PART 3

April 2014

CREDITOR TAKING CONTROL OF GOODS - PROCESS  

9.27 Creditor taking control of goods – scope of this Part

As detailed in Part 2, the ability of a creditor to seek recovery of debts through the removal and sale of property of the debtor has been formalised in statute, bringing into force a tightly regulated process.  This Part of the Chapter explains the detail of that process.

 

9.28 Binding of the goods of the debtor

With the exception of exempt goods (see paragraph 9.30), the goods of the debtor are bound (and are liable to be taken control of and cannot be assigned or transferred) from the following dates:

• In the case of a power conferred in a High Court writ of control (see paragraph 9.13), the goods are bound from the time that the writ is received by the enforcement agent under a duty to endorse it [note 1] [note 2] [note 3].
• Where a warrant of control (see paragraph 9.14) is issued by the county court or magistrates’ court, the goods are bound from the time it is received by the person to whom it is directed i.e. the enforcement agent [note 4] [note 5].
• Where there is no court writ or warrant required to effect control of goods, the goods are bound from the time when the notice of enforcement is given (see paragraph 9.32).

 

9.29 Bound goods assigned or transferred

As outlined in paragraph 9.28, goods transferred or assigned are still liable to be taken under control (and sold) by the enforcement agent [note 6].

Good title to any of the debtor’s goods is not affected where the assignee/transferee acquires the goods in good faith, for valuable consideration and without notice of the relevant writ, warrant or notice [note 7] (see paragraph 9.28).

 

9.30 Exempt goods

Certain goods are exempt and cannot be taken control of by the enforcement agent.  The main categories of exempt goods are as follows [note 8]:

Items or equipment which are necessary for use personally by the debtor in the debtor’s employment, business, trade, profession, study or education, not exceeding £1,350 in value.

• Such clothing, bedding, furniture, household equipment, items and provisions as are reasonably required to satisfy the basic domestic needs of the debtor and his/her household.
• A vehicle displaying a valid disabled badge.

 

9.31 Time when goods cease to be bound

The bound goods (see paragraph 9.28) cease to be bound [note 9]:

• In relation to particular goods, when the goods are sold;
• In the case of money, when it is used to pay a sum outstanding;
• When the amount outstanding is paid;
• When the power to take control of the goods ceases to have effect.

 

9.32 Notice of enforcement

An enforcement agent (see paragraph 9.10) may not take control of goods unless the debtor has been given notice [note 10].  The notice must be given to the debtor not less than seven clear days before the enforcement agent takes control of the goods [note 11].  The court may order a shorter period of notice (where, for example, there is evidence that the goods are to be removed from the premises by the debtor) [note 12].

The notice must be given in writing and must contain information regarding the debtor, a reference number, the date of the notice, details of the judgment or other enforcement power under which the debt is enforceable and details of the debt, (including the amount due), how and when payment may be made, contact details, the date by which payment must be made [note 13].

 

9.33 Delivery of notice of enforcement

The notice of enforcement (see paragraph 9.32) must be given by one of the following methods [note 14]:

• Post
• Fax or other electronic means
• By hand to the premises
• Affixing it at or in a place where it is likely to come to the attention of the debtor
• Personally to the hand of the debtor (where the debtor is an individual)
• Delivery to the place of business or registered office (where the debtor is not an individual)

 

9.34 Definition of ‘premises’

For the purposes of an enforcement agent’s power to enter premises (see paragraphs 9.35), premises are defined as ‘any place, and in particular includes a vehicle, vessel, aircraft or hovercraft; a tent or movable structure’ [note 15].

 

9.35 Premises that enforcement agent has the power to enter

Apart from premises specified in a warrant (see paragraph 9.36), the enforcement agent may enter premises to search for and take control of goods only if [note 16] [note 17]-

• when acting under a CRAR (see paragraph 9.19), only the premises that are the demised (occupied by the tenant) premises, and
• in any other case, if the agent reasonably believes that the premises are the place, or one of the places, where the debtor usually lives or carries on a trade or business. 

 

9.36 Warrant authorising entry to premises

The court has the power to issue a warrant authorising entry to a premises by the enforcement agent to search for and take control of goods [note 18] [note 19].  Before issuing a warrant, the court must be satisfied that [note 20]-

• the agent is attempting to recover a debt enforceable under the tax legislation [note 21] or the premises are premises to which the goods have been deliberately removed in order to avoid control being taken of them;
• there are, or are likely to be, goods of the debtor on the premises of which control can be taken;
• the enforcement agent has explained to the court the likely means of entry, the type and amount of force that will be required and how, after entry, the enforcement agent proposes to leave the premises in a secure state; and
• in all the circumstances it is appropriate for the court to give an authorisation, having regard (among other matters) to the sum outstanding and the nature of the debt.

 

9.37 Method of entry or re-entry to premises

The enforcement agent may enter relevant (see paragraph 9.35) or specified (see paragraph 9.36) premises only by [note 22]-

• any door, or by usual means by which entry is gained to the premises (for example, via a loading bay, but not via a window); or
• any usual means of entry where the premises are a vehicle or movable structure.

 

9.38 Time of entry to, or presence at, the premises

The enforcement agent may enter, re-enter or remain on the premises on any day of the week [note 23], but may only enter, re-enter or remain on the premises after 6am and before 9pm [note 24].

Where premises are used for a trade or business, the enforcement agent may enter, re-enter or remain on the premises during any hours when the premises are open for the conduct of trade or business [note 25].

Where the agent has entered during the permitted hours, he/she may remain on the premises if it is reasonably necessary to continue to search for and take control of goods, etc [note 26].

 

9.39 Enforcement agent to prove identity and authority

The enforcement agent must on request show the debtor and any person who appears to be in charge of the premises evidence relevant identification, and authority to enter the premises [note 27].

Such a request may be made before the agent enters the premises or while he/she is there [note 28].

 

9.40 Entry with other persons or equipment

The enforcement agent may take other people onto the premises [note 29].  They may assist the agent in exercising any power, including a power to use force [note 30], but they must not remain on the premises without the enforcement agent [note 31].

The enforcement agent may take, and leave, his/her own equipment onto the premises [note 32] [note 33].

 

9.41 Entry using force

An enforcement agent may if necessary use reasonable force to enter (or re-enter) relevant premises (see paragraph 9.35) or premises specified in a warrant (see paragraph 9.36) or to do anything for which the entry is authorised [note 34].

The power to use force does not include a power to use force against persons [note 35].

 

9.42 Restrictions on entry and re-entry to premises

The enforcement agent may enter the premises only if [note 36]-

• the debtor is not a child; or
• a child or vulnerable person is not the only person present in the premises.

 

9.43 Re-entry to the premises

Subject to the restrictions outlined at paragraph 9.42, the enforcement agent may enter the premises on a second or subsequent occasion only [note 37]-

• if the agent has reason to believe that, since the occasion of last entry, there have been brought on to the premises further goods of the debtor of which control has not yet been, but may be, taken; or
• where the agent was prohibited from taking control of particular goods at the time of the original entry due to the restrictions outlined at paragraph 9.49 regarding a breach of the peace.

 

9.44 Notice of intention to re-enter premises

A notice of the enforcement agent’s intention to re-enter premises must be given to the debtor not less than two clear day before the agent re-enters the premises [note 38].

The court may order that a specified shorter period of notice may be given to the debtor [note 39].

The notice of re-entry must contain information similar to the original notice of the intention to take control of goods (see paragraph 9.32).

 

9.45 Only goods of the debtor may be taken control of

An enforcement agent may only take control of goods of the debtor, and may not take control of third-party items [note 40].

 

9.46 Controlled goods cannot be taken control of

Goods already taken control of, whether they have been taken control of following a CRAR or in execution of a judgment, cannot be taken control of unless the goods have been abandoned (see paragraph 9.67) [note 41] [note 42] [note 43].

 

9.47 Ways of taking control of goods

To take control of goods an enforcement agent (see paragraph 9.10) must do one of the following [note 44] [note 45]-

• secure the goods on the premises (see paragraph 9.53) on which they are found;
• if he/she finds them on a highway, secure them on a highway (see paragraph 9.54);
• remove them and secure them elsewhere (see paragraph 9.52);
• enter into a controlled goods agreement with the debtor (see paragraph 9.51).

 

9.48 Time limit for taking control of goods

The enforcement agent may not take control of goods of the debtor after the expiry of a period of 12 months beginning with the date of the notice of enforcement (see paragraph 9.32) [note 46].

Where the debtor breaches any agreement for repayment of the debt entered into with the enforcement agent, the 12 month period begins with the date of the breach [note 47].

The court may order that the 12 month period may be extended by 12 months, but this is possible only once [note 48].

 

9.49 Circumstances where the enforcement agent may not take control of goods

An enforcement agent may not take control of goods where [note 49]:

• The debtor is a child.
• A child or vulnerable person is the only person present.
• The goods are also premises (for example, a caravan) in which a child or vulnerable person is the only person present.
• Where an item which belongs to the debtor is in use by any person at the time and to take control of it would, in all the circumstances, be likely to result in a breach of the peace.
• Where, in relation to relevant goods such as livestock or chemicals, to do so would pose a risk to public health.

 

9.50 Days and hours when enforcement agent can take control of goods

An enforcement agent may take control of goods on any day of the week [note 50]. 

The enforcement agent may not, however, take control of goods before 6am or after 9pm on any day unless [note 51]:

• the court orders otherwise [note 52];
• the goods are located on a premises open for the conduct of that trade or business during the normally prohibited hours [note 53]; or
• the enforcement agent has begun to take control of goods during hours that are not prohibited, and to complete taking control of goods it is reasonably necessary for the enforcement agent to continue to do so during prohibited hours [note 54].

 

9.51 Controlled goods agreement

A controlled goods agreement is an agreement under which the debtor is permitted to retain custody of the goods, acknowledges that the enforcement agent is taking control of them and agrees not to remove or dispose of them, or permit anyone else to, before the debt is paid [note 55].

Such an agreement may only be entered into by an enforcement agent and [note 56]-

• a debtor who is not a child;
• a person, aged over 18, authorised by the debtor to enter into such an agreement; or
• a person in apparent authority who is on the premises, where those premises are used (whether wholly or partly) to carry on a trade or business.

The enforcement agent may not enter into an agreement with a person who it appears (or ought to appear) to the agent does not understand the effect of, and would therefore not be capable of entering into, such an agreement.

The agreement must describe the goods subject to agreement, and also the terms of the agreement.

 

9.52 Removal and securing goods of the debtor

Where an enforcement agent takes control of the goods of a debtor and decides to remove the goods, the agent must, except in exceptional circumstances, secure them in or at a place which is within a reasonable distance from the place where control was taken of the goods [note 57].

 

9.53 Securing goods at the premises

An enforcement agent who is securing goods of the debtor on the premises on which they are found may secure the goods [note 58]-

• in a cupboard, room, garage or outbuilding;
• by the enforcement agent remaining on the premises to guard the goods (but not for residential property);
• by fitting an immobilisation device; or
• by securing the whole of the premises or such part of the premises that is occupied solely for the purpose of a trade or business.

The enforcement agent may not secure goods where any person would, as a result, be deprived of adequate access to essential facilities, including exempt goods (see paragraph 9.30), or adequate means of entering or leaving the premises, including emergency escape [note 59].

 

9.54 Securing vehicles on a highway

Where the goods to be removed by an enforcement agent are a vehicle, the vehicle must be secured by an immobilisation device, unless the debtor voluntarily surrenders the keys to the vehicle.  The vehicle must be secured where found, or within a reasonable distance from that place [note 60] [note 61] [note 62].

A vehicle must remain immobilised where it is positioned for a period of not less than two hours from the time of immobilisation.  On expiry of this period (assuming the debt not having been paid), the agent may remove the vehicle to storage [note 63].

 

9.55 Notice following entry

The enforcement agent must leave a notice at a premises to which entry has been gained giving contact details, outlining the action that has been taken, details of the goods dealt with, the location and identity of goods taken control of and details of the debt and available methods of repayment [note 64] [note 65].

There is an additional notice requirement where goods have been immobilised and where goods have been removed for storage or sale [note 66].

 

9.56 Securing the premises

The enforcement agent must leave the premises as effectively secured as he/she finds them [note 67].

 

9.57 Inventory of goods taken control of

If the enforcement agent takes control of goods the debtor (and any co-owner) must be provided with an inventory of the goods as soon as reasonably possible [note 68].

The inventory must contain details of the enforcement agent’s name and details (address, etc.), and a list of the goods of which control has been taken with a description that is sufficient to enable the debtor or co-owner to identify the goods correctly [note 69].

 

9.58 Care of controlled goods

Where the enforcement agent removes controlled goods from premises or a highway, the enforcement agent must keep the controlled goods in a similar condition to that in which the enforcement agent found them immediately prior to taking control of them.  The goods must be removed to storage, unless the goods are removed for sale.  The storage must be secure and the conditions of that storage such as to prevent damage to or deterioration of the goods for so long as they remain in the enforcement agent’s control [note 70].

 

9.59 Third party claiming goods

A person may make application to court claiming that goods taken control of are his and not the debtor’s.  After receiving notice of the application, the enforcement agent must not sell the goods unless directed by the court, until the court has considered the applicant’s claim [note 71].

 

9.60 Valuation of controlled goods

The enforcement agent is required to make a valuation of the controlled goods [note 72].

Where the enforcement agent personally makes the valuation, the valuation must be in writing and set out details of the enforcement agent and contain a separate valuation for each item of goods of which control has been taken [note 73].

Where the enforcement agent obtains a professional valuation, only a qualified, independent valuer should be instructed. The valuer must be instructed to make a written valuation and to value each item of goods separately [note 74].

The enforcement agent must provide a copy of the written valuation to the debtor and any co-owner [note 75] [note 76].

 

9.61 Sale of controlled goods – minimum period

The sale of controlled goods must not be before the end of seven clear days from removing the controlled goods, except with the agreement of the debtor and any co-owner [note 77] [note 78].

Sale may take place on the day after removing controlled goods for sale where the goods would become unsaleable, or their value would be extinguished or substantially reduced due to the nature or any characteristic of those goods [note 79].

 

9.62 Notice of sale

At least seven clear days before the sale, the enforcement agent must give notice of the date, time and place of the sale to the debtor and any co-owner [note 80] [note 81].

The notice is essentially to give an opportunity for the debtor or co-owner to pay the sum outstanding before the goods are sold.

Notice must be in writing and contain details of the debtor, co-owner and enforcement agent.  The notice must include a statement that the goods, which should be listed in such a way that they may be correctly identified by the debtor or co-owner, may be sold as the debtor has failed to pay the sum outstanding.  It must also give details of the debt and the amount needed to agree or prevent a sale [note 82].

 

9.63 Method and conduct of sale

Where it is necessary to sell the goods, such sale must be by public auction unless the court orders otherwise [note 83].  The court may make such an order on the application of the enforcement agent [note 84].

A sale of controlled goods by public auction must be conducted by a qualified auctioneer or, for an internet auction, by an auction provider independent of the enforcement agent [note 85].

The enforcement agent must sell or dispose of controlled goods for the best price that can reasonably be obtained [note 86].

 

9.64 Place of sale

A sale of controlled goods by public auction (see paragraph 9.63) may only be held in a public auction house or on an online or internet auction site [note 87].

The sale may be held on the premises where the goods were found by the enforcement agent where those premises are occupied solely for the purposes of trade or business, and the owner of the premises is in agreement [note 88] [note 89].

The enforcement agent and any person permitted by the agent may enter the premises, bringing equipment as required, to conduct or attend the sale [note 90].

 

9.65 Application of sale proceeds

Proceeds from the exercise of an enforcement power must be used to pay the amount outstanding, including costs, with any surplus being returned to the debtor [note 91].

Where there is a co-owner, the enforcement agent must first pay the co-owner a share of the proceeds of those goods proportionate to his/her interest [note 92].

 

9.66 Payment of amount outstanding

Where the debtor pays the amount outstanding in full after the enforcement agent has taken control of goods, and before they are sold or abandoned [note 93], the agent must as soon as reasonably practicable make them available for collection by the debtor [note 94] and no further step may be taken under the enforcement power concerned [note 95].

 

9.67 Abandonment of the goods

Where the enforcement agent fails to give the correct notice of sale (see paragraph 9.62) or where the controlled goods remain unsold after a sale they are considered to be abandoned [note 96].  If the goods are abandoned then the enforcement power ceases to be exercisable [note 97] and, as soon as reasonably practicable, the enforcement agent must make the goods available for collection by the debtor [note 98].  The enforcement agent must issue a notice to this effect [note 99].

 

9.68 Fees for taking control of goods

Fees for taking control of goods are recoverable from the debtor on a fixed basis for each stage of the process, but in certain situations (where, for example, goods are auctioned) an additional fee is recoverable as a percentage of the value of the sum to be recovered.  The current fees are detailed in the legislation [note 100].

Disbursements (such as locksmith or storage charges) are also recoverable [note 101] [note 102] [note 103].

 

9.69 Breach of provisions by enforcement agent

Where an enforcement agent breaches a provision of the legislation or acts under an enforcement power that is defective, the debtor may bring proceedings in relation to which the court may order goods to be returned to the debtor and order damages to be paid to the debtor [note 104].

 

9.70 Offences

A person is guilty of an offence if he/she intentionally obstructs a person lawfully acting as an enforcement agent.  A person is also guilty of an offence if he/she intentionally interferes with controlled goods without lawful excuse [note 105].

 

[Back to Part 2 – Power of creditor to take control of a debtor’s goods] [On to Part 4 – Creditor taking control of goods and insolvency – general background and initial action to take]