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Garnishee proceedings are a crucial legal mechanism in Nigeria, enabling judgment creditors to recover debt from judgment debtors by attaching funds in a third-party bank account or other assets held by the debtor. In essence, garnishee proceedings in Nigeria allow creditors to enforce a judgment by directly accessing funds in the possession of a third party, usually a financial institution, owed to the debtor.
Garnishee proceedings are legal processes through which a judgment creditor (the party who won a legal judgment for a debt) seeks to enforce that judgment by targeting a third party that owes money to the judgment debtor (the party who lost the case). The third party, usually a bank, is called the “garnishee,” while the creditor seeking to recover funds is the “garnishor.”
The primary purpose of garnishee proceedings is to ensure that a judgment debt is satisfied by securing funds from third-party assets rather than relying on direct payment from the debtor. This process has grown in importance as it enables creditors to enforce judgments efficiently, particularly in cases where debtors are unwilling or unable to make direct payments. Ref: Union Bank of Nigeria PLC vs. Boney Marcus Industries Ltd & Nichimen Co. Nigeria Limited.
Garnishee proceedings in Nigeria are governed by the Sheriffs and Civil Process Act, the Judgments (Enforcement) Act, and related judicial interpretations. Under Section 83 of the Sheriffs and Civil Process Act, a judgment creditor can obtain a garnishee order to enforce a judgment debt.
According to the Act, garnishee proceedings involve a two-stage process where the creditor must first obtain a garnishee order nisi (an initial conditional order) and, subsequently, a garnishee order absolute (a final order permitting the transfer of funds to the creditor).
A garnishee order nisi is a preliminary order that commands the garnishee (usually a bank) to appear in court and demonstrate why the funds in the debtor’s account should not be paid to the creditor. At this stage, the court requires the bank to temporarily “freeze” the account. For example, if a debtor owes a creditor 5 million Naira and has funds in their account at Bank X, the creditor can initiate garnishee proceedings to freeze the amount in that account.
If the garnishee (e.g., Bank X) fails to provide a valid reason for withholding funds, the court issues a garnishee order absolute. This final order authorizes the transfer of funds from the garnishee to the judgment creditor, thereby satisfying the debt. However, the court may dismiss the garnishee order absolute if the garnishee shows the debtor’s account lacks sufficient funds.
Also Read: Understanding Garnishee Proceedings in Nigeria
The judgment creditor’s primary right in garnishee proceedings is to receive the judgment sum directly from the debtor’s funds held by a third party. By law, creditors can initiate garnishee proceedings if they suspect the debtor possesses sufficient funds or assets in a third-party account.
The garnishee is legally obligated to disclose the existence of funds or assets owed to the debtor. Banks are required to freeze funds and adhere to the court’s orders, ensuring they do not release funds in a way that would compromise the garnishment process.
The law provides some protections for judgment debtors. For instance, if the garnishee order nisi is issued, debtors may contest the order by showing cause in court or demonstrating that funds in the garnished account are insufficient or belong to third parties.
A garnishee order nisi is an initial order that temporarily freezes the debtor’s funds held by a third party, usually a bank. It requires the garnishee to show cause why the funds should not be paid to the creditor.
A garnishee order absolute is a final order issued after the garnishee order nisi, authorizing the transfer of funds from the garnishee to the judgment creditor, thus satisfying the judgment debt.
In general, funds in government bank accounts are immune from garnishment unless specific consent is obtained from the Attorney General. This immunity limits creditors from attaching public funds for private debts.
The duration varies but may extend for several months due to court delays and possible objections from the debtor or garnishee. The two-stage nature of the proceedings also adds to the timeline.
A garnishee is legally bound to comply with a court order. If a garnishee fails to comply without valid grounds, they may be held in contempt of court, facing legal penalties.
Any liquid funds held in a bank account or by a third party on behalf of the debtor may be garnished, with exceptions for government funds and certain protected accounts.
Garnishee proceedings are a powerful tool in Nigerian law, enabling creditors to enforce judgments by directly attaching funds from third-party accounts. Understanding the intricacies of this process—including the principles, legal framework, and challenges—is essential for both creditors and debtors. As Nigerian courts continue to interpret garnishee laws, it is advisable for parties involved in these proceedings to stay informed and seek professional guidance.
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