Enforcing judgments against defendants with empty pockets

31 January 2023

At the point at which a court hands down judgment, in many cases months or sometimes years after a commercial dispute has arisen and proceedings first issued, and the final outcome is in the Claimant’s favour, this is likely to represent a real moment of triumph. Still, any jubilation may be short-lived if the Defendant does not have sufficient funds to satisfy the judgment debt.

If you decide to sue a Defendant with empty pockets this will almost certainly result in a pyrrhic victory, one that inflicts such a costly toll on you, as the legal victor, both in terms of wasted time and expense, that it is tantamount to defeat. Indeed, it is not uncommon for established businesses or even high net-worth individuals to struggle to pay what is owed in the context of a sizeable commercial dispute, especially one running into several hundred thousand or millions of pounds.

Moreover, if the Judgment Debtor (the Defendant) falls to pay up, the onus will fall squarely on you as the Judgment Creditor (the Claimant) to issue further proceedings to enforce this debt, equating to extra time and expense over and above that already invested in successfully securing judgment. It is important to remember that obtaining judgment is only the first step to getting what you are entitled to, where the court will not automatically enforce this order on your behalf. In theory, it may be possible to add the costs of pursuing enforcement action to the outstanding judgment debt, but if the Defendant simply cannot pay, this will represent yet another pointless victory.

The good news is that, having cleared the first and often high litigation hurdle, there are several different routes to choose from in England and Wales when seeking to enforce a judgment debt, from Freezing Orders to Writs of Control. There is also nothing in principle stopping you from using more than one method to maximise the prospects of recovering the monies owed, although not all enforcement methods necessarily enforce against the same types of assets.

By way of example, provided you can satisfy the requirements for injunctive relief, including the imminent prospect that any available funds or assets of value will be dissipated by the Defendant, a post-judgment Freezing Order can be used to prevent this from happening. In the alternative, a Writ of Control is the permission authorising a High Court enforcement officer to seize and auction off any goods belonging to the Defendant’s business to realise funds to discharge what is owed.

Other enforcement options include: Charging Orders (to secure the debt against any land or securities owned by the Defendant); Orders for Sale (to compel the Defendant to sell any property charged); and Third Party Debt Orders (to recover sums owed to the Defendant by third parties).

Still, the key takeaway when contemplating court proceedings is to ensure that any prospective Defendant is worth pursuing, financially speaking, before issuing a claim against them. By instructing specialist legal representation to undertake due diligence as to the net worth of any party with whom you are locked in a dispute, making comprehensive pre-litigation enquiries to investigate that party’s finances, can save you time and money in the long run. The Defendant’s ability to satisfy any judgment sought should also remain under review throughout proceedings, and again closely scrutinised prior to commencing enforcement action. Put plainly, absent any assets or available funds, the Defendant and Judgment Debtor may no longer be worth pursuing.

 Equally, it is just as crucial to consider all other dispute resolution options as potentially far more effective alternatives to litigation. With a wealth of experience in helping to resolve all kinds of business disputes, often without recourse to the courts, I can offer creative and practical solutions to help resolve a dispute efficiently, and to ensure my client’s commercial objectives are still met.

Legal disclaimer

The matters contained within this article are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such.

Whilst every effort is made to ensure that the information is correct, no warranty, either express or implied, is given as to its’ accuracy, and no liability is accepted for any errors or omissions.

Before acting on any of the information contained herein, expert advice should always be sought.

© Melissa Worth, January 2023

The Dispute Adviser

A legal blog by Melissa Worth
You can also follow and/or contact me on:
Copyright
2024
 © All rights reserved
Design by John Cooper
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram