Newsflash: MoJ consults on default county court judgments

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The Ministry of Justice has opened a consultation on the fairness of the process for obtaining a county court judgment in default against a debtor. Walker Morris’ Louise Power and Justin Coley explain.

Default judgments: Fairness for creditors and debtors

The UK Government has announced its aim to ensure that the process for debt recovery in the county court strikes the right balance between the legitimate right of a business or individual creditor to pursue its money claim on the one hand; and the right of a debtor to be afforded the proper opportunity to learn of, and defend, that claim, on the other.

Currently, where a defendant fails to respond to a county court money claim, the claimant creditor can apply for a judgment to be entered against the defendant ‘in default’. That judgment can then be enforced against the debtor and it is likely to affect its credit rating.

In some cases the defendant will fail to respond to the claim because it is deliberately avoiding payment; however in many cases it may be because the defendant is genuinely unaware of the claim.

Amid concerns that the process is open to abuseĀ – for example by unscrupulous creditors giving addresses which they know to be incorrect, old or out of date, for service of court papers on the defendantĀ – the Ministry of Justice has opened a consultation which seeks to canvass views on the effectiveness and appropriateness of the current process, and which sets out proposals for informing the public of their relevant rights and responsibilities (including why and how they should keep creditors up to date with their contact details).

Have your say

Following receipt of consultation responses, the UK Government and the Civil Procedure Rules Committee will consider whether any changes to the existing law and procedure are required. Any such changes are likely to apply to all money claims and the consultation will therefore be of interest and importance to anyone involved in the county court debt recovery process.

The consultation is open until 21 February 2018 and can be accessed here.

WM Comment

In the meantime, in our opinion, there is no point seeking a judgment unless you believe that there is a reasonable prospect of it being successfully enforced. It may be unwise for a claimant to commence proceedings without knowing a defendant’s current address, as this may mean that they are unaware of their assets and likely enforcement strategy.

In our experience, the most popular enforcement methods across England & Wales are: Warrants of Control; Attachments of Earnings; and Charging Orders, and successful enforcement by each of these methods is usually enhanced when a defendant’s whereabouts is known. Using a defendant’s address that a claimant knows is incorrect could, in effect, be throwing away good money after bad.