Whilst receiving a judgment in your favour may feel like the culmination of a potentially lengthy legal process, it may be just the first step (though an important one) on the path to financial recovery. In our latest insight, we look at how and when you can enforce a judgment to realise payment of any damages or costs which have been awarded.
What is enforcement?
When can I enforce my judgment?
Methods of enforcing judgments in England & Wales
What is enforcement?
Enforcement describes the process of recovering what you have been awarded in a judgment. It is often used as a catch-all term for a number of technically distinct legal processes on the way from judgment to realisation, which may include, depending on the circumstances:
- Enforcement - the court giving permission for the beneficiary of the judgment to enforce it; and
- Execution - actually taking steps to secure payment of the judgment debt.
In this article, we focus on enforcing money judgments of the courts of England & Wales within the jurisdiction. Many of these methods are however equally applicable to enforcing domestic arbitration awards. Under the Arbitration Act 1996, where an arbitration seated in England & Wales (or Northern Ireland) produces an award, that award can, with leave of the court, be enforced in the same manner as a court judgment to the same effect.
When can I enforce my judgment?
Unless a different period is specified in the judgment, a party must comply with a judgment or order for the payment of a sum of money (including costs) within 14 days of the date of judgment. The party with the benefit of the judgment (the judgment creditor) should ensure that the judgment is served on the judgment debtor. If payment is not made within 14 days (or by such other time as specified in the judgment) then the judgment creditor can seek to enforce the judgment. If the judgment provides for payment by instalments, then a missed instalment can also be a trigger to enforcement.
It is however possible for the judgment debtor to ask the court to stay execution of the judgment (i.e. order that it cannot be enforced) while they appeal the judgment. If such a stay is granted, then the judgment creditor won't be able to enforce the judgment pending the outcome of the judgment debtor's appeal. However, judgment debtors should note that enforcement of a judgment is not automatically stayed when a judgment is appealed. If you wish to stay enforcement while challenging the underlying judgment, you need specifically to seek and receive a stay of execution from the court. Such an application should be made promptly on learning of the judgment, not raised as a defence only when the judgment creditor takes enforcement action.
Whilst there is not a formal limitation period for enforcing a judgment, judgment creditors should not delay too long in taking action. Delay in taking enforcement action may give the judgment debtor opportunity to dissipate their assets, and may also weigh against the judgment creditor where an execution method is at the discretion of the court (e.g. seeking to obtain a charging order).
Methods of enforcing judgments in England & Wales
There are various methods of enforcing (or executing) a judgment in England & Wales. Which to choose will depend on what assets the judgment debtor is known to have. For instance, does the judgment debtor own land or property; valuable goods (cars, boats, business stock); bank accounts; or have an employment income?
Ideally you should ascertain your opponent's assets (and means of satisfying any judgment) at an early stage of proceedings, and if there is any doubt about their ability or willingness to satisfy a judgment, take steps to protect your position. For example, if there is a risk of your opponent dissipating their assets, it may be possible to obtain a freezing order; or a defendant may be able to obtain security for costs (an order requiring the claimant to provide funds or a guarantee to cover the defendant's legal costs of the proceedings).
If the judgment debtor's assets are not already known at the point of judgment, then there are processes by which the judgment creditor can ascertain them. These include simply asking the judgment debtor to volunteer the information; seeking a court order that the judgment debtor give that information under oath; making enquiries with third parties (e.g. banks, company and land registry searches) or instructing an enquiry agent to obtain evidence on the debtor (by legal means). Some of the most common methods of executing a judgment are as follows:
- Goods - if the judgment debtor is known to have goods (e.g. business stock), then it may be possible to 'take control' of these. The judgment creditor will need to apply to the court for a writ or warrant of control, which authorises an enforcement officer to seize and sell goods of a sufficient value to satisfy the judgment debt. Often the actual sale of goods is not necessary, as the attendance of enforcement officers and/or seizure of goods prompts the judgment debtor to make payment to avoid the necessity of their sale.
- Third party debt order - this method allows a judgment creditor to recover the judgment debt from a third party who holds funds for the judgment debtor (for example a bank where the judgment debtor holds an account).
- Charging order - with a charging order, the judgment creditor places a charge on the judgment debtor's property. Usually the charged property will be real estate, but it can also be used for other assets, for example shares in a company. The debt is then paid from the proceeds of sale of that property. However, this method is a two stage process - to realise the debt, the creditor needs not only to obtain the charge, but also to await the sale of the property or otherwise force it by seeking a further order for sale of the property. The judgment creditor will also rank behind prior charge holders on the property (e.g. any mortgagee of the property) so this method may not result in full satisfaction of a judgment debt.
- Attachment of earnings - this method entails a judgment debtor's employer deducting a proportion of the judgment debtor's salary payment and paying it to the judgment creditor. This can be a convenient method of enforcing smaller debts owed by individual judgment debtors.
- Insolvency proceedings - if the judgment debtor appears unable to pay, the judgment creditor can institute insolvency proceedings. Whilst insolvency should not be threatened frivolously, it can sometimes prompt payment from a recalcitrant judgment debtor. If the judgment debtor is genuinely unable to satisfy the judgment, then the judgment creditor stands to recover a proportion of the debt in the subsequent insolvency procedure. If however the judgment debtor has substantial other creditors, then the statutory insolvency procedure means that the judgment creditor will rank with other unsecured creditors, and may therefore ultimately recover nothing. For more information, see our insight The Basics: How to wind up a corporate debtor.
Points to remember
- Obtaining a favourable judgment is an important milestone in litigation, but may not be the end of the road.
- Judgment creditors may have to take enforcement action to recover sums awarded in a judgment.
- You should therefore try to ascertain your opponent's assets and ability to meet any judgment at an early stage of proceedings (and, if you are a claimant, ideally before commencing proceedings).
If there is doubt about your opponent's ability or willingness to satisfy a judgment debt, then there may be steps that can be taken in advance to give you protection, e.g. obtaining a freezing order, or a defendant may be able to seek security for their costs of defending the claim.
[] Although s.24(1) of the Limitation Act 1980 provides "an action shall not be brought upon any judgment after the expiration of six years from the date on which the judgment became enforceable", the court has held that this limitation period applies only to fresh actions, not to proceedings to enforce a judgment.