Financial orders and new ideas
By:1 commentMarch 17, 2015
Yesterday I looked at the Law Commission’s recent consultation paper on the enforcement of financial orders, concentrating on the Commission’s proposals to improve the existing system of enforcement. In this post I will conclude my look at the paper by considering the Commission’s proposals for new methods of enforcement. Once again I will use the term ‘creditor’ to describe the party trying to enforce the order and the term ‘debtor’ to describe the party against whom the order is being enforced.
As I said in my previous post, a creditor can take enforcement action against various types of assets held by the debtor. However, there is one type of asset that is exempt: pensions. The Law Commission proposes that this exemption be removed, by allowing the court to make pension orders on an enforcement application, similar to the kind of orders that the court can make on a financial remedies application following divorce. I don’t see any problem with this in principle. As the Commission points out, it would be rather odd if the debtor’s only asset was a pension fund, which could be of considerable value, but the creditor could not get their money because they could not enforce against the pension. These days pensions are losing their ‘protected’ status, and there seems to me to be no reason why they should not be utilised for enforcement purposes, as with other types of assets.
Of course, there is another way to enforce compliance with a financial order apart from taking action against the debtor’s assets: you can take other action against the debtor him/herself, in an effort to pressurise them into complying with the order. At present, there is only one type of ‘coercive order’ available to creditors: the judgment summons, under which the court can commit a person to prison for up to six weeks for failure to pay a debt due from him under a court order. The Law Commission now proposes that three new coercive orders be introduced: disqualification from foreign travel, disqualification from driving and curfew orders. I will deal with each of these in turn.
The Commission suggests that, where it has been proved that the debtor has the means to pay but has failed to do so, the court can disqualify them from travelling abroad for a period of up to 12 months, or until the debt has been paid. As the Commission points out, the court already has powers to prevent a party to the original financial proceedings leaving the country, so as to avoid or hinder a claim by the other party. Disqualification from travelling abroad is in effect, therefore, merely an extension of those powers. I suppose that I don’t have too much of a problem with this proposal, although whether such a disqualification would have an effect upon the debtor does of course depend upon the debtor and their circumstances. Obviously, many debtors might not be too concerned about such a prohibition.
The Commission proposes that the disqualification from driving measure also be subject to proof that the debtor has the means to pay and to a 12 month limitation. Such a measure is, of course, already available in connection with the enforcement of unpaid child support and would not therefore be anything new to the family justice system in this country. For that reason I suppose that once again I wouldn’t have any problem with it being introduced, subject to the usual safeguards, such as ensuring that the disqualification does not have an adverse effect upon the debtor’s ability to earn a living. I also think that a driving ban might be more likely than a foreign travel ban to encourage the debtor to pay up.
The final new measure that I want to consider is the curfew order. Under this, the debtor would be required to remain at a place specified in the order, for between two and twelve hours in any one day. The order would last for up to six months, or until the debt is paid. Breach of the order could lead to an extension of the curfew for up to another six months, or to the debtor being committed to prison. Once again, curfew orders are part of the child maintenance legislation, although they are not yet in force.
I’m not at all sure about curfew orders. Whilst they might very well encourage debtors to pay up, I have an uneasy feeling that they are a step backwards to the bad old days of debtors’ prisons. Do we really want debtors to be stigmatised in this way? There are also the issues of the costs involved and the extra work that they may cause for our already over-stretched police force (which may have something to do with why they are not yet in force in connection with child maintenance enforcement). Personally, I would not be disappointed if this proposal did not find its way into the law.
To conclude, the consultation paper is a thorough look at a difficult area of law, and I have only considered some of the Commission’s proposals for reform. There are many interesting ideas there, and hopefully the paper will lead to an improvement in the system, so that more creditors will get what they are entitled to more quickly and more easily. To the latter end, it would also be good if all of the law relating to enforcement was consolidated into one place – presently it is contained in a range of legislation and court rules, in order to make it more convenient to find, especially for litigants in person. But perhaps that would be too much to ask for.
The consultation paper can be found here.
Image by TaxRebate.org.uk via Flickr
March 17, 2015
Categories: Finances and Divorce