Recent news reports suggest that a growing number of people and individuals in England and Wales are discovering that judgments have unknowingly been entered against them. A government report found that a small number of debt collection firms may be deliberately taking advantage of debtors who may have moved house by court issuing proceedings against them and serving the court paperwork at the debtor’s old address. This enables the company pursuing the debt to apply for default judgments when the debtor in question does not respond to the claim.
Acting Quickly
The government is currently considering bringing in tougher legislation to deal with this problem. However, many people do not realise that a default judgment is not necessarily the end of the line. If you ever find yourself saddled with a County Court judgment that you dispute, it is essential to act quickly. If you take advice from a solicitor at the earliest opportunity, all may not be lost.
Judgments in default are granted by a court when a business or an individual has been served with a claim form and fails to file an acknowledgement of service or a defence within 14 days. Once a judgment has been entered, it can damage the defendant’s credit rating which is why it is important to know what your rights are if you don’t believe you owe the money, or if you have not had a chance to respond to the claim form.
A fair few people however get caught out because a claim form can legally be “served” even if the debtor has not received it. The position is as follows…
A claimant (a person or company pursuing a money claim) must ensure that when a claim is issued, the full name and address, or registered office, of the defendant (the person or company being sued) is stated on the claim form. The service address should be the defendant’s “last known address” or in the case of a company, the registered office as it appears on Companies House.
The claimant must ensure that the claim form is served on the debtor at this address, even if the defendant does not live there anymore. Many individuals who owe historic debts – debts they may not even be aware of – are caught out by this. A classic example is the owner of a leasehold property being pursued for historic ground rent, and another is a utility provider seeking unpaid utility bills. Once a claim form has been served, the defendant has 14 days to acknowledge service. Failure to do so means that the claimant may enter judgment in default.
However, judgments in default can be set aside. If you can show that the claim form has not been correctly served (i.e. the address is wrong and the claimant knew or ought to have known this), the Court has to set aside the judgment. However to meet this criteria, it must be shown that the claimant would have known of the correct address after making reasonable enquiries (e.g. checking the electoral roll or instructing a desktop tracing agent).
If the claimant was serving the claim form at what was reasonably believed to be the defendant’s last known address, then the claimant has acted lawfully. This can apply even if, for example, the defendant was away on holiday when the claim was served, or had moved away temporarily (e.g. whilst building work took place). The thinking behind this rule is that a claimant cannot be expected to know what is happening on a day to day basis with the defendant, and all most claimants can do is make enquiries through official channels.
Even when the claimant has acted reasonably, the court can still be persuaded to set aside the judgment in default. For this to happen the defendant must be able to show that:
- There was a good reason why he/she did not reply to the claim form (and there are many, many possible reasons why but having evidence in support is often crucial);
- The defendant has acted quickly in making the application (whilst there’s no strict time limit, a court won’t be impressed if a judgment has been sat on for months with no good excuse); and
- If the judgment were to be set aside, meaning that the claim would proceed on a defended basis, the defence has to be more than arguable – the idea behind this is that if there is no chance of defending the claim, reinstating it will just waste everyone’s time.
When you apply for a judgment to be set aside, you will have to pay an application fee of £255 (although if you lack means you may qualify for fee remission) and there are often solicitors’ costs. Unless the claimant has behaved improperly, it is rare for a defendant making this type of application to get costs back – at least immediately. They can sometimes be awarded at the end of the case depending on the circumstances. It’s important to remember that you are applying to save yourself from enforcement action by the claimant and to remove any blemishes from your credit history.
If you are ever in this situation and aren’t sure what your rights are, you can contact our Dispute Resolution Team at Nelsons for advice, on 0800 024 1976.