Alex Kohn, Partner and David Wong, Associate
Parents enrolling their children in boarding schools or religious-based schools want their children to be educated in an environment which reflects their values, beliefs and hopes. For a variety of reasons, sometimes parents do not or cannot pay their child’s boarding and tuition fees (outstanding fees).
Debt recovery for outstanding fees needs to be undertaken within a framework reflecting each school’s policy in the treatment of their students’ parents.
Commencing legal proceedings
Once instructions are received to proceed with legal action against a parent for unpaid fees, the school has already exhausted their efforts in recovering the fees. We begin by:
- Sending parents a letter demanding payment of the fees in full or make an offer to accept instalment payments;
- File and serve a Statement of Claim on each parent if there is no reply to the letter of demand; and
- Seek Default Judgment if a Defence to the Statement of Claim is not filed within 28 days of service on the parents or if no offer to pay has been made.
An option open to schools is to accept parents’ offer to pay outstanding fees by instalments if a reasonable offer is made.
While obtaining judgment against a debtor is relatively easy and cheap to accomplish, our experience has shown that the real challenge in recovering outstanding fees is in enforcing the judgment against the parent (judgment debtor).
Enforcing a judgment
If little is known about the judgment debtor’s financial resources or place of employment, an Examination Notice (Notice) is served on the judgment debtor.
The Notice contains a series of questions directed at the judgment debtor’s financial circumstances and the Notice must specify the period (not less than 28 days) within which its requirements must be complied with, typically involving completion and forwarding supporting financial information to us.
If the Notice is not returned to us or is not satisfactorily completed, a court order for examination of the judgment debtor is sought, which basically compels the judgment debtor to attend court and provide their financial details.
The Examination Order must be served on the judgment debtor 14 days prior to the examination hearing and a Notice of Motion for an Examination Order must be sent to the registry within 30 km of the debtor’s residence (or nearest registry)
If the judgment debtor fails to attend the examination, the Court may issue an arrest warrant to compel the judgment debtor to attend court.
A judgment debtor may at any stage make an offer to pay by instalments. An instalment agreement may be confirmed by letter or made an order of the court by filing it with the court. The effect of an instalment order is that NSW law provides a stay of execution of the judgment while an instalment order is in place.
In my next blog, I will discuss some of the options for enforcing a judgment debt against parents for unpaid school fees.