• Commercial Law

    Commercial Law

    We are business people as much as we are lawyers. We will take care of the legal documents so you can confidently run your business.
    As your business grows, its risk profile and governance challenges will change. We partner with our clients over the long term to ensure they are in the driver’s seat for success.

  • Dispute Resolution

    Dispute Resolution

    We are in your corner when the going gets tough. Having resolved over 6,500 disputes for business owners have seen it all before.

    Whether you need a skilled negotiator or a fearless litigator, we specialise in delivering commercial results when:

    Customers refuse to pay;
    Suppliers let you down; and
    Business Partners do the wrong thing.

  • Employment & Safety

    Employment & Safety

    The biggest challenge for any business owner, is managing their employees.

    A difficult employee can make you question why you got into business in the first place and be toxic to your team morale.

    We deliver proactive solutions to manage your team via employment contracts, policies and procedures as well as handling employment disputes when they arise.

  • Property & Construction

    Property & Construction

    Property is the key most wealth in Australia.  Whether you are buying, selling, leasing or developing property, you need a lawyer you can count on.

    We can advise on the whole property development process from obtaining finance to development approvals, construction and sale or leasing.

    We also act for the Master Builders Victoria and have extensive expertise in construction contracts and disputes.

  • Family Law

    Family Law

    At Taurus Legal Management we understand the unique challenges clients encounter during family disputes, especially when children are involved. Our family lawyers specialise in handling high-asset cases with a focus on protecting clients wealth, securing their family’s future, and safeguarding the best interests of their children.


In business, if you don’t get paid, you don’t survive.

There is a lot you can do to improve your debt recovery processes and cash flow. But all businesses have some unpaid debts. If you have done all you can to recover a debt as set out in our last article, you may need to take legal action. The legal action required will depend on whether the debtor is an individual or a company.


Letter of Demand

As a first step, your lawyer may send a formal letter of demand to the debtor requiring payment of the debt within 7 days. The letter will set out in some detail the invoice number(s) which are outstanding, the date payment was due, and that payment is now due.

If an agreement is reached for payment of the debt, the parties may enter into a formal Deed of Settlement which puts the agreement into written form which can be relied upon in the future. We recommend a Deed be executed where payment is required in instalments or the parties want to relinquish each other from claims which may arise in connection with the debt. It will be the best outcome for both parties if payment in full or a settlement can be reached at this stage.

Legal Proceedings

If a letter of demand or negotiations do not result in payment of the debt, the next step is to issue legal proceedings. The Court the proceeding is issued out of will depend on the orders you are seeking, including the sum of the debt. Generally, debts of less than $100,000 will be issued out of the Magistrates’ Court, with larger debts being issued out of the County or Supreme Court.

Your lawyer will prepare a legal document, called a Statement of Claim, which will explain the legal basis upon which you are entitled to payment. Once this document is prepared and filed with the Court, it will be given to an agent to personally hand to the debtor (i.e. effect service). Upon being served, the debtor will have an opportunity to file and serve a defence. The time for doing so will depend on the Court the proceeding is issued out of.

If the debtor fails to file and serve a defence within the required time frame, you may apply for default judgment. This is where the Court makes an order in your favour, usually without the parties being required to attend Court.

If the debtor does file a defence, the proceeding will proceed through the Court in the usual course.

Enforcing the Judgement

Even if you have a Court Order requiring the debtor to pay you a sum of money, this may not result in payment. It is always important, prior to issuing legal proceedings to consider, if you win, how the debtor will be able to pay you the debt. If you are awarded a Court Order for payment and believe the debtor can pay the debt, you should enforce the Court Order. As a first step, your lawyer will usually write to the debtor requesting payment be made within 7 or 14 days and enclosing a copy of the Court Order. If payment is not made within this time, further action may need to be taken to enforce the Court Order, including:

  • Seizing and selling assets or property: applying to the Court for an order that the sheriff seize
    property of the debtor to sell, the funds of which will go towards repaying the debt;
  • Garnishee order: applying to the Court for an order that a third party make payment to you
    rather than payment to the debtor;
  • Attachment of earnings: applying to the Court for an order that a percentage of the debtor’s
    wage be directed to you;
  • Bankruptcy: for debts greater than $5,000 you may proceed with issuing a bankruptcy notice
    and if the debtor does not make payment or set aside the notice, take further steps to bankrupt
    the debtor;

Summons for oral examination: serve a summons on the debtor with a form which examines the financial affairs of the debtor. The debtor will be required to attend Court and provide details of their assets and liabilities. You will be given a copy of the debtor’s financial position which will allow you to choose the best option to enforce your Court Order. The deciding factor in choosing which enforcement option will be where the debtor’s property lies which will be used to pay the debt.


Statutory Demand

The most common means of recovering a debt owed by a company is to serve the company with a statutory demand. The statutory demand is a formal demand made under the Corporations Act 2001 (Cth) which requires the company to:

(a) Pay the debt within 21 days of being served; or
(b) Make an application to set aside the statutory demand. An application is generally made where there is a genuine dispute regarding the debt or a technical defect with the statutory demand.

As well as completing the statutory demand form, proof of the debt must be attached in the form of a supporting document. If you have a Court Order, it is sufficient to simply attach the Court Order. In other circumstances, you may need to swear an Affidavit in Support which sets out the basis upon which the debt is payable. A statutory demand is an extremely useful tool which has a relatively high rate of resulting in payment. The reason being, if a company fails to do either of the above options, the company is presumed to be insolvent. This presumption allows you to take further steps to wind-up the company.

  • Although a statutory demand can be used for a wide variety of debts, there are limitations on when a
    statutory demand can be issued, including where:
  • The debt is prospective, contingent or unliquidated;
  • The debt is for less than $2,000; or
  • You are aware that the company has a genuine dispute regarding the debt.

If you are owed payments for several invoices, there is no need to issue a separate statutory demand for each one, it is acceptable to lump all of the outstanding invoices into one demand. However, if you are aware that the debtor disputes one invoice, you may consider to strategically exclude that invoice from the statutory demand.

Legal Proceedings

If you cannot issue a statutory demand or are seeking more than simply repayment, you may consider issuing legal proceedings. The orders you are seeking, including the amount of the debt, will dictate which Court the proceedings are issued in. Generally, debts of up to $100,000 will be issued with the Magistrates’ Court, with the larger debts being issued with either the County Court or Supreme Court. If you are successful and the Court orders the debtor to pay the debt, again you will have to go through steps to enforce the Court Order. The most common recovery tool is to issue a statutory demand and if the debt is not paid or the demand set aside, proceed with winding up the debtor company.

If you need help recovering any of your debts, please contact Ali Dogan or anyone at the Taurus Legal Management team today on (03) 9481 2000.

Posted by Taurus Legal Management