Credit and Debt

Credit and Debt

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Electing small claims proceedings for credit matters

If court proceedings seem to be an appropriate option for your client, you should consider electing to have the proceeding dealt with as "small claims proceedings" under section 199 of the National Credit Act. 

Under Part 4-3, Division 2 of the National Credit Act, the client can elect to "opt-in" to file "small claims proceedings" in the Magistrates' Court of Victoria or the Federal Circuit Court.

For a claim to be dealt with as a small claim proceeding, you must indicate that the person wants the small claims procedure to apply to the proceedings.  This form can be used in the Federal Circuit Court to elect for a matter to be heard as a small claim proceeding.

Small claims proceedings will be conducted in an informal manner.  There is a presumption that each party will bear their own costs (i.e. legal costs won't be awarded against unsuccessful parties).   

Section 199 of the National Credit Act lists causes of action that may be brought within the small claims jurisdiction:

  • orders under sections 74 or 75 of the Code in respect of variations to credit contracts on the grounds of financial hardship;
  • where the value of the credit contract, mortgage, guarantee or consumer lease is not more than $40,000, an order under:
    • section 37 of the Code that a credit provider provide a statement of account;
    • section 38(7) of the Code to determine a disputed liability under a credit contract;
    • section 76 of the Code reopening an unjust transaction;
    • section 78 of the Code reviewing unconscionable interest, fees or charges;
    • section 96 of the Code postponing enforcement proceedings;
    • section 101 of the Code requiring a person who has possession of mortgaged goods to deliver those goods to the credit provider;
    • section 108 of the Code that a credit provider return mortgaged goods to a debtor;
  • provided that the order sought is for not more than $40,000, an order under :
    • section 118 of the Code that a credit provider pay compensation to a debtor or guarantor for loss arising from a contravention of a key requirement of the Code (as defined in section 111);
    • section 178 of the National Credit Act for compensation in respect of loss or damage suffered as a result of a contravention of the National Credit Act;
    • section 106 of the Code requiring a credit provider to compensate a debtor in the event that mortgaged goods were not sold as soon as reasonably practicable, or at a time agreed between the parties, or for the best price reasonably obtainable; and
    • section 107(3) of the Code determining the reasonableness of any enforcement expenses charged to a debtor by a credit provider.

In a matter which is dealt with by the Federal Circuit Court’s small claim procedures:

 

  • the Federal Magistrate is not bound by rules of evidence;
  • the Federal Magistrate may correct any mistake in the application;
  • the Federal Magistrate can act in an informal manner and without regard to legal form and technicalities; and
  • neither party can be represented by a lawyer unless the Federal Magistrate permits this, so you will need to seek leave to appear as a legal representative.