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Enforcement Warrant for Seizure and Sale of Property

26/12/2018 By Debt Recovery Qld

A warrant for seizure and sale of property is an enforcement option pursuant to the Uniform Civil Procedure Rules 1999 (QLD) (“UCPR”).

A warrant for seizure and sale of property is a way of enforcing a judgment or enforcing a registered QCAT decision.

A warrant for seizure and sale of property allows the creditor to enforce an enforceable money order over the property of the debtor.

Property can include all real and personal property of the debtor that is not exempt property, but in reality, is more likely to be real property or vehicles.

A warrant for seizure and sale is obtained by making an application to the Court. The application consists of:

The application;
A statement in support of the application; and
A draft enforcement warrant.

After applying for enforcement warrant, when the Court issues the UCPR enforcement warrant, it is then given to the enforcement officer to execute the warrant.

This article will give you all the information needed to apply for an enforcement warrant, and give you hints and tips to avoid pitfalls.

There are a number of complicated steps that need to happen before a Court Bailiff can execute a warrant for seizure and sale of property. We strongly recommend engaging a legal professional

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Enforcement Warrant for Seizure and Sale of Property

The steps needed for a warrant for seizure and sale of property include:

A creditor will need an enforceable money order;
The creditor must complete an application – Form 9;
The creditor must complete the draft warrant – Form 75;
The creditor must complete a statement in support of the application – Form 74;
The creditor will then need to provide the warrant to the enforcement officer for enforcement by one of the various enforcement options.

We will break each of these steps down in more detail below.

A Creditor will need an Enforceable Money Order

An enforceable money order is defined in rule 793 of the UCPR:

“enforceable money order” of a court, means—
(a) a money order of the court; or
(b) a money order of another court or tribunal filed or registered under an Act in the court for enforcement.

Schedule 3 of the UCPR defines an order to mean:

“order” … includes a judgment, direction, decision or determination of a court whether final or otherwise.

An enforceable money order is a money judgment, direction, decision or determination – of a court, another court or tribunal – filed or registered … in the court for enforcement.

This will include a money judgment in the Magistrates Court, or a decision in QCAT registered in the Magistrates Court for enforcement. An unregistered QCAT decision is not an enforceable money order until it is registered in the Court.

Six (6) Year Limitation Period

The enforceable money order is able to be enforced – without leave of the Court – and time after six (6) years from the date of the order.

Rule 799(1) of the UCPR says:

An enforcement creditor may start enforcement proceedings without leave at any time within 6 years after the day the money order was made.

If six (6) years have passed since the day the money order was made then a judgment creditor may still proceed against the debtor, but only with leave of the Court.

If you have an enforceable money order which is less than six (6) years old, then you can draft and file the required documents in the Court.

The Creditor must Complete the Documents

The documents needed for the Court to issue an enforcement warrant are all required forms on the Queensland Courts website. They are:

An application – Form 9;
A draft warrant – Form 75; and
A statement in support of the application – Form 74.

The Application

The application Form 9 outlines the order (or orders) that the plaintiff wants the Court to make.

The application will say something like:

TAKE NOTICE that the Plaintiff is applying to the Court for the following orders:
1. That pursuant to rule 828 of the Uniform Civil Procedure Rules 1999 (QLD) an enforcement warrant for seizure and sale of the property of the Defendant to satisfy the judgment amount; and
2. That the Defendant pay the costs of the Plaintiff for costs of preparing the warrant and attending to issuing and for return fixed in the sum of $XXX.

The costs of the warrant are fixed at Schedule 2 of the UCPR depending on the amount of the claim – see item 15.

A creditor may apply for an enforcement warrant without notice to another party. This means that a creditor can apply for a warrant, and the Court can issue the warrant, without the debtor being notified. Only when it is issued does the debtor need to be served.

The Draft Warrant

The draft warrant Form 75 is a pro-forma form which a judgment creditor must complete. It will need to include:

The judgment amount; less
Any payments made by the debtor; plus
The costs of preparing warrant; plus
Interest calculated pursuant to section 59 of the Civil Proceedings Act 2011 (QLD).

The Judgment Amount – is simply the amount awarded in the judgement or registered QCAT decision.

Less Payments Made – means the amount must be deducted from the judgment amount if the debtor has made a few payments toward the debt. This might have happened if a creditor is applying for a second warrant for example.

The Costs of Preparing the Warrant – means the amount fixed at Schedule 2 of the UCPR depending on the amount of the claim – see item 15.

Interest – means the amount set by section 59 of the Civil Proceedings Act 2011 (QLD) and by paragraph 4 of the Supreme Court of Queensland Practice Direction Number 7 of 2013 – 6% p/a above the cash rate at the Reserve Bank of Australia.

Once you have carefully calculated the total amount of the enforcement warrant for seizure and sale of property, the warrant is then followed by a notice to the enforcement officer saying:

You are to seize and sell such of the real and personal property (other than exempt property) in which the enforcement debtor has a legal or beneficial interest as will satisfy the total amount owing on the judgment.

The warrant then directs the enforcement officer to the known property of the enforcement debtor.

If it is real property, then the creditor will need to add a description of the real property and the lot, plan, title reference etc. on the enforcement warrant for seizure and sale of property.

If it is a vehicle, then a reference to the registration number and/or VIN number of the vehicle, who it is registered to, etc. will need to be provided.

Statement in Support of the Application

The statement in support of an application for an enforcement warrant for seizure and sale of property will need to provide the Court with evidence of what is required for the Court to issue the warrant.

Similar to an affidavit, the statement in support should identify:

The person making the statement and the authority they have (solicitor for the judgment creditor, judgment creditor, director of the judgment creditor);
Evidence of the decision, judgment, or enforceable money order;
Evidence of any payments made as against the judgment debt, or a statement that no payments have been made against the judgment debt;
Evidence and a statement supporting the calculation of costs and interest; and
Evidence of the property to be seized and sold.

If everything is done correctly and pursuant to the UCPR, the Court will issue you with the enforcement warrant for seizure and sale of property.

Rule 817 of the UCPR outlines the other things that need to be included in the statement, being:

the date the money order was made;
the amount for which the order was made;
the date and amount of any payment made under the order;
the costs incurred in previous enforcement proceedings in relation to the order debt;
any interest due at the date the statement is sworn;
any other details necessary to calculate the amount payable under the order at the date the statement is sworn and how the amount is calculated;
the daily amount of any interest that, subject to any future payment under the order, will accrue after the date the statement is sworn; and
any other information necessary for the warrant being sought.

The statement in support of an application for an enforcement warrant for seizure and sale of property must not be sworn/affirmed more than two days before the making of the application. This is to attempt to ensure that the debt is still outstanding at the time of issuing the warrant. Best practise is to swear/affirm the same day as filing.

Once you have been issued with the enforcement warrant for seizure and sale of property you then will need to commence one of the different enforcement options.

There are a number of complicated steps that need to happen before a Court Bailiff can execute a warrant for seizure and sale of property. We strongly recommend engaging a legal professional

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Enforcement Options for Seizure and Sale of Property

For the purpose of this article I will just give information in relation to the following:

A warrant for seizure and sale of real property (land); and
A warrant for seizure and sale of a vehicle.

The procedure for both are very different. I will explain both below.

A Warrant for Seizure and Sale of Real Property

Probably the most common enforcement warrant is a warrant for seizure and sale of the debtor’s real property.

Once the warrant has been issued, the creditor has to register the warrant on the title of the debtor’s real property.

This is done by completing a Form 12 and lodging it on the title of the real property.

The creditor will need to conduct a fresh title search and a QVAS (Queensland Valuation and Sales) search to ensure the ownership of the real property.

The Form 12 must then be signed by the Plaintiff or an officer of a corporate plaintiff (director for example).

Once properly drafted and signed, the Form 12 can then be lodged with the Department of Natural Resources, Mines and Energy. Once accepted, the warrant is registered on the title of the debtor.

At this point the creditor has to pay the cost of advertising and auctioning the real property to the enforcement officer. This can be around $2,000.00 to $2,500.00. Once the enforcement officer has these funds, then they will commence with executing the enforcement warrant.

These costs are recoverable – for example if the judgment debt is $50,000.00 and the enforcement costs are $2,500.00 then the bailiff will give the creditor $52,500.00 from the sale of the real property, plus the interest claimed – as a very rough example.

Finally, the enforcement officer will need a payout figure from the current mortgagee on the title. This is to ensure that there is enough equity in the property to satisfy the debts and the enforcement costs.

A Warrant for Seizure and Sale of a Vehicle

Another popular warrant is a warrant for seizure and sale of a vehicle.

If the debtor has a vehicle registered in their name, and the vehicle is not exempt property, and there is enough unencumbered equity in the vehicle to satisfy the judgment debt and enforcement costs, then you may apply for a warrant for seizure and sale of that vehicle.

The creditor will need to perform a registration search on the QLD Motor Vehicle Register, and perform a search of the Personal Property Securities Register (“PPSR”) to see if there are any registered interests over the vehicle (a finance company for example).

The creditor will also need an independent written valuation to assess the value of the vehicle.

If the judgment debtor owns the vehicle, and there are no security interests registered over the vehicle, then the enforcement officer may be directed to seize and sell the vehicle.

Once again, the enforcement officer will require security for their costs. This is somewhere in the region of $1,000.00 to $1,500.00 to store and auction the vehicle. Once again, these costs are recoverable after the sale of the vehicle.

Moving Forward

We strongly suggest that you engage a suitable qualified legal practitioner who specialises in the enforcement of money orders.

If you have a QCAT decision which needs to be registered in the Magistrates Court and enforced, or a judgment, direction, decision or determination of the Court to be enforced then contact our dedicated enforcement lawyers today.

There are a number of complicated steps that need to happen before a Court Bailiff can execute a warrant for seizure and sale of property. We strongly recommend engaging a legal professional

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Frequently Asked Questions

See below for some frequently asked questions regarding a warrant for seizure and sale of property.

What is Exempt Property?

Rule 828(1) of the UCPR states that:

A court may issue an enforcement warrant authorising an enforcement officer to seize and sell in satisfaction of a money order all real and personal property (other than exempt property) in which the enforcement debtor has a legal or beneficial interest.

Exempt property has the same meaning as given to it by the section 116(2) of the Bankruptcy Act 1966 (CTH) and Regulation 6.03 of the Bankruptcy Regulations 1996 (CTH).

These sections of bankruptcy legislation contain a number of instances where property is exempt property. The relevant property exempt from a warrant for seizure and sale of property includes but not limited to:

A vehicle with a value of less than $7,900.00 – subject to CPI – See AFSA for more information;
Property held by the debtor in trust for another person;
Tools of the trade – up to a certain value set by the regulations – See AFSA for more information;
Policies of life assurance or endowment assurance of the debtor and the proceeds of such policies (for example if they used that to purchase real property);
Funds held in a regulated superannuation fund;
Any damages or compensation recovered by the debtor in respect of such an injury or wrong or the death of such a person – and property purchased wholly or partly with that compensation).

Who is an Enforcement Officer?

Schedule 5 of the Supreme Court of Queensland Act 1991 (Qld) says:

“enforcement officer” for a court, means the sheriff, a deputy sheriff or a bailiff of the court.

That means that any of the above can enforce a warrant for seizure and sale of property.

How long does an Enforcement Warrant last?

An enforcement warrant for seizure and sale of property is valid for one (1) year after it is issued.

If the enforcement warrant for seizure and sale of property is not satisfied within one (1) year the creditor can renew the warrant by application to the court for a further period not exceeding one (1) year.

This application is made pursuant to rule 821 of the UCPR.

Is there a Priority of Enforcement Warrants?

Yes, if two (2) or more enforcement warrants for seizure and sale of property are filed around the same time, the earliest has priority over the later warrant.

Rule 823 of the UCPR deals with the priority of enforcement warrants.

What Happens if the Debtor Pays before the Sale?

If the debtor finds some money to pay the creditor, then the enforcement officer must not sell the property. Rule 830 of the UCPR says:

An enforcement officer must not sell property seized under an enforcement warrant if, at or before the sale, the enforcement debtor pays to the enforcement officer—
(a) the amount owing under the order, including interest; and
(b) the costs of enforcement then known to the enforcement officer; and
(c) an amount set by the enforcement officer as security for the enforcement creditor’s other costs of enforcement.

This means that the debtor must pay the judgment debt, interest, and the cost of enforcement. This is going to be significantly more than the judgment debt.

If the debtor does not pay all of those costs, then the enforcement officer can still sell the property.

What Costs are able to be Claimed?

Rule 797 of the UCPR says:

(1) The costs of enforcement of a money order are recoverable as part of the order.
(2) Interest on an order debt is recoverable as part of the money order.

So, the costs on the Court scale are recoverable, and interest as calculated above is also claimable.

These are added to the judgment debt and previous costs incurred.

What if the Debtor Owns the Property Jointly?

If the debtor is a joint owner in the property, then it becomes very difficult for the enforcement officer to seize and sell the property.

Best practice is to ensure that the debtor only owns the property, and that there is clear title to that property.

How much does an Enforcement Warrant Cost?

A UCPR enforcement warrant has no fee with the Court.

You will need to pay the estimated costs of the enforcement officer up-front.

These costs can include:

Advertising and auction expenses;
Seizure expenses, e.g. hire of a tow truck, or engaging a removal firm;
Storage of the property – vehicle for example;
The amount owing to the creditor pursuant to the warrant, costs and interest;
The bailiff’s execution fees and expenses – such as travel, the bailiff’s time and any other expenses incurred by the bailiff while executing the warrant.

Any remaining balance after the enforcement officer has paid for everything, is repaid to the debtor.

There are a number of complicated steps that need to happen before a Court Bailiff can execute a warrant for seizure and sale of property. We strongly recommend engaging a legal professional

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Recovering Outstanding Body Corporate Levies

15/12/2018 By Debt Recovery Qld

Are you a body corporate with outstanding body corporate levies from a lot owner?

A lot owner in a body corporate scheme is required to pay an agreed amount annually in owners’ contributions and levies.

If lot owners do not pay these contributions and levies, then this could impose a financial burden on the body corporate and/or the other lot owners, forcing the body corporate to commence the strata debt recovery process.

Non-payment of body corporate levies may mean that the body corporate is actually in breach of their obligations under the relevant Act, because they do not have the funds to complete the works.

This article will explain the body corporate debt collection process and a body corporates’ rights and entitlements when trying to recover outstanding body corporate levies and owner contributions.

A body corporate in entitled to debt recovery costs reasonably incurred when collecting outstanding body corporate levies. Let us help you recover body corporate debt and overdue strata levies

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Types of Body Corporate Levies

There are a number of different levies that need to be paid by lot owners.

The most common are the administrative fund levies and the sinking fund levies. These levies are to pay for the day-to-day running of the body corporate and the more long-term maintenance works.

These levies include costs for manager fees, cleaning costs of common property, electricity on common property, exterior & interior painting, gardening and landscaping costs, insurance, gate and/or lift and/or intercom maintenance, onsite manager fees, costs of operating the pool, road maintenance & refurbishment.

Sometimes there may be some extra insurance levies, special levies, and exclusive use levies. These levies are lot-specific levies and/or levies to deal with unexpected or unforeseen works that need to be completed – a tree on common property falls in a storm, for example.

If a lot owner does not pay these strata levies, then the body corporate may not have the funds to complete the works that need to be completed.

This effects the body corporate, the other lot owners, and residents.

Outstanding Body Corporate Levies Recovery

Because of the effect that non-payment of outstanding body corporate levies can have on the body corporate, other lot owners, and residents, there are provisions in the Body Corporate and Community Management Act 1997 (QLD) and the module regulations.

These instruments allow a body corporate to recover:

The amount of the contribution or instalment;
Any penalty for not paying the contribution or instalment;
Any costs (recovery costs) reasonably incurred by the body corporate in recovering the amount.

The Office of the Commissioner for Body Corporate and Community Management Practice Direction 24 also allows for a body corporate to be able to recover the following:

Amounts incurred by a body corporate in repairing damage caused by an owner or in carrying out work which was the obligation of the owner;
Agreed charges for the supply of services by the body corporate; or
Amounts an owner is required to pay under an exclusive use by-law.

This article will explain these in more detail below.

A body corporate in entitled to debt recovery costs reasonably incurred when collecting outstanding body corporate levies. Let us help you recover body corporate debt and overdue strata levies

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The Amount of the Contribution or Instalment

If a lot owner owes contributions to the administrative fund levy, sinking fund levy, insurance levy, special levy, and/or exclusive use levy, then the body corporate can seek to recover these outstanding body corporate levies.

On-top of the amount of the levy contribution owed by the debtor lot owner, a body corporate is able to add a penalty for non-payment.

Any Penalty for not Paying the Contribution or Instalment

The Module Schedules allow for penalty interest to be added to the debt amount.

The Modules Schedules say:

The body corporate may, by ordinary resolution, fix a penalty to be paid by owners of lots if a contribution, or instalment of contribution, is not received by the body corporate by the date for payment fixed in notices of contribution given to the owners.
The penalty must consist of simple interest at a stated rate (of not more than 2.5%) for each month the contribution or instalment is in arrears.

Therefore, to be able to recover penalty interest, the body corporate must fix the penalty interest rate by ordinary resolution.

This ordinary resolution can be made at the same time as a resolution to engage a body corporate levy recovery lawyer.

Any Recovery Costs Reasonably Incurred by the Body Corporate

The reasonable costs of engaging body corporate levy recovery lawyers and the reasonable outgoings associated with the recovery of the non-payment of body corporate levies can also be claimed.

In Body Corporate for Sunseeker Apartments CTS 618 v. Jasen [2009] QDC 162 Newton DCJ said:

Having regard to the conduct of this litigation by Ms Jasen and the evidence of Mr George I am satisfied that the plaintiff is entitled to recover the sum claimed by way of recovery fees

In this matter Newton DCJ awarded the entire legal costs of the Body Corporate in the amount of $41.445.91. In legal-speak, this is similar to indemnity costs – if fact the recovery of “reasonably incurred costs” under your particular module schedule may be better than the award of indemnity costs, and may include more than just legal costs.

As to the reasonableness of the costs incurred, Michael Howe, Adjudicator said in Body Corporate for SL8 v Falzon and Anor [2012] QCAT 556:

Whether a cost is reasonably incurred will depend on what was done, whether it was appropriate to incur the cost, when it was done, and the amount of the cost involved.

In an appeal from the Magistrates Court to the District Court on the Magistrate’s Order that:

The defendant pay to the plaintiff the whole of the recovery costs incurred by the plaintiff from and including the date of filing of Southport claim 52186/10, that is 7 December 2010.

It was submitted that there was no evidence as to what recovery costs had been incurred, and so it was not open to the Magistrate to order that all of the costs in fact incurred were both reasonably incurred and reasonable in amount. McGill SC, DCJ went on to say in Ramzy v Body Corporate for GC3 CTS38396 & Anor [2012] QDC 397:

In relation to the costs of the proceeding in Southport, it was I consider open to the Magistrate to order that those costs be assessed, but this should have followed a conclusion that the conduct of that proceeding had been reasonable, and to have been ordered to be in accordance with the test appropriate to the Regulation, namely such costs as were reasonably incurred and reasonable in amount.

Both of the cases above were cited as good law by Judge Robin QC in Prins v The Body Corporate for the Wave [2013] QDC 66.

Therefore, to ensure that the appropriate award of costs is given, it may be necessary to apply for a costs assessment from a costs assessor, and that the order of the Court be that all reasonably incurred costs be awarded on the indemnity basis, to be assessed if not agreed.

A body corporate in entitled to debt recovery costs reasonably incurred when collecting outstanding body corporate levies. Let us help you recover body corporate debt and overdue strata levies

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The Body Corporate Debt Collection Process

It is reasonable for the body corporate to have taken the following steps:

Set the contributions to be levied on owners;
Given the correct notice of contribution payable;
Set any discounts for timely payment (if at all);
Set any penalty interest on outstanding levies (if at all); and
If a lot owner is in arrears, serve an arrears notice.

If these steps have been completed (if required) then you will have to commence with the body corporate debt recovery process and engage a body corporate levy recovery lawyer.

Body Corporate Levy Recovery Lawyer

Once engaged, a body corporate levy recovery lawyer will commence the legal process of recovering outstanding body corporate levies. This is done in the following way:

Issuing the lot owner debtor with a letter of demand;
Commencing legal action in the Court with jurisdiction;
Negotiating a settlement or compromise;
Obtaining a judgment or enforceable money order;
Enforce that judgment or Court order.

We will now go into more detail below.

Issuing the Lot Owner Debtor with a Letter of Demand

The first step is to issue a lawyer’s letter of demand.

The letter of demand outlines the particulars of the debtor’s breach, gives then lot owner debtor an outline of the steps taken by the body corporate above.

The letter of demand also foreshadows pending legal action and puts the lot owner debtor on notice that if the body corporate is forced to commence legal action that the lot owner debtor will have to pay all recovery costs reasonably incurred, plus penalty interest (if applicable).

The letter of demand does two things – it encourages the debtor to pay without resorting to costly litigation; and/or if they continue to do nothing, it puts them on notice of an award of costs, which can be used in the cost recovery process.

If the lot owner debtor continues to ignore all reasonable attempts to resolve the matter without litigation, the body corporate may have to instruct the body corporate levy recovery lawyer to commence legal action.

Commencing Legal Action in the Court with Jurisdiction

The various module regulations prescribe that both the Queensland Civil and Administrative Tribunal (“QCAT”) and a Queensland court of competent jurisdiction. An adjudicator does not have jurisdiction in a debt dispute.

The jurisdictions of the Tribunal and the Courts in relation to civil debt claims is determined by the amount of the debt.

QCAT – If the debt is under $25,000.00;
Magistrates Court – If the debt is under $150,000.00
District Court – If the debt is between $150,000.01 and $750,000.00; and
Supreme Court – if the debt is $750,000.01 or over.

The body corporate would have likely taken a serious wrong-turn in a lot owners’ debt is more that $150,000.00 so most legal action would be commenced in QCAT or the Magistrates Court.

There are advantages and disadvantages with commencing legal action in either QCAT or the Magistrates Court – as a general rule-of-thumb, as solicitors we prefer to commence legal action in the Magistrates Court.

In the Court, an action for the recovery of body corporate debt is commenced by claim and statement of claim. Once the claim and statement of claim has been drafted and filed in the Court, it has to be served on the lot owner debtor.

Service of a Notice or Process

Service of an originating process on a lot owner who is a natural person must be done by giving a copy of the documents to them personally. A body corporate is required to keep an address for service of a lot owner.

If the body corporate does not have an address for service of an owner of a lot, then the address for service is the residential or business address, as last notified to the body corporate for the lot owner.

Service of an originating process on a lot owner who is a corporation must be done by sending it by prepaid post to the address of the registered office of the company.

Once served, they will have twenty-eight (28) days to file a notice of intention to defend and defence.

Negotiating a Settlement or Compromise

At this stage, the lot owner debtor might attempt to negotiate a settlement or compromise of some kind. This is quite common.

The body corporate should give some consideration to the commercial benefits of settling a matter early, without resorting to protracted litigation.

However, the lot owner debtor has obviously demonstrated that they are bad-payers, and so careful consideration should be given to any repayment plans or further promises.

We can help and assist the body corporate with the advantages and disadvantages of settling the matter early and offer a body corporate legal advice on best practices and ways to secure the debt.

More likely, the lot owner will either continue to do nothing, or attempt to defend the legal action.

Obtaining a Judgment or Enforceable Money Order

The main purpose of commencing legal proceedings is to obtain an enforceable money order.

There may be some other orders that a Court may make, but the main purpose for debt recovery proceedings is to recover the outstanding body corporate levies plus costs and interest.

If the debtor does not file a notice of intention to defend and defence within the twenty-eight (28) days, then we can apply to the Court for a judgment in default.

If the lot owner debtor does attempt to defend the proceeding but the lot owner has no real prospect of successfully defending all or a part of the body corporate’s claim; and there is no need for a trial of the claim or the part of the claim, then we can apply for summary judgment on behalf of the body corporate.

Finally, and least likely, the lot owner debtor might make this matter go all the way to a trial. If this happens (which is unlikely) then the body corporate will be given a judgment at the end of the trial.

Whichever of the above happens, once you have a judgment or enforceable money order, the body corporate can attempt to enforce that judgment on the lot owner.

Enforce that Judgment or Court Order

There are a number of ways to enforce a judgment or money order against a lot owner. The most obvious being an enforcement warrant for seizure and sale of the real property contained in the lot.

However, if for some reason this is not available, or not preferred then there are a number of other ways to enforce a judgment or money order.

If the judgment debtor is a person, then the body corporate might consider bankruptcy as an enforcement option, or an alternative enforcement warrant to collect outstanding body corporate levies.

If the judgment debtor is a company then the body corporate should consider issuing the judgment debtor with a creditor’s statutory demand and commence winding up proceedings to recover outstanding body corporate levies.

However, the obvious choice is to apply for an enforcement warrant for seizure and sale of the lot owner’s real property. This includes, but it not limited to the lot in the scheme.

This type of enforcement warrant is good for two main reasons – firstly it leverages the equity in the real property to pay the judgment debt; but it also removes and replaces the lot owner in the scheme (with hopefully a lot owner who pays the body corporate levies).

Recovery of Outstanding Body Corporate Levies

If you are on a body corporate committee, or you can make decisions on behalf of a body corporate, and you need to engage a debt recovery lawyer to recover outstanding body corporate levies, then you should give us a call.

Our lawyers have extensive experience in body corporate matters and debt recovery.

A body corporate in entitled to debt recovery costs reasonably incurred when collecting outstanding body corporate levies. Let us help you recover body corporate debt and overdue strata levies

How Long can a Debt be Chased in Australia?

17/11/2018 By Debt Recovery Qld

Have you ever wondered how long can a debt be chased in Australia?

In most states (except NT) the limitation period is six (6) years.

This is contingent on a number of different factors and so it is vital that you get the calculations correct.

Failure to realise the limitation period could mean that you will be unable to successfully recover your debts and they will become statute barred.

This article will explain how long a debt can be chased in Australia and explain the six (6) year limitation period, and the concept of a debt being statute barred.

This article will use Queensland legislation and cases however the limitation of actions acts in every State and Territory have a lot of the same concepts.

Check the bottom of this article for the limitation period in your State or Territory to understand how long can a debt be chased in Australia.

If you have ever asked yourself how long can a debt be chased in Australia, and the limitation date is approaching, then contact our debt recovery lawyers today

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What is the statute of limitation for debts in Australia?

In Queensland the limitation period for the recovery of a debt is six (6) years unless legal action has been commenced.

Section 10 of the Limitation of Actions Act 1974 (QLD) says:

(1) The following actions shall not be brought after the expiration of 6 years from the date on which the cause of action arose—
(a) … an action founded on simple contract or quasi-contract …

So, the only question left to answer is when does a cause of action arise in a debt dispute?

Cause of Action Accrual in Contract

Gibbs v Guild (1882) 9 QBD 59 is the authority that a cause of action in contract accrues at the time of the breach, not at the time the damage is sustained.

In the more recent matter of UGL Rail Pty Ltd v Wilkinson Murray Pty Ltd [2014] NSWSC 1959 the NSW Supreme Court upheld that saying:

A cause of action for breach of contract first accrues when the breach occurs: Gibbs v Guild (1881) 8 QBD 296 at 302 per Field J; Hawkins v Clayton [1988] HCA 15; (1988) 164 CLR 539 at 583 per Deane J; Nykredit Mortgage Bank Plc v Edward Erdman Group Ltd (No 2) [1997] UKHL 53; [1998] 1 All ER 305 at 308 per Nicholls LJ.

Usually, a breach of the contract will be defined in the contract.

If not, then it is likely to be the day after the last day for payment of the invoice. If your payment terms are fourteen (14) days, then breach occurs at the time of the breach. This is when the clock starts ticking.

Fresh Accrual of Action

It is possible for the six (6) year limitation period to start again, essentially restarting the clock.

Section 35(3) of the Limitation of Actions Act 1974 (QLD) says:

Where a right of action has accrued to recover a debt or other liquidated pecuniary claim … and the person liable or accountable therefor acknowledges the claim or makes a payment in respect thereof, the right shall be deemed to have accrued on and not before the date of the acknowledgment or the last payment.

This means that upon the acknowledgement of the debt, or payment made the limitation period starts on that date.

The Act then goes on to prescribe the formal requirements needed for an acknowledgement of debt and/or part-payment. Section 36 of the Limitation of Actions Act 1974 (QLD) says:

Every acknowledgment referred to in section 35 shall be in writing and signed by the person making the acknowledgment

This means that a debtor may acknowledge the debt, but that acknowledgement must be in writing and must be signed by the debtor.

So, an acknowledgment of the debt must be “in writing” and “signed by the person” or the persons agent for it to be effective. But what does this mean?

If you have ever asked yourself how long can a debt be chased in Australia, and the limitation date is approaching, then contact our debt recovery lawyers today

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Signed Acknowledgement of Debt

In Stage Club Ltd v Millers Hotels Pty Ltd [1981] HCA 71 Gibbs CJ said:

Where the claim is for payment of a debt, an acknowledgment, to be sufficient, must recognize the present existence of the debt.

Gibbs CJ then agreed with Kerr J in Surrendra Overseas Ltd v Government of Sri Lanka [1977] 1 WLR 565 who said that:

To acknowledge a claim, as a matter of ordinary English, signifies an admission that it is due. There is no acknowledgment of a debt unless there is an admission that there is a debt . . . outstanding and unpaid.

For an acknowledgement of debt, the debt must be acknowledged:

In writing; and
Signed by the person making the acknowledgement; and
Recognise the present existence of the debt; and
Admits that the debt is outstanding and unpaid.

Tip – if the limitation period is coming close, ask the debtor to acknowledge the debt, or make a small payment. This resets the clock on the six (6) year limitation period.

When does the Limitation Period Start?

The limitation period starts at different times depending on the circumstances of your case.

If a debt is loaned without any terms for repayment, then the loan is repayable on demand. This means that the limitation period starts on the day that the actual money is loaned, or upon the date of the last repayment.

If the debt is based upon a breach of contract, then the limitation period starts on the date of the breach of the contract.

It is important that a creditor knows exactly when the limitation date started, otherwise they may lose out on the right to recover that debt.

What is a Statute-Barred Debt?

A statute-barred debt is a debt which is older than the limitation period in your State or Territory, to which no payments have been made, and there has been no acknowledgement.

For example, if a debtor owes a creditor and the debtor tries to disappear (interstate etc) in an attempt to escape paying for the debt, and successfully does so for six (6) years (in Queensland) then the creditor cannot recover the debt.

This is unless the creditor brings an action “founded on simple contract or quasi-contract” as per the Act. All a creditor has to do is correctly bring the action to preserve their rights.

Can you collect Statute-Barred Debts?

A creditor has no legal right of recovery for statute-barred debts.

You can still attempt to negotiate with the debtor, but a creditor must not threaten any legal action, as they are not allowed to bring any.

If a debtor knows that the debt is unenforceable, then this could be a futile exercise, and there will be penalties if a creditor attempts to mislead or deceive the debtor.

How do I know if a Debt is Statute Barred?

If it has been six (6) years since a creditor has received a payment toward the debt, and there has been no written correspondence between the parties acknowledging the debt, then there is a good chance that the debt is now statute barred.

It is very important that this calculation is done correctly, or a creditor may lose their right to recover the debt.

For example, the debtor may have received a small payment which has been forgotten about, or the acknowledgement of debt is not a valid acknowledgement.

It is very important to seek qualified legal advice to ensure that your rights are protected.

If you have ever asked yourself how long can a debt be chased in Australia, and the limitation date is approaching, then contact our debt recovery lawyers today

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Preserving the rights of the Creditor

Section 10 of the Limitation of Actions Act 1974 (QLD) says that an action on simple contract or quasi-contract cannot be brought after the expiration of 6 years from the date on which the cause of action arose.

However, if a creditor brings the action, or commences legal action, to recover the debt, then this preserves the creditor’s rights.

For example – a creditor can wait for five (5) years and fifty (50) weeks and receive no payments toward the debt, then file proceedings in the Court with jurisdiction, and it satisfies section 10 of the Act.

The creditor is also entitled to claim interest on the outstanding debt pursuant to section 58 of the Civil Proceedings Act 2011 (QLD) which says:

The court may order that there be included in the amount for which judgment is given interest at the rate the court considers appropriate for all or part of the amount and for all or part of the period between the date when the cause of action arose and the date of judgment.

The Supreme Court Practice Direction Number 7 of 2013 says that interest is calculated at 4% above the cash rate at the Reserve Bank of Australia.

This may mean that a $15,000.00 unpaid debt, a little less than six (6) years from the date of this article, the Court Interest Calculator says that the interest amount is $5,698.50 bringing the total owing to $20,698.50. This is a considerable amount to be added.

Once filed, the debtor needs to be served with the proceeding. If the debtor continues to do nothing after being served, then a creditor can request that judgment be entered against them.

What if Judgment has been Entered Against a Debtor?

If judgment is entered against the debtor, then the creditor has a statutory limit of twelve (12) years to enforce the judgment debt. This includes six (6) years without leave of the Court, and a further six (6) years with leave of the court.

Section 10(4) of the Limitation of Actions Act 1974 (QLD) says:

An action shall not be brought upon a judgment after the expiration of 12 years from the date on which the judgment becomes enforceable.

The creditor is also entitled to post-judgment interest in the amount of 6% above the cash rate at the Reserve Bank of Australia.

If you have ever asked yourself how long can a debt be chased in Australia, and the limitation date is approaching, then contact our debt recovery lawyers today

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How Long can a Debt be Chased in Australia?

As outlined above, in Queensland a debt can only be chased for six (6) years after the cause of action arose. Other States have similar legislation.

New South Wales

Section 14 of the Limitation Act 1969 (NSW) says:

An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims:
(a) a cause of action founded on contract (including quasi contract)

South Australia

Section 35 of the Limitation of Actions Act 1936 (SA) says:

The following actions namely … actions founded upon any simple contract express or implied, or upon any award where the submission is not by specialty … shall, save as otherwise provided in this Act, be commenced within six years next after the cause of action accrued and not after.

Tasmania

Section 4 of the Limitation Act 1974 (TAS) says:

Except as otherwise provided in this Division, the following actions shall not be brought after the expiration of 6 years from the date on which the cause of action accrued, that is to say:
(a) actions founded on simple contract (including contract implied by law)

Victoria

Section 5 of the Limitation of Actions Act 1958 (VIC) says:

The following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued—
(a) Subject to subsections (1AAA), (1AA) and (1A), actions founded on simple contract (including contract implied in law)

Western Australia

Section 13 of the Limitation Act 2005 (WA) says:

An action on any cause of action cannot be commenced if 6 years have elapsed since the cause of action accrued.

Australian Capital Territory

Section 11 of the Limitation Act 1985 (ACT) says:

Subject to subsection (2), an action on any cause of action is not maintainable if brought after the end of a limitation period of 6 years running from the date when the cause of action first accrues to the plaintiff or to a person through whom he or she claims.

Northern Territory

Section 12 of the Limitation Act (NT) says:

Subject to subsection (2), the following actions are not maintainable after the expiration of a limitation period of 3 years from the date on which the cause of action first accrues to the plaintiff or to a person through whom he claims:
(a) an action founded on contract (including quasi-contract) not being a cause of action which is evidenced by a deed

How Long can a Debt be Chased in Australia?

In every State and Territory in Australia, the usual limitation time is six (6) years, except in the Northern Territory where it is three (3) years.

If you want to legally enforce your rights in the Courts then you must commence legal action before this time or you may lose your legal right of recovery.

We always recommend using a debt recovery lawyer to ensure that your legal rights are protected.

If you have ever asked yourself how long can a debt be chased in Australia, and the limitation date is approaching, then contact our debt recovery lawyers today

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Recovering Debts or Money Owed

10/11/2018 By Debt Recovery Qld

Do you need to collect debts or money owed to you?

You can recover debts or money owed in the following ways:

Negotiating with the debtor;
Mediation or alternative dispute resolution;
Filing a claim in the Court with jurisdiction;
Filing a claim in QCAT or another tribunal;
Issuing a statutory demand on an insolvent company;
Enforcing the judgment with an enforcement warrant;
Enforcing the judgment with bankruptcy or liquidation.

This article will explain each of the above and give you information on the best way to recover debts or money owed by a person or debts or money owed by a company.

Negotiating with the Debtor

In the first instance, when trying to recover debts or money owed, we recommend trying to resolve the debt matter by negotiating with the debtor.

Non-payment of debts or money owed to you is very likely a breach of contract, and as such you will be entitled to legal (or equitable) remedies. You can certainly highlight those remedies and foreshadow any relief that you will be entitled to as leverage on your side of the negotiation process.

Be mindful not to foreshadow relief that you are not entitled to!

You can’t tell the debtor that you will issue a statutory demand if the amount of the debt is below the statutory minimum.

Likewise, you cannot foreshadow bankruptcy if any future judgment would be less than the statutory minimum for a bankruptcy notice … and so on.

This is essentially what we do in a letter of demand.

Contact our lawyers to negotiate with your debtor to recover the debts or money owed on a without prejudice basis.

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Compromise or Settlement

As in any negotiation, there is an element of compromise. To reach a resolution, you may be prepared to compromise for the debt and accept a lesser amount.

The rationale for this is because if you are forced to go to Court or engage a solicitor, then an award of costs (if any) will likely not cover the actual costs that you have spent, leaving a gap which you will be out-of-pocket.

If this gap is $2,000.00 for example, then you may be prepared to accept something up to $2,000.00 less than the debts or money owed in an attempt to resolve the matter early.

If the debtor accepts a $1,000.00 reduction in the debts or money owed, then this should not be seen as a $1,000.00 loss, but a $1,000.00 win because you are not put to the cost, stress, and time of commencing legal proceedings.

Part of the job of a debt recovery lawyer is to advise our clients on the commercial realities of their debt recovery matter.

These compromise negotiations are conducted on a without prejudice basis. See our article here on settling matters early.

Contact our lawyers to negotiate with your debtor to recover the debts or money owed on a without prejudice basis.

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Mediation or Alternative Dispute Resolution

If negotiations fail, or do not yield a satisfactory result, then you can attempt to mediate or attempt another form of alternative dispute resolution.

Mediation is a good way of attempting to resolve disputes without resorting to litigation through the Court system and incurring those costs.

A mediation is a structured process where an objective third-party mediator assists to resolve the disputes over debts or money owed.

The objective of the mediation is to reach an agreement and get the parties to sign a legally binding mediated agreement.

Of course, the debtor still needs to pay the debts or money owed after the mediated agreement is made. If the debtor has breached one agreement by not paying the debts or money owed, then you should be mindful that the debtor could quite easily breach the mediated agreement too.

Contact our lawyers for advice and assistance on mediation of your commercial debt dispute

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Filing a Claim in the Court with Jurisdiction

If all else fails, then you are able to commence legal action in the Court with jurisdiction.

The Courts have a monetary jurisdiction for debts or money owed:

Magistrates Court – up to $150,000.00
District Court – from $150,000.00 to $750,000.00
Supreme Court – over $750,000.00

Proceedings to recover debts or money owed are commenced by filing and serving a claim and statement of claim.

If the debtor does not respond to your claim by filing and serving a defence within 28 days, then you can get judgment in default and commence enforcement proceedings.

If the debtor attempts to defend your claim or counterclaim, then you will likely be involved in protracted litigation unless you can obtain a summary judgment, or the parties agree to settle the matter and discontinue the proceedings.

The objective is to get a judgment or enforceable money order which you can enforce on the judgment debtor to force the debtor to pay their debts or money owed to you.

Another way to get an enforceable money order is to register a QCAT decision in the Magistrates Court.

Contact our lawyers for advice and assistance on commencing legal proceedings in the Court to recover your debts or money owed

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Filing a Claim in QCAT or Another Tribunal

If you have a minor debt of under $25,000.00 then you can file a proceeding in the Queensland Civil and Administrative Tribunal (“QCAT”).

Similar to proceeding in the Courts, you must file and serve an application on the debtor. If they respond, then it goes to a mediation and/or a hearing and the QCAT Member will decide on the amount of debts or money owed to you.

If the debtor does not respond, then you are able to obtain a decision in default.

The main advantages of commencing proceedings in QCAT are:

It is a lot less expensive than commencing in the Court;
The process can be a lot faster than the Court; and
QCAT is designed for self-represented people.

The main disadvantages of commencing proceedings in QCAT are:

The minor debt jurisdiction is mostly a no costs jurisdiction. This means that you will not be able to recover your costs save for a few designated items;
Legal representatives do not have an automatic right of appearance. This means that if you want us to appear at a QCAT hearing, you will need the leave of the tribunal, which is not always given.

Once you obtain a decision in QCAT, you can register that decision in the Magistrates Court and it becomes an enforceable money order which can be enforced on the judgment debtor.

Contact our lawyers for advice and assistance on commencing proceedings in QCAT or registering your QCAT decision and enforcement through the Courts

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Enforcing the Judgment with an Enforcement Warrant

If you get an enforceable money order, then you can attempt to enforce that order with one of a number of different enforcement warrants. The most common types of enforcement warrants are:

Enforcement Warrants for Seizure and Sale of Property;
Enforcement Warrants for Redirection of Debts; and
Enforcement Warrants for Redirection of Earnings.

I will explain these in a little more detail below

Enforcement Warrants for Seizure and Sale of Property

A warrant for seizure and sale of property allows the Court bailiff to seize and sell personal and real property of the enforcement debtor.

The warrant relates to vehicles and real property predominately. There are some strict requirements when applying for this type of enforcement warrant, and the bailiff is unable to seize exempt property.

Enforcement Warrants for Redirection of Debts

A warrant for redirection of debts directs a third party to make payment that are due to be paid to the enforcement debtor to the enforcement creditor.

Again, there are strict requirements for this type of warrant and it is best to obtain legal advice.

Enforcement Warrants for Redirection of Earnings

A warrant for redirection of earnings is a warrant directed at the enforcement debtor’s employer. It orders that the employer direct the ordered amount of the enforcement debtor’s salary to be paid to the enforcement creditor as payment of the debts or money owed under the judgment or money order.

Again, there are strict requirements for this type of warrant and it is best to obtain legal advice from a suitably qualified debt recovery lawyer.

Contact our lawyers for advice and assistance with enforcement warrants to recover the debts or money owed

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Enforcing the Judgment with Bankruptcy

If your debtor is a person (not a company) and you have a judgment of over $5,000.00 which is less than six (6) years old, then you can apply to the Official Receiver – the Australian Financial Security Authority (“AFSA”) for a bankruptcy notice.

The debtor has 21 days to comply with the bankruptcy notice or he/she would have committed an “Act of Bankruptcy”.

It is this act of bankruptcy which allows you to present a creditor’s petition to the Federal Circuit Court for a sequestration order making the debtor bankrupt.

The bankruptcy process involves the appointment of a bankruptcy trustee to administer the bankrupt estate of the debtor in an attempt to recover the debts or money owed to creditors.

The bankruptcy usually lasts for three (3) years. In this time the bankruptcy trustee can void transactions and attempt to realise assets to pay a divided to creditors.

Contact our lawyers for advice and assistance with bankruptcy notices and creditor’s petitions to recover the debts or money owed

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Issuing a Statutory Demand on an Insolvent Company

The it is a company that has the obligation to pay the debts or money owed, and the debts or money owed is over $2,000.00 then you can issue a creditor’s statutory demand on the debtor company.

A creditor’s statutory demand is a demand for payment pursuant to section 459E of the Corporations Act 2001 (CTH).

You do not need a judgment to be able to issue a statutory demand, however if there is a genuine dispute about the debt, or the debtor company has an offsetting claim, then a statutory demand without a judgment could be set aside.

The debtor company has 21 days after being served with the statutory demand to do any of the following:

Pay the debt or debts in the statutory demand; or
Secure or compound for the debt in the statutory demand; or
Request that the demand is withdrawn; and/or
Apply to set the demand aside.

If the debtor company does not do any of these things, then they are presumed to be insolvent and you can apply to wind the debtor company up in insolvency to recover the debts or money owed to you.

We offer professional advice and assistance in all things related to statutory demands


Issuing Statutory Demands	Setting Aside Statutory Demands

Enforcing the Judgment with Winding Up & Liquidation

As mentioned above, non-compliance with a statutory demand raises the legal presumption of insolvency. This presumption assists a creditor with an application to wind up the company in insolvency.

The winding up application process is very complicated with strict timelines and needs to be provided by a debt recovery and insolvency lawyer.

The process includes making the application with a supporting affidavit, other affidavits, notices to ASIC, and a consent of the liquidator.

If the application goes unopposed then it is likely that you will get the order winding up the debtor company in liquidation.

The liquidator will bring the company to an end and attempt to realise an many of the assets as possible, including voiding any voidable transactions, to make a payment of the debts or money owed to company creditors.

Contact our lawyers to negotiate with your debtor to recover the debts or money owed

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Winding Up Order – How to Wind up a Company

03/11/2018 By Debt Recovery Qld

A winding up order is an order from the Court ordering that a company be wound up in insolvency.

Section 459P of the Corporations Act 2001 (Cth) (“Corporations Act“) says that a creditor can apply to the Court for a company to be wound up in insolvency.

The most common was that a creditor applies to the Court for a winding up order is after non-compliance with a creditors statutory demand.

Non-compliance with a creditors statutory demand raises the legal presumption that the debtor company is insolvent.

That presumption of insolvency, if not rebutted, is the basis for the winding up order.

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Statutory Demand

If you are thinking about winding up a company that is insolvent and owes you money, the most common way is to serve the debtor company with a creditor’s statutory demand.

This website has a lot of content about statutory demands, do a quick search and have a read.

A creditor’s statutory demand is a demand for payment of money pursuant made pursuant to section 459E of the Corporations Act.

Once the statutory demand and supporting affidavit is correctly drafted, you must serve the demand on the debtor company pursuant to section 109X of the Corporations Act.

Once the statutory demand is served, the debtor company has to do one (1) of four (4) things, strictly within the twenty-one (21) day time limit:

Pay the amount of the debt or debts contained in the demand; or
Secure or compound for the debt or debts contained in the statutory demand; or
Ask the issuer to withdraw the statutory demand; or
Apply to set the statutory demand aside.

If the debtor company fails to do this, then it is presumed to be insolvent.

After the legal presumption of insolvency is raised, the creditor can apply to the Federal Court or the State Supreme Court for a winding up order winding up a company in liquidation.

We offer professional advice and assistance in all things related to statutory demands and winding up applications


Issuing Statutory Demands	Setting Aside Statutory Demands

Step 1 – The Winding Up Application

Once the debtor is presumed insolvent and you want to continue to get a winding up order, the first step is to draft, file, and serve a winding up application. The presumption of insolvency lasts for three (3) months pursuant to section 459C(2)(a) of the Corporations Act.

From the date of non-compliance with the statutory demand by a debtor company, a creditor has three (3) months in which to make the application to the Court.

The winding up application contains the following:

The winding up application; and
The affidavit in support of the winding up application; and
The affidavit of service of the statutory demand.

Winding up Order – Conduct an ASIC Search

Importantly, the same day that the winding up application is to be filed, the creditor must conduct a search of the online records kept by ASIC for current information on the debtor company. Strictly speaking, according to the Federal Court (Corporations) Rules 2000 (Cth) (“the Rules”):

Subject to rule 2.4A, an affidavit in support of an originating process must annex a record of a search of the records maintained by ASIC, in relation to the company that is the subject of the application to which the originating process relates, carried out no earlier than 7 days before the originating process is filed.

However, best practice is that it is done on the same day.

This is in case the debtor company has attempted to change the registered office of the company, or they have appointed a liquidator, or any number of other reasons.

Once you have ordered your ASIC current extract, and there is nothing in the extract that could be detrimental to the winding up application, you can make the application.

NOTE – check to see if the company is still registered, check to see if the address of the registered office is still the same, check to see if there are any judgments against the debtor company, and check to see if there have been any insolvency notices filed.

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The Winding Up Application

The winding up application uses standard forms. In the Federal Court it is a Form 2. In the Supreme Court it is Corporations Act Form 2.

The application should contain a statement of:

Failure by the defendant to comply with a statutory demand. A copy of the demand should be attached to the originating process;
The demand and an accompanying affidavit were served in accordance with 109X. A copy of the affidavit of service should be attached to this originating process; and
The defendant’s failure to pay the amount of the debt demanded or to secure or compound for that amount to the plaintiff’s reasonable satisfaction within 21 days after the demand was served on the defendant.

The application should also include draft orders, something like this for example:

That the Defendant, The Debtor Company Pty Ltd ACN 123 456 789, be wound up in insolvency by this Court under the provisions of the Corporations Act 2001 (Cth).
That John Liquidator, official liquidator, be appointed liquidator of the Defendant.
The plaintiff’s costs be fixed in the sum of $XXXXX and reimbursed in accordance with section 466(2) of the Corporations Act 2001 (Cth).

The winding up application must be supported by an affidavit.

The Affidavit in Support of the Winding Up Application

The affidavit uses standard forms. In the Federal Court it is a form 59. In the Supreme Court it is a Federal Court Rules form 7A.

The affidavit in support of a winding up application must include evidence of the requirements to bring the application, and that the Court needs to make the winding up order.

This information and evidence include:

That the Defendant is indebted to the plaintiff in the sum of $XXXXX;
That the sum was then due and payable;
That the statutory demand and affidavit in support of the demand was sent;
That the Defendant has failed to pay the amount of the debt specified in the statutory demand demanded, or to secure or compound for that amount to the reasonable satisfaction of the Plaintiff within 21 days after the statutory demand was served on the defendant;
Reference to the affidavit of service of the demand and the accompanying affidavit;
That the sum of $XXXXX demanded remains due and payable by the Defendant to the Plaintiff.

You must also include an affidavit of service of the statutory demand. This can be included in the above, however I prefer to draft a separate affidavit.

The Affidavit of Service of the Statutory Demand

The affidavit of service of a statutory demand uses standard forms. In the Federal Court it is a form 59. In the Supreme Court it is a Uniform Civil Procedure Rules form 46.

The affidavit of service of the statutory demand needs to prove service of the demand on the registered office of the debtor company.

We have an entire article dedicated to how to serve a statutory demand.

Without effective service, there can be no presumption of insolvency, the basis for the winding up order that you are seeking. It is very important that you take the time to ensure that you have served the statutory demand correctly, and that you have exhibited everything that you need to the affidavit of service needed to effectively prove service.

Lastly, you need consent of the liquidator.

Consent of the Liquidator

The consent of the liquidator uses standard forms. In the Federal Court it is a form 8. In the Supreme Court it is a Corporations Act form 8.

The consent of the liquidator is a form completed by the liquidator, stating:

The name and address of the official liquidator;
That they consent to be appointed by the Court and to act as the liquidator of the company;
That they are not aware of any conflict of interest or duty that would make it improper for me to act as liquidator of the company.
A statement pursuant to section 60(2) that they have not had any relationship with:
1. the company; or
2. an associate of the company; or
3. a former liquidator, or former provisional liquidator, of the company; or
4. a former administrator of the company; or
5. a former administrator of a deed of company arrangement executed by the company; and
The hourly rates currently charged in respect of work done as liquidator.

This is not a requirement for the application, Rule 5.5 of the Rules says:

In an application for an order that a company be wound up, the plaintiff must:
before the hearing of the application, file the consent mentioned in subrule (2) of a registered liquidator who would be entitled to be appointed as liquidator of the company; and
serve a copy of the consent on the company at least 1 day before the hearing.

So, you strictly need to file and serve the consent at least one (1) day before the hearing, however this is something that I like to get done and serve it all together on the debtor company.

Once you have these documents, you can go ahead and file them in the Federal Court or the Supreme Court, depending on what you have chosen.

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Step 2 – Filing and Service the Winding Up Documents

Personally, I prefer the Federal Court because of the Federal Court eLodgement System, but that is just a personal preference.

Once filed, the Court will stamp (or seal) the documents with the Courts seal.

To get a winding up order, the sealed winding up documents must be served on the debtor company.

Service of an originating process on a debtor company can be made pursuant to section 9 of the Service and Execution of Process Act 1992 (Cth) (“SEPA”) which says:

(1) Service of a process, order or document under this Act on a company is to be effected by leaving it at, or by sending it by post to, the company’s registered office.
(2) Without limiting the operation of subsection (1), a process, order or document may be served on a company by delivering a copy of it personally to a director of the company who resides in Australia.

So you can effect service by posting it to the registered office of the debtor company.

If you are serving the originating process interstate, then section 16 of SEPA says:

Service is effective only if copies of such notices as are prescribed are attached to the process, or the copy of the process, served.

The Form is prescribed in Schedule 1 of the Service and Execution of Process Regulations 2018 (Cth) as the SEPA Form 1.

The notice under this section is a SEPA Form 1, which must be attached to the process or a copy of the process. Simply staple a SEPA form 1 to the front of your winding up application.’

There are certain time limits when a company has to be served, so ensure that these times have been fully complied with to ensure that you can successfully obtain a winding up order against the debtor company.

Once properly served, to be successful in obtaining a winding up order, the creditor has to do a few more things, and file some further documents before the hearing of the winding up application. These are:

Affidavit of service of originating process (winding up application); and
Notification to ASIC of application to wind up the company; and
Publishing notice of application on Insolvency Notices website.

I will discuss these a little further below.

Notification to ASIC of Application to Wind Up the Company

Once the application and supporting documents are filed, and you have a sealed version back from the Court (including a proceeding number and a return date for the hearing), then you will need to let ASIC know that the debtor company has a winding up application pending.

What is a notice of application for winding up order? Section 465A(1)(a) of the Corporations Act says:

(1) A person who applies under section 459P, 462 or 464 for a company to be wound up must:
(a) lodge notice in the prescribed form that the application has been made

The form to use is the ASIC Form 519. You must complete this form and email it to ASIC before 10:30am on the next business day. The email address is form519documents@asic.gov.au.

Section 470(1)(a) of the Corporations Act says:

(1) An applicant (other than ASIC) for the winding up of a company must:
(a) lodge, not later than 10.30 am on the next business day after the filing of the application, notice of the filing of the application and of the date on which the application was filed

There are late fees if this is not done in time.

Once done, you will receive an acknowledgement of receipt of the Form 519 from ASIC.

You then have to draft an Affidavit of Lodgment of Notice at ASIC and file it in the Court.

Once done, you must then draft and file your affidavit of service of the winding up application.

Affidavit of Service of Originating Process

You must also draft and file an affidavit of service of the winding up application to prove service of the process was made in accordance with the legal requirements.

The affidavit of service must:

Annex a copy of the winding up application and supporting affidavits; and
Prove that the originating process and supporting affidavits were served within 14 days of filing; and
Prove that the originating process and supporting affidavits was served more than 5 days before hearing; and
Annex the affidavit of service of the statutory demand; and
Prove that service was made in a manner of service permitted by the legislation.

Once this has been filed, you will have to publish a Notice of Application on ASIC’s Insolvency Notices website.

Publishing Notice of Application on Insolvency Notices Website

Rule 5.6 of the Rules says:

If a person applies under section 459P, 462 or 464 of the Corporations Act for a company to be wound up, the person must cause a notice, setting out the information prescribed by regulation 5.4.01A of the Corporations Regulations, to be published in the manner provided by section 1367A of the Corporations Act and regulation 5.6.75 of the Corporations Regulations

After read all of those sections, rules and regulations, is basically says that you must provide all of the information requested, in the prescribed form, and it can be published on ASIC’s Insolvency Notices website.

There is a time limit for publishing this notice. Rule 5.6(2) of the Rules says:

A notice … under paragraph 465A(1)(c) of the Corporations Act, of an application for a company to be wound up must be published:
(a) at least 3 days after the originating process is served on the company; and
(b) at least 7 days before the date fixed for the hearing of the application.

So, you have a window of between three (3) days after the originating processed is served, to seven (7) days before the return date for the hearing of the application to publish this notice.

There is also a fee with ASIC for publishing this notice.

Once you have published this notice of the insolvency notices website, you will have to draft and file an affidavit proving that you have published the notice, in the required form, including the required information, within the required time.

Draft, annex the evidence, and file in the winding up application.

Hearing and Obtaining your Winding Up Order

That is basically all of the documents that need to be filed.

Unless the debtor company intends to oppose the winding up order being made, you will likely get your winding up order, ordering the debtor company into liquidation.

The hearing itself is really just a formality. All of the work required to be done has been done in the various documents filed in the Court.

What are the Consequences of a Winding Up Order

The liquidator will take control of the company and administer the process of insolvency.

The liquidator will investigate the affairs of the debtor company, report offences to ASIC and shareholders, and bring the company to an end.

The aim is to realise any assets of the company, void any voidable transactions, and attempt to distribute funds to creditors in order of priority.

This is the way that payments (if any) can be made to a creditor.

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Useful Links

https://www.courts.qld.gov.au/__data/assets/pdf_file/0005/190850/guidelines-for-winding-up-applications.pdf

http://www.fedcourt.gov.au/law-and-practice/guides/corporations-guides/checklist

http://www.fedcourt.gov.au/law-and-practice/guides/corporations-guides/information-sheet-1

Frequently Asked Questions – Winding Up

How to stop a winding up application?

If a debtor company wants to oppose a winding up application, then it will need to file and serve a notice of appearance and/or a notice giving the alleged grounds of opposition.

One of the main grounds for opposition to a winding up order being made is that the debtor company is actually solvent. The debtor company will need to prove solvency.

Another way to stop a winding up application is to pay the debt and legal costs.

What is a notice of application for winding up order?

As above, the notice of application for winding up is the ASIC Form 519.

You must complete this form and email it to ASIC before 10:30am on the next business day after filing the winding up application.

The email address is form519documents@asic.gov.au.

What happens after a winding up order is granted?

The company goes into liquidation, a liquidator is appointed, and the company is brought to an end.

The liquidator also tried to realise all of the assets of the company to pay company creditors.

How much does it cost to issue a winding up order?

It is quite expensive. We have an article about the cost of insolvency.

The filing fees and legal fees can cost around $10,000.00, but if successful, then the costs of the winding up application can be paid from the liquidation.

What is a statutory demand for payment?

A statutory demand is a demand for payment pursuant to the Corporations Act.

Non-compliance with a creditor’s statutory demand raises the legal presumption of insolvency.

This presumption, if not rebutted, forms the basis of the winding up order.

What are the types of winding up?

There are court appointed winding up orders – as per this article.

There are also creditors’ voluntary liquidation, and members’ voluntary liquidation.

A creditors’ voluntary liquidation happens when the members of the company resolve to appoint a liquidator because the company is insolvent, or likely to become insolvent.

A members’ voluntary liquidation occurs when the members of the company resolve to appoint a liquidator to bring a solvent company to an end.