Enforcement of Judgments – What are Your Options?
Obtaining judgment in your favour is often only half the battle, as the judgment debt then needs to be enforced. There are multiple enforcement options available for creditors, the suitability of which will depend on various factors, including the financial circumstances of the debtor and the quantum of the debt.
The first step to take after obtaining judgment is service of the judgment order and notice in compliance with the Court Procedures Rules 2006 (ACT) – enforcement of the judgment can only commence seven days after service has been effected. From there, creditors have twelve years to enforce judgment debts.
The most crucial consideration is whether the debtor has the financial ability to satisfy the judgment debt. If they have assets, property or a steady source of income then it is likely that one of the enforcement options is suitable. If not, or you are unsure of the debtor’s position, this information may be obtained.
Further, the debtor (or the assets) against which the creditor wishes to enforce must be within the Australian Capital Territory. If outside this jurisdiction, the creditor can register and enforce the judgment debt interstate. Certainty is key in respect of enforcement of judgments, as this process can be difficult and costly if not done correctly. While the creditor’s costs (as well as interest) are recoverable as part of the judgment debt, this is usually limited to scale costs (as determined by the quantum of the debt) and so getting the pre-requisites right and seeking the appropriate enforcement order is of high importance.
Enforcement hearings are a useful tool to inform the creditor of the debtor’s financial position (including assets, liabilities, income, living expenses and dependants). This information is either obtained by way of a sworn statement (served prior to the hearing) or on oath before the Court. From this, the creditor may consider and apply for an appropriate enforcement order, or decide to wait to enforce the judgment debt at a future date in the hope that the debtor’s financial position will improve. Enforcement hearings can only be held in respect of the same judgment debt and debtor once every six months, although on application the Court may grant leave for a further hearing.
A creditor may apply for various garnishee orders, which can be enforced against wages, bank accounts, regular payments made to the debtor (such as rental income) as well as debts owed to the debtor.
The Court can order that a regular payment of a set sum be made (weekly, fortnightly or monthly) in satisfaction of the judgment debt. The creditor or the debtor may apply for an instalment order to be made, or, if both agree on a certain payment plan, the Court can make an instalment order by agreement.
Seizure and sale orders
A seizure and sale order authorises the sheriff to enforce the judgment debt by selling the debtor’s real and personal property. Some property, such as a primary vehicle up to a certain value, or tools used for the debtor’s trade, are exempt from seizure, and creditors must be cautious where the debtor’s property is subject to a charge or mortgage, as the judgment debt will only be paid once the charge or mortgage has been satisfied.
By Laura Scotton, Litigation.
Contact our Litigation and Dispute Resolution team for more information.