The Taking Control of Goods Regulations 2013

Defending Defendants: New regulation in judgment enforcement 

The stated aim of the Ministry of Justice consultation Transforming bailiff action, which was published in February 2012, was to provide more protection against aggressive bailiffs and encourage more flexibility in bailiff collections. More than two years later, the High Court Enforcement industry awaits the commencement of the Taking Control of Goods Regulations 2013 in April. This article explores whether the regulations have achieved the aim of the consultation and what they will mean for creditors using High Court Enforcement Officers to enforce judgment debts.

The reforms have been a long time in the making. The most recent Taking Control of Goods Regulations are to enact primary legislation (The Tribunals, Courts and Enforcement Act) which dates back to 2007. The need for reform had been identified some decades earlier in a Law Commission report published in 1986 and later, in a detailed independent review of bailiff law by Professor Jack Beatson for the Lord Chancellors Department in 2000. Professor Beatson’s report identified that bailiff law was ‘antiquated’ and needed rationalisation and simplification. Beatson’s report also suggested that there was room to legislate to provide more proportionality; recognising that the process of seizing and removing someone’s goods in execution of a debt is a grave course of action and should be undertaken responsibly.

Many of Beatson’s recommendations are mirrored in the Taking Control of Goods Regulations. The introduction of a notice period prior to ‘taking control of goods’ is perhaps one of the more notable reforms that Beatson recommended. From 6th April, under the new Taking Control of Goods Regulations, an Enforcement Officer will be required to provide seven clear days notice before he can attend to seize goods. Where the notice is provided by post (as is envisaged in the majority of cases) the notice will be subject to the usual CPR rules around postal service and the Sundays and bank holidays will not count as part of the notice period. In most cases where notice is posted, this will mean that the first visit will not be undertaken until the 12th day after the notice is dispatched. During this period, the defendant will have the option of paying the Enforcement Officer in full and limiting the costs of enforcement to just the ‘Compliance Stage’ fee of £75+VAT. The notice will also make the defendant aware of the ‘next steps’ that the Enforcement Officer could take if the notice is not satisfied, the associated costs of non-compliance and where to seek advice. Under the  Taking Control of Goods Regulations, the Enforcement Officer has the option of applying to the court to make an order providing for a shorter notice period if he can satisfy the court that the debtor is likely to hide goods.

There are two schools of thought regarding the introduction of a notice period. The first is that it will give the defendant a final opportunity to pay and that where a defendant can pay (but previously hasn’t) the clearly expressed threat of seizure of goods and the cost implications of this process might prompt payment. Others take a more cynical view that the notice period is just a further delay or frustration in the enforcement process. The introduction of a notice period will certainly act as a ‘check’ on the enforcement process and will give the defendant a final opportunity to engage.

The second significant change brought about by the Taking Control of Goods Regulations is to what can be considered goods exempt from seizure. The usual basic items that one might expect are included in the list, including appliances necessary to satisfy the basic domestic needs of the defendant and every member of the household. However, there is a significant change to what might be considered ‘tools of the trade’ in that only items necessary for use by the defendant in his trade or employment with an aggregate value of £1,350 or less will be exempt from seizure. This will be an important change for those creditors attempting to enforce against self-employed tradesmen (e.g., creditors in the construction industry). On strict construction of the regulations, vehicles used for business purposes with a value of £1,350 or more will now be subject to seizure (provided of course that they are in fact owned by the defendant).

On the issue of ownership of goods, the new Taking Control of Goods Regulations also provide some useful guidance on the interpleader process. The interpleader process is one that is intended to determine ownership of goods where a third party makes a claim. Interpleader situations are something of a thorn in the side of most High Court Enforcement Officers. It is not uncommon for defendant to make fraudulent claims that goods seized in the execution process belong to a spouse, family member or friend (and to encourage a third party to be complicit in that claim). In theory, it is not for the High Court Enforcement Officer to investigate such claims and it will be for the creditor to decide whether or not to accept a claim; or to instruct the High Court Enforcement Officer to make an application to court to determine the matter. The expense of the court proceedings would usually be visited on the unsuccessful party, which is often enough to discourage the most spurious of claims. However, where a third party seems intent to ‘push’ the claim, the inherent risks in any court process can lead the judgment creditor to conclude that it is safer just to back down and admit the claim. Paragraph 60 of Schedule 12 to the Tribunals, Courts and Enforcement Act 2007 and the supporting regulations suggest that the onus is now firmly on the third party claimant to start interpleader proceedings and that he should make a payment into court of an amount equal to the value of the goods if he does so. This change should help to avoid lengthy disputes regarding third party claims; if the claimant to the goods is not able to prove his claim at a hearing (and provide the assurance of a payment into court) he will refrain from doing so.

The Taking Control of Goods (Fees) Regulations 2014

The final key reform is the advent of a new fee structure. High Court Enforcement Officer’s fees have historically been a matter of some contention; raising complaints from aggrieved defendants and concern from creditors that a lack of certainty in the costs structure makes High Court Enforcement an inappropriate method of judgment enforcement. The current High Court Enforcement Officer fee scale is based upon The Sheriffs’ Fees Order 1921 and all stakeholders to the consultation accepted that it was not fit for purpose in the modern enforcement regime. The current fee scale allows some room for interpretation and this has historically meant that the fees charged by one provider of High Court Enforcement services might have differed significantly from the fees charged by another. The Taking Control of Goods (Fees) Regulations 2014 will provide greater certainty with a fee scale that is based around fixed fees for ‘stages’ of enforcement; with clear incentives for the defendant to engage as early as possible in the enforcement process. Whilst this will doubtless mean a difficult transition for some service providers, it will give creditors the comfort of knowing exactly what costs the defendant will face. This will no doubt be an important shift for those who have regulatory obligations to defendants (their customers), e.g. utilities providers. The Taking Control of Goods (Fees) Regulations 2014 also provide protection for vulnerable debtors in that Enforcement Officers will be required to give vulnerable persons adequate opportunity to seek assistance and advice before removing goods; or face forfeiting their fees for enforcement action.

The regulations will also provide for a new certification process, with Enforcement Officers being required to satisfy competency requirements through training.

There are other less consequential changes but, for the most part, these are just a matter of clarification. The new Taking Control of Goods Regulations codify: days and times for enforcement (6am-9pm on any day of the week); modes of entry (by door or ‘any usual means of entry’); additional requirements around sale of goods and the provision of notices to the defendant at the various stages of the enforcement process. These might be considered just a matter of ‘best practice’; but that is of course the purpose of the legislation as a whole. The Taking Control of Goods Regulations appear to have been largely welcomed by the enforcement community and signal an end to many years of hard work for all those involved in the reform process. Historically the industry has been subject to regular review and the Ministry of Justice has committed to a Post Implementation Review of the new regulations at one, three and (if necessary) five years after the implementation date (6th April 2014); so this is unlikely to be the final conclusion.