Claimants who go to court and win are sometimes surprised to find that the judgment awarded by the court is not self-enforcing. A defendant can simply refuse to pay, and thus require the claimant to take further action to collect the amount of the judgment.
Although claimants will often try to verify — before initiating court proceedings — that the defendant is insured or otherwise has the means to pay a judgment, even a careful and diligent claimant may find that ultimately he is unable to collect on a judgment. Fortunately, though, there are several alternatives open to the claimant in such circumstances.
The defendant’s ability to pay
If you are not certain whether the defendant has the means to pay your judgment, or if you want to determine how best to enforce your judgment, you can require the defendant to disclose information about his assets, employment status and other aspects of his financial situation. You do this by obtaining a court order, which compels the defendant to make such disclosure under oath to a court officer.
Methods of enforcement
Depending on what you know or are able to find out about the defendant’s financial circumstances, you may want to take formal action to enforce your judgment. The four main methods of enforcing a judgment are: (i) a warrant of execution; (ii) an attachment of earnings order; (iii) a third-party debt order; and (iv) a charging order.
(i) Warrant of execution
A warrant of execution can be useful if the defendant has assets that could be sold to satisfy the judgment (or enough money to pay the judgment in order to stop the sale of such assets). You will, however, need to be able to identify the assets, say where they are kept, and be certain that they belong to the defendant (and are not, for example, borrowed or on hire).
If you’re owed 5,000 or less, then you can ask the county court to issue a warrant of execution, which will enable a bailiff to collect the amount that is due. The bailiff will do this by first sending a letter to the defendant asking for payment. If the defendant does not pay in response to the letter, the bailiff can visit premises where the defendant’s assets are kept, take them, and sell them. (There are, however, certain types of assets, such as items the defendant needs for his job or business, which the bailiff may not take and sell).
If you’re owed more than 5,000, you can transfer your judgment to the High Court (and in fact you can do so if you’re owed more than 600). You can then ask a High Court Enforcement Officer to enforce your judgment.
It is possible for the defendant to ask for the warrant to be suspended, but — in effect — he then must make an offer of payment that is acceptable to you.
(ii) Attachment of earnings order
In general, if the defendant is employed, you can ask the court for an attachment of earnings order, which can allow you to collect the amount you are owed in instalments withheld from the defendant’s pay.
If the court grants such an order, it will ask the defendant for a statement of means so that the court can determine how much the defendant can afford to have withheld from his earnings. If the defendant does not reply to the request, there are various ways the court can require him to do so — including arrest by the bailiff. If the defendant earns only a low wage, you may not be able to attach any of his earnings, since there is a certain minimum amount that he is permitted to keep.
If the court orders that a part of his earnings be attached, then the court will send his employer instructions about how much to withhold, when to withhold it, and where to pay it. The Centralised Earnings Attachment Payment System will then administer the process — collecting payment from the employer and remitting it to you.
(iii) Third-party debt order
A third party debt order is essentially a freezing order for bank accounts, building society accounts and/or other similar accounts held by the defendant. To get the order, you must apply to the court and you must attend a court hearing. If the court decides to issue the order, it will notify the defendant’s bank (and/or other financial institutions).
When a bank receives such an order, it must search its records for any accounts held by the defendant and disclose information about such accounts to you and to the court. The court can then order the bank to pay to you out of the frozen funds.
A point to bear in mind is that a third party debt order will only freeze funds that are in the defendant’s account on the day that the bank (or other financial institution) receives the order. Money paid into the account after that date will not be frozen by the order.
In addition, the defendant can object to your application for a third party debt order and present the grounds for its objection to the court. The defendant can also ask the court to release frozen funds to the defendant on the grounds that it will cause hardship to the defendant and his family if sufficient funds are not released to enable the defendant to meet day to day living expenses.
(iv) Charging order
A charging order places a charge on assets owned by the defendant (such as a house or land). The effect of the charge is that if and when the defendant sells the charged asset you will be entitled to payment of the judgment debt out of the sale proceeds.
If the court issues a charging order to you, then you will need to register the charge over any land or other real property that is subject to the order. It will be up to you to complete such registration — which ordinarily will be with the Land Registry.
A drawback to a charging order is that it does not ensure immediate payment. The order does not compel the defendant to sell the charged property. It only provides that you will get paid if and when the defendant does sell.
Other methods of enforcement
Another way to enforce a judgment is to have the court appoint a receiver by way of equitable execution. The receiver will collect amounts due to the defendant (such as rent, business income, etc) and use it to pay you the unpaid amount of the judgment. You have to apply to the court for such an appointment, and the court rules specify the information you must provide in support of your application.
Finally, you can petition the court to have the defendant made bankrupt (if he is an individual) or wound up (if it is a company). Frequently, in response to such a petition, a defendant will pay the judgment promptly in order to have the petition discharged. Some drawbacks, though, to bankruptcy or winding up petitions are (i) they can be expensive, and (ii) if the defendant is made bankrupt or wound up, then as an unsecured creditor you might actually recover little or nothing.
Costs and interest
In general, you can recover the cost of enforcement action from the defendant. The corollary to this, however, is that if you take enforcement action and the defendant simply lacks the means to pay, then you will have incurred the cost of enforcement yourself — with nothing to show for it.
Court judgments also accrue interest (at a rate set by statute), and you can recover interest from a defendant by way of the enforcement process.
Given the potential cost implications and complexity of the rules relating to enforcement, most judgment creditors get the assistance of a solicitor in taking enforcement action. There are several ways to find a lawyer with experience of enforcement actions, including online research, consulting the Law Society, and/or searching our Solicitor Directory – you can do this by filling in the form on the top right-hand side of this page.