Make adequate provision for your spouse otherwise, the Court will do it for you. That’s the message we are being given from the Courts, and it’s a concern commonly faced by our clients. What do you do if you think you have been unfairly left out of a Will or left with inadequate provision?
It’s an issue faced by not only spouses or partners but also by children, siblings and, in some cases, grandchildren.
Does a Will really matter anyway?
While there is a notion that a person should be afforded the freedom to decide whom they want to leave their assets when they die (called ‘testamentary freedom’), this is balanced by Family Provisions legislation which requires that a person must make proper and adequate provision for those for whom the community would expect such provision to be made, such as your family.
This is not a question of fairness or equality, but a moral duty to provide for the maintenance, education and advancement of “eligible people”. Eligible people typically include your spouse, partner, children and other dependants.
If you fail to make adequate provision for an eligible person in your Will, the Court may intervene and make adjustments in order to provide this adequate provision.
This is an area becoming more complex, particularly in second marriages. What is the appropriate balance between providing for a second spouse and any children of your first marriage?
What can a widow expect to receive from an estate?
The Courts have recently considered this issue in the matter of Steinmetz v Shannon (2019) NSWCA 114. In this matter, the deceased had an estate of approximately $6.8million and left his wife an annuity payment of $52,000 per year for her lifetime, with the balance of the estate left to his children.
The Court held that the deceased failed to have sufficient regard to his obligations to his wife of 28 years and held that the annuity was insufficient and that it was not an appropriate form of provision in any event.
The Court had regard to factors such as the size of the estate, the care the widow had provided the deceased and the future needs of the widow and ordered that the widow receive a legacy of $1.75m in lieu of the annuity provided in the Will.
In doing so, the Court of Appeal noted that it’s not the role of the Court to worry whether there would be a perception by society that a Will is hardly worth the paper it is written on. Still, its role is simply to interpret and apply the legislation.
It’s clear that while you are free to make a Will as you see fit if your Will is challenged, the Court will step in to decide what your obligations are to your family and amend your Will accordingly. If you have been left out of a Will or inadequately provided for, it is crucial that you seek expert legal advice.
Contact Chamberlains for a free first consultation with one of our wills & estates experts to discuss your legal rights.
Call 02 6188 3600, email hello@chamberlains.com.au or visit chamberlains.com.au
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On 1 September 2020, the NSW Government issued the Building and Construction Industry Security of Payment Regulation 2020 (“the Regulation”), which drastically altered how residential builders and homeowners resolve disputes about progress payments after 1 March 2021.
Currently, a residential builder who takes out construction work for an owner-occupier cannot employ the modernised requirements of the security of payment laws to resolve disputes by Adjudication. Nor can they invoke the significant statutory rights to payment that arise when a homeowner does not promptly dispute a progress claim.
This has all changed from 1 March 2021, a date that residential builders should be excited about and will apply to all residential building contracts regardless of whether they are made before or after said date.
However, these new reforms may cause concern for home owners wanting to build their home.
The new Regulations provide that the Building and Construction Industry Security of Payment Act 1999 (NSW) will apply to residential construction contracts entered into after 1 March 2021. The Act itself has been in place for over 20 years but has never before applied to residential building projects.
For those unfamiliar with the Act, it creates an alternative form of dispute resolution for disputes over payment in the construction industry. It has been designed to promote cash flow on an ‘interim’ basis by protecting a party’s final rights at law. It is commonly referred to as a ‘pay now, argue later’ scheme.
Whom does the Act apply? And what does the process involve?
The process involves:
The entire process outlined above has strict time-frames, and a Determination will be achieved within 6 – 9 weeks of a Claimant first issuing a claim for payment. In the context of the complexities of litigated building disputes, that is extremely fast (by comparison, a standard NCAT dispute typically takes 6 – 9 months to resolve, and District or Supreme Court cases take even longer).
To achieve that rapid result time, the Act imposes rather draconian consequences upon the parties, particularly the Respondent and their obligation to provide a written response to a claim for payment. In the context of commercial or infrastructure building contracts, those consequences are somewhat mitigated by the fact that the Respondent is (presumably) a larger and more sophisticated entity than their subcontractor, who is issuing a claim for payment.
In the context of commercial or infrastructure building contracts, the draconian consequences are somewhat mitigated by the fact that the Respondent is (presumably) a larger and more sophisticated building and construction entity than their subcontractor, who is issuing a claim for payment. The concept being that even if a larger builder (for example Multiplex) is required to pay (under the Act) their subcontractor an amount that a Court later determines was not actually owed, they can afford to pay now and sue their subcontractor later.
When the draft Regulation was released for industry consultation, the amendment making the Act apply to residential construction contracts was not included. Consequently, there was no industry consultation about how the scheme might apply in the residential building context.
Conclusion
Homeowners building their home will need to be conscious of the significant statutory debt they will be subject to pay (after 1 March 2021), simply if they do not respond to a Payment Claim with a Payment Schedule disputing the amount claimed within the allowed time.
Homeowners should also be mindful of the need to respond swiftly to Adjudication Applications (typically within five business days) to avoid Applications being determined based purely on a residential builder’s submissions.
Chamberlains Director, Michael Terry-Whitall, has written a letter to the Hon. Minister Kevin Anderson expressing his concerns regarding the adverse outcomes for parties building their own home, which in his view, requires urgent attention. Mr. Terry-Whitall also encourages everyone to raise awareness for parties planning to construct their own homes of their obligations under the Act and its existence more generally, as he suspects many will have never even heard of the Act, let alone are aware of their obligations under it.
Chamberlains have outlined a hypothetical case study demonstrating just how bad it could get for someone building their home, under the new reforms, who fails to issue a payment schedule on time (which you can download below).
We’re here to help
We at Chamberlains appreciate the difficulties builders, contractors and homeowners alike have been facing in recent times. Should you or your business need some assistance to navigate any legal issues which have arisen during these unprecedent times, please do not hesitate to contact our building and construction law team.
A reminder about the rule in Millar v Candy [1981] FCA 239.
Facts
The respondent was in possession of a car under a hire purchase agreement with Lombard Australia Ltd when a collision occurred and the car was damaged beyond repair, due to the appellant’s negligence. The appellant paid the respondent in the amount of $4,800, being the market value of the car prior to the accident. Pursuant to the hire purchase agreement, the respondent was liable to pay Lombard Australia Ltd in the amount of $6,504, being the market value of the car as well as $1,704 for the early termination of the agreement. The respondent commenced action to recover the additional $1,704 from the appellant, as well as $200 in damages for loss of use and enjoyment of the car.
This case was first heard in the Supreme Court of the Australian Capital Territory, where the trial judge found in favour of the respondent. It was held that the $1,704 became payable to Lombard by the respondent due to the negligent actions of the appellant, and that the appellant ought to have foreseen this damage because of how common hire purchase agreements are.
Issues
The Federal Court of Australia heard the appeal and considered the following issues:
Judgment
The Federal Court of Australia upheld the appeal, deciding 2:1 that the respondent should be awarded $200 and not the $1,704 in damages.
With respect to the first and second issues, Franki J (dissenting) considered the case of Caltex Oil (Aust) Pty Ltd v The Dredge “Willemstad” (1976) 136 CLR 529 (“Willemstad“), deciding that damages beyond the value of the property will only be awarded where there is a “special relationship” which provides for a duty of care between the parties. Franki J held that there was a special relationship between the parties, as the appellant worked with the respondent and knew he was paying off his car. Blackburn J disagreed with this conclusion, deciding that there was no special relationship or duty of care existing between the parties as the appellant could not have known the identity of the car at the time of the collision.
I cannot believe that the law requires that the reasonable man driving a motor vehicle on the highway has a duty to keep a sharp lookout for those vehicles, and those persons, which are the subject of hire-purchase agreements about which he has previously had some information. Blackburn J at page 302-3.
McGregor J was of the view that the $1,704 owed by the respondent to the hire purchase company was not damages resulting from the negligent act of the appellant, rather it was “a discounted substituted version of what he expected and had undertaken to pay anyway” under the hire purchase agreement.
With respect to the third issue, the Court unanimously agreed that damages of $200 for loss of use was recoverable and the appellant was liable for this amount.
Impact of Decision
This decision reaffirmed that damages for loss of a non-profit earning chattel are recoverable.
More significantly, this decision illustrated that parties subject to a hire purchase contract are unable to recover damages for costs associated with early termination of the agreement as a result of damage to the property, unless you can prove a special relationship and duty of care exists.
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***Assisted by; Madeline Furchtmann***
A 14-year-old girl has successfully sued a local council after she was injured whilst riding on a Ferris wheel at a local festival when a light aircraft collided with the Ferris wheel. The Ferris wheel was located on land adjacent to an airstrip that was operated by the local council.
The Pilot also brought a claim in negligence against the Council.
FACTS
At the Old Bar Festival (in Old Bar New South Wales), a pilot of a light aircraft travelled from Taree Airport to the Old Bar Airstrip, which is situated next to the land on where the Festival was taking place.
While attempting to land the plane, the pilot veered too far to the left and crashed into the Ferris Wheel which the plaintiff was riding on at the time with her brother.
Both the plaintiff and the pilot suffered psychiatric injuries as a result of the crash. The plaintiff, aged 13 at the time of the incident, proceeded to sue both the Pilot and the Mid-Coast Council for damages as a result of negligence, via her tutor.
DECISION
The Supreme Court of New South Wales found that the risk of harm was clearly foreseeable and ought to have been known to the local council. The local council was negligent in the approval of the festival, the location of the Ferris wheel and the operation of the airstrip.
Damages were awarded in the total sum of $1,513,023. The council successfully cross claimed against the pilot, with his contribution assessed at 35%.
The Pilot’s claim against the council, however, was unsuccessful, and the court held that the harm suffered was the materialisation of an obvious risk of a dangerous recreational activity, as found in s 5L of the Civil Liability Act.
If you or someone you know would like to discuss a claim or has any questions please contact Alison McNamara on alison.mcnamara@chamberlains.com.au or Jon May jon.may@chamberlains.com.au from Chamberlains injury compensation team to see how we can help.
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Effective from 1 July 2021, the Draft Practical Compliance Guideline PCG 2021/D2 (PCG 2021/D2) issued by the ATO outlines their proposed compliance approach to the allocation of profits by professional firms. This PCG is critical for professional firms in allocating their profits in a way that does not draw ATO scrutiny.
These guidelines apply to ‘professionals’ such as lawyers, medical practitioners, engineers, architects, financial services and accountants. It should be noted that these guidelines can apply to any kind of professional, which includes any person who must be accredited by a body.
Previous Guidelines
The previous guidelines were contained on an ATO webpage, titled ‘Assessing the risk: allocation of profits in professional firms’. These guidelines were suspended by the ATO suddenly in December 2017 due to suspected abuse by some professional firms.
Since December 2017, there has been no ATO guidance on any safe harbour for allocating profits in professional firms.
New Guidelines
The new PCG uses a two-step approach to assess the tax risk, called ‘Gateways’, that must both be passed to be considered low risk.
Also included is a risk framework, with levels of risk of green, amber and red.
Gateway 1 – Genuine Commercial Rationale
The first gateway considers whether the implemented arrangement has a genuine commercial rational for all parties involved. This considers both, the overall commercial structure of the professional firm and
If the arrangement enhances, assists or improves the business’ ability to produce income or make profits, the commercial rationale is clear and this gateway will be passed. The arrangement must be appropriately documented, with evidence stating the commercial purpose was achieved as a result of the arrangement.
The commonly used explanation of asset protection will not be sufficient if the arrangement does not actually provide improved asset protection. The ATO has stated that when considering a structure or flow of profits, any change in tax performance with no change to the underlying business changing is a strong indication of a lack of commercial rational for the arrangement.
If there is a genuine commercial basis for the way in which profits are distributed within the group, then it will likely pass-through Gateway 1. Practically showing this will be difficult however.
Gateway 2 – Lack of High Risk Features
If you conclude that your arrangement will pass through the first gateway, you must then assess whether the arrangement contains any high-risk features. The ATO considers the following as potentially high-risk features:
This is particularly unhelpful as passing this gateway it depends on determining whether an arrangement is arms-length in almost all cases. These features are more difficult to identify in a practical sense.
Risk Zones
The ATO has three zones your arrangement may fall into after passing through both gateways. Whether you fall within the low, medium or high-risk (Green, Amber or Red) category depends on your application of the following risk assessment factors and the aggregate scores for the following (extracted from PCG 2021/D2 paragraph 70 and 71.
| Risk assessment factor | Score | |||||
| 1 | 2 | 3 | 4 | 5 | 6 | |
| (1) Proportion of profit entitlement from the whole of firm group returned in the hands of the IPP | >90% | >75% to 90% | >60% to 75% | >50% to 60% | >25% to 50% | 25% |
| (2) Total effective tax rate for income received from the firm by the IPP and associated entities | >40% | >35% to 40% | >30% to 35% | >25% to 30% | >20% to 25% | 20% |
| (3) Remuneration returned in the hands of the IPP as a percentage of the commercial benchmark for the services provided to the firm | >200% | >150% to 200% | >100% to 150% | >90% to 100% | >70% to 90% | 70% |
The actual scoring applies to the below risk framework:
| Risk zone | Risk level | Aggregate score against first two factors | Aggregate of all three factors* |
| Green | Low risk | 7 | 10 |
| Amber | Moderate risk | 8 | 11 & 12 |
| Red | High risk | 9 | 13 |
The result of each process is broadly:
Green – Compliance resources dedicated only to confirming calculations and position and ATO may provide binding advice
Amber – Likely to be reviewed and moderate analysis conducted to ensure arrangement is acceptable
Red – Reviews will be conducted as a priority, may proceed directly to audit, likely use of formal powers to gather information.
Of course, professional firms should seek to be in the green zone where possible but many will likely be pushed into the Amber if following the previous ATO guidelines.
Conclusion
The draft guidelines unfortunately do not clarify the ATO’s position on professional firm profits as it intended. It has made the process more systematic of determining risk, but clients should be aware that ATO guidelines are not law and should seek independent legal advice before ATO compliance activities start from the coming financial year.
Just because a client is in the green zone does not protect them from ATO audit activity or give any surety in their tax position. The general anti-avoidance rules in Part IVA are always a risk that every firm should consider in remunerating professionals and their families.
Chamberlains law firm are tax planning experts and are well equipped to assess the tax risk for your firm and professionals, navigate ATO guidelines, and find the optimal structure for your professional services firm.
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Under section 290 of the Corporations Act 2001 (the Corporations Act), a director has an unrestricted right to access the financial records of a company. A director also has a common law right to any other documents of a company as a necessary incident of a director exercising their powers and duties.
As a general rule, this right of access extends to documents that are privileged, such as confidential legal advice given to a company.
However, in certain circumstances a company may prevent a director from accessing privileged documents. Typically, that right to maintain privilege against a director arises when a company is in dispute with that director and the advice concerns that dispute.
An example of this is the recent case of Hammond v Quayeyeware Pty Ltd [2021] FCA 293. In that case the company had obtained legal advice in relation to a dispute with a director of the company, Ms Hammond. Ultimately, the dispute that was the subject of the advice was finalised. However, after the dispute was finalised Ms Hammond asserted that she had a right to access the legal advice as a director of the company. The court held that she did not have the right to access the legal advice. The privilege was the company’s and the subject matter of the advice was the dispute between the company and Ms Hammond. Because Ms Hammond’s interests and the company’s interest were adverse, the company was entitled to maintain its assertion of privilege against disclosure to Ms Hammond.
The take-home message is that if your company is in a dispute with a director, the company can confidently seek legal advice without fear of such advice coming into the hands of that director.
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On 24 September 2020, the Australian Government announced changes to the national insolvency framework to better address the needs of Australian small businesses, their employees, and their creditors. The key goals of these changes were to address the lack of flexibility for small business, and reduce the high cost, time barriers, and complex processes. These deficiencies with the old framework limited small businesses’ ability to engage with the insolvency system early and save business.
These reforms came into effect on 1 January 2021, and included changes such as:
1. The creation of a formal debt restructuring process for eligible small companies;
2. Temporary relief for eligible companies seeking to enter the formal debt restructuring process;
3. A simplified liquidation process for a creditors’ voluntary winding up of an insolvent company; and
4. A permanent increase to the threshold amount at which a creditor can issue a bankruptcy notice to $10,000 from the pre-COVID-19 threshold of from $5.000.
Further to these reforms, the Government recently consulted industry participants on whether the threshold for issuing a statutory demand should receive a permanent increase.
What Is a Statutory Demand?
A statutory demand is a demand under section 459E of the Corporations Act 2001 (Cth) (Act) issued upon a company by a creditor for outstanding debts, payable within 21 days of service. The Act currently requires that statutory demands relate to either a single debt of at least $2000, or 2 or more debts totalling at least $2,000.
Most commonly, statutory demands are issued for the purpose of pressuring a company to pay their debts or proving that a company is insolvent if they fail to comply with the demand.
If a company fails to comply with a statutory demand, they will be presumed to be insolvent. Therefore, any issues with the statutory demand should be raised within 21 days of being served. If no action is taken within this time, the company will have little recourse to resist being compulsorily wound up.
Should the Threshold Be Increased and by How Much?
There are a range of arguments both for and against increasing the statutory demand threshold, and even more debate about how much it should be increased by.
No Increase
A key argument against any increase is that, to be solvent, a company must be able to pay all its debts as and when they are due. Accordingly, there is no reason to increase the threshold, because if a company is not able to pay a debt of $2,000 then it just as insolvent as a company who cannot pay a debt of $5,000 or $10,000.
Increase to $5,000
An increase in the threshold would acknowledge that the $2,000 threshold was set many years ago and needs to be increased to allow for inflation. A threshold amount of $5,000 would allow for these considerations, whilst avoiding setting the threshold too high so as to prevent businesses for recovering legitimate debts from corporate debtors. A threshold of $5,000 would also be consistent with the typical legal fees associated with issuing a statutory demand, whereas many debts in the $2,000 to $5,000 range might be uncommercial to pursue in this way.
Increase to $10,000
Given the amount time that has passed since the $2,000 threshold was introduced and the rate of inflation, some might argue the $5,000 is not a sufficient threshold to reflect the current Australian economy.
It is also arguably desirable to have symmetry in threshold amounts between the bankruptcy regime and the corporate insolvency framework to increase simplicity. This is debated however, as some people consider the process and outcomes of personal bankruptcy to be significantly more serious than corporate insolvency, as should thus have a higher threshold.
Different Threshold for Different Debts
Another viable option would be to increase the general threshold to some amount, while introducing a second, lower threshold to enforce judgment debts (debts arising out of a Court or Tribunal judgment). This would assist in avoiding the perception that companies can ignore judgment debts if they were below the statutory threshold due to lack of fear of litigation or enforcement.
Summary of the Key Impacts of an Increase in the Threshold
An increase in the threshold will reduce the number of creditors who will be able to use a statutory demand to obtain payment of their debts. The higher the threshold, the more creditors will be prevented from using statutory demands to recover their debts.
Increasing the threshold would prevent creditors from issuing statutory demands from many debts that would fall within the various small claims jurisdictions (typically less than $25,000). This would mean many claimants with small disputed claims would be less likely to seek to pursue small claims in the Courts or Tribunals. This is because even if they obtain a judgment they would not be able to enforce it by way of a statutory demand, and other avenues available to enforce judgments are typically more expensive.
An increase in the threshold may also encourage rogue debtors to incur debts from multiple suppliers totalling just under the increased threshold, and then avoid payment. This will be more prevalent the higher the threshold, and more serious given that creditors, especially small businesses.
Conclusion
While consultation on the threshold increase may have already closed, be sure to check back in to see what the outcome of the proposed reforms are.
If you have any questions or concerns please contact Chamberlains and talk to one of our insolvency lawyers today.
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HOW RISKY IS SKYDIVING? LIABILITY WAIVERS IN HIGH RISK ACTIVITIES: HAYLEY MARKS V SKYDIVE HOLDINGS PTY LTD (2021) VSC 21
A woman who fractured her spine during a heavy landing following a tandem skydive from 13,000 feet, has unsuccessfully sued the skydive operator, Skydive Holdings Pty Ltd in negligence. The decision from the Victorian Supreme Court demonstrates the importance of understanding liability waiver clauses prior to engaging in risky activities. Despite the Plaintiff’s clear injuries, the Judge determined that the Defendant did all things reasonably necessary to avoid injury.
FACTS
The Plaintiff booked two tandem skydives for $603 with Skydive Australia at Lilydale Airfield in the Yarra Valley to surprise her partner for his 30th birthday. Neither of them had been skydiving before they jumped on 18 August 2018.
The Supreme Court of Victoria heard the Plaintiff’s partner completed his skydive from 13,000 feet “without incident” but the Plaintiff and her instructor landed “very heavily”. The Plaintiff fractured her lumbar spine at the second vertebrae and required surgery to remove L2 and fuse L1 and L3.
The Defendant relied upon a waiver in the online terms as a Defence which argued was a complete bar to the Plaintiff’s claim. Further, the Defendant denied “any fault and contended that the heavy landing was due to an unfortunate, random event in the form of a short-lived, localised downdraft.”
DECISION
Justice Richards found the waiver did not form part of the contract between Ms Marks and Skydive, and was not a bar to her claims.
Despite the lack of a valid waiver, Her Honour found that the heavy landing and resultant injuries were not the result of a failure by the diving instructor to exercise reasonable care. She found they were caused by an isolated downdraft. This is a risk inherent in the activity of skydiving and which could not have been avoided by the exercise of reasonable care.
If you or someone you know would like to discuss a claim or has any questions please contact Alison McNamara on alison.mcnamara@chamberlains.com.au or Jon May jon.may@chamberlains.com.au from Chamberlains injury compensation team to see how we can help.
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NEGLIGENT JET SKI DRIVER ORDERED TO PAY $350,000 IN DAMAGES FOLLOWING COLLISION – WEST V ROSENLIS [2021] VSC 41
The driver of a jet ski that collided with another jet ski on the Goulburn River has been found liable in negligence and ordered to pay $350,000 in damages. This Judgment included $300,000 in non-economic loss with the Supreme Court of Victoria finding the driver was travelling much faster than the 5 knot speed limit and took no action to steer, manage or control his jet ski so as to avoid the collision.
FACTS
Mr West and Mr Rosenlis spent a day jet skiing on Lake Nagambie. They were both experienced jet skiers. Mr West was on the lead ski, proceeding slowly in accordance with the 5 knot speed limit as they entered the Goulburn River. A person in a nearby boat called out to Mr West, who released the throttle allowing his jet ski to slowly drift to the left. Mr Rosenlis, who was some distance behind, was travelling much faster than 5 knots. He did not take action to steer clear and collided with the middle of Mr West’s jet ski, causing him injury.
Prior to the hearing, Mr Rosenlis pleaded guilty to and was sentenced on one charge of driving his jet ski in a manner dangerous causing injury, arising from the accident.
Mr Rosenlis did not attend court for the trial and no solicitor appeared for him.
DECISION
The Court found that Mr Rosenlis owed Mr West a duty to take reasonable care in the driving, management and control of his jet ski to avoid causing him injury. The Judge found there was a foreseeable risk of harm to Mr West if Mr Rosenlis failed to do so.
Having regard to all the circumstances, including the matters in s 48(2) of the Wrongs Act 1958 (Vic), a reasonable person in the position of Mr Rosenlis would have taken precautions against the risk of harm to Mr West, which include driving his jet ski at a slower speed, keeping a proper lookout, and steering and controlling his jet ski so as to avoid colliding with Mr West’s jet ski.
The Court awarded $350,000, consisting of $300,000 damages for non-economic loss and $50,000 for medical and like expenses.
If you or someone you know would like to discuss a claim or has any questions please contact Alison McNamara on alison.mcnamara@chamberlains.com.au or Jon May jon.may@chamberlains.com.au from Chamberlains injury compensation team to see how we can help.
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If a Court has made a judgment against you and you fail to make payment to resolve your debt, the party you owe money to (the judgment creditor) may apply to the Court for a garnishee order to recover the money from you.
A garnishee order is made to a third party who either owes you money, for example, your employer or someone who holds money on your behalf, such as a bank or financial institution. The third-party, referred to as the garnishee, must pay the judgment creditor a lump sum or a portion until the judgment debt is satisfied.
If you are a judgment creditor, garnishee orders are helpful to obtain if contact has been made with the judgment debtor and they fail to take steps to resolve the debt.
A garnishee order for wages or salary is issued on your employer to withhold a portion of your wages or salary until the judgment debt is satisfied. The garnishee must leave you with a ‘weekly compensation payment’, which is a minimum amount of your wage or salary you can live off. Currently, the weekly compensation payment in NSW is $527.40 (as of 1 October 2020), and this amount is adjusted in April and October of each year.
Payment is to be made by the garnishee to the judgment creditor within 14 days of when the wage or salary is due to be paid to the judgment debtor.
A garnishee order for debts can be issued on your bank, financial institution or a party who owes you money or holds money on your behalf, such as a tenant. This garnishee order is satisfied by a lump sum payment. The bank or financial institution is also required to leave you with the weekly compensation amount plus $20.
Payment is to be made by the garnishee to the judgment creditor within 14 days of the order’s service. If the garnishee is expecting debt to accrue or fall due more than 14 days after the order’s service, payment is to be made within 14 days of when the debt falls due to the judgment debtor.
If the debt is expected to fall due after 28 days of service, the garnishee is required to inform the judgment creditor of when the debt is expected to accrue and the amount of the debt.
If you have a judgment against you and a garnishee order is in place, there are several options to stop the order.
If you are able to find a way to make payment to satisfy the debt, the garnishee order will no longer be in force.
If you declare bankruptcy, your unsecured debt is no longer payable, and related garnishee orders will stop; however, declaring bankruptcy has longer last effects and should be considered very carefully.
You could attempt to contact the judgment creditor or their solicitor and offer an alternative payment arrangement with them, such as a payment plan or reduced judgment sum.
If you are in financial difficulty and the judgment creditor does not wish to negotiate or declines your offer, you may apply to the Court for an instalment order. It is at the Court’s discretion to make an instalment order, and an application will usually be refused if it will result in the debt taking too long to repay.
If an employer, bank, financial institution or other garnishee does not comply with the garnishee order, the Court may give judgment against them for the amount of the debt. This is why, if you have been served with a garnishee order, it is essential you comply with the order or seek legal advice if you require more information.
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Assisted by Madeline Furchtmann