Credit and Debt

Credit and Debt

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Case study 3: Magistrates' Court

Thomas’s debt to the owners of a damaged fence (court proceedings commenced)

Thomas’s circumstances

Thomas was a man in his mid-50s who was long term unemployed.  He had no assets or income except for his fortnightly Centrelink payments. 

Thomas sought Homeless Law’s assistance when civil proceedings in the Magistrates’ Court of Victoria were commenced against him by the owners of a heritage fence, which it was alleged Thomas had damaged.  Thomas had been issued with a Form 5A Complaint  and had two days to work out whether to lodge a Form 8A Defence. 

Thomas’s instructions

In early 2010, Thomas leased a removal van from a rental company and clipped a parked 4WD while parking the van.  The 4WD did not have its handbrake on and rolled onto the footpath and into the plaintiffs’ fence. 
While there was no damage to the 4WD, the fence needed to be replaced.  Unfortunately, it was a heritage fence that needed specialist restoration at a cost of $9,500.  The home owners commenced proceedings against Thomas to recover this amount.

Thomas instructed his Homeless Law’s lawyers that, when hiring the removal van from the rental company, he signed up for and paid an additional premium to secure insurance in the event he caused any property damage while driving the vehicle.  Subsequent to the accident, Thomas had completed a Damage Report in the form required by the rental company’s insurer which he had submitted to the rental company.

Steps taken in Thomas’s matter

  • Thomas contacted Homeless Law with only two days left to lodge a defence (i.e. 19 days into the 21 day period allowed in the Magistrates’ Court).  The Homeless Law lawyer explained to Thomas that if he lodged a defence, there was a risk of increased costs being added to the $9,500 being claimed.  However, if he didn’t lodge a defence, judgment was very likely to be entered against him.  Thomas instructed the lawyers that he wanted to lodge a defence (Form 8A ) – although he was judgment proof, after his lawyer stepped through the consequences of relying on being judgment proof, Thomas decided he wanted to try to avoid judgment being made against him.  
  • Once the defence had been lodged, Thomas’s Homeless Law lawyer contacted the plaintiffs’ lawyers to negotiate on the basis of Thomas being judgment proof i.e. he had no assets or income that could be attached by an order of the Court.  The aim was to discourage the plaintiffs from incurring further unrecoverable costs by pursuing the claim to court.  The plaintiffs’ lawyer indicated that the plaintiffs still intended to pursue their claim against Thomas.  It was clear, though, that the claim was brought in the hope that the rental company’s insurer would indemnify the claim.
  • The Homeless Law lawyer first attempted to make contact with the director of the rental company and request a copy of the Damage Report be sent to the rental company’s insurers but the director was uncooperative. 
  • Steps were then taken to contact the insurance company directly to ensure there was policy coverage.  The insurance company confirmed it was the relevant insurer at the time of Thomas’s accident and that it only required a copy of the Damage Report from the rental company and the claim would be processed.  Unfortunately, the rental company was refusing to forward the claim form and the insurer was unwilling to accept a claim from Thomas directly.  
  • The time for filing a third party notice was running out, so the Homeless Law lawyer decided to formally join the rental company as a third party to the proceeding.  A Form 11A Third Party Notice, including a separate Statement of Claim was filed, seeking to rely on a liability waiver under the terms of the rental contract which Thomas had paid for.  There was also potential to join the owner of the 4WD that had been left without its handbrake on, however the owner’s whereabouts were unknown and it was decided that the best course of action was to join the rental company to compel the insurer to play a part in the proceeding.  
  • The proceeding had been listed for a pre-hearing conference and the rental company had not made any approach to the Homeless Law lawyer or filed a defence to the third party notice.  The insurer also confirmed it had not received any material from the rental company.

Outcome

Shortly prior to the pre-hearing conference, the Homeless Law lawyer contacted the director of the rental company and persuaded him to attend the upcoming pre-hearing conference, including by explaining the consequences of not attending the conference. 

After attending the pre-hearing conference, the director of the rental company signed the Damage Report and agreed to submit it to the insurer as a matter of priority.

The pre-hearing conference was adjourned for a month to allow the insurer to receive and process the claim.  This occurred meaning that the plaintiffs were indemnified by the insurer and Thomas was absolved from liability.