Friday, 7 October 2016

Powers of distress

I have recently published on Kindle a supplement to my 2008 book, Powers of distress, which looked at the forms of seizure which were not incorporated into the 2007 Act. There are only a handful of these, but for various reasons never fully publicised, MoJ decided to keep these outside the new regime despite their obscurity and the infrequency with which they are used.
An example of such a power is the writ of execution specially designed to be issued against Church of England clergy who get into debt. This may sound like fantasy but it is quite genuine. I imagine some complex interrelationships between state and church necessitated this, but the results are duplication of law and greater complexity. The reforms of 2014 sought to simplify and harmonise the law but what they actually did was to aggravate the existing situation by creating the new process of taking control of goods and retaining alongside that the older laws of distraint and execution. Moreover, I think the retention of forms of writ not covered by the new regulations also (in part) led to retention of the old structures for the enforcement profession.
I think it must be admitted that, under the revised law, there is very little difference between enforcement agents and HCEOs. Their powers are virtually identical and whilst certain debts attract additional or special powers, it is by no means civil court judgments that are uniquely favoured; fines often are singled out for separate treatment.
As many readers will know, Lord Justice Briggs' review of the county court and High Court suggested a single civil court. This must imply, in due course, a single 'civil court bailiff.' The logical and rational direction appears to be towards increased simplicity and harmony. This would indicate that a final consolidation of enforcement powers within the modernised taking control procedure and subject to a single form of licencing/ authorisation for enforcement professionals must be an inevitable and obvious element in this.
This appears to be the sensible solution to our present muddle. However, inertia, attachment to tradition and understandable fear of change and upheaval and possile threats to income and livelihood are all likely to stand in the way.

Monday, 12 September 2016

Reinventing the inventory

"Property has its duties as well as its rights" Thomas Drummond
Sch.12 para.34 of the Tribunals, Courts and Enforcement Act 2007 asserts the centrality to the new process of taking control of goods of providing debtors with an inventory of the chattels taken into control.  This list must be supplied.  The form that must be used and the information that it must contain are set out in reg.33 of the 2013 Regulations; these require a very detailed list and description of the goods to be prepared.  
There is a long history of agents seeking to generalise or find short-cuts in completing inventories: see the previous case law set out in my Taking control of goods 9.12, Sources of bailiff law chapter 4 or in my Practice Note on the subject.  This sort of conduct may be very understandable in order to save time and effort but the new law reasserts principles that have long been insisted upon by the courts.  These are therefore not in the least new but- significantly they are now statutory duties rather than the opinions of judges, in addition to which they must stand alongside an agents' duties to their principals to protect their interests as creditors.
What latitude ought then to be allowed to agents (if any)?  For example:
  • serial numbers are required- what if the rear of the item is more or less inaccessible.  Is this an excuse?
  • large numbers of items may have to be taken into control in a shop or factory.  Must the agent count and describe every dress, skirt or shirt on the hangers and in the stock room?  Must he distinguish every pattern and size?  Identify every CD or DVD?
  • If there is only one item of a description on the premises, so that no confusion might arise, what degree of detail is permissible?
There have been (and still are) some very poor and cursory inventories taken, therefore it would be helpful to provoke a debate on this issue and to try to determine what is good and bad practice.  What is the minimum information that an enforcement agent should provide?  How thorough should we demand agents to be?

Thursday, 25 August 2016

Forget about the price tag?

Although Romford's finest, Jessie J., may advise a casual attitude to value, this is not an approach the enforcement agent can afford.  Sch.12 para.12 of the 2007 Act states that (subject to some exceptions) agents may not take control of goods where the aggregate value is more than the amount outstanding and the amount of future costs.  This is a restatement of the principle of "excessive seizure" which is the oldest rule of English enforcement law.  The basic elements of rights of entry were laid down from the 14th century; the concept of excessive levying was already established by the latter half of the 13th century, when the Statute of Marlborough 1267 confirmed the common law rules in statute (see my Bailiff Law volume 1, A lawful trespass, chapters 6, 4 & 7 and my Sources of Bailiff Law chapters 1 and 7).
Much of the established case law and practice on this ought, it seems, to be safely imported from the laws of distraint (see my Taking control of goods 13.9 and Bailiff Studies Centre Practice Note number 1).  Nonetheless, the new law creates three new questions for parties to debate.
  1. Paragraph 12 is one example of several references to the 'aggregate value' of goods.  This phrase is not defined, but presumably a bailiff has to assess value on the basis of what will be raised at auction or other disposal.  It is hard to conceive what other measure would be reasonable or workable, but I may be mistaken in my assumption.
  2. The legislation appears to anticipate a very close parity between the sums due and the value of the goods taken into control.  How much margin for error should an agent be allowed to protect against the vagaries of the sale process and his/her own errors in valuation?  Some latitude is permitted, it is clear.  If too little is taken, a bailiff may return later in limited circumstances; if the chattels' price subsequently rises, the agent is not penalised (para.12(4)).  Even so, it appears that a very high level of accuracy is demanded on the day that control is taken.
  3. Para.12(3) states that "goods are above a given value only if it is or ought to be clear to the enforcement agent that they are."  What 'clear' evidence should an agent rely upon?  The agent has to sell for the 'best price' (para.37(1)); what s/he anticipates this is likely to be must be a powerful, if not the sole, determinant of the value of an item.  In a dispute between debtor and creditor over a taking into control, to what could they turn for guidance as to a fair valuation of chattels?  
It is clear then that the onus is upon agents to conduct a precise estimation at the time of taking (though they will have to provide a written valuation at the time of removal under reg.35 and para.36).  I would welcome readers views on the problems and practicalities of this process.

Wednesday, 10 August 2016

Old law for new

As I've suggested elsewhere, we are now in a position to confirm the list of 'known unknowns' in the new enforcement law- the areas where further clarification is required. These include issues such as: 
  • the existence and duration of the right of an agent to remain on premises, if no goods are available;
  • the correct handling of fees when payments are made directly to creditors- as increasingly happens where online payment facilities exist.  As II have publicised in Bailiff Studies Bulletin in recent issues, a range of views as to the proper interpretation of the law and of the correct handling of funds exists, which in turn generates considerable uncertainty; 
  • the extent and nature of the 'licence' to enter premises (in other words, whether or not entry may be legitimately refused by an occupier and what the agent's response might be in such situations).  This is, of course, not a new argument and not, in my opinion, one where the law has changed at all since April 2014.  Diverging views nevertheless exist, both as to the impact of the 2007 Act and, for that matter, as to the exact status of the law before the reforms were introduced.  Suffice to say, then, that this continues to be a contentious area; and,
  • the proper treatment of goods on HP.  On this subject, the argument is that the 2007 Act grated a right to seize 'beneficial interests' in goods.  This would appear to include the 'equity' of a consumer debtor purchasing a vehicle by monthly payments under a hire purchase or conditional sale agreement.  So far there has been- we are told- one county court finding in favour of this contention, but we need clarification from a higher court.  The former law of distress for rent allowed goods on hire purchase to be taken, despite the fact that they were third party property, for the simple reason that they were to be found upon the demised premises.  The new law is rather more refined, giving the creditor the power to dispose of the debtor's share of the chattel's value only, but it provides no mechanism for doing this, not explanation of the process for sale or for making arrangements with the finance house.  They will retain a claim and must be viewed (I guess) as akin to joint owners, but agents are currently groping in the dark to develop proper procedures in such cases.
Some of these issues will have to be resolved by the courts, most particularly where they arise from the form of the new statute; some may be resolved by reference to and application of the existing case law under the laws of distress and execution. For example, many of the questions pertaining to rights of entry- whether force may be used against internal doors, how access should be gained to flats and HMOs and how long is it reasonable for an agent to remain at premises searching for goods- are all fully examined in longstanding judgments which are readily transferable to the new regime. Many previous principles and concepts were deliberately carried over, in any case- the binding power being a good example- so that it follows that guidance on understanding these may reasonably be derived from pre-April 2014 jurisprudence.

After two years, we remain virtually devoid of case authority (except for one case which largely concerns the old law). This may, of course, be because the Act was so well drafted, or it may reflect the obstacles in the way of litigation under the new dispensation. Whatever the explanation, the paucity of judgments leaves many areas of uncertainty. Many of these could, I believe,be quickly resolved by reference to the abundance of old cases we possess. Completion of the MoJ review would also help, but reference to the wealth of existing case law may prove to be a faster solution...

Tuesday, 26 July 2016

Does the enforcement sector need a regulator?

Back in April 2011, I issued through Bailiff Studies Centre a discussion document (number three in the series) entitled "Do we need an enforcement services ombudsman?"  The query was met with enthusiasm from some and wariness by others.  Since then, of course, matters have moved on considerably.  At the time of writing it still appeared likely that the Security Industry Authority would have some regulatory role in the sector and that the introduction of the reformed regime of bailiff law would lead to a considerable strengthening of the procedures for licencing and monitoring individual agents.
None of that happened.  The SIA dropped out of the picture and the rejigged certification process brought in to the Civil Procedure Rules in 2014 is very far from comprehensive or robust.  We were promised thorough training for county court district judges; there is little evidence of this.  A recent issue of Bailiff Studies Bulletin highlighted some of the problems with the qualifications upon which certificates are issued and there is, of course, no regulation of agencies, only individual agents- a bizarre result in the early 21st century.  
We still lack any sector overview and any industry wide maintenance of standards or best practice.  It seems to me that there is still a very strong argument for some for of regulator (the commercial body Ombudsman Services were interested in the function five years ago).  I would propose, too, that this regulation is not limited to enforcement agents and agencies.  I suggest that there would be a useful function for all parties (not just debtors) for those offering advice on bailiff law also to be regulated.  With the proliferation of web based advice and consumer forums, I believe that there may be a role in setting and maintaining standards wherever consumers are asked to pay for advice on dealing with debt enforcement.
Another proposal for regulation that is currently in circulation is the idea of extending the remit of the Financial Conduct Authority (FCA) to bailiff services.  The main argument for this appears to be that it is anomalous for debt collection by taking control of goods to stand outside of FCA supervision when almost all other forms of debt collection are now regulated by them.  The largely unregulated status of the enforcement sector might be said, in itself, to be anomalous, but there is another more compelling argument which will possibly have to be confronted before too long.  That is, if county court judgment enforcement is opened up to the private sector (as has been suggested)- and especially if that liberalisation extends not just to HCEOs but also to certificated enforcement agents (bailiffs in the traditional sense) then compliance with FCA rules may become obligatory in any case.  Access to the work of executing county court warrants of control would almost inevitably include the recovery of Consumer Credit Act 1974 regulated agreements and that would necessitate FCA licencing.  The FCA regime is tough, but it might also go a long way to creating confidence in a professional enforcement sector and thereby eradicating the kinds of doubts and suspicions which then generate hostile and confrontational advice in some online fora.
Whether a new regulatory body is introduced or not, the current certification complaints process will still manifestly have a future: in cases of gross misconduct by an agent it enables the courts to exclude an individual from the profession and to forfeit all or part of the bond to provide compensation and pay costs.  However:
  • it is not apparent that the promised training for district judges has been provided by MoJ, given the reports of widely varying handling of certification matters;
  • Only individuals are certificated, not companies, and yet companies are the major factor in the sector in shaping practice and procedure; and,
  • the bond remains at £10,000, the same figure as when it was last fixed in 1988.  This drastically reduces the threshold to the sector without providing an equivalent level of sanction.

Wednesday, 29 June 2016

Students & enforcement

At the start of the week I attended the annual conference of NASMA (National Association of Student Money Advisers) in Solihull and gave a presentation on the 'new' bailiff law.  The audience had its particular perspective and preoccupations, but a number of themes were significant:

  • use of HCEOs by colleges- there has been a notable increase in educational institutions pursuing students (or former students) through the county court and then transferring their CCJs to the High Court for enforcement.  Grants, fees and similar are now pursued with significantly higher fees added against individuals who will frequently have scant assets or income.  For instance, I once assisted a student who had had to drop out of her course  because she got pregnant.  Despite being a single parent on Income Support in a council flat, her previous college chose to send an HCEO to chase her.  What possible point was there to that?  Would he take the cot or the milk bottle steriliser?  Shame on the college...
  • rights of entry- as may be imagined, enforcement agents can face some severe problems accessing student accommodation when it is in halls of residence and purpose built blocks and general issues of access to private land can often serve to protect students from taking control of goods.  Likewise in the traditional shared house, locked rooms are likely to be a further obstacle even if it is possible to get through the front door of the house.
  • third party goods- ownership of goods is going to be a second major hurdle or source of contention.  In halls much of the property will belong to the college; the same will be the case in rented houses, coupled with arguments over items whose use is shared with other house mates but which belong to someone else.  Questions over property at parental homes (combined with the question as to whether they are any longer the 'usual' residence of the student debtor) are likely to generate contention.  Further disputes may arise for mature students who are in relationships and have complex questions of property with their partners/ spouses.
  • exempt goods- even were much of the furnishing of student accommodation the student's, it would very likely be protected as exempted household necessities.  Of all groups, students are perhaps most noticeable for their gain of specific protection for items needed for study under the 2013 Taking Control of Goods regulations.  Equipment and books needed for education or study are protected from being taken into control provided that their aggregate value does not exceed £1350 (reg.4).  Accordingly, a student's laptop, printer and other hardware (the key tools of many courses these days and the repository of essays as well as access route to online library resources) may well be protected.  In the context of the issues listed above, this was definitely something to welcome.

Thursday, 23 June 2016

Where are we now?

Two years and two months into the reformed regime of enforcement law, how has the landscape changed?  How radically different is enforcement in 2016 to bailiff action in March 2014?

It is a mixed picture.  The major source of complaint before (it is safe to say) was fees.  The new fee scale, by being more remunerative at an early stage and by eliminating much of the scope for disputed interpretation, has by and large eradicated contention.  For all parties, this must be a welcome improvement- and a considerable saving of time and resources.

Equally, by front loading fees and discouraging removals, the new procedure has probably further reduced the already low numbers of disposals of goods, which must again benefit debtors and creditors.

On the downside, many of the old causes of dissension remain: arguments continue over the classification of exempted and third party goods, over the rights of entry, over the valuation of assets and over the treatment of 'vulnerable' debtors.  There are still some problems of interpretation and application linked to fees- most notably the question of VAT.  The majority of the issues just listed concern the proper manner of taking control of goods, and accordingly are still a major reason for complaints and discontent.  As most of these questions are not new, and as most of these arguments simply perpetuate arguments from before the law was reformed, it may be suggested that we still await a fundamental reform in approaches to enforcement law.