The Law Handbook 2024

Chapter 5.2: Are you in debt? 363 the debt. An order for attachment of debt is known as a ‘garnishee order’. A garnishee can only be subject to a garnishee order made by a Victorian Magistrates’ Court if they are in Victoria. Or, if the garnishee is a partnership, one partner – or a person apparently having the control or management of the partnership business – is in Victoria. A garnishee order may not be made if it is worthless or vexatious on account of the smallness of the amount to be recovered or of the debt sought to be attached or otherwise. If the garnishee disputes liability they must apply to the court within 14 days of being served with the garnishee order (r 71.05 Magistrates’ Court General Rules). Summons for oral examination If there is a court order for a debt against you, the creditor or the creditor’s solicitor can have a summons issued by the registrar requiring you to appear in court with any relevant documents to be questioned on oath about your financial position (r 67.01.(1) Magistrates’ Court General Rules). You will be served with a summons to attend for oral examination (form 67A), together with enough money to pay for your public transport to the court (‘conduct money’). The summons requires you to attend at the Magistrates’ Court on a particular day to be questioned. This questioning usually takes place at the Magistrates’ Court nearest or most convenient to your place of business or residence, although some creditors will summon you to appear at the Magistrates’ Court located nearest to them. Nobody except you, the creditor and legal representatives can be present without the consent of both parties. The questioning is conducted by the registrar, who is required to ask a number of set questions about your financial situation (see below) and can ask any other relevant questions about your ability to pay the debt. The creditor or their solicitors may also question you, although they often do not attend the examination at all. Some creditors may try to question you without the registrar being present. It is recommended that you insist on the registrar being present for the oral examination to ensure that you avoid being pressured by a creditor to make an arrangement to pay that you later find you cannot afford. NOTE There is no obligation to enter into an arrangement to pay at the time of an oral examination. The registrar records your answers to the questions and sends a copy of the answers to the creditor or the creditor’s solicitor (see r 67.01(8), form 67B Magistrates’ Court General Rules). For the questions the registrar is required to ask, as set out in form 67B, search for ‘form 67B’ on the Magistrates’ Court of Victoria’s website (www.mcv.vic.gov.au) . All that the creditor obtains from the questioning is information that could assist in determining what (if any) is the best way of enforcing the judgment debt. No court order can be made at the questioning requiring you to pay the creditor (by instalments or otherwise), even if the questioning reveals that you can pay the debt. However, an order for the costs of the examination, including the conduct money, is usually made against you. If you do not attend the court on the date set for the questioning, it is likely that a warrant of apprehension will be issued, which could lead to a police arrest. If this occurs, you will very likely be bailed to attend on a new date, and failure to attend will be an offence under section 30 of the Bail Act 1977 (Vic). Action by a debtor If the debt has been paid, or you think the amount the creditor is claiming is wrong, you should immediately contact the creditor’s solicitor to check the facts. If the creditor will not re-examine the matter and you were not at court when the original order was made, you should seek advice about applying for a rehearing (see ‘Applying for a rehearing’, above). If the amount of the debt is correct, you should consider negotiating and, if practicable, make an offer to pay by instalments in advance of the hearing date. If the creditor’s solicitor insists that the questioning by the registrar must go ahead, you should prepare careful answers to the questions that you will be asked. For this purpose, it is generally advisable to seek assistance from a financial counsellor (see Chapter 5.4: Financial counselling services). As a general rule, immediate action will cut down court costs. Not communicating with the creditor and not attending court is generally the worst policy.