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An Increase in Judicial Leniency towards Debtors?

26/05/2009

With the country in recession, many more people are struggling to pay their debts. This is resulting in litigation in the courts, with many of the matters being undisputed.

A recent case indicates that the courts are becoming more sympathetic to the position of debtors, who cannot afford to pay their debts. The courts have a difficult balancing exercise to carry out in upholding the reasonable positions of both the creditor and debtor.

In Amsalem (t/a MRE Building Contractors) v Raivid, the Claimant issued proceedings, to which the Defendants failed to respond in the stipulated timeframe and the court entered judgment. The Defendants requested an extension of time to pay the sum ordered, beyond the usual 14 days.

The court refused in this case to make any order giving the Defendants time to pay, because it found that the Defendants had no reasonable prospects of being able to pay the sum ordered, whether after 14 days or at all. However, Mr Justice Akenhead stated in his judgment:

“I would have been prepared to seriously consider extending the 14 day period if there was a realistic prospect that substantial sums could be paid, and could be offered, within the next few weeks or months. … I fear that, with some real regret, the law prevents me, on the information available, from acceding to the application made by the Defendants in this case. The Court must balance the feeling of regret for the very unfortunate circumstances in which the Raivids find themselves in albeit of their own making and the rights which the judgment creditor, Mr Amsalem, has to seek to enforce his judgment; I do bear in mind that Mr Amsalem is very much out of pocket”.

This is a worrying approach for creditors who have legitimately obtained a judgment and wish to enforce it to obtain payment without delay.