debt recovery and debt claims

21/01/2016

Karen Elder, Partner and specialist litigation lawyer explains the changes to recovering a judgment debt – now known as enforcement.

Introduction_

From April 2014 changes have been made as to how a judgment debt can be recovered by threatening to sell, or by selling the debtor’s goods. This is currently one of the most popular methods of enforcement and was known as execution. It is renamed “taking control of goods” and is obtained by a writ or warrant from the High or Country Court.

Initial Considerations_

When considering whether to go down the route of taking control of goods as a method of debt recovery, it is worth having regard to two important general features:

  • A writ or warrant of control does not require a judicial decision.
  • The process can be combined with other methods of enforcement

The court in which the judgment was obtained will usually be the court in which the taking control of goods will take place, unless:

  • The proceedings are for a sum of £5,000 or more, when all proceedings for enforcement against goods must be undertaken in the High Court.
  • Where the sum to be enforced is more than £600, but less than £5,000, you can choose whether to proceed in the High Court or County Court.
  • Where the sum is less than £600 or is a Consumer Credit Act 1974 matter the County Court can be used.

The costs, usually fixed, of the taking control of goods are added to the writ or warrant.

The process of taking control of goods_

There are three stages:

(a)   Notice of enforcement to the debtor by an enforcement agent;

(b)   Taking control of the goods by entry into the premises and securing the goods or entering into a controlled goods agreement; and

(c)   Notice after entry and inventory of goods.

Notice to the debtor of enforcement_

The judgment debtor must be given not less than seven clear days notice of enforcement before an enforcement agent takes control of his goods unless the court orders a shorter period. The period of days does not include a Sunday, bank holiday, Good Friday or Christmas Day.

The court can order a shorter period of notice where it is satisfied that, if the order is not made, it is likely that the debtor’s goods will be moved or disposed of to prevent enforcement.

The notice must be in writing and contain detailed information about the debtor, the debt, the costs and the likely timescale of the enforcement process. The notice of enforcement must also be delivered by an enforcement agent by one of a number of prescribed postal, fax or personal delivery methods. The enforcement agent must keep a record of the time when the notice is given and by which means. There is no obligation to state the actual date when the enforcement officer will attempt to take control of the debtor’s goods.

The enforcement agent may not take control of goods of the debtor after 12 months has expired from the notice of enforcement unless the court has given permission or a repayment arrangement (usually payment by instalments) has been breached, in which latter case, the 12 month period commences on the date of the breach of the repayment arrangement.

Entry and securing goods_

Securing the goods

An enforcement agent must do one of the following:

  • Secure the goods on the premises or highway on which he finds them.
  • Remove them and secure them elsewhere within a reasonable distance from the place taken.
  • Enter into a “controlled goods agreement” with the debtor. This was formally known as ‘taking walking possession’. What this essentially means is that the debtor is permitted to retain custody of the goods, acknowledges that the enforcement agent is taking control of them and agrees not to remove or dispose of them, nor to permit anyone else to, before the debt is paid. The agreement must be in writing and signed by both enforcement officer and debtor and must contain the contact details of the debtor and a list of the goods of which control has been taken with a description to enable the debtor to identify the goods correctly.

The enforcement agent must give the debtor a copy of the signed agreement at the time of entering and if someone other than the debtor enters into the agreement on the debtor’s behalf, the debtor must be provided with a copy at his premises.

 Entry requirements

The enforcement agent may enter relevant or specified premises and re-enter only by:

  • Any door, or any usual means by which entry is gained to the premises (for example, a loading bay to premises where a trade or business is carried on).
  • Any usual means of entry, where the premises are a vehicle, vessel, aircraft, hovercraft, a tent or other moveable structure.

An enforcement agent may if necessary use reasonable force to enter premises or to do anything for which the entry is authorised. He can also ask the court to issue a warrant allowing the use of reasonable force to enter premises. However, a power to use force does not include power to use force against persons, except to the extent that other regulations provide that it does. The enforcement agent must remember to leave the premises as effectively secured as he finds them.

Notice after entry and inventory of goods_

Notice Requirements

After entering the debtor’s premises, the enforcement agent must provide a notice for the debtor giving information about what he is doing. This must be in writing, signed by the enforcement officer and contain information about the debtor and enforcement agent along with details of what the enforcement agent has actually done whilst at the premises.

If the debtor is on the premises at the time, the enforcement agent must give him the notice. If he is not, the enforcement agent must leave the notice in a conspicuous place on the premises.

Inventory

In addition to the notice after entry, the enforcement agent must provide the debtor with an inventory of the goods taken control of as soon as reasonably practicable. This must be signed and contain information about the debtor and enforcement agent along with a list of the goods of which control has been taken, with a description, to enable the debtor to identify the goods correctly.

The inventory can also be combined with a controlled goods agreement and the notice after entry.

What goods are exempt from a writ or warrant of control?_

Generally, any goods belonging to the debtor can be taken control of by the enforcement agent except for land, goods not owned by the debtor (such as goods on hire purchase), trust assets and any item that falls within the list contained in

A summary of the most common items that appear in the exempt goods list is;

  1. 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 or, except that in any case the aggregate value of the items or equipment to which this exemption is applied shall not exceed £1,350.
  2. Such clothing, bedding, furniture, household equipment, items and provisions as are reasonably required to satisfy the basic domestic needs of the debtor and every member of the debtor’s household,,
  3. Assistance dogs
  4. A vehicle on which a valid disabled person’s badge is displayed.
  5. A vehicle which is being used for health emergencies, police, fire or ambulance purposes.

Previously, there was no financial limit for the tools of trade exemption. It is likely that many debtors will dispute therefore dispute the value of the goods and this could generate satellite litigation regarding the value of goods.

Summary_

The new process of taking control of goods is not wholly unlike its predecessor – execution – but if you are considering taking enforcement action in either the High or County Courts, regard should be had to the new terminology, forms and procedural changes if effective and expedient debt recovery is to be achieved.

Should you need advice or assistance on enforcement or judgment debts please contact Karen Elder on 01782 205000 or email karen.elder@beswicks.com