The difference between a debt and a claim for damages: part 1

It is sometimes said that once the time for taxation has expired, a bill for legal fees may be ‘sued on as a debt’.  Quite frankly, I have never quite understood what the difference between a debt claim and a damages claim is, or why it matters in general, though there are certain consequences I’m aware of in terms of the  civil procedures applicable.  By way of first instalment: I just saw this little passage in Copuss Pty Limited v Nix [2012] NSWSC 671, and thought to squirrel it away on the blog:

’56              There is no reason why Copuss should not be entitled to recover the loans it made to Mr and Mrs Nix. The recovery of those loans do not depend on the contract and whether Mr and Mrs Nix were in breach of it. As the High Court explained in Young v Queensland Trustees Ltd (1956) 99 CLR 560 at 567:

The common law does not and never did conceive of indebtedness in a sum certain for an executed consideration as a mere breach of contract: it is rather the detention of a sum of money and that was so whether the creditor enforced his demand by an action of debt or by indebitatus assumpsit.

 And later it said (at 569):

 A debt recoverable under an indebitatus count was not and is not now conceived of simply as a cause of action for breach of duty or obligation. In other words it is a mistake to regard the liability to pay a debt of a kind formerly recoverable in debt or indebitatus assumpsit as no more than the result of a breach of contract, a breach which the creditor must affirmatively allege and prove.’

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2 Replies to “The difference between a debt and a claim for damages: part 1”

  1. Stephen,

    (I'm a huge fan of your blog, by the way… :D)

    One of the crucial differences between pleading damages and debt is the onus of proof. Once debt is pleaded, if the Defendant pleads payment as a defence, the onus shifts upon them to show that payment has in fact been made (see Young v Queensland Trustees Ltd (1956) 99 CLR 560 at 568)… therefore there is a big strategic advantage in framing a cause of action in debt…

  2. I would suggest anyone looking into this also have a read of Frinty v Landmax Developments [2010] NSWSC 734 ( which makes clear some of the implications of the quoted clauses of Young.

    In Frinty, the Plaintiff had made various claims against the Defendant, basing their claims on one agreement. The Defendant denied that agreement to exist, and said that a different agreement existed, which also caused them to owe at least some of the Plaintiff's claim. However, the Defendant argued that, so long as it denied the Plaintiff's agreement to exist, and the Plaintiff denied the Defendant's agreement to exist, no summary judgment could be entered.

    Without any particular difficulty, Ball J came to the conclusion that the cause of action arose out of the detention of funds, not the contracts that gave rise to the detention. Therefore, summary judgment was ordered.

    While a fairly common-sense decision, such defences do seem to pop up fairly often when you're dealing with cash-strapped debtors looking for any excuse to delay judgment. I've already relied on Frinty in a case or two, and it has been very useful as a way to cut short such nuisance defences (or at least to obtain partial summary judgment, which can be used to then start enforcement and force the debtor to settle the matter).

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