Aw burlington pres_high_court_enforcement_post_tce_act

Adam WonnacottSales Director, Burlington Group

ICM Law Conference 2013: The Law Society, London

www.burlingtongroup.co.uk

Effective Enforcement, Responsibly Delivered

“Quids in? High Court Enforcement post-TCE Act”

• Primary and Secondary Legislation• Tribunals, Courts and Enforcement Act 2007• Taking Control of Goods Regulations 2013

• ‘Transforming bailiff action’ – MoJ consultation

• Government response & future developments

• Impact upon claimants and representatives

Tribunals, Courts and Enforcement Act 2007

• Part Three of the TCE Act provides for a new procedure, ‘taking control of goods’, to replace existing bailiff powers

• Schedule 12 to the Act provides framework for the procedure, with much of the detail deferred to secondary legislation

• The Taking Control of Goods Regulations 2013 provide detail on procedure and are due to come into force on 6th April 2014

• Further regulations regarding fee structures and certification and competency requirements still outstanding and due imminently

Tribunals, Courts and Enforcement Act 2007

The legislation changes will affect:

• High Court Enforcement Officers

• Bailiffs collecting public sector debts (court fines, HMRC debt, council tax, non-domestic rates, parking fines, etc.)

• Bailiffs acting on behalf of commercial landlords (CRAR procedure)

• Judgment creditors, local authorities, central government and commercial landlords

Taking Control of Goods Regulations 2013

Exempt Goods (para 4)

Defined as: ‘items or equipment (for example, tools, books, telephones, computer equipment and vehicles) which are necessary for use personally by the debtor in the debtor’s employment, business, trade, profession, study or education’ (“tools of the trade”)

Limit on value: Aggregate value of the items or equipment to which the exemption is applied shall not exceed £1,350

Also includes items required to satisfy the basic domestic needs of the debtor (household appliances etc)


Notice of intention to take control of goods (para 6)

• 7 clear days will be required (not including Sundays and bank holidays)

• Court may order that a shorter period of notice can apply where it is satisfied that the goods are at risk of being moved or otherwise disposed of

• Notice must follow form specified at para 7

• Enforcement Officer must give the notice by method specified in para 8 (postal service will suffice)


Notice of intention to re-enter premises (para 25)

Will apply where the Enforcement Officer seeks to re-enter premises having granted walking possession (entered into a ‘Controlled Goods Agreement’)

• 2 clear days notice must be provided, unless the court orders otherwise

• Notice must follow form specified in para 26

• Notice must be given by the Enforcement Officer and will follow the same method as para 8


Shelf life of writ of fi fa/‘writ of control’ (para 9)

12 months from date of issue of notice of intention to take control of goods; or

12 months from the date of breach of a repayment arrangement that follows service of the notice

Court can order extension of 12 months in specified circumstances


Days and times for taking control of goods (para 12)

• Any day of the week (removes previous restriction on Sundays) between hours of 6am-9pm (reflecting National Standards for Enforcement Agents)

• Enforcement Officer may apply to the court for permission to proceed during ‘prohibited hours’

• Enforcement Officer may proceed during prohibited hours (without the need for an application) if goods are located on premises that are open for the conduct of business outside of those hours (e.g. restaurants, nightclubs, etc.)


Securing and removal of vehicles (para 18)

• When securing a vehicle, enforcement agent must provide a written warning to the debtor in specified form

• The vehicle must remain immobilised where it is positioned for a period of not less than 2 hours from the time of immobilisation

• Thereafter vehicle may be removed for storage (further notice required prior to proceeding to sale)


Mode of entry or re-entry to premises (para 20) and powers of entry

• Entry must be by any door, or any usual means by which entry is gained to the premises

• HCEO’s retain power to use reasonable force to enter commercial premises and upon re-entry following default upon ‘controlled goods agreement’ (Schedule 12 to TCE Act, as amended by Crime and Courts Act 2013)

• Enforcement Officer may apply to court for warrant authorising use of force to enter premises to which goods have been moved to avoid execution (para 28)


Minimum period before sale (para 37)

• TCE Act provides that 7 clear days notice must be provided before goods can be sold

• Notice must be in prescribed form and method/service requirements as per Part 2 of Regulations

“Transforming bailiff action”: What’s next?

The consultation on bailiff reform (‘Transforming bailiff action’) represented a much heralded government commitment to protect the public against ‘aggressive bailiffs’ and to clarify the law

The Taking Control of Goods Regulations 2013 go some way towards clarifying the law but the government has yet to produce regulations concerning two other key areas: the costs regime and competency/certification of Enforcement Officers

The consultation document also looked at removing the current restrictions upon enforcement of monetary judgments arising from Consumer Credit Act regulated agreements


Costs Regime

High Court Enforcement Officer costs are currently determined by Schedule Three to the High Court Enforcement Officers Regulations 2004, which are themselves based upon fee structures and case law that date back (in some cases) to the earlier part of the last century

The new fee regime proposed in the consultation document provides for a more simplified ‘staged’ approach to costs, with fixed costs being applied at each stage upon completion of one or more of the elements within the relevant stage. An additional percentage fee (7.5%) is likely to apply to High Court debts over £1500.00 which proceed to Enforcement Officer visit


Enforcement Officer Certification/Competency

Further regulations are also required to state the certification process for Enforcement Officers.

Transitional provisions will be put in place for those holding ‘bailiff certificates’ issued under section 7 of the Law of Distress Amendment Act 1888.

There will also be mandatory training for Enforcement Officers, although the competencies/training methods are yet to be finalised


Consumer Credit Act (CCA) Regulated Debt

The consultation also asked whether the High Court and County Courts Jurisdiction Order 1991 should be amended to allow judgment creditors whose monetary judgments arose from a CCA regulated agreement the freedom to enforce the judgment in the High Court using HCEO’s

The government response to the consultation appeared to reserve comment on this issue until the fee regime and its impact could be determined

Likely Effect of Regulatory Changes

Notice Requirements

Will introduce another hurdle and further delays, although it may be that notice could be served concurrently with the ‘transfer-up’ process

May result in debtors removing goods to defeat execution. This certainly might apply to vehicles, but it may not be practicably possible for debtors (particularly businesses) to relocate/hide goods.

Notice might prompt the more intransigent ‘won’t pays’ to act within the 7 day period


Tools of the trade

The Regulations are a little more prescriptive as regards ‘tools of the trade’ and introduce a rule regards the maximum aggregate value of goods that can be covered by this exception (£1350.00)

This could be good news for judgment creditors whose debtors are self-employed tradesmen, where commercial vehicles are usually currently considered exempt from seizure


Shelf life of writs

Currently writs of fi fa are valid for 12 months from date of issue.

The Regulations will allow for writs to remain valid for 12 months from the date of default on terms of repayment

This may have a small positive effect as regards costs and administrative burden as it will reduce the number of writs requiring extension


Days and times for enforcement

The removal of restrictions on seizing goods on a Sunday will allow HCEO’s more flexibility around managing their workload and make it easier to achieve results for judgment creditors

The ‘new’ restrictions on times (6am-9pm) are unlikely to have any practical effect because most HCEO’s will already subscribe to the National Standards for Enforcement Officers, which recommend the same as appropriate


Notice to be provided prior to sale of goods

The introduction of a 7 day notice period prior to sale proceeding represents a potential additional delay for creditors in realising value from the proceeds of sale

However, the practical impact of this is likely to be negligible since auctioneers processes of cataloguing and advertising tend to take longer than 7 days


Costs Regime

The new costs regime is likely to bring more certainty for debtors and uniformity across different organisations providing High Court enforcement services

High Court Enforcement Officer costs have been a matter of some contention within the advice sector and forums so increased certainty/legitimacy is welcomed and may encourage the more ‘reputationally aware’ creditors to use High Court Enforcement Officers

It will also provide creditors and their solicitors with more certainty as to what they might expect to receive as a credit from proceeds of sale/part payments


Enforcement Officer Certification/Competency

The certification process is likely to be broadly similar to that which currently exists for bailiffs seeking to levy distress for rent (acting on behalf of commercial landlords)

The competency requirements are likely to raise the bar – resulting in a better quality of Enforcement Officer, with a positive impact for all concerned


High Court and County Courts Jurisdiction Order 1991

If the government opts to amend the Jurisdiction Order, the consumer finance industry will have an effective method of enforcement against goods

This will enable lenders to use private sector enforcement rather than relying on an under-resourced County Court bailiff service

Conclusions

The changes in legislation are designed to make the process of taking control of goods ‘fairer’ for debtors, whilst maintaining an effective enforcement method for creditors and the changes broadly achieve this aim

The new regime appears to encourage a resolution without the need for enforcement by seizure and removal of goods; creditors expectations may need to change, with even more recoveries likely to be made by repayment arrangement

Whilst the changes are likely to have a mixed impact for High Court enforcement service providers, they will almost certainly give more consumer-focused creditors confidence in High Court enforcement, which will open up new markets

Email: [email protected]: 07788 871250 / 0845 520 2000

@BurlGroup

www.burlingtongroup.co.uk

Winners of Credit Today Enforcement Team of the Year Award 2013

Education

Aw burlington pres_high_court_enforcement_post_tce_act