Understanding the Australian legal system in a few words

By Graham Lacey, Upper Class Collections/TCM Australia | Aug 10, 2020

The Australian legal system is very much a bi product of our history. When we were colonized by England in 1788 there was no logical process involved. First New South Wales was colonized and then when it was convenient further settlements were established. Each colony was also established with a different purpose in mind, initially as a place to dump convicts (e.g. New South Wales), then convicts were sent as a necessity (e.g. Western Australia) and then were not sent at all (e.g. South Australia).

Australia is also a huge country, the largest island in the world. We can fit England inside Australia 60 times and still have space leftover. So, the different colonies were rather isolated from each other even though they were on the same island. Perth is one of the most isolated cities in the world, the road distance to Adelaide the nearest city is more than 2600 Kms.

How the colonization impacts the Australian legal system?

So, the different colonies initially grew as separate entities, developing very much an independent mindset. This has resulted in Australia investing a lot of power in the states in comparison to the federal (or commonwealth) government. This is illustrated in the Australian legal system, which has both a state and federal component.

From a credit management perspective, more important than the Australian legal system is the state legal system as they have jurisdiction over such matters as debt, breach of contract, and other such matters relating to our industry.

The Australian legal system: Western Australia

For Western Australia we have the following legal hierarchy:

Supreme Court                             For claims from AUD $750,001 and higher

District Court                               Claims from AUD $75,001 to AUD $750,000

Magistrates Court                       For claims from AUD $10,001 to AUD $75,000

Small Claims Court                     For claims up to AUD $10,000

(A part of the Magistrates Court)

While the other states are similar, the lower courts may have a different name or have jurisdiction over different claim amounts.

The Australian legal system: New South Wales

In New South Wales we have the following legal hierarchy:

Supreme Court                               For claims from AUD $750,001 and higher

District Court                                  Claims from AUD $150,001 to AUD $750,000

Local Court                                     For claims up to AUD $100,000

The Australian legal system: Victoria

In Victoria we have the following legal hierarchy:

Supreme Court                               No Monetary Limit

County Court                                  No Monetary Limited

Magistrates Court                        For claims up to AUD $100,000

VCAT                                              Maybe able to deal with some claims

The Australian legal system: Queensland

In Queensland we have the following legal hierarchy:

Supreme Court                              Amounts above AUD $750,000

County Court                                 Claims from AUD $150,001 to AUD $750,000

Magistrates Court                         For claims up to AUD $150,000

These are examples of how each state is similar with its own little idiosyncrasies and demonstrates the differences in the Australian legal system.

More differences between states in the Australian legal system

Another big difference between the states is their fees. Fees vary wildly from one state to another. In Western Australia for example it is a lot cheaper to seize property than in Victoria because no court appearance is required by your lawyer.

To confuse things a bit further, if you wish to proceed with bankruptcy proceedings this is dealt with by the Federal court and not the state courts. The same applies if a company was to become insolvent, this is dealt with by the federal courts. So, if you obtain a judgment in Western Australia you would then transfer the case to the Federal courts to proceed with bankruptcy or to place a company into administration.

How to handle the issues of the Australian legal system?

Often, we get requests from clients about the likelihood of success on an account or what the legal costs would be. The first question we always ask is “where does the debtor reside?”, by this we mean what state the debtor resides in as the legal action would have to be instigated within the same state the debtor is located.

The second question we normally ask is “Does the contract have a legal jurisdiction clause”? This must be the Achilles heel for international debt recovery agencies. Solicitors in Australia are refusing to accept files with a valid contract stating legal jurisdiction is in another country. So, the creditor must instigate the legal action in their own country and then apply to transfer judgment to the relevant Australian state where the debtor resides. Unfortunately, this is dealt with by the Supreme Court within the relevant state which means it will be expensive. Filing fees alone to commence the action can be as high as AUD $2,700 to AUD $3,200.

If there is no contract or no legal jurisdiction clause then we have never had any issues previously in instigating a legal action in the Australian courts. The courts appear happy to accept any action regardless of where the creditor is and just allow the legal process to determine the outcome as per the facts for each individual case.

TCM Group Global Debt Collection
Graham Lacey
Upper Class Collections/TCM Australia

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