Judgment enforcement - time for change
Speaking during the Legal and Enforcement stream in October at CCR-interactive, HCE Groups, Alan J Smith gave a presentation about the restrictions on High Court Enforcement Officers and the types of judgments they can enforce.
He has précised his presentation, firstly to explain the background and reasons and why there are restrictions on what judgments High Court Enforcement Officers can enforce and to examine in more detail how changes would allow more client choice on enforcement.
Where are we now?
Well, I always look for hard facts, so how about some of these: judgment numbers have leapt!
- There were some 344,109 consumer county court judgments (CCJs) in the first half of 2014 (data from Registry Trust)
- This is an increase of 40% compared with the 245,424 judgments recorded in the same period in 2013
- The latest figures bring the average value of a consumer CCJ in England & Wales down to £2,319, a 42% reduction compared with £3,982 in the first half of 2009
- The jump in judgment numbers does not reflect a worsening economy
So, to the current position of HCEOs. Well, we can act where there is:
- Any judgment over £600 – non regulated
- Employment tribunal/ACAS awards – any value
- Only possession against trespassers, unless otherwise with the court's permission
In the County Court:
- All judgments up to £5,000 – if the debt is £5,000 or more it must be enforced in the High Court by HCEOs
- All consumer regulated judgments
- All possession orders
It is important to understand why we have these restrictions:
- The restriction is due to a judgment made in the case of Forward Trust Plc v Whymark (1990)
- The enactment of The High Court and County Courts Jurisdiction Order 1991 which prevents HCEOs from enforcing Consumer Credit Act regulated judgments
- An amendment to the jurisdiction order was brought about following the case regarding interest on interest of a regulated judgment.
The High Court and County Courts Jurisdiction Order 1991: (1A) A judgment or order of a county court for the payment of a sum of money in proceedings arising out of an agreement regulated by the Consumer Credit Act 1974 shall be enforced only in a county court.
Article 8 of the High Court and County Courts Jurisdiction Order 1991 imposes limitations on the kinds of claim that may be transferred to the High Court for enforcement.
Subject to paragraph (1A) a judgment or order of a county court for the payment of a sum of money which it is sought to enforce wholly or partially by execution against goods:
- Shall be enforced only in the High Court where the sum which it is sought to enforce is £5,000 or more
- Shall be enforced only in a county court where the sum which it is sought to enforce is less than £600
- In any other case may be enforced in either the High Court or a county court
Interest upon interest
There does not appear to have been much debate about this provision when it was laid before parliament.
On 16 December 1994, Lord MacKay is recorded in Hansard as noting that: “The effect of the second amendment is that judgments given in proceedings arising out of the Consumer Credit Act 1974 may only be enforced in a county court, whatever enforcement method is chosen. It is inappropriate that such judgments should be enforceable in the High Court because this creates problems of ‘interest on interest’.”
It is not easy to see why “problems of interest upon interest”, if they arise, could not be dealt with in a similar way to the provision in section 35A(4) of the Senior Courts Act 1981: “Provided that interest will not be awarded under that section for a period during which, for whatever reason, interest on the debt already runs”.
Orders for possession
The current procedure is for residential possession to be enforced through the County Court, unless the matter is against trespassers, and creditors can be facing delays for possession in the County Court – both corporate and litigants in person.
Amendment of N293a to take away reference to trespassers would allow creditor choice.
Under the consultation paper "Transforming Bailiff Action", the Ministry of Justice (MoJ) sought in a green question the opinion of whether the order should be amended.
As part of their proposal to encourage more flexibility in bailiff collections, they sought early views on possible changes in the future to offer creditors more choice in the jurisdiction of enforcement from the county court.
The question was: do you consider that the jurisdiction order should be amended?
The majority of respondents were in favour. While a clear majority of the enforcement sector, public creditors and debtor responses were in favour, responses from other sectors were mixed.
Those in favour welcomed a move to a single system which would be easier to understand and would provide creditors with greater choice.
Those opposed had a number of concerns. The High Court system was viewed as less effective, difficult to challenge and disproportionally expensive for the debtor.
Some respondents were concerned that this move would eliminate protections outlined in the Consumer Credit Act 1974.
Other respondents were willing to consider the change but only on the condition that the level of HCEO fees were revised downwards.
Responses to the consultation
There was a 44% response rate, with 72.7% of those in favour of change.
Concern was expressed that the HCEO fees were disproportionally expensive to the debtor. Well, we answered that so: The HCEO when working with the MoJ on the new fee scale made it clear that if we were given an opportunity for the jurisdiction order to be amended then the new fee scale could be looked at and amended. The High Court Enforcement Officers Association agreed to not have a percentage fee for judgments under £1,000.
Indeed, if you look at the fee scale for a debt under £1,000 where a defendant pays before attendance to remove, then an HCEO is cheaper to the defendant than under the bailiff fee structure.
The fee scale is volume adjusted, the more writs, the fee scale would be reduced at enforcement stage 1, 2 and sale stage.
Less than half of respondents provided answers, the majority agreed that the order should be amended to give the creditor greater choice.
Some were opposed and viewed that High Court enforcement was less effective. As an association, we do not believe this came from the Court users; some also believe a change would take away the protection of the debtor.
The jurisdiction order does not provide any protection, this is covered in the Consumer Credit Act 1974 (the only protection is from effective enforcement by HCEOs who want to enforce the judgments for their clients.
What can HCEOs offer?
Delivering a first rate enforcement service, with:
- First time compliance and early payment
- Convenient payment options
- Firm but fair approach
- Proven capacity to deliver a nationwide service
- Experienced, professional and highly trained staff
- The latest advances in technology
- Customer care
- Working with clients to agreed service levels
- Produce information in real time about the progress of writs.
- Protection of client reputation. This is so important for all parties
- Treating Customers Fairly policy
- Quality management – ISO9001/27001
- CRB and credit checks
- Complaints procedures
- HCEOs should be viewed as a provider with diligence, integrity and honesty.
Audit trail of HCEOs’ actions
HCEOs adhere to formal rules, such as
- Transparency in all our actions, this can be through a full online system
- Full transparency on the fees we charge the debtor and when will the fees be applied
- Charge fees under the Taking Control of Goods (Fees) Regulations 2014.
The MoJ has said they will wait to see the impact of the new fee regime before any final decision is made on whether to amend the jurisdiction order. I would ask why, if the majority of respondents wanted change?