In this series I will explore the circumstances in which each enforcement mechanism may be used and why a judgment creditor may want to use a particular mechanism and set out some of the advantages and disadvantages of each of these methods.

Enforcement mechanism 2: Third Party Debt Orders

A third party debt order (“TPDO”) is an order from the court for the payment to the judgment creditor of a debt owed to the judgment debtor by a third party. This may be money held in a bank account or some other debt owed to the judgment debtor.

An interim order is made following an application without notice and freezes the third party debt in the hands of the third party. A hearing for the application will then be listed and the order will be made final unless the judgment debtor persuades the court to revoke the interim order (this seldom happens in practice).

If the application is successful, the final order may require the third party to pay to the judgment creditor

1. the amount of any debt due to the judgment debtor from the third party; or
2. so much of that debt as is sufficient to satisfy the judgment debt and the judgment creditor’s costs of the application.

When to use this method?

Once judgment has been obtained, the debt is due, and if after 14 days the judgment debtor has failed to pay the judgment debt or an instalment due under the terms of the order, an application for an interim TPDO can be made.

The application for information made under Part 71 might reveal one or both of the following, which would be sensible to attach to a TPDO:

1. Money held in a bank account;
2. Money owed to the judgment debtor by a third party (this question is specifically asked in sections 9 and 5 of forms EX140 and EX141, respectively).

You might also have become aware of circumstances where a debt is owed to the judgment debtor at another stage of the litigation, such as discovering that a lender is exercising their charge over the judgment debtor’s property when considering applying for a charging order.

Advantages and disadvantages

A key advantage is that the interim order will prevent the debtor from dissipating the sums owed to them by the third party.

A final TPDO is an effective way of getting money without requiring any cooperation from the judgment debtor.

However, it won’t always be clear who the appropriate third party is (even when you can identify the funds that should be attached), and third parties may dispute that such a debt is due (although this is unusual). Such issues may increase the costs of obtaining a TPDO and the recoverable costs of making the application are fixed at £98.50, which is likely to be less that your solicitor charges on a time basis.

It is also possible to apply for money held by the court to be paid to the judgment creditor, although this is not a TPDO.

Timescales

Once an interim order has been made, a hearing for a final TPDO must be listed within 28 days. How long the court will take to issue the interim order will vary depending on the capacity of the county court at which the application is made (determined by the judgment debtor’s address).

This series provides a general overview of options for judgment creditors. For detailed advice and assistance with enforcing your money judgments contact Seamus Smyth at seamussmyth@cartercamerons.com, Head of Litigation and Arbitration, or Julian Smith at juliansmith@cartercamerons.com.