The High Court granted a creditor's application for permission to enforce a third party debt order during a mental health crisis moratorium.
Summary
The creditor (Guy parties) applied to the High Court for permission to enforce a third party debt order (TPDO) against the debtor (Brake parties). The debtor's co-debtor was subject to a mental health crisis moratorium (MHCM).
The creditor applied under regulation 7 of the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 SI 2020/1311.
The Court granted the application and held it was reasonable to permit enforcement action because:
the process was almost complete
the remaining steps did not need the debtor's involvement
the Brakes had deliberately delayed complying with the TPDO
The court also found that allowing enforcement did not result in any debtor detriment and did not significantly undermine the MHCM protections.
Background
This judgment is part of ongoing extensive and complex litigation between the parties.
In July 2022, the High Court made a final TPDO enforcing a cost order against Mr Brake's pension provider and granted an injunction. This required Mr Brake to take steps to draw down his pension by a specific date.
Mrs Brake failed to take the steps required by the TPDO. She requested the court extend the deadline and it refused.
Mental health crisis moratorium
Mr Brake was in a mental health crisis moratorium from May 2021. This would not protect against enforcement of the costs order incurred after his moratorium began.
On 26 August 2022 Mrs Brake entered a MHCM. This prohibited the Guys parties from enforcing the TPDO against Mr Brake's pension because she jointly owed the costs order.
The Guy parties applied to court for permission to enforce the TPDO.
The court's decision
The High court exercised its discretion to grant the Guy parties' application for permission. It considered each limb of the test set out in regulation 7(2)(b).
Reasonable to allow enforcement
The court held that it was reasonable to allow enforcement in the circumstances.
The enforcement process was almost complete. The Brakes had deliberately delayed complying with the injunction to enable Mrs Brake to start her own moratorium.
The remaining enforcement steps did not need Mrs Brake's involvement. The more onerous the potential involvement of the debtor, the more likely that permission would not be reasonable.
Debtor detriment
The court found there was no debtor detriment in allowing enforcement of the TPDO.
The test is not confined to financial detriment but is also applicable to physical and mental health. The evidence of the Approved Mental Health Professional did not prove that enforcement would result in mental health detriment.
There would be no financial detriment because the asset would never be available to the debtor or her family to the interim TPDO.
Protections of the moratorium
The court held that allowing enforcement did not significantly undermine the MHCM protections.
Enforcement would not threaten any assets currently available to Mrs Brake, or those from which she could benefit in the future. None of the other eligible moratorium debts would change in status as a result of allowing enforcement.
Comments
This is the first decision of the senior courts addressing the question of whether to grant permission to enforce a debt subject to a MHCM.
It provides welcome guidance for advisers on how judges may exercise their discretion.
Courts might distinguish future applications from this one based on their facts. The circumstances of this case were specific as they concerned a relatively unusual enforcement process against the assets of a joint debtor. The enforcement process was almost complete when the MHCM began.
Find out more about breathing space and mental health crisis moratoriums.