Information Hearings and the Pre-Action Protocol – The creditors perspective? ‘All bark and no bite’

It’s a common problem.  A judgment creditor, despite their best efforts, has been unable to establish what assets and income their judgment debtor has.  The creditor is struggling to enforce their judgment.

With the introduction of the Pre-Action Protocol for Debt Recovery claims, the parties are encouraged to exchange information at an early stage, prior to issue of the claim.  When an individual, the debtor is supposed to complete an Income and Expenditure form, so that the creditor can consider what options are available and also any payment plans that have been offered.  This is the idea anyway.  The early signs are that debtors are failing to complete the forms, or are not providing full disclosure.  Unlike penalties that can be imposed on the creditor if they fail to comply with the protocol, there is no bite when it comes to the debtor’s conduct.

The creditor can turn to the court once judgment is obtained, and apply for the debtor to attend an information hearing.  The debtor is obliged to attend and there are potential committal proceedings if they fail to do so or provide inaccurate information.  Such applications are rare because of the costs involved in making the application against the debt value.  There is also a major hurdle.  The debtor has to be personally served with the order, meaning there is an opportunity to delay the process by avoiding service.  Judgment creditors as a result often shy away from the process.  The application also places the debtor on notice that assets could be at risk, and they have the opportunity to dissipate those assets.

There is no bite to the current rules when it comes to obtaining information from a debtor. The various government consultations currently taking place provide us with an opportunity to consider another way for creditors.  I would propose a radical solution.  In the event that a debtor wishes to defend a money claim or requests a judgment to be paid by instalments, there should be a statutory obligation on the debtor to provide various information concerning their income, expenditure and assets.  This information must be supported by evidence.  If this information is not provided, the creditor will be entitled to obtain judgment immediately for the full amount claimed.  If a debtor fails to provide accurate information, then they should be found in contempt of court.

This solution would ensure that creditors know at an early stage whether there is a prospect of being paid.  This would assist those owing money who simply don’t have the means to pay, as creditors will be unlikely to proceed with claims where they have certainty that the debtor can’t pay.  It would also reduce the number of non-meritorious defences currently flooding our courts, and in turn free up judicial time.