CPR Part 85 Third Party Claims......an update from the High Court

[Bailiff Advice]

Last week a very important judgment was released in the High Court in relation to Part 85 'Third Party' claims.

 

Given the importance of the subject, Master McCloud issued a draft decision, and invited the High Court Enforcement industry to provide comments and suggestions, based upon their experience in the area.

 

The reason why the Master was asked to make the judgment is outlined in details in the following post. In this respect, I have referred to the recent news article from The Sheriffs Office.

[Bailiff Advice]

The following News Article is from The Sheriffs Office

 

Master Victoria McCloud has reviewed two applications relating to third party claims that had been brought under CPR Part 85 (Civil Procedure Rule).

 

After reviewing the claims (Riaz and Celador Radio), Master McCloud published her judgment last week on 16th February 2018, giving clear direction for High Court Enforcement Officers (HCEOs) on how to manage these issues in future cases.

 

In a very welcome move, before publication she invited the HCEO industry to provide comments and suggestions on the judgment, based on their experience in this area.

 

Third party claims via CPR Part 85

 

The third party claim process, whereby a third party claims that goods seized under a writ of control belong to them rather than to the judgment debtor, is covered by CPR Part 85. This replaced the old interpleader rule covered by RSC Order 17 in April 2014 when the new enforcement regulations were brought in.

 

The process for a claim

 

The process set out in CPR Part 85 is that:

 

• The third party gives the notice required under r. 85.4(1)

• If the claim is disputed, the creditor or any other party with a claim to the goods gives the counter-notice under r. 85.4(3)

• If the creditor or other claimant to the goods fails to give the notice required by 85.4(3), the HCEO may apply to the court for direction as to what to do

and for protection against liability

• Where a notice is given under 85.4(3), the party claiming the goods must issue an application to the court for determination, under r. 85.5

 

Why the Master was asked to make a judgment

 

The situation that can arise is when the third party has given notice, the creditor has given the counter-notice, but the third party does not issue the application to court for determination. CPR Part 85 does not cover what the HCEO, who has control of the goods, should do next.

 

The other issue is that there is no time limit by which the application must be made by the creditor, so there is no clear point at which the rule has been breached, and no provision within the rule for what should happen when no application is made.

 

In summary her order is that:

 

1. Unless by 4pm on a date 14 days from the date of service of this order the Third Party files and serves evidence setting out its basis for its asserted rival claim to title, it shall be debarred from relying on evidence of title to contradict that put forth by the HCEO.

 

2. In the event that the Third Party is so debarred then without further hearing the HCEO shall be entitled to a declaration that the judgment debtor was at the material time the person with title to the seized goods and consequent upon that declaration the HCEO shall be entitled to dispose of them in execution and shall be entitled to his reasonable costs summarily assessed in the sum of*[£959.30 in Riaz, £681.50 in Celador] being the sum claimed for this application.

 

3. In the event that the Third Party serves and files evidence as above and is not debarred, the HCEO shall apply to this court for directions as to determination of the issue of title and as to management of the dispute and payment of the sums required by para 60(4)(a) of the Tribunals Courts and Enforcement Act 2007 Sch. 12, and for the application to proceed thereafter in accordance with CPR Part 85, and in that event costs shall be reserved.

 

4. In the event that the Third Party serves and files evidence as above and is not debarred, any further evidence relied on by the judgment creditor in respect of the ownership of the [goods, in Riaz money in Celador] shall be provided by the Creditor, and the HCEO's witness evidence shall deal with enforcement steps taken insofar as not already detailed in the original application for this order.

 

Master McCloud also suggests that the court make a decision about the sum to be paid into court at the same time as it makes the above order to remove the time and expense of having a further hearing.

 

She also suggests that, going forward, HCEOs make an application to the court supported by evidence of the basis for seizure, and evidence from the creditor as to why they believe the goods are the judgment debtor’s, and seek an unless order in the form broadly as above leading to a declaration in the event of default, which then should offer the degree of protection reasonably required by the HCEO as ‘middleman’.

 

https://thesheriffsoffice.com/articles/new-guidance-on-cpr-part-85?utm_medium=email&utm_campaign=Property%20newsletter%20Feb%2022nd%20-%20property%20database&utm_content=Property%20newsletter%20Feb%2022nd%20-%20property%20database+CID_2090a76fac28ebf30e72bf3b39dfaa7b&utm_source=Email%20marketing%20software&utm_term=MORE

[Bailiff Advice]

And the following is from the Phoenix High Court Enforcement Newsletter:

 

In a previous article we looked at what happens if a judgment debtors goods are taken into control but then a third party claims that the goods are theirs and therefore cannot be seized. However, there is a crucial missing part in the CPR and in this article, we look at a recent decision issued by Master McCloud in the High Court, which goes some way to assist cases held in limbo.

 

CPR 85

 

Under Civil Procedures Rules (CPR) part 85, which replaced RSC Order 17, if a third party claims the goods that have been taken into control, they must inform the High Court Enforcement Officer (HCEO) within 7 days of their claim together with their supporting evidence. Within three days of receiving this claim the HCEO must then pass this information onto the claimant, who must either admit or dispute the claim within a further seven days.

 

THE MISSING PART

 

Once the above steps have been taken, if the claimant disputes the claim the HCEO must inform the third party, who must in turn must make an application to court giving details of their claim, and importantly under these rules they must also pay the value of the goods into court.

 

However, the problem lies as to what the HCEO does if the third party then fails to make the application, meaning that the question of ownership of the controlled goods remains in question. This can cause a knock-on effect as the HCEO cannot release the goods and they may be subject to storage fees.

 

Prior to Master McClouds’ decision, if HCEO found themselves in this predicament, they would make an application into court with a draft order allowing the third party more time to submit the application and should they default, prohibiting them making any future applications and ordered not to bring any claims against the HCEO. Master McCloud expressed concerns that allowing the draft order may not in actual fact offer the protection the HCEO was looking for as the question of ownership had not been determined.

 

DECISION

 

Master McClouds’ decision on the 16th February 2018 was based upon the old Interpleader summons under RSC Order 17, which until the Taking Control of Goods Regulations 2014, was used by HCEOs to ask the court to determine ownership of the seized goods. She stated:

 

Therefore, my order is that:

 

(1) Unless by 4pm on a date 14 days from the date of service of this order the Third Party files and serves evidence setting out its basis for its asserted rival claim to title, it shall be debarred from relying on evidence of title to contradict that put forth by the HCEO.

 

(2) In the event that the Third Party is so debarred then without further hearing the HCEO shall be entitled to a declaration that the judgment debtor was at the material time the person with title to the seized goods and consequent upon that declaration the HCEO shall be entitled to dispose of them in execution and shall be entitled to his reasonable costs summarily assessed in the sum of [£959.30 in Riaz, £681.50 in Celador] being the sum claimed for this application.

 

(3) In the event that the Third Party serves and files evidence as above and is not debarred, the HCEO shall apply to this court for directions as to determination of the issue of title and as to management of the dispute and payment of the sums required by para 60(4)(a) of the Tribunals Courts and Enforcement Act 2007 Sch. 12, and for the application to proceed thereafter in accordance with CPR Part 85, and in that event costs shall be reserved.

 

(4) In the event that the Third Party serves and files evidence as above and is not debarred, any further evidence relied on by the judgment creditor in respect of the ownership of the [goods, in Riaz money in Celador] shall be provided by the Creditor, and the HCEO's witness evidence shall deal with enforcement steps taken insofar as not already detailed in the original application for this order.

 

Master McCloud went on to say:

 

“It may be of use for HCEOs to adopt the approach in future cases of making an application to the court supported by evidence of the basis for seizure, and evidence from the Creditor of the basis for the Creditor's belief that the ostensible title to the goods is that of the judgment debtor, and seeking an unless order in the form broadly as above leading to a declaration in the event of default, which then should offer the degree of protection reasonably required by the HCEO as 'middleman'.”

 

https://phoenixhce.co.uk/news/cpr85-filling-in-the-gap

[Bailiff Advice]

The full judgment can be read below:

 

PS: We do sometimes have trouble with Bailii links. Hopefully the following works

 

http://www.bailii.org/ew/cases/EWHC/QB/2018/219.html