Chapter 14: Enforcement

14.1 What is enforcement? 

If you lose a court case, the court will make orders in favour of the person or organisation that won (the judgment creditor) as part of its judgment. Those orders may mean that you must pay the judgment creditor some money or take other steps, such as returning property. 

Make sure you understand what the court orders mean and what your options are — this is especially important if you’re unrepresented. It is advisable to get legal advice from Legal Aid or a community legal centre in your area, because failure to comply with orders can result in the judgment creditor taking further enforcement action against you. 

After judgment, your choices are: 

  • pay the judgment sum — you must do this within 28 days if you want to avoid paying interest on the debt (see 13.8 in Chapter 13
  • appeal from the judgment — rights of appeal are limited and there are strict time limits for lodging appeals (see 13.9 in Chapter 13), so get legal advice immediately if you are considering this 
  • seek to pay by instalment — you can make an application to pay by instalments within 28 days of the judgment, to avoid having the judgment enforced by the judgment creditor (see 15.5 in Chapter 15
  • seek a stay of enforcement — which can stall enforcement action for a set time (see 15.3 in Chapter 15). 
  • negotiate another arrangement with the judgment creditor (see 15.4 in Chapter 15
  • do nothing — this is a risky option as you may be charged additional interest and enforcement fees, as well as the judgment debt
  • enter voluntary bankruptcy or a formal debt agreement (see Chapter 16 for further information about bankruptcy and debt agreements). 

This chapter considers the different ways in which a judgment creditor can enforce a judgment debt issued by the NSW Local Court. Chapter 15 deals with how to stop or delay various types of enforcement action. 

14.2 Types of enforcement 

After judgment, a judgment creditor can take additional steps to ensure you pay the outstanding debt. These include: 

  • Examination — this order enables the judgment creditor to compel you to answer questions about your income and assets and to produce documents about them. 
  • Garnishee order — this is an order that a person/entity who owes you money, such as an employer who owes you wages or a bank in which you hold an account, pays your money directly to the judgment creditor, to repay the judgment debt. 
  • Writ for levy of property (also called a writ of execution) — this is an order empowering the sheriff to seize your property and to sell it to satisfy the judgment debt. 
  • Forced bankruptcy — this is an order that forces you into bankruptcy against your wishes (see Chapter 16 for further information about bankruptcy). 

14.3 Can I stop enforcement? 

In some cases, you can stop or delay enforcement processes. Chapter 15 of this guide deals with stopping enforcement. Even if you can stop or stall a particular enforcement action, this will not necessarily negate the underlying debt.

14.4 Examination 

The judgment creditor can force you to disclose your financial position if you have not paid the judgment debt. The purpose of the examination of your financial situation is to enable the judgment creditor to decide what they should do to enforce the judgment. 

Examination takes place when the judgment creditor: 

  • serves you with an examination notice (UCPR Form 51); or 
  • obtains an examination order from the Court (which will require you to go to court for examination). 

Examination notice 

An examination notice (UCPR Form 51) is essentially a formal request to answer specific questions about your financial situation. The notice can also require you to provide documents about your finances. The notice tells you how long you have to respond (usually at least 28 days). If you receive an examination notice, you should answer all questions to the best of your ability, and supply copies of all requested documents, before the due date included on the notice. If you do not respond, or your response is unsatisfactory, the judgment creditor can apply to the court for an examination order. 

Examination order 

If you don’t provide a satisfactory response to the examination notice, the judgment creditor can arrange for you to be ordered to attend court to answer questions and produce documents. 

In these cases, the judgment creditor will serve you with a notice of motion — examination order (UCPR Form 53) and an examination order (UCPR Form 54). 

The examination order will tell you when and where you must attend court, and the order must be given to you at least 14 days before the court date.

Beware: If you don’t attend the examination hearing, the court may issue a warrant for your arrest. You should never ignore an order to attend court. Seek legal advice if you do not understand what you must do. 

Examination hearing 

Examination hearings are informal hearings conducted by the registrar and/or the judgment creditor to investigate your assets and income. 

The registrar will invite parties to sit together, and the judgment creditor (or their lawyer) will conduct the examination. 

The judgment creditor will usually ask you a standard list of questions about your bank account details, employment, marital status, any dependents you have and how much you spend on day-to-day living. They will want to know what assets you own or are purchasing and whether you owe any debts. From the examination hearing, they will try to get a complete picture of your current financial situation. 

If you try to hide information or refuse to answer questions, the judgment creditor can cross-examine you or request an order for production of documents. Usually, however, the examination is conducted in an informal and relaxed way. The hearing is usually held in a ‘call-over room’ which is a small office-like room, located near the courtrooms. 

If the judgment creditor fails to attend and has not requested the registrar to examine on their behalf, you can ask the registrar to cancel the examination. The judgment creditor is then barred from making another examination request for three months. 

At the examination, the judgment creditor may try to persuade you to make an offer to repay or to enter into an agreement to pay the debt by instalments. Judgment creditors can apply a lot of pressure in the stressful court environment, so it is best to go along to court with a good idea of what you can afford to pay. You should see a financial counsellor before the hearing to get advice about your financial situation and to have a realistic idea of what you can (or can’t) repay.

At the end of the examination, the registrar may make an order for you to pay by instalments. If you abide by this order, and do not miss any payments, the judgment creditor cannot take any further enforcement action against you. However, if you miss a payment, all the enforcement options will be open to the judgment creditor. The court can issue a fine if you refuse to give evidence on oath at an examination hearing, provide false evidence, or fail to produce documents. 

14.5 Garnishee order 

A garnishee order is a court order requiring someone who owes you money (the garnishee) to pay it directly to the judgment creditor instead. 

A judgment creditor can apply to the court for a garnishee order against either: 

  • any debt owed to you from another party (including your bank account, agent); or 
  • your wages. 

A garnishee order can come as a nasty surprise because judgment creditors need not inform you of the application. Often, the first you’ll know about a garnishee order is when you access your bank account and notice there’s money missing. 

If you are making regular payments following an instalment order or agreement, and do not miss any payments, a judgment creditor cannot apply for a garnishee order against you. 

Garnisheeing your bank account 

A judgment creditor can apply to have your bank account garnisheed. A garnishee order directs your bank to pay the judgment debt amount from your account directly to the judgment creditor. The bank can deduct a further amount of $13 to cover the cost of complying with the garnishee order. You must be left with a minimum balance amount — currently $536.90 per week (as at 1 October 2021). If your account has less than the minimum balance, plus $20, the bank cannot garnish your account. The creditor can request multiple orders over time, if needed. 

There are some additional protections for people reliant on Centrelink payments. Notably, social security laws state that you can keep a ‘saved’ amount in your account that cannot be garnisheed. The saved amount is calculated by adding up all the Centrelink benefits paid into your account during the four weeks before the date of the order and subtracting all the money withdrawn during the same time. The balance is the saved amount and cannot be garnisheed. For example, if you received $800 in Centrelink payments over the last four weeks and you only withdrew $200, the remaining $600 is your saved amount and cannot be garnisheed. 

If you receive a low income or no income and have some savings in a bank account, all that money can be garnisheed. 

Garnisheeing your wage 

The most common form of garnishee order is an order to your employer to have your wages paid directly to the judgment creditor, to repay the debt. 

When your wage is garnisheed, you must be left with a minimal amount to live on (known as the ‘weekly compensation amount’). At the time of writing, this minimal amount is $527.40. 

Garnishee’s obligations 

If the third-party garnishee fails to comply with the order, the judgment creditor can apply to the court to have a judgment entered against the garnishee for the amount that was due under the order. 

14.6 Writ for the levy of property 

A writ for the levy of property (sometimes called an execution warrant) is an order of the court that authorises a sheriff to seize (take) your property, sell it at auction and use the sale proceeds to pay the judgment creditor.

The NSW Sheriff’s Office is responsible for providing security at court and for some enforcement actions such as carrying out writs for levy of property. The Sheriff’s Office is also responsible for seizing property under a property seizure order for the payment of unpaid fines for Revenue NSW (see Chapter 4 Fines). 

A sheriff can only take property up to the value of the debt. However, the value of your goods is calculated by the amount they would obtain at a sale by auction, which will be much lower than what you paid for them. For example, a new television might only contribute $100 towards the debt because that is what it sells for at a public auction. 

What will happen when the sheriff comes? 

The judgment creditor does not have to let you know that they are seeking a writ. So, the first you’ll probably know of it is when the sheriff comes knocking at your door, requesting entry. 

The sheriff will give you a copy of the notice of motion — writ for levy of property (UCPR Form 65) and inform you that they intend to seize your property. The sheriff will also outline the options you still may have available to you to stop further enforcement action from taking place (see Chapter 15 Stopping enforcement). 

Usually, the sheriff will not remove the property at this stage unless there is reason to believe there is a real risk of the property being damaged, lost or removed. 

The sheriff will, however, prepare a list of items that you own, that can later be taken away and sold (these are called seized items). The sheriff may also tag the property and will give you a document titled ‘notice to custodian’. This document warns that you are not allowed to sell or remove the items on the list. The custodian of the property (judgment debtor) is responsible for its safekeeping. A fine can be issued by the court against the custodian if the property is removed or damaged.

What can the sheriff take? 

The sheriff can seize things you own, including your car, land and home (however, land cannot be seized for debts of less than $20,000). 

The only things the sheriff cannot take are: 

  • clothes 
  • bedroom and kitchen furniture 
  • one car valued under $8000 
  • ordinary tools of trade, plant and equipment, professional instruments and reference books up to a total amount of $3800, and 
  • things you are buying on hire purchase or things you rent. 

Property that belongs to someone else 

Where property belongs to someone else, you will need to provide proof of ownership (for example, registration, purchase agreement etc.) 

If the sheriff believes that the combined cost of seizing, removing, storing and selling the property is likely to be more than the amount of the debt owed, the sheriff may decide that the writ cannot be executed. In this case, the sheriff would report to the creditor that insufficient goods are available for execution of the writ. 

How should I deal with the sheriff? 

If a sheriff comes to your house with a writ for the levy of property, you should know your rights and obligations. Although the idea of a sheriff coming to seize your property can be frightening, sheriffs are generally quite reasonable people who routinely deal with people in financial difficulty. 

There is no point being obstructive, angry or violent to the sheriff, and if you cooperate with the officer and talk about your options, they may be able to help you. The sheriff will usually have application forms which they can help you fill out to make an application to pay by instalments or to set aside the judgment. If it is the first application you have made, this will stop the enforcement continuing while the court considers your application. 

The sheriff can wander about outside your house and can force entry into any shed or garage on your property. The sheriff is not entitled to force entry into your home but can enter through an unlocked door or gate. If all means of access to the house are secured (locked or bolted), the sheriff may not legally enter. 

If the sheriff has gained access to your premises lawfully, you must not get in the way. The sheriff is entitled to break open any cupboards and other items containing your property. If you assault, resist, interrupt or obstruct the sheriff in the exercise of any of their duties, you can be charged with a criminal offence. 

If you don’t let the sheriff in, the judgment creditor can apply to the court to authorise the sheriff to come back with the police and force entry to your property. 

14.7 Bankruptcy 

If the judgment debt is $10,000 or more, the judgment creditor can apply to the Federal Court of Australia to have you declared a bankrupt. 

Bankruptcy can give you a fresh start financially, but can also have severe consequences for your life, income and future credit rating. Some adverse consequences include: 

  • You cease to own property (apart from some personal belongings). Your property is controlled by a trustee who can sell it to raise funds to pay out your debtors. 
  • You can lose your home, your investments and your business
  • Part of your wages may go straight to your trustee.
  • You are not entitled to manage a company or be a director of a company while you are bankrupt without the permission of the court. 
  • You may not be allowed to travel outside Australia
  • The bankruptcy will be recorded on your credit record. It will affect your ability to borrow money and may impair your ability to get a job. 

There may be steps that you can take to avoid bankruptcy, but you need to act quickly. If you have received a bankruptcy notice or a creditor’s petition, get legal advice as soon as possible. 

Chapter 16 deals with bankruptcy in more detail. 

14.8 Time limits 

A judgment creditor has 12 years, from the date of the judgment, to commence any of the enforcement processes mentioned in this chapter. After 12 years, the creditor would need to apply to the court to have the time for enforcement extended (and they would need a good reason).