Enforcement of judgments - Enforcement of money judgments

Learning Outcomes

This article outlines the primary methods available to a judgment creditor to enforce a money judgment obtained in England and Wales. It details the procedures and key legal considerations associated with taking control of goods, third party debt orders, charging orders, and attachment of earnings orders. For the SQE1 assessment, you will need to identify the appropriate enforcement method in given scenarios, understand the procedural steps, and recognise the limitations and protections involved. This will enable you to apply the relevant rules to SQE1-style single best answer questions concerning debt recovery post-judgment.

SQE1 Syllabus

For SQE1, your understanding of enforcing money judgments must be practical and application-focused. You may need to advise a judgment creditor on the most suitable enforcement method or identify the legal consequences of using a particular method.

As you work through this article, remember to pay particular attention in your revision to:

  • the main methods of enforcing money judgments: taking control of goods, third party debt orders, charging orders, and attachment of earnings orders
  • the procedural requirements associated with each method of enforcement
  • the types of assets targeted by each method and the circumstances in which each method is most appropriate
  • key limitations and protections for the judgment debtor, such as exempt goods and protected earnings.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

  1. Which enforcement method directly targets funds held by a bank belonging to the judgment debtor?
    1. Charging order
    2. Taking control of goods
    3. Attachment of earnings order
    4. Third party debt order.
  2. What is the minimum notice period required before an enforcement agent can take control of a debtor's goods at their premises?
    1. 24 hours
    2. 3 clear days
    3. 7 clear days
    4. 14 clear days.
  3. Which of the following assets are generally considered 'exempt goods' when taking control of goods?
    1. A luxury watch
    2. Basic household furniture
    3. Tools of the trade above a certain value
    4. A second vehicle not used for work.

Introduction

Obtaining a court judgment ordering a party (the judgment debtor) to pay a sum of money to another party (the judgment creditor) is often only the first step. If the debtor fails to pay voluntarily, the creditor must take further action to enforce the judgment and recover the debt. Understanding the available enforcement mechanisms is essential for advising clients on the practical steps involved in turning a judgment into recovered funds.

The primary methods of enforcement against a judgment debtor's assets within England and Wales include taking control of goods, third party debt orders, charging orders, and attachment of earnings orders. The choice of method depends on the debtor's circumstances, particularly the nature and location of their assets. It is often necessary to obtain information about the debtor's means before deciding on the most effective enforcement strategy.

METHODS OF ENFORCEMENT

This section explores the main methods used by judgment creditors to enforce money judgments. For SQE1, you must understand the core procedures and applications of each.

Taking Control of Goods

This method involves seizing the judgment debtor's goods and selling them to satisfy the debt. It is commonly used when the debtor has valuable physical assets. The process is governed primarily by the Tribunals, Courts and Enforcement Act 2007 (TCEA 2007) and the Taking Control of Goods Regulations 2013.

The creditor first obtains a writ of control (High Court) or warrant of control (County Court).

Key Term: writ of control / warrant of control
A court authority permitting an enforcement agent to take control of a judgment debtor's goods to satisfy a debt.

An enforcement agent (formerly known as a bailiff), certificated by the court, carries out the enforcement. Before visiting the debtor's premises to seize goods, the agent must give the debtor at least seven clear days' notice of enforcement (Schedule 12, TCEA 2007).

Key Term: enforcement agent
A person certified by the court to take control of goods under a writ or warrant of control.

The agent attends the debtor's premises to identify goods that can be taken. Certain goods are protected.

Key Term: exempt goods
Goods that cannot be taken by an enforcement agent, such as basic household items, clothing, bedding, and tools of the trade up to a prescribed value (currently £1,350).

Goods taken into control are usually sold at public auction if the debt remains unpaid. The proceeds, after deducting the costs of enforcement, are paid to the judgment creditor.

Worked Example 1.1

A judgment creditor obtains a warrant of control against a debtor who runs a small food service business from home. The enforcement agent attends the debtor's home. Can the agent take control of the debtor's commercial-grade oven used for the business (valued at £2,000) and the family television?

Answer: The television is likely a basic household item and may be exempt. The commercial oven is a tool of the trade. As its value (£2,000) exceeds the current statutory limit (£1,350), the agent can take control of it. The agent must act reasonably and follow the correct procedures.

Third Party Debt Orders

This method allows a judgment creditor to intercept money owed to the judgment debtor by a third party. It is most commonly used to obtain funds held in the debtor's bank or building society accounts.

The creditor applies to the court without notice to the debtor for an interim third party debt order.

Key Term: interim third party debt order
A temporary court order freezing funds owed to the judgment debtor by a third party (like a bank) and preventing payment to the debtor.

If granted, the interim order is served on the third party (e.g., the bank) and the judgment debtor. The third party must freeze the debtor's account up to the amount specified in the order. The debtor has an opportunity to object.

If there are no valid objections, or objections are dismissed, the court may make a final third party debt order, requiring the third party to pay the frozen funds directly to the judgment creditor.

Key Term: final third party debt order
A court order directing a third party (holding funds owed to the judgment debtor) to pay those funds directly to the judgment creditor.

This method is effective if the debtor has funds in an account, but it only captures the amount available at the time the interim order is served on the third party. Joint accounts raise complexities and are often protected unless all account holders are judgment debtors.

Charging Orders

A charging order secures the judgment debt against the debtor's beneficial interest in certain assets, most commonly land or securities (like shares). It does not directly produce payment but converts the judgment creditor into a secured creditor.

Key Term: charging order
A court order imposing a charge over a judgment debtor's interest in property (e.g., land, shares) to secure the judgment debt.

The creditor applies for an interim charging order, usually without notice. If granted, this is registered (e.g., at the Land Registry for property) and served on the debtor and other interested parties. The court then considers whether to make the order final at a hearing. The court has discretion and will consider all circumstances, including the interests of other creditors and any co-owners.

Obtaining a final charging order does not guarantee payment. To realise the security, the creditor may need to apply for a separate order for sale.

Key Term: order for sale
A subsequent court order, obtained after a final charging order, compelling the sale of the charged property so the proceeds can be used to pay the judgment debt.

The court is often reluctant to order the sale of a family home, especially if dependents reside there.

Worked Example 1.2

A creditor has a judgment for £20,000 against a debtor who jointly owns a house (worth £300,000, mortgage £150,000) with their spouse. The creditor obtains a final charging order against the debtor's interest. What is the immediate effect, and what further step is needed for payment?

Answer: The immediate effect is that the £20,000 debt is secured against the debtor's share of the equity in the house. The creditor now ranks as a secured creditor. To obtain payment, the creditor must apply for an order for sale. The court will consider the circumstances, including the spouse's interest and whether it's a family home, before deciding whether to grant the order.

Attachment of Earnings Orders

If the judgment debtor is employed (not self-employed), the creditor can apply for an attachment of earnings order. This requires the debtor's employer to make regular deductions from the debtor's salary and pay them to the court, which then forwards the money to the creditor.

Key Term: attachment of earnings order
A court order directed to a judgment debtor's employer, requiring them to deduct sums from the debtor's earnings and pay them towards the judgment debt.

The court calculates a protected earnings rate (PER) – the minimum amount the debtor needs to live on. Deductions can only be made from earnings above the PER.

Key Term: protected earnings rate (PER)
The minimum amount of earnings the court decides a debtor needs for basic living expenses, which cannot be touched by an attachment of earnings order.

This method provides a regular stream of payments but depends on the debtor remaining in employment and having sufficient earnings above the PER.

Revision Tip

Remember that choosing the right enforcement method depends entirely on the debtor's known assets and circumstances. Obtaining information about the debtor's financial position (e.g., through an order for information) is often an essential preliminary step.

Key Point Checklist

This article has covered the following key knowledge points:

  • Enforcement is necessary when a judgment debtor does not pay voluntarily.
  • Taking control of goods involves seizing and selling the debtor's physical assets (subject to exempt goods rules) via an enforcement agent after obtaining a writ/warrant of control and giving 7 days' notice.
  • Third party debt orders freeze and capture funds owed to the debtor by a third party, typically a bank (interim order followed by final order).
  • Charging orders secure the debt against the debtor's interest in property (e.g., land, shares), making the creditor secured but requiring a further order for sale to realise funds.
  • Attachment of earnings orders compel an employer to deduct payments from a debtor's salary above the protected earnings rate.
  • The choice of method depends on the debtor's assets (goods, bank funds, property, employment status).

Key Terms and Concepts

  • writ of control / warrant of control
  • enforcement agent
  • exempt goods
  • interim third party debt order
  • final third party debt order
  • charging order
  • order for sale
  • attachment of earnings order
  • protected earnings rate (PER)
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