The first and most important question or issue you need to decide before you sue any company is:
“Can you recover the monies owed or enforce the judgment granted by the court, if you win your case?”
There is little or no point in suing a company for a breach of contract, for negligence or for money they owe you, etc., if it turns out that the company has no money(assets) to pay you. All you have done is waste time and incur unwanted legal fees.
As it has a separate legal personality from its owners (shareholders and/or directors) you cannot normally seek to have them made personally liable for the debts of the company, except in very limited circumstances, where the law will allow this.
So from a practical point of view you need to have a credit check or financial investigation carried out against the company, so see if it has sufficient assets to pay you if you are successful.
We can assist you in this regard. Please also see our debt collection service for more information.
Having decided that the company you wish to sue has the assets or wherewithal to pay out if you win and having then successfully obtained your Judgment in the court, see below a brief outline of the issues and options available. Please also see our debt collection section of our website for further information on obtaining and the enforcement procedure available for judgments obtained.
From a practical point of view it has to be said that currently, some of these procedures can give rise to very unsatisfactory outcomes for the person/company who have obtained their judgment.
Seizure and sale of goods by the Sheriff
The primary method of enforcement of a judgment obtained for the payment of money, is for you (the judgment creditor) to obtain an order from the court directed to the sheriff (or if this is outside of Dublin or Cork, the County Registrar) commanding them to seize whatever goods are within their area (bailiwick) belonging to the company (judgment debtor) and to sell those goods, in order give you the sum (money) due, this can also include interest and costs, out of their sale.
In our experience the success of this method will depend on two things, the assets of the company that can be readily realised (as already discussed) and the capabilities of the particular Sheriff or County Registrar.
Under various laws, you (the judgment creditor) have the right to apply to, convert your judgment or order obtained from the Court, into a mortgage against the land or property of the company, provided that the judgment or order requires the payment of a sum of money to you.
Where a judgment mortgage is obtained against a company it is very important that you send two copies (certified by the Property Registration Authority) of the Affidavit required for that purpose, to the company within 21 days after the date of registration and within a further three days from then, you have to also deliver a copy of the Judgement mortgage to the Company Registration Office (‘The CRO’).
One means of enforcing a judgment that is exclusive to company debtors is the creditors’ ability to petition the courts to have the company wound up. A a court ordered winding up has to be taken in the High Court, making it a very expensive process. However, if you have not obtained a judgment, the courts do not look kindly on this action if you are using it simply as a debt collection method. Additionally, if you do decide to wind the company up, if you are an unsecured creditor, you will only be paid with the other unsecured creditors, after the preferential and secured creditors.
Enforcing court orders and judgments
The enforcement of High Court orders and judgments against companies is regulated by the Rules of the Superior Courts (these are available online at www.courts.ie)
Order 42, Rule 32 states:
“any judgment or order against a company wilfully disobeyed may, by leave of the court, be enforced by sequestration against the corporate property, or by attachment against the directors or other officers thereof, or by order of sequestration of their property.”
Central to the operation of this rule is that a judgment or order is “wilfully disobeyed” by the company.
It is important to note that a company’s inability to pay a money judgment against it, will unfortunately, not result in “wilful disobeyance” and will not give rise to its officers (usually senior management) being attached (imprisoned).