When is recovery of a stale judgment debt an abuse of process?

Recovering an unpaid debt from a debtor generally involves a 2 step process - you need to prove that the debt exists and is payable (at which point, the Court will award judgment in your favour as the creditor) and then you need to enforce the debt (that is, seek to get payment of the debt in compliance with the Court order).  Enforcement could include a combination of obtaining a garnishee order against the debtor's bank accounts and/or wages, arranging the sheriff to seize the debtor's assets and/or requiring the debtor to attend the Court for an examination of their financial circumstances.  A creditor generally has 12 years in which to enforce a judgment debt, so if early enforcement attempts fail, there is still some time to try again, particularly if the debtor's financial and/or employment circumstances change over the course of time.  In the meantime, interest continues to accrue on the unpaid debt.

The recent decision in Shreeve & Ors v Jourdan [2025] NSWSC 102 highlights key issues concerning the enforcement of judgment debts and potential abuse of process. The case revolved around whether plaintiffs could sue afresh on an old judgment debt that had become unenforceable without the court’s leave under section 134 of the Civil Procedure Act 2005 (NSW). The Supreme Court of New South Wales ultimately dismissed the proceedings, determining that the plaintiffs' action circumvented statutory time limits and constituted an abuse of process.

Factual Background

The plaintiffs, Glenda and Colin Shreeve, along with their companies C & G Building Consultants Pty Ltd and Malachi Corporation Pty Ltd, had been involved in property development projects with several other parties, including the defendant, Raymond Jourdan. Their business relationship ended in December 2003, formalised in a Deed, under which Mr Jourdan agreed to repay various sums to the plaintiffs.

When Mr Jourdan failed to make the required payments, the plaintiffs initiated three separate proceedings in the District Court of New South Wales in 2004-2006. These proceedings resulted in judgments in favour of the plaintiffs, with orders for payment of sums totaling over $300,000, including interest and costs.

However, Mr Jourdan did not comply with these judgments, and the plaintiffs did not take enforcement action at the time. From 2006 onwards, the plaintiffs conducted periodic searches to locate Mr Jourdan, believing he had moved overseas. In 2017, they became aware that he had returned to Australia, leading them to file fresh proceedings in the Supreme Court in March 2018, just days before the 12-year limitation period expired.

Main Issues Considered by the Court

The Supreme Court considered several key issues in determining whether the plaintiffs’ fresh proceedings should be allowed to proceed:

1. Whether the plaintiffs could commence a new action based on the old judgment debts

   • At common law, it is possible to sue afresh on a judgment debt, effectively obtaining a new judgment that resets enforcement time limits.
   • Section 17(1) of the Limitation Act 1969 (NSW) allows an action on a judgment within 12 years of the original decision.

2. Whether the plaintiffs’ delay in enforcing the original District Court judgments was reasonable

   • The plaintiffs argued that they refrained from enforcing the judgments due to financial difficulties and uncertainty over Mr Jourdan’s whereabouts.
   • The court noted that the plaintiffs’ delay was unexplained between 2006 and 2018, and that even after obtaining a default judgment in 2018, they did not take any enforcement steps until 2024.

3. Whether the fresh proceedings were an abuse of process

   • The defendant argued that the plaintiffs’ action was an attempt to avoid statutory enforcement restrictions.
   • Under section 134 of the Civil Procedure Act 2005 (NSW), a judgment creditor must seek the court’s leave to enforce a judgment more than 12 years old.
   • The fresh proceedings effectively circumvented this requirement by seeking a new judgment that would restart enforcement time limits.

4. Potential prejudice to the defendant

   • The defendant claimed that the plaintiffs’ delay had unfairly increased the amount of interest payable.
   • The plaintiffs countered that interest was a consequence of the defendant’s failure to pay.
   • The court noted that interest could still be reviewed at trial, so this alone did not constitute prejudice.

The Court’s Consideration and Decision

Abuse of Process

The court found that while suing on a judgment debt is legally possible, the plaintiffs' attempt to obtain a new judgment without seeking leave under section 134 was an abuse of process. Justice Faulkner highlighted:

• The Civil Procedure Act 2005 was designed to regulate judgment enforcement and included safeguards requiring leave after 12 years.
• Allowing the plaintiffs to obtain a fresh judgment would undermine the statutory framework by effectively resetting enforcement periods indefinitely.
• The plaintiffs’ delay in seeking enforcement lacked sufficient justification.

Dismissal of Proceedings

Given the finding of abuse of process, the court determined that the appropriate remedy was to dismiss the proceedings entirely. The plaintiffs were still entitled to apply for leave under section 134 to enforce the original District Court judgments, but they could not bypass that process through fresh litigation.

The court made the following orders:

1. The proceedings were dismissed.
2. The plaintiffs were ordered to pay the defendant’s costs.

Key Takeaways for Judgment Creditors

The decision in Shreeve & Ors v Jourdan provides important lessons for creditors seeking to enforce old judgments:

• Timely enforcement is crucial – Waiting too long to act can lead to procedural hurdles, including the need for court approval to enforce a judgment.
• Seeking leave is necessary after 12 years – If a judgment is more than 12 years old, creditors must apply for leave under section 134 rather than attempting to restart the enforcement clock with new proceedings.
• Delays must be justified – Courts will scrutinise delays in enforcement, and vague explanations will not suffice.
• Interest claims may be challenged – Defendants can argue against excessive interest claims where delay has significantly increased the amount owed.

Conclusion

The Supreme Court’s decision reinforces the importance of adhering to procedural safeguards in enforcing judgment debts. While the law does allow creditors to sue afresh on a judgment debt, this cannot be used to circumvent statutory time limits or avoid seeking leave where required. The dismissal of the plaintiffs' case serves as a cautionary tale for judgment creditors to act diligently in enforcing debts within the permitted timeframes.