HAND OVER THE MONEY

Enforcing a court order against a recalcitrant debtor

THE PROBLEM

You have gone to Court. The judge has ruled in your favour. You now have judgment against someone who owes you goods or money. What happens next?

As you can see from the flowchart below, the answer to this question can depend on the debtor. In a perfect world, they will pay the debt and that will be the end of it. Unfortunately, this may not always be the case. Sometimes, despite a court order, the debtor may fail to hand over the goods or money. If you find yourself in this situation, you may have to take further court action to make the judgment debtor pay. This further action is called “enforcement”.

hand-over-the-money-flow-chart

OPTIONS AVAILABLE TO ENFORCE A JUDGMENT IN VICTORIA

While all states and territories have procedures available to enforce a judgment, the following are specific to Victoria.

Attachment of Earnings

If the debtor is earning a salary, the court can order that the debtor’s employer deduct instalments from their salary each pay day and pay them directly to you.

Garnishee Order

Where a third party owes the debtor money, the court can order that the third party pay the money directly to you, instead of the debtor, in satisfaction of your judgment debt.

Warrant to Seize Property

If the debtor has property that can be seized and sold to pay the debt, you can ask the Court to issue a Warrant to Seize Property. This Warrant empowers the sheriff to seize and sell goods belonging to the debtor unless the debtor pays the amount stated in the warrant.

Warrant of Seizure and Sale

Another option available is to apply to the Supreme Court or County Court for a Warrant of Seizure and Sale. This will enable the sheriff to take possession of the debtor’s real property in satisfaction of the debt. If the property is jointly owned by the debtor and a third party, the sheriff can only sell the share owned by the debtor, so practically speaking it is difficult to pursue this remedy unless you hare judgment against all owners of the property. Any recovery from the debtor’s share of the property will be limited to the value of their share in the land, after payment any mortgages, outstanding rates and other encumbrances affecting the debtor’s share.

Bankruptcy

If the debt you are owed is $5000 or more, you can apply to the Official Receiver for a Bankruptcy Notice. The debtor has 21 days after receiving a copy of the bankruptcy notice to make payment, failing which you can commence bankruptcy proceedings. If a debtor is made bankrupt, any property they own will vest in the debtor’s trustee in bankruptcy, who will sell that property and distribute the proceeds pro rata amongst the debtor’s unsecured creditors.

Warrant for Delivery

If the Court has made orders requiring the judgment debtor to deliver goods to you and the debtor fails to do so, you can apply to the Court for a Warrant of Delivery. A Warrant of Delivery allows the Sheriff to take possession of the goods and deliver them to you.

Summons for oral examination

If you are unsure of the employment status or property owned by the debtor, you can compel the debtor to appear in court to be questioned about their financial position. The information you obtain from the examination could assist you in determining the best way of enforcing the judgment debt. At the conclusion of the examination, no orders will be made compelling the judgment debtor to pay you, even if the examination reveals that they can pay the debt.

CONCLUSION

While the failure of a judgment debtor to abide by a court order to pay their debt is undoubtedly frustrating, rest assured there are numerous options available to assist you. Should you find yourself in this situation, our experienced team can assist you recover your debt.

Article by: Bianca Quan- Partner and Sophie Davey

Disclaimer

This article does not constitute legal advice, if you are concerned about any of the topics discussed please seek legal advice.
Please contact Bianca Quan or Jodie Scott of Cornwalls on 9608 2000 for more information.