Our recent debt recovery work in the education sector
Joint and several liability despite parents’ divorce
A substantial debt had accumulated for school fees for two children that had since left. The school had made its own efforts to recover the debt and had agreed a number of instalment plans with the parents. Unfortunately after defaulting several times, the parents stopped responding. It was apparent that the debt would not be paid voluntarily so our client instructed us to recover the debt on its behalf.
Our credit searches revealed that the father had recently been declared bankrupt. As a result, we would not be able to pursue him for the debt as the school was a creditor in his bankruptcy estate.
However, in the terms of their contract with the school, both parents were jointly and severally liable – so both or either of them individually, could be pursued for the debt. Our enquiries revealed that the mother had an interest in a property which we could enforce against if necessary.
After receiving no response to our initial correspondence, we issued court proceedings against the mother who defended the claim on a number of grounds; including that she and the father were now divorced and they had agreed he would pay the school fees.
After advising our client on the merits of the defence, it was decided to pursue the claim. At trial, our counsel successfully argued that the agreement between the parents was irrelevant, as contractually both parents were jointly and severally liable.
The judge found in our favour and our client was awarded the full amount of the debt together with all costs and interest. When the mother did not repay the debt within the time allowed, we applied for a charging order to secure the judgment against the mother’s beneficial interest in the property. To our client’s satisfaction, this was sufficient to prompt the mother to settle the debt.
Successful recovery of a long-standing debt
After five years of trying to recover unpaid school fees of approximately £5,500, our client instructed us to act on their behalf.
We reviewed the case and could see no reason why the debt hadn’t been paid. We often find that debtors will ignore a client’s request for payment, only taking notice once ‘it gets serious’ and firm of solicitors are instructed. This appeared to be such a case, as when we contacted the debtor he quickly agreed an instalment plan to repay the debt plus our client’s costs and interest.
Initially, all went well and the debtor made several payments before defaulting on the plan a few months later. Given his history, and the length of time the debt had been outstanding, we agreed with our client to issue court proceedings. The debtor responded by filing a part-admission, accepting liability for the outstanding fees but disputing the costs and interest claimed.
Armed with a clearer understanding of the debtor’s position, we contacted him again and explained that under the terms and conditions of the contract he had signed, the school was legally entitled to recover the costs of its action. As such, we did not consider that he had any prospect of successfully defending his claim and our next step would be to apply for summary judgment. The debtor accepted our position and agreed another instalment plan to repay the full balance outstanding, including costs and interest.
The school was delighted with the outcome because, as well as ensuring effective recovery of the debt, we had saved our client the time and costs associated with further court action.
This case shows that by taking a firm but fair approach, and by maintaining a dialogue with the debtor, it is possible to successfully recover even long-standing debts with minimal court action and costs incurred.
Understanding a debtor’s ability and willingness to pay
Our client had received only sporadic payments from a parent who owed £6,500 in overdue school fees. Frustrated by his behaviour, and having exhausted its internal procedures, the school referred the case to us.
We reviewed the case and completed our usual credit checks and other searches. As far as it was possible to tell, the parent had the financial means to repay the debt but was simply choosing not to do so.
We attempted to contact the debtor, but when he failed to respond, we agreed with our client to issue legal proceedings as soon as possible. Once again, the debtor failed to respond and we were able to secure a default judgment.
However, even with a judgment recorded against him, the debtor maintained his silence and withheld payment of the debt. Our next step was to obtain a writ of control and a High Court enforcement officer (HCEO) made an attendance at the debtor’s property.
This move finally prompted the debtor to make an offer to pay by instalments. However, given his previous patchy payment history this was far from ideal; we advised the debtor that it was not acceptable. In the absence of any further offer from the debtor, we instructed the HCEO to enter a controlled goods agreement in respect of the debtor’s assets.
This proved to be the spur needed and to our client’s satisfaction, we received payment in full shortly afterwards.
As well as highlighting the importance of tenacity in successful debt recovery, this case demonstrates the critical role that thorough research, combined with experience and judgment, plays in understanding when a debtor cannot pay, and when he or she is simply prioritising other commitments.
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To find out more about how our team of debt recovery lawyers can support your establishment, please contact one of our specialists directly or send us an email.
Clarke Willmott has offices in Birmingham, Bristol, Cardiff, London, Manchester, Southampton and Taunton. We are members of the Civil Court Users Association (CCUA) and provide debt recovery advice to the education sector across the UK.
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Phil is a Chartered Legal Executive and Partner in Clarke Willmott's Debt Recovery team specialising in defended debt recovery litigation and insolvency actions.View profile >