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16 June 2020
Should Creditors be Issuing Writs Now to Protect Their Debt and Get to the Front of the Queue of Priority?
In March 2020, in the case of 365 Business Finance Limited v Bellaggio Hospitality WB Ltd that involved the enforcement companies Marston and Court Enforcement Services (CES), Lord Justice Lewison in the Court of Appeal upheld an earlier order of Mr Justice Turner, who had rejected a decision by Master Eastman in the Queen's Bench Division, to order CES to send Marston the money they had collected from a debtor due to priority. Marston were entitled to the money as they received their Writ first, from a different creditor.
Lord Justice Lewison said “to not allow for priority would permit a disorderly race between enforcement agents, favouring the most aggressive and least forbearing.” That in turn, Mr Ryan (who was representing Marston) pointed out, would be contrary to one of the policy objectives of the reforms of the TCE Act, which was to encourage a proportionate and staged approach to the enforcement of judgment debtors and discourage aggressive actions by enforcement agents.
Why does this order from the Court dictate when a creditor should issue a Writ?
There are two important things to recognise since this order was handed down:
Both of these points are very rarely considered in today’s enforcement processes. Creditors use a number of different enforcement companies, meaning that a debtor could be visited by an enforcement company at any time for a debt that was issued at any time. As there is no centralised register to see what creditor sits in priority, the enforcement agent that gets their first, generally wins. A ‘first past the post situation’.
This can, at times, create an environment where the enforcement agent is less forbearing as he/she knows that another enforcement agent could visit at any point. This can cause aggressive enforcement action and almost always creates increased enforcement costs and charges. If the debtor was dealt with by the same enforcement organisation for example, then a single set of enforcement fees would apply. This could save the debtor thousands of pounds in some cases and obviously leave more money to repay the creditor.
The later a creditor issues their Writ, the higher the chance that there are a number of other creditors in front of them in the queue.
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