So, you’ve just received a statement of claim and you don’t know what to do with it?
Whilst you may be tempted to just add it to the pile of junk mail and forget about it, you may want to think twice about doing so. If you have received a statement of claim you have 28 days from the date you received it to consider your options and, if necessary, file a defence.
First of all you should consider that the Victorian Civil Procedure Act 2010,
Section 7 explains the overarching purpose in relation to civil proceedings is to facilitate the just, efficient, timely and cost‑effective resolution of the real issues in dispute and goes on to say that you can use any appropriate dispute resolution process to resolve the dispute, you don’t “have to” go to Court and pursuant to Section 11 you have a right to any appropriate dispute resolution, Section 3 defines “appropriate dispute resolution” as a process attended, or participated in, by a party for the purposes of negotiating a settlement of the civil proceeding or resolving or narrowing the issues in dispute, including mediation, whether or not referred to a mediator in accordance with rules of court;
In the meantime, while you ponder whether you want to go to Court or Mediation
What happens if you just leave it in the pile of junk mail, will it just go away?
Unfortunately deciding to ignore a statement of claim can have a snowball effect. If. after 28 days, you decide to do nothing, the party who issued the statement of claim may apply to have default judgment entered against you. They may then seek to enforce the judgment to recover the debt by, for example:
1. Issuing a garnishee order to deduct payments from your wages or any rental income you usually receive to pay the debt
2. Issuing a writ allowing a sheriff to seize your personal property to pay for the debt
3. Commencing bankruptcy proceedings against you
4. A combination of the above.
If a judgment is entered against you this can affect your credit rating and this may make it difficult for you to obtain credit in the future.
So, what should you do if you receive a statement of claim?
As a starting point, you should seek legal advice about the options available to you having regard to the facts and circumstances of your particular matter. By doing this you will be able to place yourself on the front foot from the outset.
There are several options which may be available to you, for example:
5. It may be that you have a valid defence to the claim and should file a defence and defend yourself in Court proceedings.
6. You may be able to negotiate with the party that issued the statement of claim to reach a settlement without having to resort to protracted and costly Court proceedings. This will of course depend on your individual circumstances and the attitude of the other party.
7. You may admit that you owe the amount claimed in the statement of claim… You may be able to negotiate an agreement with the other party to pay the amount claimed by way of installment payments.
Mediation is an option that you can invoke at any time during proceedings, however at the time you are served a statement of claim it may well be the best time strategically to commence Mediation instead of either ignoring the matter or going straight to litigation.
Mediation firstly will often cost less than it would cost to have a lawyer even look at the statement of claim let alone work on it and file a defence. It will give you the opportunity to force the other party to come to the negotiating table and hear you out and your side of the story. Whatever is said in Mediation is “without prejudice” meaning it can not be used in Court against you, this is a protected right in Section 67 of the Civil procedure act.
The other party is obliged to come to Mediation otherwise any lawyers and Court costs incurred may go against them for not being reasonable and considering appropriate dispute resolution methods provided for in the Act.
Mediation gives you some control of the situation in that it enables and facilitates the parties themselves to resolve the dispute without the need of costly lawyers and court fees not to mention the time and stress and the toll that litigation can take.
These are just some of the many options that are available to you if you are served with a statement of claim.
To see if Mediation can work for you feel free to contact us using this form for a free no obligation initial consultation.