Recovery of Judgment Debts in England

Obtaining a favourable judgment in legal proceedings is a significant step in the course of litigation. Upon obtaining judgment, the successful litigant has obtained the relief that was sought from the court. Legal proceedings are usually commenced to either prevent a continuance of named conduct by the defendant, but most frequently to obtain a money order to compensate the claimant for some unlawful conduct on the part of the defendant. When judgment includes an order the unsuccessful party pay damages to the successful litigant - the judgment debt - the question turns to payment of the damages award to satisfy the order of the court. That is, to execute the judgment. In the first case, the claimant would be seeking an injunction; in the second the claim would be for damages or an account of profits.

It may the case that the unsuccessful party does not have sufficient liquidity to satisfy the sums payable, or they may look to evade compliance with the order.

On the other hand, they may be in a position to pay the judgment within the required period (usually 14 days) themselves or look to an insurer to satisfy the judgment. In any event, means and methods have been developed and remain in force to allow judgment creditors to ascertain the assets of a judgment debtor and elect the most appropriate means to recover those sums against judgment debtors.

Furthermore, European Enforcement Orders introduce a means by which to more cost-effectively pursue judgment debts in any member state of the European Union, so that assets may be realised in other member states, on the back of a judgment obtained in England.

When a judgment creditor enforces an order, the judgment debtor is liable for the costs of satisfying the order, and such legal costs are added to the sum recoverable by the execution of the enforcement process.

Methods of Enforcing Judgment Debts

When it comes time for enforcement of a judgment, an array a measures are available to the successful claimant (the judgment creditor) to:

1. obtain information in respect to the unsuccessful defendant’s (the judgment debtor) assets, and
2. secure the judgment over assets owned by the judgment debtor by:
   1. a writ of control or warrant of execution;
   2. a third party debt order;
   3. a charging order, stop order or stop notice;
   4. the appointment of a receiver for the purposes of equitable execution;
   5. in a county court, an attachment of earnings order;
   6. using any of the means made available by the Insolvency Act.

Judgment creditors are entitled to apply for any of these means under the rules of court to enforce a judgment. In addition to this, a creditor may use more than one method of enforcing the judgment, concurrently or sequentially.

Obtaining Information on Judgment Debtors

The judgment creditor may apply for an order that the debtor attend court to provide information in respect to their assets. When in attendance the debtor will be required to answer questions under oath relating to their debts and assets. In addition to this, for corporate defendants, information may be located at Companies House, by conducting insolvency searches and others.

Third Party Debt Orders

After the cross-examination of the debtor, it may come to light that they are owed money themselves from a third party to the proceedings. Third Party Debt Orders allow the judgment creditor to take over such debts, and be paid the sums due, rather than the judgment debtor.

These debts may include bank accounts, money held on behalf of the judgment debtor or ordinary debts that are due and payable. The judgment creditor is entitled to apply to the court without notice and obtain an interim order that the sums held by the third party are not paid to the judgment debtor to preserve the fund to satisfy the judgment debt. The third party will have a limited opportunity to inform the court that the debt to the judgment debtor is in dispute prior to a final order being made.

Charging Orders

Charging orders are used to obtain security over land, shares and other securities owned by the judgment debtor up to the sum of the judgment debt. In common with Third Party Debt Orders, charging orders are made on an interim basis to allow interested parties to object to the making of a final order.

Such orders grant the judgment creditor a secured interest over named property and as such become a secured creditor by virtue of the equitable charge that it imposed over the subject property. The judgment creditor may apply for an order for sale of the property in the event that the debt remains unsatisfied.

Writs of Control

A writ of control, formerly writs of fieri facias entitle a High Court Enforcement Officer (formerly a sheriff) to peaceably enter upon premises to seize goods owned by the judgment debtor for the purposes of sale to satisfy the debt. County Courts are empowered to issue warrants of execution for judgment debts for sums less than or equal to £5,000.

Writs of delivery are available to require the judgment debtor to deliver up specified property.

Sequestration Orders

In a sequestration, property is seized by persons executing the writ, and the subject property is managed for the purpose of collecting rents or profits for the purpose of discharging the judgment debt.

Equitable Receivers

In circumstances where the foregoing measures have been or are likely to remain ineffective to recover sufficient assets for sale, the judgment creditor may wish to apply for a receiver to be appointed to take control of funds that would otherwise be received by the debtor. Applications must be supported by evidence, setting out why a receiver ought to be appointed and propose a suitably qualified person for the appointment.

Contempt of Court Proceedings

Judgment debtors that seek to interfere with execution orders such as those referred to above is likely to be susceptible to a charge of contempt. The Court itself has power to order that a fine be imposed, security be taken and/or order that an injunction be imposed to prevent the debtor from taking further measures to interfere with the administration of justice.

Conclusion

Different means of enforcement are available under the Civil Procedure Rules to cater for the variation of circumstances of judgment debtors. Orders for the examination of judgment debtors, charging orders and sequestration orders are particularly powerful tools in the hands of a judgment creditor to recover sums due arising from a court order.