As indicated in the last publication on 17th August 2020, we shall continue this topic by looking at the implications of failure of a Garnishee to attend the Garnishee Proceedings after having been duly served, disputes of liability and discharge of Garnishee or Judgment Debtor. We shall also answer the question regarding whether Garnishee proceedings apply to monies that have been paid into court.
A brief recap of some salient points in the last publication. We know that Garnishee Proceedings is a tripartite proceeding among 3 Parties i.e. the Judgment Creditor, Judgment Debtor and the Garnishee. The Garnishee is a third party, not originally party to the suit but brought in only at the stage of execution of Judgment. The Garnishee can be either a person or an institution (usually banks). A person cannot be made a Garnishee unless there exists, a Creditor – Debtor relationship between the Garnishee and the Judgment Debtor. By way of procedure in the Court, we know that Garnishee proceedings is commenced by an application/motion ex-parte i.e. on the blind side of the Garnishee and Judgment Debtor, and the Court upon granting the said application, will make an initial order known as the Garnishee Order Nisi which must be served on both the Garnishee and the Judgment Debtor, in compliance with the rules on service regarding same i.e. at least 7 days before the hearing. Upon hearing the Garnishee and there being no reason not to attach the monies held by the Garnishee, the Court will make the Garnishee order absolute and order the Garnishee to pay out the sum held to the Judgment Debtor.
What happens if the garnishee fails to attend?
If the Garnishee fails to attend upon the Garnishee Order Nisi proceedings or does not dispute the debt due or claimed to be due, the Court may subject to some exceptions make an order absolute under Order 47 Rule 1 of the High Court (Civil Procedure) Rules 2004, C.I 47 against the Garnishee. Order 47 Rule 4 deals with no appearance or dispute of liability by Garnishee and it provides that “Where on further consideration of the matter, the garnishee does not attend or does not dispute the debt due or claimed from the garnishee to the judgment debtor, the Court may, subject to rule 7 make an order absolute under rule 1 against the garnishee” Sub rule 2 makes the point that “An order absolute under rule 1 against the garnishee may be enforced in the same manner as any other order for payment of money”. The question here is, whether upon failure by the Garnishee to attend the proceedings, the court can make the order absolute and the Garnishee called upon to pay for the entire judgment sum, even if the Garnishee does not hold such sums on behalf or to the credit of the Judgment Debtor. The authors answer this in the negative.
It is the authors’ view that, although the rules permit the court to make the Order absolute, this, must subject to Order 47 rule 1 of C.I 47, in relation to the amount held by the Garnishee for the Judgment Debtor without more. Such an Order Absolute (assuming the amount in the Order is above what the Garnishee holds) could be challenged once the Garnishee does not hold such sums on behalf of the Judgment Debtor. Doing so, may mean that the Garnishee will be ordered to pay more than he or she holds for the Judgment debtor, and that is not the intendment of Garnishee Proceedings from the authors’ reading of Order 47 Rule 1 of CI 47. The advice, therefore, is that, if for any reason the Garnishee was unable to attend upon the court and the court makes the order absolute, but the Garnishee does not hold the said amount on behalf of the judgment debtor, and as a result, the order is made absolute, the garnishee should apply quickly or timeously to the court to either vary the order or set same aside. In the absence of such an order varying or setting aside, the Garnishee may be bound to pay the amount in the Garnishee Order Absolute since failing to do so would amount to disobeying a valid court order which is contemptuous.
Disputes of liability and Claims by third parties.
The Rules also allow for disputes of the liability by the Garnishee. This means that a Garnishee can actually come to the court and deny that it/he /she holds monies belonging to the Judgment Debtor. The law is that “Where on the further consideration of the matter the garnishee disputes liability to pay the debt due or claimed to be due from the garnishee to the judgment debtor, the Court may summarily determine the question in issue or order that any question necessary for determining the liability of the garnishee be tried in any manner which any question or issue in an action may be tried.” In this regard, it is possible that the Judgment Debtor may have some monies with the Garnishee but same has been used as a security for a loan, which the Garnishee in its capacity as a bank has granted to the Judgment Debtor, in which case a lien is held over those funds. The Garnishee must indicate to the court that it has a prior interest in the property sought to be attached. When the Garnishee satisfies the court of its interest, the court will order that the funds cannot be attached because the Garnishee has a valid prior interest in the funds.
Persons, aside the Garnishee can also make a claim in the sums or property being sought to be attached in execution. The law allows such persons to state the nature of their claim for the court to determine same. Order 47 Rule 6(1) provides in that regard that “If in garnishee proceedings, it is brought to the notice of the Court that some person other than the judgment debtor is or claims to be entitled to the debt sought to be attached or has or claims to have a charge or lien on it, the Court may order that other person to attend before the Court and state the nature of the claim with particulars of it” At the hearing, the court will make a determination as to whose claim must be upheld by the Court. In that regards the CI 47 provides that “After hearing any person who attends before the Court in compliance with an order under subrule (1), the Court may summarily determine the question in issue between the claimants or make such order as it considers just, including an order that any question or issue necessary for determining the validity of the claim of the other person as is mentioned in subrule (1) be tried in any manner in which any question or issue in an action may be tried.”
When the court determines the claimants’ claim in the negative or dismisses same, the Court will then make the Garnishee Order Absolute ordering the Garnishee to pay whatever sum is owed under the Judgment to the Judgment Creditor.
What happens when the Garnishee pays out the money to the Judgment Creditor pursuant to the Garnishee Order Absolute of the Court?
When the Garnishee pays out the money under the Court Order, the Garnishee is discharged from any obligation he or she has towards the Judgment Debtor. So assuming, the Garnishee is a bank (which is usually the case) that holds money belonging to its customer (the Judgment Debtor) is ordered to pay out the monies, the customer cannot lay claim to that money from the bank. This is the case even if the Garnishee Proceedings is set aside. Simply put, once payment is effected pursuant to a Garnishee Order Absolute, the bank is discharged and the Judgment Debtor cannot proceed against the bank to claim what has been paid out. Order 47 rule 8(1) provides clearly, that “Any payment made by a garnishee in compliance with an order absolute under this order and any execution levied against the garnishee under the order shall be a valid discharge of the liability of the garnishee to the judgment debtor to the extent of the amount paid or levied, notwithstanding that the garnishee proceedings are subsequently set aside or the judgment or order from which they arose are reversed”
Additionally, when the Garnishee pays out the money as ordered by the court, it discharges the Judgment Debtor from any obligation to the Judgment Creditor to the extent of the amount paid. This means that when the third-party (Garnishee) pays, the Judgment Creditor cannot lay any further claim on the amount against the Judgment Debtor simply because the money was paid by the Garnishee and not the Judgment Debtor. The rules are clear on this under Order 47 rules 8 (2) which succinctly provides that “Any payment by a garnishee in compliance with an order absolute under this Order and any execution levied against the garnishee in pursuance of the order shall also be a valid discharge of the liability of the judgment debtor to the judgment creditor to the extent of the amount paid or levied notwithstanding that the garnishee proceedings are subsequently set aside or the judgment or order from which they arose are reversed.” This means that once the money has been paid, there is a discharge of liability from the judgment debtor against the judgment creditor. The import is that, once the payment is done, it is deemed that the Judgment Debtor has made the payment to the Judgment Creditor hence the discharge.
Does Garnishee Proceedings apply to Monies paid into Court?
The answer is an emphatic No. Garnishee proceedings are undertaken for Judgments in respect of payments of money, other than orders for payment of monies into court. Indeed the foundation rule in Order 47 rule 1 quoted previously is explicit on the fact that Garnishee proceedings cannot be taken over/in respect of monies paid into court. Indeed, Order 47 rule 9 is clear on this. Sub rule 1 provides that “Where money stands to the credit of a judgment debtor in court, the judgment creditor is not entitled to take garnishee proceedings in respect of that money but may apply to the Court for an order that the money or so much of it as is sufficient to satisfy the judgment or order sought to be enforced and the costs of the application be paid to the judgment creditor.” To this end, in instances where the monies sought to be recovered, have been paid into court, an application must be made to the court to recover same. Such an application is required by the rules, particularly Order 47 rule 9(2) to be served on the Judgment Debtor at least seven (7) days before the date named for the hearing of the application. If the period is shorter than seven (7) days it amounts to short service and may hinder the progress of the application. This is because once the law requires that a person must be served, one cannot proceed unless that person has been notified of the proceedings in accordance with law.
In the next and final publication, we shall be examining whether, whether the Garnishee Order Nisi attaches or affects monies held by the Garnishee for the Judgment Debtor even after service on the Garnishee of the Order Nisi and some judicial interventions on subject. Keep reading.
The authors are Attorneys @ Law.