Enforcement of the foreign judgment
In our previous posts we examined the two ways to have a foreign judgment recognised in Australia: under the Foreign Judgments Act 1991 (Cth) and under the common law. Once the foreign judgment is recognised, the next step is to get the money owing under the judgment.
In this post we will explore the steps the judgment creditor may take to enforce the judgment.
Writing a letter of demand
As a first step, it is usually advisable to write a ‘letter of demand’ to the judgment debtor, demanding payment of the judgment debt.
Registering the judgment
If there is no reply to the letter of demand, or if that step is skipped, the next step is to register the judgment in the same court that recognised the judgment.
Consider the financial position of the judgment debtor
After registration, the judgment creditor should give consideration to the financial position of the judgment debtor. This means considering matters such as:
- what assets they have (including bank accounts)
- where in Australia those assets are located
- whether there are regular payments made to the judgment debtor or their bank account(s), and
- whether a third party owes money to the judgment debtor.
To find out more about the judgment debtor’s financial position, the judgment creditor may apply for an enforcement hearing. This is a process by which the judgment debtor is compelled to reveal information about their financial position in a written statement (called a ‘Statement of Financial Position’) and subsequently in a court hearing. During the enforcement hearing, the judgment creditor can question the judgment debtor about their financial position.
There are other, informal methods creditors may employ to uncover information about the debtor’s financial position such as hiring a private investigator.
To enforce the judgment, the judgment creditor must apply for an enforcement warrant. This is an order of the court compelling the judgment debtor to pay the judgment in a specified way. Enforcement warrant applications must be made to the same court in which the judgment was registered. There are various types of enforcement warrants, which provide for a different method to enforce the judgment. Some of the more common types of enforcement warrants are:
- seizure and sale of property: This directs an enforcement officer (such as the sheriff or bailiff of the court) to seize and sell property belonging to the judgment debtor. The proceeds of sale are paid to the judgment creditor. There are restrictions on the type of property that can be seized and sold
- redirection of a debt: This directs a third party who currently owes money to the judgment debtor to pay the judgment creditor instead, and
- regular redirections from a financial institution: This directs a financial institution (such as a bank) to redirect to the judgment creditor regular payments received by the judgment debtor.
Alternatives to enforcement warrants
Instead of obtaining an enforcement warrant, the judgment creditor may apply to bankrupt or wind up the judgment debtor.
Bankruptcy is the process followed if the judgment debtor is an individual; winding up is the equivalent process for companies. Each process is commenced by service of a prescribed notice. If the judgment creditor is successful, each process generally ends with the division of the judgment debtor’s assets amongst its creditors.
There are some disadvantages to this approach. For example, it gives the judgment debtor’s other creditors the opportunity to raise claims, which might ultimately reduce the assets available to the judgment creditor. The judgment creditor also has less control over this process, compared to the enforcement warrant process.
Enforcement in multiple jurisdictions
Enforcement is not restricted to the jurisdiction in which the foreign judgment was recognised; the judgment can be registered in alternate jurisdictions.
Recognition and enforcement of a foreign judgment is a complicated and potentially expensive exercise. It is best to give proper consideration to the judgment debtor’s financial position before you start, to ensure it is worth going through the trouble.
It is also worth engaging a local lawyer to handle the process to avoid the trouble and stress of trying to navigate a foreign law and foreign courts.