If you find yourself in a position where you're out of pocket because of someone else and the amount you're owed is relatively small, it can be difficult to know what to do next.
Whether it's a debt someone hasn't repaid (like a customer who won't pay your bill), money you've had to outlay to repair something damaged by someone else (like the cost of repairs to your car after a collision), or someone you've hired to do something who hasn't held up their end of the bargain (like a tradie you've paid upfront who doesn't finish the job) – how do you recover what you're owed?
When the amount in dispute is small, in many cases it can be impractical to retain a lawyer to pursue the matter for you, because the fees necessarily involved could well end up being more than what you're fighting to recover. But there many options available to you that you could pursue on your own.
There is a wealth of information about these options, as well as a free number you can call, on the LawAccess NSW website. We've also included a summary below.
Resolving a small claim without legal action – negotiation
Attempting to talk to the other party involved and negotiating or reasoning with them may just be enough to resolve the matter. If at all possible, you should attempt this approach first. More information about the benefits of negotiation and tactics you might use is available here.
Remember, it's a good idea to keep a note of the conversations you have and a copy of any documents you send to or receive from the other person. If you do end up having to take the matter to a court or tribunal, these records may become useful evidence to support your claim.
If you're meeting with the other person, consider taking a friend or colleague along with you so that there is someone independent who can verify and confirm the conversations that take place should that become necessary.
Resolving a small claim without legal action – mediation
If your attempts at negotiation and reasoning are unsuccessful, or it is difficult to communicate with the other party, a better dispute resolution option might be mediation. The process of mediation allows you and the other party to sit down together and try to settle the dispute with the help of a professional mediator.
The mediator remains neutral throughout the meeting and simply assists the parties involved to engage in a dialogue and come up with solutions. If a solution is agreed upon, the parties can put it in writing so that it then becomes enforceable. More information about the benefits of mediation is available here.
To find a mediator, contact your local Community Justice Centre. They will help you to determine whether your dispute is suitable for mediation and will give you information outlining the next steps to take.
Taking your small claim to court
If you've tried negotiation and/or mediation without success, then court proceedings might be your next step. In NSW, there are two different judicial bodies that can hear and determine small claims – the NSW Local Court and the NSW Civil and Administrative Tribunal (NCAT).
Bringing a claim in the NSW Local Court
You can apply to have your matter heard in the NSW Local Court, where it will either be dealt with in the Small Claims Division (for claims up to $20,000) or the General Division (for claims greater than $20,000 but less than $100,000). The NSW Local Court has a wide jurisdiction to determine civil claims, including matters related to home building, renovations, defective products, mechanical repairs and tenancy disputes.
If you do decide to go to court, you can choose either to instruct a lawyer to represent you, or to represent yourself, but be aware that the other party can instruct their own lawyer. The costs for a lawyer to represent you will vary depending on the nature of the claim, whether the other side is prepared to negotiate and/or is challenging the whole or only part of your claim, whether the other side has instructed a lawyer also, and so on.
If the matter cannot be resolved and the court does list it for a formal hearing, your lawyer will need to devote many days to prepare the matter properly for trial and attend to represent you for the duration of the hearing. The legal costs associated with a hearing can therefore be significant.
If you choose to represent yourself, you might be able to seek advice from a lawyer nonetheless about how best to prepare and prosecute your own claim at a hearing. In some cases, a lawyer might be prepared to provide a coaching service of this nature to you for a fixed fee that you and they can agree up front. This can help to give you the confidence to present your case at court in the best way possible.
There are more than 160 NSW Local Court locations across metropolitan, suburban and regional NSW. If in doubt about how to pursue your claim in the Local Court, you can always attend at your nearest registry and ask the registry staff for assistance.
Bringing a claim in the NSW Civil and Administrative Tribunal (NCAT)
NCAT can be likened to a small claims court. However, it is specifically designed to make it easier and more cost-effective for the everyday person to run their own matter and is more informal than the NSW Local Court.
You should be aware of the timeframes in which you must lodge your claim at NCAT. These vary depending on the nature of the claim and are explained on the NCAT website. It's also pertinent to know that the maximum amount a party can claim at NCAT will vary, depending on the type of dispute.
Additionally, lawyers generally do not represent clients in NCAT hearings (unless you seek prior permission from NCAT). That said, as detailed above, a lawyer might be prepared to provide advice and coaching to you for a fixed fee to give you confidence to pursue your own claim in NCAT.
NCAT deals with a broad range of matters, including home building disputes, consumer disputes relating to defective products or mechanical repairs, tenancy disputes, financial management disputes and guardianship matters. NCAT also reviews administrative decisions made by NSW government agencies. For more information on the types of matters that are heard by this tribunal, visit the NCAT website.
How do you initiate an NCAT claim?
You can initiate your NCAT claim by completing and lodging the relevant form for your dispute and paying the requisite fee. NCAT will send the application to the other party involved in your matter and will then email you the details regarding the first hearing date.
At the first NCAT hearing, you will need to bring evidence that supports your claim. A nominated tribunal member will discuss the dispute and ask the parties to try to negotiate an agreement via mediation, or by another alternative dispute resolution method.
What happens if you can't reach agreement?
If no agreement can be reached, the tribunal member may review your evidence and make orders to resolve the matter. If the claim is more complex, the tribunal member may ask you or the other party (or both) to provide more evidence at a future date.
At this future date, you and the other party can both present your case and any further evidence. The tribunal member will then review the evidence to make a decision on behalf of both parties. You and the other party will be informed of the decision within two weeks.
NCAT has locations in Sydney CBD, Liverpool and Penrith, as well as in the regional cities of Newcastle, Tamworth and Wollongong.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
