Judgment Enforcement Options

Published 15 Oct 2013
Adrian O'Dea, Lara Piercy

Judgment Enforcement Options

If you have received a Court judgment for a specific monetary sum in your favour, the judgment debtor usually has 28 days in which to pay to you the judgment debt.

 

In the event that payment of the judgment debt is not made, you may need to take steps to enforce the judgment against the judgment debtor (noting that in New South Wales you usually have 12 years to enforce the judgment against the judgment debtor).

 

Methods of enforcement which you might choose to pursue include the following:

 

a)      Examination notice

You may choose to serve an examination notice on the judgment debtor requiring the judgment debtor to answer questions regarding his or her financial circumstances and provide copies of specified documents.  The examination notice must specify the period (at least 28 days) within which the information is to be provided to the judgment creditor.

 

b)     Examination order

If the judgment debtor fails to provide sufficient answers or documents specified in the examination notice, then the judgment creditor may choose to make an application to the Court for an examination order directing the judgment debtor to attend the nearest Court to their residence for examination under oath as to his or her financial capacity to satisfy the judgment debt.  An examination order must be served on the judgment debtor at least 14 days before the day on which he or she is required to attend for examination.  An examination order often can have the effect of prompting the judgment debtor to satisfy the judgment debt or to arrange for payment.  If a judgment debtor fails to make arrangements for examination with the Court within 14 days, the judgment creditor might then apply for a warrant to be issued (additional fees are payable in relation to taking such steps). 

 

c)      Writ of execution of property

A writ of execution authorises and directs the Sheriff's Office to attend the judgment debtor's address and seize property owned by the judgment debtor and sell it at a public auction.  A filing fee is payable to file a writ of execution and you will also be liable to the Court for any fees and disbursements properly incurred by the Sheriff in executing or attempting to execute the writ of execution.  A writ of execution is valid for 12 months from the date of issue.  The Sheriff's Office provides a written report in relation to the attempts made to execute a writ.

 

d)     Writ for possession of property

In appropriate circumstances, a notice of motion seeking a writ for possession of property is filed seeking to take possession of real property (ie a house or land) and to ultimately sell the property in order to satisfy the judgment debt.  A writ for possession of property should only be utilised when a writ of execution against personal property will not raise sufficient funds to meet the judgment debt.  The Court will usually avoid issuing a writ for possession of property if there are other means by which the judgment debtor can satisfy the debt, such as by paying the debt by instalments.  Given the nature and significant consequences (and expenses) associated with executing a writ against real property, a number of procedural steps must be fulfilled prior to the real property being sold by the sheriff.

 

e)     Garnishee orders

A further option is to apply to the Court for a garnishee order.  Garnishee orders may, for example, apply to a judgment debtor's wages, money in a bank account or money held under contract.  A bank, building society or employer (on the judgment debtor's behalf) might be directed to pay money to the judgment creditor in satisfaction or in part satisfaction of the judgment debt.  Where a garnishee order requires a person or an institution to deduct money held on behalf of the judgment debtor and the person or institution fails to do so, that person or institution may become liable for part or whole of the judgment debt. 

 

f)       Bankruptcy proceedings (against an individual debtor)

If it appears that the judgment debtor has insufficient funds to pay all of his or her creditors, you may consider commencing proceedings in bankruptcy.  It is not necessary to give notice of your intention to commence bankruptcy proceedings, however a letter of demand to the judgment debtor advising of the intention may prompt the judgment debtor to satisfy the judgment debt.  Before the judgment debtor commits an “act of bankruptcy”, a bankruptcy notice must be issued to the judgment debtor requiring payment of the judgment debt within 21 days after service of the bankruptcy notice.  If the judgment debtor fails to comply with the bankruptcy notice, the judgment creditor can petition the Federal Court to make a sequestration order declaring the judgment debtor bankrupt.  If a sequestration order is made, a trustee is then appointed and the judgment debtor's assets are distributed to creditors according to priority.  If the judgment debtor has substantial debts and insufficient assets, it may still be the case that a judgment creditor (being an unsecured creditor) is not ultimately able to recover the amount outstanding to them.

 

g)     Creditor's statutory demand for payment of debt (against a company)

You may choose to serve a creditor’s statutory demand for payment of a debt on the debtor company.  In the event that the debtor company fails to satisfy the debt within 21 days of issue of a statutory demand, if certain conditions are satisfied, and the debtor company has not made an application to set aside the creditor’s statutory demand, you may be entitled to make an application to the Supreme Court of New South Wales to wind the company up on the basis of insolvency.  A liquidator will then be appointed to conduct preliminary investigations into the affairs and conduct of the company.  In the event that the debtor company makes an application to the Supreme Court to set aside any creditor’s statutory demand served on it, it will have to show the Court that there is a genuine dispute about the debt.

 

Reality check

It is important to remember that even if you receive judgment in your favour, there is no guarantee that you will always be able to recover the judgment amount owed to you.  This may be the case if the judgment debtor simply does not have sufficient assets capable of satisfying the judgment.  You may also experience difficulties locating the judgment debtor in order to enforce the judgment.

 

Costs

In addition to a Court judgment for a specific monetary sum, you may receive a judgment for costs in your favour.  This judgment may include a specific sum for your costs, or may be for your costs as agreed with the other side or as assessed by a Costs Assessor.  If you are unable to agree the amount of costs, you will need to go through the costs assessment process and ultimately register the Costs Assessor’s Certificate of Determination as a judgment in the appropriate Court.  Once you have a Court judgment for a specific amount for your costs, you might enforce that judgment, if necessary, using one of the methods of enforcement outlined above.

 

The information contained in this article is not to be taken as legal advice.  Please contact us if you require specific information or advice.