Enforcing a money judgment

There are a number of factors to be considered before proceeding to enforce a money judgment.

Opportunity to pay

The debtor must be given an opportunity to pay the judgment debt (usually 14 days). A court can order that a money judgment be paid in instalments and, if this is ordered, a creditor is usually entitled to apply to court for enforcement of the whole judgment if the debtor misses just one instalment.

Service

The debtor must have been served with the judgment and be aware of its existence. Whether the debtor has appealed the judgment, applied to have it set aside and/or sought a stay of execution should be checked prior to commencing any enforcement action.

Interest

Interest is due on most judgment debts and is usually payable at the statutory post-judgment rate of 8% unless the court has otherwise ordered or if the judgment is for a sum less than £5,000.

Assets of the debtor (if any)

Before proceeding to enforce the judgment or order, consideration of whether the debtor has any assets against which it can be enforced should be given and this should also have been considered before commencing proceedings (see this blog).

If the debtor has no assets then it will probably not be worth wasting any money on enforcement proceedings. However, if it is not known what assets the debtor has then there are formal and informal mechanisms to make enquiries:

• Ask the debtor, who may respond voluntarily. If he does not, it is possible to apply (without notice to the debtor) for an order to obtain information under Civil Procedure Rule 71. This order would require him to give answers orally on oath to a court officer. Failure to comply would result in the matter being referred to a judge, who may commit the debtor for contempt of court…it takes a bold debtor to ignore the threat of prison! Sheree-Ann has particular experience of pursuing orders to obtain information in local county courts, particularly in Taunton County Court.

Other options for finding out about assets are:

• Instruct an enquiry agent to make lawful enquiries about the debtor and his assets. Maitland Walker have relationships with several enquiry agents.
• Check the Insolvency Register to see if the debtor is bankrupt or subject to an individual voluntary arrangement, debt relief order or any bankruptcy restriction order and undertaking.
• Conduct a Land Registry search to establish the ownership of any address you have for the debtor. Inspection of the charges register will also ascertain whether the property is mortgaged and to whom.
• Consult the Attachment of Earnings Index. You can search this to find out if a debtor has had any attachment of earnings orders against him.
• Check the Register of Judgments, Orders and Fines to see if the debtor has any other judgments or orders against him. All County Court and High Court judgments for the payment of money since 6 April 2006 are in this public register unless exempt. They remain on it for six years from the date of the judgment unless the judgment is set aside or reversed, or the judgment sum paid within one calendar month of the judgment.
• Conduct a search on a company or limited liability partnership at Companies House and obtain basic information about the company and their latest filed accounts.
• Check for any insolvency procedures against companies by searches of the Bankruptcy and Companies Court, Companies House and the London Gazette.

All of the solicitors in Maitland Walker’s litigation and dispute resolution department are experienced in making enquiries of debtors’ assets and can advise you on the most appropriate avenues of enquiry.

Methods of enforcing a money judgment

There are many ways by which a money judgment might be enforced and in some cases different methods might be used simultaneously. The main methods of enforcement are as follows:

Taking control of goods by writ or warrant of control

Taking control of goods requires the issue of a court document (in the High Court, a writ of control; in the County Court, a warrant of control) which commands an enforcement officer to then take control of and sell a debtor’s goods (provided they are not exempt goods or do not belong to a third party), and raise funds to satisfy a judgment debt. Successful enforcement by this method can be done quite speedily, but it depends on the debtor having goods of sufficient value.

Julian was once instructed in a case for a creditor where High Court Enforcement Officers took control of a debtors fleet of lorries pending payment of the significant judgment debt.

Third party debt order

By third party debt orders, sums owed to a debtor that are in the hands of a third party (such as a bank) are frozen and seized for the benefit of the creditor. Third party debt orders are not the most popular method of enforcement, as they depend on there being a third party debt. However, they can be useful where the  creditor knows that the debtor has a bank account into which his salary is paid.

Charging orders

A charging order is a way of securing a judgment debt by imposing a charge over a debtor’s beneficial interest in land, securities or certain other assets. This prevents the debtor from selling the land without settling his debt to the creditor, provided that there is enough equity left for the creditor after payment of prior creditors.

For a court to use its discretion to grant a charging order, it will examine whether enforcement by this method is proportionate. Therefore, the court may choose not to secure a small judgment when this could be enforced by another method.

A charging order is most effective when there is substantial equity in a property and the debtor is the sole owner. For obvious reasons courts are reluctant to charge a property that is co-owned where the judgment debt has nothing to do with the co-owner.

The process for obtaining a charging order can be slow, and a charging order of itself does not realise funds to satisfy a debt. To satisfy the debt, the creditor then has to apply separately for an order for sale of the property. Alternatively, he could simply await its sale in due course by the owners, or following an order obtained by other creditors.

All of the solicitors in Maitland Walker’s litigation and dispute resolution department are experienced in applying for charging orders taking advice from the solicitors in our Property Team, based in our Minehead and Taunton office, where appropriate.

Attachment of earnings

An attachment of earnings order provides that a proportion of a debtor’s earnings is deducted by his employer and paid to the creditor in instalments, until the judgment debt is satisfied.

Attachment of earnings orders are a popular method of enforcement, as they are inexpensive and fairly easy. Automatic deduction from wages means that you do not have to rely on the debtor making payment. However, it depends on the debtor being in employment and it can take a long time to pay off a large judgment debt by this method.

Note that, where the debtor has other creditors and his total indebtedness does not exceed £5,000, the court has a duty to consider whether the debtor’s liabilities should be dealt with together under a County Court administration order. Under such an order, the debtor makes one payment to the court each week or month, from which the court attempts to pay all its creditors. If it is making a County Court administration order, a court can refuse an application for an individual attachment of earnings order.

Insolvency proceedings: bankruptcy and company liquidation

If more than £5,000 is owed by an individual debtor, a creditor can apply to make him bankrupt. A creditor can also apply for a debtor company to be wound up. After a bankruptcy or winding-up order is made, the debtor’s assets will be collected by a trustee in bankruptcy or liquidator, and distributed among all the creditors according to priority under insolvency law. However, this can be expensive (the fee is payable by the creditor regardless of whether he recovers anything) and time-consuming, and may not ultimately lead to any recovery because of other creditors taking priority.

The threat of insolvency can sometimes lead to debtors making payment, but the courts discourage the use of insolvency procedures as a debt collection exercise.

Likely costs of enforcement and recovery of those costs

There are court fees for various methods of enforcement through the courts. High court enforcement officers and County Court bailiffs will also charge for their fees and expenses, and there are also fees for using insolvency as a method of enforcement. However, it may be possible to recover some of them from the debtor as part of the enforcement.

If a creditor is successful in enforcement proceedings, he can recover the following costs from the debtor in addition to the judgment debt and interest (provided that he has sufficient funds):

• The fees paid to enforce. This can include fees for unsuccessful methods tried at the court’s discretion.
• An amount reflecting your legal costs that is fixed by the court rules, assessed by the court or agreed between the parties.

Conclusion

Deciding which enforcement method to use is a careful decision in each case depending on the factors considered most important by the creditor – for example, whether the goal is to be repaid quickly even if there is a shortfall, or whether recovery of the highest percentage of the debt possible over the long term is sought.

At Maitland Walker we provide clear and practical advice having taken into account all of the options available for enforcement and the cost and risk of those options.

For more information on enforcement of a money judgment or on the litigation process or if you just want some advice, please do not hesitate to contact Sheree-Ann Virgin by telephone on 01643 707777 or by e-mail to sheree-ann.virgin@maitlandwalker.com. We can arrange for your initial consultation to be by telephone or in person in one of our offices in Minehead, Taunton or London.