Repossession: Enforcement of judgments & Judgment mortgage

Introduction

Getting a judgment means that the creditor is now entitled to use various mechanisms to get the money from you. This is known as enforcing a judgment – the legal term is ‘execution’ of the judgment. There are a number of different ways of enforcing a judgment. The creditor chooses the means and can use several different means at the same time.

In general, once the creditor has a judgment order, the judgment can be enforced. Enforcement orders can be issued by court offices – the creditor does not have to go back to court for the order.

Creditors have 12 years from the date of the judgment to look for enforcement orders. However, if the judgment order was issued six or more years earlier, the creditor may have to apply to court for ‘leave to issue execution’. Once issued, enforcement orders are generally valid for a year and may then be renewed.

Stay of execution:

The courts can grant a stay of execution. This means that the enforcement of the debt is halted for a period. A stay of execution may be granted, for example, if you can show that your inability to pay is not your fault. You cannot get a stay of execution if you have not engaged with the proceedings.

The following are the main ways of enforcing judgments:

• Registration of the judgment
• Execution against goods
• Judgment mortgage
• Instalment orders, followed if necessary, by committal orders
• Attachment of earnings
• Attachment of debts
• The appointment of a receiver
• Bankruptcy proceedings

Registration of the judgment:

This involves the creditor registering the judgment in the Central Office of the High Court. Judgments from the District Court, the Circuit Court and the High Court may all be registered.

Registering the judgment does not directly enforce the judgment. It does, however, publicise the fact that there is a judgment against you and, as a result, means that you are unlikely to be able to borrow further. Lists of judgments are published by credit reference agencies (for example, in Stubbs Gazette and some newspapers).

Before registering a judgment, the creditor must tell you that it is intended to register and give you an opportunity to pay the debt.

Execution against goods:

Execution against goods is one of the main ways of enforcing a judgment. It is sometimes called “distress” against goods. It means that the creditor gets an order from the court which directs the Sheriff or County Registrar to seize your goods and sell them in order to raise the amount of money which you owe plus costs.

• In the case of a High Court judgment, the order directing the seizure of your goods is known as an order of fieri facias or fifa.
• In the case of a Circuit Court judgment, the order is known as an execution order against goods.
• In the case of the enforcement of a District Court judgment, the court’s judgment or decree itself is sent to the Sheriff or County Registrar for execution.

Sheriffs and County Registrars:

Sheriffs enforce judgments in counties Cork and Dublin while County Registrars enforce them in all other places.

Sheriffs are self-employed people who are paid for their enforcement work on a commission basis. The system is called ‘poundage’. The fees which they get are set out in statutory instruments. The current one is Sheriff’s Fees and Expenses Order (SI 644/2005) made under the Enforcement of Court Orders Act 1926. This provides for various fixed fees and a scale of fees related to the amount involved. This is 5% of the first €5,500 and 2.5% of the balance. It also provides for the payment of various expenses incurred in the enforcement process.

County Registrars are civil servants whose main job is to organize the business of the Circuit Court in their areas. (They are also Returning Officers for elections and referendums.)

As well as County Sheriffs in Cork and Dublin there are Revenue Sheriffs who enforce debts owed to the Revenue Commissioners. They have the power to collect tax debts. They can do this on the basis of a certificate of liability issued by the Collector General (the official in the Revenue Commissioners who is responsible for collecting taxes) and do not need a court order. Revenue debts can also be collected in the normal way if there is a court order.

 Seizing your goods:

The Sheriff or the County Registrar does not have to give notice of intention to seize your property or goods in order to execute a judgment. The Sheriffs’/County Registrars’ duty is to the creditor so they cannot take your circumstances into account. Revenue Sheriffs have specific powers to make an instalment arrangement with you.

The creditor may apply to court to have you examined about your assets so that it can be established what assets you have that are available for the execution of the judgment. Sheriffs/County Registrars have the power to go onto your property in order to seize your goods. They must make reasonable efforts to do this peaceably and without violence but they may make a forced entry.

The law provides that Sheriffs/County Registrars may not seize certain goods but this is effectively meaningless because of the amounts allowed. They may not seize your necessary clothes and bedding and the tools of your trade provided the value of such necessities is not more than £15 (€19). In practice, goods with a low resale value are unlikely to be seized.

The Sheriffs/County Registrars must account to the court for the goods seized. If no goods are found, they make a return of ‘nulla bona’, literally meaning no goods.

If Sheriffs/County Registrars do seize your goods, they must, within 24 hours, give you an itemised and signed list of the goods seized. They may then sell the goods by public auction – this can happen at any time from two days after the seizures. In practice, you are usually given warning of the impending sale.

Judgment mortgage:

Legal issues affecting repossessions:

In 2011, a High Court decision was made which established that there were legal difficulties with getting orders for possession of certain properties. This decision was made in a number of cases where mortgage providers were applying to repossess mortgaged property.

Put simply, the decision meant that, in the case of mortgages created before 1 December 2009, it was very difficult for a mortgage provider to get an order for possession unless the court proceedings were started before that date.

There are no such difficulties in the case of mortgages created after 1 December 2009.

This situation arose because the law was changed on 1 December 2009. An existing law governing repossessions was repealed. The new law (the Land and Conveyancing Law Reform Act 2009) provided for repossessions but applied only to mortgages created after it came into effect. The Land and Conveyancing Law Reform Act 2013, which became law in July 2013, aims to remedy the legal difficulties described above. It also provides for a court to adjourn repossession proceedings for up to 2 months in certain situations, to allow the possibility of a Personal Insolvency Arrangement (PIA) to be explored as an alternative to repossession. A PIA is one of the new personal insolvency options introduced in 2013.

The legal processes involved in repossession-

If you agree to have your home repossessed:

You can consent to have your home repossessed. You may agree terms with your lender for the sale of the house, if you are unable to pay your mortgage.

For mortgages taken out on or after 1 December 2009, when the Land and Conveyancing Law Reform Act 2009 came into effect, the lending institution must get a court order to repossess or sell your house unless you consent in writing 7 days before the repossession or sale.

If the issue has to go to court, you are generally liable for the costs of the court action.

In some cases, the lending institution may have difficulty in finding a buyer who would be willing to buy the house unless there is what is known as a well-charging order in place. This is a court order which among other things allows for the sale of the property.

If you don’t agree to have your home repossessed:

If you haven’t agreed a repayment plan with the lender or you have been unable to meet the payment arranged by a repayment plan the lender may take you to court to repossess your home. You must engage in the legal process if you don’t want your home repossessed.

In general, a lending institution may start the proceedings for repossession in either the Circuit Court or the High Court. However, if the mortgage was taken out on or after 1 December 2009, then a case for the repossession of the home arising from default on a housing mortgage loan must be first taken in the Circuit Court. The Land and Conveyancing Law Reform Act 2013 (described above), has extended this rule to housing loan mortgages taken out before 1 December 2009. A housing loan mortgage is the usual kind of mortgage that individuals take out in order to build, buy or improve a house. (Cases involving repossession for default on other kinds of mortgages may continue to be taken in either the Circuit or the High Court.)

The usual procedure is that the lending institution applies to the court for one or more orders – a possession order and/or a well-charging order. These orders may be granted in the same proceedings. Generally, it is the practice of the courts to allow you some time to make arrangements to repay the money owed before making any final orders.

If an order for possession or a well-charging order is made against you and you do not hand over possession or comply with other terms of the orders, the orders may be enforced by the Sheriff (in Dublin and Cork) or by the County Registrar in other areas.

 Circuit Court procedure:

The procedure in the Circuit Court is governed by the Rules of the Circuit Court as set out in the Circuit Court Rules (Actions for Possession and Well charging Relief) 2009: SI 264/2009.

The Circuit Court process starts when the mortgage provider issues you with a civil bill. This is usually accompanied by an affidavit setting out the claim that is being made against you. The civil bill has a return date – that is the date on which the matter will come before the County Registrar. The civil bill must be served on you at least 21 days before the return date.

The mortgage provider may apply for a possession order and/or a well-charging order (see below).

If you intend to fight the action taken by the mortgage provider to repossess your home, you must enter an appearance (there is a specific form for doing this) within 10 days of being served the civil bill. You must then file an affidavit replying to the mortgage provider’s claim and serve that on the mortgage provider at least four days before the return date.

When your case comes before the County Registrar it will be decided on the basis of what is in the affidavits. Neither side has the right to give oral evidence except in specific circumstances. However, you do have the right to cross examine the person who swore the affidavit. In order to do this, you must have given notice that you require this person to be present.

The County Registrar has the power to make a number of orders including adjournments, notice to third parties and more time to file affidavits.

Decisions by the County Registrar:

The County Registrar may make an order for possession and/or a well-charging order if you have not entered an appearance.

The County Registrar can also make an order for possession, if you have entered an appearance and filed a replying affidavit, but your affidavit does not disclose a prima facie defence (this means that the affidavit does not show any obvious defence).

If you have entered an appearance and filed a replying affidavit which does disclose a prima facie defence, the case must be sent by the County Registrar for hearing by a judge.

Judge’s decision:

The judge may grant or refuse the order requested.

High Court:

The procedures for getting well-charging and possession orders in the High Court are similar. The Master of the High Court has a similar (but not exactly the same) role as the County Registrar in the Circuit Court. The procedure is set out in Order 38 of the Rules of the Superior Courts.

The lender may apply to the High Court for a possession order and, if necessary, a well-charging order.

The process involves the lender issuing a special summons. This is first dealt with by the Master of the High Court. He sets a return date which may not be less than 7 days after the issuing of the summons. The summons must then be served on you at least four days before the return date. The lender must file an affidavit setting out the facts of the claim in the Central Office of the High Court. The hearing may be on affidavit only or oral evidence may be given.

The Master may grant or refuse the orders requested or may forward the case for hearing by a High Court judge.

Mortgage suit:

A mortgage suit is a court procedure which is taken by the holder of a security on property (for example, your mortgage lender) to recover a debt by forcing a sale of that property. If a mortgage suit is successful, the court issues a well-charging order. A well-charging order usually includes:

• A declaration by the court that the debt owing to the person or institution (together with any interest and costs) taking the case is “well charged” on the property in question
• A direction that the property be sold (usually the court gives you time to pay the amount due before the order for sale becomes effective)
• A direction that the Examiner’s Office take an account of all encumbrances and make an inquiry into their respective priorities. This can arise, for example, if you have more than one mortgage on a property or there is some arrangement whereby some of the proceeds of sale of the house must be used for other purposes

The arrangements for the sale are also generally agreed through the Examiner’s Office. The sale is usually by public auction. If the sale price is greater than the amount you owe, then the excess is paid over to you. If it is less, you are still liable to repay the shortfall.

If you manage to make a settlement with the lender and agree repayment terms, then the lender may apply to the court to discharge the well-charging order.

Executing the orders:

If you do not comply with the terms of the court orders, they may be enforced by the sheriff or the County Registrar.

Other debts and loans:

If you owe money for any reason and the creditor is trying to get repayment, one of the options open to the creditor is to create a judgment mortgage on your property (your home or any other property you own). A judgment mortgage has broadly the same effect as a conventional mortgage on your home and can be enforced by way of a mortgage suit – see above.

First the creditor must get a judgement order, and then an execution order (usually a fi fa order) and if the execution order doesn’t result in payment of the debt the creditor may get a judgement mortgage on your property.

Judgement order:

The creditor must first get a court to decide that you do owe them money. This is called a judgement order. To get a judgement order the creditor will take their case (make a motion) to District Court, the Circuit Court or the High Court – which court depends on the amount of money involved. This motion may, of course, be contested by you (the debtor). A judgment order is made if it is established that you (the debtor) owe the money in question.

When a judgment for the payment of money is obtained from a court, the person in whose favour the judgment is given is called a judgment creditor and the person who has to make the payment is a judgment debtor.

In general, the creditor has 12 years in which to enforce the judgment order.

Enforcing the judgment order:

The legal term for enforcing the judgment is execution. Having got a judgment order, the creditor then has to get an order to execute the judgment. The execution order entitles the creditor to enforce the judgment.

A number of different execution orders are available. Generally, execution orders remain in force for a year but may be renewed.

Fi fa order:

The execution order most commonly used to enforce a High Court judgment for a specific amount of money is an order of fieri facias (the literal meaning is “that you cause to be done” and the orders are generally called orders of fi fa) These orders are issued by the Central Office of the High Court.

This order entitles the creditor to direct the sheriff or County Registrar (County Registrars fulfil this function in all areas except Dublin and Cork cities and counties) to seize and sell property belonging to the debtor. If this fails because there is no property to seize, then the sheriff or County Registrar reports that no goods could be found to be seized (the legal phrase is to return the writ nulla bona).

 Judgment mortgage:

A judgment mortgage is frequently created when the order of fi fa fails to deliver any property. The judgment creditor may not look for a fi fa order at all and may create a judgment mortgage instead. Creating a judgment mortgage involves registering the judgment as a mortgage against your property. Effectively, the judgment is converted into a mortgage and this is registered in the Land Registry or Registry of Deeds.

Registration of the judgment mortgage does not have any automatic immediate effect until the judgment creditor decides either to force a sale or to claim entitlement to the proceeds of a sale by the judgment debtor.

A judgment mortgage has broadly the same effect as a conventional mortgage and can be enforced by way of a mortgage suit – see above.

Instalment orders:

The instalment order procedure is mainly used by small creditors such as shops and credit unions. It can be used for judgments given in the District, Circuit or High Court.

It is also used by creditors in family law proceedings, mainly for the enforcement of maintenance orders. If you are a family law creditor, for example, if you have a maintenance order against you which has not been met, your creditor can get an attachment of earnings order.

Instalment orders are governed by the Enforcement of Court Orders Acts 1926 – 2009 and Order 53 of the District Court Rules.

Your creditor can apply to the District Court in the district in which you live to have you attend the court in order to establish your means. The judge may then order payment in full or payment in instalments, taking account of your means.

Failure to meet instalment order:

If you fail to meet the instalment order, the creditor may look for a committal order which would commit you to prison. The Enforcement of Court Orders (Amendment) Act 2009 sets out the procedure for committal orders. This effectively provides that you may be imprisoned for failure to pay debts only if you can afford to pay but refuse to do so.

The process involves a summons to appear at the District Court. This is issued by the District Court clerk at the request of the creditor. The summons must clearly set out:

• the consequences of a failure to turn up in court, including the possibility of imprisonment;
• the options available to the judge at the hearing;
• the possibility that you will be arrested if you fail to turn up in court.

You are required to prepare a statement of means and lodge this at least a week before the hearing is due to take place.

If you fail to turn up, without reasonable excuse, a judge can either issue an arrest warrant (this orders the Gardaí to bring you before the court at the earliest opportunity) or adjourn the hearing. If you are arrested and brought to court, a date is fixed for the hearing. The judge must make clear to you, in ordinary language,

• that you are entitled to apply for legal aid and
• the consequences, including imprisonment, of failing to comply with the instalment order or of failing to appear for the hearing on the date fixed.

At the hearing, both you and the creditor may give evidence. The court has a number of options. It may vary the instalment order. Alternatively, the court may ask you to engage in mediation. MABS may be used for such mediation. The third option is to make a committal order (for a maximum of three months). This can come into effect immediately or at a later date. A committal order is an order to the Gardaí for your arrest and imprisonment.

The creditor is obliged to establish, beyond reasonable doubt, that you have means but you are wilfully refusing to pay.

The court has the power to grant you legal aid in accordance with the rules governing the criminal legal aid scheme.

Attachment of earnings:

At present, attachment of earnings is available only for the purposes of paying maintenance to spouses and children.

Attachment of a debt/Garnishee:

If you owe money to a creditor and another person owes money to you, then your creditor can get an order which attaches the debt owed to you by the other person. This is known as a garnishee order. Generally, it is used only in cases where there are no goods to be seized to satisfy the judgment. It is relatively rarely used in cases of consumer debt. The Revenue Commissioners have specific powers of attachment which can be exercised without a court order.

Appointment of a receiver:

A receiver may be appointed over some of your assets or over future income such as rents, income of a trust fund or a pension. The law in this area is complex but it seems that a

If you require any further detail do not hestiate to contact Cormac Mohan T: 01-2135910 who is authorized to act as a Personal Insolvency Practitioner by the Insolvency Service of Ireland.

He also has significant experience in restructuring small to medium sized businesses and holds a Diploma in Corporate Insolvency & Restructuring from the Law Society of Ireland.