No judgment - but assets could still be threatened
Not a lot of people know this . . . but someone claiming money through the courts could retain a charge over property without having a judgment debt, as a result of the court’s discretionary powers when dealing with an application to set aside a judgment.
Where a claim is made for a debt that is disputed, it is vital to defend the claim quickly to avoid judgment being entered by default - without a trial, and even though the debt is disputed.
If the response to the claim is filed too late and the claimant enters judgment, the alleged debtor may apply to set the judgment aside, but must do it quickly. When the court decides whether to allow the debtor to defend, it has to take into account how promptly the application was made. Delay can lead to refusal of permission, even if there might be a good defence to the claim.
If the debtor succeeds in having the judgment set aside, they are still not out of the woods. The claimant might have applied for a charging order against the debtor’s home or other property before the judgment was set aside. This might not necessarily disappear along with the judgment. The court has extensive discretion to impose conditions when it sets aside a judgment. It can even order that any enforcement of the judgment may still remain in place. For example, a charging order might be registered against the debtor’s property and continue in force - even though a judgment no longer exists. This could prevent a sale or remortgage of the property without full payment of the disputed debt.
The rule giving this discretion to the court is CPR part 70, but several other rules also apply to the situation described.
The essential thing to bear in mind is to seek specialist advice quickly. Court claims can be complicated and can develop in unexpected ways: it is best to contact us as soon as a dispute arises, and not to wait until the court process is under way.
Our Dispute Resolution team is always on hand to give advice - call us now on 0800 118 1500 to find out how we can help you. Or email us at DisputeResolution@talbotslaw.co.uk.