Preventing assets being sold by the debtor once you have a writ of control from the High Court is straightforward.
Preventing asset dissipation
Preventing assets being sold by the debtor once you have a writ of control from the High Court is straightforward. Once the writ has been signed and received by the High Court enforcement officer and the judgment debtor notified, the debtor’s goods are effectively bound. Where there is a warrant of control issued by either the county court or the magistrates’ court this is also the case.
The binding of goods
The binding of goods prohibits the debtor from assigning, charging, or selling the goods and includes all debtor’s goods aside for tools of the trade to the value of £1,350.
If the enforcement is taking place under CRAR, the goods are bound from the time enforcement is ordered under Tribunals, Courts and Enforcement Act 2007. It is therefore important where possible to have a record or inventory of the goods on site so it can be easily determined if anything has been wrongfully transferred.
This may not be physically possible given that the tenant has no obligation to allow it and the costs incurred will not be recoverable under enforcement.
What happens if the debtor tries to sell goods?
If the debtor does sell to a third party in good faith without notice (an innocent purchaser) then the goods may be kept by the third party. It is important to remember this is only the case if the warrant has not been executed. If the warrant has been executed then the goods remain under the enforcement agents control. Another pertinent point to remember is that the debtor may have committed an offense through such sale and that the creditor may have an additional claim against the debtor for such a breach.
If the debtor sells to a purchaser and has undervalued the goods, or it can be proved in some way that the debtor was not acting in good faith, then the goods remain subject to the enforcement agents control.
A criminal offence
Once goods are listed in the enforcement agent’s inventory, it is a criminal offence under Section 68, Schedule 12 of the Tribunals, Courts and Enforcement Act 2007 for anybody to intentionally interfere with controlled goods without lawful excuse.
A person guilty of this offence is liable on summary conviction to imprisonment for a term not exceeding 51 weeks, a fine not exceeding level 4 on the standard scale (currently £2,500) or both.
Are any goods exempt?
Yes, items or equipment for use such as tools of the trade, books, computers and equipment to the value of £1,350 are exempt from enforcement control.
How long are the goods bound?
The items are no longer bound when items have been sold to pay the debt, or if the entire debt is paid up. The items also cease to be bound if the enforcement power ceases to have effect for instance if there was notice to set aside enforcement for CRAR.
David is an authorised High Court Enforcement Officer and our Director of Corporate Governance