Cost Order Enforcement
Enforcement of Money Orders
Once you have obtained your finalised money order agreed by both sides of the court proceeding. You may be left thinking; how can I enforce my money order?
The person who holds the cost order can elect to retrieve the money through either Commonwealth or State legislation.
Below are the Commonwealth legislations that governs two of the following categories:
- For a natural person– Bankruptcy Act 1996 (Cth)
This legislation is applicable to everyone but corporations. It provides that a person who is owed more than $5,000.00 can apply and serve a bankruptcy notice for the debtor. This means that once the person is declared bankrupt, a trustee will manage the bankruptcy and consider whether the debtor has any assets which can be sold to pay creditors.
- For corporations- Corporations Act 2001 (Cth)
This legislation provides that person who is owed money (creditor) can serve a company debtor with a Creditor’s Statutory Demand. This letter of demand done so in an attempt to recover debt without involving a court order. Once the debtor company has received this notice, they have 21-days to respond either by paying the creditor or asking the Supreme Court to set aside the Statutory Demand.
Alternatively, the individual who is owed money, may elect to retrieve the money through State legislation. In Queensland, the Uniform Civil Procedure Rules 1999 (Cth) is the state legislation which deals with the enforcement of money orders. It provides the following;
The person who is owed money (enforcement creditor) can apply to the court for an enforcement hearing. An enforcement hearing is aimed to uncover the financial information about the person who owes money (enforcement debtor) to the creditor under a court order.
A creditor can apply for enforcement proceeding within six weeks of the money order or judgement being made.
Once an enforcement hearing is applied for, the debtor must attend court and complete a statement of their financial position, which gives the creditor information regarding the debtor’s ability to apply the cost order.
Before applying for an enforcement hearing
Prior to applying for an enforcement hearing, the creditor must first send the debtor a link or an electronic file to form 71- Statement of financial position. Once this preliminary step is taken, and the creditor has not received the form back or the form has been insufficiently filled within fourteen days, then the creditor is eligible to apply for an enforcement hearing.
Information commonly requested
Prior to an enforcement hearing, a creditor can instruct the debtor to provide their financial information. This information can include (but not limited to);
- The debtor’s assets (such as, land, house, shares, bonds, vehicles and other property);
- The debtor’s income;
- Other debts that the debtor has; and
- The debtor’s bank details.
Location of enforcement hearings
An enforcement hearing usually takes place in the court where the money order or judgement was originally handed down by the Magistrate.
What is the debtor does not attend the hearing?
In the case that the debtor fails to attend or does not have an acceptable explanation, the creditor can then ask the register to order an enforcement hearing warrant for the debtor’s arrest.
As specified above, an enforcement warrant can be applied by the creditor if the debtor fails to attend the enforcement hearing. Similar to an enforcement hearing, an enforcement warrant is used to recover money awarded to creditors. A warrant however, gives authority to a bailiff to come and obtain any assets the debtor has, without the debtor’s authority.
Prior to applying for an enforcement warrant, the creditor may make an application form to the court applying for the debtor to pay for the costs of the creditor for preparing the warrant.
Below are the main types of warrants that can be applied for:
- Seizure and sale of property
This warrant authorises an enforcement officer (bailiff) to enter the debtor’s private property. The bailiff is then sanctioned to seize and on sell the debtor’s property (goods and chattels) by a public auction. The auction proceedings are then applied to the judgement and associated expenses. (Rule 828 UCPR)
- seizure and sale of Real Property
Unlike goods and chattels, Real property refers to land. If the sale of the goods and chattels did not cover the debts that the debtor is owing, then this warrant authorises a bailiff to seize and further on sell any real property (land) the debtor has. Similarly, the proceedings are applied to the costs order.
- Seizure and sale of vehicles
This warrant permits the bailiff to seize and sell any vehicles that are registered in their name. Similarly, the proceedings are then applied to the costs order.
- redirection of debt
This warrant is relevant when a third party, such as a financial institution (bank), holds money on behalf of the debtor. The warrant permits the creditor to recover money held in the debtor’s financial institution. E.g savings in a savings account.
- regular redirection from financial organisations
This warrant orders a fourth party (employer) to regularly deposit earnings into a specified bank account. The financial institution of the specified account is then required to deduct money and pay it to the creditor.
- redirections of earnings
Similar to a warrant of redirection of financial organisations, this warrant (also known as a garnishee order) which authorises a third party (employer) to redirect part of the debtor’s earnings to the creditor.
- payment by instalments.
Unlike the warrants presented above, payment by instalment is order and not a warrant. This order allows the debtor to pay the creditor money he/she owes over a period of time in regular amounts.
Limitation Period- time frames
The creditor must apply for the issue of a warrant within six years of the judgement or the cost order. (Rule 799 (1) UCPR)
Subject to the type of warrant is applied for, the creditor may need to pay a bailiff’s execution fees. The Supreme and District Court Registries require a security deposit of $2,500.00 for Seizure and Sale of Property enforcement warrant. A bailiff executing a warrant for seizure and sale of a vehicle will incur costs between $1,000.00 – $1,500.00 to store and auction the vehicle. While these costs are payable by the creditor, these costs are recoverable through the sale of the debtor’s property. For example, if the costs order is for $40,000.00 and the enforcement costs are $2,500.00 (bailiff’s fees) then once the property is sold, the bailiff will give the creditor $42,500.00.