Small Claims (NSW)
In New South Wales, when a minor financial dispute cannot be resolved, a claim can be made to the Small Claims Division of the Local Court. A “small claim” is a claim for money, goods, labour or a combination of these, for an amount up to $20,000.
Statement of claim
To lodge a small claim, a statement of claim (Form 3B) needs to be filed with the local court. The claim should include:
- the name and address of the person who owes money;
- the dates and events of the claim;
- details of what is being claimed.
A claim can be made against an individual, business/sole trader/partnership, company, incorporated association or government department.
It is critical the correct person or company is named in the claim. If not, the claim may be dismissed, the judgment might not be enforceable, and the claimant can be ordered to pay the legal costs of the other party.
Interest may be claimed on amounts over $1000. The pre-judgment interest rate is either the rate set under the parties’ agreement, or the rate set by court rules, which is currently 4.1%.
A claim must be made within 6 years of the debt being incurred.
A standard filing fee of $105 applies, which increases to $170 for corporations. The fee may be waived or postponed on application to the court, on account of hardship.
Serving the claim
The document then needs to be “served” on the other party, with the mode of service dependent on who the other party is. For instance, to serve a statement of claim on an individual, the claim can be handed to them, left in their presence, left at their home or work, or posted to them by a court; but to serve on a partnership, the document can be left with a partnership employee who appears to be aged over 16 or posted to the partnership. An affidavit of service needs to be filed with the court to confirm that the statement of claim has been served.
Once the statement of claim has been served on the other party, that party has 28 days to either:
- pay the debt in full;
- apply to the court to pay the debt by instalments;
- file a defence;
- request further information;
- attempt to negotiate a resolution with the claimant;
- take no action.
If the other party opts to take no action, the claimant can apply to the court for a “default judgment” in the claimant’s favour.
Defence of a claim
If the other party disagrees that they owe some or all of the debt being claimed, that party will file a defence form listing the reasons and the court will send a copy to the claimant.
This review is the first opportunity in the court for the parties to try to resolve the dispute. At this review, documents and witnesses are presented, and a magistrate or registrar will encourage the settlement of the case.
If no settlement is reached, the case will be listed for a hearing. At the hearing, the magistrate or an assessor will consider all evidence and submissions from both parties then make a decision.
Evidence could include:
- quotes to repair or replace damaged items;
- contracts or agreements;
- letters, emails and text messages;
- order forms, invoices and receipts;
- bank statements;
- diary entries;
- wage records;
- diagrams or photos.
Witnesses could include those who:
- were present at loan discussions;
- were present when services or goods were ordered or delivered;
- have expert knowledge on the matter;
- saw the incident involved, such as a car accident.
All statements and evidence need to be filed with the court and exchanged with the other party at least 14 days before the hearing. Subpoenas can also be filed and served if necessary.
A decision is usually made on the same day as the hearing but a decision can be “reserved” when the decision-maker needs more time to consider all the evidence.
If the court makes a judgment in the claimant’s favour, the claimant becomes the “judgment creditor” and the other party the “judgment debtor”. The court will order the payment of money or return of goods claimed a well as any interest and fees. If the judgment debtor does not comply within 28 days, “post-judgment interest” can be claimed until the debt is paid.
If the court makes a judgment in the other party’s favour, it can order the claimant pay the other party’s legal costs.
Appeals and reviews
The court’s decision can be appealed within 28 days of the date it was made. An appeal can be made only on the grounds of denial of procedural fairness or that the magistrate or assessor acted beyond their powers. For this reason, it is difficult to appeal a Small Claims decision.
A review by a magistrate can be requested of decisions made about applications to the court and during the pre-trial review, such as a decision to set aside a default judgment.
For advice or representation in any legal matter, please contact Armstrong Legal.