I’m a little surprised that I haven’t written a post on this in the past, so it’s high time that it be mentioned. I was reading one of the last decisions handed down by the English House of Lords and there was an interesting quote from a prior decision. The quote addresses the ability to be paid on a judgment once it is awarded to you. The quote is from an earlier (2003) decision of the House of Lords:
As many a claimant has learned to his cost, it is one thing to recover a favourable judgment; it may prove quite another to enforce it against an unscrupulous defendant. But an unenforceable judgment is at best valueless, at worst a source of additional loss.
As I often tell my clients, you can go all the way through to the end of a trial and the only guarantee that I can give is that if you win you will get a lovely, very impressive piece of paper that says “Judgment” and has a nice big, red seal on it. If, however, the other side goes bankrupt, or doesn’t have any money to pay on the judgment, then you will get little more than that lovely piece of paper.
This is not to say that the exercise of pursuing judgment is not a worthwhile endeavour. Some clients pursue the matter for “the principle of it all” or to ensure that nobody will try to sue them if they are seen as “an easy mark”. If nothing else, pursuing a matter through to the end and obtaining a judgment that cannot be paid is usually sufficient for the Canada Revenue Agency to accept that the debt (and the legal costs to obtain the judgment) is truly a “bad debt” that can be written off as against future income. But, it is yet another factor to take into account when deciding whether to pursue litigation (if you are a plaintiff) – are you even comfortably satisfied that you will be paid at the end of it all.
It’s not quite as easy if you are a defendant since you don’t have the choice of whether this is to be pursued or not. However, it can help in your determination, for example, of whether you are willing to make a settlement for even a small amount. To do otherwise could result in you spending thousands of dollars on legal fees for which you will get nothing back. To use some simple math: which is easier to swallow – making a payment to the other side of $3,000 to settle the case or spending $10,000 in legal fees that you will never see a penny from the other side because they can’t pay the judgment you get dismissing their claim and awarding costs to you?
Something to think about.