Good news for those who are owed money...

Money, Debt Recovery

Smith Partnership is spreading some good news for those who are owed money. . .

Almost daily one of our Debt Recovery team has a conversation with a debtor who claims to have received “advice” that all they have to do is “offer £1 a week and the creditor has to accept this”.

Whilst this has never been the case, the Courts do make low repayment Orders frequently and this can make a creditor think twice before issuing proceedings to recover a debt. We regularly hear from creditors who say, “what is the point going to Court, when the offer of repayment will take an unreasonable time to repay the debt?”

The following article gives the welcome news that even if a debtor says they can’t afford to pay, a creditor is entitled to their money and the Court should not intervene with the creditor’s right to take enforcement action and any repayment offered must be reasonable. This decision will allow creditors to be more assertive and may encourage creditors to pursue debts through the Courts.

The decision was made in the recent 2018 case of Diana Loson v Brett Stack Newlyn Plc [2018] EWCA 803.

The claim arose from a parking ticket which Mrs Loson’s husband was issued from Camden Council whilst driving her car. The fine was appealed but was unsuccessful. Mrs Loson’s husband, on learning that his appeal had been unsuccessful, challenged the outcome by seeking a judicial review. The High Court, refused permission for judicial review. This didn’t encourage Mrs Loson’s husband to pay the fine.  Due to the non-payment of the fine, Camden Council issued a warrant of possession for the vehicle. Bailiffs were instructed to enforce the possession Order. The vehicle was located by the bailiffs, whilst the bailiffs were in the process of clamping the car, Mrs Loson, who was the owner of the vehicle, returned to her car. Mrs Loson alleged the bailiffs had caused damage to her car and pleaded with the bailiffs not to take the car. She said that her husband would immediately pay the fine. The bailiffs removed the vehicle and complied with all appropriate processes. The bailiffs stated that when Mrs Loson returned to the car she was uncooperative and they believed there was no prospect of payment. Mrs Loson issued proceedings in the County Court against the bailiffs, for an injunction to stop them from disposing of the vehicle and she claimed for loss of use. Mrs Loson was unsuccessful in her claim and was ordered to pay the bailiff’s, Brett Stack Newlyn Plc’s, costs of £5.000.00.

Mrs Loson responded to the costs Order by making an application for a stay and a variation of the cost Order. Prior to Mrs Loson’s application being dealt with by the court, the bailiffs served Mrs Loson with a statutory demand for failing to make payment of the cost Order in the required timeframe.

Mrs Loson’s application was later heard and was dismissed with a further cost Order totalling £3,000.00. Mrs Loson therefore was required to pay £8,000.00 plus interest to the bailiffs.

After all of that, Mrs Loson made an application to Court under the Civil Procedure Rules to vary payments on Court Judgments and Orders. The application requested that the Judgment debt of £8000 plus interest was paid in monthly instalments of £50.00. The bailiffs objected to the proposed rate of instalments as it would take in excess of 13 years for the debt to be repaid. The District Judge who heard the application for the repayment granted an order that Mrs Loson be able to pay the cost Order by instalments. The bailiffs appealed the decision of the District Judge.

The appeal was heard by His Honour Judge Luba, who considered that the District Judge had not balanced the interests of the bailiffs against the interest of Mrs Loson and that to base the decision purely on what Mrs Loson was able to pay was incorrect. Accordingly Honour Judge Luba set aside the instalment Order. Mrs Loson then appealed this decision.

The case was placed before the Court of Appeal. The Court of Appeal sympathised with Mrs Loson but agreed that the decision to set aside the instalment order by Honour Judge Luba was correct. The Court considered that it could not “interfere with the Judgment creditor’s right to seek enforcement of the Judgment by whatever means are available to them.”

This Judgment provides welcome news to creditors and a warning to debtors that for a court to grant an instalment order, a debtor must present the court with a “realistic repayment schedule backed up by evidence that the creditor can be expected to receive the amount within a reasonable period of time.”

This is a stark warning to debtors who cannot afford to pay a Judgment within a reasonable time frame that a Court will be unwilling to prevent a creditor enforcing a Judgment.

If you or your business requires help and advice on debt recovery matters, contact our team of debt recovery experts on 0330 123 1229.

Along with legal know-how, we also offer Activate, a cost-effective online debt recovery service that puts businesses in control of managing their finances.