Obtaining the benefit of a monetary judgment whereby the successful party is to claim a sum of money from the unsuccessful party can often be a stressful and difficult process.
Whether the monetary judgment was obtained through succeeding at a trial or in default of the unsuccessful party doing something that they were obliged to do (usually resulting in a default judgment) or whether the unsuccessful party wasn’t able to establish a defence in merit with a prospect of success (usually resulting in a summary judgment), the process the successful party must go through to reap the rewards of the monetary judgment is largely the same.
This article will explore what steps need to taken to enforce a monetary judgment.
Registration of monetary judgment
Sometimes a preliminary step needs to be taken whereby the monetary judgment needs to be registered. This is the case where
- The monetary judgment that is being sought to be enforced was not made in the jurisdiction where the defendant lives;
- The monetary judgment was awarded by a non-judicial forum such as a commission or tribunal.
In these cases, the judgment will need to be registered with the appropriate court. Generally speaking, judgments under $75,000.00 are registered in the Magistrates Court, judgments between $75,000.00 to $750,000.00 are registered in the District Court and judgments over $750,000.00 are registered in the Supreme Court.
However, it is highly recommended that legal advice is obtained as these are not hard and fast rules and it will depend on the circumstances of the case.
The first enforcement action a Judgment Creditor (the party that is owed money) commences against the Judgment Debtor (the party that owes money) is often a means enquiry. This is because a Judgment Creditor often times does not know what assets that the Judgment Debtor possesses to pay that monetary judgment.
At a Means Enquiry, a Judgment Debtor is required to declare its financial position on oath to the court and to the Judgment Creditor. This includes disclosing assets, liabilities, income and expenses. A Judgment Debtor will often also be required to produce documents showing evidence of its financial position. This includes tax returns, payslips, motor vehicle registrations and certificates of titles to property.
Prior to the means enquiry, a Judgment Debtor will also be required to complete a Statement of Financial Affairs and produce this document to the Court.
It is common for the Judgment Creditor and Judgment Debtor to sit down and attempt to negotiate an outcome before the parties enter the courtroom for the Means Enquiry. Often times, Judgment Creditors and Judgment Debtors will agree to enter into a payment arrangement such as an instalment order or a time for payment order. A court will refuse to grant such an order if it believes that the Judgment Debtor does not have the capacity to comply with the instalment or time for payment order or that the order will cause unnecessary financial hardship to the Judgment Debtor.
If a Judgment Debtor fails to attend a Means Enquiry despite being summoned to do so, the Judgment Creditor can seek leave to make an application for an Arrest Warrant so that the Judgment Debtor is compelled to attend the next Means Enquiry.
Other Enforcement Actions
Under the Civil Judgments Enforcement Act 2004, a Judgment Creditor may look for alternative ways to have their monetary judgment satisfied.
Property seizure and sale order
One of the more common enforcement actions other than an instalment or time to pay order is a Property Seizure & Sale Order. This is where the Judgment Creditor identifies an asset that the Judgment Debtor owns that has value and obtains the court’s permission to seize and sell it through the Bailiff. The property that is seized can be personal property or real property, though the latter must go through a somewhat complicated process, which will not be covered in this article.
Earnings appropriate order
Another enforcement action that the Judgment Creditor can apply for is an Earnings Appropriate Order. This is where the court orders that a portion of the Judgment Debtor’s earnings for a period of time be redirected to the Judgment Creditor. However, this kind of order is only available if an instalment order was previously made, but the Judgment Debtor defaulted on it and it was cancelled.
Debt appropriate order
A debt appropriate order is another enforcement action that the Judgment Creditor can apply for. This is where a court orders that where a Judgment Debtor is owed money by another party and receives this money, then that money be paid to the Judgment Creditor instead.
What happens if a Judgment Debtor breaches an order made against them?
If a Judgment Debtor has breached an order such as an instalment order or time for payment order, the Judgment Creditor can apply for a Default Inquiry. If at the hearing, the Judgment Debtor had the means to pay the judgment debt and does not have a reasonable excuse, then the court can declare the Judgment Debtor to be in contempt of court and issue pecuniary penalties against it. In addition, the court may order new monetary orders against the Judgment Debtor in favour of the Judgment Creditor, such as new instalment or time for payment orders.
Bankruptcy or Winding up Applications
If all else fails and the Judgment Creditor is convinced that the Judgment Debtor has the means to pay but believes that the Judgment Debtor is being secretive or not telling the truth, the Judgment Debtor can consider making a Creditor’s petition to declare a Judgment Debtor bankrupt, or in the case of an incorporated company’s, issue a Statutory Demand winding up that company.
However, both of these actions carry significant risks and costs and thus it is highly recommended that you obtain legal advice before considering either of these actions.
GTC Lawyers has a team of highly trained expert lawyers who are more than capable of advising and representing clients seeking to enforce a monetary judgment.
For more information on enforcing judgments, or on any of the associated elements or processes, book a consultation with a GTC Lawyers’ solicitor.