#7378 - Topic 15 Enforcement - Civil Procedure

TOPIC 15: ENFORCEMENT

Parties now usually referred to as:

• “Judgment Creditor” (winner)

• “Judgment Debtor” (loser)

Incentive to pay:

• Interest accrues on a judgment order at rate far higher than ordinary commercial rates (10.5% cf 3.75%)

• The judgment debtor is liable for any enforcement costs; and

• Most property sold to enforce a judgment debt usually realises a price that is less than market value

Reasons for non-payment by a judgment debtor include:

• No capacity to pay (so why did the Pl sue them in the 1^st place!?)

• Ignorance of interest (SCA ss57-60) and costs consequences

• A desire to appeal

• Belligerence! (There was a reason the Pl needed to sue them!)

• But – the judgment creditor has 15 years to enforce the judgment (LAA s.5(4))

Modes of enforcement by Judgment Creditor:

• Warrant of Seizure & Sale (of the debtor’s property to recover the debt)

• Warrant of Possession

• Charging Order

• Appointment of Receiver

• Bankruptcy or Winding Up proceedings (see Company law)

• Attachment of Debts

• Attachment of Earnings (an order, e.g. a garnishee order, that attaches to the debtor’s earnings)

• Installment Order

• Punishment for refusal to comply: contempt or sequestration

• Generally most modes of enforcement are available to any judgment creditor (in principle)

  • Some more suited to money judgments than to orders that a party do some act

  • Best mode will often depend on the financial circumstances of the Judgment Debtor – use Discovery in Aid of Enforcement (O. 67)

Gathering information to enforce judgment

• What assets does the Judgment Debtor have?

  • O 67 – procedures are available for the Judgment Creditor to find out about Judgment Debtor’s assets. Including:

    • Oral Examination: the Judgment debtor attends court to be examined and produce documents about any property capable of satisfying the debt

    • Oral Examination order must be personally served.

1. Stays

• Once judgment is authenticated it is normally enforceable immediately.

• But…Judgment Debtor may apply for a stay of execution of the judgment (30 days is pretty standard)

• Courts possess an inherent, discretionary, power to do this. In addition the rules specify a range of circumstances that parties can apply for a stay:

  • General power to stay

  • Stays pending an appeal

  • Stays of execution of summary judgment pending trial of counterclaims

  • Stays where summary judgment is for part only of a plaintiff’s claim; and

  • Stays where facts arise after judgment that justify a different judgment

• Usually the application is made immediately after judgment, to the judge hearing the matter.

• Granting of stays is discretionary:

  • Short stay often granted after monetary order.

  • Stay less frequently granted pending appeal, and are not automatic: r.64.25.

• A Stay is the exception and the party seeking a stay must show special circumstances

  • e.g. that if no stay the appeal would be defeated

    • need the $ to mount the appeal or

    • creditor would spend the $ before the appeal heard, also

    • good grounds for appeal

    • Equitable issues

2. Warrant of seizure and sale: O68 & 69

• A person requesting an order or warrant for seizure or sale, delivery of chattels, or recovery of land produces a form of the order or warrant and evidence of the relevant judgment to the relevant official (Prothonotary)

  • The judgment creditor applies without notice to the Prothonotary using Form 68A.

  • The Creditor pays the fees, and once the officer is persuaded that the party requesting the order is entitled to it, the document is sealed and the Prothonotary forwards a sealed copy to the Sherriff for execution. (r68.03)

• The Court directs the Sherriff seize and sell such property as is needed to pay the judgment debt and the sheriff’s expenses (r68.08)

• The warrant is valid for 1 year and may be extended for 1 year: r 68.05

• Sheriff’s powers:

  • The Sheriff cannot force entry – can’t break into debtor’s house.

    • BUT the debtor’s failure to grant access - constitutes contempt.

  • The Sheriff doesn’t have to physically remove goods – he can sell them in situ later – it is sufficient to post a notice saying goods have been seized.

  • The Sheriff can seize real and personal property, money and bills of exchange but:

    • The judgment debtor has some protection over his basic possessions e.g. household property and goods used to derive income. See Supreme Court Act s 42, and CB [20.7.21]

      • E.g. can’t take the fridge, the washing machine, the first car, the first TV

  • Execution is to be parsimonious. If there appears to be more than enough property to satisfy the amount levied, the sheriff need not seize all the property listed in the order.

  • Once seized the creditor becomes obliged to compensate the sheriff accordingly. However the debtor must indemnify the creditor thus the sheriff can claim enough to compensate the debt AND his expenses

• Dates:

  • Date the writ is delivered to the sheriff, date of seizure of possession, date of sale

  • From the date of delivery, the process is binding on the debtor, and it determines priority among creditors.

• Third Parties

  • Where other parties claim ownership of seized goods e.g. they are under a hire purchase agreement – the person claiming the interest must file a notice with Sheriff 12.03

    • If the judgment creditor disputes the claim, that the other person has such an interest the Sheriff applies to the court for a determination as to whose property it is: Interpleader Summons under Order r 12.0

  • If it turns out that a TP owns the goods, the sheriff must notify the judgment creditor:

    • If the creditor admits the claim, the creditor is liable for the sheriff’s costs only for fees incurred prior to the notice.

• Sale of Seized Goods

  • Auction first; private sale only if auction fails to attract adequate bids r69.05(2) land only

  • Sell moveable property before real property (unless the debtor instructs otherwise)

  • Per r69.04: The sheriff is to take account of three considerations, such that the first trumps the second, and each trump the third:

1. Sell in the order which best ensures prompt and economical enforcement;

2. Sell in the order the debtor directs; and

3. Sell in the order which appears to the sheriff to minimize hardship to the debtor and others

3. Orders against third parties

• Judgment debts can sometimes be recovered from third parties.

• Attachment of debts, see O71

  • A judgment creditor may be able to collect from people who owe the judgment debtor money (and thus ‘by-pass’ the debtor)

  • Can’t attach to future debts.

  • Process:

    • Judgment creditor applies on summons with affidavits and on notice for an order nisi

    • Court grants the order which is served on the non-party

    • Garnishee must be given an opportunity to show why an order should not be made.

    • Initial step is ex parte

  • Credit balances in current accounts have generally been treated as simple debts owed by the bank to the customer

• Attachment of earnings, see O72

  • No power to garnishee an employee’s wages or salary except when, at the time of the order nisi, these have become due for payment.

    • This means in the case of a debtor who is paid weekly, a new garnishee order would be needed each week.

  • Also tend to prejudice employers against employees because the garnisheeing of wages involves added administrative burdens for the employer

  • Protected earnings rate ensures not oppressive: r72.05(5)

  • Court may make the order if satisfied that:

    • The debtor is a person to whom earnings are payable or likely to be payable

    • That the unpaid debt exceeds $20; and

    • That the debtor has consistently failed to comply with an order

4. Charging order

• Court can impose a charge on the beneficial interest of the judgment debtor in any securities for purpose of securing payment of judgment debt (r73.02)

• Service of the provisional order, enforcement warrant or the application generally freezes the securities (r73.06)

• Judgment creditors may apply for an order preventing dealings in funds in court without notice (r77.12)

5. Instalment order

Judgment Debt Recovery...