Overdue contribution payments

Overdue contribution payments

If an assisted person is late in paying all or part of their financial contribution to Victoria Legal Aid (VLA), then the action which VLA may take varies, depending whether the grant of legal assistance is:

  • an existing grant
    or
  • a grant which has been finalised.

Overdue payment on an existing grant

If an assisted person who is receiving an existing grant is more than 60 days overdue in paying all or part of their contribution, then VLA may give a written notice of arrears to the assisted person and their assigned lawyer.

The notice will warn the assisted person that VLA may permanently stop the grant unless the assisted person either:

  • pays the overdue amount
  • gives VLA a satisfactory explanation of why they have not paid the overdue amount and ask VLA to change its decision about the amount or method of payment of the contribution.

The assisted person then has 30 days from the date of VLA’s notice in which to take either action. If the assisted person takes neither action, then VLA may permanently stop the grant of legal assistance.

Overdue payment on a finalised grant

If an assisted person is more than 60 days overdue in paying their final contribution or an instalment of it, then VLA will send a written notice of arrears to the person. The notice of arrears will require the assisted person to either:

  • pay the overdue amount
  • give VLA a satisfactory explanation of why they have not paid the overdue amount and ask VLA to change its decision about the amount or method of payment of the contribution.

If the assisted person does not respond to the notice of arrears within 30 days of the date of VLA’s notice, then VLA may refer the file to a debt collector or start court proceedings to recover the whole amount of the final contribution.

VLA may charge interest on late final contributions

If a person is late in paying a final contribution, then VLA may charge the person simple interest. The rate of interest which VLA may charge is 70 per cent of the rate fixed under section 2 of the Penalty Interest Rates Act 1983.

Effects of overdue payments any additional or further grants of assistance

VLA may refuse an application from a person seeking an additional grant of legal assistance or a further grant of assistance if they are more than 60 days late in paying their contribution or an instalment of their contribution in relation to an earlier or existing grant of legal assistance. VLA will write to the person to tell them it intends to refuse to provide a grant of legal assistance.

However, VLA will usually give the person a period of 14 days from the date of its letter in which the person can:

  • explain to VLA why they did not pay the previous amount
  • ask VLA to change its decision.

VLA may then provide a grant of legal assistance to the person if:

  • VLA considers their explanations (about why they did not pay the previous amount and about why the amount should be reduced) are satisfactory
    and
  • the person qualifies for a grant of legal assistance.

If the assisted person does not ask VLA to change its decision or provide an explanation for non payment of the contribution, then VLA may refuse to provide further assistance.

Financial hardship

If an assisted person would suffer financial hardship if VLA insisted on recovering the full cost of the grant of legal assistance by way of a financial contribution from them, then VLA may:

  • waive the payment of all or some of the final contribution
  • delay payment of some or all of the final contribution on condition that the person sign an equitable charge to secure its repayment later
  • delay payment of some or all of the final contribution without requiring a charge.

See: Charge or other security over an assisted person’s property

What sort of circumstances might amount to ‘financial hardship'?

The sort of circumstances which might mean financial hardship for an assisted person in paying a final contribution include:

  • if the person has received an award of damages in a personal injuries case, but the amount is not enough to pay the person’s past, present or future medical expenses
  • if the person needs to use their award of damages in a personal injuries case to alter their home to accommodate their disability
  • if Centrelink stops the person from receiving a pension, benefit or allowance for a period of time (a ‘preclusion period’) and the person does not have enough financial support during that period of time
  • if the person has been disadvantaged because of VLA’s grant of legal assistance to them – for example, if a court refuses to make an order for costs because the person has received a grant of legal assistance in the case.

What sort of circumstances are usually not enough to amount to ‘financial hardship’?

The sort of circumstances which VLA considers would not usually mean financial hardship for an assisted person in paying a final contribution include:

  • if the person has spent, or intends to spend, some or all of an award of damages
  • if the person’s lawyer has released an award of damages to the person without accounting to VLA, and the person is unable or unwilling to pay the final contribution
  • if the person wants to use an award of damages to pay debts rather than to pay the final contribution
  • if the person wants to use an award of damages to buy a home or for home renovations
  • if Centrelink has decided, on the basis of an award of damages, to reduce the amount of any Centrelink payments to the person.