The debt recovery process can be long, complicated, and stressful. We lots of questions about the process from our clients, trying to make head or tail of it. We’ve put together a short explanation of what the process looks like.

Letter of Demand

The first step is usually a firm letter of demand. While this is not necessary from a legal point of view, it is often a relatively inexpensive exercise that can sometimes resolve matters at an early stage.

A letter of demand can be written by yourself or by a solicitor. It should contain an unequivocal demand for the outstanding sum, copies of the tax invoices issued or outstanding bills, a deadline for payment, and clear instructions on how payment can be made.

Filing the Statement of Claim

If a letter of demand does not work then you would have to commence formal legal proceedings. This is normally done by filing a “Statement of Claim” with the relevant Court. The Statement of Claim sets out who the parties are and what relief is being sought – in the case of debt recovery, what money is to be paid. It also must contain a summary, also known as “pleadings”, of the reasons of why the defendant should pay you the money.

The amount of money you are seeking to recover will determine which Court you are in (Local Court, District Court, or Supreme Court), and what fee you would have to pay.

You can claim a certain amount of legal costs for the preparation of the Statement of Claim.

After filing the Statement of Claim, you must serve it on the defendant. There are some rules in relation to how this can be done, but generally it must be personally if the defendant is an individual, or at their registered business address if they are a company.


The defendant must now file and serve their defence within 28 days of service of the Statement of Claim on them. A defence must contain a short summary of the reasons why the defendant is not liable to pay you the money.

Sometimes, before a defence is filed, the defendant (or their lawyers) may write a letter to you seeking “Further and Better Particulars”. The purpose of this letter is to clarify any ambiguous or unclear matters set out in the Statement of Claim.

In the event that the defendant fails to file a defence, you may make an application to seek default judgment against the defendant, and proceed with enforcement of the judgment. There are limited circumstances in which default judgment can be set aside, which we shall cover in a later article.

Directions and Pre-Trial Reviews

After the defence has been filed, your case will be listed in Court. The Court will manage your case to ensure that it can be heard speedily and fairly. The Court will issue directions, known as “Orders”, to the parties to prepare for the hearing. The Orders that the Court can make are:

  • Responding to particulars
  • Preparation of evidence
  • Disclosure of documents
  • Mediation or Arbitration
  • Expert Reports
  • Setting a date for hearing


Negotiations between the parties can occur at any time, and the Court typically encourages for disputes to be settled where possible between the parties in private. As Court can often be an expensive exercise it’s usually best to try to negotiate the matter at the start, rather than at the end when legal fees have already been incurred.

Preparation of Evidence

The parties are usually given directions for the preparation of evidence by a certain date, with a copy of the evidence provided to the other party. This date is usually quite strict, and there is a chance that evidence submitted after that date could be excluded from the hearing.

Evidence is usually submitted in affidavit format and is set out in separate and numbered paragraphs. It must be signed in front of an authorised witness, usually a Justice of the Peace. Written contracts, letters, e-mails, or other documents in support can be attached or annexed to the evidence.

Evidence also must comply with certain “rules” – for example, you might have an opinion about the workmanship of a building, but unless you are qualified to express that opinion, it is quite likely that your opinion will be excluded or disregarded. Another example of a rule is the rule against hearsay evidence.

Final Hearing

The final hearing is where the parties have their “day in court”. By this stage, theoretically, all parties should be fully aware what their case is, what evidence each party has, and arguments in support of their case. The final hearing is also when the each parties’ evidence is tested – parties may critique each other’s evidence, point out contradictions, and discredit witnesses.

Witnesses who tendered an affidavit as part of their evidence should be present to be cross-examined, unless the case is in the Small Claims Division.

Following the hearing of the matter, parties often are given the opportunity to make submissions in support of their case. A decision is then given by the Court, but often not on the same day of hearing – more likely after a number of weeks, after the Magistrate or Judge has had the opportunity to digest all of the information.

If judgment has been awarded in your favour after all of that, it will usually include some (but not likely all) of your legal costs. If the debtor still refuses to pay the amount awarded, you can then proceed to legal enforcement of the judgment – another topic for another time.

Scroll to Top
Scroll to Top