Whilst receiving judgment in a debt recovery proceeding is wonderful, it does not always mean that the debtor will happily pay the amount they owe you. To enforce the judgment, you may need to take further steps.
One of the options available to you, is to apply for a Garnishee Order.
If someone else “owes” money to a debtor, you, as the creditor, can apply for a Garnishee Order from the Court that enables that debt to be paid to you rather than the Debtor.
Some examples of someone who may “owe” money to the debtor is their employer, for wages, or their bank, for money held in a bank account in the name of the debtor.
A Garnishee Order is most commonly served on a financial institution, such as a bank, to recover funds held in the debtor’s account. This is why it is helpful to obtain bank account details of the debtor on any agreement with the debtor to provide goods or services now, and the debtor to pay later.
Another form of Garnishee Order is issued to the employer of the debtor, known as a “wage garnishee.”
What can I expect if a Garnishee Order is made?
The Garnishee (such as the bank or financial institution) must pay the funds outlined in the Garnishee Order within 14 days of the amount being due. In accordance with s 123 of the Civil Procedure Act 2005 (NSW), payment is to be made directly to you, as the creditor.
Are there any restrictions on a Garnishee Order?
The debt must be owed to the debtor “now.” This means the funds you are applying to recover cannot be owed to the debtor at some point in the future.
Under s 122 of the Civil Procedure Act 2005 (NSW), recovery of funds under a Garnishee Order cannot reduce the weekly wage or salary received by the debtor to below a “weekly compensation amount” as determined by WorkCover.
Can a Garnishee dispute the Order made?
Yes, a Garnishee can dispute that they are required to pay the amount in the Garnishee Order to you if they believe they do not “owe” any money to the debtor (in the case of a financial institution), or that there are no wages or salary (in the case of an employer) payable to the Garnishee for the period of the Garnishee Order.
What happens if a financial institution or employer fails to comply with the order?
If the Garnishee Order is not complied with, a Garnishee Summons may be issued to the third party to show cause why the payment has not been made. The Court may decide to make the garnisheed party (the financial institution or employer) responsible for the debt owed to you, the creditor.
