Judgment – Enforcement beyond six years?
We are incredibly excited to share our very successful day at court recently, where we acted on behalf of a consumer client, against a major UK financial mortgage provider that was seeking to enforce a judgment debt obtained over 10 years ago.
The mortgage provider’s application to enforce the judgment and vary the money order was dismissed and the Court ordered them to pay our Clients’ costs in full.
Background: The Facts
Our Clients had previously entered into a mortgage agreement in 2007, but due to a very difficult and tragic turn of events, they were unfortunately unable to inhabit the family home and failed to maintain their agreed mortgage repayments.
The property was subsequently repossessed and sold at auction, but the full mortgage amount was not recovered by the sale of the property. The first our Clients knew of this shortfall came 10 years after the mortgage provider had originally secured judgment when court proceedings were issued by the lender to recover the shortfall in the sale.
Enforcement of judgment after six years
Should a judgment creditor fail to enforce a judgment or court order within the six-year time period, then, in accordance with CPR 83.2.(3)(a), they require the permission of the Court to take any legal action against the debtor. Having said that, judgment creditors should be wary that the permission to enforce the execution of a judgment or court order over six years old, is not a ‘mere formality’, and sufficient reasons for the delay in enforcement must always be given.
The general rule is that execution will not be allowed after the six-year time period (Society of Lloyd’s v Longtin [2005] EWHC 2491) and that it is for the judgment debtor to prove that is demonstrably just to extend the six-year period (Duer v Frazer [2001] 1 W.L.R 919).
Our clients success
We helped our Clients successfully argue that no reasons had been provided to justify why the judgment was not enforced within the six years, and also successfully argued that:
- Substantial prejudice would be suffered as a result of the judgment creditors’ failure to enforce the judgment debt;
- Our Clients’ circumstances had materially changed from the date of the original judgment and, in the circumstances, it would be unjust to enable the judgment creditor to recover the shortfall on the mortgage account – especially given the majority of the shortfall being sought was made up of interest payments; and
- Taking into account the plethora of enforcement options available to the judgment creditor (a major UK lender), the sending of generic letters to our Clients requesting payment, to addresses at which they did not live, was not enough to convince the Court that enforcement should be allowed past the six-year period.
Consequently, our clients were able to move on with their lives without the risk of:
- a) a charging order being placed on their property;
- b) the lender obtaining an attachment of earnings order; or
- c) dealing with any third-party debt collection agency knocking at their door.
Conclusion
In any circumstances where a judgment has been obtained against a debtor, it is advisable to take enforcement action as soon as possible, unless there is a very good reason not to do so. Enforcement beyond six years is still achievable if the right legal advice and guidance are obtained as early in the process as possible, but creditors should seriously consider the large impact of late enforcement.
The outcome of our Clients’ case is a clear example that any application to the Court to enforce a judgment beyond six years is capable of being successfully defended. Whether you are a creditor, or debtor, facing similar circumstances to those outlined above, we strongly recommend that you seek independent legal advice as soon as possible, in order to protect your position and put yourself in the strongest legal position possible.
How can Ellis Jones help you?
Our specialist team of lawyers will be able to assess the merits of any potential claim or application and will be able to advise you on the best options available to you, in a clear, sensitive, and pragmatic way, whilst keeping you informed of the likely costs and providing a cost-benefit analysis of the case as well.
For more information please get in touch with the Banking and Finance Litigation team on 0203 978 4721.
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When you submit this form an email will be sent to the relevant department who will contact you within 48 hours. If you require urgent advice please call 01202 525333.
