I recently downloaded this article written by John Kruse and cannot find the original source so my apologies for having to show the whole paper-
B: BAILIFF STUDIES CENTRE
Briefing Note No.3
The Enforcement Act 2007-
Practical implications (1)
The Bailiff Studies Centre periodically issues Briefing Notes dealing with recent events and developments and offering information, commentary and guidance upon them. This Note is the third in that series and the first of several planned to keep track of the implementation of the 2007 Act and the new code of bailiffs’ powers and fees. Further regulations will follow dealing with fees and certification and there will also be new court rules covering all the applications that may be made to court.
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Bailiff Studies Briefing Note 3
Introduction
Based upon the form of the Act and the new Regulations recently published,[1] there are several areas which will need close attention from enforcement agencies.
An important general issue to stress is that there are several important changes in ethos between the old law and the new Act and Regulations. The former procedure has been quite tolerant of informality and flexibility of procedure on the part of enforcement agencies. Being a statutory scheme, the new law is far more prescriptive. For taking control to be carried out effectively, it must be carried out correctly. This will demand of bailiffs thorough training, a high degree of supervision and a high level of accuracy. Bailiffs will need to know exactly what can and must be done at each stage, what documents and notices are required and a detailed knowledge of procedure. It is not for nothing that the Ministry of Justice has promoted raised professional standards in the sector.
Secondly, the new procedure will take more time. The prescribed manner of taking control prevents corners being cut; the new ethic underlying the legislation demands that taking control of goods is an interaction between bailiff and debtor. Old attitudes to the job must be abandoned: for example, given the highly detailed rules on exempt goods in the new regulations, it will not be possible for decisions as to what items are necessary to a business or household to be imposed or assumed. Enquiries will have to be made; evidence will have to be assessed. Training will be needed in advance; the job itself cannot be rushed.
Lastly, emphasis is laid on the duty to keep the debtor and other parties informed at all stages. This will be time consuming in itself but it also is indicative of the change in approach- the emphasis now is on providing full and accurate information to enable debtors to make informed and timely decisions.
National Standard
The National Standard has, for the last decade, provided good practice guidance to enforcement agents. Many of its features (for example, the duty to serve notice every time an action is taken and the protection of children and vulnerable persons) are now incorporated into the legislation. However, it is likely that further guidance will also be issued, which will reproduce many of the other aspects of the Standard subject to a condition that bailiffs have ‘due regard’ for the recommendations.
Bailiffs will need to be alert to the presence of children under the age of 16 and ‘vulnerable’ persons on premises. This is not just because they may be adversely effected (whether materially or psychologically by a levy) but because the regulations specifically state that:
Goods cannot be seized where the debtor is a child or where a child or vulnerable adult is the only person present;
Children cannot make controlled goods agreements; and,
Premises cannot be entered where only a child or a vulnerable person is present.
Readers should note, however that the Regulations do not define ‘vulnerable.’ The guidance hopefully will assist but this may prove to be an area open to interpretation and dispute.
Binding effect of warrants
This is an innovation for most enforcement agents, although it is a facet of warrants that will be familiar to county court bailiffs and HCEOs. The binding effect commences either when a warrant is issued or when the enforcement notice is issued depending on the debt involved). Its effect is ownership of any goods is ‘bound’ so that any form of assignment or transfer is ineffective as far as the bailiff is concerned. The binding power does not prejudice the title to any of the debtor’s goods that a person acquires in good faith, for valuable consideration, and without notice that either a court warrant or writ of control had been issued or that an enforcement agent had served an enforcement notice. For the purposes of this provision, a thing is to be treated as done in good faith if it is in fact done honestly (whether it is done negligently or not).
This change creates a right to pursue and to take control of goods which the debtor might think have been placed beyond the reach of enforcement. Putting this new power into effect may be more trouble than it is worth, but it may dissuade individuals from trying to transfer goods. Combined with the new offence of interfering with goods taken into control, it may mean that more goods remain on premises available for seizure than has been the case in hitherto.
Notices
A very distinct difference between the new rules and the former law is the requirement for bailiffs to provide successive notices to debtors as the enforcement process progresses. These include:
Enforcement notice advising the debtor that a warrant or writ has been issued against him/her;
Notice after entry;
Notice after taking control of goods- including, specifically, a notice warning that a vehicle has been clamped;
Copies of controlled goods agreements (i.e. walking possession) where someone other than the debtor has signed;
Notice after removal of goods from premises; and,
Notice before sale or other disposal of goods.
In all these cases mandatory content for the notice is provided in the regulations, which will have to be used. Drafting and issuing these notices will clearly add to the work and costs of enforcement agencies. Additionally, failure to provide a statutory notice may invalidate subsequent stages of the process. This is particularly the case with the enforcement notice, which initiates the entire process and upon which all subsequent time scales depend.
The purpose of these new notices seems to be:
To ensure that a debtor understands exactly what steps have been taken, by whom and for what debt;
To ensure that the debtor knows what charges have been made; and,
To warn a debtor what might happen next and what it will cost.
These measures therefore give statutory form to the provision in the current National Standard which requires a notice to be given every time that an action is taken for which a charge may be made. Current good practice is therefore being transformed into duties under the new Act.
It goes without saying that the content of the forms as laid down in the regulations must not be changed, nor the wording altered. Other than the insertion of company details and logos, additions should not be made- nor should any required information be deleted.
Entry
The new Regulations make it clear that entry to premises will from now on only be possible by the usual means of ingress- in other words, by means of doors, gates and similar entrances.
This change does away with the old law which sanctioned climbing through windows and lifting floorboards as ‘normal’ entry routes, which is probably no bad thing if it removes a source of antagonism and confusion, but it may also cause difficulties in some levies. The wording of the Regulations is such that it seems that climbing over walls and fences is also prohibited, as access by these means cannot ever be described as “usual”. Equally, even climbing over a locked gate or barrier is probably not within the narrow wording of the new law and therefore is no longer permissible.
Levying
The new terminology is ‘taking control of goods.’ The procedure is simplified: there are no longer the two separate stages of seizure and impounding to get right; moreover, new forms of taking control are created. For example, the use of wheel clamps by bailiffs is expressly sanctioned by legislation for the first time and all bailiffs are given the power to secure goods on premises by locking them in a room or cupboard or (in limited cases) by securing the entire premises.
These changes will be beneficial for enforcement agencies and creditors. They will remove doubts about legality and proper procedure and give greater flexibility to the securing of goods. Of course, these new procedures bring with them detailed regulations and, often, a duty to provide notice to the debtor and it will be necessary to comply exactly with the rules to ensure that goods are validly taken into control. It must also be stressed that the methods by which goods may be impounded (“control may be taken”) are now prescribed by the Act and Regulations. Four methods- and only four methods- of taking control are permitted. Agents will have to observe closely the detailed rules for these to ensure the legal consequences of taking control, whilst departures from the statutory procedures will have to be avoided.
Goods
Far more detailed and comprehensive lists of exempted goods are now provided. ‘Tools of the trade’ are expanded to include items required by students, but a ceiling of £1350 is placed on the aggregate value of all exempted trade assets. Whether this is to be assessed on the basis of the purchase, resale or forced sale value is not clarified.
The exemptions for household goods are considerably increased. The former general wording is retained, but then a range of items which will fall within this are specified, including cooker, fridge, washing machine, ‘phone, heaters and medical equipment. The latter items are significant, as a range of assets used for or by sick or disabled persons (including guide dogs and cars displaying blue badges) are now explicitly protected from seizure.
Families in general- and households with particular health or care needs in particular- are now far better protected than they were previously. For enforcement agents, the range of seizable goods will have become more restricted whilst the job of ascertaining what ought to be classified as essential will have become considerably more lengthy and demanding.
Inventories
As I have explained elsewhere, the function of an inventory is to ensure that all concerned parties (debtors, creditors, all bailiffs involved and any third party owners of goods) understand exactly what goods have been seized and placed in the custody of the law.[2]
The new regulations again give statutory and binding form to the guidance of the old case authorities. Regulation 33 is quite prescriptive about the information which should be supplied to a debtor and this is given express form in the prescribed content and wording of the inventory included in the statutory instrument. The regulations require that the debtor be supplied with the following information:
The debtor’s name and address;
The agent’s name, reference numbers and the date of the inventory;
The name and address of any co-owner of the goods;
Confirmation that the goods listed on the inventory have been taken into control;
A list of the goods providing sufficient details to enable the debtor to identify them, such as their model, make, serial or registration number, colour, usage or other identifying feature.
The inventory may be combined with a controlled goods agreement or with any notice given under the regulations provided that the inventory is provided at the same time as the agreement/ notice and that the goods taken into control are the same as those listed.
Despite the concession contained in the last provision, it will be clear that the new regulations set very high standards for the form of inventories in the future. General descriptive phrases (such as ‘all necessary goods’ or ‘all goods not exempt’) should be avoided- although they have not been acceptable practice for many decades anyway. Moreover, as with the notices discussed in the previous section, the content of inventory should not be changed, nor should the wording be altered. Other than the insertion of company details and logos, additions should not be made- nor should any content be deleted.
The extra information required will clearly add to the workload of some bailiffs who in the past have been content with relatively laconic descriptions. What is more, the stipulation that usage of an item be stated is not simply a matter of description: it is connected to the bailiff’s duty to make enquiries about the exempt status of goods. It is expected that enforcement agents will be proactive in these matters: as the form of the exemptions is complex, and is unlikely to be known by most individuals, it is apparent that bailiffs are now expected to make efforts to elicit information from debtors in order to try to identify vehicles or other items which may be needed for trade or which should be regarded as household essentials. I have for some time argued that a levy should be regarded now as an interaction between debtor and bailiff; these new regulations reinforce this position.
Non-leviable goods
The old classes of exemption for trade and domestic necessities remain in place, but additional definitions are added which tend to make the categories of exemption more prescriptive. Bailiffs will need to pay close attention to the wording of these. Categories of protection are at the same time added- for instance by granting protection to those with special needs arising from medical conditions or disability. Where the debtor’s only asset is a mobile home, its seizure is prohibited. One regulation specifically prohibits infectious or hazardous items being taken into control- for example, livestock with notifiable diseases or radioactive materials. The problem for agents may be the identification of such hazardous goods.
These rules make it clear that, at this stage of the process, there is a strong obligation on the enforcement agent to make thorough enquiries about goods- what they are needed for, any problems that might arise from storing them and any claims to them which might exist (see following paragraphs).
Co-owners
The need to be aware of the existence and rights of co-owners of goods ‘taken into control’ is much greater under the new code than previously. In the past, the case law guidance was that co-owners had to receive their fair share of sale proceeds, but this duty could easily be overlooked. The new Act and Regulations give statutory form to these rights- for example, at several stages in the process it is necessary to serve notice on the co-owner as well as the debtor. The bailiff is expected to make ‘reasonable enquiries’ as to whether or not another person has a claim over goods taken into control. This should be regarded as a duty: the questions must be asked at the time of the levy and details recorded so that the necessary notifications can be sent out.
Third party claimants
If goods have been seized which belong to third parties, there now exists a formal court procedure for that person to register their claim and to seek a court order for the restoration of their property. This is a further innovation of the new rules: previously this sort of procedure only applied to civil court executions; now it is extended to all the debts recoverable by taking control of goods under the 2007 Act.
The implications are that, if they do not take reasonable care, agencies could find themselves involved in time consuming and possibly costly litigation. The recovery procedure will certainly be delayed, even if the outcome of the hearing is favourable to the creditor and bailiff. Once again, it seems that proper investigation at the time of the levy- taking time to ask questions- is going to be important. Investing a few minutes to make enquiries at this early stage could avoid considerable waste of resources later.
Valuation
The new regulations require that in every case where goods are removed from premises for storage or for sale, they must be valued by the enforcement agent and a copy of the valuation must be provided to the debtor and any co-owner. This innovation has several potential consequences:
It will clearly add to the expenses to be met from the new fixed fee for the final stage of the enforcement process;
It will add delay to the process;
It will focus attention on the new duty to ensure that co-owners are kept informed and to pay them half of any proceeds of sale; and,
It will focus attention upon the likely sale proceeds and upon the question of whether a levy was ‘excessive’ (i.e. on goods of too high a value or goods worth too little to justify the seizure).
Given these new strictures, it is arguable that some levies which might in the past have appeared at first glance economic will be revealed as not worth pursuing under the new regime.
Sale
The new regulations allow sale by a much wider range of methods than just public auction. This again should benefit all parties by helping to ensure that the best price possible is obtained.
Considerations of the viability of levies will also be effected by a newly created duty to share proceeds pro-rata with creditors (the detail of this will follow in later regulations).
Conclusions
The new code of powers promises many enforcement agencies higher fees for their work. However, this gain is balanced by higher risk and increased responsibilities. For many debts bailiffs will have new powers they did not possess previously; they will also have these set out in a clear and modern code. The cost of these gains is the greater range duties and obligations imposed upon them.
There is a duty of openness and clarity as demonstrated by the succession of notices that must be served. There is a duty to make enquiries as to co-owners, third party claimants, exempt status of goods and vulnerable status of individuals. All of this will increase the time that must be spent by enforcement agents on levies- and in particular at the point of entering premises for the first time and taking control of goods.
Overall, then, there are increased duties and far more deadlines for bailiffs to observe. This increases the risk of facing court claims for breach of the new code under Sch.12 para.66 of the 2007 Act.
Timescale
The new Taking Control of Goods Regulations have been published. The fees regulations will appear in October and the new rules on certification about the same time. We can anticipate the have the new rules for civil and criminal courts by the end of the year. Implementation takes place in April 2014. Further Briefing Notes and other documents will be sent to practitioners in due course as the practical detail emerges.