Reforming enforcement of financial orders
By:1 commentMarch 16, 2015
It is a trite point, but it needs saying: there is no point whatsoever in obtaining a financial order against the other party in family proceedings if that party disregards the order and you are unable to enforce the order against them. Unfortunately, enforcing orders under the current system can be extremely difficult and time consuming. In fact, in some cases enforcing an order may entail more time, effort and expense than obtaining the order in the first place.
Given how difficult some parties to family proceedings can be and how much ingenuity they can put into evading enforcement, I am sure that no system would be capable of alleviating all the problems of enforcement in every case, but I’m also certain that things can be improved. This is a view clearly shared by the Law Commission, which published a consultation paper last week aimed at improving enforcement of financial orders.
The consultation paper is a long document, running to over one hundred pages and covering a considerable amount of ground. My comments on it will therefore be rather more than can be contained in one post of reasonable length. Accordingly, I will spread them out over two posts today and tomorrow, with this post concentrating upon the Commission’s proposals to improve the existing system and tomorrow’s post looking at the Commission’s proposals for new methods of enforcement.
Two quick points before I proceed. Firstly, from now on I will refer to the party trying to enforce the order as ‘the creditor’ and to the party against whom the order is being enforced as ‘the debtor’. Secondly, for the benefit of non-lawyers there are many ways in which orders can be enforced, and most of those ways relate to some element of the debtor’s financial circumstances. For example, an attachment of earnings order, usually used to enforce a maintenance order, obviously enforces against the debtor’s earnings (by requiring their employer to deduct a sum from their pay before they receive it), a third party debt order (previously known as a ‘garnishee order’) might enforce against money in the debtor’s bank account and a charging order would enforce against the debtor’s property, such as their house.
Having said that this post will concentrate upon the Commission’s proposals to improve the existing system, I will begin by discussing two possible new tools that the Commission puts forward: information requests and orders, and financial statements by the debtor. The reason that I am discussing them in this post is that they relate to an issue that the current law already attempts to address: getting information about the debtor’s finances, to enable the creditor to know how best to enforce the order. The main way in which the current law addresses this is the ‘order to obtain information’, better known to me and older lawyers as the ‘oral examination’ procedure, which requires the debtor to disclose details of their means.
Obviously, an order to obtain information has the problem that the debtor may be unwilling to fully cooperate. Information requests and information orders (which are ideas borrowed from the tribunals system, although not yet in force) seek to address this problem. Basically, they entail requesting information about the debtor’s means from third parties, including government departments and HM Revenue and Customs (HMRC). Now, I realise that there may be privacy issues (certain information may not be disclosed to the creditor), and that certain non-governmental third parties might be put in a difficult position by being required to disclose personal information, but essentially I am in favour of this idea. After all, the debtor has put him or herself into this position, by failing to comply with a court order.
The other idea is that where the creditor applies for enforcement the debtor should be required to file a financial statement, similar to a Form E. The only things I would say about this are that the debtor may already have filed a recent Form E in the proceedings in which the original order was made, and there is again the issue of whether they will cooperate – all family lawyers will have regularly come across Form Es that have not been properly or fully completed.
Moving on, the Commission proposes that the procedure for obtaining both third party debt orders and charging orders be streamlined, so that there is only a final hearing where a debtor (or third party, in the case of third party debt orders) raises an objection following the service upon them of the interim order. This seems to me to be eminently sensible, and should reduce the costs involved in such enforcement actions (which can often deter the creditor from taking the action).
The next proposal also comes from the tribunals system (although also not yet in force), and relates to improving attachment of earnings orders. One of the problems with such orders is that the debtor might change employment and might not comply with the requirement to provide information about such changes. A tracking system would enable the court to request information about the debtor’s employment from HMRC. As with information requests, I like this idea, subject to possible limitations upon how much information is disclosed to the creditor. The whole idea of getting information from tax authorities for the purpose of family proceedings, including child support, is now becoming accepted in many jurisdictions, and I don’t see why it should not here – again, the debtor has brought it upon him or herself, by not complying with the original order.
Finally for this post, the Commission looked at the ‘12 month rule’, although it did not make a specific recommendation, only enquiring whether it should be changed. Under the rule, arrears under a maintenance order that are more than 12 months old at the time enforcement proceedings are started will usually only be enforced where there are special circumstances. Accordingly, a debtor may ‘get away’ with payments if the creditor fails to enforce for a year. Personally, I have never liked the rule, which seems to me to encourage non-payment. I therefore agree that the rule should be changed to make it more likely that all arrears will usually be payable – after all, they are under the child support system (at least until they are written off!).
As I said above, I will continue this look at the consultation paper tomorrow, when I will consider the Commission’s proposals for new methods of enforcement.
The consultation paper can be found here.
Photo by rosefirerising via Flickr
March 16, 2015
Categories: Family Law