Enforcement: Who has priority?
When deciding whether to take action against a debtor it is important to consider whether or not you will be able to enforce a County Court Judgment (‘CCJ’).
The issue of enforcement is exacerbated in situations where a person or business is indebted to more than one creditor and enforcement is pursued by multiple creditors at the same time.
The recent court decision of 365 Business Finance Ltd v Bellagio Hospitality WB Ltd established what happens when more than one creditor obtains a writ of control and who is entitled to any goods seized or money recovered.
Two creditors obtained CCJ’s against the defendant business and sought to recover sums owed to them by applying for a writ of controls and instructing High Court Enforcement Officers (‘HCEO’) to seize goods in satisfaction of the judgment debts.
The first creditor (‘A’) was owed £23,000 and instructed HCEO who seized goods and subsequently agreed to a payment plan with the defendant business. The second creditor (‘B’), owed £8,500, similarly instructed HCEO who attended on the defendant and obtained payment of the judgment debt in full.
On hearing this, A claimed that the money recovered by HCEO on behalf of B should actually be paid to A on the basis that A’s writ was obtained first and therefore had priority. The court agreed and ordered B to transfer the funds recovered to A.
What does this mean?
This decision means that, if more than one writ is issued, the party with the benefit of the first writ has priority over any goods seized or payments obtained. It is therefore extremely important that you do not delay taking steps to enforce a CCJ.
A writ of control is one method of enforcing a CCJ. The most appropriate method of enforcement will depend on the debtor’s circumstances and should be considered on a case by case basis.
If the debtor is employed you can apply for an attachment of earnings order so that a set sum is paid out of the debtor’s salary each week or month in satisfaction of the debt.
If the debtor owns property or shares you can apply for a charging order over the land or security so that, when it is sold, the judgment debt is paid (provided there is sufficient equity in the property). You can also take steps to force the sale of the charged property.
If you know details about the debtor’s bank account, you can apply for a third party debt order which effectively intercepts money owed to the debtor by freezing the account and seizing sums that are paid in.
Alternatively, if you don’t have enough information about the debtor’s circumstances and assets you can apply for an information hearing order so that he debtor has to attend court to answer questions and provide further information.
We Can Help You
If you need help recovering sums of money owed to you then contact the specialist Dispute Resolution team at Ashtons Legal through this website or by calling 0330 404 0772.
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