After reviewing the claims (Riaz and Celador Radio), Master McCloud published her judgment last week on 16^th February 2018, giving clear direction for High Court Enforcement Officers (HCEOs) on how to manage these issues in future cases.

In a very welcome move, before publication she invited the HCEO industry to provide comments and suggestions on the judgment, based on their experience in this area.

Third party claims via CPR Part 85

The third party claim process, whereby a third party claims that goods seized under a writ of control belong to them rather than to the judgment debtor, is covered by CPR Part 85. This replaced the old interpleader rule covered by RSC Order 17 in April 2014 when the new enforcement regulations were brought in.

The process for a claim

The process set out in CPR Part 85 is that:

• The third party gives the notice required under r. 85.4(1)
• If the claim is disputed, the creditor or any other party with a claim to the goods gives the counter-notice under r. 85.4(3)
• If the creditor or other claimant to the goods fails to give the notice required by 85.4(3), the HCEO may apply to the court for direction as to what to do and for protection against liability
• Where a notice is given under 85.4(3), the party claiming the goods must issue an application to the court for determination, under r. 85.5

Why the Master was asked to make a judgment

The situation that can arise is when the third party has given notice, the creditor has given the counter-notice, but the third party does not issue the application to court for determination. CPR Part 85 does not cover what the HCEO, who has control of the goods, should do next.

The other issue is that there is no time limit by which the application must be made by the creditor, so there is no clear point at which the rule has been breached, and no provision within the rule for what should happen when no application is made.

Master McCloud’s judgment

You can read the full judgment below.

In summary her order is that:

1. Unless by 4pm on a date 14 days from the date of service of this order the Third Party files and serves evidence setting out its basis for its asserted rival claim to title, it shall be debarred from relying on evidence of title to contradict that put forth by the HCEO.
2. In the event that the Third Party is so debarred then without further hearing the HCEO shall be entitled to a declaration that the judgment debtor was at the material time the person with title to the seized goods and consequent upon that declaration the HCEO shall be entitled to dispose of them in execution and shall be entitled to his reasonable costs summarily assessed in the sum of [£959.30 in Riaz, £681.50 in Celador] being the sum claimed for this application.
3. In the event that the Third Party serves and files evidence as above and is not debarred, the HCEO shall apply to this court for directions as to determination of the issue of title and as to management of the dispute and payment of the sums required by para 60(4)(a) of the Tribunals Courts and Enforcement Act 2007 Sch. 12, and for the application to proceed thereafter in accordance with CPR Part 85, and in that event costs shall be reserved.
4. In the event that the Third Party serves and files evidence as above and is not debarred, any further evidence relied on by the judgment creditor in respect of the ownership of the [goods, in Riaz money in Celador] shall be provided by the Creditor, and the HCEO's witness evidence shall deal with enforcement steps taken insofar as not already detailed in the original application for this order.

Master McCloud also suggests that the court make a decision about the sum to be paid into court at the same time as it makes the above order to remove the time and expense of having a further hearing.

She also suggests that, going forward, HCEOs make an application to the court supported by evidence of the basis for seizure, and evidence from the creditor as to why they believe the goods are the judgment debtor’s, and seek an unless order in the form broadly as above leading to a declaration in the event of default, which then should offer the degree of protection reasonably required by the HCEO as ‘middleman’.

Conclusion

We would like to thank Master McCloud for both making and for publishing her judgment, which will greatly assist HCEOs and creditors.