An overseas client tapped our services to collect on unpaid invoices from one of their regular customers. The client advised initially that they had a good relationship with this customer for over more than five years, although some times the debtor was not able to pay on time.
On those times, the client agreed to delayed payments because the debtor always paid anyway. The relationship, however, turned sour in 2019 when the debtor paid later than usual. By this time, the debtor had $184,000 in unpaid debt. The client, no longer able to tolerate this business relationship, decided to lodge a debt with Slater Byrne Recoveries. A call to our Sydney office started the debt collection ball rolling.
The case involved several challenges:
- The client was an overseas client collecting debt from an Australian debtor.
- Both the client and the debtor had an agreement before the client hired us.
- The coronavirus pandemic prompted courts across Australia to postpone civil cases. The Australian government also extended insolvent trading relief to 31 December.
Following the onboarding of the client, the client supplied Slater Byrne with documents relevant to its debt collection case. SBR’s Account Manager in Sydney communicated to the debtor that the client hired us to collect the debt. Together with this notice, our Accounts Manager gave the debtor seven days to settle the debt or legal action could be commenced. If the debtor does not file any defense within 28 days of issuing legal action, the client will proceed with a default judgment.
The debtor was adamant that the client already accepted the term that it would pay 50cents on the dollar. The client, however, felt pressured to accept the settlement because they were on the belief that the debtor was on the brink of liquidation. When they had the chance to seek advice, they decided to reject the agreement. The client felt the terms were unfair. The client also was unable to probe into the financial status of the debtor to check the veracity of its insolvency claim.
From Slater Byrne’s point of view, our goal is to collect the money owed in the quickest time possible. Should the matter be more complicated than usual, we will provide suitable advice on what we fell can get the quickest result. We advised our client that we can issue a credit default warning giving the debtor additional seven days for payment or offer a reasonable settlement offer. Another alternative would be to start legal action by issuing a creditor statutory demand for payment.
Ultimately, the client, with legal advice and after weighing up the costs involved for litigation, decided to file a statement of claim. A Statement of Claim sets out the overdue invoices which are unpaid and outlines the details supporting the facts. Helping overseas clients collect debts in Australia is not impossible but may take some time as in this case. Australian courts have online filing systems. However, because the client was an overseas entity, it needed to file documents physically.
How Slater Byrne used garnishee order to collect debt
While the case was already scheduled for a hearing, Australian courts postponed hearings on all civil cases due to COVID-19, which further scuppered our client’s debt recovery attempts. Our client was also concerned with the government regulations on insolvent trading relief, which, fortunately, did not affect our client’s court proceeding.
Eventually, the court issued a decision in our client’s favor, directing the debtor to pay $185,000. However, we still needed to recoup the actual money from the debtor.
We used a garnishee order to collect the judgment debt. Our client did not have the debtor’s bank account details but a simple search in the debtor’s online shop showed that their bank account details were publicly available.
After almost a year to the day the client engaged our services, the debtor finally processed the payment. Our client was able to recoup the full amount. Despite the challenges and the COVID-19 pandemic, we were able to use a garnishee order to collect debt for our overseas client.
Liam White joined the Slater Byrne Recoveries team in early 2013. He has worked across the credit & dispute resolution industry for a number of years. He is currently National Head of Sales at Slater Byrne Recoveries.