In many instances we forget to pay invoices. However, problems can arise where unpaid invoices lead to legal proceedings. If legal proceedings are initiated against you, it is important that you act quickly and respond to claims.

Quick responses are important

Ordinarily for legal proceedings, as a defendant, you have 28 days from the date of being served the initiating process to file a defense. An initiating process, often a statement of claim, is a document filed with the court by a plaintiff which starts legal proceedings against you. Normally, this document needs to be served personally on a defendant which means it has to be hand delivered to you (or sent to a registered business address if the defendant is a corporation) to start proceedings (but there are other methods of service).

If a statement of claim has been served on you, you need to file a defense which sets out the basis of your argument against the plaintiff. Once you file a defense, the dispute can be heard before the court, and you will have “your day in court”. You should speak to one of our lawyers to discuss your defense.

What happens if I don’t defend the proceedings? What could happen?

If you don’t file a defense or file a defense out of time, the plaintiff can apply to the court for default judgment. This is essentially the equivalent of “winning” their case against you even though the matter has been uncontested. When a judgment is recorded against you, the court may declare you owe a particular debt, have breached a particular obligation, or have committed some other act or failure which was the subject of the dispute.

In addition to losing your case by default, the recording of a judgment against your name could adversely affect your credit score. Therefore, obtaining finance after the judgment has been recorded against you can be made more difficult and lenders may refuse your application.

What should I do if I have been served a letter of demand or statement of claim?

Given the adverse consequences that result from not defending proceedings and having default judgment awarded against you, it is imperative you speak to one of our lawyers as soon as you suspect legal proceedings may be initiated against you. Doing so will give you the chance to potentially negotiate a settlement to the dispute without having to go to court and if required defend any actions against you in court.

Even if default judgment has been awarded against you may still have options to set the judgment aside. You should speak to one our lawyers who can advise you of what these options are if you are in this situation.

If you require legal advice in respect of legal proceedings feel free to contact us on 42 222 666 or at hansons@hansonslawyers.com.au