Enforcing a Judgment (NSW)
Enforcing a judgment is sometimes necessary when a court or tribunal has handed down a monetary judgment against a party and they have failed to comply with its terms. In New South Wales, when a judgment creditor has a judgment ordering a judgment debtor to return goods or pay money and the debtor doesn’t comply, the creditor has 12 years from the judgment date to enforce the judgment.
Some types of enforcement action involve fees. These fees are added to the judgment debt, together with interest. Before seeking to enforce a judgment, the creditor should be aware that if the defendant cannot pay the debt, then the monies may not be recovered.
Enforcing a judgment in NSW is done by application to the NSW Civil and Administrative Tribunal (NCAT). If the judgment was entered in another state, it must first be registered as a judgment of the Local Court. The rules governing enforcing judgments are contained in the Civil Procedure Act.
Enforcing a Judgment using Writs
One approach to enforcing a judgment is through a writ. There are two types of writs in New South Wales. A Writ for the Delivery of Goods is used where the court ordered that goods be returned and they haven’t been returned. This writ authorises the sheriff to seize the goods and return them to the creditor, or recover their value by seizing and selling other property
A Writ for Levy of Property authorises the sheriff to seize and auction personal property belonging of the debtor to pay the debt. Both types of writ remain in force for 12 months.
There is no court filing fee for the Notice of Motion to issue the writ; however, the sheriff will charge a fee to execute it. The fee is payable in respect of each address and each visit that the sheriff makes. If the sheriff auctions goods, a 3% levy will be charged. The sheriff may also charge for expenses such as towing a car. All these amounts must be paid by the creditor initially but are then added to the debt.
Enforcing a Judgment with Garnishee Orders
A garnishee order is an order for money to be taken from a debtor’s wages, bank account, or from people who owe money to them. The person the order is addressed to (for example, the debtor’s employer) is known as the garnishee.
For a garnishee on wages or salary, an employer must take an amount of money out of the debtor’s wages until the whole debt is paid or until another order is made. The debtor must be left with a minimum amount of money to cover necessities.
The other type of garnishee order is a Garnishee Order for Debts. This can be addressed to a bank or other financial institution or to anyone else who holds money on the debtor’s behalf, such as a real estate agent who collects rent for them. All of the money that is in the account at the date of the order is taken and sent to the creditor. If the amount doesn’t cover the debt, another garnishee order can be applied for. With any garnishee order, the garnishee is allowed to deduct a small amount to cover administration expenses. If the debtor receives a Centrelink payment, it can be difficult to withdraw funds under a garnishee order because all or part of their income will be protected.
If the creditor doesn’t know the financial position of the debtor, they can send an Examination Notice to the debtor requesting that they provide this information. This information can be used to decide what, if any, enforcement action to take.
If a debtor doesn’t fully comply with the Examination Notice, then the court can issue an Examination Order. This is an order that the debtor must attend court to answer questions about their financial position and show documents
Enforcing a Judgment through Bankruptcy and winding up a company
Winding up is similar to bankruptcy. To wind up a company, a creditor must show that it is insolvent (unable to pay its debts). This is done through a statutory demand. If the debtor company does not respond within 21 days of receiving a statutory demand then an application can be made to the Supreme Court for a winding-up order.
Action by the defendant
Defendants can respond to enforcement action in a few different ways.
In response to a Writ for Delivery of Goods, the debtor can return the goods. For other methods of enforcement, the debt can be paid. If the debtor claims they did not receive the Statement of Claim, they can make an application to set aside the judgment and seek an order to stay enforcement. If this order is granted, the defendant can then file a defence to the claim and the court will hear the matter.
A defendant may apply to pay the debt by instalments. If the court accepts this application the creditor can object within 14 days of being notified. If an objection is filed, the court will hear evidence from the creditor and the debtor about the instalment application and make a final decision.
If you require legal advice or representation in any legal matter, please contact Armstrong Legal.