Adam WonnacottSales Director, Burlington Group

ICM Law Conference 2013: The Law Society, London

www.burlingtongroup.co.uk

Effective Enforcement, Responsibly Delivered

“High Court Enforcement v Alternative methods of enforcement & insolvency”

Scope of this seminar

(Brief) introduction to High Court Enforcement

Alternative methods of enforcement and using insolvency procedures

Comparison/application of methods

Working with High Court Enforcement Officers

What is High Court Enforcement?

High Court Enforcement Officers enforce CCJ’s transferred to the High Court and judgments issued in the High Court by seizing the goods of the defendant/debtor

If payment isn’t made, goods can be removed and sold to pay the amount owing under the writ

If the defendant opts to make payment, it will be liable to pay costs awarded under the judgment (including court fees) and the High Court Enforcement Officers costs in addition

Litigation and Enforcement in the High Court

When can High Court Enforcement be used?

- Where the creditor has a judgment debt over £600.00; and- the judgment debt does not arise from a Consumer Credit Act regulated

agreement

Note: Changes to legislation that would permit enforcement of CCA regulated judgments are currently being considered by government as part of a package of bailiff reforms already underway

Litigation and Enforcement in the High Court

When does High Court Enforcement work well?

- Where the debtor is known to have or is likely to have assets- Particularly where debtor is a trading business

Can be used in conjunction with (and at the same time as) alternative methods of enforcement – CPR Part 70

There may be situations in which HCE may not be appropriate and where another enforcement method might be better employed

Alternatives to High Court Enforcement

Pre Litigation/Non Litigation based alternatives:

- Instructing Debt Collection Agents- Issuing Statutory Demands

Alternative Methods of Enforcement:

- Third Party Debt Orders- Charging Orders- Attachments of Earnings- County Court Bailiffs (Warrant of execution)- Order for questioning

Advantages

• Inexpensive: A statutory demand is not ‘court issued’ and, as such there is no fee (besides process server fee)

• Leverage: As the first stage in insolvency, a Statutory Demand can be an effective way of prioritising a debt

Statutory Demands

Disadvantages

• If the debt is disputed in good faith and on substantial grounds, the creditor may obtain an injunction against winding up – potential for adverse costs award

• May cause bank overdraft facilities/lines of credit to be withdrawn, making it difficult for the debtor to make payment

• The next step (Winding up Petition) can be costly and ultimately unrewarding – which can leave the debtor to conclude that a Statutory Demand is an ‘idle threat’

Statutory Demands

Litigation and Enforcement in the High Court

How long does the High Court Enforcement process take?

The process of obtaining a High Court writ may take 2-3 weeks, after which time the Enforcement Officer will make an attendance to enforce the judgment

Dependent on the circumstances, the Enforcement Officer may be able to collect payment in full or may agree terms of repayment with the debtor

Litigation and Enforcement in the High Court

What happens of the defendant cannot pay?

If the defendant cannot make payment in full, the Enforcement Officer will usually attempt to set up a payment arrangement.

If the defendant refuses to make a payment arrangement we may look to remove assets for sale by public auction

If the defendant has insufficient assets to cover the cost of removal and sale then we may return the file for alternative enforcement action

High Court Enforcement v Alternative Methods of Judgment Enforcement

• Cost of issuing a writ is lower than cost of making an application for other modes of enforcement – making HCE a good ‘default’ method for bulk issuers

• Since no hearing is required, using HCE is generally quicker

• HCE can be a very effective alternative to a warrant of execution

Litigation and High Court Enforcement v Insolvency

• Issuing claim is a less ‘risky’ method of drawing out defences if there is a possibility that the debtor will contest the debt

• Where the debtor is a business, commencing insolvency proceedings may have undesired effects

• Issuing statutory demands will only be appropriate where the debtor is a ‘won’t pay’ (but does not contest the debt) or where the business would realise a value for the creditor in administration/liquidation

N.B. Obtaining judgment/enforcing using HCEO’s and insolvency are not mutually exclusive - they can be complementary methods

The most appropriate method will depend on circumstances:

• Is there any mileage in retaining a customer relationship?• What is the average debt amount? • What is the provenance of the debt? Goods or services? • Is the debt disputed or is it likely to be? If so, is there a substantive defence? • Does the debtor have assets that could be seized? • Does the debtor own a property?• Does the debtor business have any less tangible assets; debt book etc?

Also consider what you can develop as a scalable process

Which method is most appropriate?

What is everyone else doing?

Working effectively with High Court Enforcement Officers

Ways in which you can assist your HCEO

Provide as much information as you can – is there further information you can collect during sales process?

Explain your ‘attitude’ towards enforcement – Is the focus on payment arrangements or removal?

Payment arrangements – What are your acceptable terms/parameters for payment arrangements?

Working effectively with High Court Enforcement Officers

What to expect

Decide upon KPI’s and expect to receive management information based on these

Method of case reporting – how would you like to receive reports, how often would you like to receive reports and how comprehensive should they be?

Establish a key contact or Account Manager

If acting on behalf of a client, would you entrust enforcement of your own debts to your HCEO?

The right debt recovery method will depend upon your particular circumstances

High Court Enforcement is very often a good ‘jumping-off’ point and can be a way of gathering information about your debtor

In many ways, we are simply a court-authorised method of debt collection; but with powerful sanctions for non-compliance

If High Court Enforcement is your chosen method, ensure you are working with your HCEO effectively and monitoring progress/benchmarking

Conclusions

Email: adam.wonnacott@burlingtongroup.comCall: 07788 871250 / 0845 520 2000

@BurlGroup

www.burlingtongroup.co.uk

Winners of Credit Today Enforcement Team of the Year Award 2013