Today’s sheriffs play an important role in recovering debts; they can seize assets, including land, and have the power to sell land and other personal property to satisfy those debts. In Victoria, the sheriff operates out of the Department of Justice and enforces court orders from criminal and civil proceedings in the Supreme, County, Magistrates’ and Infringement Courts.

Once a debt is owed and a creditor has obtained judgment through court, the sheriff can enforce the judgment via a warrant issued by the court that allows the sheriff to seize and sell the debtor’s property.

This warrant must be recorded on the title to the property (if any) before a sale by the sheriff can take place. Once the sale is complete, the proceeds are used to satisfy the judgment debt, with any excess going to the debtor/registered proprietor.

However, the sheriff sale process can be cumbersome. The time taken to enforce warrants and collect assets, particularly land, is usually very slow. And while warrants don’t give a creditor any registrable interest in the land in the same way that a mortgage or a charge over land does, they effectively “freeze” the title pending sale by the sheriff and prohibit any dealings with the land that could affect the sheriff recovering the monies owed.

Warrants give notice of the debt to anyone interested in dealing with the land and prospective buyers need to be mindful of them as a recent New South Wales case showed.

The case, which went on appeal to the High Court, highlights the difficulties caused by delays with the sheriff sale process, particularly the delay in issuing the warrant and its subsequent recording on the title.

In Black v Garnock [2007] HCA 31, the creditors obtained judgment for a debt of about $228,000 against two debtors, one of whom owned farm land. Some months after the creditors obtained judgment against the land owner, but before the issue of any warrant of execution by the sheriff, the owner agreed to sell the land and a contract of sale was executed.

Documents for the sale, including transfers, surrender of lease, discharges of mortgages etc. were prepared for settlement. On the morning of settlement, the purchasers’ solicitors carried out the relevant title searches and found no encumbrances. Hours later, however, the warrant of execution for the debt was issued and recorded on the Register for the land.

Settlement went ahead, but weeks later, the purchasers’ solicitors were told the transfers that had been lodged could not be registered because of the sheriff’s warrant that was recorded on the Register.

The purchasers, who had failed to lodge a caveat, began proceedings in the Supreme Court of NSW seeking an injunction to stop the creditors and the sheriff from executing the warrant. The injunction was denied, but granted on appeal by the NSW Court of Appeal in a majority decision.

The creditors appealed to the High Court and won, with the majority decision confirming the operation of the registration process and concluding that the legislation prohibits the Registrar-General from registering any dealings during the protected period after a warrant is lodged.

In its judgment, the High Court commended the practice of a purchaser lodging a caveat after signing a contract.

The case highlights the importance of lawyers being involved in the conveyancing process. They are better equipped to carry out appropriate title searches and to provide legal advice on matters affecting the land including any outstanding writs. Similarly, lawyers can advise on debt recovery generally and the alternatives available to both debtors and creditors.

More information

Useful web links

For further information look for sheriff’s operations under ‘Fines and Penalties’ at www.justice.vic.gov.au