A credit finance company launched a legal bid to have one of its customers imprisoned after he defaulted on his car payments and then failed to comply with a court order demanding the vehicle's return.

The request from Moneybarn No.1 Ltd was rejected by Hamilton Sheriff Court in South Lanarkshire, Scotland, last Thursday (13 October). The ruling stated that "the arguments which led to the abolition of imprisonment for non-payment of civil debt in the nineteenth century are likely to be equally valid and apt today".

In his judgment on the case, Sheriff Daniel Kelly said: "While many customers might relish the opportunity to acquire a new car, few would expect that experience to lead to their imprisonment on the application of the finance company".

The dispute began when Steven Bell missed a number of payments on a £9,389 car loan from Moneybarn. In November 2014 Moneybarn cancelled its agreement with Mr Bell. It demanded possession of the car and payment of a further £11,109.

In June this year a court order was issued requiring the car to be delivered to Moneybarn, but Mr Bell didn't comply. Court papers show that a solicitor from law firm Brodies, representing Moneybarn, then requested a "warrant to apprehend and imprison [Mr Bell] for a period not exceeding six months or to make such other order as appeared to the court to be just and equitable".

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Martin Lewis
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Can courts imprison debtors?

It's extremely unusual for prison sentences to result from a civil debt case such as this – the penalty is usually financial rather than custodial.

One notable exception is if you refuse to pay your council tax – you could end up facing a prison sentence of up to three months if you defy a court's order after refusing to pay, but this is very much a last resort.

In the vast majority of UK civil debt cases, people can't be arrested or imprisoned because of their debt. It's only if you deliberately disobey a court order in relation to the debt that you may face prison.

Moneybarn's request was made under Scottish law which allows for someone to be imprisoned for up to six months if they wilfully refuse to comply with a court order demanding a particular action be performed. Similar laws are in place in England and Wales.

In this case Sheriff Kelly refused Moneybarn's request because he judged that the circumstances of the case "would not ... warrant the imprisonment of one of the parties to it at the behest of the other".

He explained that even where the court can apply the penalty, it "retains a discretion" over whether to impose it, adding: "Civil imprisonment for such matters is now likely to be rare".

However, Sheriff Kelly said in some cases imprisonment could be justified, explaining: "There might be instances where a sentence of imprisonment would be appropriate as an effective sanction".

He ruled instead that Mr Bell must pay the outstanding £11,109 owed and said Moneybarn had an existing warrant to "search for and deliver the car".

'The law must be changed'

Mike Dailly, solicitor advocate at Govan Law Centre, says of the case: "We can thank our Victorian ancestors for largely abolishing imprisonment for civil debts – in 1880 for Scotland, and 1869 for England and Wales. But there remain some ugly remnants of our punitive past on the statute book.

"In England and Wales jail remains a possibility for council tax liability orders, and for debts where there is a contempt of court. Likewise in Scotland, it remains possible to be jailed for failing to comply with a civil court order."

Dailly adds: "The Scottish sheriff in the Moneybarn case had no difficulty in refusing the demand for a consumer debtor to be jailed, yet the fact a creditor could make this demand should send alarm bells ringing to us.

"Creditors should never be entitled to seek imprisonment for civil debts in the UK. The law must be changed." 

What does Moneybarn say?

A Moneybarn spokesperson says: "If a customer encounters difficulties with their repayments, Moneybarn will work with them to put in place an appropriate forbearance repayment plan ['forbearance' is a legal term for when one party to an agreement does not pursue its legal rights, such as when a creditor allows a debtor time to pay].

"If the forbearance plans have been exhausted or if a customer is unresponsive to further repayment solutions, the last resort would then be the usual debt recovery process which relies upon court proceedings.

"In Scotland, in circumstances where a customer does not then respond to an order made by the court to attend, as a last resort, the court can take action [to imprison]. Moneybarn do not pursue prison sentences for customers – this is a potential consequence of a refusal to attend court proceedings."

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