Entering a CCJ against a named individual or sole trader often raises the problem of the goods of that person being owned wholly or partly by their “significant other”. Where it is their spouse, their life partner, or some other form of co-ownership you need to be aware that this creates the proverbial “spanner in the works” when it comes to enforcing your judgment.
A claim by a co-owner has to be dealt with. It can’t be ignored however unlikely it seems, but it doesn’t actually stop the enforcement process.
The Position of the Co-Owner in Relation to the Goods
When the High Court Enforcement Agent reaches the address on the Writ it is possible that a husband, wife, or partner may answer the door and say that the Judgment Debtor doesn’t own the goods or that they own them 50/50. We rarely seem a “significant other” claiming a percentage of more or less than 50%.
Both the Judgment Debtor and any co-owner may think that as the goods are not wholly owned by the Judgment Debtor, they somehow escape the enforcement process and are “exempt” from being taken into legal control.
However, the law says otherwise. Co-owned goods can be taken into legal control, and the claim of the “significant other” can be dealt with as a Third-Party Claim to Goods Taken into Legal Control, under the Civil Procedure Rules – see CPR Part 85.
Managing Third-Party Claims
If a claim by a “significant other” is made at the time of attendance, or 3 days later, then the High Court Enforcement Agent has to report this back to the High Court Enforcement Officer who must process it in accordance with requirements of CPR Part 85.
This means the claim of co-ownership must be sent to the Judgment Creditor to either accept or dispute this claim.
If the claim is accepted, then the goods (other than exempt goods) can be removed from the Judgment Debtor’s address and sold to satisfy the Judgment Debtor’s share of the debt.
If the goods are held jointly then 50% of the proceeds will be used to pay off the amount due under the Writ, leaving the other 50% being returned to the co-owner.
If the Judgment Creditor disputes the claim by the Third Party to their interest in the goods, then either the Third Party or the High Court Enforcement Officer can issue an application to have the question of ownership dealt with before the Court. The Court will be asked to decide on the question of ownership and how the sale should proceed.
Weighing Up the Decision to Dispute A Co-Owner’s Claim to Ownership
Third-Party claims to goods are the proverbial “spanner” in the enforcement process and must be taken seriously.
The value of the goods taken into legal control will often determine the way the third party’s claim will proceed.
Where goods are valuable, a co-owner can expect a Judgment Creditor to look carefully at the claim to ownership and weigh up if the Third Party’s claim is supported by evidence in the form of bank statements showing the Third Party’s funds or joint funds being used to purchase the goods.
A sensible Judgment Creditor will be persuaded by evidence of ownership and either pursue a sale of the valuable items to clear the value outstanding under the judgment or accept that the co-owner owns the goods 100% in his or her own right, and the Judgment Debtor has no interest in them.
The High Court Enforcement Officer plays an important role in helping the parties to understand their respective positions and taking sensible commercial decisions.
Where the goods are not valuable, then the parties should look carefully at the cost of disputing the co-owners claim to either a share or full ownership. Taking control of goods and selling them to liquidate the Judgment Debtor’s share in the goods may work, but 50% of the sale proceeds will have to go back to the co-owner.
You can tell from reading this blog that the appearance of a claim by a “significant other” in the enforcement process can chuck a spanner in the works.
Ways to stop this happening start right at the outset of your dealings with an individual or sole trader. Where you are supplying to a customer check out if it is a “spouse and spouse” team or co-owners – and put that person’s name on your invoice, and then add them into the claim and then they will appear on your judgment.
A credit application at the outset of supplying goods and/or services is a great way to find out information about who your customer is before you start trading.
Of course, not all judgments are based on contract, so this may only help some of you reading this blog.
If you find yourself bumping into a third-party claim, then you can talk to us about your options and we can advise you on how to get the best from the situation. Just remember the less value in the goods, the less likely you are to come away with a paid in full Writ – unfortunately.
Talk to us on 0845 890 9200 or email us at [email protected] if you need more help on this aspect of enforcement.