Blood out of a Stone – what can you do when the other party doesn’t pay up?
By Blaise Alexander, Solicitor, Property, Construction and Planning Law, Lovegrove Smith & Cotton
You have won the battle, gone through lengthy litigation proceedings, incurred substantial legal costs, and finally had your day in court and the decision is in your favour. You are awarded a settlement sum and an order of costs. This should be a relief, all that effort culminating in your success and a certain sense of vindication or justice.
All of a sudden the other party seems to have ‘gone to ground’, or perhaps their legal representation is ‘stonewalling’. You are getting nowhere in your efforts to obtain the costs awarded in your favour. How can this be right when you won the battle? If you won the battle, how do you now win the war?
Debt recovery is an important part of the process of litigation, especially in recent times where legal costs involved can equal or even exceed the sum being claimed in the proceedings. A party may go bankrupt during proceedings, making it all but impossible to recover losses.
One should also be very mindful of the dubious practice of some parties of using delay tactics in order to buy time to liquidate assets, thereby leaving themselves immune to the fallout of losing the litigation.
Where litigation has reached its end game and orders for costs have been made, there are some actions available in certain circumstances where orders or agreements for payment are not being complied with.
Where the Victorian Civil and Administrative Tribunal (VCAT) orders payment of money, the order is handed to each party and the debt is payable immediately. If the relevant party fails to comply with that order, consider the following:
- If the other party was not at the hearing they may not be aware of the order;
- You can call or write to the other party or their legal representative to remind them of the debt;
- Make sure you have a correct and current address and contact details for the other party.
Where both parties have legal representation it will be easier to have your lawyer exert some pressure on the other party in terms of communicating the conviction of your intentions to pursue payment of the debt.
VCAT does not make orders to enforce payment of a debt. Where you are experiencing serious delays and ‘stonewalling’, you may apply to the Magistrates Court for enforcement of the Order. This also applies for orders for costs made by the VCAT and by Magistrates Court itself, up to an amount of $100,000.
The Magistrates Court General Civil Procedure Rules 2010 states that a creditor (person to whom the money is owed) may apply for common orders such as:
- an order to freeze assets,
- enforcement orders to seize property, or
- an attachment of earnings order.
If an order has been to recover payment of money, the creditor may apply for a warrant to enforce orders, and apply for the Court to issue a summons for the debtor to appear before the Court to be orally examined as to the amount of property, assets and income, cash and debts, and other means available to satisfy the order. The “distress warrant” is another process whereby the Court bailiff attends to attempt the seizure of assets to satisfy the judgment debt.
An application to the Magistrates Court for enforcement orders does involve preparation of an affidavit and payment of filing fees, and such further costs such as fees and interest can be included in the application for recovery of the debt.
The injustice of it all can be a very frustrating process, especially where the time, effort and expense undertaken in order to recover amounts that the court has already deemed rightfully yours can make the whole exercise seem futile. However, it is important to take appropriate and timely action in order to maximise the chance of a successful debt recovery and costs. With sound legal representation it is possible not only to achieve a favourable costs award, but also to ensure that the other party complies with the orders.
By Blaise Alexander, Solicitor, Lovegrove Smith & Cotton
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© Lovegrove Smith & Cotton 2014