Securing a favourable judgment in court is a significant moment for most people involved in litigation, because it can be a mentally strenuous, long, and costly process. However, sometimes, that does not mark the end of proceedings, particularly when a court order grants a party the right to payment, as compliance from the debtor may be an issue. Accordingly, claimants should carefully evaluate their available recovery options and obtain appropriate legal advice to ensure that any action pursued is proportionate and effective.
There are a variety of enforcement methods available, such as a writ of control over the debtor’s assets, a third-party debt order, a charging order on the debtor’s property or an attachment of earnings order. These methods differ in effectiveness and appropriateness based on the assets possessed by the debtor and their sources of income.
The fragmented nature of these enforcement methods can present an additional challenge for claimants pursuing recovery. Selecting the wrong approach may result in significant expenditure of time and resources, with no guarantee that the costs incurred will be recovered. In some cases, claimants may ultimately be unable to recover any amount at all. Therefore, carrying out due diligence into the debtor’s financial circumstances before initiating recovery proceedings is essential. This enables claimants to evaluate the prospects of successful enforcement and determine whether pursuing recovery is proportionate in light of the debtor’s ability to satisfy any costs or liabilities.
Absence of assets, concealing assets and frustrating sale of property
A writ of control allows enforcement agents to seize and sell assets to repay costs. That said, certain assets are exempt from seizure, such as any essential household goods and any equipment necessary for the debtor’s business operations or employment. Therefore, if the debtor is already in financial straits, it is extremely unlikely that claimants will be unable to recover any monies.
In the event that property is seized and to be sold, debtors can also frustrate the cost orders through delaying the sale; less than 1% of orders result in a sale and usually take years to complete. Debtors can also conceal or restructure their assets so that on paper it appears that there is less for enforcers to seize than they actually possess. The numerous limitations of these methods can prove to be frustrating to claimants.
Limitation period
It is recommended that creditors act immediately after judgment is obtained in order to be able to choose from the most enforcement options possible. If enforcement action has been repeatedly or unreasonably delayed, the debtor will have had time to restructure their assets and may attempt to evade payment. Furthermore, permission from the courts will be required to enforce cost orders after a six-year period from the judgment. If the court deems that there had been an extended delay in enforcement, they may be reluctant to grant the creditor power to do so again.
To maximise the chances of obtaining costs from the other side, it is in the parties’ favour to consider enforcement and costs strategies before beginning legal proceedings. This includes understanding the financial situation and background of the defendant and the likelihood of them making payment voluntarily. These are also important factors to consider before deciding to pursue litigation to ensure that these efforts are worthwhile.
If you have secured a money judgment and want more advice on the best way of ensuring payment, please contact Nath Solicitors on 0203 983 8278 or get in touch with the firm online.