When a Court makes a judgment in your favour for the recovery of a debt, there is a mechanism available to recover the judgment debt through a third party. This mechanism is a garnishee order.
What is a Garnishee Order?
A garnishee order is an order of the court which enforces a third party who either owes money to a debtor, or is holding money for a debtor, to make payment to the creditor of any funds held by that third party for the benefit of the debtor.
This order essentially permits a judgment creditor to ‘seize’ monies from the judgment debtor via a third party.
What can a Garnishee Order recover?
A garnishee order can be issued for:
- Debts: being amounts held by a third party (such as a bank) – however they are a single use order; and/or
- Wages/salary – which are ongoing until such time as the debtor ceases employment with the garnishee recipient.
Wages/Salary
In respect of a garnishee order for wages or salary, upon garnishing the debtor’s wages, the debtor must be left with a minimum of $570 per week from their wage for living expenses (from 1 October 2023).
Despite the effectiveness of garnishee notices, specific debts are not able to be garnished including:
- superannuation funds;
- gifts from a deceased person’s estate; or
- joint bank accounts.
Potential Action by a Debtor
Upon funds being garnished from a debtor’s bank account, wages or otherwise, the debtor may elect to file a motion to seek to either set aside the garnishee order, or set aside the underlying judgment.
However the debtor will have the onus of showing to the court that they have a bona fide defence to the primary claim and that it was improper for such orders to be made.
If you are currently involved in a legal proceeding and/or have a judgment which you wish to enforce, or would simply like more information to see whether this avenue may be an option for you, contact a Principal of the Matthews Folbigg Insolvency, Restructuring & Debt Recovery Group:
Jeffrey Brown on (02) 9806 7446 or jeffreyb@matthewsfolbigg.com.au
Stephen Mullette on (02) 9806 7459 or stephenm@matthewsfolbigg.com.au
Chairman
