Changes to the Attachment of Earnings and Charging Order process

From 6th April 2016, the process for applying for Attachment of Earnings Orders and Charging Orders has changed.  We consider the main changes and likely impact of these changes for creditors.

There have been numerous changes to the Civil Procedure Rules (CPR) in the latest update, which came into force April 2016.  From a debt recovery perspective, the most significant changes are those that have been made to the process for applying for Attachment of Earnings Orders and Charging Orders, with the introduction of a centralised processing centre within the County Court Money Claims Centre (CCMCC) in Salford.

Charging Orders (CPR Part 73)

A Charging Order gives a Judgment creditor security for the debt.  Previously, applications were made to the Court in which the Judgment or Order was made. Now, save for Charging Orders over an interest in a fund in Court, applications for Charging Orders will initially be processed at the CCMCC and, in the main, will likely be a wholly paper-based exercise;

  • Upon the new form N379 being lodged with the CCMCC and providing certain conditions are met, a Court Officer will make the Interim Charging Order;
  • The Judgment creditor will then be required to effect service within 21 days of the Interim Charging Order being granted.  Service extends to any spouse or civil partner (if known), even where not listed as a co-owner or having an interest in land;
  • Once served, the Judgment debtor will have a limited period of 28 days to object to the making of the Final Charging Order;
    • To object to the Court making a Final Charging Order, written evidence stating the grounds of objection must be filed at Court and served on the Judgment creditor within the 28 days of service.  Should this happen then the matter will be sent to the Judgment debtor’s home Court to be listed for hearing before a District Judge;
  • If, however, the Judgment debtor raises no objection then, following the expiry of the 28 days, the matter will referred to a District Judge to consider the Application and whether to make a Final Charging Order, without a hearing.

In practice, this is likely to be a largely positive change for creditors, meeting the stated aim of streamlining the process, saving Court time and expense.  With a centralised processing centre, priority of applications is likely to be determined by the date of the Application being lodged with the Court, rather than being dependent upon the timing of the Court in which the Judgment or Order was made.  Whilst the onus for service is now explicitly on the Judgment creditor this is not a significant departure from the directions that were generally given previously; indeed, if anything this at least provides for a more consistent approach to service, where there were previously differences of opinion within the judiciary as to which parties beyond the Judgment debtor (if any) should be served.  Furthermore, as any legal practitioner will agree, the vast majority of hearings of this nature went without any attendance made by the Judgment debtor or an objection from any third party – for these cases, there is an immediate saving on advocacy fees.

On the downside, there is likely to be an increasing administrative burden in respect of service on the persons listed in CPR Part 73.6(7); this extends to persons who might not be even listed on the register, including as it does any spouse or civil partner and so it will be important for Judgment creditors to note any instances of this nature.  Unfortunately, any creditors expecting a commensurate reduction in the Court fee payable on application  will be disappointed; this remains at £100 (with the Part 45 - Fixed Costs allowed for any legal representative also static at £110).

Attachment of Earnings Orders (CPR Part 89)

Still one of the most popular methods of court-based enforcement, an Attachment of Earning Order essentially instructs an employer to deduct money from a Judgment debtor’s wages, in order to pay to a Judgment creditor. 

This was previously a relatively straightforward remedy, with applications made to the Court for the district in which the Judgment debtor resided if known (otherwise, the Court in which the Judgment or Order was made) and the Centralised Attachment of Earnings Payments System (CAPS) then monitoring the collection and dealing with distribution of monies. 

The new CPR Part 89 replaces the old CCR Order 27, albeit the content is not significantly different from a Judgment creditor’s perspective.  Now, applications for Attachment of Earnings Orders will simply be made to the CCMCC.

  • The existing form (N337) remains in place but is now lodged with the CCMCC;
  • The Court will give notice of the Application to the Judgment debtor, together with the Reply Form (N56);
  • If the Court Officer receives a reply with sufficient information then they may make an Attachment of Earnings Order;
  • If the Judgment debtor does not provide sufficient information or fails to file within 8 days after service then the Court Officer may send the debtor’s employer notice requesting a statement of the employee’s earnings or must refer the matter to a District Judge.  The District Judge may then determine the Application or transfer the matter to the debtor’s home Court for hearing;
  • In the event of any objection from either the Judgment creditor or debtor to an Attachment or Earnings Order being made, they may still apply within 14 days of service of the Order in order to have the matter re-considered.  In this case, the matter would then be the Judgment debtor’s home Court to be listed for hearing before a District Judge; and
  • Should payments under an Attachment of Earning Order fail then this would result in referral to the home Court.

In practice, creditors are not likely to see changes from this process, which was largely led by Court Officers in any event.  The direction of the application to the CCMCC is likely to save practitioners the search to confirm the district in which the Judgment debtor resides.

Our experience

In respect of both processes our experience indicates that, at this early stage at least, there are a few ‘teething issues’. 

With particular regard for Charging Orders, the approach of Court Officer’s to processing, even with a checklist to work through, is concerningly inconsistent. Without proper, robust and consistent processing, how can Court Officers be sure that they are making these decisions correctly? 

For Local Authorities, whilst the CCMCC requires what may be an additional step to take for some – in respect of applying to the local County Court to enforce the award – this is at least more consistent than was the case previously, with the requirement for such an ancillary application varying from Court-to-Court (and sometimes even within the same Court).

Nevertheless, as any legal practitioner will agree, a centralised system avoiding the inconsistencies of local practice and delays incurred in increasingly under-resourced local Courts can only be a positive development.

Ultimately, this begs the question as to whether all methods of enforcement should be centralised?

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.

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