Thursday, October 28, 2010

Oral Examination and Judgment Summons

The Oral Examination and the Judgment Summons
[1]     I have been asked to speak to you this afternoon on the twin subjects of the procedure for oral examination of a judgment debtor and the judgment summons procedure.
The Procedure for Oral Examination of a Judgment Debtor.
[2]     Oral examinations are governed by Part 44 of CPR 2000.  An oral examination is notoriously not a method of enforcement of a judgment.  It is merely a tool to assist an attorney to determine which method of enforcement to use.  It is a particularly valuable tool where the judgment creditor is ignorant of the nature and location of the assets, income and liabilities of his judgment debtor.  After the completion of the oral examination procedure, the attorney for the judgment creditor is expected to decide which of the various enforcement options provided by the Rules he will invoke.
[3]     The oral examination procedure is described in the English Supreme Court Practice.  It is essentially, as follows.  The attorney for the judgment creditor, by an application without notice, obtains from a judge an order for oral examination of the judgment debtor.  That order in Form 14 is served personally on the judgment debtor at least 7 days before the date fixed for the examination.  At the same time, a draft financial position notice in Form 16 requiring the judgment debtor to complete a statement of his financial position is served.  An affidavit of service must be filed not less than 3 days before the date fixed for the examination.
[4]     The examination is conducted normally by the Registrar.  The judgment debtor is examined by his attorney and cross-examined by the attorney for the judgment creditor.  The Registrar or her clerk writes out the evidence of the judgment debtor on loose sheets of paper, and at its conclusion reads it back to the judgment debtor, who is then asked to sign it.  The statement of the judgment debtor is placed on the court file.  Parties may receive a copy of it from the Registrar on payment of any necessary photocopying fee.  A copy of it may be exhibited with any affidavit supporting a method of enforcement that may subsequently be filed.
[5]     Rule 44.6 introduced a novel provision that did not exist previously under the 1964 Rules of the Supreme Court: power for the Registrar to record an agreement that the judgment debt be paid by instalments.  The Registrar may draw an order to that effect, which will be served in the usual way. 
[6]     It is important to note that such a consent order under Rule 44.6 is not enforceable in the same way as an order made under a judgment summons.  Due to the restrictions on imprisonment for non-payment of a civil debt established by the Debtor's Act, which we shall examine below, any non-compliance with such an agreement or consent order must be followed by the necessary judgment debtor summons for any order to be enforceable by imprisonment.
[7]     A careful attorney will follow up the oral examination proceedings by an application for one of the enforcement proceedings provided for in the Rules.  Even if an offer is made and accepted at the oral examination, the subsequent order of the Judge, Master or Registrar is not enforceable by imprisonment.  It should be buttressed and given effect by obtaining an order for a judgment summons and having the judge make any order on those subsequent proceedings.  Of course, the attorney for the judgment creditor is free to select any of the other enforcement procedures.
Judgment Debtor Summons procedure
[8]     In the Leeward Islands prior to 1889, the most common method of enforcing a judgment for money was by way of imprisonment.  Before the reforms of the nineteenth century, access to a debtor’s property in satisfaction of a judgment debt both in England and in the Leeward Islands was limited.  Besides the writ of fieri facias, there was only the remedy of imprisoning the debtor in the hope of coercing him to sell his real and other property to settle his debt.  At that time there was no need to allege that the debtor had behaved dishonestly in order to obtain a writ of arrest to enforce a judgment debt.  Reports of the Governors of the Leeward Islands back to the Secretary of State in London remark that common debtors on occasion filled the prisons of Basseterre and St John's[1].  Reform eventually came by way of introducing the UK reforms to the Leeward Islands.
[9]     The Debtor’s Act[2], which came into effect on 31 December 1888, instituted a major reform in the law applicable to civil debts in the Leeward Islands.  This Act was based on the Debtor’s Acts of 1869 and 1878 of the United Kingdom.  The purpose of the Act was to clear the prisons of persons imprisoned for debt.  From the date of that Act no debtor may be imprisoned in the Leeward Islands save under the limited procedure authorised by the Act.  The rule now is that no person may be arrested or imprisoned for making default in the payment of money.
[10]   The principle which the law seeks to enforce is that if any merchant gives credit to a customer who does not have the means to pay for the goods bought, then that is a risk that the merchant chose to take.  If any money lender hands over to a borrower a sum of money without taking adequate security for the loan, then that is a risk that the money lender took.  The careless creditor is not to come to law and expect to find a summary procedure to permit him to enforce his reckless transactions by the imprisonment of the impecunious debtor
[11]   CPR 2000, Part 52 is the Rule governing the issue of a Judgment summons in the jurisdiction of the Eastern Caribbean Supreme Court.  Rule 52.1 applies to applications to commit to prison a judgment debtor for non-payment of a debt where this is not prohibited by any relevant statute.
[12]   The most relevant statute is the Debtor’s Act.  By this Act, the Leeward Islands followed the UK precedent in abolishing imprisonment for debt, except in certain specific cases.  The exceptions are set out in section 3.  They are:
(1) default in the payment of a penalty;
(2) default in the payment of a sum recoverable summarily before a Magistrate;
(3) default by a trustee ordered by the Court to pay any sum;
(4) default by a solicitor in payment of costs for misconduct;
(5) default in payment for the benefit of creditors of any portion of a salary in respect of which a court having jurisdiction in bankruptcy is authorised to make an order; and
(6) defaults in payment of sums in respect of payment of which orders are in this Act authorised to be made.
[13]   We are interested in the exception found at paragraph (6).  Section 4(1) of the Act governs committal for judgment debts.  It provides that the court may commit a judgment debtor to prison for a term not exceeding 6 weeks.  There are conditions.  The order must be made by a judge in open court by an order showing on its face the ground on which it is issued.  Further, the court can only make such an order where it is proved to the satisfaction of the court that the person making default has or has had since the judgment the means to pay the debt and has refused or neglected to do so.
[14]   Subsection (3) authorises the judge to exercise his jurisdiction under this section in Chambers or otherwise in the prescribed manner.  However, subsection (1), as we have seen, requires the order committing the judgment debtor to be made in open court.  In the old days that order was obtained by a contempt motion heard in open court on what was called “Motions Day”.  I am not certain that this practice still continues under the new Rules.
[15]   Section 5 of the Debtor’s Act is an important section, but I believe it is seldom used in the Leeward Islands.  The section authorises the judge hearing a judgment summons, instead of making a committal order, with the consent of the judgment debtor, to make a receiving order against him.  He is deemed at that time to have committed an act of bankruptcy. 
[16]   Bankruptcy has always been viewed as an offence against the state.  Bankruptcy proceedings are proceedings by which the state through the agency of the trustee in bankruptcy assumes control over a debtor's assets.  The advantage of bankrupting a debtor is that the burden of proving his assets or lack of them passes to the debtor. 
[17]   The Debtor’s Act at section 9 et sec deals with persons adjudged bankrupt.  The bankrupted debtor commits a crime punishable with imprisonment merely by concealing one of his assets.  The procedure involves the prosecution of the fraudulent bankrupt and his conviction before a jury.  The last time a bankrupt was hanged in England for failing to disclose an asset was one John Perrott in 1761[3]. 
[18]   The second exception recognised by section 3 of the Debtor’s Act is the summary procedure for imprisonment of a judgment debtor in the Magistrate's Court.  The Magistrate's Code of Procedure[4] came into effect in the Leeward Islands in the year 1892.  The civil jurisdiction of the Magistrate is governed by sections 142 et sec.  There were no civil procedure rules made under the Act, but the Code provided that the Rules made under the Summary Jurisdiction Act should apply to proceedings in the Magistrate's civil court. 
[19]   Section 153 of the Magistrate's Code of Procedure provides a summary mechanism for imprisoning a judgment debtor.  Basically, after the Magistrate has entered a money judgment against the judgment debtor, the judgment creditor takes out a judgment summons.  The debtor is then examined as to his means by the creditor before the Magistrate.  On being satisfied as to the debtor's means, the Magistrate makes an order for periodic or other payment.  In the event that this order is disobeyed, the creditor applies for a Defaulting Debtor Summons.  On hearing this summons, the Magistrate, if satisfied that the debtor has the means and has wrongfully defaulted, may commit the debtor to prison for up to 6 weeks. 
[20]   When I practised in the Magistrate’s Court in Basseterre in the period 1971-1976 this evidence was frequently given by the attorney for the creditor going into the box and being sworn.  He would repeat as evidence some hearsay given to him by his client.  The Magistrate would listen to the excuses of the judgment debtor and, if he thought it appropriate, strong-arm the debtor into making a promise to pay by a certain date failing which he was to be imprisoned for 6 weeks or until he sooner paid the debt.  Imprisonment is subsequently secured by the attorney for the creditor applying for a Warrant of Commitment by which the debtor is imprisoned by the Bailiff without any further hearing. 
[21]   The summary procedure described above was never permitted in the High Court.  I do not know if it still continues in the Magistrate’s Court.  Perhaps unsurprisingly, some attorneys who practise in both the Magistrate's Court and the High Court, have been known to be tempted to apply the principles and procedures of the Magistrate’s Court to the judgment summons procedure in the High Court.
[22]   To emphasise how abhorrent it is to the common law courts to countenance the imprisonment of a judgment debtor for failure to pay the debt, it may be worthwhile noting that in the UK the Judgment Summon procedure for civil debt has been abolished since the early twentieth century.  You will not find detailed notes in the UK Supreme Court Practice of any edition subsequent to the First World War on the judgment summons procedure, as you will for the oral examination.  Unlike the Eastern Caribbean, the judgment summons is retained in the UK only for cases of willful failure to pay a tax debt and similar matters. 
[23]   Rule 52 is the rule governing the issue of a judgment summons in the High Court.  It is to be read in conjunction with the Debtor's Act and the rules made under it.  In particular, the Debtors (Committal) Rules[5] govern the procedure for enforcement of an order made by a judge under a judgment debtor summons.
[24]   Rule 52.2 provides for all applications to commit a judgment debtor to be made by way of a judgment summons in Form 21.  The summons must state certain particulars[6].  The Rule proceeds in sub-rules 3, 4 and 5 to provide for the service, and hearing, of the summons, and the enforcing of any instalment order.
[25]   The extent to which Rule 52 of CPR 2000 can have provided an entirely new procedure for the issue of a judgment summons is open to doubt.  CPR 2000 was made by the Chief Justice and two judges of the court, being the rule-making authority under section 17 of the West Indies Associated States Supreme Court Order 1967 (the Courts Order).  The Courts Order does not empower the authority to amend either a substantive Act or the Rules that may have been made under it.  It is not even clear if the intention was for CPR 2000 Rule 52 to amend or replace the Debtors (Committal) Rules made under the Debtor's Act.  A proper reading of Rule 52 would seem to require that it be read and interpreted in accordance with the Debtor's Act and the Rules made under it, ie, the Debtors (Committal) Rules.
[26]   A careful attorney will follow the Debtors (Committal) Rules in applying for a judgment summons.  Rule 2 requires that the application to commit the judgment debtor to prison must be made by summons and shall specify certain particulars.  By Rule 3 the service of the summons must be personal unless the judge is satisfied that the judgment debtor is evading service.  Rule 4 provides that proof of the means of the debtor shall, whenever practicable, be given by affidavit.  The affidavit should be sworn by the client or someone else knowledgeable about the debtor’s affairs, not by the attorney or his clerk, as is sometimes done in the Magistrate’s Court.  Where it appears to the judge that the debtor or other person should attend, the judge may order the person's attendance for the purpose of being examined on oath.  Rule 5 provides that the judge may then make an order of committal in Form A in the Schedule to the Rules.  These provisions are all essentially the same as those in Rule 52.
[27]   Rule 52 of CPR 2000 introduces some novel features to the judgment summons procedure.  They did not exist under the previous 1964 Rules.  To the extent that these new features protect the debtor, no complaint of substance can be made, as they will not offend against the Debtor’s Act.  To the extent that they may impose new burdens on the debtor, their validity is open to question as described above.  So, Rule 52.4 permits orders for periodic payments to be made, with the hearing of the judgment summons adjourned to a later date presumably to see if the judgment debtor is complying.  Rule 52.5 provides that imprisonment is not automatic in the event of default. 
[28]   The practice of delegating judgment summonses to a Master or the Registrar that had begun to creep in after the advent of CPR 2000 is not a proper one[7].  While the Registrar or Master frequently handles oral examinations only the judge should hear a judgment summons.
[29]   If a suspended committal order has been made on a judgment summons, and there has been default, the judgment creditor must follow the provisions of Rule 53 in obtaining a committal order.  Rule 53 provides the requirements that must be met before a judgment debtor may be committed.  So, at Rule 53.3 the original order under Rule 52 must generally have been served personally on the judgment debtor.  The order must have been endorsed with the usual penal notice.  There must have been sufficient time after service of the order afforded to the judgment debtor to comply.  The application for the committal order must specify the exact nature of the alleged breach, be verified by affidavit, and be served, and there must be an affidavit of service.
[30]   In conclusion, the oral examination procedure should never be used as a mechanism to obtain an order for periodic payments by a judgment debtor.  In my opinion, such an order is unenforceable as being an illegal avoidance of the protections introduced by the Debtor’s Act since 1888.  An illegal imprisoning of a judgment debtor may have the consequence of making the State liable to a claim in damages. 
[31]   There is a contrary view popularly held by judges and attorneys throughout the region.  It is that it is open to a court to imprison for contempt in a case where there is a failure or refusal to pay a judgment or an instalment on a judgment in circumstances where the court considers that the judgment debtor has the means to pay the same and an order has been made, and served, and then flouted.  In my humble opinion that is a wrong view if we are considering any proceedings other than a judgment summons.  When I began the practice of law in the High Court some 39 years ago, that was the conventional wisdom.  The interpretation and practice of the law has only been altered in the succeeding years.
[32]   It is my opinion that evidence of the flouting of an order to pay a judgment debt can only be properly adduced under the judgment summons procedure.  That is the correct proceeding not because it is right or just, but because the Debtor’s Act says so.  Until the Debtor’s Act is overturned by parliament it remains binding law. 
[33]   To admit otherwise, to permit what may be described as a back-door mechanism for imprisoning judgment debtors who fail or neglect to pay their judgment debts, would be to subvert the reforms to the enforcement regime introduced by the Debtor’s Act over one hundred years ago.  It would make it virtually unnecessary for a judgment creditor to go through the more onerous procedures introduced by the Debtor’s Act.  Every judgment creditor would prefer the easier procedure of obtaining a consent order under the oral examination procedure, and then to have the debtor imprisoned on some proof short of that required under the judgment summons procedure.
[34]   Finally, once the detailed provisions of the Debtors (Committal) Rules and Rule 53 of CPR 2000 are followed by the attorney for the judgment creditor, and credible evidence of willful default produced to the judge, there should be no difficulty in obtaining a committal order.  Of course, where the debtor’s oral examination produced evidence of his ownership of land or valuable personal possessions, the court will expect alternative enforcement proceedings to be preferred.
A talk to the Antigua and Barbuda Bar Association on Thursday, 28 October 2010
- By Don Mitchell CBE QC

[1]      The Quaker missionary John Candler who visited the West Indies in 1841 reported 6 of the 56 prisoners in the Basseterre gaol at the time of his visit to be debtors.
[2]      An Act of the Federal Assembly of the Colony of the Leeward Islands [No 2/1888] which came into effect on 31 December 1888.
[3]      Halsbury's Laws of England, 2nd Edition, Vol 2, page 4 dealing with “Bankruptcy and Insolvency”.
[4]      An enactment of the Leeward Islands Federal Legislature [10/1891] which came into effect on 10 February 1892.
[5]      Made on 24 November 1890 under section 8.
[6]      It may be worth noting here that there appear to be two printer's errors in sub-rule 2:  (i) The sub-rule (2) commences with the words “The court order must” when what is meant is “The court office must”.  Then, paragraph (c) reads “return the order” when what is meant is “return the summons”.  It can be certain that these printing errors do not aid in the interpretation of the Rule.
[7]      Practice Direction 2 of 2007 made by the Chief Justice under Rule 4.2(2) of CPR 2000.