Where do I start?
You will need a:
- Letter of Demand;
- Statement of Claim.
The first thing to do is writing to the debtor using a Letter of Demand requesting payment. If your letter is ignored or your demand refuted, you then have the option of taking the party to court. This is done by filing a Statement of Claim (or Statutory Demand) in the relevant court.
It is very important to word a Letter of Demand correctly to ensure that it is descriptive, effective and 'technically' acceptable by the court. However, by including a Summons with your Letter of Demand, you will let them know that you are serious about your claim and that you are prepared to take the matter to court if they don't do as you ask.
There is nothing, but nothing that concentrates someone’s mind more than prospective wipe out. The reason why a Letter of Demand is so powerful is that the mere issue of a summons, no matter how easily dismissed triggers a domino effect on borrowing and many other agreements. The usual words in any legal agreement, which entitles a party to avoid the agreement often, refer to the issue of a summons rather than an order for winding up. So your enthusiastic debt collection really could wipe out the largest of companies.
It used to be difficult for a third party to know about your summons. The Internet has changed all that. If you publish a copy of a summons in the right place, and tell a few banks for good measure, you are spelling disaster for someone.
The law assumes that a Letter of Demand merely paves the way for a summons. But it can be an incredibly powerful debt-collecting device without you even setting eyes on a summons.
What is more, the procedure is very easy to follow. All you need are a couple of forms and a stamp; no solicitors, no court fees.
What must a Statutory Demand show?
- Specify the debt and its amount or if there is more than one debt, the total amount of all debts;
- It must relate to a debt or debts which are due and payable at the date of the demand.
NB: They cannot relate to contingent, prospective liabilities or unliquidated damages:
- It must demand the company to pay the amount of the debt or total amount of debts within twenty one (21) days after the demand is served or secure the payment of the debt or debts within a reasonable time;
- It must be in writing;
- It must be in the prescribed form;
- It must be signed by the creditor or on behalf of the creditor.
How to avoid the traps:
- Be careful of the manner in which you stipulate the amount of the debt, in particular the way interest is claimed;
- You must state in paragraph (1) of the form the amount of the debt and the interest due as at the date of the Statutory Demand in one figure;
- The Court will declare a Statutory Demand as defective, if you state the amount as follows;
- $179,722.73 together with interest from 11 March 1993to date and continuing being;
- the amount of the debt in the Schedule;
- Where there are two or more debts, the Court is undecided if a total amount of the individual debts should be specified. You should identify each individual debt and its amount and the total of the debts be inserted into the Statutory Demand to eliminate the possibility of challenge;
- Form 509H must be signed by the Creditor and/or the Creditor's solicitor;
- A Statutory Demand must be accompanied by an Affidavit Supporting Statutory Demand where there is no judgment.
- A statutory demand under section 268 must be dated, and be signed either by the creditor himself or by a person stating himself to be authorised to make the demand on the creditor's behalf;
- The statutory demand must specify whether it is made under section 268(1) (debt payable immediately) or section 268(2) (debt not so payable);
- The demand must state the amount of the debt, and the consideration for it (or, if there is no consideration, the way in which it arises) and;
- If made under section 268(1) and founded on a judgment or order of a court, it must give details of the judgment or order, and;
- If made under section 268(2), it must state the grounds on which it is alleged that the debtor appears to have no reasonable prospect of paying the debt.
Note: Net Lawman does not advise on the rare cases founded on a judgement or order of court and debts not payable immediately.