Learning Outcomes
This article outlines the principal methods available to a judgment creditor seeking to enforce a money judgment in England and Wales. It covers procedures under the Civil Procedure Rules (CPR) and related legislation. For the SQE1 assessments, you will need to identify the appropriate enforcement method based on the debtor's circumstances and assets. You will also need to understand the key procedural steps and limitations associated with each method. This knowledge will enable you to apply the rules effectively to SQE1-style single best answer MCQs.
SQE1 Syllabus
For SQE1, you are required to understand the practical application of different enforcement methods for money judgments. It is likely you will need to advise a judgment creditor on the most suitable option(s) or identify the correct procedure in a given scenario.
As you work through this article, remember to pay particular attention in your revision to:
- the distinction between High Court and County Court enforcement procedures
- the scope and limitations of Taking Control of Goods (including exempt goods)
- the process for obtaining Charging Orders and their effect
- how Third Party Debt Orders operate, particularly against bank accounts
- the requirements for Attachment of Earnings Orders
- the use of insolvency procedures as a means of enforcement pressure.
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.
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A judgment creditor wishes to enforce a £4,000 County Court judgment. Which enforcement method involving the seizure of goods is available?
- Writ of control
- Warrant of control
- Charging Order
- Third Party Debt Order.
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Which of the following assets would typically be considered 'exempt goods' and therefore protected from seizure under Taking Control of Goods regulations?
- A second television set used occasionally in a spare room.
- A van essential for the debtor's sole trader business, valued at £1,000.
- Antique jewellery inherited by the debtor.
- A laptop primarily used for personal entertainment.
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A creditor obtains a final Charging Order over a debtor's residential property. What does this order directly allow the creditor to do?
- Immediately evict the debtor and sell the property.
- Receive payments directly from the debtor's employer.
- Secure the debt against the property, affecting future sale proceeds.
- Freeze the debtor's main bank account.
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A Third Party Debt Order is sought against funds held in a debtor's bank account. Who are the main parties notified when an interim order is made?
- The judgment creditor and the court only.
- The judgment debtor and the third party (the bank).
- The judgment creditor and the judgment debtor only.
- The third party (the bank) and the court only.
Introduction
Obtaining a court judgment is often only the first step for a successful claimant (judgment creditor). If the defendant (judgment debtor) fails to pay the amount awarded, the judgment creditor must take further steps to enforce the judgment. Enforcement refers to the legal processes used to compel payment or compliance with a court order.
Key Term: Judgment creditor
The party who has obtained a court judgment in their favour for a sum of money.Key Term: Judgment debtor
The party against whom a court judgment for a sum of money has been made.
The rules governing enforcement of money judgments are primarily found in the Civil Procedure Rules (CPR) Parts 70-73, along with legislation such as the Tribunals, Courts and Enforcement Act 2007 (TCEA 2007). The appropriate court for enforcement depends largely on the judgment amount and type. Judgments up to £5,000 are typically enforced in the County Court, while High Court judgments (or County Court judgments over £600 transferred up) can utilise High Court Enforcement Officers (HCEOs). Judgments for £5,000 or more can generally be transferred from the County Court to the High Court for enforcement without needing the court's permission (subject to exceptions).
This article focuses on the main methods for enforcing money judgments.
Taking Control of Goods (TCG)
This is a common method allowing enforcement agents (HCEOs or County Court bailiffs) to seize the judgment debtor's goods and sell them to satisfy the debt. The procedure is governed by Schedule 12 to the TCEA 2007 and the Taking Control of Goods Regulations 2013.
Key Term: Taking Control of Goods (TCG)
The statutory process allowing enforcement agents to seize a debtor's goods for sale to recover a judgment debt. Replaces the older terms 'distress' and 'execution'.
The enforcement agent must give the debtor at least 7 clear days' notice of their intention to enter premises to take control of goods (the 'Notice of Enforcement'). Entry must usually be peaceful and between 6 am and 9 pm.
Crucially, certain goods are protected from seizure.
Key Term: Exempt goods
Goods protected by law from being taken by enforcement agents. Includes items necessary for the debtor's basic domestic needs (clothing, bedding, basic furniture, cooker etc.) and tools essential for the debtor's personal employment, business, or education up to a value of £1,350.
If goods are taken, they are typically sold at public auction if the debtor does not pay the amount due (including enforcement costs).
High Court enforcement uses a Writ of control, whereas County Court enforcement uses a Warrant of control.
Key Term: Writ of control
A High Court command directing an HCEO to take control of a judgment debtor's goods to satisfy a judgment debt.Key Term: Warrant of control
A County Court command directing a County Court bailiff to take control of a judgment debtor's goods to satisfy a judgment debt.
Worked Example 1.1
A judgment creditor has a High Court judgment for £10,000 against Ben, a self-employed plumber. Ben owns two vans; one worth £8,000 used daily for work, and an older one worth £1,500 used for spares. Can the HCEO take control of both vans?
Answer: The HCEO can likely take control of the older van (£1,500). The main work van (£8,000) is likely essential for Ben's business. As its value exceeds the £1,350 limit for tools of the trade, it is not automatically exempt, but the HCEO must consider the proportionality of seizing an essential tool. However, the second van is unlikely to be considered essential and can be taken.
Charging Orders
A Charging Order secures the judgment debt against the debtor's beneficial interest in assets, most commonly land or property, but also securities like shares. It operates like a mortgage, meaning if the asset is sold, the judgment creditor is paid out of the proceeds (after any prior secured creditors). The procedure is governed by CPR Part 73 and the Charging Orders Act 1979.
Key Term: Charging Order
A court order securing a judgment debt against a debtor's interest in specified property (e.g., land, shares).
The process involves two stages:
- Interim Charging Order: An initial application (usually without notice to the debtor) freezes the debtor's interest.
- Final Charging Order: After the interim order is served on the debtor and relevant third parties (like co-owners or mortgagees), the court holds a hearing to decide whether to make the order final.
A Charging Order does not itself force a sale. The creditor must make a separate application to the court for an Order for Sale if they wish to compel the sale of the property. Courts have discretion and consider factors like whether it is a family home and the interests of other residents.
Key Term: Order for Sale
A separate court order, applied for after obtaining a final Charging Order, which compels the sale of the charged property to satisfy the debt.
Worked Example 1.2
Chloe has a £25,000 judgment against David, who jointly owns his house (worth £300,000, mortgage £150,000) with his wife. Chloe obtains a final Charging Order against David's beneficial interest. Can she immediately force the sale of the house?
Answer: No. The final Charging Order secures the debt against David's share of the equity. To force a sale, Chloe must apply for a separate Order for Sale. The court will consider all circumstances, including the fact it is jointly owned and is likely the family home, and the amount of equity available for David after the mortgage. Sale is not guaranteed.
Third Party Debt Orders (TPDO)
This method allows a judgment creditor to intercept money owed to the judgment debtor by a third party. The most common use is to obtain funds held in the debtor's bank or building society account. The procedure is under CPR Part 72.
Key Term: Third Party Debt Order (TPDO)
A court order requiring a third party who owes money to the judgment debtor (e.g., a bank) to pay that money directly to the judgment creditor instead.
Similar to Charging Orders, there is a two-stage process:
- Interim TPDO: An initial order served on the third party (e.g., the bank) freezing the amount of the judgment debt in the debtor's account.
- Final TPDO: A hearing takes place where the court decides whether to order the third party to pay the frozen funds to the judgment creditor. The debtor can raise objections (e.g., the funds belong to someone else).
Banks are only required to pay funds actually available in the account at the time the interim order is served, up to the judgment amount. Overdraft facilities cannot be attached. Joint accounts present complexities.
Worked Example 1.3
A creditor has a £1,500 judgment against Sam. They know Sam has a current account with Bank X which usually has funds. They apply for and obtain an interim TPDO which is served on Bank X when Sam's account balance is £800. What happens next?
Answer: Bank X must freeze the £800. The interim order is served on Sam. At the final hearing, unless Sam has valid objections, the court will likely order Bank X to pay the £800 to the creditor. The creditor would need to use other methods to recover the remaining £700.
Attachment of Earnings Orders (AEO)
An Attachment of Earnings Order requires the judgment debtor's employer to make deductions from the debtor's wages or salary and pay them directly to the court, which then forwards the money to the judgment creditor. This method is only available in the County Court (CPR Part 89, Attachment of Earnings Act 1971).
Key Term: Attachment of Earnings Order (AEO)
A court order directed to a judgment debtor's employer to make regular deductions from the debtor's earnings and pay them to the court for the judgment creditor.
This method is only suitable if the judgment debtor is employed (not self-employed). The court sets a 'protected earnings rate' – an amount the debtor needs for basic living expenses, which cannot be deducted. The employer is legally obliged to comply with the AEO.
Exam Warning
Remember that AEOs are only available against employed individuals and applications are made to the County Court. They are not suitable for debtors who are self-employed, unemployed, or companies.
Insolvency Procedures
While primarily designed to deal with inability to pay debts generally, initiating insolvency proceedings can be used tactically to put pressure on a debtor to pay a specific judgment debt.
For individual debtors owing £5,000 or more, the creditor can serve a Statutory Demand. If the debt is not paid or disputed within 21 days, the creditor can petition for the debtor's bankruptcy.
Key Term: Statutory Demand
A formal written demand for payment of an undisputed debt (minimum £5,000 for individuals, £750 for companies). Failure to comply can be used as evidence of inability to pay debts in subsequent insolvency proceedings.
For company debtors owing £750 or more, a Statutory Demand can be served, followed by a winding-up petition if the company fails to pay.
Revision Tip
Using insolvency procedures purely as debt collection for disputed debts is frowned upon by the courts and can lead to adverse costs orders. It is most effective where the debt is undisputed and the creditor believes the debtor has assets but is refusing to pay.
Key Point Checklist
This article has covered the following key knowledge points:
- Enforcement is necessary when a judgment debtor fails to pay voluntarily.
- Different methods exist under CPR Parts 70-73 and related Acts.
- Taking Control of Goods (Writ/Warrant of Control) allows seizure and sale of non-exempt goods.
- Exempt goods include essential domestic items and tools of the trade up to £1,350.
- Charging Orders secure debt against property/shares but require a separate Order for Sale to compel sale.
- Third Party Debt Orders attach funds owed to the debtor by third parties (commonly bank accounts).
- Attachment of Earnings Orders deduct from an employed debtor's wages (County Court only).
- Insolvency (bankruptcy/winding-up) can be used tactically via a Statutory Demand for undisputed debts.
- Choice of method depends on the debtor's assets and circumstances.
Key Terms and Concepts
- Judgment creditor
- Judgment debtor
- Taking Control of Goods (TCG)
- Exempt goods
- Writ of control
- Warrant of control
- Charging Order
- Order for Sale
- Third Party Debt Order (TPDO)
- Attachment of Earnings Order (AEO)
- Statutory Demand
