Debt Recovery – VCAT Vs. Magistrates Court

One question which I am commonly asked in relation to debt recovery proceedings is whether VCAT or the Magistrates Court is a better choice of venue. The answer, quite simply, is that it depends on the nature of the dispute. However, in general terms for serious debt recovery proceedings nine times out of ten I find myself recommending the Magistrates Court. There are several reasons for this. Generally speaking there are two types of civil claims which can be brought in VCAT both of which requires ??? under the Fair Trading Act Victoria or the Australian Consumer Law (which is now contained in the Competition and Consumer Act 2010.

VCAT

The first claim that can be bought to VCAT which is under $10,000 can be listed and heard in one day.  The parties have the options of insisting that no lawyers are involved (unless you are a company) and the rules of evidence do not apply. This means that generally speaking you can introduce evidence which may otherwise be excluded in the Court of law (e.g. here say).

The second type of claim that can be bought in VCAT is a claim for more than $10,000. Lawyers may be involved if the party chooses to retain them. Procedural rules similar to that of the Court apply which means that the claim may go through many steps including directions hearings and interlocutory procedures (e.g. disclosure of documents,   witness summons and statements etc.) mediation and a final hearing. Generally no costs are rewarded unless exceptional circumstances apply (See section 109 of the VCAT Act).

Magistrates Court

The Magistrates Court adopts a similar system for the chase for debt recovery. For civil claims under $10,000 which are known as arbitrations and which may decided by the judge or civil registrar again in similar to VCAT relaxed rules of evidence apply.  For civil claims over $10,000 rules of evidence apply and a judge will decide the case. The Magistrates Court Civil procedural rules will also apply. The overriding objective of these rules is to enable the court to deal with the case justly. Procedural rules also apply meaning that the matter must has a pre-hearing conference (mediation) followed by interlocutory procedures (disclosure witness summons and statements etc.) and then proceed to a final hearing.

In terms of differences between the two approaches I have prepared the following table which might assist. If you’re interested in debt recovery please contact Anthony Snooks of our office for further advice in these matters.

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