The effectiveness of the garnishee Order
As a Creditor, once you have obtained Judgment against a debtor, there are a number of ways with which you can enforce the payment of that Judgment. One of them is the garnishee Order.
A garnishee Order allows you to bypass the Judgment Debtor ("JD") – especially when the JD is recalcitrant - and recover the amount directly from a third party who owes money to the JD, or who holds money on the JD's behalf.
There are two types of garnishee Order – one being a garnishee of salary or wages, and the other being a garnishee of debts.
By the garnishee Order the Court orders the third party, which is usually:
- the JD's bank,
- the JD's employer, or
- a person owing money to the JD to pay that money, or a portion of it, on the JD's behalf, to you.
That payment will satisfy the Judgment amount, or as much of it as is paid.
How do you obtain a garnishee Order?
You file an application for a garnishee Order in the Court in which you obtained Judgment.
It is not served on the JD, and is decided in the absence of the parties. The benefit of this is that the JD is not, therefore, aware of the fact that their bank account or salary will shortly be the subject of enforcement action.
The application must be supported by an affidavit sworn by you. That affidavit must:
- identify the party against whom the order will be made;
- specify the amount of the debt owed by that party to the JD;
- account for payments made since the Judgment was given; and
- confirm the balance of the Judgment which is still outstanding.
It is worth noting that the effectiveness of any garnishee order depends on the amount and quality of the information that you possess in relation to the JD.
Clearly the more information that you have about the JD, the greater the scope and breadth available to you for obtaining effective garnishee orders. You should therefore obtain from clients as much detail as possible of their bank accounts, building society accounts, employers and so on at the time of their initial application for credit.
When you have filed the application, the Court will decide the application. The Court may refuse to make the garnishee Order if it considers that the Order is inappropriate in the circumstances, for instance:
- that the debt is too small, or
- that the debt against which the order is sought is too small.
If the Court does make the garnishee Order, it is returned to you to be served upon the third party – now known as the 'garnishee'.
Frequently Asked Questions Concerning a Garnishee Order for Salary/Wages
What is a salary/wages garnishee?
This is the garnishee Order against an Employer that is paying the JD a salary or wage.
What is its duration?
The garnishee order for wages and salary is ongoing, and remains in force until the whole of the Judgment amount has been paid.
Is all of the JD's salary paid over?
No. The Employer must leave the JD with some monies from his salary. That amount is determined by legislation, and is called the "weekly compensation amount". It is currently $417.40. The Employer is also entitled to retain $13.00 from each payment, to cover its administrative expenses.
The balance is then paid to you.
When does the payment have to be made?
The Employer must make payment within 14 days of the salary falling due.
Who does the Employer pay the money to?
The Employer must pay the money directly to you.
What if the JD is a Commonwealth public servant?
If your JD is a Commonwealth public servant, then recovery is governed by Commonwealth Regulations. An application for deductions from the salary of the JD must be made directly to a specified officer (the "paying officer") of the JD's employing agency, supported by an affidavit. The Agency then makes the deductions from the JD's salary.
Frequently Asked Questions Concerning a Garnishee Order for Debts
What is a debts garnishee?
This is the garnishee Order against the JD's bank, building society, or a person owing money to the JD or holding money on the JD's behalf, such as a real estate/rental agent collecting rental for remittance to the JD.
What is its duration?
This garnishee order operates once only. All the money held by the garnishee at the time that it is served with the garnishee Order will be paid to you, and that payment will extinguish the order.
To obtain payment of further funds that might accrue later, you will have to apply for a further garnishee order.
When does the payment have to be made?
The garnishee must make payment of the amount from the funds that it holds for the JD within 14 days from the date on which you serve it with the garnishee Order.
If, however, the garnishee Order attaches to a debt payable to the JD by the garnishee after that date on which it is served with the garnishee order, then the garnishee must make payment within 14 days after the date on which the debt falls due.
If the debt that is due for payment is not due for more than 28 days after the garnishee Order is served, the garnishee must serve you with a notice specifying the date that the debt is likely to become due for payment to the JD.
Provisions applying to both types of garnishee
Statement by garnishee with payment
When and if the garnishee makes a payment to you it must provide you with a statement setting out:
the amount of the garnishee order,
the amount being paid to you, and
the amount retained by the garnishee. Any amount retained by the garnishee for administrative expenses (currently $13.00) does not operate to reduce the Judgment amount owed by the JD.
Can the garnishee refuse to remit?
No. If a garnishee fails to comply with a garnishee Order, then you can apply to the Court, citing the garnishee's non-compliance and asking for an Order that the garnishee itself should now pay the amount that should have been remitted under the garnishee Order. If the garnishee had no reasonable excuse for not remitting, then the Court may give judgment in favour of you against the garnishee for the outstanding Judgment amount.
The Judgment amount then becomes payable by the garnishee, as well as the JD, although payment towards one Judgment are in reduction of the other.
What if the garnishee has no funds or salary to remit?
If a garnishee is not in fact an Employer, or does not hold funds on behalf of the JD, then of course there is nothing for it to remit to you. In that situation the garnishee should serve on you a statement that it cannot remit any funds, supported by an affidavit setting out any relevant facts in support of its statement.
You have the right then to apply to the Court to decide the question of whether or not the garnishee is in fact liable to make a payment under the garnishee Order. If the facts are not as the garnishee has alleged then the Court can make a Judgment against the garnishee.
Can the JD oppose the garnishee order?
The JD is not given the opportunity to oppose the making of the garnishee Order. Generally the JD will only become aware of the Order after the deductions have been made by the garnishee. At that time the JD can apply, however, to pay the Judgment amount by instalments. If that application is granted, then the garnishee is converted to the rate of the instalments allowed by the Court.
Why use a Garnishee Order?
The garnishee procedure is an excellent procedure for recovering Judgment amounts, since it enables you to bypass the JD, who is almost invariably reluctant or disinclined to co-operate in paying the Judgment.
By enabling you to deal with third parties at a stage before they pay monies to the JD, the garnishee procedure gives you a greater chance of having those monies paid to you, than if you were obliged to recover them directly from the JD.
For more information on how to collect debts owed to you, contact one of our experienced lawyers in the CG Collect team. They can provide expert advice on all of the methods available to you.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.