We will be drafting a series of articles focused on the enforcement of Court judgments. This is the first in the series. This series discusses different methods of enforcing judgments in Courts and outline best ways to get paid depending on the debtor’s financial position.
It is advisable to firstly seek repayment of the judgment debt informally through demands and negotiations as these options are usually cheaper and could result in a more favourable outcome. Enforcement of judgments through Courts should be pursued where the judgment debtor is not willing to cooperate.
In this issue, we discuss attachment orders.
An attachment order is an order directing the judgment debtor’s employer to deduct a specific sum (or percentage) of the judgment debtor’s wage/salary (or even benefit) and pay that sum directly to the creditor. Such deductions could be made until the judgment debt, costs and interest are repaid in full.
An employer who, without reasonable excuse, fails to comply with the directions of the attachment order, commits an offence and could be liable on conviction to a fine.
The attachment order is appropriate in situations where the judgment debtor does not have any substantial assets of value that could be sold and result in immediate payment, but the judgment debtor is employed or on a benefit. The attachment order could also be obtained in combination with other enforcement methods, for example a sales order, where that enforcement method is not sufficient to satisfy the debt in full.
Assessment of debtor’s position
Before you decide to apply for an attachment order, you need to consider whether the order is capable of being enforced. The judgment debt cannot be enforced if the judgment is more than 6 years old. Further, the judgment debtor has to be in a paid employment or on a benefit. The attachment order cannot be enforced against a debtor who is a contractor or receives income from other sources.
This information might already be known by the time you obtain judgment, however, if it is not, the judgment creditor has a range of options to assess the judgment debtor’s financial circumstances.
First, the judgment creditor can serve a notice on the judgment debtor requiring the judgment debtor to complete a statement of financial position. Once the notice is served, the judgment debtor has 10 working days to complete and return the statement to the judgment creditor. This process avoids court fees; however, it demands the judgment debtor’s cooperation as the judgment debtor can choose not to comply with the request.
Alternatively, if the judgment debtor is not willing to cooperate, the judgment creditor can apply for financial assessment at Court. The Court will make orders requiring the judgment debtor to disclose their financial position. This could be done either through the Court officer corresponding with the judgment creditor (available in District Court), or by summoning the judgment creditor (or in case of a company, an officer of the judgment creditor) to Court for examination (available in both District Court and High Court). The judgment debtor will be under an obligation to cooperate, and if he/she fails to do so, arrest orders could be issued.
Assessing the debtor’s position will demonstrate whether an attachment order is capable of being enforced, and whether there are other methods of enforcement that could be sought instead of, or in addition to, the attachment order.
Obtaining an attachment order at District Court
If the judgment was obtained at the District Court, the attachment order can be sought at the District Court.
In order to apply for the attachment order, you need to provide the debtors’ employment details, if they are employed, or the benefit number or date of birth, if they receive benefit.
When you make the application, you can propose the amount or percent of the payments that you believe should be deducted from the judgment debtor’s salary/wage. The Court will then assess, after making contact with the judgment debtor, if this amount is reasonable taking into account their personal circumstances.
The Court could change the amount in the future if it believes that the debtor will not be able to keep up with the payments or their circumstances change.
Obtaining an attachment order at High Court
If the judgment was obtained at the High Court, the attachment order can be sought at the High Court.
The process of obtaining an attachment order in the High Court is slightly more complex. Before the judgment creditor can obtain an attachment order, the judgment debtor must be orally examined in Court to assess their assets and liabilities. Whereas, in the District Court examination in Court is optional. During examination, after taking into account the debtor’s personal circumstances, the Court will assess the amount/percentage that should be deducted from the salary/wages.
Once the judgment debtor has been examined, the judgment creditor can then make an application to Court for an attachment order.
An attachment order could be an efficient method of debt recovery as it guarantees that the employer will make regular deductions from the judgment debtor’s salary, wage or benefit. The downside of this method, especially in cases where the debt is of a substantial value, is that it might take a while until the debt is repaid in full. Further, if the debtor moves employment, a variation to the order will be necessary to bind the new employer.
In the articles to follow, we will discuss other enforcement options that may be more suitable to the situation.
If you are considering applying for enforcement of judgment, or require legal assistance with the application, we invite you to contact our specialists for a no obligation discussion.