Matters of Judgment: The Register of Judgments, Orders and Fines and post-registration settlements

The Practical Law Dispute Resolution team are receiving a growing number of Ask Practical Law queries relating to the Register of Judgments, Orders and Fines (“the Register”). These have highlighted some of the grey areas within the current regime for the registration of County Court and High Court judgments, which is underpinned by the Register of Judgments, Orders and Fines Regulations 2005 (SI 2005/3595) as amended (“the 2005 Regulations”).

This blog offers some general observations on the registration regime before focusing on two particular issues arising from the post-registration settlement of judgment debts:

  • Is it possible for a judgment debtor to secure the removal of a judgment debt from the Register when it was paid more than a calendar month after the date of judgment, or when it is settled for a reduced sum?
  • If so, should a judgment debtor be permitted to avoid the long-term registration of a judgment in this way?

The registration regime

The general rule is that where a registered judgment is satisfied (paid in full) within a calendar month of the judgment date, or is set aside or reversed, it will be removed from the Register (see further Regulations 11(2) and 16(a) of the 2005 Regulations). If, however, the judgment is paid in full after a calendar month has passed, it may only be marked as satisfied (see Regulations 11(3) and 16(b)). Regulations 17 to 19 of the 2005 Regulations allow the judgment debtor to apply to court for a certificate of satisfaction (using Form N443), but the judgment will remain registered for 6 years (Regulation 26). This is, in effect, a two-tier system, favouring judgment debtors who are able and willing to pay up promptly.

For a judgment debtor, the fact that a registered judgment paid after a calendar month remains on the Register for 6 years can be highly frustrating and potentially damaging. Naturally, a satisfied judgment is preferable to an outstanding one, and as time goes by, the negative effects of the judgment can diminish, at least in the eyes of some lenders. However, a paid-off judgment may still have a prolonged impact on the judgment debtor’s ability to obtain credit, or adversely affect the terms on which credit will be offered. There is also the embarrassment and inconvenience of featuring on the (publicly searchable) Register for years to come. Prospective suppliers or customers may be unwilling to risk dealing with a company which has a judgment registered against it, even if this was an isolated incident. With all that in mind, some might say that once a judgment debt has been paid – whenever that may be – the registration slate should be wiped clean, so as to avoid protracted financial stigmatisation of judgment debtors, especially those who are not “serial offenders”.

All of that said, there is, of course, another side to the debate. It is not unreasonable for a third party to want to know who they may be dealing with. If there are skeletons lurking in the financial closet, why should the judgment debtor be able to “airbrush” them out of the picture? While a judgment debt may have been satisfied, the very existence of that judgment and the time taken for it to be satisfied are factors which may be significant when a third party is deciding whether to do business with a particular person or company. For example, if a landlord is contemplating letting a property to a new tenant, or a homeowner is considering engaging a builder, a county court judgment or two lying on the Register, even if satisfied, may justifiably prompt a re-think. A prospective employer or professional body might also look at a person’s judgment history, or it could conceivably be checked in connection with certain voluntary or charitable roles.

Is it possible for a judgment debtor to secure the removal of a judgment debt from the Register when it was paid more than a calendar month after the date of judgment or the creditor accepted a reduced sum?

At first sight, by providing that a judgment remains registered if paid off after a calendar month, the registration regime favours the third party user of the Register. If the judgment debtor is unable or unwilling to pay within that short window of opportunity, it seems that they must live with the judgment staying on the Register, albeit marked as satisfied. Or must they?

As noted above, under Regulation 11(2) of the 2005 Regulations, a judgment registration will be cancelled if the judgment is satisfied (paid in full) within one calendar month from the date of the judgment, or if it is set aside or reversed. According to the FAQs on the Registry Trust website (see nos. 28 and 44), a judgment registration is only removed from the Register because it was “entered in error” (which is presumably intended to cover setting aside or reversal), “paid before the court date”, or cancelled because full repayment was made within one calendar month.

Some subscribers have reported entering into consent orders which provide for a judgment to be set aside on payment of the full amount and/or which have enabled the judgment debtor to secure removal of the judgment from the Register, even though payment occurred more than one calendar month after the judgment date. Technically speaking, a consent order of this nature appears to fall within Regulation 11(2), because it seeks to “set aside” the judgment. However, a setting aside of judgment in these circumstances seems at odds with the position as described by the Registry Trust, which apparently assumes that the judgment must have been entered “in error” for the registration to be removed. It is also difficult to reconcile this type of settlement arrangement with the principle that a judgment which is paid after a calendar month should stay on the Register, albeit marked as “satisfied”.

There is also the question of whether courts may be prepared to sanction consent orders providing for setting aside of judgment and/or removal of a judgment registration on payment of a sum which is less than the judgment debt (whether within or after the initial calendar month). A judgment creditor might, understandably, take the pragmatic view that it is better to recoup some money now, than to incur the expense of potentially fruitless enforcement action. However, a settlement of this nature which facilitated the removal of the judgment debt would seem to sit uncomfortably with various aspects of the registration regime. Firstly, Regulation 11(2) allows for a judgment to be removed where it is paid in full within a calendar month. Secondly, while the point is not directly addressed in the 2005 Regulations or on the Registry Trust website, bearing in mind the definition of “satisfied” in the Regulations and the evidential requirements specified in Form N443, it appears that a certificate of satisfaction is only available if a judgment debtor has paid the judgment debt in full.

Attitudes and approaches to post-registration settlements apparently vary between courts. Paragraph 5.13 of the CCBC Code of Practice (headed “Application to set aside judgment”) appears to caution parties against making what might be perceived as artificial set-aside applications. That paragraph includes the following text, in bold:

“Note: Applications [to set aside judgment] should contain legitimate grounds and should not simply serve to remove the defendant’s name from the Register of Judgments, Orders and Fines. Such applications will not be granted and will be referred to the district judge.”

We have also heard from a subscriber who encountered resistance from one court to a consent order seeking to set aside default judgment and dismiss the claim upon payment of the judgment debt. The court queried the basis on which the parties were seeking to set aside judgment when payment had been made in full. Although the order was eventually approved, this subscriber’s experience indicates that courts are not necessarily prepared to rubber stamp consent orders in this context.

Should a judgment debtor be permitted to avoid long-term registration of a judgment in this way?

Does it really matter if a judgment debtor can potentially avoid or minimise the long-term consequences of the registration regime by entering into a settlement which includes setting aside the judgment, simply to remove it from the Register? Some might reason that the court and Registry Trust are simply being asked to give effect to what has been agreed between judgment debtor and judgment creditor, so there should not be any issue.

From a third party’s perspective, however, matters are not quite so simple. If the court approves the consent order, forwards it to Registry Trust and the judgment registration is cancelled, the judgment debtor might “disappear” from the Register (if that was their only registration). Alternatively, a subsequent search of the Register will only give a partial picture of their judgment history over the previous 6 years. This undermines the Register’s purpose as a reference point for third parties.

In addition, it might be said that as a matter of principle, it is unsatisfactory (not to mention unfair to those who pay in full within the calendar month) if judgment debtors are able to avoid the long-term effects of registration through the use of consent orders. Such arrangements serve to blur the distinction drawn in the Regulations between the effect of paying in full within a calendar month, and the effect of paying later.

However, take, for example, the scenario of a default judgment debtor who did not receive the proceedings because he was abroad for a period of time, but if he had, would have paid immediately – avoiding any judgment or registration in the first place. No doubt he would say that a settlement allowing for setting aside of the judgment and a late removal of the registration on payment of the full amount would simply put him back in the position he would have been in, had he known of the proceedings at the time. From the perspective of the court and third parties, should that judgment debtor be treated as someone who seeks impermissibly to “airbrush” their judgment history, or do they deserve a more flexible and tolerant response?

In my view, it would be helpful to have clear guidance from the courts and Registry Trust (or perhaps some additional regulations) on the circumstances in which it is (a) possible and (b) permissible to have a judgment removed from the Register. Currently, it appears that the extent to which the Register reflects a person’s judgment history may conceivably depend on whether they can persuade the judgment creditor to settle on terms including setting aside the judgment, and on which particular court or judge considers the relevant consent order. This is liable to lead to inconsistency and uncertainty, and must ultimately have the side-effect of diminishing the value of the Register as a reference point for third parties.

Practical Law Dispute Resolution Natalie Stopps

One thought on “Matters of Judgment: The Register of Judgments, Orders and Fines and post-registration settlements

  1. Hi, a very interesting article. I think the only circumstances we can ever consider not allowing consent orders after the 30 day window after the judgement, is if the claimant/solicitors had to ensure you received the court papers.

    At the moment, the law allows the claimant to sent to the last known address, unless they know or have reason to suspect it is wrong. However, this is often not enough and is subjective and thus sending to an address on file is often enough.

    I will put into context with my situation:
    I have a professional job, a masters, and have never had anything on finance, never owned a credit card, store card or even contract mobile phone. I paid off my student loan 5 years after leaving uni and bought my first home a couple yrs later (despite no ‘credit’ history had no issue with obtaining mortgage). One week before selling this property and completing, I was involved in a minor car accident where I rolled into the car in front at a roundabout. As per usual, I exchanged details at the roadside and then informed the fleet team of my employer and their insurers (it was a company car). I moved out one week later, updated my new address with work, utilities, electoral roll.

    Fast forward 3 years later and I have had a mortgage declined. Signing up to see my credit score it transpires there is an outstanding CCJ less than 2 yrs old. It relates to the car accident and the insurers didnt pay the costs in time, so fir some reason hey came after me?! After waiting for 1 year for their costs, the other insurers took action to reclaim. All paperwork was sent to me (at my old address), and a default judgement was made against me. The insurance company eventually paid but only after CCJ (I am taking legal advice as to whether I have any recourse). I had a 3 month Royal Mail redirection too, but the CCJ action started around one year later. Circumstances are all so unfortunate.

    Researching CCJs, it is crazy, that in this country in this day and age they can claim a default judgement against you when they dont even have to prove you got the paperwork.

    That is a real shame.

    I think consent orders are a last resort, and somewhat of a lifeline, for those hard working, honest people to have some way out for situations like this. And though they are removed from the register it is a small victory in comparison to the running around needed.

    Those that have a chequered history with finance or credit who are unable to pay and settle will be the ones that remain on the register and thus it is doing its job in terms of informing third parties.

Leave a Reply

Your email address will not be published. Required fields are marked *

Share this post on: