Purpose of this consultation paper
This is the second in a series of consultation papers issued by the Lord Chancellor's Department during the course of the Review of Enforcement of Civil Court Judgments.
The original intention for this second consultation, which was set out in our Newsletter in November 1998, had been to issue a paper focusing on the oral examination and judgment summons procedures. However, it is now clear that there would be benefit in first setting out for discussion some of the key principles for creating a more effective enforcement system which have been identified by the panels, before proceeding to the detail of individual procedures. This paper, therefore, invites responses to a number of questions in the following areas:
the distinction between debtors who can't pay and debtors who won't pay;
gathering information about debtors;
sanctions for failure to comply with court orders; and
the role of the court.
The first consultation paper described the current arrangements for enforcement and posed a number of general questions, inviting comments and views on how the current arrangements could be made more effective. Each chapter in this paper includes an overview of the relevant responses to the first paper, to put the discussion in context. A more comprehensive analysis of the responses to the first paper, in so far as they relate to the issues contained in this paper, is provided at Annex A. The full Terms of Reference of the Review are also included at Annex B.
Following the first consultation exercise, four panels of experts were set up to generate ideas, identify problems and propose solutions in the first phase of the Review. Panel members were drawn from across the spectrum of interest groups involved in enforcement. The four panels are looking at the following areas in enforcement:
Oral Examinations and Judgment Summonses (including broader issues relating to information gathering);
Attachment of Earnings, Charging Orders and Garnishee Orders;
Warrants and Writs; and
General Issues - looking at issues which cut across the different methods of enforcement.
This paper is based largely on the views expressed and the conclusions reached to date by the General Issues and Oral Examination/Judgment Summons panels. The views and conclusions in the paper should not be read as Government policy proposals.
It should be borne in mind that many of the suggested options in this paper would require primary legislation, which would be dependent on securing Ministers' agreement and a suitable space in the Government's legislative timetable.
Responses should be sent by 30 July 1999 to:
E-mail responses can be sent to: consult.response- lcdhq@btinternet.com
Paper copies of this consultation paper can be obtained from David Goss at the above address or by calling 0171-210 8863.
The Department will be unable to guarantee to take account of any responses received after the deadline.
In the course of the Review, the Department may wish to publish responses received.
Please ensure you state clearly in your response if you wish us to keep your name, and the contents of your response, confidential. Otherwise, your name and the general contents of your response may be made public, under the provisions of Open Government. Confidential responses will only be included in general statistical summaries of the number of responses received and views expressed.
1.1 The distinction between debtors who "can't pay" and debtors who "won't pay" a judgment debt is crucial in any debate on enforcement. Creditors do not want to waste time and money taking action against debtors who do not have the means to pay a debt. Equally, debtors who genuinely cannot pay must be protected from over- zealous creditors. A proper identification of "can't pay" debtors would also free up court resources for the pursuit of those resisting payment.
1.2 The first consultation paper asked whether the court should have a role in limiting enforcement procedures, and the extent to which a debtor should be protected from enforcement. The majority of respondents (mainly creditors and their associations) thought the court should not limit enforcement, but without providing detailed reasons for that view. Others thought that the court had a double duty - to protect creditors from taking action which was likely to prove fruitless, and to protect vulnerable debtors from over-zealous creditors.
1.3 On the question of the extent to which debtors should be protected from enforcement, the majority of respondents (again, mainly creditors and their associations) thought there were already sufficient safeguards in place, by way of provisions for protected income and assets. Some respondents suggested there should be no, or less, protection for debtors. Many who advanced a case in support of a degree of protection for debtors based their arguments on the need to provide protection for genuine "can't pay" debtors. One response said "...debtors who can pay but choose not to should not be able to escape enforcement by the provisions intended to protect the less fortunate...we are also concerned about the situation of chronic debtors, those who are in genuine financial difficulty, due to their own mismanagement of resources...we believe that the judiciary should retain the power to limit enforcement in cases of genuine hardship...but the onus should be on the debtor to seek protection at the earliest opportunity".
1.4 The panels recognised the importance of the can't pay/won't pay distinction. They acknowledged, however, that the frequency with which the terms "can't pay" and "won't pay" were used belied the difficulties involved in making any truly meaningful distinctions between the two. The panels discussed whether it would be possible to draw up working definitions of "can't pay" and "won't pay", but concluded that any attempt to arrive at universally accepted categories, into which every debtor could be placed, was clearly doomed to failure, not least because many debtors would fall somewhere within the wide spectrum between the extremes. They also suggested that it would be a mistake to require every creditor, or the courts, to determine, at the outset of the enforcement process, whether a particular debtor was someone who could not pay or one who would not pay, since the information required to make that distinction would be too demanding. They concluded, therefore, that there was no scope for a two-track enforcement system, with one track dealing leniently with those in genuine difficulty, and a second track dealing more severely with those deliberately evading payment.
1.5 Instead, the panels suggested the aim should be to ensure that court procedures would enable informed decisions to be taken in as many cases as possible about whether and how to proceed with enforcement. They also concluded that a further aim should be to ensure that adequate safeguards were in place for each method of enforcement - for example, to provide for a minimum income level for those subject to an attachment of earnings order - so that those in financial difficulty could be identified at the earliest opportunity and dealt with appropriately.
1.6 The panels also concluded that, however difficult it was in practice to draw the distinction between "can't pay" and "won't pay", it was vital that creditors had access to the information they needed to take responsible decisions about enforcement action. Chapter 2 discusses the issues of identifying more effective sources of information about debtors.
Q1. Do you agree that the enforcement system should not attempt to distinguish between "can't pay" and "won't pay" debtors at the outset, but should continue to be a single-track system, incorporating adequate safeguards to ensure that "can't pay" debtors are dealt with appropriately?
2.1 This chapter summarises the responses to the first consultation paper and the panels' discussions on information gathering. It goes on to present the panels' initial proposals for enabling the courts to obtain more comprehensive and accurate information about debtors through access to information held by Government Agencies and other third parties.
2.2 Full details of how the proposed new information gathering mechanisms will operate will be contained in a separate consultation paper, based on the discussions of the oral examination/judgment summons panel.
2.3 A key theme running through the Review, in responses to the first consultation paper and in the panels' discussions, has been the need for more comprehensive information, both for creditors, about debtors' circumstances, and for debtors, setting out their rights and responsibilities in relation to enforcement. Creditors can only take responsible decisions about enforcement if they have sufficient information about debtors' circumstances - which is also in the interest of debtors.
2.4 Many respondents to the first consultation paper said they thought the current oral examination process was flawed. Individual creditors, solicitors and commercial companies suggested that, whilst information obtained through an oral examination could be helpful, it was often incomplete or inaccurate. Respondents cited the main causes of inaccurate information as being inadequate court questionnaires, lack of documentary evidence to substantiate and verify information provided, and a general reluctance on the part of debtors to be forthcoming with information and verification.
2.5 The current enforcement system relies heavily on obtaining information about a debtor's circumstances from the debtor himself, through the N9 Statement of Means enquiry, and the oral examination process. In many cases, the information requested is either not forthcoming - because the debtor deliberately refuses to provide it, or simply avoids acknowledging the need to take action through fear, ignorance or indifference - or the information provided is incomplete or inaccurate.
2.6 The current system can leave creditors wondering whether there was any point in obtaining a judgment of the court if the judgment was then unenforceable because of a lack of information about a debtor's circumstances. It has also led many creditors to believe, often mistakenly, that the only possible method of enforcement open to them was a warrant of execution. In many cases, had a fuller picture of a debtor's circumstances been available, creditors might have been able to make a more careful assessment of, and often a quite different choice about, how to enforce a judgment, with a greater likelihood of success. It is clear that better targeted enforcement action would be in the best interests of both debtors and creditors. The panels concluded, therefore, that the solution lay in enabling the courts to play a more proactive role in obtaining information about debtors, through access to alternative sources of information.
2.7 Government agencies and external organisations who have dealings with the public hold varying levels of information about their users or customers, according to the type of business or service provision in which they are involved. And, whilst many members of the public may already believe that information held by Government Agencies circulates freely, in reality, the exchange of information between such Agencies is limited.
2.8 The panels took the view that there was a strong case for enabling the court to obtain selected information held by other Government Departments and external third parties. The perceived ineffectiveness of the current information gathering process, and the courts' apparent inability to compel intransigent debtors to provide the necessary information, undermined the authority of the courts and, ultimately, the civil justice system. This also had the potential to reduce the impact of the civil justice reforms, which took effect in April 1999. Whilst judgment debts are essentially private debts, they do carry with them the authority of the courts, and it could be argued that the courts should, therefore, be able to assist the creditor to enforce a judgment by making selected information about the debtor available.
2.9 The panels acknowledged that the public had a right to expect their personal information to be used only for a specific purpose, and not disclosed without good reason, but considered that the need to provide a more effective enforcement system was sufficient to justify the disclosure of information about judgment debtors.
2.10 At the same time, they recognised that there would need to be appropriate checks and balances to ensure that information obtained by the courts from external sources was properly controlled and managed.
2.11 The panels also recognised that the proposal to enable the courts to obtain information from third parties outside Government might be particularly contentious since this was likely to raise even greater issues about the fundamental right of individuals to privacy. However, they took the view that the public interest argument for a more effective enforcement system, in order to prevent intransigent debtors subverting the authority of the court, was still more compelling.
2.12 The panels considered sources of information about a debtor's financial circumstances which might be made accessible to the courts. These included information held by:
creditors and their associates;
debtors and their advisors/representatives;
third parties with a relationship to debtors, e.g. employers, landlords, mortgage lenders, banks, building societies, credit reference agencies, other financial service providers, other trade suppliers/creditors;
Government Departments and Agencies with information about debtors, e.g. the Benefits Agency, Employment Service, Inland Revenue, Customs & Excise, Companies House, keepers of the electoral role and the courts.
2.13 Of this list of potential sources of information, the panels identified four key sources which they considered would be likely to provide the necessary information to inform the choice of enforcement options in the majority of cases. These were:
Banks and Building Societies - for information about a debtor's financial circumstances, to support a garnishee/charging order;
Department of Social Security - for information about any benefits paid to a debtor;
Driver Vehicle Licensing Agency - for information about vehicle ownership to support a warrant or writ of execution;
Inland Revenue - for information about the debtor's annual earned income from employment and National Insurance contributions paid on earnings.
2.14 Creditors must take seriously their responsibility to make appropriate and responsible decisions about the people to whom they extend credit, based on a proper appraisal of the individual's, or company's, personal and financial circumstances.
2.15 The panels also took the view that creditors and debtors have a vital role to play in providing the courts with accurate information. Creditors must recognise their responsibility to obtain and supply to the court, in support of their claims, as much information as possible, and as accurately as possible. Debtors and their advisers ought also to provide the fullest information possible, whether admitting or defending a claim, either in the N9 Statement of Means enquiry, or by attending for oral examination. A pre-action protocol for debt claims - which will emphasise the responsibility of both parties to exchange information before action is begun - is being developed by a group of representative organisations with an interest in the early resolution of money claims.
2.16 The panels acknowledged from the outset that any system for enabling courts to obtain information about debtors from external sources would need to have regard to the provisions of the Data Protection Act and the European Convention on Human Rights.
2.17 The Data Protection Act 1984 restricts the disclosure of personal data held on computer. The 1984 Act will shortly be replaced by the Data Protection Act 1998 which will apply similar restrictions to personal data held on some paper records. The 1998 Act establishes a general prohibition on the disclosure of personal data in any manner which is incompatible with the purpose for which it was obtained.
2.18 The Act provides for exemptions from the non-disclosure provisions, for example, where the disclosure is required by, or under, any enactment, or by the order of a court, or where it is required for the purpose of, or in connection with, legal proceedings.
2.19 Article 8 of the European Convention on Human Rights provides that: "Everyone has the right to respect for his private and family life, his home and his correspondence. There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well- being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others."
2.20 In taking forward any proposal to enable the courts to have access to information about debtors' circumstances from external sources, it will be necessary to ensure that final recommendations comply fully with these provisions. This will mean, among other things, providing for an appropriate level of judicial control over the process, and specifying clearly the type of information to be accessed and the specific purpose for which it is required.
2.21 The panels have proposed that the mechanism for obtaining information about debtors from external sources should be by way of a court order, requiring the disclosure of specific information. Examples of the kind of information which the court may need to obtain from an external source would include details of a debtor's bank and/or building society account(s) in order to establish whether a garnishee order might be appropriate, or employee details from an employer to be able to consider an attachment of earnings order.
2.22 The court order would be debtor specific and issued on a case-by-case basis, either where the debtor had not provided the information requested in an N9 Statement of Means enquiry or at an oral examination, or where there was some doubt about the accuracy of information a debtor had provided. Recipients of the court order would be obliged to provide the information requested or provide a good reason for any failure to do so. Refusal to provide the required information, or deliberately providing misleading or inaccurate information, would be subject to a prescribed penalty.
2.23 The panels envisaged the court order being used either as a complement to the existing methods of information gathering, or as an alternative to them, for example, where it was clear from the outset that the debtor would be unlikely, or unable, to provide the information requested. The order would be subject to the discretion of the court and could be made either at the court's own motion or on an application by a creditor. Not only would this provide a more effective method of obtaining information about a debtor's financial circumstances, it would also act as a powerful incentive to encourage debtors to respond to requests for information in the first instance. To this end, the N9 Statement of Means enquiry would need to be amended to make it clear that a failure to respond or providing inaccurate or incomplete information would result in the court seeking the required information independently from external sources.
2.24 The panels have also acknowledged the need to build in necessary safeguards to prevent possible misuse of a system of obtaining information from external sources. These safeguards would be achieved by ensuring an appropriate degree of judicial control over both the process and the information obtained through the order. The panels have proposed that it would not be appropriate for information obtained from external sources to go directly to the creditor, but that it should instead be held by the court. The court would be responsible for giving the creditor information needed to make a responsible decision on the appropriate method of enforcement to employ in any particular case.
2.25 Finally, the panels recognised that there would be additional administration and staff resource costs associated with any process of obtaining information from external sources, both to the courts and to the external third party from whom the information was sought. These costs would have to be borne initially by the creditor, but could be recouped from the debtor where a judgment debt was successfully enforced. Where a judgment debt could not be enforced because the debtor did not have the means to pay, these costs would be borne by the creditor.
Q2. Do you agree with the proposal that the courts should be able to obtain information about debtors from external sources, including Government Departments and other third parties with a relationship to the debtor?
Q3. What restrictions ought there to be on access to information about a debtor's circumstances? What safeguards ought to be incorporated in any scheme for access to information from external sources?
Q4. Do you agree that the mechanism for obtaining information about debtors should be by way of a specific court order and that the court should be responsible for controlling and managing the information obtained?
Q5. Do you agree that the four key sources of information listed in paragraph 2.13 would be likely to provide, for the majority of cases, the information creditors might need to take responsible decisions on which method of enforcement to employ?
3.1 The only sanctions currently available for failure to comply with a court order to provide information, or to attend for oral examination or on a judgment summons, are imprisonment or a fine. The first consultation paper invited views on the effectiveness of these sanctions and suggestions on how the enforcement process could be improved through the introduction of other sanctions.
3.2 Responses were generally in agreement that imprisonment could be an effective sanction and should be retained for cases where debtors deliberately refuse to co-operate with the court. There was concern amongst creditors who perceived that the courts were reluctant to use imprisonment as a sanction and that, because of this, it was less effective than it could be. On the other hand, some groups representing debtors thought that imprisonment was too harsh a sanction to be used in civil cases under any circumstances.
3.3 Most respondents thought that existing sanctions were inadequate and did little to encourage co-operation with the court. Respondents, however, clearly had some difficulty conceiving of alternatives to imprisonment that might be more effective. The following quote was typical:
3.4 The extension of fines attracted no support, with respondents generally echoing the above view. The most widely mentioned alternative was the imposition of higher interest rates on debts in cases where the debtor failed to provide information or attend court. Other options mentioned were the withdrawal of passports, suspension of driving licences and community service.
3.5 The enforcement system is described by many creditors as "lacking teeth". Some debtors are known to play the system to their advantage, in the knowledge that only the most tenacious or well-funded creditor will be able to make them pay a judgment debt.
3.6 Imprisonment is inevitably a sanction of last resort, usually after a long and protracted process in which the debtor will have failed on several occasions to keep appointments at the court. Very few people are actually imprisoned, although that is not necessarily an indication that the courts are unwilling to use the sanction or that it is ineffective - it may simply be that debtors threatened with imprisonment eventually co- operate with the court, leading to the committal order being revoked, or that they provide the required information when they are brought before a judge.
3.7 The panels recommended that imprisonment be retained as an option for cases where the debtor refuses to comply with an order of the court to attend a hearing or to provide information. They also considered that the procedures leading up to imprisonment should be streamlined, in order to reduce the time it takes to reach that point in the process and, thereby, make the ultimate threat more effective.
3.8 Given the apparently widespread belief, certainly amongst creditors, that the enforcement system lacks teeth, the panels sought to identify additional sanctions which could be imposed for failure to attend court or to provide information. They attempted to identify a number of sanctions, short of imprisonment, which it might be possible to impose more quickly or more easily, and preferably without requiring the co- operation of the debtor. The primary purpose would be to prompt reluctant debtors to provide the required information earlier.
3.9 The panels envisaged that it would be necessary to invoke alternative sanctions only in very limited circumstances, usually against those debtors who were deliberately and wilfully avoiding compliance (and where the court had been unable to obtain all the required information from external sources). They also recognised that the decision whether or not to impose a particular sanction in any given case should be a matter for the judge.
3.10 A variety of possible sanctions were discussed by the panels - some which would be applicable to individuals and some which would be applicable only to business debtors. Many were dismissed as being disproportionate to the problem being addressed, unworkable or too costly to administer. These included suspension of a driving licence, imposition of penalty points on a driving licence, clamping a debtor's car, withdrawal of the ability to reclaim VAT, initiating winding up procedures and disqualification of company directors.
3.11 The panels considered that the following sanctions had some merit, although they recognised that there could be significant practical obstacles to their application:
suspension of passport;
bar on future credit;
inhibiting disposal of assets;
publication in the press of debtors' contempt of court;
withdrawal of tax concessions;
imposition of directors' personal liability for company debt;
loss of protection from the Statute of Limitations for debt-related transactions.
3.12 In seeking views on these possible sanctions, we would wish to emphasise that they are not sanctions for failure to pay the judgment debt. They would be sanctions for refusal to co-operate with the courts' requests for information, or orders to attend court.
Q6. Do you agree with the views expressed by the panels about imprisonment as a sanction, and in particular, that the procedures leading to imprisonment should be streamlined?
Q7. What are your views regarding the additional sanctions identified by the panels? What practical difficulties would you foresee? Which of these sanctions would you regard as acceptable to deal with debtors who fail to co- operate with the courts' requests for information?
4.1 Fundamental to the civil justice reforms, which were implemented on 26 April, is the principle that the court should take responsibility for the management of cases before them. The speed of progress of the case, the issues to be decided and the documents to be produced are no longer matters purely for the parties. The court will now actively manage cases, setting timetables and making early decisions about how the case should progress. Many litigants - particularly litigants in person - are surprised that, having received a court judgment, it is their responsibility, not the court's, to require the debtor to honour the judgment if he is not willing to do so voluntarily.
4.2 In this context, the General Issues panel considered what application, if any, the principle of judicial control should have to the enforcement system.
4.3 A large majority of the respondents to the first consultation felt that creditors should retain the same degree of control over the choice of enforcement method as they have at present. A few respondents suggested variations to that - for example, for the court to identify what it believes to be the best option, but leaving the final choice to the creditor. Others identified the desirability of making procedures more automatic after the creditor had chosen the enforcement method. But most of the creditors who responded were firm in their desire to retain choice:
4.4 The only dissenters from this view were litigants in person and the organisations who represent them, whose responses are typified by the following quote from one such organisation:
4.5 Comparing the two quotes above, there is clearly a significant divide, both in terms of the need for advice in making decisions and the expectation of what the court will provide, between commercial creditors on the one hand and litigants in person on the other.
4.6 In defended cases, it would be possible for the judge to ask, at the end of a hearing in which judgment had been given in favour of the creditor, how the debtor proposed to pay the judgment debt and, if necessary, for an oral examination hearing to be held whilst the debtor was present in court. This idea received almost unanimous support from respondents to the consultation, but some cautioned that it should not be done in such a way as to remove the creditor's ability to choose, at a later date, what enforcement method to use.
4.7 There could be occasions on which it would be inappropriate for such an enquiry to be conducted - for example, when feelings during the trial or small claims hearing have been running high and the judge was concerned for his own safety or that of the parties, or considered that little of value would be gained without a period of reflection for the judgment debtor.
4.8 Post-judgment enquiries would extend the length of the hearing and would, therefore, have financial implications and an impact on the listing of other cases.
4.9 The key decision to be made in enforcement proceedings is which enforcement method should be used. It was clear from the responses to the consultation paper that there would be no support amongst commercial creditors for a system in which the court decided which method of enforcement ought to be used. This view was mirrored closely by the views of the panel. They argued that creditors were in a better position than the court to make decisions about how to enforce a judgment. Many creditors would have experience of the enforcement system. They might have information about the debtor's circumstances not immediately available to the court. And they would have developed an expertise in the sort of approach which would work best in the variety of circumstances which could arise.
4.10 In the panel's opinion, therefore, control of, and responsibility for, the enforcement of judgment debts should remain with the creditor. They agreed, however, that wherever possible within each method of enforcement, successive steps should be taken automatically by the court, unless there was a need to refer back to the creditor. This principle should be applied in the development of revised oral examination, garnishee, charging order and attachment of earnings procedures.
4.11 The panel also considered the needs of those litigants who would prefer the court to take responsibility for decisions about the enforcement of their judgments. One possibility would be to allow a creditor to apply to have the court take control of decisions about the enforcement of a particular judgment debt. Decisions would have to be made by court staff or by the judiciary about what information should be sought from the debtor as well as which enforcement procedures should be pursued. This would be likely to be a costly process, involving a considerable amount of court time. In addition, the court fee charged for the service would need to be sufficient to cover the costs of a number of eventualities, including sustained resistance by the debtor to requests for information, and the pursuit of multiple routes of enforcement where necessary. Since the information available to the court on which to base these decisions would be little or no better than that available to the creditor, this option might not yield any practical benefits to creditors, apart from the removal of frustration at the perceived reluctance of the courts to provide assistance.
Q8. Do you agree that post judgment enquiries, immediately after a hearing, would be useful? Would their value be sufficient to justify the time which these would take and the impact on the listing of other cases?
Q9. Do you agree with the panel's conclusion that, in general, creditors should retain control of decisions about the method of enforcement?
Q10. Do you consider that it would be desirable for there to be an option, for those creditors that wish to take advantage of it, for the court to manage the enforcement process and make decisions about how to proceed? Would there be sufficient practical benefits to justify this option?
5.1 This consultation paper invites views on key principles for creating a more effective enforcement system. In particular, the paper poses the following questions:
Q1. Do you agree that the enforcement system should not attempt to distinguish between "can't pay" and "won't pay" debtors at the outset, but should continue to be a single-track system, incorporating adequate safeguards to ensure that "can't pay" debtors are dealt with appropriately?
Q2. Do you agree with the proposal that the courts should be able to obtain information about debtors from external sources, including Government Departments and other third parties with a relationship to the debtor?
Q3. What restrictions ought there to be on access to information about a debtor's circumstances? What safeguards ought to be incorporated in any scheme for access to information from external sources?
Q4. Do you agree that the mechanism for obtaining information about debtors should be by way of a specific court order and that the court should be responsible for controlling and managing the information obtained?
Q5. Do you agree that the four key sources of information listed in paragraph 2.13 would be likely to provide, for the majority of cases, the information creditors might need to take responsible decisions on which method of enforcement to employ?
Q6. Do you agree with the views expressed by the panels about imprisonment as a sanction, and in particular, that the procedures leading to imprisonment should be streamlined?
Q7. What are your views regarding the additional sanctions identified by the panels? What practical difficulties would you foresee? Which of these sanctions would you regard as acceptable to deal with debtors who fail to co-operate with the courts' requests for information?
Q8. Do you agree that post judgment enquiries, immediately after a hearing, would be useful? Would their value be sufficient to justify the time which these would take and the impact on the listing of other cases?
Q9. Do you agree with the panel's conclusion that, in general, creditors should retain control of decisions about the method of enforcement?
Q10. Do you consider that it would be desirable for there to be an option, for those creditors that wish to take advantage of it, for the court to manage the enforcement process and make decisions about how to proceed? Would there be sufficient practical benefits to justify this option?
5.2 Following this consultation exercise, there will be further consultation on proposals from the panels looking at Oral Examination/Judgement Summons procedures and Attachment of Earnings, Garnishee and Charging Order procedures. It is likely that these papers will be issued simultaneously. Thereafter, in the Autumn, there will be further consultation on proposals from the panel looking at warrants and writs procedures.
There were 140 responses to the first consultation paper, from a wide range of interest groups. They can be broken down as follows:
| Creditors/Creditor Associations | 53 |
| Courts | 21 |
| Solicitors | 15 |
| Advice Organisations | 14 |
| Individuals | 8 |
| Judges | 6 |
| Bailiffs/Sheriffs | 3 |
| Academics | 1 |
| Others | 19 |
This section sets out an analysis of responses to questions posed in consultation paper no.1 on the issues discussed in this paper. That is:
the court's role and sanctions
court-led enforcement
1. The distinction between debtors who "can't pay" and debtors
who "won't pay"
Q.78 Should the court have a role in limiting enforcement procedures?
72 responses were received. Of those, 47 respondents, mainly creditors, creditor associations and solicitors, were not in favour of the court limiting enforcement. Many considered that enforcement should not be restricted at the expense of the creditor. The remaining 25 responses, mainly advice organisations, solicitors and some creditors, were in favour of court involvement in limiting enforcement, in particular, to prevent vexatious enforcement by creditors. However, the scale of suggested court involvement ranged from taking a pro-active role in providing guidance, to having a reserved power to refuse to issue vexatious enforcement.
Q.79 To what extent should a debtor be protected from
enforcement? Are the current safeguards (such as protected earnings in the
attachment of earnings procedure) sufficient?
should there be a protected income limit which applies to all instalment
orders? should there be a protected asset limit (list of goods exempt from
seizure, list of financial assets exempt from enforcement)?
72 responses were received. Of those, 42 respondents, including creditors, creditor associations, solicitors, bailiffs and others, considered that the existing protected income limits were sufficient and that imposing a protected income limit on instalment orders would not be workable or fair to the creditor. Some respondents also believed that clarification about the type of assets which could and couldn't be seized was needed. The remaining 30 respondents, whilst in favour of some form of protection for debtors, were divided as to how such a system should be applied and believed that it should be subject to clear rules to prevent abuse by the debtor. Advice organisations considered that a protected income limit should apply to all instalment orders. Some respondents commented that, whilst limits should be imposed to protect income, there should be no limit protecting assets from seizure.
Q.27 Should the court check regularly whether the debtor's circumstances have changed, i.e. asking the employer whether the debtor is earning more, or asking the debtor whether their outgoings have increased?
The majority of respondents were in favour of regular court checks on debtors' circumstances. Out of 74 responses, only 17 respondents, including creditors, courts and judges, were not in favour because of the administrative burden placed on the courts. A few believed that the burden to provide information should be placed on the creditors and debtors and that creditors should make an application to seek a review of a debtor's circumstances. Many of those in favour of regular court checks suggested that a debtor's circumstances should be monitored at 6 monthly intervals. However, these respondents were also concerned about the administrative burden that would be placed on the courts.
Q.72 Should creditors have access from the Register of County Court Judgments to plaintiff details and the timescale in which the debtor paid the debt?
The majority of respondents were in favour of this option. Out of the 74 responses only four respondents - solicitors and an advice organisation - did not favour this option because of the administrative cost and burden on the creditor to update and provide details to the Register of County Court Judgments. Those in favour believed that this option would be a useful way of gaining information which could assist a creditor to decide on an appropriate course of action. However, these respondents were also concerned about the administrative burden placed on the creditors and a few recognised that there may be data protection implications.
Q.9 - 21 - Oral Examinations - Should the court dispense with
the adjourned hearing, requiring personal service of the initial order to
attend a hearing, and warning the debtor in the order that failure to attend
could result in imprisonment? If so,
should the court or the creditor serve the order to attend? And to what extent should there be an alternative sanction to imprisonment/a
fine?
75 responses were received. Of those, 49 respondents specifically referred to the question of whether the court should dispense with the adjourned hearing. 9 respondents, mainly advice organisations, were not in favour because the issue of a debtor's liberty was at stake. A few respondents suggested that greater research into the reasons for non attendance at the first hearing was required before any decision was made. 55 respondents answered the question about service of the court order to attend. Whilst all the respondents agreed that the initial court hearing notice should be served personally rather than by post, respondents differed as to whether the court or the creditor should be responsible. The majority of respondents, mainly advice organisations, creditors and individuals, believed that the court should be responsible for service because the cost to creditors would be significant. Creditors would also want to pass on the cost to debtors, which would increase the financial burden on debtors. Several respondents believed that the creditor should retain the option to serve the notice themselves. Creditor associations and sheriffs favoured creditor service suggesting that the procedure would be quicker and that creditors would have more control over the timescale of the procedure.
Only three respondents were in favour of imposing a fine as a sanction. The majority believed that the sanctions currently available were inadequate. A few respondents suggested that interest rates should be increased for non-compliance.
Q.17 - Judgment Summonses - Should the court dispense with the
adjourned hearing, requiring personal service of the initial order to attend
a hearing, and warning the debtor in the order that failure to attend could
result in imprisonment? If so,
should the court or the creditor serve the order to attend? And to what extent should there be an alternative sanction to imprisonment/a
fine?
13 responses were received. Of those, only one respondent did not favour dispensing with the first hearing because the liberty of the debtor was involved and any abridgement of stages could mean that the court would be obliged to commit a debtor too quickly. All respondents agreed that the court order to attend a hearing should be served personally and that either court or creditor service should be available. Only two respondents suggested that a fine should be imposed, the rest believing that imprisonment should remain the ultimate threat.
Q.69 What scope is there/should there be for imposing a penalty for failure to contact the court or creditor to explain why he [the debtor] is not paying a judgment debt?
44 responses were received. Of those, 11 respondents, mainly advice organisations, were not in favour of imposing penalties for the reason that this would simply increase the burden on the debtor. A few were concerned that penalties would in effect criminalise civil procedures. The remaining respondents were in favour of imposing a financial penalty because the costs to chase and remedy a debtor's failure to pay are borne by the creditors and the courts. Penalties ranging from imposing a fine, imprisonment or increasing the interest payable on a debt were suggested. A few respondents, whilst in favour of penalties, were doubtful of the effectiveness of imposing any penalty.
Q.70 What form should this penalty take?
Out of the 41 responses, 40 were in favour of some form of sanction. However, respondents were divided about what type sanction would be most appropriate. Those suggested included imprisonment and fines; several respondents were in favour of increasing the interest rate on the debt. A few respondents, mainly creditors associations, believed that credible sanctions were important but that imposing a financial sanction would put the debtor in a worse position and suggested that banning a debtor from access to further credit should be considered as a non-financial sanction.
Q.71 Should the sanction be applied automatically after a prescribed period? If so, after how long a period?
38 responses were received. Of those, only 1 respondent did not favour automatic sanctions because it presumed that all debtors wilfully avoided paying debts. The remaining 37 respondents, whilst in favour of automatic sanctions, were divided as to the length of the prescribed period before a sanction was applied. Suggestions ranged from 7 days to 3 months. A few respondents believed sanctions would have to follow confirmation by the creditor of non payment and that a notice should be sent to a debtor warning that a sanction for non payment was about to be imposed.
Q.3 - Oral Examinations - In your experience, is the procedure automatic, or do you have to chase the court to initiate the next stage in the proceedings?
50 responses were received. Of those, 22 respondents considered that the oral examination procedure was automatic. However, respondents still needed to chase the courts for updates on the progress of the case. Several respondents were concerned that procedures varied from court to court - some achieved each stage without being prompted, others required constant prompting. The majority agreed that the longest delays occurred when the court needed to serve adjourned hearing notices.
Q.10 Should the oral examination procedure lead directly to the issue of a means of enforcement e.g. attachment of earnings/garnishee where the result of the examination indicates that might be appropriate?
70 responses were received. The majority of respondents were in favour of an oral examination which led directly to enforcement, but did not want the court to decide which method of enforcement would be used. A few respondents commented that enforcement orders, such as charging orders and garnishee orders, could not be finalised immediately if third parties were involved. Those not in favour, mainly advice organisations and solicitors, were concerned that the debtor should have time to seek advice and/or make an offer of payment before the cost of enforcement proceedings was added to the debt.
Q.22 - Attachment of Earnings - In your experience, is the procedure automatic, or do you have to chase the court to initiate the next stage in the proceedings?
52 responses were received. The majority of respondents considered the attachment of earnings process to be automatic and many believed that procedures had improved with computerisation. Several respondents were concerned that despite automation procedures for monitoring cases were still slow and varied from court to court. Several respondents cited the need to chase progress updates, particularly, where the court needed to serve adjourned hearing notices.
Q.58 To what extent should there be equal access to all methods of enforcement, irrespective of whether judgment has been given in the county court or the High Court, in default or in the small claims track, Fast Track, and Multi- Track?
64 responses were received. The majority of respondents were in favour of equal access to all methods of enforcement and saw little justification in retaining two regimes. A few respondents suggested that the rules should be unified. However, one respondent suggested that some distinction should be made between commercial and non- commercial debts.
Q.59 To what extent should all judgments be subject to the same registration provisions?
There was unanimous agreement from the 67 respondents that all judgments should be registered. One respondent suggested that suspended recovery of goods judgments should be registered but that the registration should be marked to reflect the suspended status of the judgment.
Q.60 To what extent should all judgments be subject to the same provisions?
61 responses were received. Of those, only 3 respondents, mainly advice organisations, were not in favour of commonality because additional interest would simply increase debt problems and there was no evidence to suggest that applying an interest sanction would encourage early settlement of a debt. The majority of respondents were in favour of all judgments being subject to the same interest provisions. However, many believed that the current exemptions should continue to apply to cases under the Consumer Credit Act. A few respondents were in favour of allowing creditors to choose between contractual interest, where it existed in the original agreement, or a single statutory interest rate.
Q.77 How much of the decision as to the most appropriate method of enforcement should rest with the creditor and how much with the court?
78 responses were received. Of those, 13 respondents, mainly individuals, were in favour of the court deciding what enforcement methods should be used because the court was independent and could be consistent. A few, whilst favouring court led enforcement, suggested that the court should identify the most appropriate method or methods of enforcement, but leave the final decision to the creditor. The majority of those in favour considered that it was the creditor's responsibility to decide on what enforcement methods to use because the creditor was the one who would pay. Many suggested that the courts could be more pro-active in providing guidance and information to assist the creditor, and in particular, litigants in person. A few respondents suggested that an alternative would be to use a third party specialist in enforcement, to handle enforcement on behalf of the creditor. However, it was recognised that this could increase the cost of enforcement to both the creditor and debtor.
Q.81 Should a judge automatically ask questions about how the defendant intends to pay after he has given judgment?
74 responses were received. The majority of respondents were in favour of this option because it would emphasise the importance of paying. 9 respondents, including creditors and advice organisations, did not favour judges asking a debtor, at the end of a hearing, how he intended to pay because they were concerned that judicial decisions would restrict the creditor's right to enforce as he saw fit. Those respondents in favour also wished to retain the right to reject any offers made and seek additional information as to the debtor's circumstances. A few respondents did not think this option should apply to companies.
1. To examine the present methods available for enforcement of county court and High Court judgments, to assess their effectiveness, identify the reasons for any ineffectiveness, to identify what changes would be necessary to enhance the effectiveness of the current methods of enforcement; and to make costed recommendations;
2. To examine the information, advice and assistance currently available to creditors and debtors, to identify what changes would be necessary to enhance the effectiveness of the current methods of enforcement; and to make costed recommendations;
3. To review the powers of bailiffs (county court and private sector) to determine what changes to their powers would be needed to enhance the effective enforcement of civil court judgments and to increase uniformity; and to make costed recommendations;
4. To consider what amendment is needed for the successful implementation of section 13 of the Courts and Legal Services Act 1990; and to make costed recommendations;
5. To consider whether, and if so how, the present power to distrain for rent should be abolished (as recommended by the Law Commission); and to make costed recommendations;
6. To identify, in the light of the amended procedures and revised powers of bailiffs, the type of agent(s) or form of agency which should be responsible for carrying out those enforcement procedures; and to make costed recommendations;
7. To implement those recommendations accepted by the Lord Chancellor (including the production of a unified set of Rules of Court for enforcement); and
8. To gather the necessary data to make comparisons between the current and revised methods of enforcement and to evaluate the effectiveness of the project.