What happens when a garnishee order is filed against you?

Once this is acceded to by the court in question, you, along with all entities which hold your funds – for example, a bank – are notified of the existence of the garnishee order.

This means that from here onwards, such entities (the garnishees) are obliged at law to deposit funds up to the amount claimed by the plaintiff from you. Up until such deposit is made, your bank accounts will be frozen and if a vehicle is registered under your own name, you will not be able to transfer it to third parties.

Why would such a procedure exist? While on the face of it, this all seems draconian and extreme, it is there to ensure that if a lawsuit renders a positive result for the plaintiff, the judgment would be able to be enforced. It would be wholly unfair and unjust if the plaintiff’s claim is accepted by the court and then there would be no funds at same’s disposal to actually obtain what is due. That is why procedures such as the garnishee order exist.

Of course, there are safeguards to this. The most crucial of them all is that the garnishee order must be followed by a lawsuit on the merits. If this is not done, consequences in the form of a penalty will ensue upon whoever files a garnishee order carelessly and without any regard for the actual claim.

Revoking a garnishee order

There is also a counter-procedure for the revocation of the garnishee order. However, this only applies in very particular circumstances. For instance, it may result that the amounts deposited in court are excessive or that another, better guarantee exists. These are all provided for in Article 836 of Chapter 12 of the Laws of Malta. It may also be the case that the garnishee order affects a bank account in which one receives a pension or their salary constituting their only source of income, triggering the possible application of Article 381(1)(j) and Article 382(1) of Chapter 12 of the Laws of Malta. 

An application filed under these two articles was dealt with by the Civil Court First Hall in a decree in the names of: Hotel San Antonio Limited vs Nik Dee McGowan, Heather Rose McGowan, and Travis McGowan, delivered on the 20th of December 2022 (revocation application number: 1137/2022AD).

On the 24th of October, plantiff company filed an application for the issuance of a precautionary garnishee order against the respondents so as to caution the amount of €18,906.93. Two of the respondents, Nik Dee McGowan and Heather Rose McGowan, in an application filed on the 25th of November 2022, invoked Articles 381(1)(j) and Article 382(1), respectively.

With regard to Nik Dee McGowan, it was argued that since he is a pensioner with special needs and the only source of income is his pension, which is received in the bank account affected by the garnishee order, he has no other way through which to maintain his daily needs. He argued that any sporadic payments received in that same bank account from his daughter amounted to refunds of sums lent to her. He thus asked the court to release this bank account in terms of Article 381(1)(j) of Chapter 12 of the Laws of Malta.

On the other hand, Heather Rose McGowan argued that her only source of income is her salary and as a consequence of the garnishee order, she has no means with which to maintain her children and her own basic needs. She thus asked the court to order that the garnishee order in regard to her is limited to an amount exceeding to €698.81 monthly as per Article 382(1) of Chapter 12 of the Laws of Malta. This would mean that the first €698.81 in her account every month would be able to be used by her.

The Civil Court First Hall carefully analysed the provisions of Articles 381(1)(j) and 382(1) of Chapter 12 of the Laws of Malta, as well as various jurisprudence in their respect.

With regard to the first article, the court examined the wording of Article 381(1)(j) in that it provides that the bank account in question needs to be used “solely and exclusively” for the reception of the pension or benefit in question. Since in this case the account was also used to receive funds from the respondent’s daughter, as well as payments from PayPal Europe S.a.r.l et Cie S.C.A, the court could not apply Article 381(1) of Chapter 12 of the Laws of Malta.

With regard to the second article, the court noted that the garnishees originally listed were not societies and/or departments that the second respondent is employed with, but simply bank accounts. With this said, the funds affected by the garnishee order were not deemed to be the respondent’s salary but simply funds in her relative bank accounts. Therefore, the respondent’s funds and her salary could not be distinguished and thus, Article 382(1) of Chapter 12 of the Laws of Malta could not be applied.

The requests of the respondents (sekwestrati) were thus rejected.

Celine Cuschieri Debono is a junior associate at Azzopardi, Borg & Associates.