BM Bank JSC v Chernyakov and others

This little-known provision of the Civil Procedure Rules enables an individual judgment debtor who is subject to a third party debt order to apply for a ‘hardship payment order’ releasing sums from the bank or building society account subject to the third party debt order. 

In what appears to be the first reported decision in relation to this provision, His Honour Judge Waksman QC held that:

(1)      CPR 72.7 requires the court to exercise a discretion.  There is no automatic right to a hardship payment order even if the defendant establishes the requisite hardship;

(2)     The discretion is not necessarily the same discretion as is exercised in relation to the living expenses provision under a freezing order.  That is obvious in particular from the references in the provision to ‘hardship’;

(3)     The provision is aimed at circumstances where there are bank or building society accounts which are used for regular day-to-day payments of the defendant or his family and in circumstances where without being able to meet the claimed living expenses there would be hardship.  The examples of hardship given in the notes in the White Book (inability to pay a mortgage or rent or buy food for their family) are not exhaustive, but are a good indicator of the typical scope of this provision.  The provision is not intended to enable a defendant to pay for luxuries;

(4)     The question of hardship cannot be decided unless it is known what other resources may be available to the judgment debtor. If for example something which could be regarded as ordinary living expense can be defrayed elsewhere then by definition not using the account subject to the third party debt order to pay them will not result in any hardship.

It is unlikely, following Chernyakov, that a defendant who is subject to a freezing order and who subsequently becomes a judgment debtor subject to a third party debt order would be able to claim his living expenses as provided for under the freezing order by way of a hardship payment order.

Click here for the judgment. 

 Peter Head acted for the Claimant.  Shane Sibbel acted for the Defendant.