In April last year, new regulations introduced the need for a debtor to be given at least 7 clear days' notice before an enforcement agent can take control of their goods, at the risk of ‘tipping off’. Over one year on, we remind readers of the changes and look at a mechanism available to help reduce the risk of 'tipping off'.
The Taking Control of Goods Regulations 2013 (TCGR 2013), which came into force on 6 April 2014, introduced the current procedure for ‘taking control of goods’.
An outline of the procedure
Initially, what must be given is a ‘notice of enforcement prior to taking control of goods’, which allows no less than 7 clear days before the Enforcement Agent can take control of the debtor’s goods. 7 clear days will include a service period, so may start to run (for example) the second day after the notice was posted by first class post; it does not include Sundays, Bank Holidays, Good Friday or Christmas Day. Not accounting for national holidays, the likely minimum notice period from the date of lodging a Writ of Control will actually be between 10 and 12 calendar days.
This is in stark contrast to the previous position in law, which required for no such notice. The rationale was to both clarify the law and introduce a transparent fee structure, less prone to abuse than was previously in place – the effect is clearly to provide a debtor with sufficient details of the debt to enable them to identify it correctly, the interest and costs to the date of the notice and the possible additional costs should the outstanding sum remain unpaid. A debtor will be given details as to how payment may be made and a deadline by which the sum must be paid to prevent their goods being taken control of and sold and the debtor incurring additional costs.
In addition to the clear delay this process incurs the Regulations unintentionally provide the debtor with a clear indication of the likely date of when the Enforcement Agent will attend to take control of their goods – it could be said that this risk of ‘tipping off’ was a foreseeable effect neglected in the Impact Assessment led by the Ministry of Justice.
With the Enforcement Agent entitled to the first enforcement stage fees from the first attendance (pursuant to The Taking Control of Goods (Fees) Regulations 2014), the debtor can expect an attendance the day immediately after the deadline expires. There is obviously a real risk that a debtor may take advantage of this ‘tip off’ and move or dispose of their goods. We have seen this issue previously under the old regime – it is now even more likely.
Minimising the risk
The TCGR 2013 does, however, provide for a mechanism to minimise this risk, pursuant to s 6(3): ‘The court may order that a specified shorter period of notice may be given to the debtor.’ It is notable that this does not permit the Court to dispense with the need for service entirely. However, the Court’s discretion as to what the shorter period may actually be set at is unfettered; this may be virtually contemporaneous, given that the permissible methods of notice include delivery by hand or letterbox service.
To make such an order and pursuant to TCGR 2013 s 6(4), the Court must satisfy itself that:
‘… if the order is not made, it is likely that goods of the debtor will be moved to premises other than relevant premises, or otherwise disposed of, in order to avoid the goods being taken control of by the enforcement agent.’
There is no further direction in the regulations as to what exactly is likely to satisfy the Court, nor any case law to provide examples. The only clear reference point is an explicit statement made by the debtor to say that they will move or dispose of their goods or something implicit that will satisfy the Court of the likelihood, on the balance of probabilities.
Meeting the test
The Debt Recoveries Department at DWF has experience in making such Applications to the Court, including through the Royal Courts of Justice, and can provide further advice on what is likely to meet the test.
Working with tried and trusted experts in Court, we work to facilitate the fast determination of these issues, in what may be time-critical situations where goods are at risk.
We also work continuously with our preferred High Court Enforcement Officers to streamline processes and maximise the chances of successful enforcement for our clients, through this ‘shock and awe’ strategy.
Please do not hesitate to contact us directly, should you require any further information.This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.