The trial and judgment - The nature and effect of judgments

Learning Outcomes

This article explains the nature and effect of judgments in civil litigation. It covers the key components of a typical money judgment, including liability, quantum, interest, and costs. It also outlines the principles of finality (res judicata and estoppel), the methods available for enforcing judgments, and the concept of judicial precedent. Understanding these elements is essential for advising clients on the potential outcomes and consequences of litigation in the SQE1 assessment context. This article additionally clarifies how different costs bases operate, how interest is treated before and after judgment, the practical steps in enforcement (including orders to obtain information), and the basic grounds and permissions required to appeal.

SQE1 Syllabus

For SQE1, you are required to understand the practical implications of judgments in civil proceedings, including the components of a judgment and its effect on the parties and the wider legal system. A thorough understanding of these topics is necessary to apply the relevant legal principles effectively in multiple-choice questions, with a focus on the following syllabus points:

• The determination of liability following a trial.
• The assessment of quantum, including different types of damages.
• The principles governing the award of interest on judgments.
• The rules and discretion concerning costs orders.
• The concept of finality through res judicata and issue estoppel.
• The main methods of enforcing money judgments.
• The doctrine of precedent and its operation within the court hierarchy.
• The steps and criteria for appeal and the consequences of non-compliance with pre-action conduct in costs.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. Which component of a judgment refers to the amount of financial compensation awarded?
   1. Liability
   2. Quantum
   3. Interest
   4. Costs
2. Which doctrine prevents a party from re-litigating issues already decided in previous proceedings between the same parties?
   1. Stare decisis
   2. Ratio decidendi
   3. Res judicata
   4. Obiter dicta
3. Which of the following enforcement methods involves seizing and selling the judgment debtor's assets?
   1. Third party debt order
   2. Charging order
   3. Attachment of earnings order
   4. Taking control of goods

4. True or false? The part of a judgment containing the legal reasoning essential for the decision is known as obiter dicta.

Introduction

Following the conclusion of a civil trial, the judge delivers a judgment. This represents the court's formal decision on the matters in dispute between the parties. For SQE1, it is essential to understand both the components that make up a judgment and the legal effects that flow from it. A judgment not only resolves the specific dispute but can also have wider implications, such as setting a precedent for future cases or necessitating enforcement action if not complied with voluntarily.

Judgments may be delivered immediately at the end of the trial or reserved to a later date. The judgment will usually determine liability and, where appropriate, assess quantum (damages), interest, and costs. Orders reflecting the judgment may be declaratory (stating legal rights), mandatory (requiring an act), prohibitory (forbidding an act), or monetary (requiring payment). Parties should also be aware that certain settlements reached after proceedings are commenced may be embodied in consent orders or Tomlin orders (a stay with agreed terms in a confidential schedule), each having differing effects on enforcement and costs.

The Nature of Civil Judgments

A civil judgment typically addresses several key aspects of the dispute, determining the rights and liabilities of the parties involved. In a money claim, the main components are liability, quantum, interest, and costs.

Liability

The first element the court determines is liability. This involves deciding which party's version of events is proven on the balance of probabilities and applying the relevant legal principles to those facts. The judge assesses whether the claimant has established the necessary elements of their cause of action (e.g., duty, breach, causation, and loss in negligence) or whether the defendant has successfully established a defence. The finding on liability dictates whether the claimant is entitled to a remedy.

Findings of liability may include contributory negligence, apportioning responsibility and reducing damages accordingly, or defences such as limitation, illegality, or consent. Where liability is established but the precise damages require calculation, judgment may be entered for damages to be assessed at a later hearing.

Quantum (Damages)

If liability is established in favour of the claimant in a money claim, the court must then determine the quantum – the amount of damages to be awarded.

Key Term: Quantum
The amount of money awarded by the court as compensation for the loss or damage suffered by the successful claimant.

The assessment of quantum aims to put the claimant back in the position they would have been in had the wrong not occurred (in tort) or had the contract been performed (in contract). This involves calculating both:

• Special damages: Quantifiable financial losses incurred up to the date of trial (e.g., lost earnings, medical expenses, repair costs). These must be specifically pleaded and proven.
• General damages: Compensation for non-quantifiable losses, such as pain, suffering, and loss of amenity in personal injury claims, or damages for distress where appropriate. These are assessed by the judge based on precedent and guidelines.

The court may also deal with:

• Aggravated damages where the defendant’s conduct has caused additional injury to feelings beyond the ordinary harm.
• Exemplary (punitive) damages in rare categories to punish and deter egregious conduct.
• Provisional damages in limited circumstances allowing for further damages if the claimant’s condition seriously deteriorates.

Claimants remain under a duty to mitigate loss; unreasonable failures to mitigate may reduce recoverable damages. Remoteness principles and loss of chance may be relevant depending on the cause of action.

Interest

A successful claimant is usually entitled to interest on the damages awarded. Interest compensates the claimant for being kept out of their money between the time the loss was suffered and the date of judgment. The court has discretion regarding the rate and period for which interest is awarded, guided by statutory provisions like the Senior Courts Act 1981 or the County Courts Act 1984. Specific rules may also apply, such as under the Late Payment of Commercial Debts (Interest) Act 1998 for commercial debts. Interest may also be awarded on the judgment debt itself from the date of judgment until payment.

Key Term: Interest
An additional sum awarded on damages or debts to compensate the claimant for the delay in receiving payment.

Pre-judgment interest is often claimed at a commercial rate (for example, 1–2% above base) or, absent contractual provision, at a rate the court considers just under the Senior Courts Act 1981 (High Court) or County Courts Act 1984 (County Court). Post-judgment interest differs by forum:

• In the High Court, interest on judgment debts is generally 8% per annum under the Judgments Act 1838.
• In the County Court, interest follows the County Courts (Interest on Judgment Debts) Order 1991 (often 8% per annum where applicable), and specific thresholds and exceptions apply.

Interest may continue to accrue during enforcement in the High Court. In the County Court, interest generally ceases on commencement of enforcement proceedings unless those proceedings do not yield payment.

Costs

Costs refer to the legal expenses incurred by the parties in pursuing or defending the litigation, including solicitors' fees, court fees, expert witness fees, and barristers' fees. The general rule (CPR 44.2) is that the unsuccessful party will be ordered to pay the successful party's costs ('costs follow the event'). However, the court retains discretion and can make different orders based on factors such as the parties' conduct, any admissible offers to settle (including Part 36 offers), and the degree of success on different issues. Costs can be assessed on the standard basis (allowing only proportionate costs) or the indemnity basis (a more generous assessment, often ordered as a penalty for unreasonable conduct).

Key Term: Costs
The legal expenses incurred by parties during litigation, which the court may order one party to pay to the other.

Costs outcomes vary by track. On the small claims track, recoverable costs are very limited (principally fixed commencement costs and certain disbursements). On the fast track, costs are usually summarily assessed at the end of the hearing. On the multi-track, costs are typically subject to detailed assessment unless agreed. The court will consider proportionality, reasonableness, conduct (including compliance with pre-action protocols and ADR efforts), and approved costs budgets (where applicable). Part 36 offers carry specific and, at times, significant costs consequences, including indemnity costs and enhanced interest where a claimant’s offer is beaten at trial. Non-party costs orders and security for costs may arise in appropriate cases.

The Effect of Civil Judgments

A judgment has several important legal effects, extending beyond the immediate resolution of the dispute for the parties involved.

Finality: Res Judicata and Estoppel

A fundamental principle is that judgments are final and binding between the parties. This is underpinned by the doctrine of res judicata, which prevents the same claim or issue being re-litigated.

Key Term: Res Judicata
A legal doctrine meaning 'a matter decided', which prevents the re-litigation of claims or issues that have already been determined by a court between the same parties.

Res judicata encompasses two main forms of estoppel:

1. Cause of action estoppel: Prevents a party from bringing a subsequent claim based on the same cause of action that has already been decided.
2. Issue estoppel: Prevents a party from re-arguing a specific issue of fact or law that was essential to the decision in a previous case between the same parties, even if the subsequent claim involves a different cause of action.

These principles ensure certainty and prevent parties from being subjected to repeated litigation over the same matters.

Key Term: Issue Estoppel
A form of res judicata preventing a party from re-litigating a specific issue previously decided by a court in earlier proceedings between the same parties.

Res judicata operates alongside abuse of process controls (often associated with the Henderson v Henderson principle), which restrict parties from raising matters that should have been brought in earlier proceedings. Exceptions are narrow and may include cases of fraud, fresh evidence that could not reasonably have been obtained earlier, or changes in the law with compelling reasons. The original cause of action generally merges into the judgment, reinforcing finality.

Enforcement of Judgments

A judgment creates a legal obligation. If the unsuccessful party (the judgment debtor) fails to comply voluntarily (e.g., by paying the sum awarded), the successful party (the judgment creditor) can take steps to enforce the judgment.

Key Term: Enforcement
The legal process by which a judgment creditor compels a judgment debtor to comply with the terms of a court judgment, typically involving the recovery of money owed.

In practice, creditors often begin with an information-gathering stage:

Key Term: Order to Obtain Information
A court order requiring the judgment debtor to attend court and answer, on oath, questions about their assets, employment, and finances so the creditor can choose a suitable enforcement method.

Various methods of enforcement are available for money judgments, including:

• Taking control of goods (previously writ/warrant of execution)
• Third party debt orders (attaching funds owed to the debtor by a third party, like a bank)
• Charging orders (securing the debt against the debtor's property)
• Attachment of earnings orders (deductions from the debtor's salary)

Key Term: Taking Control of Goods
A process by which enforcement agents seize and sell a debtor’s goods to satisfy the judgment debt, enforcement costs, and fees.

Key Term: Third Party Debt Order
An order compelling a third party (often a bank) to pay a debtor’s funds to the judgment creditor to satisfy the judgment.

Key Term: Charging Order
An order securing the judgment debt against a debtor’s property (e.g., land or securities), enabling payment from sale proceeds.

Key Term: Attachment of Earnings Order
An order requiring a debtor’s employer to deduct specified sums from wages and pay them to court for the judgment creditor until the debt is satisfied.

The appropriate method depends on the debtor's assets and circumstances. Certain items are exempt from taking control of goods (e.g., essential household items, tools of the trade). Enforcement agents must comply with strict entry rules (for example, no entry at prohibited hours or where only children or vulnerable people are present). Charging orders involve an interim order followed by a final order, and may be followed by an order for sale. Third party debt orders proceed by interim order, followed by a hearing to determine whether a final order should be made. Attachment of earnings orders apply to employed debtors (not self-employed). Interest treatment differs depending on the court in which the judgment was obtained, and the High Court rate usually continues during enforcement.

Worked Example 1.1

Scenario: Clara obtained a judgment against David for £15,000 following a successful breach of contract claim. David has failed to pay. Clara knows David is employed full-time and owns a car, but has no property. Which enforcement method might be most suitable for Clara?

Answer:
Clara could consider an attachment of earnings order given David's employment, which would deduct payments directly from his salary. Alternatively, if the car has sufficient value and is not essential for David's basic needs or work, she could apply for an order taking control of goods to seize and sell the car. A third party debt order or charging order would be unsuitable as David has no known significant bank savings or property.

Precedent

Judgments, particularly those from higher courts, contribute to the development of case law through the doctrine of precedent (stare decisis).

Key Term: Precedent
The principle that courts are bound by the legal decisions of higher courts in previous cases involving similar facts or points of law. Also known as stare decisis.

The binding part of a judgment is the ratio decidendi – the legal principle or reason essential for the decision based on the material facts.

Key Term: Ratio Decidendi
The legal reasoning or principle forming the basis of a court's decision, which is binding as precedent on lower courts.

Other statements made by the judge that are not essential to the decision are known as obiter dicta. These are not binding but may be persuasive in future cases.

Key Term: Obiter Dicta
Statements made by a judge in a judgment that are not essential to the decision and therefore do not form part of the binding precedent, but may be considered persuasive.

The hierarchy of the courts dictates the application of precedent:

• The Supreme Court binds all lower courts but is not strictly bound by its own previous decisions, though it generally follows them for certainty.
• The Court of Appeal binds all lower courts and itself (subject to limited exceptions).
• The High Court binds lower courts (County Court, Magistrates' Court) but not itself (though High Court judges usually follow previous High Court decisions for consistency).

Within the Court of Appeal, limited exceptions to horizontal binding allow departure from past decisions (for instance, conflicting past decisions, decisions inconsistent with the Supreme Court, or decisions made per incuriam). Lower courts may distinguish cases on their facts, apply persuasive authority from coordinate or foreign jurisdictions where appropriate, and must follow higher court determinations of law.

Worked Example 1.2

Scenario: The Court of Appeal delivers a judgment interpreting a specific clause in a standard form commercial contract. A later case involving the same clause comes before the High Court. Is the High Court judge bound by the Court of Appeal's interpretation?

Answer:
Yes, the High Court judge is bound by the Court of Appeal's decision due to the doctrine of precedent. The Court of Appeal is higher in the court hierarchy than the High Court. The judge must apply the ratio decidendi (the reasoning behind the interpretation of the clause) from the Court of Appeal case.

Appeals, variation, and the register of judgments

Judgments may be appealed with permission where the decision is wrong or unjust because of serious procedural or other irregularity. Permission is granted only if the appeal has a real prospect of success or there is some other compelling reason to hear it. Appeals from the County Court or High Court are subject to time limits (commonly 21 days from judgment). The correct “destination of appeal” depends on the level of judge and court that made the decision.

Monetary judgments are often entered on public registers (e.g., the Register of Judgments, Orders and Fines). Registration may adversely affect the debtor’s credit rating and usually remains for six years unless paid promptly, reinforcing the practical consequences of non-compliance.

Worked Example 1.3

Scenario: Priya obtains County Court judgment for £6,800 against Marco. Priya applies immediately for a warrant of control. What happens to post-judgment interest, and what alternative enforcement routes are open if Marco owns a buy-to-let flat?

Answer:
In the County Court, interest ordinarily ceases when enforcement proceedings commence, unless those proceedings do not result in payment. If Marco owns property, Priya could apply for a charging order to secure the judgment against the flat’s title and, if necessary, seek an order for sale. A third party debt order may be appropriate if he holds sufficient funds in a bank account. If Marco is employed, an attachment of earnings order is also possible.

Worked Example 1.4

Scenario: The claimant made a valid Part 36 offer of £50,000 inclusive of interest. The defendant declined the offer. At trial, the claimant is awarded £55,000. What are the likely costs and interest consequences?

Answer:
Because the claimant beat their own Part 36 offer, the court is directed (unless unjust) to impose enhanced consequences from the day after expiry of the relevant period, which can include: indemnity costs, enhanced interest on damages and costs (up to 10% above base rate), and an additional amount (a percentage uplift) capped at the applicable maximum. Pre-expiry costs will normally be on the standard basis.

Worked Example 1.5

Scenario: A claimant sues a defendant for failure to deliver specific goods and loses after trial on the basis that no binding contract existed. The claimant later brings a second claim seeking damages for wasted expenditure arising from the same transaction. Is this permitted?

Answer:
Generally no. Cause of action estoppel prevents re-litigating the same cause of action between the same parties following a final judgment. The new label for loss does not avoid estoppel if the essential facts and cause of action are the same. Abuse of process may also bar attempts to raise matters that should have been advanced in the first proceedings.

Worked Example 1.6

Scenario: A High Court judge is asked to depart from a previous High Court decision on a point of construction. There is no Court of Appeal authority. Can they do so?

Answer:
The High Court is not strictly bound by its own decisions, and a judge may depart where convinced the earlier decision was wrong. However, for consistency, High Court judges usually follow prior decisions unless there are cogent reasons to differ, especially where the earlier decision is well reasoned and has been followed in practice.

Revision Tip

When analysing judgments for revision, focus on identifying the ratio decidendi. Understanding the difference between the binding ratio and persuasive obiter dicta is critical for applying case law correctly in problem questions. Consider the court hierarchy when determining the precedential value of a case. For enforcement and costs, associate the remedy chosen with the debtor’s circumstances and be clear on the distinct treatment of interest in High Court versus County Court judgments.

Key Point Checklist

This article has covered the following key knowledge points:

• Civil judgments determine liability based on evidence and legal principles.
• Quantum refers to the assessment of damages (special and general) awarded to compensate for loss, with aggravated, exemplary, and provisional damages available in limited circumstances.
• Interest is typically awarded on damages to account for the delay in payment, with different pre- and post-judgment regimes in the High Court and County Court.
• Costs orders allocate the legal expenses of litigation, usually requiring the loser to pay the winner's costs, subject to court discretion and specific Part 36 consequences; track-based differences affect assessment (summary vs detailed).
• Judgments are generally final due to res judicata, preventing re-litigation of the same claims (cause of action estoppel) or issues (issue estoppel), and abuse of process controls apply.
• Successful parties can use various methods (e.g., taking control of goods, third party debt orders, charging orders, attachment of earnings) to enforce unpaid money judgments, usually preceded by an order to obtain information.
• Judgments from higher courts create binding precedent (ratio decidendi) for lower courts, ensuring legal consistency. Obiter dicta are persuasive but not binding; limited horizontal exceptions exist for the Court of Appeal.
• Appeals require permission, time limits apply, and registration of judgments can adversely affect debtors, underscoring the real-world effect of civil judgments.

Key Terms and Concepts

• Quantum
• Interest
• Costs
• Res Judicata
• Issue Estoppel
• Enforcement
• Order to Obtain Information
• Taking Control of Goods
• Third Party Debt Order
• Charging Order
• Attachment of Earnings Order
• Precedent
• Ratio Decidendi
• Obiter Dicta