Unit 7 – Enforcement of Money Judgements

Question 1

What are the 2 ways to obtain more information about the judgement debtor’s financial circumstances?

Answer 1

1) Instruct an enquiry agent; and

2) Apply to the court for an order to obtain information from the debtor.

Where a party is hiding assets – use both.

Question 2

What is the procedure for obtaining an order to obtain information from a judgement debtor (i..e, person who owes money)?

Answer 2

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

(b) The order is normally personally served on the debtor who can, within 7 days, request payment of their reasonable travelling expenses to and from the court;

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

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

(e) Standard questions are asked. Creditor may also request additional ones. 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.

(f) 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 3

What are the 4 methods of enforcement?

Answer 3

1. Taking control of goods – seizure and sale of debtor’s goods
2. Charging order – A charge on the debtor’s land or securities
3. Third party debt order – An order requiring a third party who owes money
4. Attachment of earnings order – An order requiring the debtor’s employer to make deductions from their earnings and pay them to the creditor.

Question 4

What is Part 83 taking control of goods?

Answer 4

This method is used where the amount owed can be recovered by seizing the debtor’s possessions of an equivalent value. The items are then sold by public auction.

Question 5

Who carries out a taking control of goods order?

Answer 5

• In the High Court, the task is carried out by a High Court Enforcement Officer (HCEO).
• In the County Court, by enforcement officers (bailiffs).

Question 6

What powers can the officer have in taking control of goods?

Answer 6

• Residential = Enforcement officers cannot force entry into a debtor’s home.
• Commercial = Enforcement officers can use “reasonable force” to enter business premises if they believe the debtor’s goods are inside.

Question 7

What can be siezed under a control of goods order?

Answer 7

• Usual contents of a home or business premises (e.g., cars, computers, bank notes, boats, securities (e.g., share certificates).

Question 8

When can exemptions be applied for a control of goods order?

Answer 8

Necessary exemption applies only to INDIVIDUALS (not companys / sole traders etc).

Question 9

What cannot be taken under the necessary exemptions?

Answer 9

• Items like clothes, bedding, furniture, household equipment, which are reasonably required for the basic needs of the debtor and their family cannot be taken.
• 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 which belong solely to another, like a spouse or other family member, or those subject to hire or hire-purchase agreements may not be removed.
• Any disputes as to co-owner’s entitlement to a share of the proceeds of sale will be resolved by the court.

Question 10

For a judgement less than £600 (control of goods) what court should it be applied for in and what document is required?

Answer 10

1) County Court
2) Warrant of control
3) Enforced by enforcement officer (bailiffs)

Question 11

For a judgement of £600 or more (but less than £5,000) what court should it be applied for in and what document is required?

Answer 11

1) County court / High court (can choose)
2) Warrant or Writ of control
3) Enforcement agent applicable to the court

Question 12

For a judgement of £5,000 or more, what court should it be applied for in and what document is required?

Answer 12

1) high Court
2) Writ of control
3) Enforced by High Court Enforcement officer.

Question 13

What is the procedure for obtaining control of goods order in the high court ?

Answer 13

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

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

(c) 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 14

What is the procedure for obtaining the control of goods order in the county court?

Answer 14

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

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

Question 15

What is a controlled goods agreement and what is its effect?

Answer 15

• Controlled goods agreement = debtor acknowledges that the enforcement agent has taken control of the goods and, they will not remove or dispose of them before the debt is paid.
• Effect = goods remain on the premises for a few days to allow the debtor one final opportunity to pay.
• If payment is still not received, the goods seized will be sold at a public auction and the amount required to pay the judgement, including costs, will be deducted from the money raised. Any surplus is returned to the debtor (and any co-owner).

Question 16

Advantages / disadvantages controlled goods agreement –

Answer 16

Limitations:

1) Enforcement officers cannot force entry into a debtor’s home and a debtor may simply refuse them entry.

2) Objects can be hidden (e.g.., cars inside garages) and there can be low re-sale value of the goods seized. Creditor does not always obtain all monies due.

Advantages:

1) Enforcement officers can use reasonable force to break into business premises if there is no living accommodation attached and the debtor’s goods are believed to be inside.

2) Advantage of enforcement in the High Court = HCEOs are usually paid on their results – based on the amount collected – and so they’re usually more successful.

3) In High Court, interest accrues on the debt.

Question 17

What is a Part 73 Charging Order?

Answer 17

• Charging order can be made either on land or on securities (like stocks and shares)
• Charging order will sit on the asset until a time as it is worth the creditor pursuing the matter further and applying for an order for sale.

Question 18

Can a charging order be made over land jointly owned?

Answer 18

• Charging order can be made on land both solely owned by the debtor and jointly owned by the debtor.
• In joint ownership, the charging order sits over the debtor’s beneficial interest.
• This should be registered at the Land Registry (or, if unregistered, at the Land Charges Department).
• Creditor then has to apply to the court for an order for sale of the land charged and the judgement will then be satisfied out of the proceeds of sale.

Question 19

What is the procedure for applying for c ahrging order?

Answer 19

Debts more than £5,000 = Either County Court or High Court

3 Stages: 1) Interim charging order 2) Final charging order 3) Order for sale

Question 20

1) Interim charging order

Answer 20

• Creditor must file an application notice on the debtor and any interested party in advance notice.
• Notice includes the details of the judgement debt, the land over which the charging order is sought, names and addresses of any other person affected (e.g., a party with a prior charge over the property).
• Creditor must also file a draft interim charging order (ICO).
• Application will 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.
• ICO, application notice and any documents filed in support must be served by the creditor on the debtor within 21 days. This includes any other interested party.
• Debtor has 14 days to request that the court officer’s decision be reviewed by a judge.

Question 21

2) Final charging order

Answer 21

• 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 an FCO, discharge the ICO or direct a trial of any issues.

Question 22

3) Order for sale

Answer 22

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

Question 23

Advantages / disadvantages charging orders:

Answer 23

Limitations:

1) Charging order not appropriate where there are significant other prior charges or mortgages over the property so there may be no or insufficient equity available to enforce against, or where the debtor has no beneficial interest over it.

2) Lengthy process – payment may not be received for many years if an application for an order for sale is unsuccessful (i.e., if there are children living there).

Advantages:

1) Good where the debtor lacks liquid (available) assets.

2) Although it does not necessarily result in a prompt payment, it does secure the judgement debt.

3) May encourage the debtor to make efforts towards settling the debt, as interest will continue to accrue, unless the debt falls under the Consumer Credit Act 1974.

Question 24

What is a Third party debts order Part 72?

Answer 24

The debtor may be owed money by a third party, for example:

• Bank or building accounts that are in credit; and
• Trade debts due to a business

The court can make an order under Part 72 requiring the third party to pay the creditor sufficient monies to satisfy judgement debt and costs.

 Debt must belong to the judgement debtor solely and beneficially.

Question 25

What is the procedure for a third party debt order?

Answer 25

(a) Creditor applies to court without notice to the debtor, providing details like the name and address of the branch where the money is held and the account number.

(b) Judge makes 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.

(c) 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 then requires the third party to pay the money to the creditor.

Question 26

Advantages / disadvantages of third party debts orders –

Answer 26

Limitations:

1) If the account is not in credit on the day when the order is served, it is ineffective.

2) The bank account must be held in the sole name of the debtor. If it is in joint names, the application will fail.

Advantages:

1) Element of surprise as the debtor will not be aware of the application until after the order has been made.

2) By this time, their bank account or funds held by a third party will already have been frozen.

Question 27

What is a Part 89 attachment of earnings order?

Answer 27

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

– Method requires that the debtor is employed. Cannot be self-employed.

Question 28

Can an attachment of earnings order be applied for someone who is self employed?

Answer 28

NO.

Question 29

What is the procedure for applying an attachment of earnings order?

Answer 29

(a) Creditor applies to the County Court Money Claims Centre.

(b) The court informs the debtor of the application and required them either to pay the sum due, or to file a statement of means, giving details of their outcome and outgoings.

(c) 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.

– Protected earnings rate = the amount that the court considers reasonable for the debtor to live on, so if their earnings for a particular week are equal to or less than this figure, the creditor will receive nothing that week.

(d) The order will be sent to the parties and 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 for their administrative costs.

(e) If either party objects to the order, they can apply for the matter to be reconsidered by the district judge at a hearing.

Question 30

What are the advantages / disadvantages of an attachment of earnings order?

Answer 30

Limitations:

1) If debtor loses their job, the payments cease.

2) If debtor moves employment, the creditor will have to repeat the process.

3) Court may order a very low value instalment so the judgement will take a considerable time to satisfy.

4) If debtor is self-employed, it is not available.

Advantages:

1) If debtor is employed, effective means of obtaining payment of debt.

Question 31

If a creditor wishes to enforce a money claim in Scotland and Northern Ireland what should they do?

Answer 31

(a) CERTIFICATE – Obtain a certificate confirming the date of the judgement, the sum awarded and details of interest and costs; and

(b) APPLICATION TO COURT – Make an application to the court in Scotland or Northern Ireland, supported by evidence, to register the judgement within 6 months.

If the application is successful, the judgement will be registered and can be enforced using local methods.

Question 32

Where the creditor wishes to enforce a money claim in the commonwealth what do they require?

Answer 32

• For High Court judgements = Enforcement is possible under the Administration of Justice Act 1920.

– Judgement must be final and registered within 12 months.

• For Foreign Judgements = Enforcement is possible under the (Reciprocal Enforcement) Act 1933.

– Judgement must be registered within 6 years.

Note – Failure to register means the creditor loses their right to enforce outside the jurisdiction.

Question 33

Where the creditor wishes to enforce in other countries (i.e. not commonwealth or scotland / NI)?

Answer 33

For all other countries, including Member States of the EU where proceedings commenced on or after 1 January 2021, the issue of enforcement is dealt with in 2 ways:

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

2) If not part of the Hague convention, then the common law rules apply.

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

Practical considerations

• If enforcement is likely to require new proceedings to be issued, it may be sensible to start the claim in that country rather than in the English courts.