are recovering money paid by mistake or you are the payee of money paid by mistake, contact us to explain the causes of action and any possible defences.**

[CONTACT US TODAY](https://stonegatelegal.com.au/contact-stonegate-legal/)

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#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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## Enforcing Judgments
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# Enforcing A Judgment

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## NEWS & ARTICLES

- [By \\
Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| January 23, 2017

Table of Contents

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![Enforcing-a-Judgment-or-money-order in qld](https://stonegatelegal.com.au/wp-content/uploads/2019/10/Enforcing-a-Judgment-or-money-order-in-qld.png)Enforcing a judgment, money order, or a registered adjudication or QCAT decision is complicated and expensive if not done correctly.

Stonegate Legal’s debt enforcement lawyers can help you through the complicated process of enforcing a judgment, money order, or an adjudication or QCAT decision over the property of the judgment debtor.

Your options for enforcing a Judgment:

1. Enforce the judgment in the Court with jurisdiction;
2. Serve the debtor company with a [statutory demand](https://stonegatelegal.com.au/statutory-demand/); or
3. Serve the debtor person with a [bankruptcy](https://stonegatelegal.com.au/bankruptcy/) notice.

**If you have been given judgment and the debtor still does not pay, then you will need to start enforcement action against the debtor to recover the judgment debt**

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**For advice & assistance enforcing a judgment call [1300 545 133](tel:1300545133)**

## **Enforcing a Judgment in the Court with Jurisdiction**

Your options for enforcing the Judgment in the Court are:

1. Attempt to extract from the debtor information regarding its financial position; or
2. Apply to the Court for the issue of one of the various types of enforcement warrant.

### Attempting to extract information regarding the debtor’s financial position

If the debtor provides documents showing any assets they own, the equity in those assets, and details of any debts owed to them, this method of enforcement has achieved its purpose.

If you are not satisfied with the contents of the completed statement of financial position, or the debtor does not return one at all, a creditor can then apply to the Court for an enforcement hearing summons order.

An enforcement hearing summons order is a Court order requiring a debtor to complete a statement of financial position (if they have not done so), produce substantial documents regarding their financial position, and appear in Court for the purpose of being cross examined about their financial position.

If the debtor does not show up to the enforcement hearing (which is quite common), then you are able to apply to the Court to issue an enforcement hearing warrant (arrest warrant).  The enforcement hearing warrant allows the Court enforcement officer to attend at the debtor’s address (with or without the police) to arrest the debtor and force him/her to attend the hearing.

The main purpose for an enforcement hearing is to gather enough information from the debtor to be able to apply for an enforcement warrant.

Your option to apply to the Court for the issue of one of the various types of enforcement warrant is explained below.

### Issuing an Enforcement Warrant when Enforcing a Judgment

The most common type of enforcement warrants that can be issued by the Court to enforce the Judgment are:

1. Enforcement warrants for seizure and sale of property; and
2. Enforcement warrants for redirection of earnings and/or debts.

### Enforcement warrants for seizure and sale of property

[Section 828 of the _Uniform Civil Procedure Rules 1999_](http://www.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s828.html) (QLD) allows for Enforcement warrants for seizure and sale of property.

To issue a warrant for seizure and sale of property, the Court will need evidence showing what property is owned by this debtor and the equity in that property.

### Enforcement warrants for redirection of earnings

[Section 855 of the _Uniform Civil Procedure Rules 1999_](http://www.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s855.html) (QLD) allows for Enforcement warrants for redirection of earnings.

To issue a warrant for redirection of earnings the Court will need to be provided with evidence whether the enforcement debtor is employed and the enforcement debtor’s employer has been identified; whether the enforcement debtor has sufficient means of satisfying the order after deducting, the necessary living expenses of the enforcement debtor and the enforcement debtor’s dependants; and any other known liabilities of the enforcement debtor.

### Serving the Debtor with a Bankruptcy Notice

If a judgment debtor is a person owes a judgment debt of over $10,000.00 then a creditor can ask the [Federal Circuit Court](http://www.federalcircuitcourt.gov.au/wps/wcm/connect/fccweb/home) to declare the debtor bankrupt.

To declare the debtor bankrupt the creditor must prove to the Court that debtor has committed an [act of bankruptcy](http://www.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s40.html).

If the debtor fails to follow the instructions in a bankruptcy notice then the debtor has committed an act of bankruptcy, allowing you to present a creditor’s petition to the [Federal Circuit Court](http://www.federalcircuitcourt.gov.au/wps/wcm/connect/fccweb/home).

## Serving the Debtor with a Post-Judgment Statutory Demand

As outlined above, when enforcing a judgment, if the judgment debtor is a company you have the option to serve this debtor with a statutory demand for payment of the debt under section [459E of the _Corporations Act 2001_ (Cth)](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s459e.html). If this debtor is served with a statutory demand, it will have twenty one days to:

1. Comply with the demand; or
2. Apply to the Court for [an order setting the demand aside](https://stonegatelegal.com.au/setting-aside-statutory-demand/).

If the statutory demand is not set aside and the debtor does not comply with it, then the debtor is presumed to be insolvent for three (3) months. While the debtor is presumed to be insolvent, you may apply to wind it up on the grounds of insolvency.

## What can you do when Enforcing a Judgment

If you instruct us to arrange for the judgment debtor to attend an enforcement hearing and produce documents or things relating to its financial position, it is possible the debtor might reveal information that would enable you to enforce the Judgment against it using one of the procedures described earlier in this advice.

However, there is no guarantee that any useful information will be revealed. In particular, this process will not reveal whether the debtor has the ability to raise funds (by borrowing money for example) to pay the debt.

Conversely, in our experience, debtors who have the ability to raise funds to pay their debts usually take steps to avoid being forced into bankruptcy or being wound up.

For these reasons, we recommend serving the debtor with a bankruptcy notice or a statutory demand in most cases.

**If you have been given judgment and the debtor still does not pay, then you will need to start enforcement action against the debtor’s property to recover the judgment debt**

**DEDICATED LAWYERS – FAST ENFORCEMENT – PROVEN RESULTS**

[CONTACT US FOR A FREE CONSULTATION](https://stonegatelegal.com.au/contact-stonegate-legal/)

**For advice & assistance enforcing a judgment call [1300 545 133](tel:1300545133)**

![Picture of Wayne Davis](https://secure.gravatar.com/avatar/5b54ec283af918fb28f171190159c8892905cb00c7f8bf19a380e6224d11fa82?s=300&d=mm&r=g)

#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation.

With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice.

Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings.

Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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#### [QCAT Building Disputes in Queensland – Complete Guide](https://stonegatelegal.com.au/qcat-building-disputes-in-queensland-complete-guide/)

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#### [Statutory Demands in Construction – Complete Guide](https://stonegatelegal.com.au/statutory-demands-in-construction-complete-guide/)

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#### [Extrinsic Evidence and the Parol Evidence Rule](https://stonegatelegal.com.au/extrinsic-evidence-and-the-parol-evidence-rule/)

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#### [Who Can Sue for Defamation in Australia?](https://stonegatelegal.com.au/who-can-sue-for-defamation-in-australia/)

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#### [Statutory Demands in Construction – Complete Guide](https://stonegatelegal.com.au/statutory-demands-in-construction-complete-guide/)

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#### [Damages in Defamation Claims – Complete Guide](https://stonegatelegal.com.au/damages-in-defamation-claims-complete-guide/)

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#### [Extrinsic Evidence and the Parol Evidence Rule](https://stonegatelegal.com.au/extrinsic-evidence-and-the-parol-evidence-rule/)

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## Shadow and De Facto Directors
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# What is a Shadow Director & De Facto Director?

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## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| June 24, 2023

## Article Summary

A **de facto director** is an individual who has not been officially appointed as a director but acts in the position of a director and/or has power over decision making for the company.  For someone to be classed as a de facto director they must do the work of a director of the company or act in the position of director.

Although the de facto director is not officially a director or has not been officially allowed a place on the board in the company, a de facto director will still have a high level of influence on the strategy, planning, and decision making of the company.

A **shadow director** is a person who is not validly appointed as a director but a person to whose instructions or wishes the de jure directors of the relevant company are accustomed to acting in accordance with, or a person who has influence over other directors of the company, or the board of a directors.

A shadow director does not take on the role of a director or claim to be in a position to be a director. Instead, they take a more backseat role in the company, while still having an extremely large influence on the affairs and management of the company.

Director duties apply to de facto directors and shadow directors. This means that they are responsible for complying with directors duties such as care and diligence, good faith, preventing insolvent trading, and a couple of others.

There are serious consequences associated with breaching directors’ duties, including the following:

1. Personal liability
2. Commercial consequences
3. Criminal consequences
4. Disqualification from directorship

This article discussed this in a lot more detail.

Table of Contents

[Toggle](https://stonegatelegal.com.au/what-is-a-shadow-director-de-facto-director/#)

A de facto director and a shadow director of a company are people who are not officially appointed in the position of a director of that company.

A de factor director is a person who is not validly appointed as a director but a person who does the work of a director and/or acts in the position of director of that company.

A shadow director is a person who is not validly appointed as a director but a person to whose instructions or wishes the actual directors of the relevant company are accustomed to acting in accordance with (including de facto directors).

If a person is found to be a de facto director or a shadow director of a company, then they will be bound by the same obligations and duties as if they were a validly appointed director and be liable as if they were a validly appointed de jure director.

In this article, our [corporations disputes lawyers](https://stonegatelegal.com.au/services/corporations-dispute-lawyer/) explain the difference between a de facto director and a shadow director, and explain the risks of a breach of those duties.

## What is a Director of a Company?

[Section 9 of the _Corporations Act 2001_ (Cth)](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html) (“ **the Corporations Act**”) defines the term director to mean:

> _“director” of a company or other body means:_
>
> _(a)  a person who:_
>
> _(i)  is appointed to the position of a director; or_
>
> _(ii)  is appointed to the position of an alternate director and is acting in that capacity;_
>
> _regardless of the name that is given to their position; and_
>
> _(b)  unless the contrary intention appears, a person who is not validly appointed as a director if:_
>
> _(i)  they act in the position of a director; or_
>
> _(ii)  the directors of the company or body are accustomed to act in accordance with the person’s instructions or wishes._

The _Corporations Act_ clearly intended a person who is not officially appointed to the position of director to be defined as a director.  This is commonly referred to as a de facto director or a shadow director.

[Section 9 of the _Corporations Act 2001_](http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html) defines the term officer to mean (inter alia):

> _“officer” of a corporation … means:_
>
> _(a)  a director or secretary of the corporation; or_
>
> _(b)  a person:_
>
> _(i)  who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the corporation; or_
>
> _(ii)  who has the capacity to affect significantly the corporation’s financial standing; or_
>
> _(iii)  in accordance with whose instructions or wishes the directors of the corporation are accustomed to act (excluding advice given by the person in the proper performance of functions attaching to the person’s professional capacity or their business relationship with the directors or the corporation)._

In _[In the matter of Idylic Solutions Pty Ltd – Australian Securities and Investments Commission v Hobbs \[2012\] NSWSC 1276](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/nsw/NSWSC/2012/1276.html)_, Ward J said at \[1337\]:

> _The term “director”, as defined in s 9 of the Corporations Act, includes a person who, though not validly appointed as a director, acts in the position of a director (a de facto director) or whose instructions or wishes are ones in accordance with which the directors of the company or body are accustomed to act (a shadow director). The term “officer” is defined in s 9 of the Corporations Act as including a person who is a director (which, by reference to the earlier definition of director, includes a de facto or shadow director); who makes or participates in making decisions that affect the whole or a substantial part of the corporation’s business; who has the capacity significantly to affect the corporation’s financial standing; or in accordance with whose instructions or wishes the directors of the corporation are accustomed to act. There is room for overlap between persons occupying a de facto role (as director and officer) and those occupying a shadow role of that kind._

This essentially states that the characteristics of a director, shadow director, or defacto director include:

1. A person who makes or participates in making decisions that affect the whole or a substantial part of the corporation’s business; and/or
2. A person who has the capacity significantly to affect the corporation’s financial standing; and/or
3. A person who in accordance with whose instructions or wishes the directors of the corporation are accustomed to act.

A director of a company can be a director of that company even without any purported appointment of that person to that position at any time. These are de facto directors and shadow directors.

## What is a De Facto Director?

A de facto director is an individual who has not been officially appointed as a director but acts in the position of a director, and has the power over decision making for the company.

For someone to be classed as a de facto director they must do the work of a director of the company or act in the position of director.  But what is “ _the work of a director_” and what does “ _act in the position of director_” mean?  For law geeks like me there is a lot of great case law on this issue.

The leading authority on these questions in _[Grimaldi v Chameleon Mining NL (No 2) \[2012\] FCAFC 6](http://classic.austlii.edu.au/au/cases/cth/FCAFC/2012/6.html)_, where Finn, Stone and Perram JJ set out the leading principles from a number of relevant authorities from Australian case law from \[64\] to \[69\].  The citation is too long for this article, but in summary:

1. _A person may be a director even without any purported appointment of that person to that position at any time. The definition applies as much to a person who is a true usurper of the functions of a director in a company … as to a person who takes “an active part in directing the affairs of \[a\] company” \[64\]._
2. _The formula, “acts in the position of a director” … contemplates that in some degree the person has been “doing the work of a director” in that company. Or the person has been acting in a role (or roles) within the company and performing functions one would reasonably expect to have been performed by a director \[65\]._
3. _The roles and functions so performed will vary with the commercial context, operations, and governance structure … of the company. Whether a person is a director is a question of degree having regard to “the nature of the functions or powers which are exercised and the extent of their exercise” \[66\]._
4. _There is no reason why the relationship of a person with a company may not evolve over time into that of de facto director. It also may be the case that the person only performs the role and functions that constitute him or her a director for a limited period of time \[67\]._
5. _Whether a person has acted in the position of a director is a question of substance and not simply of how that person has been denominated in, or by, the company … Whether or not he or she will be a director will turn on the nature and extent of the functions to be performed \[68\]._
6. _A rigid distinction between a de facto and a shadow director cannot be maintained \[69\]._

Although the de facto director is not officially a director and/or has not been officially allowed a place on the board of the company, a de facto director will still have a high level of influence on the strategy, planning, and decision making of the company.

De facto directors are recognised by law to be directors, as the level of influence that they have over the company that they direct matches that of an official director and, therefore, has the same/similar responsibilities.

When determining if a person is a de facto director, a Court will likely consider factors such as:

1. The internal affairs of the company.
2. The duties perform for the company.
3. The size of the company and the responsibilities allocated.
4. The company structure.
5. If people outside the company or inside the company consider you to be a director.
6. If you consider yourself, or are considered by the company to be, a director.
7. If you perform the general duties expected of a director of a company.

As with any appointed director, a de facto director has duties and responsibilities that must be met. This is to ensure that they are not taking advantage of their position as someone with a high level of control and leadership over the company for personal gain.

If these duties are not met, harsh consequences can apply that have [damaging effects on both the company](https://stonegatelegal.com.au/winding-up-a-company-that-owes-you-money/) and the director personally.

Just because the director has not been formally appointed, these consequences will still potentially apply.

Claiming to not have been aware that you were in the role of a de facto director will not be accepted as a legal defence if duties are breached, so a person must make sure they know their role and position in a company.

## What is a Shadow Director?

A shadow director is a person who is not validly appointed as a director but a person to whose instructions or wishes the de jure directors of the relevant company are accustomed to acting in accordance with, or a person who has influence over other directors of the company, or the board of a directors.

In _[Oliana Foods Pty Ltd v Culinary Co Pty Ltd (in liq) \[2020\] VSC 693](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/vic/VSC/2020/693.html)_ Connock J defined shadow director at \[236\] to mean:

> _What I have for convenience termed a ‘shadow’ director is a person who is not validly appointed as a director but a person to whose instructions or wishes the directors of the relevant company are accustomed to acting in accordance with._

The appointed directors should be used to following the directions of this shadow director.

This is stated in section 9 of the _Corporations Act_(as outlined above), which states that a shadow director is a “ _a person in accordance with whose directions or instructions the directors of the company are accustomed to act_”.

In _[Re Akron Roads Pty Ltd (in liquidation) (No 3) \[2016\] VSC 657](http://classic.austlii.edu.au/au/cases/vic/VSC/2016/657.html)_, Robertson J summarised the relevant legal principles in relation to shadow directors at \[271\].

01. _To establish that a defendant is a shadow director of a company it is necessary to prove:_
- _who are the directors of the company, whether de facto or de jure;_
- _that the defendant gave instructions or expressed wishes to those directors on how to act in relation to the company or that he was one of the persons who did so;_
- _that those directors acted in accordance with such instructions of wishes; and_
- _that there were accustomed so to act._
02. _What is needed is first a board of directors claiming and purporting to act as such; and secondly a pattern of behaviour in which the board did not exercise any discretion or judgment of its own, but acted in accordance with the instructions or wishes of others._
03. _It is not necessary that the instructions or wishes be given over the whole field of corporate activity for which the directors are responsible._
04. _There is no inconsistency with a person being a shadow director and on the other hand and the board exercising some discretion or judgment in areas in respect of which the shadow director does not give instructions or express a wish. Rather, the test for a shadow director only requires that when the directors are given instructions or wishes, they are accustomed to act as s 9 requires._
05. _The directors of the company must be accustomed to act as directors or the company in accordance with the person’s instructions or wishes as to how they should act. This requires habitual compliance over a period of time._
06. _The directors who must be accustomed to act need not be all of the directors but should be a governing majority of the board._
07. _Although it is not necessary to establish that a person is a shadow director that the directors of the company do not exercise any discretion of their own, there must be a causal connection between the instructions or wish of the shadow director and the act taken by the directors._
08. _The fact that a person has a genuine interest of his or her or its own in giving advice to the board, such as a bank or mortgagee, the mere fact that the board will tend to take that advice to preserve it from the mortgagee’s wrath will not make the mortgagee, et cetera a shadow director._
09. _Similarly, the fact that the governing majority of the board accepts the views and wishes of another director (who represents and acts for another company) does not by itself make the other company a shadow director. The views or wishes of that director may be sound advice that the governing majority may consider as directors should be adopted as it is in the best interests of the company._
10. _Similarly, not every person whose advice is in fact heeded as a general rule by the board is to be classed as a de facto or shadow director._
11. _On the other hand, if the instructions or wishes of the other director (who represented the putative director) were to carry out acts not in the best interests of the company, such as a decision to continue trading while insolvent, that might support the conclusion that the directors deferred to the decision making of the director who represents the putative director and were thus deferring to the decisions of the other company._
12. _It is not necessary to go so far as to show that the de jure directors were subservient or had surrendered their roles._

A shadow director does not take on the role of a director or claim to be in a position to be a director. Instead, they take a more backseat role in the company, while still having an extremely large influence on the affairs and management of the company.

They are often referred to as a ‘puppet master’ of sorts, as they do not take actions themselves necessarily but are highly influential over the decisions and actions made by others.

It is important to understand that not everyone with a high level of influence over the affairs of the company will be considered to be a shadow director.

## What are the Duties of a De Facto Director and/or a Shadow Director?

As we have discussed, a de facto director and/or a shadow director are considered by law to be in the same position as a regular director.

Therefore, the duties that they have line up almost exactly with those of a director. Shadow directors and de facto directors must both fulfill director duties.

A director of a company has a number of duties and obligations.  These include:

1. Duty of care and diligence.
2. Duty of good faith and the interest of the company.
3. Duty to disclose all material personal interests to the company.
4. Duty to maintain proper books and records.
5. Duty to not improperly use information.
6. Duty to not improperly use position.
7. Duty to [prevent insolvent trading](https://stonegatelegal.com.au/services/insolvency/).
8. Duties at common law and in equity.

### Duty of Care and Diligence

De facto directors and shadow directors have the responsibility to act with care and diligence regarding the company and the decisions made about it.

As directors have a lot of power of the future and wellbeing of the company that they direct, they must be sure to act with care and diligence in relation to the company.

This means that they are required to act with care and consideration and be aware and up to date on the internal and external affairs of the company and how it is running.

As a party with a lot of influence and power, it is important that they are aware of their actions and the consequences they will have on the company .

### Duty of Good Faith

De facto directors and shadow directors also have the duty to act in good faith when acting for the company .

To act with good faith is to act honestly and in the best interests of the company.

The motivation behind any decision made by a director should be known and made for no other reason than to benefit the company.

This does not mean that you cannot gain from the position as a de facto director, but you should be acting properly.

### Duty to Properly Use Position

De facto directors and shadow directors also have the duty to properly use their position and not take advantage of their power.

A de facto director and a shadow director will have a higher extent of influence and power over the board and the company in general.

A director should be sure to never use this power improperly, for reasons such as personal gain or gain for a limited selection of employees.

A director should only use your power for the good of the company, nothing else!

### Duty to Prevent Insolvent Trading

De facto directors and shadow directors also have the duty to prevent the company from engaging in insolvent trading.

Insolvent trading occurs when the company continues to incur debt when already insolvent, or unable to pay existing debts.

This should be prevented entirely by directors, as it is damaging to both the company and any creditors of the company.

Further Reading – [https://stonegatelegal.com.au/breach-of-directors-duties-in-australia/](https://stonegatelegal.com.au/breach-of-directors-duties-in-australia/)

## What’s the Difference Between De facto directors and shadow directors?

Both shadow directors and de facto directors fulfill similar roles. Neither are officially directors but have a high level of influence and both must fulfill director duties.

A de factor director is a person who is not validly appointed as a director but a person who does the work of a director and/or acts in the position of director of that company.

A shadow director is a person who is not validly appointed as a director but a person to whose instructions or wishes the actual directors of the relevant company are accustomed to acting in accordance with (including de facto directors).

This means that de facto directors are practically directors of the company that they work for and act as a director of the company, while shadow directors only advise and direct the directors that have been validly appointed to the role.

## How does Liability Apply?

As both a shadow director and as a de facto director, [personal liability](https://stonegatelegal.com.au/directors-liability-when-are-directors-personally-liable/) applies.  But what does this mean?

Director duties apply to both types of alternative directors. This means that a director has the responsibility to uphold the duties of a director, such as care and diligence, good faith, preventing insolvent trading, and a couple of others.

There are very serious consequences associated with breaching directors’ duties, including (inter alia) the following:

1. Personal liability.
2. Commercial consequences.
3. Criminal consequences.
4. Disqualification from directorship.

We will explain these in more detail below.

### Personal Liability

When a de facto director and/or a shadow director fails to fulfill their duties, they can be held personally liable for a range of penalties and obligations.

These may include civil penalties, compensation payments to affected third parties, repayment of company debts and financial losses, and fulfilling the [company’s tax obligations](https://stonegatelegal.com.au/director-penalty-notice-complete-guide-for-directors/).

### Commercial Consequences

If de facto director and/or a shadow [director breaches](https://stonegatelegal.com.au/unreasonable-director-related-transactions-and-how-to-defeat-them/) their duty it can negatively impact a company’s reputation, leading to increased scrutiny from the public, investors, and regulatory bodies such as ASIC.

This tarnished reputation can have significant commercial consequences for the company.

### Criminal Consequences

In severe cases where a de facto director and/or a shadow director has substantially violated their duty to act in good faith or has breached their obligations regarding the improper use of information, they may face criminal charges.

Such charges can result in a maximum prison sentence of 15 years. Criminal convictions for these breaches typically involve dishonesty or recklessness, such as making false or misleading disclosures or engaging in deceitful behaviour as a de facto director and/or a shadow director.

### Disqualification from Directorship

If a director breaches a civil penalty provision and the Court deems disqualification appropriate, the Court has the power to disqualify that person from managing corporations for a suitable period.

[ASIC](https://asic.gov.au/) also has the authority to disqualify individuals from managing corporations for up to five years in specific circumstances.

## De Facto Director and Shadow Director FAQ

In this frequently asked questions section, we provide answers to commonly asked questions about these roles and their implications in corporate governance.

### What is a De Facto Director?

A De Facto Director is a person who acts and behaves like a director, assuming the responsibilities and making decisions typically reserved for directors, even though they have not been validly appointed to this role.

### What are the legal implications of being a De Facto Director?

From a legal perspective, De Facto Directors have the same duties, obligations, and potential liabilities as formally appointed directors. They can be held accountable for any breaches of directors’ duties and may face personal liability for their actions.

### Who can be considered a Shadow Director?

A Shadow Director is a person who has not been formally appointed as a director but exercises significant influence or control over the company and its directors. The instructions, guidance, or directions of shadow directors are typically followed by the de jure directors, making them effectively equivalent to directors.

### Are Shadow Directors subject to the same legal responsibilities as appointed directors?

Yes, Shadow Directors have the same legal responsibilities and duties as formally appointed directors. They are expected to act in the best interests of the company, exercise due care and diligence, and avoid conflicts of interest. Failure to fulfill these obligations may result in legal consequences and liabilities.

### Can De Facto Directors and Shadow Directors be held liable for their actions?

Yes, both De Facto Directors and Shadow Directors can be held personally liable for their actions, just like formally appointed directors. If they breach their duties or engage in wrongful conduct, they may face legal action, civil penalties, compensatory payments, and even disqualification from managing corporations.

### What is a de jure director?

A de jure director is a person who has been legally appointed as a director. Sometimes a de jure director is known as a “ _director in law_” or a “ _true director_”.

![Picture of Wayne Davis](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/desktop/optimized/rev-748d11d/secure.gravatar.com/avatar/5841d7da8b6c7d486226c9358f93fc5a.5b54ec283af918fb28f171190159c8892905cb00c7f8bf19a380e6224d11fa82)

#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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# Do I have to let the Builder Back on Site to Rectify Defective Work?

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- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| February 4, 2023

## Article Summary

If you are asking yourself “ _Do I have to let the builder back on site to rectify defective work?_” then the answer is both yes and no, depending on whether it is reasonable in your particular set of circumstances.

The relevant general legal principles in relation to this issue says that:

1. A person who suffers loss because of a breach of contract is required to act reasonably in relation to that loss in order for the loss to be recoverable.
2. The party who has suffered a loss is under a duty to mitigate its loss; and
3. Therefore, it is generally accepted that the owner must give the builder a **reasonable** opportunity to rectify any defects.

If the builder has done one (1) or more of the following, then maybe not:

1. Caused the owner to lose confidence in the builder’s ability.
2. The builder is denying the defects exist.
3. The builder failing to return to site.
4. Builders’ rectification proposal not reasonable.

If that is the case, then it is quite right for an owner to not have the builders back on site to rectify defective work with the risk of causing further damage, or defects, or exacerbating the issues, or delaying further.

Table of Contents

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![Do I have to have the builder back on site to rectify defective work - when is it reasonable](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/02/Do-I-have-to-have-the-builder-back-on-site-to-rectify-defective-work-when-is-it-reasonable-300x300.png)A common question we get asked quite regularly is “ _Do I have to let the builder back on site to rectify defective work?_”

Obviously, if an owner has had a bad experience with a builder, and the owner has lost confidence in the builder, then the owner quite rightly may not want the dodgy builder back on their property.

Maybe the builder has caused further damage to the property trying to rectify the defects or has made the defects worse by trying to cowboy a cheap solution to simply save money.

If that is the case, then it is quite right for an owner to ask if they have to allow the builder back again with the risk of causing further damage, or defects, or exacerbating the issues.

Well, the relevant general legal principles in relation to this issue says that:

1. A person who suffers loss because of a breach of contract is required to act reasonably in relation to that loss in order for the loss to be recoverable.
2. The party who has suffered a loss is under a duty to mitigate its loss; and
3. Therefore, it is generally accepted that the owner must give the builder a **reasonable** opportunity to rectify any defects.

In this article, our [building and construction lawyers](https://stonegatelegal.com.au/services/building-and-construction-lawyers/) break these issues down with relevant case law, and try to answer the question, “ _Do I have to let the builder back on site to rectify defective work?_”

**If you are asking “Do I have to let the builder back on site to rectify defective work?” then it is vital that you get suitably qualified legal advice by profession building and construction solicitor.**

[SPEAK TO A CONSTRUCTION LAWYER TODAY](https://stonegatelegal.com.au/contact-stonegate-legal/)

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## Do I have to let the builder back on site to rectify defective work?

It has been considered in the case law on this point that the relevant legal principles are:

1. Losses related to an owner’s own unreasonable behaviour are not recoverable.
2. The owner must offer the contractor a reasonable chance to minimise the damages it must pay by [fixing the defective works](https://stonegatelegal.com.au/defective-building-work-in-queensland-complete-guide/) except in cases where it is unreasonable for the builder to fix the defective works.
3. What is reasonable depends on all the specific facts of the situation.
4. The burden of proving the plaintiff’s reasonableness is with the defendant; the plaintiff is not required to do so.

We will explore these legal principles in more detail below.

## Losses related to an owner’s own unreasonable behaviour are not recoverable

_[Hasell v Bagot, Shakes & Lewis, Ltd (1911) 13 CLR 374](http://classic.austlii.edu.au/au/cases/cth/HCA/1911/62.html)_, O’Connor J. succinctly stated this principle by saying:

> _There is no question that it is one of the principles on which damages are assessed that a party to an agreement suffering injury from the other party’s breach of its terms is bound to exercise reasonable care in mitigating the injurious consequences of the breach, and is not entitled to recover from the party in default any damage which the exercise of reasonable care on his part would have prevented from arising._

This has been followed in a number of [building and construction disputes](https://stonegatelegal.com.au/how-to-avoid-and-manage-building-disputes-in-queensland/) on the issue of whether you have the builders back on site to rectify defective work.

In _[Woodlands Oak Ltd v Conwell & Anor \[2011\] EWCA Civ 254](https://www.bailii.org/ew/cases/EWCA/Civ/2011/254.html)_ the Court found at \[6\]:

> _The Conwells had in addition claimed for the cost of rectifying snagging items. They had not given Woodlands Oak the opportunity to rectify these defects which, so the Recorder found, Woodlands could have put right by subcontractors at no cost to themselves and, more importantly, no cost to Mr and Mrs Conwell. The Recorder held that the Conwells had failed to mitigate their loss and awarded them nothing for this._

In _[The Owners – Strata Plan 89041 v Galyan Pty Ltd \[2019\] NSWSC 619](http://classic.austlii.edu.au/au/cases/nsw/NSWSC/2019/619.html)_ Stevenson J cited the _[Hasell](http://classic.austlii.edu.au/au/cases/cth/HCA/1911/62.html)_ case above at \[21\] and said:

> _\[T\]he overarching principle is that a plaintiff is not entitled to recover losses attributable to its own unreasonable conduct._

In _[The Owners – Strata Plan No 76674 v Di Blasio Constructions Pty Ltd \[2014\] NSWSC 1067](http://classic.austlii.edu.au/au/cases/nsw/NSWSC/2014/1067.html)_, Ball J also cited the _[Hasell](http://classic.austlii.edu.au/au/cases/cth/HCA/1911/62.html)_ case above at \[42\] and said:

> _Generally speaking, a person who suffers loss as a consequence of a breach of contract is required to act reasonably in relation to that loss in order for the loss to be recoverable. An important aspect of this general principle is that the party who has suffered a loss is under a duty to mitigate its loss … Rather, the principle is that the plaintiff is not entitled to recover losses attributable to its own unreasonable conduct._

In the more recent case of _[Upton v Hartman Construction Development Pty Ltd (Building and Property) \[2022\] VCAT 224](http://classic.austlii.edu.au/au/cases/vic/VCAT/2022/224.html)_, H. Nash, Member said at \[191\] and \[192\]:

> _As noted above the general principle is that a person who suffers loss must take all reasonable steps to act reasonably with respect to the extent of that loss, and in particular, to mitigate the loss … That is, the wronged party is not entitled to recover losses attributable to its own unreasonable conduct._

The decision in _[Hasell](http://classic.austlii.edu.au/au/cases/cth/HCA/1911/62.html)_ was also cited in a [Queensland District Court](https://www.courts.qld.gov.au/courts/district-court) matter in Maroochydore, in the matter of _[Aquavista Pty Ltd v Timevale Pty Ltd \[2016\] QDC 235](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/qld/QDC/2016/235.html)_, where Long SC DCJ said at\[60\]:

> _\[t\]he principle sought to be invoked here is that the plaintiff is not entitled to recover for avoidable loss, through any failure to take reasonable steps to mitigate the loss flowing from the breach of contract. It is the demonstration of failure to avoid loss, through unreasonable action or inaction, which is necessary._

The first relevant principle to be applied is that the owner of the property in a construction dispute in relation to defective works has an active duty to act reasonably to mitigate their losses.

Failure to act reasonably to mitigate their losses (or acting unreasonably) may mean that owners are not entitled to recover any damages from the builder in relation to the defective building works.

The next relevant principle is that the owner must give the builder a **reasonable** opportunity to rectify any defects.

## The Owner must give the Builder a Reasonable Opportunity to Rectify Defects

Unless the owner’s unwillingness to do so is **reasonable**, or if the builder has refused to make any necessary repairs, the owner is generally required to provide the builder with the **reasonable** opportunity to mitigate their damages by rectifying the building defects.

In _[Cassidy v Engwirda Construction Co (No 2) \[1968\] Qd R 159](https://www.queenslandjudgments.com.au/case/id/508464)_, where Sheehy S.P.J. Wanstall and Hart JJ. agreeing with Hoare J. when he said:

> _One can see that, generally speaking, when a builder is actually working on a job it will ordinarily be cheaper for him to remedy defects rather than to have them remedied by some other contractor. In such a case it is clear that a building owner must generally give the original contractor the opportunity to rectify the defects unless, I should say, there is some good reason to the contrary._

However, this does not apply if the builder has already said that he will not rectify the defects.  In _[Cassidy](https://www.queenslandjudgments.com.au/case/id/508464)_, Hoare J also said:

> _… \[t\]here is no necessity for a building owner to give notice to a builder who has stated he will not remedy the defects or execute repairs, and it seems to me that such a proposition is sound in principle._

In _[The Owners – Strata Plan No 76674 v Di Blasio Constructions Pty Ltd \[2014\] NSWSC 1067](http://classic.austlii.edu.au/au/cases/nsw/NSWSC/2014/1067.html)_, Ball J also cited the _[Cassidy](https://www.queenslandjudgments.com.au/case/id/508464)_ case above at \[44\] and said:

> _In the case of building contracts, it is also generally accepted that the owner must give the builder a reasonable opportunity to rectify any defects … \[t\]he owner is required to give the builder an opportunity to minimise the damages it must pay by rectifying the defects, except where its refusal to give the builder that opportunity is reasonable or where the builder has repudiated the contract by refusing to conduct any repairs … That obligation may be an aspect of the duty to mitigate, since it may be less expensive for the builder rather than a third party to rectify the defects, particularly if the builder is still on site._

In _[Bedrock Construction and Development Pty Ltd v Crea \[2021\] SASCA 66](http://classic.austlii.edu.au/au/cases/sa/SASCA/2021/66.html)_ Doyle J with Livesey and Bleby JJA agreeing) looked at the passage in _[Di Blasio](http://classic.austlii.edu.au/au/cases/nsw/NSWSC/2014/1067.html)_ above and said at \[124\]:

> _Properly understood, the passage from the reasons of Ball J in The Owners -Strata Plan No 76674 v Di Blasio Constructions Pty Ltd relied upon by the trial judge is consistent with the above. In that case, Ball J was considering the position as a matter of common law, and reasoned that an owner was required to give a builder a reasonable opportunity to rectify defects, by way, it would seem, of an implied term, or at the very least as an aspect of the principles governing mitigation of loss._

In _[The Owners – Strata Plan 89041 v Galyan Pty Ltd \[2019\] NSWSC 619](http://classic.austlii.edu.au/au/cases/nsw/NSWSC/2019/619.html)_ Stevenson J cited the _[Di Blasio](http://classic.austlii.edu.au/au/cases/nsw/NSWSC/2014/1067.html)_ case above at \[21\] and said:

> _… in cases involving building contracts, the owner is required to give the builder an opportunity to minimise the damages it must pay by rectifying the defects, except where its refusal to give the builder that opportunity is reasonable or where the builder has repudiated the contract by refusing to conduct any repairs._

This principle and the cases have been followed in Queensland in the [Queensland District Court](https://www.courts.qld.gov.au/courts/district-court) case of _[Thallon Mole Group Pty Ltd v Morton \[2022\] QDC 224](http://classic.austlii.edu.au/au/cases/qld/QDC/2022/224.html)_, where Muir DCJ said at \[370\]:

> _It has been over 60 years since the High Court recognised in Belgrove v Eldridge (1954) 900 CLR 613 that a plaintiff whose property is damaged or defective as a consequence of a defendant’s breach is generally entitled to recover the costs of reinstating the property so that it corresponds to the contractual promise, except to the extent that it is unreasonable to insist on reinstatement._

So, the legal concept of reasonableness is a major factor in determining whether you have to have the builders back on site to rectify defective work.  But what is “reasonable” in these situations.

## What is “Reasonable” in this Context?

The criteria for what constitute “reasonable” depends on the particulars of each particular case and is assessed on a case-by-case basis.

In _[Karacominakis v Big Country Developments Pty Ltd & Ors \[2000\] NSWCA 313](http://classic.austlii.edu.au/au/cases/nsw/NSWCA/2000/313.html)_, Giles JA said at \[187\] (with Handley and Stein JJA) agreeing:

> _Since the defendant is a wrongdoer, in determining whether the plaintiff has acted unreasonably a high standard of conduct will not be required, and the plaintiff will not be held to have acted unreasonably simply because the defendant can suggest other and more beneficial conduct if it was reasonable for the plaintiff to do what he did … Whether the plaintiff acted unreasonably is a question of fact._

In _[The Owners – Strata Plan No 76674 v Di Blasio Constructions Pty Ltd \[2014\] NSWSC 1067](http://classic.austlii.edu.au/au/cases/nsw/NSWSC/2014/1067.html)_, Ball J stated at \[44\]:

> _The question of what is reasonable depends on all the circumstances of the particular case._

This was also directly referenced in the [Queensland District Court](https://www.courts.qld.gov.au/courts/district-court) case of _[Thallon Mole Group Pty Ltd v Morton \[2022\] QDC 224](http://classic.austlii.edu.au/au/cases/qld/QDC/2022/224.html)_, at \[371\], In _[The Owners – Strata Plan 89041 v Galyan Pty Ltd \[2019\] NSWSC 619](http://classic.austlii.edu.au/au/cases/nsw/NSWSC/2019/619.html)_ at \[21\], and in the Federal Court in the case of _[F.Y.D. Investments Pty Ltd v Promptair Pty Ltd (No 2) \[2019\] FCA 419](http://classic.austlii.edu.au/au/cases/cth/FCA/2019/419.html)_ at \[258\].

Lawcite reference **[here](http://classic.austlii.edu.au/cgi-bin/LawCite?cit=%5B2014%5D+NSWSC+1067)** for further cases on this point.

Not particularly helpful if you are reading this to see if you have to have the builders back on site to rectify defective work.

However, some of the cases have been decided one way or the other based upon what was reasonable or unreasonable facts in their respective cases.

### Loss of Confidence in the Builders Ability

In _[Eribo v Odinaiya \[2010\] EWHC 301 (TCC)](http://www.bailii.org/ew/cases/EWHC/TCC/2010/301.html)_ Deputy Judge Acton Davis QC referring to case law and legal text book, said at [\[70\]](http://www.bailii.org/ew/cases/EWHC/TCC/2010/301.html#para70)

> _It is suggested, however that this latter view fails to take account of the not uncommon case of an owner who, by reason of a past history of unsatisfactory work or dilatoriness, may have reasonably lost confidence in the contractor’s willingness or ability to remedy the defects satisfactorily, and who therefore reasonably prefers to bring in another contractor. …. Since explicit language is rarely used in the clauses on this particular point, it is submitted that the Courts should … be slow to imply a term that the contractor would in all cases have an unqualified right to re-enter and remedy defects himself for breach of which damages would be recoverable from the owner._

In _[Oliver & Jasmine Investments Pty Ltd v White (Domestic Building) \[2013\] VCAT 740](http://classic.austlii.edu.au/au/cases/vic/VCAT/2013/740.html)_, Senior Member M. Lothian said at \[93\]:

> _The Builder also referred to [Woodlands Oak Ltd v Conwell & Anor](https://www.bailii.org/ew/cases/EWCA/Civ/2011/254.html), which raises the possibility that a failure to give the builder a chance to rectify might amount to a failure to mitigate, but not surprisingly, the question turns on the facts of the case … There are good reasons in an owner’s self-interest why a builder, **unless plainly incompetent or dangerous**, should be given an opportunity to rectify. One is that if other defects are discovered later, they can only be the fault of the original builder. Where the original builder repairs, there is the potential for losses to the owner and the original builder to be minimised._

In the [Queensland Civil and Administrative Tribunal](https://www.qcat.qld.gov.au/) case of _[Sun Building Services Pty Ltd v Minh & Anor \[2015\] QCAT 134](http://classic.austlii.edu.au/au/cases/qld/QCAT/2015/134.html)_, Member Deane said at \[134\]:

> _The Court of Appeal of England and Wales in Woodlands Oak Limited v Conwell and Anor held that where the employer fails to give the contractor an opportunity to rectify defects in the work that may amount to a failure to mitigate the losses … there may well be circumstances in which it is entirely reasonable not to give the contractor that opportunity … The Court of Appeal in that case indicated that this might be satisfied where an owner, through past experience, was not satisfied that a particular sub-contractor would satisfactorily rectify the defect._

In [_The Owners – Strata Plan No 76674 v Di Blasio Constructions Pty Ltd_ \[2014\] NSWSC 1067](http://classic.austlii.edu.au/au/cases/nsw/NSWSC/2014/1067.html), Ball J also cited the [_Woodlands Oak_](https://www.bailii.org/ew/cases/EWCA/Civ/2011/254.html) case above at \[44\] and said:

> _The question of what is reasonable depends on all the circumstances of the particular case. One relevant factor is what attempts the builder has made to repair the defects in the past and whether, in the light of the builder’s conduct, the owner has reasonably lost confidence in the willingness and ability of the builder to do the work._

In _[The Owners – Strata Plan 89041 v Galyan Pty Ltd \[2019\] NSWSC 619](http://classic.austlii.edu.au/au/cases/nsw/NSWSC/2019/619.html)_ Stevenson J cited the _[Woodlands Oak](https://www.bailii.org/ew/cases/EWCA/Civ/2011/254.html)_ passage as it was referenced in _[Di Blasio](http://classic.austlii.edu.au/au/cases/nsw/NSWSC/2014/1067.html)_.

### The Builder is Denying the Defects Exist

It might also be reasonable to not let the builder back on the site if they continually ignore owner, or refuse to admit that there are defective building works.

In _[Ryan v E J Lowe trading as Urbane Builders (Domestic Building) \[2005\] VCAT 2031](http://classic.austlii.edu.au/au/cases/vic/VCAT/2005/2031.html)_ the builder refused to acknowledge the existence of the defects. Senior Member M. Lothian said at \[34\] to \[36\]:

> _The Builder’s attitude in ignoring the terms of the contract during construction and again when rectification is contemplated, plus the Builder’s consistent refusal to admit most of the defects until well into the trial demonstrates that the Owners’ attitude is reasonable in refusing to consent to the Builder rectifying the work … if the \[owner\] denies the \[builder\] a contractual right to rectify the defects, the \[owner’s\] quantum of damages for breach of contract will generally not be allowed to exceed what would have been the cost to the \[builder\] … The difference in this case is that the Owners have reasonably refused to consent to have the Builder rectify outstanding defects. The measure of damages is thus the reasonable cost to them of having an independent builder complete or rectify items which the Tribunal finds are incomplete or defective._

In _[Oliver & Jasmine Investments Pty Ltd v White (Domestic Building) \[2013\] VCAT 740](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/vic/VCAT/2013/740.html)_, Senior Member M. Lothian referenced his earlier decision in _[Ryan](http://classic.austlii.edu.au/au/cases/vic/VCAT/2005/2031.html)_ and said at \[91\]:

> _I accept the Builder’s submission that … the Owner must take all reasonable steps to mitigate the loss flowing from the breach of contract … In Ryan, I found that the owners were reasonable in refusing to allow the builder to rectify where it refused to admit “most of the defects until well into the trial”. As submitted for the Owner on 22 March 2013, until the hearing commenced the Builder’s proposed scope of repairs was substantially less than that agreed upon by the experts during the hearing._

### The Builder Failing to Return to Site

Similar to the above, it is also not unreasonable if the builder refuses to return to the site and rectify the defects.

In _[Upton v Hartman Construction Development Pty Ltd (Building and Property) \[2022\] VCAT 224](http://classic.austlii.edu.au/au/cases/vic/VCAT/2022/224.html)_, H. Nash, Member said at \[193\] to \[195\]:

> _The Builder argues that because the Owners were aware of the water ingress since June 2017 and as they took no steps to stop the water ingress and it is the water ingress which caused the mould, the Owners failed to exercise reasonable case in mitigating their loss with respect to this defect … I do not accept this proposition. It places an unfair burden on a wronged party when equally, the Builder chose not to undertake all the rectification works in June 2017 when he returned to site and undertook some rectification works or at any time since then. The expert evidence before me is that there is water leak causing the water ingress. The water ingress has caused the mould. The water ingress is occurring by reason of a defect in construction of the house. The mould has arisen as a consequence of the water ingress … The obligation on the Owners to mitigate their loss applies equally to the Builder to attend the premises and rectify its defective works. It chose not to do so and therefore must compensate the Owners for the cost of them having to undertake the rectification works themselves using third parties._

### Builders Rectification Proposal Not Reasonable

Sometimes, builders will try to cut corners in the defect rectification works to save money.  If the method of rectification are unreasonable, then it may be reasonable for an owner to reject this.

In _[Steele & Associates Pty Ltd v Heath \[2015\] NSWCATAP 239](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/nsw/NSWCATAP/2015/239.html)_, the appeal jurisdiction discussed the finding in the original case.  In doing so, A Coleman SC, Senior Member, and P Boyce, Senior Member found at \[50\]:

> _It is clear from the factual matters recited by the Tribunal that there were bone fide attempts to reach a solution whereby the builder could attend to rectify the defect, but no agreement could be reached. Once of the reasons why no agreement could be reached was that there was a genuine disagreement about the manner in which the builder proposed to rectify the defect. The owner’s architect regarded that method as unsatisfactory. The owner was not acting unreasonably in relying on the architect’s opinion that the builder’s proposed method of rectification was unsuitable. As in Di Blasio here the owners did not have confidence that the builder’s proposed method of rectifying the defects was the correct method. As it turns out, this opinion was validated by the expert evidence._

In _[Christopher Kerrie Gates v Crown Constructions Pty Limited \[2014\] NSWCATCD 172](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/nsw/NSWCATCD/2014/172.html)_, GA Kinsey, General Member said at \[50\] and \[51\]:

> _The Tribunal rejects the respondent’s submission that the applicant failed to mitigate his loss. The applicant had engaged in a dialogue with the respondent and on the advice of Messrs Grave and Novkovic had decided the application of a sealant would not fix the problem. The respondent did not propose an alternative solution and the applicant had reasonably concluded that he was not going to reach an agreement with the respondent … In the Tribunal’s opinion, the applicant was justified in engaging another tradesperson to undertake the rectification work to minimise the damage from the water leaks._

In _[The Owners – Strata Plan 89041 v Galyan Pty Ltd \[2019\] NSWSC 619](http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/nsw/NSWSC/2019/619.html)_, Stevenson J said at \[89\]:

> _The rectification work ultimately proposed on the Builder’s behalf by Mr Seeto fell far short of that which Ms Grey has now determined was needed. This points strongly to the conclusion that it was reasonable for the Owners Corporation not to permit the Builder to rectify the work on the basis proposed by Mr Seeto._

In _[The Owners – Strata Plan No 76674 v Di Blasio Constructions Pty Ltd \[2014\] NSWSC 1067](http://classic.austlii.edu.au/au/cases/nsw/NSWSC/2014/1067.html)_, Ball J said at \[51\]:

> _It appears that the Builder made some inadequate attempts to repair defects that were identified initially. As the defects continued to emerge, the Owners Corporation took the reasonable step of engaging an expert to identify the defects and took the reasonable position that the Builder should prepare a scope of works to remedy the defects that had been identified. In my opinion, the Builder’s response was inadequate … In my opinion, the Owners Corporation could reasonably have taken the view that it no longer had confidence in the Builder and that it wanted someone else to undertake the rectification work._

These are some of the reasons that the various Courts and Tribunals have found that the owners acted reasonably in not having the builders back on site to rectify defective work.

The burden of proof is on the builder to prove that the owner did not act reasonably, and not the owner to prove that they acted reasonably.

## The Builder must prove that the Owner is Acted Unreasonably

In a dispute about defective residential building works (or commercial works), it is for the builder (as defendant) to prove that the owner (as plaintiff) has acted unreasonably.

In _[Industrial Plant Pty Ltd v Robert’s Qld Pty Ltd (1963) 180 CLR 130](http://classic.austlii.edu.au/au/cases/cth/HCA/1963/57.html)_, Kitto, Windeyer and Owen JJ said at \[138\]:

> _Next it was said that the plaintiff had failed to mitigate its damage in that it should, so it was said, have sought from the Commonwealth an extension of time for performance of the contract and made arrangements to obtain another crushing machine capable of carrying out the necessary work. But it was for the defence to show that the plaintiff had failed to mitigate damages …_

In _[Burns v MAN Automotive (Aust) Pty Ltd \[1986\] HCA 81](http://classic.austlii.edu.au/au/cases/cth/HCA/1986/81.html)_, Brennan J said at \[6\]:

> _Foreseeability extends until it would be unreasonable for the injured party to fail to act to mitigate his loss, and the onus of proving such a failure is on the party in breach. Unless the respondent (defendant) showed that the appellant (plaintiff) unreasonably failed to avoid the losses incurred after July 1978, those losses were as foreseeable after July 1978 as they were before._

In _[Karacominakis v Big Country Developments Pty Ltd & Ors \[2000\] NSWCA 313](http://classic.austlii.edu.au/au/cases/nsw/NSWCA/2000/313.html)_, Giles JA said at \[187\] (with Handley and Stein JJA) agreeing:

> _The plaintiff does not have to show that he has fulfilled his so-called duty, and the onus is on the defendant to show that he has not and the extent to which he has not._

All of the above cases were summarised in In _[The Owners – Strata Plan No 76674 v Di Blasio Constructions Pty Ltd \[2014\] NSWSC 1067](http://classic.austlii.edu.au/au/cases/nsw/NSWSC/2014/1067.html)_ at \[48\]:

> _It is for the defendant to prove that the plaintiff has acted unreasonably. It is not for the plaintiff to prove that it acted reasonably: TC Industrial Plant Pty Ltd v Robert’s Queensland Pty Ltd [\[1963\] HCA 57](http://www.austlii.edu.au/au/cases/cth/HCA/1963/57.html); [(1963) 180 CLR 130](http://classic.austlii.edu.au/cgi-bin/LawCite?cit=%281963%29%20180%20CLR%20130) at 138; Burns v MAN Automotive (Aust) Pty Ltd [\[1986\] HCA 81](http://www.austlii.edu.au/au/cases/cth/HCA/1986/81.html); [(1986) 161 CLR 653](http://classic.austlii.edu.au/cgi-bin/LawCite?cit=%281986%29%20161%20CLR%20653) at 673 per Brennan J; TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd [(1989) 16 NSWLR 130](http://classic.austlii.edu.au/cgi-bin/LawCite?cit=%281989%29%2016%20NSWLR%20130) at 158 per Hope JA (with whom Priestley and Meagher JJA agreed); Karacominakis v Big Country Developments Pty Ltd [\[2000\] NSWCA 313](http://www.austlii.edu.au/au/cases/nsw/NSWCA/2000/313.html) at [\[187\]](http://www.austlii.edu.au/au/cases/nsw/NSWCA/2000/313.html#para187) per Giles JA (with whom Handley and Stein JJA agreed)._

These cases were cited the [Queensland District Court](https://www.courts.qld.gov.au/courts/district-court) case of _[Thallon Mole Group Pty Ltd v Morton \[2022\] QDC 224](http://classic.austlii.edu.au/au/cases/qld/QDC/2022/224.html)_, where Muir DCJ said at \[371\]:

> _The onus is on Thallon Mole to prove that Mrs Morton has acted unreasonably, it is not for her to prove that she acted reasonably._

However, although it is not on the owner to prove they acted reasonably, it is always a good idea to act reasonably in an attempt to [mitigate the damages](https://stonegatelegal.com.au/builders-subcontractors-charge-get-paid-protect-yourself/).

## Do I have to let the builder back on site to rectify defective work?

If you are asking yourself “ _Do I have to let the builder back on site to rectify defective work?_” then the answer is both yes and no, depending on whether it is reasonable in your particular set of circumstances.

The relevant general legal principles in relation to this issue says that:

1. A person who suffers loss because of a breach of contract is required to act reasonably in relation to that loss in order for the loss to be recoverable.
2. The party who has suffered a loss is under a duty to mitigate its loss; and
3. Therefore, it is generally accepted that the owner must give the builder a **reasonable** opportunity to rectify any defects.

If the builder has done one (1) or more of the following, then maybe not:

1. Caused the owner to lose confidence in the builder’s ability.
2. The builder is denying the defects exist.
3. The builder failing to return to site.
4. Builders’ rectification proposal not reasonable.

If that is the case, then it is quite right for an owner to not have the builders back on site to rectify defective work with the risk of causing further damage, or defects, or exacerbating the issues, or delaying further.

**If you are asking “Do I have to let the builder back on site to rectify defective work?” then it is vital that you get suitably qualified legal advice by profession [building and construction solicitor](https://stonegatelegal.com.au/services/building-and-construction-lawyers/).**

[SPEAK TO A CONSTRUCTION LAWYER TODAY](https://stonegatelegal.com.au/contact-stonegate-legal/)

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## Allowing a Builder bank on site to Rectify Defects FAQ

We get asked a number of frequently asked questions in relation to whether an owner has to let the builder back on site to rectify defective work.

### Do I have to let the Builder Back on Site to Rectify Defective Work?

In relation to building contracts, the answer is both yes and no, depending on whether it is reasonable in your particular set of circumstances. The relevant general legal principles in relation to this issue says that:

1. A person who suffers loss because of a breach of contract is required to act reasonably in relation to that loss in order for the loss to be recoverable.
2. The party who has suffered a loss is under a duty to mitigate its loss; and
3. Therefore, it is generally accepted that the owner must give the builder a reasonable opportunity to rectify any defects.

### Do we have to give the Builder a Reasonable Opportunity to Rectify Defects?

Unless the owner’s unwillingness to do so is reasonable, or if the builder has refused to make any necessary repairs, the owner is generally required to provide the builder with the reasonable opportunity to mitigate their damages by rectifying the building defects.

### What is “Reasonable” in relation to letting the builder back on site?

The cases have found that the in following circumstances, it is not unreasonable to allow your building back on site to rectify the defects:

1. Loss of Confidence in the Builders Ability
2. The Builder is Denying the Defects Exist
3. The Builder Failing to Return to Site
4. Builders Rectification Proposal Not Reasonable

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#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

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## Property Seizure Warrant Guide
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# Enforcement Warrant for Seizure and Sale of Property

[Discuss Your Case Today](https://stonegatelegal.com.au/contact/)

## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| December 26, 2018

## Article Summary

A seizure and sale warrant in Queensland gives an enforcement officer the power to access private premises, seize, and publicly auction the debtor’s property (usually real property). Funds raised from the auction are allocated towards settling the judgment debt and related costs, after deducting any pre-existing mortgages or charges.

In this article our [Queensland debt recovery lawyers](https://stonegatelegal.com.au/services/debt-recovery-lawyers/) provide a comprehensive guide on the process of enforcing a judgment or registered QCAT decision through a warrant for seizure and sale of property.

This enforcement option, under the _Uniform Civil Procedure Rules 1999_ (QLD), allows a creditor to seize and sell a debtor’s property, including real estate and vehicles, to satisfy a judgment debt.

Key steps and requirements for obtaining a warrant include:

1. **Enforceable Money Order** – The creditor needs an enforceable money order from a court or tribunal, which is valid for enforcement within six years from the date of the order.
2. **Completion of Documents** – The creditor must complete several forms, including an application (Form 9), a draft warrant (Form 75), and a statement in support of the application (Form 74).
3. **Application Process** – The application outlines the orders sought by the plaintiff, and the draft warrant includes details like the judgment amount, payments made by the debtor, costs of preparing the warrant, and interest.
4. **Enforcement Options** – The article discusses two main options for enforcement – seizure and sale of real property and vehicles. Each option has specific procedures, such as registering the warrant on the title of the debtor’s property or conducting vehicle registration and PPSR searches.

The article emphasises the complexity of the process and recommends engaging a legal professional for assistance in enforcing money orders.

Table of Contents

[Toggle](https://stonegatelegal.com.au/warrant-for-seizure-and-sale-of-property/#)

![Enforcement Warrant for Seizure and Sale of Property in Queensland](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2018/12/Enforcement-Warrant-for-Seizure-and-Sale-of-Property-in-Queensland.png)A warrant for seizure and sale of property is an enforcement option pursuant to the _Uniform Civil Procedure Rules 1999_ (QLD) (“ _**UCPR**_”).

A warrant for seizure and sale of property is a way of **enforcing a judgment** or **enforcing a registered QCAT decision**.

A warrant for seizure and sale of property allows the creditor to enforce an enforceable money order over the property of the debtor.

Property can include all real and personal property of the debtor that is not exempt property, but in reality, is more likely to be real property or vehicles.

A warrant for seizure and sale is obtained by making an application to the Court.  The application consists of:

1. The application;
2. A statement in support of the application; and
3. A draft enforcement warrant.

After applying for enforcement warrant, when the Court issues the UCPR enforcement warrant, it is then given to the enforcement officer to execute the warrant.

This article will give you all the information needed to apply for an enforcement warrant, and give you hints and tips to avoid pitfalls.

**There are a number of complicated steps that need to happen before a Court Bailiff can execute a warrant for seizure and sale of property. We strongly recommend engaging a legal professional**

[SPEAK TO A LAWYER FOR FREE TODAY](https://stonegatelegal.com.au/free-case-evaluation/)

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## Enforcement Warrant for Seizure and Sale of Property

The steps needed for a warrant for seizure and sale of property include:

1. A creditor will need an enforceable money order;
2. The creditor must complete an application – [Form 9](https://www.courts.qld.gov.au/__data/assets/word_doc/0009/92925/Form-9-Application-UCPR.doc);
3. The creditor must complete the draft warrant – [Form 75](https://www.courts.qld.gov.au/__data/assets/word_doc/0009/88425/ucpr-f-75v3-070614.doc);
4. The creditor must complete a statement in support of the application – [Form 74](https://www.courts.qld.gov.au/__data/assets/word_doc/0010/92926/Form-74-Statement-in-support-UCPR.doc);
5. The creditor will then need to provide the warrant to the enforcement officer for enforcement by one of the various enforcement options.

We will break each of these steps down in more detail below.

### A Creditor will need an Enforceable Money Order

An enforceable money order is defined in [rule 793](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s793.html) of the UCPR:

> _“ **enforceable money order**” of a court, means—_
>
> _(a) a money order of the court; or_
>
> _(b) a money order of another court or tribunal filed or registered under an Act in the court for enforcement._

[Schedule 3](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/sch3.html) of the UCPR defines an order to mean:

> _“ **order**” … includes a judgment, direction, decision or determination of a court whether final or otherwise._

An enforceable money order is a money judgment, direction, decision or determination – of a court, another court or tribunal – filed or registered … in the court for enforcement.

This will include a [money judgment](https://stonegatelegal.com.au/enforcing-a-judgment/) in the Magistrates Court, or a decision in [QCAT](https://www.qcat.qld.gov.au/) registered in the Magistrates Court for enforcement.  An unregistered [QCAT](https://www.qcat.qld.gov.au/) decision is not an enforceable money order until it is registered in the Court.

### Six (6) Year Limitation Period – Warrant for Seizure and Sale of Property

The enforceable money order is able to be enforced – without leave of the Court – and time after six (6) years from the date of the order.

[Rule 799(1)](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s799.html) of the UCPR says:

> _An enforcement creditor may start enforcement proceedings without leave at any time within 6 years after the day the money order was made._

If six (6) years have passed since the day the money order was made then a judgment creditor may still proceed against the debtor, but only with leave of the Court.

If you have an enforceable money order which is less than six (6) years old, then you can draft and file the required documents in the Court.

### The Creditor must Complete the Documents

The documents needed for the Court to issue an enforcement warrant are all required forms on the [Queensland Courts website](https://www.courts.qld.gov.au/about/forms?root=84820).  They are:

1. An application – [Form 9](https://www.courts.qld.gov.au/__data/assets/word_doc/0009/92925/Form-9-Application-UCPR.doc);
2. A draft warrant – [Form 75](https://www.courts.qld.gov.au/__data/assets/word_doc/0009/88425/ucpr-f-75v3-070614.doc); and
3. A statement in support of the application – [Form 74](https://www.courts.qld.gov.au/__data/assets/word_doc/0010/92926/Form-74-Statement-in-support-UCPR.doc).

## The Application – Warrant for Seizure and Sale of Property

The application [Form 9](https://www.courts.qld.gov.au/__data/assets/word_doc/0009/92925/Form-9-Application-UCPR.doc) outlines the order (or orders) that the plaintiff wants the Court to make.

The application will say something like:

> _**TAKE NOTICE** that the Plaintiff is applying to the Court for the following orders:_
>
> _1.    That pursuant to rule 828 of the Uniform Civil Procedure Rules 1999 (QLD) an enforcement warrant for seizure and sale of the property of the Defendant to satisfy the judgment amount; and_
>
> _2.    That the Defendant pay the costs of the Plaintiff for costs of preparing the warrant and attending to issuing and for return fixed in the sum of $XXX._

The costs of the warrant are fixed at [Schedule 2 of the UCPR](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/sch2.html) depending on the amount of the claim – see item 15.

A creditor may apply for an enforcement warrant without notice to another party.  This means that a creditor can apply for a warrant, and the Court can issue the warrant, without the debtor being notified.  Only when it is issued does the debtor need to be served.

## The Draft Warrant for Seizure and Sale of Property

The draft warrant [Form 75](https://www.courts.qld.gov.au/__data/assets/word_doc/0009/88425/ucpr-f-75v3-070614.doc) is a pro-forma form which a judgment creditor must complete.  It will need to include:

1. The judgment amount; less
2. Any payments made by the debtor; plus
3. The costs of preparing warrant; plus
4. Interest calculated pursuant to [section 59](http://classic.austlii.edu.au/au/legis/qld/consol_act/cpa2011175/s59.html) of the _Civil Proceedings Act 2011_ (QLD).

**The Judgment Amount** – is simply the amount awarded in the judgement or registered [QCAT](https://www.qcat.qld.gov.au/) decision.

**Less Payments Made** – means the amount must be deducted from the judgment amount if the debtor has made a few payments toward the debt.  This might have happened if a creditor is applying for a second warrant for example.

**The Costs of Preparing the Warrant** – means the amount fixed at [Schedule 2 of the UCPR](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/sch2.html) depending on the amount of the claim – see item 15.

**Interest** – means the amount set by [section 59](http://classic.austlii.edu.au/au/legis/qld/consol_act/cpa2011175/s59.html) of the _Civil Proceedings Act 2011_ (QLD) and by paragraph 4 of the [Supreme Court of Queensland Practice Direction Number 7 of 2013](https://www.courts.qld.gov.au/__data/assets/pdf_file/0004/180553/sc-pd7of2013.pdf) – 6% p/a above the [cash rate](https://www.rba.gov.au/statistics/cash-rate/) at the Reserve Bank of Australia.

Once you have carefully calculated the total amount of the enforcement warrant for seizure and sale of property, the warrant is then followed by a notice to the enforcement officer saying:

> _You are to seize and sell such of the real and personal property (other than exempt property) in which the enforcement debtor has a legal or beneficial interest as will satisfy the total amount owing on the judgment._

The warrant then directs the enforcement officer to the known property of the enforcement debtor.

If it is real property, then the creditor will need to add a description of the real property and the lot, plan, title reference etc. on the enforcement warrant for seizure and sale of property.

If it is a vehicle, then a reference to the registration number and/or VIN number of the vehicle, who it is registered to, etc. will need to be provided.

## Statement in Support of the Application

The statement in support of an application for an enforcement warrant for seizure and sale of property will need to provide the Court with evidence of what is required for the Court to issue the warrant.

Similar to an affidavit, the statement in support should identify:

1. The person making the statement and the authority they have (solicitor for the judgment creditor, judgment creditor, director of the judgment creditor);
2. Evidence of the decision, judgment, or enforceable money order;
3. Evidence of any payments made as against the judgment debt, or a statement that no payments have been made against the judgment debt;
4. Evidence and a statement supporting the calculation of costs and interest; and
5. Evidence of the property to be seized and sold.

If everything is done correctly and pursuant to the UCPR, the Court will issue you with the enforcement warrant for seizure and sale of property.

[Rule 817](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s817.html) of the UCPR outlines the other things that need to be included in the statement, being:

- the date the money order was made;
- the amount for which the order was made;
- the date and amount of any payment made under the order;
- the costs incurred in previous enforcement proceedings in relation to the order debt;
- any interest due at the date the statement is sworn;
- any other details necessary to calculate the amount payable under the order at the date the statement is sworn and how the amount is calculated;
- the daily amount of any interest that, subject to any future payment under the order, will accrue after the date the statement is sworn; and
- any other information necessary for the warrant being sought.

The statement in support of an application for an enforcement warrant for seizure and sale of property must not be sworn/affirmed more than two days before the making of the application.  This is to attempt to ensure that the debt is still outstanding at the time of issuing the warrant. Best practise is to swear/affirm the same day as filing.

Once you have been issued with the enforcement warrant for seizure and sale of property you then will need to commence one of the different enforcement options.

## Enforcement Options for Seizure and Sale of Property

For the purpose of this article I will just give information in relation to the following:

1. A warrant for seizure and sale of real property (land); and
2. A warrant for seizure and sale of a vehicle.

The procedure for both are very different.  I will explain both below.

### A Warrant for Seizure and Sale of Real Property

Probably the most common enforcement warrant is a warrant for seizure and sale of the debtor’s real property.

Once the warrant has been issued, the creditor has to register the warrant on the title of the debtor’s real property.

This is done by completing a [Form 12](https://www.dnrme.qld.gov.au/) and lodging it on the title of the real property.

The creditor will need to conduct a fresh [title search](https://www.infotrack.com.au/products/property-searches/title-search/qld/) and a [QVAS](https://www.infotrack.com.au/products/property-searches/qvas-search/) (Queensland Valuation and Sales) search to ensure the ownership of the real property.

The Form 12 must then be signed by the Plaintiff or an officer of a corporate plaintiff (director for example).

Once properly drafted and signed, the Form 12 can then be lodged with the Department of Natural Resources, Mines and Energy.  Once accepted, the warrant is registered on the title of the debtor.

At this point the creditor has to pay the cost of advertising and auctioning the real property to the enforcement officer.  This can be around $2,000.00 to $2,500.00.  Once the enforcement officer has these funds, then they will commence with executing the enforcement warrant.

These costs are recoverable – for example if the judgment debt is $50,000.00 and the enforcement costs are $2,500.00 then the bailiff will give the creditor $52,500.00 from the sale of the real property, plus the interest claimed – as a very rough example.

Finally, the enforcement officer will need a pay-out figure from the current mortgagee on the title.  This is to ensure that there is enough equity in the property to satisfy the [debts and the enforcement costs](https://stonegatelegal.com.au/recovering-debts-or-money-owed/).

### A Warrant for Seizure and Sale of a Vehicle

Another popular warrant is a warrant for seizure and sale of a vehicle.

If the debtor has a vehicle registered in their name, and the vehicle is not exempt property, and there is enough unencumbered equity in the vehicle to satisfy the judgment debt and enforcement costs, then you may apply for a warrant for seizure and sale of that vehicle.

The creditor will need to perform a [registration search](https://www.confirm.com.au/products/vehicle/) on the QLD Motor Vehicle Register, and perform a search of the  [Personal Property Securities Register](https://www.ppsr.gov.au/how-quick-motor-vehicle-search) (“ _**PPSR**_”) to see if there are any registered interests over the vehicle (a finance company for example).

The creditor will also need an independent written valuation to assess the value of the vehicle.

If the judgment debtor owns the vehicle, and there are no security interests registered over the vehicle, then the enforcement officer may be directed to seize and sell the vehicle.

Once again, the enforcement officer will require security for their costs.  This is somewhere in the region of $1,000.00 to $1,500.00 to store and auction the vehicle.  Once again, these costs are recoverable after the sale of the vehicle.

If the property does not sell at auction, then the enforcement creditor can make an application for an [order for sale at best price obtainable](https://stonegatelegal.com.au/how-to-get-an-order-for-sale-at-best-price-obtainable/).

### Moving Forward

We strongly suggest that you engage a suitable qualified legal practitioner who specialises in the enforcement of money orders.

If you have a [QCAT decision](https://stonegatelegal.com.au/enforce-qcat-decision/) which needs to be registered in the Magistrates Court and enforced, or a judgment, direction, decision or determination of the Court to be enforced then contact our dedicated enforcement lawyers today.

Once you have all of the information, you can get your [debt recovery solicitor](https://stonegatelegal.com.au/debt-recovery-solicitors/) to apply for this or another enforcement warrant, including:

1. [Enforcement warrant for the redirection of debts](https://stonegatelegal.com.au/enforcement-warrant-redirection-debts/).
2. [Enforcement warrant for redirection of earnings](https://stonegatelegal.com.au/enforcement-warrant-for-redirection-of-earnings/).

## Frequently Asked Questions

See below for some frequently asked questions regarding a warrant for seizure and sale of property.

### What is Exempt Property?

[Rule 828(1)](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s828.html) of the UCPR states that:

> _A court may issue an enforcement warrant authorising an enforcement officer to seize and sell in satisfaction of a money order all real and personal property (other than exempt property) in which the enforcement debtor has a legal or beneficial interest._

Exempt property has the same meaning as given to it by the [section 116(2)](http://classic.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s116.html) of the _Bankruptcy Act 1966_ (CTH) and [Regulations 27 to 30](http://classic.austlii.edu.au/au/legis/cth/num_reg/br2021202100261267/s30.html) of the _Bankruptcy Regulations 2021_(CTH).

These sections of bankruptcy legislation contain a number of instances where property is exempt property.  The relevant property exempt from a warrant for seizure and sale of property includes but not limited to:

1. [Section 27](http://classic.austlii.edu.au/au/legis/cth/num_reg/br2021202100261267/s27.html) – Household property that is not available for payment of debts.
2. [Section 28](http://classic.austlii.edu.au/au/legis/cth/num_reg/br2021202100261267/s28.html) – Personal property with sentimental value that is not available for payment of debts.
3. [Section 29](http://classic.austlii.edu.au/au/legis/cth/num_reg/br2021202100261267/s29.html) – Tools that are not available for payment of debts.
4. [Section 30](http://classic.austlii.edu.au/au/legis/cth/num_reg/br2021202100261267/s30.html) – Motor vehicles that are not available for payment of debts (worth less than $8,100).

### Who is an Enforcement Officer?

[Schedule 5](http://classic.austlii.edu.au/au/legis/qld/consol_act/scoqa1991304/sch5.html) of the _Supreme Court of Queensland Act 1991_ (Qld) says:

> _“ **enforcement officer**” for a court, means the sheriff, a deputy sheriff or a bailiff of the court._

That means that any of the above can enforce a warrant for seizure and sale of property.

### How long does an Enforcement Warrant last?

An enforcement warrant for seizure and sale of property is valid for one (1) year after it is issued.

If the enforcement warrant for seizure and sale of property is not satisfied within one (1) year the creditor can renew the warrant by application to the court for a further period not exceeding one (1) year.

This application is made pursuant to [rule 821 of the UCPR](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s821.html).

### Is there a Priority of Enforcement Warrants?

Yes, if two (2) or more enforcement warrants for seizure and sale of property are filed around the same time, the earliest has priority over the later warrant.

[Rule 823](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s823.html) of the UCPR deals with the priority of enforcement warrants.

### What Happens if the Debtor Pays before the Sale?

If the debtor finds some money to pay the creditor, then the enforcement officer must not sell the property.  [Rule 830](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s830.html) of the UCPR says:

> _An enforcement officer must not sell property seized under an enforcement warrant if, at or before the sale, the enforcement debtor pays to the enforcement officer—_
>
> _(a) the amount owing under the order, including interest; and_
>
> _(b) the costs of enforcement then known to the enforcement officer; and_
>
> _(c) an amount set by the enforcement officer as security for the enforcement creditor’s other costs of enforcement._

This means that the debtor must pay the judgment debt, interest, and the cost of enforcement.  This is going to be significantly more than the judgment debt.

If the debtor does not pay all of those costs, then the enforcement officer can still sell the property.

### What Costs are able to be Claimed?

[Rule 797](http://classic.austlii.edu.au/au/legis/qld/consol_reg/ucpr1999305/s797.html) of the UCPR says:

> _(1) The costs of enforcement of a money order are recoverable as part of the order._
>
> _(2) Interest on an order debt is recoverable as part of the money order._

So, the costs on the Court scale are recoverable, and interest as calculated above is also claimable.

These are added to the judgment debt and previous costs incurred.

### What if the Debtor Owns the Property Jointly?

If the debtor is a joint owner in the property, then it becomes very difficult for the enforcement officer to seize and sell the property.

Best practice is to ensure that the debtor only owns the property, and that there is clear title to that property.

### How much does an Enforcement Warrant Cost?

A UCPR enforcement warrant has no fee with the Court.

You will need to pay the estimated costs of the enforcement officer up-front.

These costs can include:

1. Advertising and auction expenses;
2. Seizure expenses, e.g. hire of a tow truck, or engaging a removal firm;
3. Storage of the property – vehicle for example;
4. The amount owing to the creditor pursuant to the warrant, costs and interest;
5. The bailiff’s execution fees and expenses – such as travel, the bailiff’s time and any other expenses incurred by the bailiff while executing the warrant.

Any remaining balance after the enforcement officer has paid for everything, is repaid to the debtor.

### What happens if the debtor disputes the warrant for seizure and sale?

If a debtor disputes the warrant for seizure and sale, they may file an application with the court challenging the warrant’s validity or enforcement process. The debtor must provide substantial evidence or legal grounds for their dispute, such as errors in the warrant’s issuance or a claim that the property is exempt. The court will then review the case and decide whether to uphold, modify, or cancel the warrant. During this dispute process, enforcement actions may be temporarily halted until the court reaches a decision.

### Can a creditor seize and sell property that is under lease or rent to a third party?

Seizing and selling property that is leased or rented to a third party involves additional legal complexities. The creditor must consider the terms of the lease or rental agreement and the rights of the third party. In some cases, the lease may be terminated upon sale, or the new owner may assume the role of the landlord. However, specific legal advice is necessary to navigate these situations, as they can vary based on the property type and existing contractual agreements.

### How is the sale price of the seized property determined?

The sale price of seized property is typically determined through a valuation process conducted by a professional valuer or through market analysis. For real estate, this might involve a comparative market analysis or a formal appraisal. For vehicles and other personal property, market value or expert assessments are used. The goal is to achieve a fair market price that reflects the property’s current value, ensuring that the creditor recovers the owed amount while also being fair to the debtor.

### What occurs if the sale proceeds exceed the debt amount?

If the sale proceeds exceed the debt amount, the surplus is returned to the debtor. After the auction, the enforcement officer deducts the owed debt amount, including any interest and enforcement costs, from the sale proceeds. The remaining balance, if any, is legally owed to the debtor and must be paid to them. This process ensures that the debtor receives any excess funds after the satisfaction of the debt.

### Are there any alternatives to the seizure and sale of property for debt recovery?

Yes, there are alternatives to the seizure and sale of property for debt recovery. These can include entering into a payment plan, where the debtor agrees to pay the debt in instalments, or seeking a garnishee order, where a debtor’s earnings or bank accounts are directed to pay the debt. Creditors may also consider mediation or negotiation to reach a mutually agreeable solution. These alternatives can be less confrontational and preserve the debtor-creditor relationship.

### What rights do debtors have during the enforcement process?

Debtors have several rights during the enforcement process, including the right to receive notice of the enforcement actions, the right to dispute the warrant or the amount owed, and the right to claim certain properties as exempt from seizure. They also have the right to attend the auction and receive any surplus from the sale proceeds. It’s important for debtors to be aware of these rights and seek legal advice if they feel their rights are being infringed upon during the enforcement process.

**There are a number of complicated steps that need to happen before a Court Bailiff can execute a warrant for seizure and sale of property. We strongly recommend engaging a legal professional**

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#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

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# Tax Debt Dispute Lawyers

The constantly evolving and intricate tax laws can present an ongoing challenge for compliance. However, having a reliable and proficient team of tax dispute lawyers can significantly impact the outcome.

[Book A Consultation](https://stonegatelegal.com.au/services/tax-debt-lawyers/#book)

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## Don't Face Tax Debt Disputes Alone

## Queensland Litigation & Dispute Lawyers

## What are ATO Tax Debts?

ATO tax debts are the taxes you owe to the Australian Taxation Office (ATO). These debts can arise when you fail to pay your tax liabilities on time, or if the ATO determines that you have underpaid your taxes. [ATO](https://www.ato.gov.au/) tax debt is a serious matter and should not be taken lightly. If left unresolved, it can lead to serious financial consequences such as fines and interest charges, garnishment of wages or bank accounts, or even legal action.

Our experienced tax debt dispute lawyers can help you resolve any outstanding tax debt issues with the ATO and protect your rights. We can negotiate on your behalf with the ATO to reduce any fines and interest charges associated with your debt, as well as work out a payment plan that meets both parties’ needs.

### Thorough Understanding of the Australian Taxation Office

At [Stonegate Legal](https://stonegatelegal.com.au/), we have a thorough understanding of the Australian Taxation Office and its policies. We are well-versed in the laws and regulations that govern tax debt disputes and will fight hard to ensure that you get a fair and equitable resolution. Our team of tax lawyers are highly experienced in this field, having worked with numerous clients to resolve their ATO tax debt issues. We understand how stressful it can be to deal with the ATO, so we will work diligently on your behalf to protect your rights and get the best outcome for you.

### Trusted Legal Advise for Tax Debt Disputes

We understand that tax debt disputes can be a daunting and overwhelming experience. Our team of experienced tax dispute lawyers are here to provide you with the legal advice and representation you need to resolve your ATO tax debt dispute efficiently and effectively. We will work with you every step of the way to ensure that your rights are protected and that you get the best possible outcome in your situation. With our reliable and proficient team of tax lawyers, we can help you significantly impact the outcome of your dispute with the ATO.

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### How We Can Support You

Stonegate Legal offers premium legal services to help you settle your ATO tax debt. We provide expert guidance and assistance throughout the process.

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![Asset 13](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/Asset-13.png)

### Director Penalty Notice

ATO can issue a director penalty notice to a company's director for failure to meet PAYG, Superannuation Guarantee Charge, and GST obligations. Two types of notices: traditional and lockdown. The traditional notice gives 21 days to pay or take action, while lockdown notice makes the director instantly liable for the tax debts. Contacting a tax debt lawyer or liquidator is crucial after receiving a director penalty notice.

![Asset 8Banking](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/Asset-8Banking.png)

### Garnishee Notice

ATO's garnishee notice can harm your business reputation and cause cash flow problems by involving third-party money holders. The notice can be issued to banks, employers, suppliers, and others who owe money to the tax debtor. It is crucial to seek legal advice promptly upon receiving notice.

[![About Stonegate Legal Commercial Litigation Lawyers](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2023/03/Asset-18Banking.png)\\
\\
**Statutory Demands to Recover Tax Debts** \\
\\
The ATO can serve a creditor’s statutory demand on a tax debtor company, without needing a money judgment. The debtor then has 21 days to pay, compound the tax debt, request withdrawal, or make a court application. Failure to do so may lead to a presumption of insolvency and a winding-up application. Defending ATO tax debts is challenging due to the ‘conclusive evidence rule’. It’s vital to seek legal advice promptly since the 21-day deadline is strict.](https://stonegatelegal.com.au/statutory-demand/)

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### Tax Debt Legal Proceedings

Defending tax debt legal proceedings can be difficult due to the conclusive evidence rule, which means the tax debtor may have to pay the entire amount until the dispute is resolved. Even if a notice of objection or an appeal is filed, the entire amount must still be paid. Contacting our tax debt lawyers as soon as possible after being served with the claim and statement of claim is crucial.

### What Our Clients Have To Say

At our Stonegate Legal, client satisfaction is our top priority. We are proud to have served hundreds of clients who have had positive experiences working with us.

Designation

Stonegate Legal assisted my business from a strong legal perspective, while highlighting valuable strategy. They have the perfect sized firm to help with all matters either big or small. Wayne is a rare expert in Debt Recovery and his knowledge is extensive.

We had tried for 6mths to get payment from one of our debtors - Damon and the Stonegate Legal team were able to secure full payment within 30days. Sincerely appreciate the efficiency and professionalism.

Stonegate Legal provided good advice, and got us the outcome we were looking for. They were easy to deal with and kept me well informed through the process letting me know the options available as well as their advice.

The entire team at Stonegate Legal have been exceptional to deal with making a difficult situation so much easier to deal with, very pleasant and efficient, I highly recommend them.

### Our Team

## Meet Our Tax Debt Disputes Team

![Wayne Davis - Lawyer - Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/06/wayne.avif)

## Legal Practice Director / Principal Solicitor

## Wayne Davis

Wayne Davis is the principal solicitor, legal practice director of the firm, and leads the litigation team.  Wayne has an LLB, and GDLP and is admitted to the Supreme Court of Queensland and the High Court of Australia.  Wayne is a debt recovery, defamation, litigation, and insolvency professional.

Wayne is dedicated to achieving the best possible outcomes, whether through strategic negotiation, alternative dispute resolution, or courtroom advocacy. Wayne understand that every case is unique and takes a proactive approach to ensure your rights and interests are protected at every stage of the process.

### Education & Certifications

LLB – Bachelor of Laws, Graduate Diploma of Legal Practice (GDLP)

### Personal Quote

Don’t believe everything you think.

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Lease Disputes](https://stonegatelegal.com.au/tag/commercial-lease-disputes/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/) [Debt Recovery/Collection](https://stonegatelegal.com.au/tag/debt-recovery-collection/) [Defamation Litigation](https://stonegatelegal.com.au/tag/defamation-litigation/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [Statutory Demands](https://stonegatelegal.com.au/tag/statutory-demands/) [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/) [Wills/Estate Litigation](https://stonegatelegal.com.au/tag/wills-estate-litigation/)

![Kirsty Walker - Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/12/Kirsty-Walker-Stonegate-Legal-scaled-1-1024x1024.jpg)

## Solicitor

## Kirsty Walker

Kirsty has come into the legal profession later in life, having been a primary school teacher for 24 years. Her interest in the law stemmed from running a small construction company. After self-representing against debtors, she came to value the ability of the law to assist contractors in David and Goliath situations. Kirsty is admitted to the Supreme Court of Queensland and the High Court of Australia.

### Education & Certifications

Bachelor of Law (First Class Honours), Graduate Diploma Legal Practice, Bachelor of Criminology, and Justice Bachelor of Education (Primary), Certificate IV Small Business Management

### Personal Quote

Always pray to have eyes that see the best, a heart that forgives the worst, a mind that forgets the bad, and a soul that never loses faith.

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/)

![Stacey Harvey Paralegal - Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/06/20250624-Stonegate-Legal-13-1024x1024.jpg)

## Senior Paralegal

## Stacey Harvey

Stacey has been a part of the team at Stonegate Legal since 2022 but has worked in the industry for over 20 years, having extensive knowledge of the legal processes in Australia and specializing in debt recovery claims, default judgments, enforcement action, and bankruptcy.

Stacey spent a large portion of her career as a senior paralegal responsible for the performance and management of a team of paralegals and an administration department for many years.  During the first 18 years, she worked for one of Brisbane’s largest debt collection companies, where she managed large portfolios of debt for councils, schools, government departments, and insurance companies, along with debt purchased from various banks, utilities, and other credit providers.

### Education & Certifications

Justice of the Peace, Certificate III in Office Business Administration

### Personal Quote

Stay positive, work hard, make it happen.

## Areas of Interest

### [Commercial Lease Disputes](https://stonegatelegal.com.au/tag/commercial-lease-disputes/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Debt Recovery/Collection](https://stonegatelegal.com.au/tag/debt-recovery-collection/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [Statutory Demands](https://stonegatelegal.com.au/tag/statutory-demands/) [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/)

![Caterine Molini - Stonegate Legal](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2024/06/20241210-Stonegate-Legal-101-1-scaled-1-1024x1024.jpg)

## Law Graduate / Paralegal

## Caterine Molini

Caterine holds a law degree and passed the bar exam in 2011, practicing as a lawyer in Brazil until 2018. She also completed a postgraduate qualification in environmental law. Caterine holds a Certificate IV and a Diploma in Leadership and Management from Australia.

With 12 years of experience in civil litigation, insurance, and building and construction, Caterine spent six years leading a team to negotiate major agreements with insurance companies. She worked closely with engineers to ensure construction projects met environmental regulations, and she advocated for clear contracts to prevent issues and avoid costly litigation.

She is excited to be working towards admission as a Solicitor in Australia.

### Education & Certifications

Bachelor of Law (Brazil)

### Personal Quote

You are the size of your dreams. Dream big. Play smart, not hard.

## Areas of Interest

### [Building and Construction](https://stonegatelegal.com.au/tag/building-and-construction/) [Civil/Personal Litigation](https://stonegatelegal.com.au/tag/civil-personal-litigation/) [Commercial Litigation](https://stonegatelegal.com.au/tag/commercial-litigation/) [Corporations Disputes](https://stonegatelegal.com.au/tag/corporations-disputes/) [Insolvency Law](https://stonegatelegal.com.au/tag/insolvency-law/) [insurance disputes](https://stonegatelegal.com.au/tag/insurance-disputes/) [Tax Debt Disputes](https://stonegatelegal.com.au/tag/tax-debt-disputes/)

## Frequently Asked Questions

[What is a director penalty notice?](https://stonegatelegal.com.au/services/tax-debt-lawyers/#collapse-b0d504b687f03ddd19c6)

A director penalty notice is a legal document issued by the ATO to a company's director for failure to meet PAYG, Superannuation Guarantee Charge, and GST obligations. It gives the director 21 days to pay or take action. The ATO can also issue a lockdown notice that makes the director instantly liable for the tax debts.

[Can the ATO issue a garnishee notice for tax debt?](https://stonegatelegal.com.au/services/tax-debt-lawyers/#collapse-4e10eba687f03ddd19c6)

Yes, the ATO can issue a garnishee notice to banks, employers, suppliers, and others who owe money to the tax debtor. The notice can cause cashflow problems and harm your business reputation. It is important to seek legal advice promptly upon receiving a garnishee notice.

[What is a creditor’s statutory demand?](https://stonegatelegal.com.au/services/tax-debt-lawyers/#collapse-f591981687f03ddd19c6)

A creditor’s [statutory demand](https://stonegatelegal.com.au/statutory-demand/) is a formal request from the ATO to a tax debtor company, without needing a money judgment. The debtor then has 21 days to pay, compound the tax debt, request withdrawal, or make a court application.

If the debtor does not comply with the demand within 21 days, they may be presumed insolvent and face a winding-up application.

[What happens if I don't pay my tax debt?](https://stonegatelegal.com.au/services/tax-debt-lawyers/#collapse-de9d696687f03ddd19c6)

If you do not pay your taxes, the ATO may take legal action against you or your business. This could include issuing a director penalty notice or garnishee notice, or making a creditor's statutory demand. The ATO could also take steps to recover the debt from other sources such as your bank accounts, personal property, and wages. If you fail to comply with the ATO's demands, you may be subject to fines and prosecution. It is important to seek legal advice promptly upon receiving any notices from the ATO.

[How long do I have to pay a tax debt?](https://stonegatelegal.com.au/services/tax-debt-lawyers/#collapse-91f3d08687f03ddd19c6)

The amount of time you have to pay a tax debt depends on the type of debt. For example, the ATO may give you 21 days to respond to a director penalty notice or creditor's statutory demand. The ATO may also give you an extended time period for payment arrangements or for lodging an objection. It is important to check the specific details of your notice and contact the ATO if you need more time.

[Can the ATO seize my assets for tax debt?](https://stonegatelegal.com.au/services/tax-debt-lawyers/#collapse-9027d80687f03ddd19c6)

In some cases, the ATO can seize your assets to recover a tax debt. This is known as third-party debt recovery. The ATO may take control of your bank accounts, shares, and other property to cover the amount owing. They may also apply levies or liens on your property. It is important to contact the ATO as soon as possible if you receive a notice of seizure or any other legal action. You may be able to dispute the debt or arrange an alternate payment plan.

## Litigation & Dispute Resolution

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## Litigation Services

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Monday – Friday

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At Stonegate Legal, client satisfaction is our top priority. We are proud to have served hundreds of clients who have had positive experiences working with us.

Copyright © 2023 [**Stonegate Legal**](https://stonegatelegal.com.au/) Pty Ltd – All Rights Reserved – Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732) \| [Terms](https://stonegatelegal.com.au/terms-and-conditions/) \|  [Privacy](https://stonegatelegal.com.au/privacy-policy/) \| [Sitemaps](https://stonegatelegal.com.au/sitemap_index.xml) \| [\*Conditions Apply](https://stonegatelegal.com.au/terms-and-conditions/)

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[Statutory Demands](https://stonegatelegal.com.au/statutory-demand/)

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## QCAT Applications Guide
[Skip to content](https://stonegatelegal.com.au/qcat-applications/#content)

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# QCAT Applications

[Discuss Your Case Today](https://stonegatelegal.com.au/contact/)

## NEWS & ARTICLES

- [By Wayne Davis](https://stonegatelegal.com.au/author/1ngeya87tzffu8lmvfqlub2/)

- \| January 29, 2017

Table of Contents

[Toggle](https://stonegatelegal.com.au/qcat-applications/#)

![QCAT Applications Appeal applications Respondent applications in QCAT](https://cdn-chdkf.nitrocdn.com/AasjhPiSTdtknDEMBxXtsUDKDZKtezQA/assets/images/optimized/rev-748d11d/stonegatelegal.com.au/wp-content/uploads/2017/01/QCAT-Applications-Appeal-applications-Respondent-applications-in-QCAT-300x285.png)QCAT applications are a way of commencing proceedings against a debtor without having to go to Court

QCAT is the [Queensland Civil and Administrative Tribunal](http://www.qcat.qld.gov.au/)

QCAT has jurisdiction to hear debt recovery claims of up to $25,000.00

QCAT minor civil dispute jurisdiction generally do not allow legal representation, however we can guide you through the process and help you draft your submissions.

Stonegate legal has been successful in obtaining orders in QCAT which are then ready to be registered in the Magistrates Court and enforced.

**If you are going to QCAT make sure that you give yourself the best chances. Our debt recovery lawyers can guide you through the process**

**FIXED FEES – FAST RECOVERY – PROVEN RESULTS**

[REQUEST A FREE CASE EVALUATION](https://stonegatelegal.com.au/free-case-evaluation/)

**Call [1300 545 133](tel:1300545133) for FREE and speak to our debt recovery lawyers**

## QCAT Applications

In Queensland you can apply for a QCAT minor debt resolution for the following:

1. Cheques that have been dishonoured;
2. IOUs – for money borrowed or services rendered;
3. Money that you have lent and has not been repaid;
4. Money owed for work performed or services rendered;
5. An unpaid business invoice or unpaid credit account; and
6. Work performed and/or goods supplied with the cost under prior agreement.

There are other areas in which QCAT can assist, including administration for adults, anti-discrimination, building disputes, children and young people, consumer and trader disputes, decision-making for adults, dividing fence disputes, guardianship for adults, minor civil disputes, occupational regulation, other civil disputes, residential tenancy disputes, retail shop lease disputes, review of administrative decisions, and neighbour & tree disputes.

But for the sake of this, we will focus on debt recovery.

### QCAT Applications for Minor Debt

If you need to make an application for a minor debt then you can apply online at the Qld Govt website.  Or, you can download and print out the [forms](http://www.qcat.qld.gov.au/) and fill them in longhand.

If you have a debt of less than $25,000.00 then you can make an application to QCAT to recover that debt.  You need to:

1. Complete the paperwork;
2. File the completed paperwork in QCAT or your local Magistrates Court;
3. Serve a sealed (stamped with the seal of QCAT) copy of the debtor or debtors.

### Service of QCAT Applications

The service of QCAT applications for minor debt mean that an original of the document must be given to a person (rather than a company) personally.

[Section 38 of the Queensland Civil and Administrative Tribunal Rules 2009](http://www.legislation.qld.gov.au/LEGISLTN/CURRENT/Q/QldCivAdTrRu09.pdf) says:

> _A copy of an application for a minor debt claim may be given to an entity only by delivering it personally to the entity in the way provided in the [service practice direction](http://www.qcat.qld.gov.au/__data/assets/pdf_file/0009/101250/Practice-Direction-2009-8-amended.pdf)._

We use specialist document service professionals called process servers to serve all personal service documents.  [Contact us](https://stonegatelegal.com.au/contact-debt-recovery-qld/) if you would like advice in relation to personal service.

### Service on a Company

If the debtor is a company, for example you contracted with ABC Pty Ltd (this would be shown on the invoice, or an ACN rather than an ABN) then you can serve a company by posting it to the registered office as shown in the [ASIC Current Extract](http://asic.gov.au/).

Alternatively, you can serve it personally on the director of the company or if a liquidator has been appointed then by leaving it at, or posting it to the liquidator’s office.

## QCAT Application for Appeal

You may have had a crack at doing all of the above yourself.  But you got a decision against you.

Or you are a responding to a QCAT application and you got a decision against you.

In these cases, you may be able to apply for an appeal of the original decision.

For more information on [Appealing a QCAT Decision](https://stonegatelegal.com.au/appealing-a-qcat-decision/) read our article [here](https://stonegatelegal.com.au/appealing-a-qcat-decision/).

## Enforce a Decision from QCAT

If you go through the QCAT application for a minor debt and you get a decision in your favour, and you are still having difficulty getting the debtor to pay then you may have to attempt to enforce the QCAT decision.

The way to enforce a QCAT decision is to register the decision in the [Magistrates Court](http://www.courts.qld.gov.au/courts/magistrates-court) and commence enforcement procedures in the Court.

We have a detailed post [here](https://stonegatelegal.com.au/enforce-a-decision-from-qcat/) about how to Enforce a Decision from QCAT.

**If you are going to QCAT make sure that you give yourself the best chances. Our debt recovery lawyers can guide you through the process**

**FIXED FEES – FAST RECOVERY – PROVEN RESULTS**

[REQUEST A FREE CASE EVALUATION](https://stonegatelegal.com.au/free-case-evaluation/)

**Call [1300 545 133](tel:1300545133) for FREE and speak to our debt recovery lawyers**

![Picture of Wayne Davis](<Base64-Image-Removed>)

#### Wayne Davis

**[Wayne Davis](https://www.qls.com.au/register-of-solicitor/individual/Wayne-Philip-Davis), LLB, GDLP** \- Commercial litigation solicitor and legal practice director at [Stonegate Legal Pty Ltd](https://www.qls.com.au/register-of-solicitor/organisation/Stonegate-Legal-Pty-Ltd). Member of the [Queensland Law Society](https://www.qls.com.au/).  Wayne Davis is a seasoned commercial litigation solicitor and the legal practice director of Stonegate Legal Pty Ltd, a firm renowned for its expertise in commercial and civil disputes, building and construction disputes, debt recovery, enforcement of money orders, and defamation. With a strong academic foundation, Wayne holds a Bachelor of Laws (LLB) and a Graduate Diploma of Legal Practice (GDLP), showcasing his formal qualifications in the legal field. As a member of the Queensland Law Society, he is committed to upholding the highest ethical and professional standards in legal practice. Under Wayne’s leadership, Stonegate Legal® has earned a reputation for delivering strategic, client-focused solutions to complex legal challenges. His dedication to ensuring justice and fairness is reflected in the firm’s innovative approach to dispute resolution and enforcement proceedings. Wayne frequently shares his legal insights through educational content and professional speaking engagements, further solidifying his authority in commercial litigation. His mission is to empower clients with expert guidance and actionable advice tailored to their unique circumstances. Stonegate Legal® is a [registered trademark](https://search.ipaustralia.gov.au/trademarks/search/view/2043732).

**Disclaimer:** The content on this website is intended only to provide a general summary of information of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this website. Your use of this website or the receipt of any information on this website is not intended to create nor does it create a solicitor-client relationship.

## NEWS & ARTICLES

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[![Statutory Demands in Construction - building and construction lawyers](<Base64-Image-Removed>)](https://stonegatelegal.com.au/statutory-demands-in-construction-complete-guide/)

#### [Statutory Demands in Construction – Complete Guide](https://stonegatelegal.com.au/statutory-demands-in-construction-complete-guide/)

[![Damages in Defamation Claims - Defamation lawyers in Australia](<Base64-Image-Removed>)](https://stonegatelegal.com.au/damages-in-defamation-claims-complete-guide/)

#### [Damages in Defamation Claims – Complete Guide](https://stonegatelegal.com.au/damages-in-defamation-claims-complete-guide/)

[![Extrinsic Evidence and the Parol Evidence Rule in Australia. Litigation lawyers](<Base64-Image-Removed>)](https://stonegatelegal.com.au/extrinsic-evidence-and-the-parol-evidence-rule/)

#### [Extrinsic Evidence and the Parol Evidence Rule](https://stonegatelegal.com.au/extrinsic-evidence-and-the-parol-evidence-rule/)

[![Can You Serve a Statutory Demand by Email in Australia - Stat demand lawyer](<Base64-Image-Removed>)](https://stonegatelegal.com.au/can-you-serve-a-statutory-demand-by-email-in-australia/)

#### [Can You Serve a Statutory Demand by Email in Australia?](https://stonegatelegal.com.au/can-you-serve-a-statutory-demand-by-email-in-australia/)

[![QCAT Building Disputes in Queensland - Complete Guide - construction lawyer Sunshine Coast](<Base64-Image-Removed>)](https://stonegatelegal.com.au/qcat-building-disputes-in-queensland-complete-guide/)

#### [QCAT Building Disputes in Queensland – Complete Guide](https://stonegatelegal.com.au/qcat-building-disputes-in-queensland-complete-guide/)

[![Who Can Sue for Defamation in Australia - defamation lawyers in Queensland](<Base64-Image-Removed>)](https://stonegatelegal.com.au/who-can-sue-for-defamation-in-australia/)

#### [Who Can Sue for Defamation in Australia?](https://stonegatelegal.com.au/who-can-sue-for-defamation-in-australia/)

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At Stonegate Legal, client satisfaction is our top priority. We are proud to have served hundreds of clients who have had positive experiences working with us.

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## Who we are

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## What personal data we collect and Privacy

### Comments

When visitors leave comments on the site we collect the data shown in the comments form, and also the visitor’s IP address and browser user agent string to help spam detection. An anonymized string created from your email address (also called a hash) may be provided to the Gravatar service to see if you are using it. The Gravatar service privacy policy is available here: https://automattic.com/privacy/. After approval of your comment, your profile picture is visible to the public in the context of your comment.

## Media Privacy

If you upload images to the website, you should avoid uploading images with embedded location data (EXIF GPS) included. Visitors to the website can download and extract any location data from images on the website.

### Contact forms

Data Used: If Akismet is enabled on the site, the contact form submission data — IP address, user agent, name, email address, website, and message — is submitted to the Akismet service (also owned by Automattic) for the sole purpose of spam checking. The actual submission data is stored in the database of the site on which it was submitted and is emailed directly to the owner of the form (i.e. the site author who published the page on which the contact form resides). This email will include the submitter’s IP address, timestamp, name, email address, website, and message. Data Synced: Post and post meta data associated with a user’s contact form submission. If Akismet is enabled on the site, the IP address and user agent originally submitted with the comment are synced, as well, as they are stored in post meta.

## Cookies – privacy

If you leave a comment on our site you may opt-in to saving your name, email address and website in cookies. These are for your convenience so that you do not have to fill in your details again when you leave another comment. These cookies will last for one year. If you have an account and you log in to this site, we will set a temporary cookie to determine if your browser accepts cookies. This cookie contains no personal data and is discarded when you close your browser. When you log in, we will also set up several cookies to save your login information and your screen display choices. Login cookies last for two days, and screen options cookies last for a year. If you select “Remember Me”, your login will persist for two weeks. If you log out of your account, the login cookies will be removed. If you edit or publish an article, an additional cookie will be saved in your browser. This cookie includes no personal data and simply indicates the post ID of the article you just edited. It expires after 1 day.

### Embedded content from other websites

Articles on this site may include embedded content (e.g. videos, images, articles, etc.). Embedded content from other websites behaves in the exact same way as if the visitor has visited the other website. These websites may collect data about you, use cookies, embed additional third-party tracking, and monitor your interaction with that embedded content, including tracing your interaction with the embedded content if you have an account and are logged in to that website.

### How long we retain your data

If you leave a comment, the comment and its metadata are retained indefinitely. This is so we can recognize and approve any follow-up comments automatically instead of holding them in a moderation queue. For users that register on our website (if any), we also store the personal information they provide in their user profile. All users can see, edit, or delete their personal information at any time (except they cannot change their username). Website administrators can also see and edit that information.

### What rights you have over your data

If you have an account on this site, or have left comments, you can request to receive an exported file of the personal data we hold about you, including any data you have provided to us. You can also request that we erase any personal data we hold about you. This does not include any data we are obliged to keep for administrative, legal, or security purposes.

### Where we send your privacy data

Visitor comments may be checked through an automated spam detection service.

### Your contact privacy information

We collect your contact information in our forms.

### How we protect your data

We use an SSL certificate to ensure that your information is kept safe during transit over the Internet.

### Plugin: Smush

Note: Smush does not interact with end users on your website. The only input option Smush has is to a newsletter subscription for site admins only. If you would like to notify your users of this in your privacy policy, you can use the information below. Smush sends images to the WPMU DEV servers to optimise them for web use. This includes the transfer of EXIF data. The EXIF data will either be stripped or returned as it is. It is not stored on the WPMU DEV servers. Smush uses a third-party email service (Drip) to send informational emails to the site administrator. The administrator’s email address is sent to Drip and a cookie is set by the service. Only administrator information is collected by Drip.

### Gravatar Hovercards

Data Used: This feature will send a hash of the user’s email address (if logged in to the site or WordPress.com — or if they submitted a comment on the site using their email address that is attached to an active Gravatar profile) to the Gravatar service (also owned by Automattic) in order to retrieve their profile image.

### Likes

Data Used: In order to process a post like action, the following information is used: IP address, WordPress.com user ID, WordPress.com username, WordPress.com-connected site ID (on which the post was liked), post ID (of the post that was liked), user agent, timestamp of event, browser language, country code. Activity Tracked: Post likes.

### Sharing

Data Used: When sharing content via email (this option is only available if Akismet is active on the site), the following information is used: sharing party’s name and email address (if the user is logged in, this information will be pulled directly from their account), IP address (for spam checking), user agent (for spam checking), and email body/content. This content will be sent to Akismet (also owned by Automattic) so that a spam check can be performed. Additionally, if reCAPTCHA (by Google) is enabled by the site owner, the sharing party’s IP address will be shared with that service. You can find Google’s privacy policy [here](https://www.google.com/policies/privacy/).

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