Defences if you are sued


There are a number of defences available to a person who is being sued for a debt. If the person being sued does not lodge a defence the court will make an order against that person. This order may include legal costs and interest.


Defences that are available to being sued include:

1 the contract or agreement does not comply with the appropriate legislation;

2 you are not a party to the contract;

3 you were not correctly informed about promised goods (misrepresentation);

4 you were under the age of 18 (a minor) when you allegedly entered into the contract with the creditor;

5 the debt is too old and therefore statute barred (seeStatute barred debts”); or

6 the contract is unfair.

There may be other defences in your particular case. If you think that there are, seek legal advice.

Defences in detail

Contract does not comply with appropriate legislation

You may have a defence if the contract or other related documents do not comply with the appropriate legislation. Seek advice from a private solicitor, community legal centre or Consumer Affairs Victoria to check this (for contact details, see Legal services that can help).

Not a party to the contract

Debts are not necessarily transferable from one person to another. If, for example, your father bought a car on credit and he died or disappeared before paying off the total amount, you would not be expected to pay off his debt. The debt is your father’s, and if you were sued you would have a defence. If you have not entered into a contract with the creditor which makes you personally liable for the debt, you are not liable and would have a defence.


If you agreed to buy goods on the basis of information which was supplied to you by the creditor or trader, and that information has turned out to be incorrect or inaccurate, you may have a defence.

Under 18

If you are under 18 a contract cannot be enforced unless it is for “necessary” goods (i.e. food, clothing or transport) (seeYoung people” in How contract law works).

Old debts

If the debt is more than six years old, you may have a complete defence to the creditor’s claim (seeStatute barred debts”).

Unfair contract

Sometimes, the circumstances in which you entered into the contract can make it unfair, and this can be a defence to an action by the creditor. Ask:

1 Did you understand the nature of the contract? (i.e. do you understand English, or the details of how the contract works?)

2 Were you subjected to undue influence from the creditor? This may occur especially where the two parties to the contract have a particular relationship (e.g. doctor–patient, parent–child), or if there were threats of unlawful acts (i.e. a threat of violence used to coerce a person to make the agreement).

3 Did you think part of the contract was unfair?

In addition to a possible defence, an unfair credit contract may be reopened in either the Federal Court, the Federal Circuit Court, or the Supreme, County or Magistrates’ Courts of Victoria. Prior to 1 July 2010, such reopening was possible in the Credit List of VCAT; however, this is no longer the case (see Credit reporting).

If you think that you may have an unfair contract, contact a private solicitor, community legal centre (see Legal services that can help) or ASIC (see contact details).

Procedure after defence is filed

In general, all defended matters, except smaller claims (such as those for less than $10,000 or claims for motor vehicle collision), are referred to a pre-hearing conference or mediation. Mediation is ordinarily reserved for the more complex matters, where the amount in dispute is $30,000 or more.

In proceedings where the amount in dispute is less than $10,000, the matter may proceed straight to arbitration (s 102 Magistrates’ Court Act 1989 (Vic) (“MC ACT”)), as discussed below.

Pre-hearing conference

Pre-hearing conferences are scheduled to take place approximately 8–12 weeks after lodging a defence. Either party can request, or object to, an order to set the matter down for a pre-hearing conference. The advantage of a pre-hearing conference is that if a resolution is reached, the time and expense of the dispute are greatly reduced.

A pre-hearing conference is an informal conference between the parties (and their legal representatives) and the Registrar of the Magistrates’ Court. The aim of this conference is to promote a settlement or clarify the issues that are in dispute. It is advisable to attend a pre-hearing conference with an adviser.

The process is informal and discussions are confidential, so no answers given or admissions made in the pre-hearing conference can be used as evidence in any subsequent hearing. There are no costs payable to the court for a pre-hearing conference, unless the costs are payable in relation to an adjournment of the conference.

If either party fails to attend a pre-hearing conference, the other party may ask the Registrar for an order, resulting in that party winning the case.

By Practice Direction No. 2 of 2011 the court may, if requested by a party to the proceeding, conduct the pre-hearing conference by telephone where the location of a party or other relevant person will cause unreasonable expense or inconvenience to that party or person in attending a pre-hearing conference personally.

If the dispute is not resolved at the pre-hearing conference, it will be set down for arbitration or hearing.


Following receiving a defence, the Magistrates’ Court may, with or without the consent of the parties, refer the proceeding to mediation. Before mediation is ordered, however, the Registrar will inform the parties by written notice that the matter appears to be suitable for mediation. Unless a party raises an issue for consideration, a mediation referral order will be made after 21 days from the date of the notice.

Mediation is an informal process where both parties sit down with an independent third party (mediator) to try and reach a resolution. The mediator is impartial and assists the negotiation process. The advantage of a mediation is that it can resolve the matter relatively quickly while keeping costs to a minimum.

Except as all the parties who attend the mediation in writing agree, no evidence can be admitted of anything said or done by any person at the mediation.

If either party fails to attend a mediation, a magistrate or Registrar may make an order, resulting in the defaulting party losing the case.

Within seven days of the completion of a mediation, the mediator must file a mediation report in Form 50A and provide a copy of the report to each party who attended the mediation.

Note that the Civil Mediation Program (which commenced as a pilot program) is available at a number of Magistrates’ Court venues (see below). If you defend a matter issued at one of the following Magistrates’ Courts in which the amount sought against you in the complaint is less than $40,000, the proceeding will be automatically referred to mediation. Further details can be obtained by reading the applicable Practice Direction of the court.

The Civil Mediation Program is available at:

Broadmeadows on or after 2 April 2009 – see Practice Direction No. 6 of 2007 and Practice Direction No. 1 of 2009;

Sunshine or Werribee on or after 17 May 2010 – see Practice Direction No. 2 of 2009 and Practice Direction No. 1 of 2010 in relation to the Sunshine Magistrates’ Court, Practice Direction No. 3 of 2009 and Practice Direction No. 1 of 2010 for the Werribee Magistrates’ Court;

Latrobe Valley on or after 1 June 2011 – see Practice Direction No. 5 of 2009 and Practice Direction No. 1 of 2011;

Ballarat on or after 15 August 2011 – see Practice Direction No. 5 of 2011;

Sale on or after 3 October 2011 – see Practice Direction No. 6 of 2011;

Shepparton or Horsham on or after 1 June 2012 – see Practice Direction No. 4 of 2012 for the Magistrates’ Court at Shepparton and Horsham;

Korumburra, Wonthaggi or Bendigo on or after 2 January 2013 – see Practice Direction No. 8 of 2012 relating to the Korumburra Magistrates’ Court, see Practice Direction No. 9 of 2012 in respect of the Wonthaggi Magistrates’ Court and see Practice Direction No. 10 of 2012 in relation to the Bendigo Magistrates’ Court;

Ararat or Stawell on or after 1 November 2013 – see Practice Direction No. 4 of 2013 in relation to the Ararat Magistrates’ Court and Practice Direction No. 5 of 2013 in relation to the Stawell Magistrates’ Court;

Geelong on or after 1 January 2014 – see Practice Direction No. 10 of 2013;

Heidelberg on or after 1 August 2014 – see Practice Direction No. 6 of 2014;

Frankston and Moorabbin on or after 1 January 2015 – see Practice Direction Nos 11 & 12 of 2014;

Wangaratta on or after 1 June 2015 – see Practice Direction No. 5 of 2015;

Warrnambool, Portland, Colac and Hamilton on or after 1 June 2015 – see Practice Direction No. 6 of 2015.


If the amount the creditor has claimed from you in the Magistrates’ Court is less than $10,000 and the dispute has not settled at the pre-hearing conference or mediation, the matter will be set down for arbitration, unless you are being sued for non-payment of local council or water rates.

In matters referred to arbitration, further particulars of the creditor’s claim are not allowed. Previously the creditor could not seek an order for summary judgment in a matter referred to arbitration, however, it now appears that the creditor can apply for summary judgment.

Where the amount of the claim is $5,000 or more, each party is required to serve on the other party a list of documents that identifies each document in that party’s possession that supports the claim or defence or is injurious to the claim or defence. This must be done not less than 14 days before the date fixed for the pre-hearing conference or the date fixed for the arbitration if there was no pre-hearing conference.

An arbitration is generally an informal court hearing conducted by a magistrate. However, the way the arbitration is run will depend on the individual magistrate hearing the matter; some magistrates run arbitrations in much the same way that they run hearings. The rules of evidence which usually apply to a hearing do not apply to arbitrations. A decision made by the court in arbitration has the same effect as if it were made at an ordinary hearing.

If you are going to arbitration, you may still need to seek legal advice.

The major advantage of arbitration is that it is sometimes informally conducted and the costs which may be awarded are limited by legislation. However, in some circumstances, such as where the matter involves complex legal issues, a party may apply to have the dispute heard in a conventional hearing rather than through arbitration.


If the dispute is not able to be settled at a pre-hearing conference or mediation, it will be set down for hearing. A hearing is conducted before a magistrate and the plaintiff must prove all the elements of its case. You must then rebut the plaintiff’s case (provide it to be untrue). The rules of evidence apply.

If your matter goes to hearing, it is likely that you will need legal assistance to help you prepare and run the hearing. The legal costs of running a matter to hearing can be very high. If you lose, it is likely that you will be ordered to pay the creditor’s costs as well. SeeInterest and costs on judgment” for further information.

No defence

If you do not lodge a defence and there is nothing apparently incorrect about the complaint, the court will make an order against you at the request of the creditor. This decision is a court order and can be enforced in the same way as any court order. It is often called “judgment in default of defence” because you have not filed a defence. The order usually includes an award of costs and may include interest (seeInterest and costs on judgment”).

Interest and costs on judgment

When a court enters judgment against you in favour of a creditor, the court will make an order stating the amount owing for the debt, plus any interest that the creditor might be entitled to claim (depending on their contract with you), plus the creditor’s legal costs. The creditor’s legal costs are calculated in accordance with the scale of costs in appendix A to the Magistrates’ Court General Rules.

The amount awarded in the court order following an action for recovery of a debt is referred to as a “judgment debt”.

Once an order is made against you, interest will begin to accrue on the debt from the date of judgment, calculated at a rate of interest set down by the Penalty Interest Rates Act 1983 (Vic). The applicable interest rate is currently 9.50% (which it has been since 1 June 2015). Prior to this the rate had been 10.50% per annum, and had been at this rate since 11 August 2014. The rate varies from time to time (and may be found on the Magistrates’ Court website by searching the phrase “penalty interest rate”).

As an example, if your judgment debt is $1,000, the annual interest that would accrue on this amount, at 9.50%, is $95. Any offer to pay by instalments made would need to be sufficient to cover this amount.

SeeEnforcement of court orders” for information about court action a creditor may take to recover the judgment debt.