When a creditor obtains a favourable judgment against a debtor in Singapore, there are various ways to enforce the judgment if the debtor fails to comply with the judgment. One method to enforce a judgment debt is garnishee proceedings.
A garnishee is someone who owes the judgment debtor money.
If the court orders the garnishee to pay the creditor the judgment amount, the obligation of the garnishee to pay the judgment debtor changes, the garnishee now has an obligation to pay the judgment creditor.
If the creditor knows that the debtor has money in a specific bank account, the creditor can ask the court for a garnishee order to force the bank to pay the amount of the judgment debt over to the creditor.
Procedure to obtain a garnishee order – Order 49 Supreme Court Rules
The formal proceedings for garnishee orders are governed by Order 49 of the Rules of Court.
First, under Order 49, rule 2, the creditor must file a summons, supported by an affidavit to apply for a provisional garnishee order. This application may be filed ex party, which means it does not have to be served on the judgment debtor or the garnishee.
The affidavit must set out the following:
- the judgment that must be enforced
- the amount of the judgment debt that is unpaid
- the name of the garnishee
- the fact that the garnishee is within the jurisdiction of the court
- the fact that the garnishee is indebted to the judgment debtor
- the source of your information/reasons for your belief
Once the provisional order is made, a date will be set for proceedings for the garnishee to show cause why the garnishee order should not be made final.
The order to show cause must be served on the judgment debtor and the garnishee personally at least seven days before the date of the hearing.
In terms of Order 49, rule 3(2) the debt specified in the affidavit shall be “frozen” in the hands of the garnishee until the final order is made.
If the garnishee does not show up at the hearing or does not dispute the debt, the order can be made final.
If the garnishee disputes the debt to the judgment debtor, the judge will conduct a hearing and make an order after hearing all the arguments.
If another party, other than the judgment debtor, claims to be entitled to the debt sought to be attached, the court may order such a party to appear before the court to determine the issue.
If a final order is granted, the garnishee must pay the judgment debt to the creditor.
A final order against the garnishee may be enforced in the same way as any other court order for the payment of money.
When is the garnishee discharged from liability?
Once the garnishee complies with the order and pays over the money, the garnishee is discharged from any liability to the judgment debtor, even if the original judgment is reversed or the garnishee order is set aside later.
Who carries the burden of proof?
In Sunny Metal & Engineering Pte Ltd v Lee Xin Ben Jimmy (Serangoon Gardens Country Club, garnishee) 2019 SGHC 135, the High Court held that the legal burden is on the judgment creditor to prove that there is a debt due to the judgment debtor from the garnishee.
Garnishee order against a bank
One of the options to enforce a judgment for payment is to obtain a garnishee order against the debtor’s bank account. Order 49 Rule 1(3) specifically allows for a current or deposit account with a bank or other financial institution to be attached to satisfy a judgment debt.
Under the law, there is a creditor-debtor relationship between a client and the bank. The bank “owes” the client the money that the client deposited in the bank. Money in an overdraft account, however, does not fall under Order 49, Rule 1(3) as that money is owed by the client to the bank.
How to obtain a garnishee order against a bank
The procedure is as set out above and in the supporting affidavit, you need to indicate that you have reason to believe that the debtor has a current or savings account with a particular bank. You could, for example, rely on cheques previously issued by the debtor.
The order to show cause must be served on the bank. Once the order to show cause is served, the account is frozen.
On the return date, the bank will inform the court whether the amount of the judgment debt is available in the account. If the court is satisfied with all the evidence, a final garnishee order can be made for the bank to pay the amount to the judgment creditor.
A possible obstacle in obtaining a garnishee order against a bank is that a bank is not required by law to disclose whether someone has a bank account with them. Banks are restricted by banking secrecy laws from proving such information.
Examination of Judgment debtor
If the creditor has no evidence about the debtor’s financial affairs or bank accounts, the creditor can apply to the court for a pre-enforcement Examination Order to examine the debtor’s financial affairs.
At an examination hearing, the debtor is obliged to disclose their financial information and bank account details if requested. Before the hearing, the court will serve the judgment debtor with an order to complete a questionnaire and supply supporting documents relating to assets such as cars, immovable property, bank accounts, and statements for the past 6-12 months. The judgment creditor may apply to question
the debtor about their financial affairs at the hearing. Information obtained at the examination hearing can then be used to apply for a garnishee order against a specific bank account.
It is important to note that a garnishee order attaches to a specific account, which could lead to another obstacle – what happens if the debtor removed the money from that account and transferred it to another account or another person? Fortunately, in such a case, withdrawals from bank accounts will be discovered during an examination hearing.
Can you obtain a garnishee order against a joint account holder?
Previously the High Court’s position was that joint accounts could not be garnished. This was the position expressed in the earlier decision of One Investment and Consultancy Ltd and another v Cham Poh Meng (DBS Bank Ltd, garnishee)  5 SLR 923.
In a landmark decision, however, the High Court recently held in Timing Limited v Tay Toh Hin & Anor  SGHC 169 that joint accounts may be garnished under Order 49 if there is a strong prima facie case to conclude that all the money in the joint account belongs to the judgment debtor. Certain conditions must be complied with.
The court distinguished this case from the previous position since there was evidence placed before the court in this matter as to the joint account holders’ respective contributions to the joint account. To protect innocent joint account holders, the court held that the applicant (the judgment creditor) must:
- establish a strong prima facie case that all the money in the joint account belongs to the judgment debtor;
- notify all the joint account holders of the application; and
- undertake to pay any costs or reasonably foreseeable losses of the garnishee or the non-judgment-debtor joint account holders, should the court be satisfied that the money in the joint account subject to the order, is not, in fact, all payable to the judgment debtor.
These three requirements should protect any innocent joint account holders against the risk of losing their share of the money in the joint account.
The burden of proof is on the applicant to establish that the amount of money in the joint account belongs to the judgment debtor.
In this case, it was proven that all the money in the joint account belonged to the debtor. It can, however, be argued that this case may open the door for judgment creditors to obtain garnishee orders against joint accounts where the money in the account does not all belong to the judgment debtor, but the exact share held by each joint account holder can be ascertained and garnished.
Garnishee proceedings are a good enforcement option if the judgment creditor is aware of a third party within the court’s jurisdiction that owes the judgment debtor money, or if the creditor knows the debtor’s bank account details. Even if the creditor does not have any knowledge, garnishee proceedings is still an option if preceded by an Examination of Judgement Debtor. However, the latter can be costly and time-consuming.