Payment by instalments

20.02.09

 

This article was written by Greg Standing, partner in Wragge & Co LLP's finance, insolvency, recoveries and sales team and published in the February issue of Motor Finance.

In these difficult financial times it is not unusual for a debtor to ask for additional time to pay outstanding finance instalments, or any judgment that might have been obtained against him. It is a commercial decision for the lender as to whether, and to what extent, any such accommodation should be made. The decision in Amsalem v Raivid and Raivid shows that the court has very limited discretion to get involved where such a request is made after a judgment has been obtained.

In Amsalem, the claimant obtained a judgment and costs award against the defendants. As a result the sum of just over £300,000 was due to be paid by the defendants within 14 days of the judgment.

The defendants applied for the normal 14 day payment rule to be extended and sought further time to pay by instalments. The defendants submitted evidence to support their application. The evidence clearly showed that their net capital worth was virtually nil (without taking account of the judgment obtained against them), that their properties were fully mortgaged with little or no equity and that their expenditure matched or exceeded their income. It was clear they had little available to satisfy or even go some way to satisfying the judgment.

Under the Civil Procedure Rules (CPR) (Part 70), the court does not automatically enforce its judgments nor decide how they should be enforced. It is up to the judgment creditor to decide how best to enforce its judgment. However, the court does have discretion under CPR 40.11 to either shorten or extend the 14 day period for payment, and to order payment by instalments. It will only exercise that discretion in exceptional cases.

In relation to a request for payment of a judgment by instalments, the court has to consider whether there is a realistic prospect that substantial sums could be offered and paid within a few weeks or months. If there is no such prospect, the discretion cannot be exercised. In this case, there was no realistic prospect of full payment and so no grounds upon which to exercise the discretion.

Comments

In the current economic climate, the reason for making a request to pay any judgment by instalments will often be the very reason why the court cannot exercise its limited power to make such an order. Creditors should always bear in mind the array of methods of enforcement open to them, such as charging orders, attachment of earnings, third party debt orders, and other writs of execution. Where the judgment is over £750, bankruptcy or winding up proceedings where the debtor is a company is also a possibility. Sometimes, the mere threat of either of these steps is sufficient to ensure that payment in full is made, or an acceptable accommodation is reached.

For further information about this published aticle, contact Kathryn Hobbs on +44 (0)121 213 2397, Amie Ryalls on +44 (0)121 213 2360 or Rebecca Davies on +44 (0)121 213 2396

This published article may contain information of general interest about current legal issues, but does not give legal advice.