As the introduction of part 3 of the Tribunals, Courts & Enforcement Act 2007 on 6th April 2014 is almost upon us, I thought you might find useful details of the enforcement stages and associated fees as they apply to High Court Enforcement Officers (HCEOs).
The introduction of fixed stages and fees is certainly going to simplify the current charging structure. There will be four stages, as follows:
The process starts with the Compliance stage. All High Court Enforcement companies will have to send a ‘Notice of Enforcement’ to the judgment debtor.
This notice gives them 7 clear days, excluding Sundays and bank holidays, to make payment in full to prevent the attendance of an Enforcement Agent (EA) to seize goods.
The new term replacing seizure is 'take control of goods', and the writ of fieri facias is to be renamed the writ of control.
Sending the Notice of Enforcement triggers the fee for this stage which is £75.
Naturally no one knows how many debtors will pay at this stage - industry data in other areas of enforcement suggest that it might be as low as 5% of cases, others suggest 15%.
Enforcement Stage 1
If the debtor fails to make contact with the HCEO or requests to pay by instalments during the Compliance Stage, an EA will attend their premises to take control of goods.
This stage is known as Enforcement Stage 1 and the fixed charge at this point is £190 plus 7.5% of the sums to be recovered over £1,000. For example, if the outstanding debt was £3,000, the 7.5% would only be charged on £2,000.
If, when the EA attends, the debtor pays in full immediately or agrees to an acceptable instalment arrangement, then the matter ends there.
Enforcement Stage 2
If the debtor refuses either to make any payment or to enter into an acceptable instalment arrangement covered by a controlled goods agreement (the term replacing walking possession agreement), then the matter moves to Enforcement Stage 2.
If a payment arrangement, with a signed controlled goods agreement, is subsequently broken, the EA will re-attend the property either under Enforcement Stage 2 or the Sales or Disposal Stage, depending upon the circumstances so far.
The fee for Enforcement Stage 2 is a flat £495.
Sale or Disposal Stage
Should enforcement get to the point where goods actually need to be removed, the enforcement progresses to the Sale or Disposal Stage.
The fee for this stage is £525 plus 7.5% of the sums to be recovered over £1,000.
However, if the HCEO anticipates exceptionally high removal costs far greater than the Sale Stage fee, for example specialist equipment and personnel to remove an aircraft, he can apply to the court to have these added to the amount payable by the debtor.
The only other fees chargeable (without application to court) are for disbursements such as locksmiths, storage and auctioneers' fees.
The new abortive fee
The current abortive fee, payable if enforcement proves to be unsuccessful, will rise from £66 to £75.
This fee is triggered by the sending of the Notice of Enforcement and is payable by the creditor in the case of unsuccessful enforcement.
Whilst not specified in the regulations, it is our understanding that VAT will be applied at the standard rate to all enforcement fees. We are awaiting MoJ and HMRC guidance on this.
David is the former CEO of The Sheriffs Office.