Over the last few years we have received more and more instructions from registered providers (RPs) seeking advice in respect of County Court Judgments (CCJs) that have been entered against the organisation without seemingly any prior knowledge of proceedings having been issued.

1. What are CCJs and how could they arise without your knowledge?

It happens more often than you would think; RPs or their subsidiaries find out about a CCJ against it when officers were not even aware of the underlying court proceedings in the first place.

This can happen for several reasons, such as the Claimant not properly serving the court papers, or the Defendant organisation not dealing with the claim, either of which could result in Default Judgment being awarded by the court (because no response was received from the Defendant).

2. What difficulties can they cause?

One of the difficulties for RPs is the fact that seeking to ‘set aside’ a Default Judgment, i.e. where you ask the Court to give you a second chance to respond to proceedings, is considerably more labour intensive, costly and subject to stringent Court rules than if proceedings had been acknowledged and a defence filed from the outset (if applicable).

A further difficulty is the fact that a CCJ is recorded on a central Register of Judgments, Orders and Fines for England and Wales (Judgments Register), which can be searched online for a small fee (rojof.org.uk). CCJs remain on the register for 6 years if not paid immediately, and will say either satisfied or not satisfied. Unsatisfied CCJs can be enforced by the Claimant, who will remain an unsecured creditor so long as the CCJ remains unpaid. It follows that CCJs recorded against RPs:

  • can cause issues when seeking to raise finance
  • are not considered good governance, and
  • can cause difficulties as part of any due diligence exercises being undertaken.

You may also find out about a CCJ from various agencies that proactively monitor the Judgments Register, or you may find out about it from the Claimant directly, or an enforcement body such as bailiffs. As you will appreciate, a commercial bailiff turning up at your registered office seeking payment of a judgment debt is undesirable. 

3. How to minimise the risk of a CCJ

Top tip: always look out for claim forms being posted to the registered office(s) of your organisation(s).

  • Ensure staff are trained to recognise Claim Forms and Particulars of Claim. One of the main causes of organisations failing to acknowledge service of a claim (the first procedural step required within 14 days) is the claim has been received by a central ‘post room’ that hasn’t appreciated the importance of the documents and no process is in place to ensure that the documentation is promptly brought to the attention of an appropriate member of staff.
  • Ensure that your Companies House registered office details are up to date, particularly for lesser known subsidiaries and after any mergers/acquisitions. When court papers are sent in the post to your head office, even if you do not open or process the post, the claim will be deemed to have been served. This means the clock starts running and you could potentially receive a CCJ if you fail to respond in time.
4. What to do if you discover a CCJ against you?

Depending on the circumstances, broadly speaking you could have the following options:

  • Let the CCJ sit there on the register (unpaid). This is not always appropriate so take legal advice if you have concerns.
  • Pay the CCJ. This is frustrating if you have not had the chance to deal with the underlying claim, but is expeditious and cost effective if a small sum (and avoids risk of enforcement officers). Or,
  • Apply to have the CCJ set aside if you believe you have a reasonable prospect of successfully defending the underlying claim. This option is more involved but, if the application to court is successful, then the case goes back to the start of the proceedings and the claim would need to be defended in full to avoid payment. Depending on the value of the claim, the further costs you would incur for this may not be recoverable and so it may not be worthwhile.

Ultimately, the first step is to seek legal advice either from your In-House Legal Team or your appointed external advisors to ensure the organisation is fully informed of the current position and the options available to address the CCJ and the applicable consequences.

Should you wish to discuss the content of this article further or would like specific advice in respect of a claim or CCJ issued against your organisation, please contact Emma Beynon.

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