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Charging orders and attachment of earnings: all change…or is it?

To those of us in practice, it often seems that the legal world is developing at a faster pace than ever before. It becomes more and more difficult to keep on top of changes and our email inboxes are full on a daily basis with legal and other updates to get stuck into.

Shortly after Easter, we were faced with the 83rd (yes 83rd) update to the CPR. As seems to be the case these days, the SI (the Civil Procedure (Amendment) Rules 2016) and the practice direction making document pulled together a disparate set of provisions, but for the debt recovery and enforcement practitioner, two provisions stood out. These were the “centralisation” of both the charging order and attachment of earnings processes.

In terms of finding the relevant law, we now have amendments to CPR 73 for charging orders, and (to the delight of many of us) the removal of CCR Order 27 on attachment of earnings applications, as well as the creation of a new CPR 89 to replace it.

County Court Money Claims Centre

What exactly does “centralisation” mean and what is the effect in practice for those of us who work in this world?

The headline statement is that the starting point for many charging order and attachment of earnings applications made from 6 April 2016 is the County Court Money Claims Centre (CCMCC) based in Salford. It is Salford that is rapidly establishing itself as the centre of the County Court universe for litigators!

Fees can be paid via a fee account and applications can be made online. The overarching aim is to speed up the application process by reducing the requirement for judicial input and streamlining the processes.

There are exceptions to this centralisation, as set out in CPR 73 and 89, but standard applications are to be made to the CCMCC. In addition, their initial consideration is to be undertaken by a court officer. This is another example of initial court applications being considered without any qualified judicial involvement.

Changes to charging order forms

Let us look first at the new charging order procedure, as it is that method of enforcement that has seen the most changes brought into play by this new process.

We are all used to starting the charging order process via an application for an interim order, and that is still the starting point, but the relevant forms (N379 for a charging order over land and N380 for one over securities) have changed.

Care should be taken to ensure the correct new form is used, as the layout is quite different to the one that has been used previously.

Where to make an application for a charging order

CPR 73.3 is the rule that provides that applications to the County Court for charging order should be made to the CCMCC, unless the application is for a charging order over an interest in a fund in court, in which case, you apply to the County Court hearing centre where the judgment or order was made. In addition, if you have a High Court judgment that has not been transferred to the County Court for enforcement, then you apply to the district registry where the High Court judgment or order was made.

Thus, as can be seen, it will be the CCMCC which is the default position. This should be considered good news by creditors and their legal representatives, as batch applications can be made. It is also good news for those who practice extensively in this area, as there are opportunities for good use of technology and systems.

What happens to the application?

As stated above, the initial application will, in the vast majority of cases, be considered by a court officer who will have a checklist of prescribed criteria and, if these are met, then he or she will issue an interim charging order (ICO) and an unless order (many of us thought that the phrase “unless order” had been confined to the great judicial dustbin in the sky, but here it is making a return to enforcement practice).

If the criteria are not met, then the matter will be referred to a district judge for consideration and directions. He could still make the orders as above, or transfer to the defendant’s home court for a hearing.

Interim charging order

If the ICO is made, then it must be registered in the normal way and that procedure hasn’t changed (although many of us are still unhappy about the complications that the Land Registration Act and related provisions cause around this area).

The service provisions are set out in CPR 73.7 and 73.7(7) is particularly important to note, as it lists exactly who else, apart from the judgment debtor, is to be served. Perhaps the one in that list to note in particular is the judgment debtor’s spouse or civil partner, as they must always be served, if they are known.

Objections and final charging order

It is now that the procedure gets interesting, as the ICO will not automatically require a hearing date. Rather, anyone who has been served and who objects to the application has 28 days from service to file an application. If an objection is received, then the matter will be referred to a district judge and the matter will probably be transferred to the debtor’s home court.

However, if no objection is received, then provided that the procedure has been complied with, a final charging order can be made without any further hearing. Of course, all this will do is secure the debt. The question of enforcing through an order for sale is a whole different ball game.

In summary, this new procedure should be considered as advantageous for creditors and their advisors. Having obtained a judgment it is incumbent, in my opinion, for the court to make the enforcement process as simple and slick as possible. Clearly, however, the new system depends on the CCMCC coping with the increasing volume of matters that will be sent through to them. With charging orders likely to become more popular as property prices continue to increase, it is vital that the system is administratively secure.

Attachment of earnings procedure

A similar centralisation is taking place for the attachment of earnings procedure, with initial applications for an order being made to the CCMCC and the applications again being considered by the seemingly ever popular “court officer”.

It is only in certain circumstances that a district judge will become involved, with initial steps being taken by a court officer. Indeed, the court officer may even issue a notice requiring a debtor to show good cause why he or she should not be imprisoned for failing to reply to notice of an application for an attachment of earnings order or to make payment to a creditor (see CPR 89.5(3), 89.8(3) and 89.8(4)). In strict terms, the alteration in the procedure is not as dramatic as for charging orders, and so it is not necessary here to set it out in full detail.

The salient points of the new procedure are as follows:

  • If a completed N56 is filed by the defendant, a full or suspended attachment of earnings (AOE) order can be made by a court officer.
  • Our old friend the Centralised Attachment of Earnings Payment System (CAPS) will monitor payments made under a full AOE order.
  • If any payments are not made, CAPS will refer the order to the debtor’s home court and not the CCMCC.
  • Requests to re-issue should therefore be made where the last step in the AOE process was taken.
  • The defendant’s local court will still deal with all other aspects of the AOE process.

Only the start?

In conclusion, these procedures should be welcomed and embraced by creditors. It should not be forgotten that they come at a time when there is much discussion surrounding the future of the civil justice system (I recently attended a stakeholder meeting with Lord Justice Briggs on his wide ranging review of this area, which will be published later this year). With much talk of digitisation, removal of court hearings and the need to lessen the cost of the civil litigation process, I wonder if these changes in the enforcement process are the start of more to come.

Certainly, many creditors would welcome a more efficient and swifter process to move judgments to the enforcement regime. It was gratifying to hear Lord Justice Briggs confirm that nothing should be considered too radical!

All change for enforcement? Maybe not yet…But watch this space for the future…

The 12th edition of the esteemed title Enforcement of a Judgment, edited by Stephen Allinson, was published in January 2016. It is available to order from the Sweet and Maxwell website.

Stephen Allinson

2 thoughts on “Charging orders and attachment of earnings: all change…or is it?

  1. This is very welcome, particularly when we use charging orders as the preferred method of enforcing a Judgment.

    I do however feel for the junior barristers that I used to instruct to attend final hearings. It was cost effective for us and allowed them to cut their teeth. Less instructions will now inevitably follow.

  2. Thank you for your comment Melissa. Some interim orders will still be challenged and so although standard instructions will reduce, it is my view that the matters that require attendance at a hearing could be potentially more interesting for the junior advocate.

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