Debt Recovery

COVID-19: McKillop Legal remains open for business

McKillop Legal remains open for business and is fully operational despite the significant and unprecedented challenges facing our families, the Australian economy and our way of life as a result of the Coronavirus/COVID-19 pandemic.

We remain open for business and available to provide advice either by telephone, email or other services (and, if necessary, in person, abiding by the Government’s social distancing guidelines).

Our staff all have the ability to work remotely from home or in other places using our secure technology infrastructure and systems.

If you or your business has any legal issue it requires assistance with, whether relating to your rights or responsibilities relating to business, shutdowns or employment in relation to the pandemic or in relation to other matters, please call or email us and we will be in touch promptly.

Take care.

in Asset Protection / Business / Commercial Law / Debt Recovery / Dispute Resolution / Employment / Estate Planning / General / Insolvency & Bankruptcy / Intellectual Property / Litigation / Online Issues / Probate / Property / Risk management / Superannuation / Tax Planning / Trusts  by 23 Mar 2020 0 comments

Lost luggage? What are your rights?

For damaged or lost luggage, where your travel is wholly within Australia with no international sectors, airlines are liable to compensate you under the Civil Aviation (Carriers’ Liability) Act 1959 (Cth) (limited to a maximum of $3,000 for registered (checked) baggage and $300 for unchecked baggage).

For those travelling internationally, the rights of passengers for most airlines (carriers) are governed by the Montreal Convention, 1999 (Montreal Convention).

For the Montreal Convention to apply, both the country of departure and country of final destination must both be members. There are 136 countries that are parties.

The Warsaw Convention will generally apply where the Montreal Convention does not, but it is considered less favourable to passengers, especially when it comes to compensation and is based on a $/Kg calculation. This article assumes the Montreal Convention will apply.

Article 17 of the Montreal Convention provides:

“The carrier is liable for damage sustained in case of destruction or loss of, or of damage to, checked baggage upon condition only that the event which caused the destruction, loss or damage took place on board the aircraft or during any period within which the checked baggage was in the charge of the carrier…”

Article 22 of the Montreal Convention states:

“In the carriage of baggage, the liability of the carrier in the case of destruction, loss, damage or delay is limited to 1,000* Special Drawing Rights for each passenger unless the passenger has made, at the time when the checked baggage was handed over to the carrier, a special declaration of interest in delivery at destination and has paid a supplementary sum if the case so requires. In that case the carrier will be liable to pay a sum not exceeding the declared sum, unless it proves that the sum is greater than the passenger’s actual interest in delivery at the destination.”

* adjusted to 1,131 SDR for inflation

So if you are travelling with something worth more than liability limit, you have the option to declare a higher value for your luggage and items when you check your bags at the airport. The carrier can provide you with a higher coverage amount for a fee (as per Article 22). The carrier will be liable to pay that higher amount unless it is proved that the declared amount is greater than the actual value of your baggage.

What is a Special Drawing Right?

A Special Drawing Right (SDR) is a fluctuating index based on a basket of international currencies as determined by the International Monetary Fund.

The SDR rate (as at the date of this article) is 1 SDR : AUD$2.01, so that entitles you to a maximum compensation of $2,273, but that is a maximum only – you will usually only get the replacement value.

If you keep every receipt you ever get, this is the time for you to shine as without receipts, it is difficult to get too much compensation!

What to do if your luggage is lost or damaged

If your luggage is damaged or does not arrive, ideally do not leave the airport. Rather, you should go to the baggage claim office at the destination airport and lodge a Property Irregularity Report (PIR) with the carrier that operated your final flight. Some carriers have time limits on reporting in their conditions of carriage (the terms you agree to when getting your ticket)

Most major airlines are relatively helpful when it comes to lost or damaged luggage, but even if they aren’t and you need to enforce your rights, note that Article 29 of the Montreal Convention provides:

“In … any action for damages … punitive, exemplary or any other non-compensatory damages shall not be recoverable.”

Travel insurance

If there is a shortfall between what the carrier pays you as compensation and what the item is worth, you can lodge a claim for the difference, subject of course to the terms of your travel cover, assuming you took it out.

For those that may not know, many credit card providers offer complimentary travel insurance if you pay an amount towards the costs of the trip on your card.

 

in Business / Commercial Law / Debt Recovery / Dispute Resolution / General / Risk management  by 03 Feb 2020 0 comments

Can you just put a caveat on someone’s house?

If you are owed a substantial sum of money by someone, whether because you have loaned them funds or if you have a bill that hasn’t been paid, you would generally like to secure those funds. This way, if the borrower or debtor ends up being a bankrupt or insolvent, you may be in a better position as a secured creditor to those that are unsecured and hopefully you can get paid.

So how does security work? Security is effectively giving notice to the world that you have a claim on that person’s estate or assets so that subsequent people or businesses dealing with the same person are aware that you are to be paid in property, ie before them.

Security can be given in several ways, including:

  • handing over physical possession of certain assets;
  • the granting of  a Security Interest over assets registered on the Personal Property Securities Register (or “PPSR”); or
  • perhaps granting a Mortgage over real property owned by the person owing the money.

The registration of securities grants priority in order of registration, so it is important not to delay in registering any securities granted.

Ordinarily, you would have put in place a Loan Agreement or had Terms of Trade in place to govern your business relationship so that you have the express written consent to do such things to secure the debt, but if these documents are not in place before the financial obligation arises, people often take the step of lodging a caveat on title to property owned by the debtor.

A Caveat registered on title to a property has the effect (subject to the specific wording of the caveat of course) of preventing the owner or registered proprietor of that land from dealing with that land without the consent of the person who lodged the Caveat (the “caveator”). Dealings that can be prevented include lodging other Mortgages, lodging Transfers and the like.

Can you just put a caveat on someone’s house? If only things were that simple!

Many people have taken the step of lodging a Caveat on title to a debtor’s property only to have been unsuccessful in protecting their debt. Why? Well, in order to lodge a caveat (or even a Mortgage or PPSR Security Interest for that matter), you need to have the relevant asset “charged” in your favour with payment of the relevant debt. Creating a “charge” over an asset creates an interest in that asset that allows you to lodge a Caveat to notify and protect that interest.

A Caveat is not a document that gives you priority over previously registered interests, but it does give you some control over the asset such that you can prevent refinancing or a sale of an asset unless satisfactory arrangements for you to be paid have been made as part of that process  Properly drafted documents in relation to the lending of funds or business agreements where credit is extended should include things such as Mortgages, General Security Deeds or other things that create an interest in the asset sufficient to lodge a Mortgage, on title (to land), a Security Interest (on the PPSR in relation to assets etc) or at a minimum a Caveat over land.

Without such an interest being created, the caveator runs the risk that the owner can’t sell or refinance and suffers financially, then pursues the caveator for damages flowing from the caveator’s wrongful act, putting the caveator in an even worse position than they were before!

These things should not be done without proper advice, so take the time to review your current situation and documents now before a problem arises and have the documents updated to best protect you or your business.

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to debt recovery, loan agreements, estate planning, any business-related matter or if you have a Caveat lodged on your property without your consent, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au.

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your legal concerns or objectives.

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in Asset Protection / Business / Commercial Law / Debt Recovery / Dispute Resolution / Estate Planning / General / Insolvency & Bankruptcy / Property / Risk management  by 01 Jul 2019 0 comments

Creditor’s Statutory Demand

If you or your business are owed a debt by an Australian company that is not disputed, then there can be a relatively simple, yet effective way of obtaining payment in as little as 3 weeks.

The Corporations Act 2001 (Cth) provides for the issue of a document called a “creditor’s statutory demand” to any Australian company that owes a debt greater than the prescribed amount (which from 01 July 2021 is $4,000*).  *Note that this threshold increased from the original $2,000 (at the time this article was original published) to $20,000 as a result of the Coronavirus legislation, but dropped back to the current threshold.

The process is basically that the demand is served and then you wait.

Statutory demands must be in the prescribed form, detail the debt due, be signed by or on behalf of the creditor and be properly served on the company. Where the debt is not a judgment debt, an affidavit is also required to be signed, certifying that the debt is due and payable.

The Act provides where the demand is served and not complied with within 21 days*, the company is presumed to be insolvent and is liable to be wound up. Compliance with the statutory demand is achieved by either paying the debt due or coming to an arrangement satisfactory to the creditor in relation to payment of the debt within that 21 day period. (*During the COVID-19 pandemic period, this increased to 6 months but has reverted back to 21 days from 01 January 2021).

The presumption of insolvency lasts for 3 months after the 21 day period expires. Any proceedings to wind up the company on the basis that it is insolvent must be commenced within that period.

Creditor’s statutory demands may only be set aside by the Court on certain grounds and applications to do so must be both filed with the Court and served on the creditor that issued the demand within that 21 day period. Grounds for setting aside the demands are limited and include where there is a defect in the demand, where the amount owed is less than the prescribed amount or where there is a genuine dispute as to the existence and/or amount of the debt claimed. None of these grounds may be relied on to oppose a demand after the 21 day period.

Where the debt is disputed, the service of a creditor’s statutory demand is not the appropriate way to obtain payment however, there are other methods available.

FURTHER INFORMATION

For further information in relation to debt recovery, company issues or any commercial law matter, contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au.

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your legal concerns or objectives.

Stay up to date – LinkedIn | Facebook | Twitter

in Business / Commercial Law / Debt Recovery / Dispute Resolution / General / Insolvency & Bankruptcy / Litigation  by 29 Jan 2018 0 comments

Do you have customers that owe you money?

WHAT OPTIONS ARE THERE TO CHASE DEBTS?

Where a customer has not complied with the terms on which goods or services have been provided by a business, in that they have failed to make payment as and when required and despite repeated requests, it can often be of assistance for a demand letter to be sent by a lawyer.

The letter of demand will usually require payment in full by a defined time or may propose a payment plan with payment by instalments.

McKillop Legal is often called upon to advise in relation to debt recovery issues. We find that a strongly worded demand, clearly setting out the situation and seeking payment within a reasonable period usually results in payment.

There are various options available for business owners to recover moneys due.

If a letter of demand does not result in payment, there are various options available.

Where the debt is due by a company and the debt is more than $4,000 (this statutory minimum was $2,000 at the time of first publishing this article but changed during COVID and has increased for demands served on or after 01 July 2021) and it has not been disputed, a Creditor’s Statutory Demand can be issued under the Corporations Act giving the company 21 days to either pay the debt or to come to an arrangement to you for payment of the debt, failing which the company is presumed at law to be insolvent and can be wound up on application to the Supreme Court.

If an individual or partnership owes the debt, a company owes the debt but it is less than the above statutory minimum or if a company debtor genuinely disputes the debt, then usually the commencement of proceedings will be necessary (and you would need to weigh up the costs and benefits of doing so to make a commercially sensible decision).

If the debt is at least $10,000 and the debt is the subject of a judgment of a court, you can issue a Bankruptcy Notice. A Bankruptcy Notice provides for payment of the debt or a satisfactory arrangement for payment of the debt to be made within 21 days, failing which an “act of bankruptcy” has been committed, entitling you to commence proceedings in for a bankruptcy/sequestration order.

Options for enforcement of judgments also include:

  • Garnishee orders
  • Writ of Execution over property – where the Sheriff sells personal property, land etc
  • Instalment orders

FURTHER INFORMATION

For further information in relation to business succession, estate planning, litigation and dispute resolution or any commercial law matter, contact us on (02) 9521 2455 or email help@mckilloplegal.com.au

 

in Business / Debt Recovery / Dispute Resolution  by 14 Aug 2016 0 comments
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