In many cases, the attendance of the EA will encourage the debtor to pay the full some owed. Once cleared funds have been received, that is the end of the matter.

When a controlled goods agreement is used

However, in other cases, the debtor may be unwilling or unable to pay any of the debt, or may only be able to pay part of the debt and will enter into a payment plan to pay the balance off in instalments, subject to the agreement of the creditor.

Under these circumstances, the EA will take control of goods belonging to the debtor. This means that he now has control of the goods and that they will remain in his custody until the debt and all costs have been paid. The debtor may not sell or remove the goods, nor may he let anyone else do so, including other enforcement agents.

However, the EA will not necessarily remove the goods, as it may be more practical to leave them at the debtor’s premises. When he does leave them on the premises, he will provide a controlled goods agreement which will be signed by him and the debtor.

What it covers

Once signed, the controlled goods agreement:

• Prohibits the debtor from selling or disposing of the goods – if he does do so, the EA can recover them from the purchaser, even if the purchaser did not know the goods were under a controlled goods agreement
• Permits the EA to re-enter at any time and as often as he needs to inspect and/or remove the goods
• Allows the EA to re-enter by force if necessary

Criminal offences

It is a criminal offence for the debtor to intentionally interfere with goods taken into control under Paragraph 68(2) of Schedule 12 of the Tribunals, Courts and Enforcement Act 2007. If found guilty, the debtor will be liable for a prison sentence of up to 51 weeks, and/or a Level 4 fine.

Also, any party guilty of removing, hiding or selling goods taken into control could have Contempt of Court proceedings brought against them. In an unreported case in 2012, a debtor who sold goods ordered to be returned to a creditor was sentenced to 28 days in prison. This would be a separate civil action (by the HCEO or creditor) and would not involve the Police until after conviction.

Who can sign a controlled goods agreement?

In most cases the controlled goods agreement will be signed by the debtor but if he is not available, it can be signed by any responsible adult at the premises. Once signed, the Enforcement Agent will also sign and leave a copy with the debtor.

When the debtor refuses to sign

If the debtor refuses to sign the controlled goods agreement, then the EA will most probably escalate the enforcement stages to remove the goods to safeguard them and ultimately sell them if payment is not made.

Payment by instalments

If the creditor and debtor agree a payment plan, the goods will remain under the controlled goods agreement until the debt and costs are paid in full. Once paid in full, ownership returns to the debtor.

However, if the debtor fails to keep up with the payments, the creditor can decide to have those goods removed and sold by moving enforcement to Enforcement Stage 2.

Third party ownership

If the Enforcement Agent takes into control goods that do not belong to the debtor or are under a hire purchase agreement, then the third party will need to provide evidence of this to reclaim them, which may result in interpleader proceedings at the High Court where a Master will determine who owns the goods.