skip to content
Law Handbook banner image

Enforcing judgment - monetary judgments

Many defendants will pay once judgment has been given but you may need to remind the debtor to pay the debt. If you do not think the debtor will pay, you can commence enforcement proceedings immediately after judgment.

From the date of judgment, interest is payable on the debt until it is paid. The rate is set at 10% (simple interest). [Magistrates Court Act 1991 s 35; rule 124(1)]

Under section 34 of the Limitations of Actions Act 1936 (SA), a judgment creditor has 15 years from the date of the judgment to enforce the debt. However, rule 121 of the Magistrates Court Rules provides that if a judgment creditor wishes to enforce a debt after 6 years, the creditor must obtain the leave or permission of the Court to proceed.

Investigation hearing

The first process in the enforcement of a judgment for a debt is an investigation hearing. If the debtor is present at court when judgment is given, you can ask the magistrate to conduct an investigation hearing into the defendant's financial position. Otherwise, to instigate an investigation hearing you will need to fill out and file a Request to Registrar (Form 18) for which there is a filing fee. A date for the hearing will then be set.

If the debtor owns real estate, a Warrant for Sale (see below) can be asked for on the original application for the investigation hearing.

Before the hearing, the debtor will fill out a form detailing their financial situation. This will include how much they spend on rent, bills, food and other expenditure. During the hearing you will have a chance to question the debtor on this information.

The registrar in charge of the hearing will then usually make an order for the debt to be paid in instalments. The court will only order the debtor to pay instalment amounts they can afford. If the court decides the debtor has no means to pay the debt, you may ask for an adjournment (usually for a year) so that the court can reassess the debtor’s circumstances at a later date.

Is the Debtor a Company?

If the judgment debtor is a company, it can be summonsed to appear at Court on an investigation hearing. Usually a director will attend and be required to produce evidence of the company's ability to pay the amount owing. If the company is unable to pay the debt, it may be appropriate to issue a statutory demand under the Corporations Act 2001 (Cth). You should seek legal advice about this process.

Examination hearing

If the debtor fails to comply with two payments under the order made at the investigation hearing, you can apply for an examination hearing by filling out a Request to Registrar (Form 18). There is a filing fee for this form. At this hearing the debtor will be asked to explain why he or she has not complied with the order from the investigation hearing. If the creditor’s circumstances have changed then the instalments to be paid under the order may be modified. If there is no valid reason for not complying with the order, then an order for imprisonment may be made for contempt of court. This does not affect the obligation to pay the debt.

Other Orders

You may wish to consider other orders to facilitate the payment of the debt. These can be made at any time after the investigation hearing. Other orders will not be made if there is a payment agreement in place from the investigation or examination hearings.

Warrant for Sale

A warrant for sale can be issued in relation to either the debtor's real property (land) or personal property (such as non-essential household items). To apply for a warrant of sale, fill in and file a Request to Registrar (Form 18).

Very few warrants for sale of real property will proceed to sale as the debtor will usually pay the outstanding amount before the property goes to auction.

If you wish to apply for a warrant of sale of real estate you must first do a search at the Land Titles Office to discover whether the debtor owns any land (there is a small fee for this service) and enter the details of the title on the form. You must also give a written undertaking that you will pay for any costs involved in the auction of the property. These costs are recoverable from the debtor upon sale of the land.

A warrant for the sale of personal property authorises a Sherriff’s Officer to enter the debtor’s address and seize property of sufficient value to cover the debt. Certain items such as cars under a certain value, ordinary clothing and necessary household goods cannot be seized. Items which are under finance or jointly owned will not be seized. If the debtor is bankrupt, their property cannot be taken. Only about a third of warrants for sale for personal property are successful in recovering any money at all. Therefore, you should consider whether it is worth applying for a warrant for sale. Try to find out whether the debtor owns more than one car or any valuable assets. If not, it may not be worth paying the fee to issue a warrant for sale.

Charging Order

A charging order allows the court to charge the property of a debtor, assuming that the debtor owns any real property. This means that the debt will be registered on the real estate of the person or on the assets of a company. If the property is sold then it will be subject to the charge and you have priority over the owner for the proceeds of the sale, although if there is insufficient equity in the property after any prior mortgage is paid out, you may still not get paid.

To apply for a charging order you will need to do a search at the Land Titles Office to identify any property owned by the debtor. You will then need to make a Form 21 application. In the space provided write “charging order over (name of property) for the judgment debt of $...”. Your application needs to be accompanied by an affidavit which annexes a copy of the title search of the property owned by the debtor and explains why you want a charging order. It then needs to be served on the judgment debtor. You will also need to attend court to get your order. Additional forms and wording may be obtained from the Court Registry.

Once you obtain the charging order, you will need to arrange for it to be registered at the Lands Titles Office. The staff at the LTO should be able to help with the right document to enable you to do this.

Garnishee Order

A garnishee order is an order that any money owed to the debtor is paid directly to the creditor. It requires the consent of the debtor and it is usually for their convenience. These orders are not common `because if money was available from a third party the debt would usually have been paid at an earlier stage.

Bankruptcy

If the debt is for more than $5000 you may start bankruptcy proceedings against the creditor. If a person is declared bankrupt then all of their property (with exceptions similar to those for a warrant of sale) comes under the control of a trustee. You may then lodge proof of your debt (the judgment) with the trustee to receive a share of the profits from the sale of the debtor’s property.

Before you commence bankruptcy proceedings consider whether the debtor owns enough property to make declaring them bankrupt worthwhile. If they own real estate (check at the Lands Titles Office) or if they have a position that they will lose if declared bankrupt, then the threat of bankruptcy may force payment of the debt. The cost of bankrupting someone should also be considered.

The first step in bankruptcy proceedings is usually to serve the person with a bankruptcy notice. A bankruptcy notice is a form requiring the debtor to pay the debt within 21 days. This form needs to be filed with Australian Financial Security Authority (AFSA) (formerly ITSA). The costs are listed on AFSA's Fees and charges page.

Once 21 days have elapsed from the service of the bankruptcy notice on the debtor, a creditor’s petition must be lodged in the Federal Circuit Court. The costs vary depending on whether the application is being lodged by a natural person, a publicly listed company or a corporation. See Federal Court and Federal Circuit Court Regulations 2012, Schedule 1 for further details. Some people on low incomes can apply for the fees to be waived.

Sending someone bankrupt is a complex process. Seek independent legal advice before commencing bankruptcy proceedings. Further information on sending someone bankrupt is available from AFSA website. A booklet on creditor’s petitions is available at the Federal Court Registry, Level 5, Roma Mitchell Commonwealth Law Courts Building, 3 Angas Street, Adelaide.

Winding up a company

Winding up a company is the equivalent of declaring a natural person bankrupt. It starts with an application to the Supreme Court and higher costs apply. You should seek legal advice if you wish to wind up a company.

Enforcing judgment - monetary judgments  :  Last Revised: Fri Dec 9th 2016
The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.