There are a number of ways of enforcing a judgment. You can use more than one method at the same time.
Credit checks before enforcing?
Before incurring the cost of enforcement you may want to check the debtor's position again. This would involve carrying out a credit check and also asking us to check that there are no current winding up petitions.
Information Order
We can apply to the court for an order that the debtor attends before a court official to be examined about his/her/their assets and means.
These applications can be useful but are not common. They are time- consuming because you have to wait for an appointment, which may be given weeks or, normally, months ahead. The information given is of limited use and there may be difficulty serving the debtor. In addition the costs you incur are not recoverable from the debtor.
Who is questioned?
In the case of an individual defendant, you will examine them.
In the case of a company defendant you can examine any director, the company secretary or any other person in the company who should have a good working knowledge of the company's financial status.
Style of examination
The examination will normally take place before a court official, in which case it will be reasonably relaxed.
If you feel the cost is worth it, we can instruct a solicitor or barrister to attend the examination and conduct a more rigorous cross examination. In exceptional cases, the examination can be held before a judge. In this case we would have to arrange someone to attend for you and conduct the examination.
There is a standard form of questionnaire and the debtor will be asked to bring along the more obvious financial documents, such as payslips etc. If you want additional questions asked, or for the debtor to bring additional documents, we can ask for this in the application.
If the debtor does not attend, the Court will make a further order against him compelling him to attend and he will be arrested if he does not. Again, we would need to instruct a process server to serve this order.
Writ/Warrant of Execution
This is the most common first method of enforcement. For a reasonable sum you get someone experienced attending the debtors premises and collecting the money, or taking steps to enforce payment by seizing and selling goods, or giving you a report as to the debtor's position.
What can be taken?
Most moveable items belonging to the debtor can be taken including any money, banknotes, bills of exchange, promissory notes, bonds, specialties or securities for money belonging to the debtor.
What can't be taken?
Essentially the basic items to enable the debtor to live and work can't be taken. These are defined as: -
- Such tools, books, vehicles and other items of equipment as are necessary to the debtor for use personally by him in his employment, business or vocation;
- Such clothing, bedding, furniture, household equipment and provisions as are necessary for satisfying the basic domestic needs of the execution debtor and his family.
- Such tools, books, vehicles and other items of equipment as are necessary to the debtor for use personally by him in his employment, business or vocation;
How are the items realised?
The items seized must generally be sold by auction. Items can only be sold privately with the court's permission. This will normally only be given where the goods are of a specialised nature or would be of special value to e.g. the debtor's colleagues or family.
The cost and delay of making an application for permission to sell privately must be balanced against any possible gain.
How to help the HCEO/Bailiff
You can help the HCEO/Bailiff by providing all the information you have about the debtor's whereabouts, contact details and movables.
This would include obviously any addresses and also telephone numbers, mobile numbers, details of vehicles etc.
For example, if you know that the debtor keeps valuable equipment or vehicles at different locations, let us know what they are and where they are.
Who enforces?
The county court bailiff enforces judgments for less than £600.
The High Court Enforcement Officer enforces judgments for more than £5000.
Judgments between £600 - and £5000 can be enforced by either the High Court Enforcement Officer or the bailiff.
Generally speaking the HCEO is more effective than the bailiff.
Forcing entry
Entry can be forced into commercial premises e.g. by employing a locksmith to pick the lock but entry cannot be forced into residential premises.
What if someone claims them?
Someone other than the debtor may claim that the goods belong to them.
If you feel the claim is doubtful (e.g. because it is from a relative or friend of the debtor), and if the goods are sufficiently valuable it is often worth contesting it and going as far as the first hearing for directions. Quite often a claimant either will fail to attend this hearing, or will fail to put in evidence of ownership, in which case the claim will be struck out. In this case the costs of the HCEO will be payable by you in the first instance, but you would be entitled to recover them and your own costs from the claimant.
Obviously, if you decide to accept the claim once you have seen the evidence, you will have to pay the HCEO's costs and may have to pay the claimant's costs as well. Although it is sometimes possible to negotiate a settlement by which you withdraw your opposition to the claim without paying the claimant's costs, this is not always possible.
If you do not accept the claim, the HCEO will make an application for the court to decide who owns the goods. There will be an initial appointment at which the court will give directions for the claimant to file an affidavit setting out the evidence supporting the claim and for you to file an affidavit in reply to this. After that the court will give directions for a hearing date at which the court will decide the dispute. The hearing will be in the HCEO's local court. If the claimant does prove ownership, you will be responsible for the claimant's costs and the HCEO's costs as well as your own. The cost of going this far will depend on what evidence is put in and we can give you an estimate once we have seen the evidence.
Don't do a deal direct
It is important that you do not make any deals direct with the debtor once the HCEO has been instructed. If you do, and you forget the HCEO's charges, you will find that you have to pay them! That can be an expensive mistake!
What does it all cost?
Various costs are involved at different stages.
The costs of instructing HCEO/bailiff - these are partly recoverable from the debtor if the HCEO/bailiff collects in full. If he does not they are payable by you.
Abortive costs - if the bailiff is unsuccessful he makes no further charge. If the HCEO is unsuccessful he will make a charge for the abortive attempt to execute.
Costs of seizing and selling - various costs may be involved here. There may be costs of breaking into premises, removal and storage costs and costs of sale. Apart from the expense actually incurred (e.g. for removing goods), the HCEO is entitled to commission of between 2.5% and 12.5% depending on the stage reached.
A Third Party Debt Order
Where your debtor is owed money by a third party, the court has the power to make an order directing that the money be paid direct to you, rather than to your debtor.
For example, the debtor may have a deposit account with a bank or building society. You only need to have evidence that the debtor has an account with the bank etc, you don't need to know the account number or even the branch, although it is helpful to have that information.
The order only affects accounts in the sole name of the defendant and not accounts held jointly with someone else. Of course, it is only useful if there is a credit balance in the account.
Debtors don't often have accounts in credit! The procedure can be used against debts due e.g. from a customer of the debtor, but getting that information can be difficult. Such applications are made, but not very often.
What this order does not do is freeze the debtor's accounts in the way that is possible in Scotland.
Charging Order
Where a debtor owns property e.g. a house, it is possible to get your Judgment secured by a charging order on the property. This gives you similar rights to those of a mortgagee. Once you have got the order you can then apply, by a separate action, for the sale of the property. An order for sale is rare.
The procedure
Obtaining a charging order is a two-stage procedure. We make an application on paper and without notice to the debtor. The court grants an Interim Charging Order and sets a date to consider the case again. The charge is registered and HM Land Registry and the debtor are told about the appointment. At the hearing the court grants a Final Charging Order. This again should be registered.
What property can you charge?
You can get a charge on the debtor's interest in: -
- Land
- Government stock
- Stock of any body (other than a building society) incorporated within England and Wales
- Stock registered in a register kept within England and Wales even though the body is incorporated outside England and Wales
- Unit trusts
- Funds in court
- Any interest under a trust
Is it worth it?
It is usually only worth getting a charge on a property if there is equity in it - i.e. it is worth more than has already been borrowed.
Most land is registered at HM Land Registry. It is possible to get a copy of the title and see what charges are registered. The title does not show how much has been borrowed or what the property is worth although more recently the price paid is shown.
You can take advice on the value of the property. You can make an application for an information order to find out the amounts borrowed.
Charges may give the right to make further advances or may cover variable amounts e.g. an overdraft in which case even if there is equity now, there may not be later.
Share in a house
It is also possible to get such an order where the debtor only has a share in the property e.g. where he owns a house jointly with his wife. The charge will then be on his share of the property and not on the property itself and is much less secure. A restriction will be entered on the debtor's title to say that notice must be given to the creditor but if that is done a sale or charge of the property can be registered. It's up to the people selling, often a husband and wife, to pay you!
Enforce by sale
Once you have a charging order you can enforce it by an application to sell the property. If an application to sell the property is subsequently made the costs will depend very much on whether the application is opposed, for example by a wife with children in the home. In one case sale was postponed for 10 years until the debtor's children became of age.
Some creditors automatically apply for a charging order, rather than instruct the HCEO etc., and find that the debts are paid off reasonably quickly because the debtor does not like having the charge on the property.
Instalment orders
A debtor who cannot pay the amount due under the judgment may apply for an instalment order. Provided the interim charging order has been obtained the court may make that order final.
There is now an agreed procedure with the CCBC where the debtor has applied for an instalment order. The creditor can obtain a charging order and consent to the instalment order at the same time.
An Attachment of Earnings Order
Where a debtor is working, this is often an appropriate method of enforcement. You will need to know the name and address of his/her employer. We will have to send them notice of your application because the courts will require a statement on the debtor's earnings from them.
The application can only be made in the debtor's county Court.
In our experience attachment of earnings orders are expensive to obtain and not effective if the employer does not pay. The courts are very slow in dealing with them.
Bankruptcy/Winding Up
This is the most expensive option but sometimes the most effective.
The first step, in the case of an individual, is to serve a statutory demand on the debtor personally. If he does not pay, or dispute the debt, within 21 days a bankruptcy petition can be presented. The real expense starts at this stage.
In the case of a company you can proceed straight to the winding up petition based on the unsatisfied Judgment. You can also present a winding up petition based on an undisputed debt without obtaining judgment or serving a statutory demand. This is very quick and can be very effective indeed.
Winding up Petitions presented against a company are advertised in the London Gazette. After advertising the Petition, other creditors may become involved. These may include the Inland Revenue & HM Customs & Excise or other creditors. If other creditors do become involved, and the debtor wants to settle this petition, it may have to satisfy them as well, otherwise they may wish to take over the Petition.
The important point to realise is that if the debtor makes payment after the date of issue of the Petition and the creditor informs the court that it does not wish to continue with the Petition, another creditor may take over the Petition. If a winding up order were subsequently made on behalf of a supporting creditor, you the creditor would have to repay to the liquidator the money recovered. This is because the Winding up Order dates back to the date of presentation of the Petition. This does not apply to payments made by a third party e.g. a director.
The court fee and receiver's deposit for a bankruptcy petition are £560.00. The court fee and receiver's deposit for a winding up petition are £810.00. In view of the size of these disbursements, we ask for these to be paid before we present the petition.
However, if the debtor lives in London, much of the work has to be done by personal attendance at the court rather than by post. If the debtor is unco-operative and evades service at all points, this can cause the costs to rise beyond this.
Such proceedings are the most costly option but can have great advantages with certain types of debtor.
Register of county court judgments
Any Judgment entered against the Defendant is immediately registered at a central registry of County Court Judgments. If the debt is cleared within one month then the entry is removed. However, if the debt is paid after one month then the debt will only be marked as satisfied. The Judgment will remain on the register for a period of six years. This will reduce his/her/their ability to obtain credit. For the Judgment entry to be removed, or marked as satisfied, the Defendant must forward proof of payment to the court together with a fee for removing or marking the entry. The fee is currently £10.00.
Appointment of receiver
Appointing a receiver is not a common way of enforcing a judgment. It is expensive and cumbersome.
A receiver does what the name implies, that is, receive amounts due to the debtor that cannot be collected in other ways.
How is it done?
Basically, a suitably qualified person, e.g. an accountant, has to be found who is willing to act. An application is then made to the court for them to be appointed to act as receiver.
The receiver has to lodge accounts and his remuneration is under the control of the court.
When is it appropriate?
It is appropriate where the debt is large enough to justify the costs in the following types of case, to: -
- Collect rent. The alternative would be a third party debt order each time an instalment became due.
- Intercept foreign debts. A third party debt order could not be obtained against a foreign party
- Collect future debts. A third party debt order can only be issued for debts that are currently due.
- Receive the income from a life interest in land or trust funds.
- Sell or surrender a life policy.
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