We hear the stories all the time. Someone takes a loan and later defaults. Before long, the creditor begins to threaten to “bring police”. Sometimes a few “security boys” show up at the debtor’s house or workplace, insisting that the money must be paid immediately. They refuse to leave until something is handed over. In other situations, the debtor is pressured into giving up property as a form of payment. In more extreme cases, the person is even prevented from leaving until the debt is settled.
There is also the courtroom version of the same story. A party wins a case and secures judgment for the payment of money. But enjoying the fruits of that judgment proves difficult because the losing party refuses to pay.
Frustrated, the successful litigant returns to court asking for stronger measures to compel payment. For a long time the question that kept lingering on my mind was: “can the judgment debtor be committed for contempt? Why can’t we punish a person who wants to disobey the Court and its sacrosanct orders?
Sounds attractive? Yes, it is a tempting solution, especially when a creditor feels wronged. But the law has long been cautious about allowing a person’s liberty to be taken away merely because they owe money.
The Supreme Court made this point quite clear in the case of Ex parte PPE Ltd & Paul Juric. It carifies the limits of using imprisonment as a tool for enforcing financial obligations.
A Question of Debt and Liberty
The case arose from a judgment obtained by Unique Trust Financial Services Ltd against PPE Ltd. Subsequent events soon revealed to Unique Trust that winning the case was only half the battle. Recovering the money proved far more difficult.
After several unsuccessful attempts to enforce the judgment, the financial institution applied to the High Court of Ghana for an order directing the debtor company to pay the judgment debt within six weeks. The court granted the request.
But the six weeks passed without payment.
At that point, Unique Trust felt that PPU Limited was taking both them and the court for granted. They therefore returned to court with a more drastic request. This time, they asked the court to commit Paul Jurek, a director of the company, to prison for contempt of court on the basis that the company had failed to comply with the order to pay the judgment debt.
Their lawyers advanced what appeared to be a straightforward argument. The High Court had ordered the debtor to pay the judgment debt within six weeks. That order had not been obeyed and, under the rules, failure to comply with a court order can attract sanctions, including committal to prison. Since the debtor was a company, the committal could properly be directed against its director.
Lawyers for PPE Limited and its director strongly challenged the application. They argued that a careful and holistic reading of the relevant provisions revealed an important limitation. While the rules permit committal for contempt where a person disobeys certain orders of the court, orders requiring the payment of money stand on a different footing.
According to them, the procedural rules governing the enforcement of monetary judgments provide specific mechanisms for enforcement, and those mechanisms do not include imprisonment.
Interestingly, the High Court accepted the arguments of the creditor and allowed the committal application. In effect, the court held that the failure to comply with the order to pay the judgment debt could justify imprisonment for contempt.
Father in the House Speaks: The Supreme Court’s View
When the case reached the Supreme Court, the Court agreed with the debtor and overturned the High Court’s decision.
The Court placed significant emphasis on the constitutional protection of personal liberty. Although fundamental rights may be limited in certain circumstances, such limitations must be justified as necessary in the public interest or for the protection of the rights of others.
The judges therefore posed an important question: is it really necessary in the public interest to imprison a person simply because a debt has not been paid?
The Court found the idea difficult to justify.
In the Court’s view, the existence of several effective enforcement mechanisms made imprisonment both unnecessary and disproportionate.
A Principle the Law Has Long Recognised
This cautious approach to debt enforcement is not new. The common law has long rejected the idea that a person’s liberty can be taken away simply because they owe money.
A well-known illustration appears in Sunbolf v Alford.
In that case, the defendant was an innkeeper who claimed that a guest had failed to pay his bill. To compel payment, the innkeeper detained the guest and assaulted him in order to seize the coat the guest was wearing as security for the debt.
The guest sued for assault and false imprisonment and succeeded.
The court held that a person cannot detain another, assault them, or seize property they are wearing merely because money is owed.
In delivering judgment, Lord Abinger warned that allowing such conduct would lead to absurd consequences. If creditors were permitted to detain debtors in this way, it could theoretically allow someone to imprison another person indefinitely until the debt was paid. He described such a possibility as a “monstrous” proposition.
The Lesson From the Law
The law recognises that debts must be paid and that court judgments must be respected. But it also recognises something equally important: personal liberty is too fundamental to be used as a bargaining tool in the enforcement of private obligations.
For that reason, the law provides creditors with powerful tools to recover what they are owed, including execution against property and other asset-recovery mechanisms. What it generally refuses to do is allow a person to lose their freedom simply because they owe money.
