Civil Litigation: Enforcement of Judgments
If, at the end of litigation, the applicant has been successful in obtaining a judgment against the respondent, the respondent will usually pay the amount he has been ordered to pay without any further action being necessary. However, this is not always strictly true.
Where the losing party is unable to pay the judgment sum, or is unwilling to pay, despite the consequences, the successful party will have to take steps to enforce the judgment debt. The judgment will not be enforced automatically, and unless the applicant is pro active and takes enforcement action, they are unlikely to recover the monies owed.
There are various factors to consider before making a claim for money owed. The successful party should ensure that, before action is commenced, the respondent party’s whereabouts is satisfactorily ascertained, that they have the means to pay any monies owed and that there are assets available should enforcement become necessary. An Enquiry Agent may be necessary to trace the respondent and the applicant should provide the Agent with as much detail as possible in order for him to make a realistic attempt to trace the respondent. However, one must bear in mind that this can be expensive and it must be ensured that a disproportionate amount of money is not spent trying to trace the respondent, especially if they do not have the means to pay the monies owed.
If the losing party is not insured and does not have the means to pay up, it is unlikely to be a commercially viable option to go after them for monies owed, as the successful party may end up either chasing these monies far in to the future, incurring substantial legal fees as a result, or may end up spending more on the proceedings than the monetary value of the claim itself.
There are a number of enforcement options available to the successful party, once judgment is obtained. These are as follows:
- Execution: This is where the losing party’s goods are seized and sold to satisfy the judgment debt.
- Charging Order: This is where a charge is placed over the losing party’s land or other securities.
- Third Party Debt Order: This is an order which requires a third party who owes money to the debtor to pay the monies owed directly to the successful party.
- Attachment of Earnings Order: This is an order which requires the losing party’s employer to make deductions from his earnings and pay them to the successful party direct.
The advisor to the successful party will, on the facts of the case, advise as to what method of enforcement is most appropriate.
However, if the judgment sum is in the region of £750 or more, the successful party may choose to petition for the bankruptcy of the losing party. This cannot be done if a charging order has been put in place, as this poses a Catch 22 situation for the successful party in that if he petitions for bankruptcy but has a charging order in place, he faces giving up his position as a secured creditor in preference of petitioning for bankruptcy of the offending party.
In relation to enforcement of judgments outside the jurisdiction, the successful party must have regard to the rules as set out in the EU, Brussels and Lugano Conventions, in relation to obtaining the relevant certificate of enforcement.
This article courtesy of the litigation team at Darlingtons solicitors in London.