If a creditor (or ‘judgment creditor’) has a judgment ordering a debtor (a ‘judgment debtor’) to return goods or pay money and the debtor doesn’t do so, the creditor has 12 years from the date of the judgment to enforce the judgment.
There are fees payable for some types of enforcement action. These fees are added to the judgment debt, together with interest from the date of the judgment.
Before enforcing a judgment, the creditor should be aware that if the defendant does not have any way of paying the debt, then the monies may not be recovered.
Enforcing a judgment in NSW is made by application to the NSW Civil and Administrative Tribunal (NCAT). If your judgment was entered in another State, you must first register it as a judgment of the Local Court.
The rules governing enforcing a judgment are in the Civil Procedure Act.
One option for enforcing a judgment is through a writ.
There are two types of writs. A Writ for the Delivery of Goods is used if the court ordered that goods are to be returned and they haven’t been. It authorises the sheriff to seize the goods and return them to the creditor, or recover their value by seizing other property and selling it. An application can be made to change the order so that the defendant does not have the option of paying the value of the goods.
A Writ for Levy of Property authorises the sheriff to seize and sell at auction personal property belonging to the debtor to pay the debt. Both types of Writ are valid for 12 months.
There is no court filing fee for the Notice of Motion to issue the Writ but the sheriff will charge a fee of $80 (current at 1 August 2015) to execute it. The fee is payable for each address and for each visit the sheriff makes.
If the sheriff auctions goods, a levy of 3% will be charged. The sheriff may also charge for expenses like towing a car.
All these amounts are initially payable by the creditor but are added to the debt.
A garnishee order is an order for monies to be taken from the debtor’s bank account, wages, or from people who owe money to the debtor. The person the order is addressed to (eg the employer, the bank) is known as the garnishee.
For a garnishee on wages or salary, an employer must take an amount of money from the debtor’s wage until the whole debt is paid or the court makes another order. The debtor must be left with a minimum amount of money, currently $474.20 (at October 2015) per week.
The other type of garnishee order is a Garnishee Order for Debts. This order can be addressed to a bank or other financial institution where the debtor has an account or to anyone else who holds money on their behalf, such as a real estate agent who collects rent for them. All of the money in the account at the date of the order is taken and sent to the creditor. If it doesn’t cover the debt, another garnishee can be applied for.
For either type of garnishee order, the garnishee is allowed to deduct up to $13.00 for administration expenses. This amount doesn’t come out of the judgment debt.
If the debtor receives a Centrelink benefit, it can be difficult to take money under a garnishee order from their bank account because all or part of the money in their account may be protected.
If the creditor doesn’t know the debtor’s financial position, they can send the debtor an Examination Notice requesting that they provide the information. This information can be used to decide whether to take enforcement action and if so, what action to take.
If the debtor doesn’t comply fully with the Examination Notice, then an Examination Order can be issued. This is an order that the debtor must come to court to answer questions and show documents about their financial position.
Winding up is similar to bankruptcy. To wind up a company the creditor must show that it is insolvent (unable to pay its debts). This is done by issuing a Statutory Demand. If the debtor company does not respond within 21 days then an application for a winding up order can be made to the Supreme Court.
The defendant can respond to enforcement action in a various ways.
In response to a Writ for Delivery of Goods, the goods can be returned. For other methods of enforcement, the money owed can be paid. Otherwise, if the debtor claims not to have received the Statement of Claim, they can apply to set aside the judgment and for an order to stay enforcement. If granted, the defendant can file a defence to the claim and the court will hear the matter.
The defendant may apply to the court to pay the debt by instalments. If the court accepts the instalment application the creditor can object to the instalment order within 14 days of being notified. If an objection is filed, the court will hear evidence about the instalment application and make a final decision.