UK: They Think It’s All Over

But when the Court Case is over all too many claimants find it isn’t when they try to retrieve their money. Claire Turner, a Solicitor with Bevan Ashford, highlights the legal pitfalls when recovering debts both in the UK and abroad.

Many people believe that obtaining a Court judgment against a debtor, either at trial or by default if the debtor does not defend the claim, means the end of Court involvement. This is true only if the debtor pays the judgment debt. If they fail to pay within the time stipulated by the Court Order, then obtaining the judgment itself can be just the start of a long, and potentially costly procedure. Here are some answers to frequently asked questions on recovering debts and enforcing judgments.

There are a number of methods which can be used to try and enforce a judgment debt, which include, if the debtor is in, or has assets in England and Wales, putting a charge on the debtor’s property, obtaining an attachment of earnings order against the debtor’s salary, getting an order that the debtor’s bank pay funds directly to you from the debtor’s account, or instructing the Court bailiffs to seize goods to the value of the debt. A further possibility is to commence bankruptcy proceedings in the case of an individual, or winding up proceedings where the debt is owed by a company. The choice of which method to use depends on the individual circumstances of the case. It is always worth taking legal advice as to the likely costs and time involved, before embarking on enforcement proceedings.

All these methods require the further involvement of the Courts, and Court fees need to be paid up-front. The Court fees and some costs can normally be added to the debt to be recovered, but the harsh reality is that it is very difficult to recover more than a proportion of the costs that you incur enforcing a judgment.

However, none of these methods guarantee recovery of the debt if the debtor is particularly elusive or does not have any assets to attack, and knowledge of the assets and means of the debtor is invaluable in deciding which route to follow. A useful weapon in this regard is that it is possible to ask the Court for an order requiring the debtor to attend Court to answer specific questions as to his means and assets. If he fails to attend two such Court appointments, he can be imprisoned for contempt of Court.

However, if the debtor cannot be traced, it may be necessary to use the services of private investigators to find him, which can add to the costs.

The time taken to enforce the debt depends on the method used. Obtaining a charge on a debtor’s property means that the charge may only have to be paid only when the property is sold. Although, once you have a charge, it is possible to apply for the property to be sold, this is not necessarily straightforward and where the debt is relatively small, it can be difficult to force a sale of the property, which means that a creditor may have to wait for years to recover the money.

Sending round the County Court bailiffs or High Court Sheriff is a quicker method, although the length of time taken varies among different Courts, as do the levels of persistence of individual bailiffs.

If the debtor is based abroad, recovering the debt can prove even more complicated. The Courts’ definition of "abroad" can be even closer to home than you might think. Scotland, Northern Ireland and even the Isle of Man all have separate legal systems and do not automatically recognise judgments obtained in England and Wales, although procedures do exist for the reciprocal enforcement of judgments obtained in England and Wales. This usually requires the judgment to be registered with the relevant Court as a foreign judgment and then following the enforcement procedures of that jurisdiction.

The UK has reciprocal arrangements for enforcing judgments with numerous countries under the Brussels and Lugano Conventions. The procedures involved can vary greatly between countries, and there is a danger that a UK judgment may be deemed unenforceable if these are not followed. It is therefore important to ensure that the procedures are fully understood, if necessary with reference to a lawyer in the country concerned.

The main problems encountered in enforcing judgments outside the jurisdiction of the English and Welsh Courts are:

• The procedures involved can be time consuming and expensive. Where the claim is relatively small there is a danger that the majority of the costs involved in obtaining payment of the debt will not be recoverable, and that the costs may even exceed the amount of the debt outstanding.
• In order to register the debt with the relevant Court, it may be necessary to instruct a lawyer within the jurisdiction to prepare the paperwork and manage the proceedings. It may also be necessary to obtain official translations of Court documentation. This can substantially increase the costs, not all of which may be recoverable.
• If little is known about the assets of the debtor, there is always the risk that it will not be possible to enforce the debt in any event. Asset tracing can be difficult and expensive, especially in respect of companies registered in jurisdictions such as the Isle of Man, where for example, the requirements for companies to file returns that are open for inspection are much more limited than in England and Wales.