Let’s imagine a scenario in which one of your clients has defaulted in payments.
Even though you have notified him through multiple emails or letters, you find no response. Finally, you decide to initiate legal action against the debtor. You appoint an experienced lawyer of your choice and fulfill all the necessary legal conditions such as sending the final letter of demand, filling the court application forms, etc.
After a series of trials, the Court finally gives the verdict in favour of you.
You are obviously delighted but confused about how to get back your money as a mere paper judgement won’t do good.
What is a Judgment Debtor Summons(JDS)?
A JDS is one of the most effective and robust forms of enforcement for the recovery of the debt.
A Judgement debtor summon can be issued under the Debtors Act, 1957 to either individuals or companies where there is a monetary judgement due to be paid.
For example, if a defendant has been ordered by the Court to make payment to the plaintiff, and the defendant refuses to pay, then a JDS can be taken out against the defendant. This is applicable even in default of payment of costs orders.
In this scenario, the collector will be known as the judgement creditor, and the defendant who refuses to pay you the money will be known as a judgement debtor.
The JDS can be useful to:
- Ascertain whether the defendant can pay the judgement debt.
- Discover the means of a defendant
It is also used for the discovery of:
- Information concerning the assets, and
- Financial means of the judgement debtor as the defendant will produce valid proof of his income and expenses to declare his financial abilities.
When the court issues a judgement debtor summons order, the debtor has to be orally examined in court regarding the following:
- The details of the debt which the judgement debtor owes to his creditor, and
- Details of any other properties owned by him that is capable of satisfying the judgement in the order.
Once an order is issued, it needs to be personally served to the judgement debtor at least seven days before the date of hearing.
Thus, in short, the judgement debtor must come to the court on the date of hearing to declare all his financial liabilities as per Section 4 of the Debtors Act 1957, failing which a warrant of arrest can be issued.
How to apply for a JDS?
An application should be made by the judgement creditor in the court of law with an affidavit in support to exhibit the judgement which was in favour of the plaintiff.
The court may sometimes ask the applicant to produce all the necessary evidence in order to validate the claim that the defendant is yet to fulfil a court order.
What will happen once an application for JDS is accepted?
Once an application for JDS has been accepted by the court, it will issue an order to compel the judgment debtor to appear before the court and provide all the information about his assets and how the judgement debtor can settle the debt
The evidence includes the details of business revenue, assets, properties, bank accounts, source of income etc.
Once a JDS has been filed, the entire process will take approximately four months. Further, once the summon is served, the judgement debtor is compelled to appear before the court and be orally examined before the court.
In situations where the Judgement debtor is a company, all the directors or officers of the company may be required to appear in court on behalf of the organisation and provide all the relevant information regarding the income and assets of the company.
If the court is satisfied and has verifying sufficient evidence confirming the fact that the individual will be able to repay back the debt, an order will be issued directing the judgement debtor to repay back the money in full or an instalment basis.
What if the debtor does not appear in court?
Any order of any court in Malaysia should be treated with great respect. Failing to do so will bring forth severe consequences including bankruptcy, winding-up, arrests and fines, etc.
Now, if a judgement debtor does not appear in the court even after a court order, the court may issue an order to arrest the defendant and bring him in front of the court.
Along with this, the judgement creditor can personally serve a notice to the judgement debtor which would require him to show the reason why he should not be arrested for refusal to comply with the court order.
Refusal to comply with a court order or resisting a warrant of arrest may lead the judgement debtor to be arrested and even jailed.
Besides JDS, bankruptcy proceedings can also be initiated against the judgement debtor if he owes a sum of RM 50,000 (In the case of an individual) or RM 10,000 (if the debtor is a company).
Section 6(3) of the Limitation Act 1953 states that no action on any judgement shall be brought after the expiration of twelve years from the date on which the judgment became enforceable.
It should also be noted that no arrears of interest in respect of any judgment debt shall be recovered after the completion of six years from the date on which the interest became due.
Thus in short even if the judgement creditor got a successful verdict against the judgement debtor from Court, no JDS can be issued after 12 years from the judgement.
Needless to say, the earlier a creditor takes action, the more likely he is to recover the delinquent debt.