A judgment creditor who has spent over 10 years trying to satisfy a judgment debt of over £1m was last month allowed to enforce against the judgment debtor’s private pensions in Lindsay v O’Loughnane [2022] EWHC 1829 (QB).
Whilst the judgment may give judgment creditors hope by identifying a potential means of enforcement, it is equally notable as a stark reminder of just how difficult the enforcement process can be.
The underlying judgment and previous enforcement attempts
In 2010 Mr O’Loughnane was found liable in deceit to Mr Lindsay in the sum of £565,000 plus interest. Mr Lindsay was also awarded the sum of £495,000 as a payment on account of indemnity costs awarded in his favour. Mr O’Loughnane’s behaviour was described by the judge in the underlying judgment as “arrogant and shameless” and the judge noted that “[Mr O’Loughnane] was prepared to lie and did lie about the essential issues in the case”. As at March 2010 the total sum owing in damages and costs was approximately £1.1m.
Mr Lindsay extracted some of the outstanding debt from Mr O’Loughnane through the sale of properties charged following the underlying judgment. These sales combined with other means of enforcement had produced just under £310,000, leaving over two thirds of the total sum outstanding.
The application and the order made
As part of his continuing enforcement efforts, Mr Lindsay applied for an order in respect of four private pensions held by Mr O’Loughnane, whose transfer values in autumn 2020 were in the region of £58,000. Amongst other things, the order sought obliged Mr O’Loughnane to direct the trustees of the pensions to draw down their entire value when he reached the age of 55 and that the monies remaining after tax be paid to Mr Lindsay.
The application had a lengthy route through the courts, coming before a procedural judge in various guises on four occasions. The procedural judge had concerns with the application, one of which was whether he could make an order which was in respect of Mr O’Loughnane’s future entitlement rather than an order that had immediate effect. Another was whether he could make a third party debt order on a debt which had yet to be due.
Simon Birt QC (the Judge) determined that he had jurisdiction to make an order in respect of the pensions and that he should do so. Dealing first with one of the procedural judge’s concerns, the Judge considered that making an order in respect of a future entitlement did not cause difficulty in principle, though it might impact on his discretion. As to the concern regarding the jurisdiction to make a third party debt order, the order sought was not on its true construction a third party debt order, so the issue did not actually arise.
Turning to discretionary issues, the Judge noted the presumption that the court should assist a judgment creditor to recover debts owing to him. One point raised by Mr O’Loughnane in opposition to the application was the delay by Mr Lindsay in bringing it, but the Judge considered that any delay did not cause prejudice to Mr O’Loughnane. It also did not lead him to believe that the debt was not being enforced given the other ongoing attempts to enforce the underlying judgment and the order would not have any effect on Mr O’Loughnane until he turned 55 in any event. Mr O’Loughnane’s main objection (his stated impecuniosity) was not satisfactorily evidenced with the effect that the Judge cold not properly conclude that Mr O’Loughnane was in fact impecunious.
The order not made
In addition to the order made by the Judge, Mr Lindsay sought an order that in default of Mr O’Loughnane notifying his pension providers, an appointed agent be authorised to make the notification instead. However, the Judge refused that order, instead stating that Mr Lindsay could apply for an order to that effect on Mr O’Loughnane’s default. The Judge was not prepared to make the order simply because Mr O’Loughnane was a judgment debtor and that his default was “anticipated”.
Comment
At first blush, the Judge’s order is a powerful one. Mr O’Loughnane has effectively been deprived of his pensions to partially satisfy the judgment debt. The ability to access another source of funds he may not have previously thought accessible is a positive step for Mr Lindsay. But the facts of this case will likely render it cold comfort.
Mr Lindsay took over two years to obtain the order he was eventually awarded and had to go to the expense of several hearings to obtain it. Even then he did not get all that he sought. Based on Mr O’Loughnane’s conduct to date, it is far from improbable that he will simply not comply with the order’s terms, forcing Mr Lindsay to make another application which, after compliance with the terms of the order will still get him only the sum of £55,000, reduced by any taxation that may be payable. This will barely make a dent in £600,000 or so judgment debt that remains outstanding.
So Mr Lindsay’s experience is therefore perhaps best seen as a reminder that, regardless of how strong a case a Claimant may have, a judgment is worth little if it cannot be enforced. This judgment may prove to be little more than another chapter in an enforcement saga that is already over ten years old. Litigants should give serious thought to enforcement before they commence proceedings to avoid the risk of a pyrrhic victory.
Alasdair McDowell