How Do You Get Your Money When You Have a Court Judgment in Your Favour?

By 9 February 2015Insolvency, News
Get Your Money When You Have a Court Judgment in Your Favour

Having obtained a judgment from the Court against someone (including a company) who may owe you money is, though a big step, not the end of things – you may still need to take action to get your money!

Though not strictly necessary, but as a first step, a letter should be written to the person or company that owes you the money under the Court judgment (known as the judgment debtor) requesting that payment of the money (known as the judgment debt) be made to you within a specified period of time (for example, 21 days).

Usually, interest continues to be payable to you by the judgment debtor on the judgment debt from the date the judgment is obtained until the date the judgment debt is finally paid.

Should the judgment debtor refuse or fail to make payment of the judgment debt to you, then there are a number of options available to you to enforce the judgment. Some, all, or a combination of these enforcement options should be considered depending on both the circumstances of the case and the judgment debtor.

Enforcement methods available include:

  1.  Requiring the completion of a Statement of Financial Position: This is a specific document served on the judgment debtor that requires them (within 14 days) to answer questions and provide information to you regarding their financial circumstances.
  2. Enforcement Hearing: This is a hearing before the Court which the judgment debtor is compelled to attend to give information and answer questions under oath about their financial affairs and produce specified financial documents in order that you can assess what means (if any) the judgment debtor has to satisfy the judgment debt.
  3. Obtaining an Enforcement Warrant: An enforcement warrant is issued by the Court on proper application by you against the judgment debtor. There are various types of enforcement warrants available, depending on the financial position of the judgment debtor and the assets owned, and each with their own particular requirements. Types of enforcement warrants include those which authorise:

(a) An enforcement officer to seize and sell, in satisfaction of the judgment debt, all real and personal property (other than exempt property) in which the judgment debtor has a legal or beneficial interest;

(b)  The redirection to you of particular debts belonging to a judgment debtor from a third person until the judgment debt is paid; and

(c) The redirection to you of the earnings of a judgment debtor from a third person (for example, the judgment debtor’s employer) until the judgment debt is paid.

  1. Commencing Bankruptcy Proceedings: A Court judgment for a judgment debt of an amount of $5,000 or more can be used by you as the basis to issue a Bankruptcy Notice to the judgment debtor. If the judgment debtor fails to comply with the Bankruptcy Notice and make payment of the judgment debt to you within 21 days from service of the Bankruptcy Notice, then an act of bankruptcy is committed. This act of bankruptcy allows you to file a Creditor’s Petition against the judgment debtor in the Federal Court or Federal Circuit Court seeking an order that

the judgment debtor be made bankrupt and a trustee in bankruptcy appointed to manage their financial affairs. The trustee in bankruptcy will locate and distribute available assets to creditors (including you) according to priority.

  1. Issuing a Creditor’s Statutory Demand for Payment: Where the judgment debtor is a company, and the judgment debt is for $2,000 or more, then you are able to serve a Creditor’s Statutory Demand for Payment on the company, which the judgment debtor company then has 21 days to comply with and make payment to you. If it does not, you may apply to the Court for the company to be wound up in insolvency and a liquidator appointed. A liquidator will investigate the company affairs and, among other things, distribute available assets to company creditors (including you) according to priority. 

It should be noted that, unlike a Bankruptcy Notice, where it is mandatory that the debt specified in the Bankruptcy Notice be a judgment debt, there is no essential requirement that the issue of a Creditor’s Statutory Demand be based on a judgment debt. Any debt owed to you by a company over $2,000 can be the subject of a Creditor’s Statutory Demand, whether you have obtained a Court judgment or not. The benefit to you of having obtained a Court judgment is that it is then extremely difficult (if not impossible) for the company to dispute the Creditor’s Statutory Demand on the basis that there is a genuine dispute about the amount or existence of the judgment debt.

Conclusion

The individual circumstances of each case and each judgment debtor is crucial when deciding which enforcement method is most cost-effective and suitable for getting you the money you are owed.

Clearly, if, after proper investigation, it is certain that the judgment debtor has absolutely no assets with which to pay the judgment debt, then taking enforcement action is generally futile. That said, it is important to keep in mind that you have the right to start enforcement proceedings in Queensland in respect to the judgment debt anytime within six (6) years after the day the Court order was made (and up to 12 years with leave of the Court). This means it may be worth keeping track of a judgment debtor in the event their financial situation improves, especially as interest will general continue to accrue on your judgment debt until it is paid.

Should you require further information, or more detailed advice on any of the above matters, please contact Craig Shepherd, Director – Commercial Litigation and Dispute Resolution

 

Prepared by Craig Shepherd

This publication has been carefully prepared, but it has been written in general terms and should be viewed as broad guidance only. It does not purport to be comprehensive or to render advice. No one should rely on the information contained in this publication without first obtaining professional advice relevant to their own specific situation.