Getting Paid After a VCAT or Court Win 2

Wednesday, August 10th, 2016
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It is a sad truth that it is relatively common in practice for a builder for example to sue for damages, win the case, and then have to wait months if not years to get paid.

What they are wanting to get paid is not only the ‘substantive’ sum they have sought but also the costs (which can obviously be substantial) they have incurred to get there.

I have been involved in a few cases (though they are rare) where the builder client won their case and received a VCAT order for damages to be paid to the builder and the monies were never paid, even years after the event.

Things such as whether the other party has the capacity to pay a judgment should be at the forefront of your mind when you are considering whether to make a court application or VCAT application in the first instance. After all, as the previous paragraph attests, it is not a ‘real’ victory when you expend the time, effort and money to pursue your right to compensation or debt, win it, and then do not get paid in the end. Ultimately, in such a situation, you can lose out big time.

If you do obtain a VCAT judgment, the first thing you should do if the other party is not paying (by sending a letter of demand reminding them that the judgment debt is now due and payable) is to register that judgment as a court order. This can be done fairly quickly and easily and at low cost.

Once the judgment is registered in a court (in the Magistrates Court if under $100,000 or in the County Court if over that amount) then you have a suite of options as to enforcement of the judgment. If the person you are pursuing is a wages earner, often the best method to get paid is to garnish their wages. A court can make an order that up to a specified percentage (20 per cent) of the debtor’s wages is paid towards the debt. An employer asked to deduct such amounts commits an offence if he or she refuses to deduct the specified amounts.

If, as is often the case with these types of matters, the debtor is not earning wages, other possible enforcement methods include having a warrant issued to seize real estate property and or personal assets or chattels. In addition, an instalment order and or agreement could be applied for, which obviously the court becomes involved in, in a supervisory sense.

Of course, as a last resort, you can apply to have the debtor (if an individual) declared bankrupt if the debt amount is over the threshold of $5,000. If the debtor is a company, recourse may be made to a creditor’s statutory demand which can sometimes lead to the company being wound up.

A creditor’s statutory demand is basically a formal notice specifying that if the debt owed by a company is not paid within 21 days, the company could be wound up. As you can no doubt appreciate, such an option may be seen as draconian but if you have waited a long time to get paid, despite the significant costs involved in a winding up process, some comfort can be gained by use of such a process.

A little-used process is the “attachment of debt” process. This is an application for an order of a court where, if you have information that there is a debt owed by someone else to the debtor who owes you, you can attach or intercept that debt and have it paid to you instead.

Finally, but more as an information gathering exercise, a debtor can be made to attend court (and complete documents) for the purpose of answering questions as to their financial situation. The information you gather from such a process (called oral examination) can often provide information as to the best possible method of enforcement of the order the court made to pay the debt.

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  1. Julie Ward

    All of the above solutions are worthy but if the debtor choses to change the company name and move regularly to avoid payment of the debt then the costs skyrocket even with a court order to locate and enforce the payment. Unfortunately the law is firmly on the debtors side.

  2. Paul Cott

    Thanks Julie, your right. The system of civil debt recovery is a quite imperfect solution to many of the problems people face in this area.