Judgment has been entered

Judgment has been entered

If judgment has already been entered against your client (i.e. an order has been made that he or she pays the debt, plus the creditor’s legal costs and any interest that the creditor is entitled to claim under the terms of the contract), this is called a judgment debt.

The judgment debt will begin to accrue interest from the day of judgment.  Parliament fixes an interest rate that accrues on all outstanding civil judgments. The amount of penalty interest due on a court judgment is calculated on the money ordered to be paid, backdated to the date the complaint was filed with the court.

The relevant interest rate will apply until the amount outstanding is paid in full.

Once judgment has been entered, options for your client include:

  • Rehearing – if a judgment order has been made against your client and your client did not attend the hearing, you may be able to apply for a rehearing. In the Magistrates’ Court of Victoria, you can use Form 46B to make a rehearing application to have the judgment set aside. An Affidavit in Support is also required, setting out why the client did not file and serve a notice of defence or why, if they did give a notice of defence, he or she did not attend the hearing. There are cost consequences of applying for a rehearing and, if the client is not successful, they will have to pay the creditor’s legal costs and further enforcement costs.
  • Appeal – if the client was present when the judgment order was made, their only further court-based option will be an appeal to a higher court. In the case of a judgment by the Magistrates’ Court of Victoria, there is no right of appeal to the County Court from a civil proceeding, so these appeals must go to the Supreme Court. This option is only available in the event that there was an error of law in the original judgment. There will also be potential costs consequences for your client in the event that the appeal is not successful. You should contact the HPLC if you think appeal is an option for your client – it is likely that Counsel will need to be briefed both to advise on the merits of an appeal and, if appropriate, to appear.
  • Negotiation – even once judgment has been entered, you can negotiate with the creditor, including, where appropriate, on the basis that the client is judgment proof. Alternatively (and depending on the client’s instructions, including on whether payment of any amount is possible), you might request an arrangement where the creditor accepts repayment by instalments (you should also consider asking the creditor to waive any enforcement costs and late payment fees on the basis of your client’s hardship).
  • Applying to the court for an instalment order – a judgment debtor is entitled to apply for an instalment order from the Court. This means that even if the creditor rejects an instalment offer in the course of negotiations, the Court may still order one. Applying for an instalment order stops other enforcement action (expect where a bankruptcy notice has been served) by the creditor until the application has been determined. Anecdotally, it appears that in order for an instalment order application to succeed a debtor would need to be able to prove that they could repay the judgment debt within approximately 2-3 years for debts of less than $10,000 or within 5 years for debts of more than $10,000. The instalments offered must cover the interest that is accruing on the debt. Refer to Judgment Debts for more information on this option.

In the event that a judgment has been entered and the debt remains unpaid (and none of the above options are successful), the creditor has the right to enforce payment of the debt. The court will only enforce the judgment if the creditor applies for enforcement.  The most common forms of enforcement include:

  • attachment of debt order;
  • attachment of earnings order;
  • instalment order;
  • summons for oral examination; and
  • warrant to seize property.

All methods of enforcement attract court fees, which can be added to the debt and are recoverable from the debtor.

The creditor has 15 years to apply for enforcement of a judgment debt, but the creditor will not be able to enforce the debt if your client is judgment proof.

Refer to Judgment Debts for more information.

Not a lawyer?

Homeless Law in Practice provides resources and tools for Victorian lawyers and advocates. If you’re looking for help, visit Justice Connect.