Taking Control Of Goods

On 6th April 2014, the long-awaited reforms to the ‘bailiff and enforcement’ regulations and costs become Law. This article is written as an outline briefing note in January 2014 and may be amended before the Regulations come into force.

This political football started a long time ago with the fact that the Government couldn’t implement any satisfactory rules to sit behind Part 3 of the Tribunals, Courts and Enforcement Act 2007, and Schedule 12 in particular.The Enforcement industry pointed out certain things that wouldn’t work, and the consumer lobby was gaining in political muscle and getting very protective of the victims of some isolated poor bailiff practice.

If you want to read about the background to this legislation, follow this link for a summary from the MOJ: http://www.legislation.gov.uk/uksi/2013/1894/pdfs/uksiem_20131894_en.pdf

After a lot of brokering by the Ministry of Justice (MOJ), and sterling work by members of the Enforcement Law Reform Group chaired by Lord Lucas, consensus about taking control of goods (not, however, commercial rent arrears) was achieved in the summer of 2013. Since then, the MOJ has published two of three statutory instruments.

For the trade credit manager wishing to levy execution on goods, here are the top 10 highlights:

Taking Control Of Goods Regulations 2013 [SI 2013 No. 1894]

  1. The existing law is very historic, and contains many anomalies on practice and fee-charging. It clearly needed modernisation.
  2. The new law deals with when a debtor’s premises can be entered; what goods can be taken, or not taken; how a repayment scheme can be made; and how goods can be sold if the debt remains unpaid.
  3. It makes special provisions for ‘vulnerable’ debtors to give them more time to get help.
  4. Certain goods belonging to a debtor are exempt. This is not new, just updated. They now include basic things like a cooker, fridge, washing machine, medical aids, etc, but also office equipment for the debtor’s personal business such as computers, tools, phones – even vehicles – as long as they don’t exceed a value of £1,350. Above that sum they may be subject to ‘taking control’.
  5. The enforcement agent must give 7 clear days notice of his intention to take control of the debtor’s goods. (The Court can order a shorter period on application by the creditor if it thinks the goods might be removed or disposed of before the enforcer can take control).
  6. The notice can be given by almost any means, including electronic communication (email, text, fax).
  7. Children and vulnerable people get special protection.
  8. Taking control must occur within 12 months of the Notice to take control.
  9. A controlled goods agreement may be made with the debtor. This means the costs are limited (unless he breaches the agreement).
  10. There are many detailed regulations relating to taking control of goods on a highway (vehicles, mainly), rights of entry to premises, removal for sale, etc.

How much can the creditor’s agent recover from the debtor for his fees?

Taking Control of Goods (Fees) Regulations 2013 [SI 2014 No. 1]

Fee StageFixed FeePercentage fee (regulation 7): percentage of sum to be recovered exceeding £1000
Compliance stage£75.000%
First enforcement stage£190.007.5%
Second enforcement stage£495.000%
Sale or disposal stage£525.007.5%

Thus, if the High Court Enforcement officer attends the debtor’s premises, and obtains a ‘controlled goods agreement’ with the debtor, then – providing there is no subsequent breach by the debtor – the fees are limited to:

a.compliance fee of£75, plus
b.first enforcement fee£190, plus
c.first enforcement percentage7.5% of amount over £1,000

If a second visit is required, then the fees increase with a heftier fixed fee, but no increase in the percentage.

The Enforcement Officer may also recover certain disbursements properly incurred.

The Schedule to this Statutory Instrument shows different figures to be due if control is taken other than by a High Court writ e.g. the county court bailiff.

16 January 14 Europe/London