Author
Edwin NarayanDirector & ASIC Registered Liquidator
1300750599
If your business has received a statement of claim, you are probably aware it’s an urgent and serious matter. But what exactly is a statement of claim, and what should you do if you’ve been served with one?
What is a statement of claim?
A statement of claim is a formal legal document signals that a creditor or other party is taking legal action against you —often to recover an outstanding debt. It’s filed when there’s a dispute between parties and it has been escalated to the court.
A statement of claim outlines:
- Who is making the claim (the plaintiff)
- What the dispute is about
- How much money is owed (if applicable)
- What the plaintiff wants the court to order
In the case of a financially struggling company with trouble paying its bills, a statement of claim could be a notice from a court to the directors of a company to pay a debt verified to be due. It means the courts have become involved in the debt recovery process, and the plaintiff is asking you to pay up or go to court.
It’s the first step in a court process that could lead to significant problems if you ignore the statement of claim.
The key thing to understand about a statement of claim is it gets things started. Once the applicant or plaintiff files the statement of claim with the court and serves you (the defendant) with it, the dispute has entered the court system so all parties are technically “going to court.” The case will then be listed for hearing.
What happens if you ignore a statement of claim?
Once you’ve received a statement of claim, you should act quickly to get professional advice to help you defend the claim or respond appropriately.
If you ignore it, the plaintiff (the creditor who initiated the proceeding) could ask the court to have you defaulted and to make a judgment debt order. Similarly, if you don’t respond to a statement of claim within the given notice period (usually 28 days), the court will order you to pay the sum owed to the plaintiff.
The plaintiff can ask the court to enforce the judgment in various ways. For example, they can seek to have a writ of possession issued over land you own, in a court. They could ask for a writ of possession issued over a delivery of goods to you. Other enforcement measures could be payment of money owed, a writ for the levy property, a garnishee order, or a charging order.
How to respond to a statement of claim
While every case is different, generally you, the defendant, could respond to the claim in a number of ways.
1. Settle the debt
If you agree with the claim, you could negotiate with the plaintiff to attempt to settle the matter and have them withdraw the statement of claim. You could negotiate to pay the full amount at a later date or pay it in instalments. Settling means you’ll avoid proceeding in court and there will be no judgment against you.
2. Pay the debt
You could pay the full amount owed, file a notice of payment to let the court know, and avoid a judgement while stopping the proceedings.
3. File a defence
You can file a defence if you don’t agree you owe some or all of the claim. This involves your lawyer filing a document known as a defence, which outlines why you don’t agree with the claim. This must be done within 28 days of you receiving the statement of claim.
4. Ask for more information
If the statement of claim lacks details or contains errors, you could also ask for more information from the plaintiff or clarify the nature of the claim before proceeding.
Other options could be available depending on the court the proceeding was commenced in. If you do nothing, you could have a default judgment against you, without your case being heard in court. How you respond to a statement of claim can have a significant impact on the future of your business.
Take action today
If you receive a statement of claim, acting quickly and getting expert advice is vital as you need to respond within a strict time frame. While being served with a statement of claim is a serious matter, you do have different options. You could try negotiating with the creditor, pay up, or file a defence. Getting legal advice as early as possible lets you understand your options and take action quickly.
Get in touch
Speak to one of our experts now for a free consultation. Enter your details below or call 1300 750 599.