Client Won’t Pay: Letter of Demand or Straight to NCAT?

The client has stopped paying and you are weighing two options. Send a Letter of Demand and give them another chance, or file a claim straight away (in New South Wales the Local Court, not NCAT; elsewhere VCAT, QCAT or the equivalent body in your state) and let the tribunal or court sort it out. Both feel reasonable. Only one is the right opening move in almost every case.

For the forms, fees and each step, see our guide to making an NCAT application.

The answer is sequencing, not choice. A Letter of Demand first, then a tribunal or court claim if needed, is the standard Australian debt-recovery sequence — and skipping the first step makes the second one harder, slower and more expensive than it needs to be.

One correction on the forum before you choose. In New South Wales, a business owed money has a debt claim for the Local Court of New South Wales, not NCAT: NCAT hears consumer claims, which are brought by the consumer. The Local Court’s Small Claims Division hears claims up to $20,000 and its General Division hears claims over $20,000 up to $100,000. Other states use their own tribunal or court.

Why tribunals and courts expect a Letter of Demand first

The Local Court in New South Wales, VCAT, QCAT and the equivalents in other states are designed to resolve disputes that have been put properly to the other side and remain unresolved. While they will accept applications without a prior Letter of Demand in most matters, the absence of one carries three real costs:

• Members frequently ask why a demand was not sent and adjourn for it to be issued
• Cost orders for any legal expenses you have incurred can be reduced or refused where you skipped the obvious step
• The other side is more likely to file a counter-claim or dispute when they have not had a chance to engage commercially first

Why a Letter of Demand often resolves the matter without filing

Many clients pay on receipt of a properly drafted Letter of Demand because the document changes their internal calculus. Before the letter, you were a creditor sending reminders. After the letter, you are a creditor with a defined legal trajectory and a 14-day clock. Filing fees, hearing dates, and the public record become real considerations rather than abstractions. A meaningful proportion of debts are recovered at this step, with no tribunal required.

What Claim Done delivers

• Debt particulars laid out cleanly with contractual and statutory basis
• 14-day deadline with the specific tribunal or court named (the Local Court in New South Wales, VCAT, QCAT, etc.)
• Pre-empts the most common counter-claims and disputes
• Drafted and sent as a PDF for a flat $49
• Where the demand is ignored, the same matter can be moved to a Tribunal Application ($97), which drafts a Local Court statement of claim for a New South Wales debt, without re-doing the foundation

Common pushbacks and why they fail

• “We are happy to see you in tribunal.” Most clients who say this never want to actually attend a hearing. Pressure-test by holding to the deadline.
• “That demand is not legal.” A Letter of Demand is not a court document; it does not need to be filed or sealed. It is a private letter setting out a legal position.
• “You did not give us notice.” The Letter of Demand is the notice. Once sent, this defence disappears.
• “We dispute everything.” Blanket dispute claims rarely survive specific pleadings; the tribunal will require particulars.

Next escalation if the demand is ignored

If 14 days pass with no payment and no genuine dispute raised in writing, the path forks by jurisdiction. In New South Wales the debt goes to the Local Court, not NCAT: the Small Claims Division hears claims up to $20,000 and the General Division over $20,000 up to $100,000. VCAT in Victoria hears these claims in its Civil Claims List. QCAT in Queensland handles minor civil disputes up to $25,000. Other states use their own tribunal or Magistrates Court. Filing fees change each 1 July; check the current fee on the tribunal’s or court’s website before you file. Lawyers are not required, and the claim follows directly from a properly drafted Letter of Demand. Claim Done’s Tribunal Application service is $97, drafts a Local Court statement of claim for a New South Wales debt, and uses the demand you have already sent as the foundation document.