Enforcement of Money Judgements

Question 1

What are the two methods of obtaining more information about a judgment debtor’s financial circumstances?

Answer 1

Instructing an enquiry agent.

Applying to the court for an order to obtain information from the debtor.

Question 2

What are the advantages and disadvantages of instructing an enquiry agent?

Answer 2

Although an enquiry agent may succeed in locating assets that the debtor seeks to hide
and may be a quicker way forward, this approach does incur expense.

Question 3

What is an order to obtain information?

Answer 3

A court order requiring the debtor to attend before an officer of the court to be questioned on oath about their finances or those of a company of which they are an officer.

Question 4

What is the procedure for an order to obtain information?

Answer 4

The judgment creditor files a notice of application at court setting out details of the
name and address of the debtor, the judgment the creditor is seeking to enforce and the
amount owed. Any specific documents that the creditor wants produced at the hearing
should be listed.

The order is normally personally served on the debtor who can, within seven days, request payment of their reasonable travelling expenses to and from the court.

The hearing will usually take place in the County Court hearing centre for the area where the debtor resides or carries on business.

The examination is conducted by an officer of the court, or a judge if requested by the creditor.

Standard questions are asked, although the creditor may also request additional ones.

The officer will make a written record of the responses given by the debtor, who will be invited to read and sign it at the end of the hearing.

If the debtor fails to attend court, the judge may make a committal order against them, which is usually suspended provided the debtor complies with the order.

Question 5

What are the four most common methods of enforcing a judgment debt?

Answer 5

Taking control of goods

Charging order

Third-party debt order

Attachment of earnings order.

Question 6

What is taking control of goods?

Answer 6

A method of enforcement where the amount owed may be recovered by seizing the debtor’s possessions of an equivalent value and then selling the items at a public auction.

Question 7

Who carries out the taking control of goods?

Answer 7

In the High Court, the task is carried out by a High Court Enforcement Officer (HCEO) and
in the County Court, by enforcement officers (often referred to as bailiffs).

Question 8

What are the powers of enforcement officers in taking control of goods?

Answer 8

They can use reasonable force to enter business premises if they believe the debtor’s goods are inside.

Question 9

What are the restrictions on an enforcement officer’s powers when taking control of goods?

Answer 9

They cannot force entry into a debtor’s home.

Question 10

What assets can be seized by enforcement officers?

Answer 10

The usual contents of a home or business premises including motor cars, computers and
banknotes, but also less common ones for instance boats and securities such as share
certificates.

Question 11

What assets are exempt from being seized by enforcement officers?

Answer 11

For individuals, clothes, bedding, furniture and household equipment, which are reasonably
required for the basic needs of the debtor and their family.

work tools, computers, vehicles and other equipment that are necessary to the debtor personally for work or study, subject to a maximum aggregate value of £1,350.

Goods that belong solely to another, such as a spouse or other family member, or those subject to hire or hire-purchase agreements

Question 12

What document must a judgment creditor issue if they wish to take control of goods to enforce a High Court judgment?

Answer 12

A writ of control.

Question 13

What are the options for a party if they wish to take control of goods to enforce a County Court judgment?

Answer 13

Question 14

What is the procedure for taking control of goods in the High Court?

Answer 14

The judgment creditor delivers a praecipe (request) and two copies of a writ of control to the court office, together with the judgment.

The court seals the writ and returns one copy to the creditor.

The creditor then forwards this to the HCEO for the county where the debtor resides or carries on business, for the writ to be executed.

Question 15

What is the procedure for taking control of goods in the County Court?

Answer 15

The creditor files the form of request for a warrant of control at the County Court hearing
centre that serves the address where the goods are to be seized.

The warrant is executed by the enforcement officer for the district where the debtor
resides or carries on business.

Question 16

What is a controlled goods agreement?

Answer 16

An agreement under which the debtor acknowledges that the
enforcement agent has taken control of the goods and, further, that they will not remove or
dispose of them before the debt is paid.

The effect is that the goods remain on the premises for a few days to allow the debtor one final opportunity to pay.

Question 17

What if a debtor breaches a controlled goods agreement?

Answer 17

The goods seized will be sold at a public auction and the amount required to pay the judgment, including costs, will be deducted from the money raised, with any surplus being returned to the debtor (and any co-owner).

Question 18

What are the advantages of taking control of goods?

Answer 18

In the High Court, HCEOs
are usually paid on their results based on the amount collected and so it is generally perceived that they are more effective in achieving a successful conclusion.

In the High Court, interest continues to accrue on the debt.

Question 19

What are the disadvantages of taking control of goods?

Answer 19

The logistical difficulties involved in locating hidden assets.

The costs

The relatively low re-sale value of the goods seized means that the judgment creditor may not obtain all the monies due to them.

Question 20

What is the effect of a charging order?

Answer 20

The creditor is placed in a similar position to a mortgagee and may apply for an order for sale.

Question 21

What assets can be subject to a charging order?

Answer 21

Land or securities.

Question 22

Can jointly-owned land be the subject of a charging order?

Answer 22

Yes, the order will be a charge upon the debtor’s beneficial interest on the land, rather than the land itself.

Question 23

What must happen after a charging order is made over land?

Answer 23

It should be registered at the Land Registry or (if unregistered) at the Land Charges Department.

Question 24

When and at which court can an application for a charging order over land be made?

Answer 24

Where the debt is more than £5,000, the application for a charging order can be made either in the High Court or the County Court Money Claims Centre.

Question 25

What are the three stages of obtaining and enforcing a charging order over land?

Answer 25

Interim charging order

Final charging order

Order for sale

Question 26

What is the procedure for an interim charging order?

Answer 26

The creditor must file an application notice including details of the judgment debt, the
land over which the charging order is sought, and the names and addresses of any other
person affected such as a party with a prior charge over the property.

The creditor must also file a draft interim charging order.

The application will usually be dealt with by a court officer without a hearing, who will
either make the ICO or refer the matter to a judge for further consideration.

The ICO, the application notice and any documents filed in support must be served by the
creditor on the debtor within 21 days.

The debtor then has 14 days to request that the court officer’s decision be reviewed by
a judge.

Question 27

What is the procedure for a final charging order?

Answer 27

If any person objects to the making of a final charging order (FCO), they must file and serve written evidence stating the grounds of objection within 28 days of service of the ICO.

If an objection is received, the court will transfer the application to the debtor’s home court for a hearing.

At the hearing the court can make a FCO, discharge the ICO or direct a trial of any issues in dispute between the parties.

Question 28

What is the procedure for an order for sale?

Answer 28

If the interim order is made final, the creditor has a charge on the debtor’s land, which can be enforced by an order for sale of the property. However, in order to do so, fresh proceedings must be commenced.

Question 29

What are the advantages of a charging order?

Answer 29

A useful means of securing payment against those debtors who lack liquid (available) assets.

Secures the judgment debt.

It may encourage the debtor to
make efforts towards settling the debt, particularly as interest will continue to accrue.

Question 30

What are the disadvantages of a charging order?

Answer 30

It is not appropriate where there are significant other prior charges or mortgages over the property so that there may be no or insufficient equity available to enforce against.

Payment may not be received for many years if an application for
an order for sale is unsuccessful.

Question 31

What does a charging order on securities cover?

Answer 31

UK government stock, shares and unit trusts with the charge extending to any interest or dividend payable.

Question 32

What is a third party debt order?

Answer 32

Where the debtor is solely and beneficially owed money by a third party, the court can make an order requiring the third party to pay the creditor sufficient of the monies to satisfy the judgment debt and costs.

Question 33

Where must an application for a third party debt order be issued?

Answer 33

In the court that made the order
being enforced, unless the proceedings have (subsequently) been transferred to a different
court.

Question 34

What is the procedure for a third party debt order?

Answer 34

The creditor applies to court without notice to the debtor, providing details such as the
name and address of the branch where the money is held and the account number.

The judge will make an interim order, which has the effect of freezing the bank account or
funds held by the third party. At this point, no money is paid to the creditor but a hearing
will be listed no less than 28 days later.

At the hearing, the court will consider any objections and, unless there is a good reason
not to do so, the order will be made final. This requires the third party to pay the money
to the creditor.

Question 35

What is the advantage of a third party debt order?

Answer 35

The element of surprise as the debtor will not be aware of the application until after the order has been made.

Question 36

What is the disadvantage of a third party debt order?

Answer 36

An informed debtor is likely to move the funds as soon as a judgment is made (if not before). If the account is not in credit on the day when the order is served, it is ineffective.

Question 37

What is an attachment of earnings order?

Answer 37

An order that compels the debtor’s employer to make
regular deductions from the debtor’s earnings and pay them into court.

Question 38

To which court must an application for an attachment of earnings order be made?

Answer 38

Only to the County Court, so if the if the judgment has been obtained in the High Court, the proceedings will have to be transferred to the County Court.

Question 39

What is the procedure for an attachment of earnings order?

Answer 39

The creditor applies to the County Court Money Claims Centre.

The court informs the debtor of the application and requires them either to pay the sum
due, or to file a statement of means giving details of their income and outgoings.

On receipt of the form, a court officer will make an attachment of earnings order, fixing the repayment rate by applying certain guidelines. Only if there is insufficient information
to do so will the matter be referred to a judge. The order will specify the normal deduction rate and the protected earnings rate. The latter is the amount that the court considers is reasonable for the debtor to live on.

The order will be sent to the parties and to the debtor’s employer, with instructions
to deduct the amount ordered from the debtor’s pay and forward it to the court.
The employer is entitled to deduct a small additional sum in respect of their administrative costs.

If either party objects to the order that has been made, they can apply for the matter to
be reconsidered by the district judge at a hearing.

Question 40

What are the disadvantages of an attachment of earnings order?

Answer 40

If the debtor loses their job, the payments will cease and if they move employment, the creditor will have to repeat the process.

The court may order a very low value instalment so the judgment will take a considerable time to satisfy.

Question 41

How may a judgment be enforced in Scotland and Northern Ireland?

Answer 41

A creditor must obtain a certificate confirming the date of the judgment, the sum awarded and details of interest and costs; and make an application to the court in Scotland or Northern Ireland, supported by evidence,
to register the judgment within six months.

Question 42

How may a judgment be enforced in the Commonwealth?

Answer 42

Enforcement is possible under the Administration of Justice Act 1920 for High Court judgments and the Foreign Judgments (Reciprocal Enforcement) Act 1933 for judgments of the County Court.

The judgment must be final and registered within 12 months
for the 1920 Act but the creditor has six years for matters that fall within the 1933 Act.

Question 43

How may a judgment be enforced in most countries?

Answer 43

If the 2005 Hague Convention applies (where the parties have an exclusive choice of court
agreement), the judgment will be enforced and recognised in that country.

Otherwise, the creditor’s ability to enforce an English judgment will be determined by the national law of the particular country where enforcement is sought. The creditor will usually have to issue fresh proceedings and instruct local lawyers to pursue their claims with the consequential increase in time and cost.