Practice Paper CL306 Conduct of a Contract Claim PDF

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PRACTICE PAPER CL306 Conduct of a Contract Claim Edited by Susan Gatford BSc (Hons) (Melb), LLB (Mon), LLM (Melb) Revised by David Kim LLB (Hons) (Melb), LLM (Melb) Barrister-at-Law Lecturer, The College of Law Victoria August 2020

CL306 Conduct of a Contract Claim

CONTENTS INTRODUCTION .......................................................................................................................................................................[CL306.10] TAKING INSTRUCTIONS AND COLLECTING ACCURATE DOCUMENTARY EVIDENCE ................................................................................................................................................................................[CL306.20] Key considerations .................................................................................................................................................................[CL306.20] INFORMAL SETTLEMENT PROCEDURES ...........................................................................................................[CL306.30] Letters of demand..................................................................................................................................................................[CL306.30] Informal settlement negotiations ...............................................................................................................................[CL306.35] Considerations for the debtor....................................................................................................................................... [CL306.40] PRELIMINARY ISSUES .......................................................................................................................................................[CL306.50] Suing the proper defendant ...........................................................................................................................................[CL306.50] Preservation of assets order............................................................................................................................................[CL306.55] Statutory demand for payment ...................................................................................................................................[CL306.60] Monetary limits to jurisdiction ...................................................................................................................................... [CL306.65] COMMENCING PROCEEDINGS.................................................................................................................................. [CL306.80] Choice of venue and transfer of proceedings ................................................................................................... [CL306.80] Commencement of action...............................................................................................................................................[CL306.85] Status of the parties ..............................................................................................................................................................[CL306.90] Facts .................................................................................................................................................................................................[CL306.95] Claim for relief .........................................................................................................................................................................[CL306.100] Costs ..............................................................................................................................................................................................[CL306.105] Signing ..........................................................................................................................................................................................[CL306.110] Address of registry ................................................................................................................................................................ [CL306.115] Proceeding numbers .........................................................................................................................................................[CL306.120] Copies ........................................................................................................................................................................................... [CL306.125] Filing the writ and statement of claim ..................................................................................................................[CL306.130] SERVICE ......................................................................................................................................................................................[CL306.140] OBTAINING JUDGMENT BY DEFAULT ................................................................................................................[CL306.150] Request for default judgment.....................................................................................................................................[CL306.150] Proof of service ....................................................................................................................................................................... [CL306.155] No appearance or no defence .....................................................................................................................................[CL306.160] COSTS ........................................................................................................................................................................................... [CL306.170] WHAT IF THE MAT TER IS DEFENDED? ..............................................................................................................[CL306.180] CONSIDERATIONS WHEN ACTING FOR THE DEFENDANT ...............................................................[CL306.190] Outline ..........................................................................................................................................................................................[CL306.190] Request for further and better particulars ......................................................................................................... [CL306.195] Timing of a notice of appearance and defence ............................................................................................. [CL306.200] Service of notice of appearance and defence/counterclaim ................................................................[CL306.205] Examples of technical defences.................................................................................................................................[CL306.210] Substantive defences ........................................................................................................................................................ [CL306.215] Defences specific to supply of goods (by sale or otherwise) ................................................................ [CL306.220] Defences to supply of services and goods ........................................................................................................ [CL306.225] AMENDMENT OF PLEADINGS ................................................................................................................................ [CL306.240]

THE COLLEGE OF L AW CIVIL LITIGATION

SUMMARY JUDGMENT FOR PLAINTIFF...........................................................................................................[CL306.260] SUMMARY JUDGMENT FOR DEFENDANT .....................................................................................................[CL306.270] ADMISSIONS ......................................................................................................................................................................... [CL306.280] Outline ........................................................................................................................................................................................ [CL306.280] Notices to admit facts/authenticity of documents .....................................................................................[CL306.285] CASE MANAGEMENT ..................................................................................................................................................... [CL306.300] Key considerations ............................................................................................................................................................. [CL306.300] CASE MANAGEMENT IN THE SUPREME COURT ........................................................................................[CL306.310] Directions and pleadings ................................................................................................................................................[CL306.310] Discovery .................................................................................................................................................................................... [CL306.315] Interrogatories .......................................................................................................................................................................[CL306.320] CASE MANAGEMENT IN THE COUNT Y COURT ..........................................................................................[CL306.330] Key considerations ..............................................................................................................................................................[CL306.330] CASE MANAGEMENT IN THE MAGISTRATES’ COURT .......................................................................... [CL306.340] OFFERS OF COMPROMISE .........................................................................................................................................[CL306.350] SETTING DOWN FOR TRIAL...................................................................................................................................... [CL306.360] MEDIATION .............................................................................................................................................................................[CL306.370] PREPARATION FOR THE HEARING ..................................................................................................................... [CL306.380] POST-JUDGMENT OPTIONS ..................................................................................................................................... [CL306.390] For the plaintiff ..................................................................................................................................................................... [CL306.390] For the defendant ...............................................................................................................................................................[CL306.395] Instalment order by agreement ...............................................................................................................................[CL306.400] PREVENTION IS BETTER THAN CURE ............................................................................................................... [CL306.410] COSTS COURT ...................................................................................................................................................................... [CL306.420] CONCLUSION ....................................................................................................................................................................... [CL306.430]

APPENDICES APPENDIX 1 – CASE STUDY INSTRUCTIONS.................................................................................................... [CL306.480] APPENDIX 2 – LET TER OF DEMAND ..................................................................................................................... [CL306.490] APPENDIX 3 – WRIT AND STATEMENT OF CLAIM ....................................................................................... [CL306.500] APPENDIX 4 – AFFIDAVIT OF SERVICE .................................................................................................................[CL306.510] APPENDIX 5 – SEARCH REQUEST AND DRAFT DEFAULT JUDGMENT .........................................[CL306.520]

CL306 Conduct of a Contract Claim

ABBREVIAT IONS

ABN

Australian Business Number

ACN

Australian Company Number

ARBN

Australian Registered Body Number

ASIC

Australian Securities and Investments Commission

CCR

County Court Civil Procedure Rules 2018 (Vic). Note that the County Court Rules and the Supreme Court Rules are identical in number and content unless otherwise stated

CPA

Civil Procedure Act 2010 (Vic)

MCA

Magistrates’ Court Act 1989 (Vic)

MCR

Magistrates’ Court General Civil Procedure Rules 2010 (Vic)

SCA

Supreme Court Act 1986 (Vic)

SCR

Supreme Court (General Civil Procedure) Rules 2015 (Vic). Note that all references to the Supreme Court Rules are to ChI unless otherwise stated

REFERENCES

Australian Securities and Investments Commission, REP 155 Debt Collection Practices in Australia (May2009) Australian Securities and Investments Commission and Australian Competition and Consumer Commission, Regulatory Guide No 96 – Debt collection guideline: for collectors and creditors (February2016) Hill G, ‘The plaintiff’s costs’ (1997) 71(12) Law Institute Journal 51 Lewis G, E Kyrou and N Dias, Handy Hints on Legal Practice (Lawbook, 4thed, 2017) LexisNexis, Civil Procedure Victoria (looseleaf and online)

ACKNOWLEDGMENT S

This practice paper is regularly reviewed and updated (as necessary) by College of Law academic staff and other legal practitioners. Previous reviewers include Susan Gatford in 2005, College of Law academic staff in 2006, Kristoffer Greaves BA, LLB(Hons) (UNE), GDLP(LeoCussen) in 2007–2010 and December 2011 (joint review), Tim Connard BSc, LLB in May 2011, VivianMoroney BA(Hons), LLB(Melb) in December 2011 (joint review), MadeleineDupuche BA, LLB(Hons)(Melb), DipEd(Mon) in 2012–2013, David Kim LLB(Hons)(Melb), LLM(Melb) in 2014–2016 and 2018–2019, David Velleley BA(Syd), LLB(UNSW) in 2017 (joint review), and Andrew Freadman BA, LLB, Masters Tax in 2017 (joint review). Current revision by David Kim, August 2020.

THE COLLEGE OF L AW CIVIL LITIGATION | CL306.10

INTRODUCTION [CL306.10] This practice paper uses the example of a debt recovery action to illustrate how to conduct civil litigation in Victorian courts. Note that this paper deals only with liquidated claims. The civil courts are frequently used by creditors for debt recovery or money claims. No matter their specialisation, law practices are regularly asked to take court action to recover a debt or other money allegedly due by a person (the debtor) to another person (the creditor) under a contract or otherwise. While the amount of a claim will determine in which court the matter will proceed, the civil procedure rules of all Victorian courts (including the Supreme Court, County Court or Magistrates’ Court) are now largely uniform. Civil proceedings in those courts are regulated by the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (SCR), County Court Civil Procedure Rules 2018(Vic) (CCR), and Magistrates’ Court General Civil Procedure Rules 2010(Vic) (MCR), respectively. This paper: • assumes familiarity and compliance with the pre-litigation requirements of the Civil Procedure Act 2010(Vic) (CPA); • describes how to bring a debt recovery claim in Victorian courts by illustrating the main principles of litigation in those courts that are shared by other common forms of litigation; • provides a description of the procedure to conduct and implement an undefended debt recovery matter in the Victorian courts, including references to the relevant rules of court; • includes a list of steps in an undefended matter; • explains the differences in procedure if the matter is defended; • shows the options and tactics available to a debtor; and • includes advice lawyers might give commercial clients after the event on ways to prevent or minimise a recurrence of the problem. Negotiations and settlements can occur at any time, so it is critical that the lawyer and the client regularly evaluate the viability of an action to decide when to continue with proceedings or when settlement should be negotiated or accepted. Every attempt should be made to negotiate a settlement (if your client agrees), even if it is on a purely commercial basis. Depending on the debtor’s financial circumstances, the creditor might prefer to accept less than the full amount claimed or agree to an instalment plan in full and final settlement of the claim, than face the possibility of obtaining a judgment in their favour but no money at all

TAKING INSTRUCTIONS AND COLLECTING ACCURATE DOCUMENTARY EVIDENCE [CL306.20] Key considerations The first step in acting in debt recovery matters is taking instructions from your client(s). If you are working in a large debt recovery practice, this is often done without meeting the client. Large commercial clients will often send you details of the outstanding debts on which they want you to act. Regardless of whether or not you meet the client, take full and accurate i t ti d l if th d t il f th i t ti Th li t’ d b

CL306 Conduct of a Contract Claim | CL306.20

(wholly or in part) or incorrectly particularised. Both the lawyer and the client should keep in mind the “proper basis” requirement imposed by CPAs18. Checking the accuracy of your client’s records and the facts on which the claim depends is important. You should form your own view as to whether the debt is owed, by whom, to whom and the correct amount of the debt, before any proceedings are issued. Ask the client to provide: • all documents evidencing the debt (such as any correspondence, written agreement, invoices and statements of account); • any documents that evidence security or part-payment or attempts at payment (such as promissory notes, dishonoured cheques, guarantees, chattel mortgages, bills of sale, credit applications or any document representing security for the debt); • details of the exact amount of the debt outstanding (including agreed interest); • the “account history” of transactions if there has been a working relationship between the creditor and debtor involving a “running account” of debts and payments to repay debts; and • any dispute as to facts raised by the debtor. Generally, the default is obvious – the debtor has not paid an account or accounts by the due date. However, it is important to review the documents in your client’s instructions to ensure that the debt is in fact due. For example, if the balance is due 30 days from the invoice and 30days have not yet elapsed, the debt is not yet due. Sometimes there may be preconditions to a suit, such as a guarantee clause might provide that no action may be taken unless a demand in writing has been served on the debtor. The claim could be so old that it is statute-barred under variousActs. Fully assess the claim at the outset It is important to assess these factors at the stage of taking instructions. If there is a problem, you can point it out to the client and (if possible) rectify it before commencing further action and avoid your client being liable for costs unnecessarily incurred by your client and the defendant. Consider using an instruction sheet and checklist. Take care with the following items: • Details of the client (creditor): especially in relation to the creditor’s legal status and capacity to sue. Consider whether the client is a natural pers...