Whether for millions or just a few hundred pounds, judgment debtors will invariably seek to avoid their liabilities. This means that enforcing a judgment debt is often just as challenging as achieving judgment in the first place.
Blight v Brewster In the case of Blight v Brewster, from earlier this year, the debtor had the right to elect to drawdown 25% of his pension as a tax free sum; however, in order that this was not available to his judgment creditors, he chose not to do so.
The creditors therefore sought to force the debtor to make the election so that the money could then be subject to a third party debt order, but the County Court judge determined that “there is no jurisdiction to make any form of mandatory order against the Defendant in these circumstances.”
Upon appeal to the High Court, however, the judge abhorred the idea that a debtor could“enjoy an enhanced standard of living at his retirement instead of paying the judgment debt.”
He also dismissed the debtor’s argument that, by analogy to the protection of pensions in bankruptcy, public policy requires pensions to be treated as exceptional when it comes to the execution of judgments, noting that “a judgment debtor…cannot have the benefits of bankruptcy without its burdens.” Interestingly, the sanctity of pensions in bankruptcy situations has since been called into question in any event, in the case of Raithatha v Williamson.
In short, following on from the decision in the Privy Council case of Tasarruf Mevduati Sigorta Fonu v Merrill Lynch Bank & Trust Co (Cayman) Ltd, the judge determined that the demands of justice were the overriding consideration in considering the scope of the jurisdiction under Section 37 of the Senior Courts Act 1981 (which gives the court power to grant injunctions and appoint Receivers where it is just and convenient).
He concluded that there was a “strong principle and policy of justice to the effect that debtors should not be allowed to hide their assets in pension funds when they had a right to withdraw monies needed to pay their creditors.” Accordingly, he ordered the debtor to delegate the power of election to the creditors’ solicitor, so that, upon the election being made, the sums due to the debtor could be made the subject of a third party debt order.
Conclusion
This case establishes that undrawn pensions are not safe from judgment creditors. If you are seeking to enforce a judgment debt against an individual, therefore, make sure you take steps to establish whether they have a pension as, depending upon the debtor’s circumstances and the provisions of the pension, there may be a large sum of money available.
Katie Norman - Solicitor, Sheffield
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