When you obtain a judgment against an individual or company, they must obey the terms ordered against them. However, what happens if they fail to do so? Are you just left with a paper judgment? A common question every litigant has in their mind upon obtaining a judgment is “How do I enforce my judgment against a party who has failed or refused to comply with them?”
Our legal system provides several types of enforcement procedures to help litigants in such circumstances. Here are some of the commonly used enforcement procedures.
When you have a monetary sum due from a Judgment, a garnishee application may be applied to attach monies owed from a debtor’s bank account to satisfy the sum due. The application will seek a court order to direct the debtor’s banks to attach whatever amount is in the debtor’s bank account to have it satisfy the judgment debt owed to the judgment creditor. Garnishee proceedings are a two stage process: during the first stage, the judgment creditor may obtain an order that will attach/freeze the debtors’ bank accounts until the second stage. During the second stage, the court will make an order for the bank to remit the monies in the debtor’s account to the judgment creditor, to satisfy the judgment.
Judgment Debtor Summons
An application which can be utilized for discovery of information on the assets of the judgment debtor. The debtor will be called to appear in front of the Court to disclose his assets and financial means. At the end of the discovery process, the Court can order the debtor to pay the judgment either in one-lump sum or instalments. If the debtor fails to comply with the payment schedule set by the Court, he can be summoned to court again to show cause why he should not be imprisoned.
Writ Seizure and Sale
This enforcement application (in which is applicable to immovable and movable property) will command the Court sheriff/bailiff to seize and sell off the property of the debtor to satisfy the judgment sum due. The satisfaction of the debt is done through an auction of the seized items in which proceeds will be channeled to the judgment creditor.
However, claimants cannot seize everything on the debtor’s premise as certain items are prohibited from being attached pursuant to Sec. 3 of the Debtors Act 1957. These includes essential life items such as clothes and cooking vessels, pension, gratuity or allowance by the government, wages of the debtor and etc.
Writ of Possession
This application is exclusively for judgment involving immovable properties. In short, it directs a court sheriff/bailiff to enter and take possession of the debtor’s property. The seized property will then be auctioned off to satisfy the judgment debt. The application can also include a provision to enforce payment of certain monies due from rental arrears and legal costs.
In certain cases, a party may apply for an order of committal against a party who has not complied with a judgment. For example, where the judgment specifies that the payment is to be made within a specified time and the judgment debtor fails to do so. The court may order that the party be fined or jailed for being in contempt of court.
A judgment creditor may apply to Court for a charging order to impose a charge on securities (eg: shares, bonds, dividends) owned by the judgment debtor. The process is a two stage process similar to that in garnishee proceedings. During the first stage, the Court will grant an order to prevent the transfer / disposition of the securities. During the second stage, the Court will make the order absolute unless there are sufficient reasons to the contrary. The judgment creditor may then enforce the charge by selling the securities (but only after 6 months from the date of the order granted in the first stage).
While not strictly a form of execution proceedings, it is also possible to commence insolvency proceedings (winding-up for a company, bankruptcy for an individual) against a debtor who refuses to comply with a monetary judgment. However, there are certain requirements that need to be fulfilled. For example, the debt threshold is RM10,000 for winding-up and RM50,000 for bankruptcy. There are also strict procedural requirements that must be met before a debtor can be declared a bankrupt / wound-up. That being said, in insolvency, judgment creditors are unsecured creditors which means they stand behind secured creditors like banks in priority when it comes to distribution of assets.
Enforcement procedures are in place to assist litigants in the face of uncooperative opponents who refuse to comply with a judgment. However, litigants should carefully consider which procedure would suit them best based on their circumstances. An execution of a judgment requires some thought and planning so as to limit the costs incurred and to maximise the chances of the judgment sum being recovered.
About the author: Amirul Izzat Hasri is an associate in the dispute resolution practice group at Donovan & Ho. He has experience in a diverse area of practice, including general civil and corporate litigation, judicial reviews, land related matters, defamation, debt recovery, and shareholder and boardroom disputes. He has also appeared in Industrial Court proceedings, having represented both employers and employees in unfair dismissal claims. Have a query? Contact us.