A note on garnishee proceedings as a post-judgment process under Order 50 of the High Court Rules 2007.
INTRODUCTION
Garnishee proceedings are a post judgment judicial process whereby a judgment creditor who has a valid judgment final judgment/order which is immediately payable of a court within the may recover such debt owed by judgment debtor from a 3rd party who in turn has an obligation to the judgment debtor. It has the effect of attaching the money owed to the judgment debtor by a third party to the proceedings instituted by the , it serves to transform a debt payable by a garnishee to the judgment debtor into an obligation to pay the debt to the judgment creditor. Third party debt orders are a particularly effective method of enforcement where the debt to be attached is owed by a responsible body, such as a bank or building society. It can apply to other monetary payments other than damages such as costs to be paid to the applicant. It applies to other forms of money such as employee wages, stocks, shares and people holding money for the judgment debtor. They are not restricted to such bodies. For instance, if Mr. A gets a monetary judgment in court against Mr. B and Mr. B has refused to pay, Mr. A can ask the court to help collect Mr. B’s money from Mr. C who in turn owes Mr. B money. The 3rd person indebted to the judgment debtor is called the garnishee while the judgment creditor is also referred to as the garnishor.
The law governing garnishee proceedings can be found in Order 50 of the High Court Rules 2007. Any debt owing to a judgment debtor from any other person within the jurisdiction of the court can be recovered by the judgment – creditor towards the satisfaction of his judgment by attachment of debts via a garnishee order. It can apply to foreign judgments Lewis & Peat (Produce) Ltd v Pellizzari App 30/2000 judgment delivered in 2001 reported in the Court can order garnishee proceedings for foreign judgment based on Order 45 of the High Court Rules, Reciprocal enforcement of judgments.
Third party debt orders can be made where there is a ‘debt due or accruing due to the judgment debtor from a third party’ (Order 50 rule 1). A court could and should, in the absence of contrary indications, accept as sufficient for this purpose evidence that the judgment debtor previously held an account at a bank which appears to have been in credit at that time (Alawiye v Mahmood 1 WLR 79). Lindsay J also said that evidence that in the past a bank account was overdrawn might be enough if there is nothing to indicate that overall the bank is owed money by the judgment debtor (see). A third party debt order was made against a bank account in the name of an unincorporated association in Huntingdon Life Sciences Group plc v Stop Huntingdon Animal Cruelty 4 All ER 899. It is essential that there is a relationship of creditor and debtor between the judgment debtor and the third party. If the evidence goes no further than showing that the judgment debtor might ultimately have a beneficial interest in money in a bank account held by a trustee there is no such relationship. In such a case a third party debt order will be refused (AIG Capital Partners Inc. v Republic of Kazakhstan 1 WLR 1420).
APPLICATION FOR GARNISHEE ORDER NISI
Third party debt orders follow a two-stage process. The first stage is commenced through an motion supported by an by the judgment-creditor applying to the court for an order attaching the said sum until a time and place is set for the garnishee(s) to show cause why such garnishee nisi should not be made absolute (Rule 2 of Order 50 of the High Court Rules 2007). The affidavit filed should contain
(a) the name and last known address of the judgment debtor(the reasoning is so that the wrong account is not attached for the garnish proceedings);
(b) the judgment or order to be enforced and stating the amount of such judgment or order and the amount remaining unpaid under it at the time of the application; and
(c) Stated to the best of the information or belief of the deponent, the garnishees (naming them) within the jurisdiction and is indebted to the judgment debtor.
In the case of St. Mary’s Supermarket S.L Ltd v Catering International and Services (CIS) African Minerals Camp and other 2014 Cc. 179/2014, Mrs.
Justice Showers (JA)in granting the Garnishee Order on the 16th day of June 2015 presupposes that the procedure is accurate and correct. The application is considered by a judge without a hearing. If satisfied there is a debt due or accruing due to the judgment debtor, the judge may make an interim third party debt order directing the third party not to make any payment which reduces the amount he owes the judgment debtor to less than the amount specified in the order. The judge will also fix a hearing to consider making the order final. The amount specified will be the total outstanding on the judgment or order being enforced. In the case of Roger v Whiteley 1892 AC 118, the House of Lords held that, the effect of an order attaching ‘all debts’ owing or accruing due by the garnishee to the judgment debtor is to make the garnishee custodian for the judgment debt of the judgment creditor.
If the garnishee who or which holds the debt (account) are not known, it is common and widely held practice that all the banks in Sierra Leone (in the case of a bank account) would be served with garnishee nisi and they would appear on the date stated on the ex parte notice of motion to show cause why it should not be made absolute.
Service of the interim order
When the order nisi is granted, you perfect the order in the registry of the High Court and then serve on the garnishee(s) first and then serve the judgment debtor.
An interim order must be served at least 7 days before the time for further of the matter on the garnishee personally, judgment debtor unless the Court otherwise directs and service of the order shall bind in the hands of the garnishee as from the date of service on him of any debt specified in the order or as much of it as may be specified (rule 3(1)) and is binding on the third party when it is served on the third party (rule 3(2)). The service of the garnishee nisi does not operate as a transfer of the property in the debt but it is an equitable charge on it, and the garnishee cannot pay the debt to anybody but the garnishor without incurring the risk of having to pay it over again (per Farwell L.J at 343 in Galbraith v Grimshaw 1910 KB 339 CA). By rule 4 if the garnishee(s) does not attend or dispute the claims, it would be made final and enforceable against him/her/it in the same manner as any other order for the payment of money. When the order nisi is served it serves as a restraint on the garnishee not to allow the judgment creditor or any other person from accessing the money.
Interim Order Hearing
The Order nisi would have a return date for the parties stated should come to court why the order nisi should not be made absolute. A summary procedure is held to determine if the garnishee either holds nonexempt property of the debtor or owes a nonexempt debt. Such causes, in the case of a bank is where the judgment creditor has an overdraft or had letters of credit, meaning the money was not his in the ab initio or that the judgment debtor have no account with them. Since garnishment is nothing more than the subrogation of the rights of the debtor by the garnishor, the garnishor has no greater rights than the debtor has with respect to the property or the garnishee.
Also, because the debtor is not a party to the garnishment action, he is not legally bound by any agreement between the creditor garnishor and the garnishee.
Possibly the defences available to the judgment debtor is that:
- He had no account
- There is a stay on the proceedings (judgment entered)
- Have also ready paid
Application Garnishee Order Absolute to be final The second stage is when the court considers whether to make a final third party debt order 76.14 on the date fixed when the order nisi was made. A judgment debtor or Garnishee objecting to the final order, or who knows or believes someone else has a claim to the money, must file and serve written evidence stating the grounds of any objection or details of the other claim not less than three days before the hearing If the court is notified that another person has a claim to the money it will serve notice of the application and the hearing on that person At the hearing the court may make a final third party debt order, discharge the interim order, decide any issues or direct a trial of any issues.
A final third party debt order is enforceable as an order to pay money. By, to the extent of the amount paid under the final order, the third party’s debt to the judgment debtor is discharged.
It should be noted that the Applicant, judgment creditor can also entitled to the interest percentage accrued on the Le 30,000,000 which is held by any of the garnishees stated above, the authority for this is the case of NATIONAL INSURANCE COMPANY v MOHSON TARAF S.C. Civ. App. 1/2004 RULING DELIVERED ON THE 5th DAY OF JANUARY 2010 Justice G.B. Semega – Janneh J.S.C at page 16 held “That the /Applicant is entitled to the bank interest that had accrued on the Leone sum representing the judgment sum ….deposited in an interest bearing account payable by the Bank”.
Attachable money
It is possible to obtain a third party debt order only over debts due to the judgment debtor. 76.15 Examples are money in a bank account, trade debts, judgment debts, and rent due to a landlord. Conversely, claims for damages, matrimonial maintenance orders, and salary not presently payable are not attachable. Most conditions imposed by banks and building societies restricting the right to withdraw money from the judgment debtor’s account are disregarded once a third party debt order is made Discretion to make third party debt orders A third party debt order may be refused if it would be inequitable to grant it. It is a fundamental feature of a third party debt order that the third party must be discharged from its liability to the judgment debtor in the amount that the third party pays to the judgment creditor. If the third party is located in a jurisdiction which will not recognise such a discharge, a court in England or Wales should not make a third party debt order (Société Eram Shipping Co. Ltd v Compagnie Internationale de Navigation 1 AC 260; Kuwait Oil Tanker Co. SAK v Qabazard UKHL 31, 1 AC 300). The insolvency of the judgment debtor is a sufficient reason for refusing to make an order, because its effect may be to prefer the judgment creditor over the general body of creditors (Roberts Petroleum Ltd v Bernard Kenny Ltd 2 AC 192). The is on the judgment debtor to show why a third party debt order should not be made final. Further, if a judgment creditor secured a charging order or third party debt order in competition with other creditors who had not been so quick off the mark, that should not affect the court’s discretion to make the order final (Reed v Oury (2000) LTL 12/2/2001).
ATTACHMENT OF EARNINGS
Where a judgment debtor is employed, but has no other substantial assets, the most effective method of enforcement is by obtaining an attachment of earnings order. Such an order can only be made, unless the application is by the debtor, if the debtor has failed to make one or more payments as required by the relevant adjudication ( Earnings attachable An attachment of earnings order may be made in respect of wages, salaries, fees, bonuses, commission and overtime payable under a contract of service, including occupational pensions and statutory sick pay. An order cannot be made in respect of self-employed income, nor State pensions, benefits or allowances In other for a salary to be attachable it must be due and payable. Rent owed by a tenant can also be attached.
Setting aside Garnishee Orders
Where the had got an order absolute against the defendant, the was held to be entitled to an order setting such order absolute aside in view of the fact that an issue tried between the plaintiff and the defendant since the order absolute had resulted in a verdict for the plaintiff (Burrell and Sons v Read 1895 11 T.L.R 36 CA)
and see judgment of Joyce J in Marshall v James 1905 1 Ch 432 as to setting aside order absolute. Moreover, where there is a case of mutual mistake by garnishee and judgment creditor, a garnishee order absolute may be set aside (Moore v Peachey 1892 66 L.T 198). It can also be set aside where the substantive judgment was by default and such judgment was set aside as was held by Hon. Mrs. S. Bash-Taqi, JSC (Presiding) in the case of West African Regional Director and Leonard Cheshire International v Jalloh Civ. App. 12/2007 Judgment delivered in June 2009.