William Shakespeare, Julius Caesar (1599):
[Cas.] Upon what meat doth this our Caesar feed, That he is grown so great? (Act 1.2.149-50)
[Caesar] Let me have men about me who are fat (Act 1.2.194-95)
Ealing Council’s use of bailiff to enforce debts has increased over the last 2 years.
It is a deservedly better-known fact that Britain’s top bailiffs are paid far more than Britain’s top judges. The reason for this are the record levels of judgment debts now being collected by enforcement agents who operate the recovery system as a profit-making business.
Britain’s domestic debt burden is growing – and high enforcement fees demand by bailiffs and High Court Enforcement Officers are making a lucrative industry even richer whilst pushing many of the poorest deeper into debt.
Typically these debts arise from rent arrears, council tax, maintenance payments, student loans, fines, penalties, court judgments and benefit recovery actions which fall predominantly upon people in poverty. Once judgment is obtained the task of enforcing judgments is passed on to the privatised enforcement industry which has grown rich in the past quarter of century on the business of recovering debts owed to institutions and the state.
Much of modern debt law was originally written on the assumption that deliberate evaders and would-be evaders of debts i.e. ‘Won’t Payers’ will be coerced into paying up by the prospect of extra charges being add to the sums owed in enforceable debts.
In reality, this notion fails to appreciate that many people in debt are simply ‘Can’t Payers’ whose incomes have been squeezed by benefit cuts and rising rent and fuel costs. Since the beginning of the 1990s millions of people have caught in a twin downward spirals of debt and falling incomes which inevitably result in the commencement of automated forms of debt recovery and the computerised issue of legal proceedings.
The recovery of fees is complex area and widely misunderstood and if anything the Tribunals Courts and Enforcement Act 2007 and the regulations made under it – which was intended as a reform of the system – has actually added to the problem.
HIGH COURT ENFORCEMENT OFFICERS….A CASE IN POINT
Let us take the fees imposed by High Court Enforcement Officers as an example. This is a branch of enforcement which is increasingly well-known from a number of TV programmes highlighting their use in debt recovery.
HCEOs are private recovery officers, often attached to firms of solicitors and the fees charged by them are regulated by statute. Their work as expanded massively since 2004. In theory the High Court Enforcement Officers come round to the debtor’s home, seize goods and – if the debtor does not pay – sells the seized goods at public auction. The fees are meant to be paid by creditors and landlord, but all too often the enforcement fees are passed on to debtor by the way in which the system has operated since 2014.
As the law stands, with High Court enforcement Officers the level of fees before 6th April 2014 is determined by the High Court Enforcement Officers Regulations SI 2004/400. After this date they are subject to the Order (as amended and the scheme of the Tribunals Courts and Enforcement Act 2007 Schedule 12 and SI 2014/600, art 2 and art 7).
The regulations as amended state that under Regulation 13 (Miscellaneous Matters) before 6 April 2014 fees may be charged against either (a) ‘the person upon whose application the writ was issued’ (i.e. the creditor) or ‘the person at whose instance the execution is stopped’ (i.e. the debtor who pays up). This meant the fees were payable by either the judgment creditor or the judgment debtor.
After 6 April 2014 these rules are amended for the Schedule 12 procedure with Regulation 3A providing that fees must be paid by the person on whose application the writ was issued (that is the creditor) where the proceeds of the auctioned good can’t cover the debt.
“[(3A) Where an enforcement officer uses the Schedule 12 procedure and the proceeds, if any, are insufficient to enable the enforcement officer to recover the compliance fee, that fee (or the balance of it which remains outstanding) that fee (or the balance of it which remains outstanding) must be paid by the person on whose application the writ was issued.” [ITALICS ADDED]
This effectively means that after enforcement action has been commenced and the goods taken into control and sold, the HCEO is expected to be paid from the proceeds of the sale of goods at auction.
After that he creditor or landlord is ultimately liable for the High Court Enforcement Officer’s fee if the sums have not been satisfied by the debtor in some capacity. Liability to pay fees is on the judgment creditor unless the sum has been recovered from the debtor by way of an agreement to pay.
Broken down into plain English that means the creditor or landlord should pay the fees.
Except it’s not happening.
It’s the debtor who is having to pay the fees without the enforcement officer having done even half the work they are employed to do.
The reason the system is failing is basically the whole of enforcement of goods is a legal con trick. The system of seizing goods and taking them away to sell at public auction to pay a judgment debt has probably not worked as the way it is imagined since before 1970.
Goods sold at public auction fetch a pittance. Alan Murdie, Chair of Nucleus comments “In nearly 30 years I never come across a case where the price of the goods at auction ever exceeded the debt; most cases don’t even cover the auctioneer’s fee.”
The only cases where enforcement against goods sold at auction actually pays are case involving high value cars, valuable heavy plant equipment, helicopters or aircraft. These are not possessed by the average person in rents arrears or appearing on the council tax debt list.
But to circumvent this problem, High Court Enforcement Officers (and other enforcement agents such as those collecting council tax) get the debtor to agree to pay up the money instalments, including the costs of the enforcement fees which otherwise would be the responsibility of the debtor. In most cases, the last thing that the High Court Enforcement Officer wants to do is actually take away goods to sell.
Effectively the fees are being demanded and paid before the actual step of enforcement, by the threat of action, rather than taking any actual enforcement action. All too often it is the enforcement officer who demands the terms of any payment, despite there being no specific power to make such an arrangement.
In short, the whole system is an organised bluff. Debtors pay up simply imagining they are required to pay, under threat of having goods seized. In most cases this accomplished by the High Court Enforcement Officer just standing on the doorstep. But it means with the inclusion of fees for the process that debtors may risk borrowing at rates they cannot afford or simply fail to pay other liabilities, including priority debts. The result is that they fall deeper into debt,
create new debts for themselves, whilst members of the enforcement industry enrich themselves further and the cycle continues.