A South Australian has been left in “financial hardship” after a company owing her $10,000 has left her unable to pay her rent and bills.
Welcome to Sisters In Law, news.com.au’s weekly column solving all of your legal problems. This week, our resident lawyers and real-life sisters Alison and Jillian Barrett from Maurice Blackburn give advice to a freelancer about an unpaid invoice causing financial hardship.
I’ve been freelancing for the same company since January and really enjoy the work. The problem is they are taking ages to pay – they owe me over $10,000 and I’m fed up with chasing them.
I really need the money as I’m now behind on my rent and bills and have had to take on a loan.
My invoices say to pay within 14 days but every time I ask where my money is I get told “it’s coming soon” and that “accounts is on it”. What can I do?
I want to keep working for this company but their slowness at paying is causing me stress and anxiety as well as financial hardship. – Flora, S.A.
This would understandably be quite distressing and frustrating for you Flora, when you’ve done the work they requested but haven’t been paid.
If you do still want to continue to work with the company, you could consider asking for money upfront, or a partial payment, before the work is performed.
In the meantime, there are some further steps you can take to pursue the money that’s owed to you, but you should be aware there is no quick fix.
Firstly, you need to send a letter of demand or final notice form to the company, setting out the amount you are owed and asking that it be repaid within a certain time frame, otherwise legal action will be taken.
You can access a template Form P1 Final Notice form on this Court SA webpage.
You should always keep a copy of any letters and documents you send.
The company has 21 days to respond to you. They may:
1. Pay the money in full
2. Negotiate with you to enter into a payment plan
3. Ignore you
If the company enters into a payment plan, ensure this agreement is in writing and signed by you both. Keep a record of any payment made and provide a receipt. Electronic transfers or a bank check are often a safer option than being handed cash in an envelope.
If the company refuses to pay but is otherwise speaking with you, you can proceed to a pre-action meeting if you both agree.
This meeting is usually called a mediation and both parties agree to meet with an independent third party to attempt to resolve the dispute. The court’s Mediation Unit can help you arrange this.
A mediation can be beneficial as:
1. It is less formal than a short process
2. The parties have more control over the process and outcome
3. Free mediation services are available, whereas filing a claim in court involves fees
4. It is usually quicker and confidential
If the company ignores you or refuses to attend a mediation, then you can submit a formal claim with the Magistrates Court (in the Civil (Minor Claims) Division) as the amount of money involved is between $6,001 and $40,000.
When you file the claim in the Court, you will have to pay a fee of about $150 and then give this claim to the company. Try to give it to them personally. You’ll need to prepare an Affidavit saying you gave the claim to them (“served it”).
The company should then prepare, file in court and provide you with a copy of their Defence. If the company doesn’t do this within a specified period then you can ask the court to decide in your favour, without a hearing.
If the company does prepare their defense then you will be required to attend court and argue your case.
You’ll need to provide evidence that the company engaged you to provide the services which you completed and your invoices remain unpaid, despite you chasing payment.
Usually a lawyer cannot represent a party at the court hearing.
If you do want a lawyer to act for you, then the company must agree to this or you can ask the court if you think you would be disadvantaged without having a lawyer.
After the hearing, the Magistrate will make a decision that is legally binding on the parties. The party that wins is usually able to ask the Magistrate to make the losing party pay their court costs.
Strict time limits apply so you should obtain legal advice about your specific situation.
This legal information is general in nature and should not be regarded as specific legal advice or relied upon. Persons requiring particular legal advice should consult a solicitor.
If you have a legal question you would like Alison and Jillian to answer, please email [email protected]
Get more from Alison and Jillian on their Facebook page