When enforcing a wit of fieri facias, the High Court Enforcement Officer (HCEO) is instructed to levy, i.e. seize, goods belonging to the debtor to sell to repay the judgment debt.
However, there are a number of differences as to what can be seized according to who the debtor is.
Individuals and sole traders
The HCEO may seize any assets belonging to the judgment debtor, sometimes including those jointly owned with a spouse. If the debtor is a sole trader, this may include domestic items, as well business items such as stock.
There are certain items that are exempt from seizure:
- Bedding, clothing, furniture and provisions that the debtor and their family need for a basic level of domestic life.
- Perishable goods: refrigerated foodstuffs, fresh flowers etc.
- Tools of the trade: those needed by the debtor to do their job or run their business, for example tools, books, vehicles etc.
It is worth noting that an item is only exempt from seizure as a tool of the trade if it is used exclusively by the debtor. If anyone else uses it, it can be seized – for example a vehicle used by a spouse or a drill by an apprentice.
If the debtor is a limited company, then any assets belonging to the company may be seized, except for perishable goods. “Tools of the trade” does not apply to limited companies or partnerships.
As liability is limited, assets belonging to the directors cannot be seized unless the director has signed a personal guarantee. It is becoming more commonplace for companies to ask for personal guarantees when supplying goods or services. They may include this as part of the contract (the contract should request that the director sign their agreement to that part specifically for it to be valid) or as a separate agreement.
If there is a personal guarantee in place, then you will need to sue both the debtor and the guarantor. It is normal practice for the HCEO to levy against the company’s debts first, before turning to those of the guarantor.
Partnerships are somewhat different.
When a person is invited to become a partner, this is often an equity partnership, where the new partner will invest into the firm. This may be a sum of money, or could be land or a building.
Once transferred to the partnership, this asset is then held jointly by all partners. This can then be seized, along with other jointly held assets as necessary, by the HCEO to satisfy the judgment. It can also happen that an asset transferred to the partnership may remain with the partnership even after the partner who originally owned it has left the firm.
Should the partnership have insufficient assets to satisfy the debt, as liability is unlimited the HCEO can then seize the personal assets of the individual partners.
However, the assets of the partnership cannot be seized to satisfy a judgment made against one partner individually.
Limited liability partnerships
Although LLPs operate in the same way as a partnership, the liability of the partnership is limited to the assets of the partnership, in the same way as a limited company. The LLP’s assets may be seized to satisfy the judgment, but the partners’ personal assets may not.
David is the former CEO of The Sheriffs Office.