Update

Following a reassessment of the enforcement provisions within the Tribunals, Courts and Enforcement Act 2007 the Government announced, on 17 March 2009, that it would implement the provisions in Part 3 of the Act whilst not extending bailiffs’ powers of entry and the use of force by enforcement agents and the introduction of a new fee structure.


As part of the implementation process a pre consultation exercise, conducted during November and December 2009, sought views from Other Government Departments, the enforcement industry, and the advice sector on draft regulations on the seizure of goods. Consideration has also been given to a proposed fee structure.


Following analysis of the responses on the draft regulations some redrafting and further consideration will be necessary. This will affect the commencement of the consultation process. However, it remains our intention to publicly consult in 2010 with a view to implementing the changes in April 2012.


Direct Bailiff Services

Introduction

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It was back in 2000 and Professor John Beatson’s recommendations for the regime of Bailiff Law to be set out clearly in one place and to comply fully with the requirement of the European Convention on Human Rights.


In July 2001 the Government published its Green Paper and detailed a chapter ‘A Single Piece of Bailiff Law’. In 2003 the Government’s White Paper reiterated this, starting the section on enforcement agent law with, ‘Government believes that regulation can only work successfully with a single piece of enforcement law...’


In July 2006 the Government announced and published a draft Bill a Tribunals, Courts and Enforcement Bill to help tackle social exclusion and over-indebtedness, and reform of the courts and tribunal system.


During the second reading in the Commons, constitutional affairs minister Vera Baird opened the debate and said that the Bill reflected 3 key principles in the Government’s legislative programme “institutional reform, extending opportunity, and protection for the vulnerable” and it aims to improve the experience of the public in their dealings with legal and quasi-legal problems by improving access to justice and the administration justice.


The Tribunals, Courts and Enforcement Act contains a wide range of provisions, including: reform of the tribunal system; changing the eligibility requirements for judicial office; measures covering the regulation of bailiffs and enforcement by seizure and sale of goods; increased effectiveness for the enforcement of civil court judgements; and measures to protect the over-indebted. The Bill was published in draft on 25 July 2006 and introduced in the House of Lords on 16 November 2006. The Act received Royal Assent on 19 July 2007.


House of Lords

16 November 2006: First reading

29 November 2006: Second reading

Bill as amended:

31 January 2007: Report stage

20 February 2007: Third reading

House of Commons

21 February 2007: First reading

5 March 2007: Second reading

Royal Assent: 19 July 2007


The Governments consultation paper Regulation of Enforcement Agents was published on 30 January 2007. The paper explored three options for regulation of enforcement agents:

  1. No change;
  2. The creation of a new regulator, the Enforcement Services Commission (ESC); and
  3. Regulation by the Security Industry Authority (SIA)

The paper made it clear that the regulation by the SIA was the Government’s preferred option. The Ministry of Justice (MoJ) set out the case for the preferred option, invited comments on these options and set questions to explore the evidence. The consultation period closed on 25 April 2007 and on the 18 March 2007 the MoJ published a report that summarised the responses it had received.


It is accepted that the current bailiff powers are archaic, that change is required and the enforcement industry shouldn’t be too critical of what the Government wants to achieve. A greater sense of regulation is what is needed and the Act is not without some thorny issues...


Distress for rent is a summary remedy which enables landlords to recover rent arrears, without going to court, by taking goods from the demised premises and either holding them until the arrears paid or selling them. Distress for rent is an ancient common law remedy which over time has been extended and modified by statute.


A look at CRAR and the proposals for change....

Enforcement by Taking Control of Goods

Abolition of Common Law Right - the common law right to distrain for arrears of rent is abolished


New terminology for seizure:

Commercial Rent Arrears Recovery

CRAR replaces the existing right of distress for rent, but CRAR is only available to commercial landlords/landlord’s managing agents. A landlord wishing to use CRAR will need to authorise a certificated enforcement officer to carry out the procedure on his behalf, in writing.


Commercial Leases

The draft Bill sets-out that leases may exist in law or by equity. This therefore makes it clear that a ‘lease’ includes a tenancy at will and other forms of leases, including short and long tenancies. A least, however, be evidenced in writing.


Commercial Premises

A commercial lease will not be a commercial lease if any part of the demise is let as a dwelling. As an example, a lease on a property comprising as a shop and flat above, will not form to be a commercial lease if the flat is used as a private dwelling. However if the lease does not impose any requirements as to its use and the flat is used as a store room, then the lease will be determined as a commercial lease and CRAR can be used.


Rent

Rent payable by the tenant for possession and the use of the premises under the lease, includes any interest payable, VAT chargeable of the sum and or interest. Any amounts not directly attributed to the tenant’s possession and uses of the premises do not qualify for recovery by CRAR.


Rent Recoverable

For the right of CRAR the following conditions are:



The requirement for the set amount to be equal or to exceed the prescribed minimum is a condition that must be satisfied at two stages; stage one before the landlord gives notice of enforcement and two, before he takes control of goods.


The amount of rent recoverable by a landlord using CRAR is the amount of unpaid rent, less any permitted deductions that the tenant is entitled to make.


One of the proposals by Government is that the set minimum available using CRAR by a landlord would be one week’s rent in arrears.


Intervention by the Court

The High Court or County Court can intervene in the exercise of CRAR but the court’s powers only arise when the following conditions are met: notice of enforcement has been served on the tenant and secondly, the tenant has made an application to the court to intervene and thirdly, the court is satisfied that the circumstances meet the prescribed grounds for court intervention.


Sub-tenants

A landlord entitled to use CRAR against the immediate tenant will be able to serve notice on a sub-tenant requiring that the sub-tenant pay rent directly to him. The notice must state the sub-tenant must pay the rent directly to the landlord, until the amount of arrears specified are recovered.


Forcing Entry

The Act overturns the historic principle that bailiffs would only use force in response to force, to re-enter a property.


The consultation paper was issued during the Parliamentary passage of the Act and respondents used the opportunity to voice concern about the provision of forced entry for enforcement agents.


Seizing Goods

Bailiffs will potentially have to self-interpret the new procedures of ‘taking control of goods’ formally known as seizure and the commercial viability, in order to remove goods at the first opportunity.


The Act also introduces new procedures for the sale of goods, creating a timetable for the complete process. The date, time and place of sale (auction) must be notified in-advance to all parties. All goods must be sold at auction under the new Act. The new Act also states, goods not sold at auction are ‘abandoned’ and cannot be held by the bailiff. Accordingly the whole process must therefore begin again, with the re-issue of new paperwork.


An observation that the enforcement industry has already made to the government –who pays the bailiff costs and removal charges, if the goods cannot be sold? The Client?


A further concern to the new timeframes is the potential pressure being placed on the bailiff and auction to sell the goods, regardless to realistic value.


3 Month Rule

The government wishes to introduce a 3 month payment rule which may appear a pro-active move, but such a move may also create the opposite desire for new businesses starting-out.


The rule could potentially prevent genuine ‘want to pay’ tenants the window of opportunity to enter into payment-plans and consequently either goods being removed and sold by the enforcement agency or the warrant being returned, nsuccessful.


Up-front Fees

The government want transparency and to stamp-out rogue bailiffs charging unlawful fees. The Act proposes to introduce an up-front fee for all bailiff action, intended as a tool to cut-out illegal fee charging.


It is uncertain what the up-front fee will be set at and having secured legislation, the enforcement law reforms contained within the Act require the development of underpinning rules and regulations; a scoping exercise to this end is in progress which involves a series of meetings with relevant stakeholders. The scoping exercise is just the beginning of the process and will identify the issues that require further public consultation.


The Tribunals, Courts and Enforcement Act 2007 Implementation Enforcement Team is further proposing a consultation and implementation of the Act, including a high level indicative timetable and this is anticipated to be completed shortly.


This guidance note has been prepared by Byron Crellin as Managing Director of dbs – Direct Bailiff Services.


For further information about dbs please contact us