How small claims court could help you get your money back

You've just bought a new pair of headphones online. When they arrive, you find out that they're faulty, but despite asking for a refund or replacement, the retailer won't budge.

Or perhaps you've paid a tradesperson to do some repairs on your driveway. Halfway through the job, they stop showing up and replying to your calls though.

Sooner or later, many Australians will encounter an issue with a business or another party that can't be resolved through negotiation.

At that point, it may feel like there are only two avenues to go down: cut your losses and move on, or gear up for an expensive legal battle.

There is an alternative.

Lodging a small claim through a court or tribunal can be an option for people looking to resolve minor civil disputes without the cost or complexity of other legal action.

What is a small claim?

While the maximum amount that can be claimed varies depending on the jurisdiction and type of dispute, in most parts of Australia small claims are typically capped between $10,000 and $25,000.

They're also dealt with by specific tribunals or courts. For example, the ACT Civil and Administrative Tribunal (ACAT) or the Magistrates Court of Tasmania.

So, what kind of cases can be brought to one of these bodies? There's a broad range of issues, ranging from consumer disputes to tenancy disagreements.

Anna Meulman, a managing lawyer at Consumer Action Law Centre, says that small claims in the Victorian Civil and Administrative Tribunal (VCAT) often stem from disputes between consumers and businesses.

"They might have purchased a product or a service from a business, and something's gone wrong - the goods could have been defective, or the services weren't performed with due care and skill.

"And they've attempted to resolve that dispute directly with the business through negotiation or a friendly chat, but those attempts have failed.

"The person might have quite strong consumer rights under the Australian consumer law, but for whatever reason, they're just unable to enforce them. So, they have no option but to take that next step of pursuing a small claim in VCAT."

Can you make a small claim without a lawyer?

One of the major features that the various courts and tribunals that deal with minor claims have in common is that parties generally need to represent themselves.

"The advantage of the [VCAT] small claims list is that people are not allowed to have lawyers representing them, and neither can the business," Meulman explains.

"By allowing people to represent themselves, they don't have the pressure of the formality that comes with lawyers there."

That doesn't mean that people can't reach out for legal help with their issues though.

"Anyone's able to kind of seek legal advice at any time," Meulman says.

"It's just that they can't have a lawyer on the record for them, drafting their VCAT documents and representing them at the hearing."

How much will pursuing a small claim cost?

While fees vary, individuals can generally expect to pay anywhere from tens to several hundred dollars to lodge an application for a minor claim.

There are also reduced rates for some applicants. The NSW Civil and Administrative Tribunal has lower fees for pensioners and students, plus fee waivers for people experiencing financial hardship.

And because people will generally need to represent themselves at these courts and tribunals, legal fees won't be an issue.

"Usually, if you lose your court case, you have to pay the other side's legal fees," Meulman says.

"In the [VCAT] small claims list, there's no ability for cost orders to be made, so it's lower risk for people."

What to do before filing a small claim

Filing a claim may be relatively cheap, but it will involve some legwork. The process also varies, so it's worth checking the requirements in your state or territory on the relevant court or tribunal website.

Before reaching that point though, Meulman recommends taking a few steps. The first is trying to resolve the dispute directly with the business or other party.

If that fails, it may be time to seek legal advice or to contact a body like Consumer Affairs Victoria to get a better understanding of where you stand from a consumer rights perspective.

Then before lodging a claim with the likes of VCAT, Meulman suggests that consumers send the business a letter of demand and give them a couple of weeks to respond.

"This should set out what's happened from their perspective. If they have been able to get some legal advice or guidance, putting in what some of those arguments might be, and then clearly setting out what they want to resolve the dispute."

Meulman also highly recommends that people pull together any evidence they have about the issue they're disputing.

"If it's possible, it can be really useful to get a report from an expert about what the issues of your product or service are.

"For example, if it's a case about a faulty car, then a report from an expert mechanic. Or if it's construction work, you might want to get a report from a builder.

"Obviously, that's often really expensive for people. So, at the very least, having photos and videos, as well as their own statement about what's wrong with the product service, can be really helpful."

The reality of making a small claim

The small claims system may be designed to be simpler and less expensive than traditional court proceedings, but that doesn't mean that the process will be fast.

Disputes can take months and even years to be resolved.

Take the Queensland Civil and Administrative Tribunal. Data shows that three-quarters of matters involving minor disputes between consumers, traders and businesses took up to 53 weeks to finalise.

Meulman says that wait times are also an issue for Victorians lodging small claims with VCAT.

"People often tell us on the phone - and we experience this when we represent clients as well - that they're unable to get a hearing for a year or even longer.

"For people that might have a car that's defective, or another product that they need for everyday life, it can be really debilitating not to have your dispute resolved for such a long time.

"So, if there is a reasonable offer on the table from the business, even if it's not absolutely everything you want, it may be worth considering if it means that you don't have to face the delays of VCAT and the unpredictability of the outcome."

Get stories like this in our newsletters.