In the case of Just Digital Marketplace Ltd v High Court Enforcement Officers Association and others, the High Court considered the issue of enforcement using consensual video appointment for the purpose of entering into a “controlled goods agreement” (CGA).
Master McCloud held and declared that it was lawful for an enforcement agent to enter into a CGA with a debtor without physically entering the premises on which the goods are located. However, due to inconsistency in the associated regulations, a non-entry CGA would offer limited enforcement options if breached.
High Court Enforcement Officers (HCEOs) are relied upon to enforce money judgments. They are instructed by the judgment creditor and, although they are independent of the court service, they are officers of the court acting under its direction.
If a judgment is being enforced in the High Court, the judgment creditor may obtain a writ of control from the court. By the writ Her Majesty, through her judges, commands the HCEO to take control of the goods of the debtor so as to enforce the court order.
Physical enforcement can be avoided if the debt is paid in full before the first enforcement is effected or by entering into an agreement to pay the debt by instalments so long as the creditor agrees. If the debtor does not pay the debt in full or enter into an agreement to pay by instalments, the enforcement begins.
The HCEO can charge their fees to the debtor. The level of fees are set out in The Taking Control of Goods (Fees) Regulations 2014 (SI 2014/1) (Fees Regulations). The “compliance stage” triggers a fee of £75 when the notice of enforcement is served. The “First Enforcement stage” triggers a fee of £190 plus 7.5% of the value of the judgment being enforced if it is over £1,000. This includes entry into a CGA. If a CGA is not entered into or is breached, and further enforcement steps are required, the fees increase.
The relevant legislation is the Tribunals, Courts and Enforcement Act 2007 (2007 Act), which provides that the power conferred by a writ of control is exercisable only by using the procedure in Schedule 12 of the 2007 Act, which includes any Regulations enacted pursuant to that Schedule. The Regulations made under Part 3 of the 2007 Act are:
- The Taking Control of Goods Regulations 2013 (SI 2013/1894).
- The Certification of Enforcement Agents Regulations 2014 (SI 2014/421).
- The Fees Regulations.
The claimant, who provides enforcement services, issued a Part 8 claim seeking declaratory relief concerning its proposed course of action by way of enforcement using consensual “virtual” visits by video online in place of “physical” attendance at the debtor’s property.
The claim form raised the following questions:
“(1) That subject to the consent of the judgment creditor and the judgment debtor, a High Court Enforcement Officer is not prevented from conducting/can carry out a ‘virtual visit’ (as opposed to a physical visit) at the debtor’s property pursuant to a Writ of Control.
(2) A High Court Enforcement Officer is able to enter into a Controlled Goods Agreement (‘CGA’) with the judgment debtor during the ‘virtual’ visit.
(3) Having entered into a CGA with the judgment debtor, the High Court Enforcement Officer takes control of the goods pursuant to the relevant legislation.”
The claimant argued that the 2007 Act and Regulations in relation to taking control make no express statement that a physical “in person” visit by an agent is required in order to enter into a CGA; it refers to an “Agreement” and agreements, as a general rule, can be entered into digitally. It proposed not charging the First Stage Enforcement Fee if a CGA is entered into remotely, which would reduce the burden on the debtor.
The High Court Enforcement Officers’ Association (the first interested party) and the Civil Enforcement Association (the second interested party) argued that the legislation did not permit entry into a CGA without physical entry into the premises in question. The matter was one of statutory construction and not general desirability.
The Ministry of Justice (the third interested party) remained neutral. Its position was that the legislation does not expressly permit or expressly prohibit virtual visits as a means of entering into a valid CGA.
Although it was described by the Master as a “friendly” action, which may affect other cases, it was in the public interest to resolve the questions and make a declaration (positively or negatively), otherwise the industry would not know the legal position.
After hearing detailed arguments and considering written evidence from bodies who are knowledgeable in the debt enforcement field, the Master gave a 160-paragraph judgment. Unusually, the judgment opened with a summary (not part of the judgment) to ensure accessibility of the judgment to readers with average reading ability.
In making the declaration, the Master reached the following conclusion:
“(1) Sch.12 of the TCEA 2007 does not prohibit ‘remote contact’ with a debtor of the sort envisaged here (this was uncontroversial in the hearing).
(2) Sch. 12 to the TCEA does not prohibit entry into a CGA without physical entry to premises, and such is a ‘taking control’ for the purposes of the Act.
(3)The Regulations which have been made do not make provision for forms of notice and procedural provisions for later entry after a CGA has been entered into and/or breached, in the absence of an initial peaceable entry having first been made under para. 14 of Sch. 12. Accordingly if a CGA were entered into without a first entry to premises under para 14 of Sch. 12, the provisions for steps in relation to entry under para 16 and forcible entry under para 19A, would not apply. (See also Paras 19A(1)(d) and (2), and 24, in terms of requirement to comply with the regulations when entering).”
In short, the 2007 Act does not forbid a non-entry CGA entry, but the Regulations do not fully enable it to be given effect as they presently stand. A non-entry CGA offers limited enforcement options if breached.
The order made by the Master declared as follows:
“An enforcement agent may enter into a controlled goods agreement within the meaning of Schedule 12 to the Tribunals, Court and Enforcement Act 2007 with a debtor whether or not the enforcement agent has physically entered the premises on which the goods are located.”
In this very helpful judgment, the Master carefully reviewed the current legislation and considered the potential for use of modern technology to carry out the court’s enforcement process and whether doing so would be valid and lawful.
Although the Master made it clear the law does not forbid a non-entry CGA, the government will now need to consider whether, in light of the judgment, there needs to be an amendment or enactment of regulations to permit entry into and enforcement of non-entry CGAs and also a consideration of the fee burden on the debtor if a non-entry CGA is agreed.
While the government may wish to consider policy in the short term due to the ongoing COVID-19 pandemic, it may be desirable to look at long term policy given technological advances in dealing with matters remotely. It is hoped the government will use this opportunity to bring the enforcement process in line with other parts of the justice process, such as remote hearings.