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Session 2006 - 07 Publications on the internet General Committee Debates Tribunals, Courts and Enforcement Bill [Lords] |
Tribunals, Courts and Enforcement Bill [Lords] |
The Committee consisted of the following Members:Alan
Sandall, Hannah Weston, Committee
Clerks
†
attended the Committee
Public Bill CommitteeThursday 22 March 2007(Afternoon)[John Bercow in the Chair]Tribunals, Courts and Enforcement Bill [Lords]Clause 88Payment
by instalments: making and enforcing charging
orders
Amendment
proposed [this day]: No. 136, in clause 88, page 57, line 5, at end
insert—
‘(9) Where the
judgment that is the subject of a charging order application relates to
an agreement regulated by the Consumer Credit Act 1974, the court shall
not make a charging order if an order under sections 129 to 135 of that
Act is appropriate.’.—[Mr.
Bellingham.]
1
pm
Question
again proposed, That the amendment be
made.
The
Chairman:
I remind the Committee that with this we are
taking amendment No. 137, in clause 88, page 57, line 32, at end
insert—
‘(4F) Where the
judgment relates to an agreement regulated by the Consumer Credit Act
1974, the court shall not enforce the charge by an order for
sale.’.
Mr.
Brooks Newmark (Braintree) (Con): Once again,
Mr. Bercow, it is a delight to see you in the Chair. I was
in full flow when time was called on the morning sitting, and I would
now like the Minister to clarifyan issue concerning charges
over assets. It is my understanding that, once a deal has been done,
when payments of an amount have been made over a certain period, and
once the agreed debt has been pegged down, individuals will not incur
additional charges should they suddenly gain further assets. Will the
Minister clarify that?
The
Parliamentary Under-Secretary of State for Constitutional Affairs (Vera
Baird):
The essential precondition for a charging order is
a judgmentdebt. Before going to court, the parties may reach a
compromise. If the hon. Gentleman lends me £10,000 and I say
that I will never be able to pay it back, but then say that I will
repay £5,000 in six months, we can make an agreement on that
basis. I get half my debt remitted and the hon. Gentleman gets
£5,000 when he might have had nothing. If we agree to such a
contract, there will be no debt left. If I subsequently come into
further assets, there will be no debt on which to charge those assets.
I hope that that clarifies the matter.
I should make it clear, if I
did not do so earlier, that there is no intention that a charging order
should be converted to an order for sale while the debtor is still
paying their instalment order. The measure offers extra protection, but
it is not intended to be used in thatway. With that, I hope
that the hon. Member for North-West Norfolk will withdraw the
amendment.
Mr.
Henry Bellingham (North-West Norfolk) (Con): Is the
Minister saying that, if instalments are being paid on time and the
instalment register is up to date at all times, there cannot be an
order for sale? That is not in the Bill. Will it be in the
regulations?
Vera
Baird:
Clause 88 (2), proposes a new subsection (7) to
section 1 of the Charging Orders Act 1979, so that it will
state:
“The
fact that there has been no
default”
will
“not prevent a charging order from
being made”.
Proposed
new subsection (8)
states:
“But if
there has been no default, the court must take that into account when
considering the circumstances of the case under subsection
(5).”
As I understand it,
as long as instalments are being paid, those measures will prevent
forced sale. By way of further clarification, the Bill adds a section
(4C) to section 3 of the 1979 Act, which
states:
“The
charge may not be enforced unless there has been default in payment of
an instalment under the instalments
order.”
Mr.
Bellingham:
I am grateful for that explanation, on which
basis I beg to ask leave to withdraw the amendment.
Amendment, by leave,
withdrawn.
Question proposed, That
the clause stand part of the Bill.
Simon
Hughes (North Southwark and Bermondsey) (LD): I want to
ask the Minister about one of the provisions in the clause. I was going
to raise the issue when speaking about amendment No. 136, but it has
been withdrawn. The amendment addresses a kind of
mediation—steps that could be taken beforehand so that people
would not get into the difficulties involved with charging orders and
possession orders. It seems to me that that area is absolutely one for
the courts, and that the mediation process and some informality are
valuable.
The
Minister will recall our earlier debate on how, even when there has
been no failure in payment, people can return to court and ask for a
charge. With respect to enforcement of charging orders, other
enforcement, and changes in debtors’ obligations, what
facilitieswill be in place to ensure that all courts offer an
opportunity for agreement and negotiation before matters are heard by a
judge? Are people offered the chance of some sort of mediation or
arbitration in all county courts and High Courts, along with referral
to appropriate agencies? The more that that can happen instead of
litigation, the
better.
Vera
Baird:
There is never anything to stop one party to a
court case discussing the case with the other party. That can occur
through mediation that is initiated from within the community, for
which several schemes are available, or through a more formal process.
In many county courts there is now every encouragement for some sort of
proportionate dispute resolution. Pre-action notices and pre-action
protocols are alsobeing piloted in various jurisdictions with
the intentionof building a mediation or proportionate dispute
resolution element into court proceedings. Nowadays, the whole civil
justice system is geared to the assumption that one goes to court only
as a last resort. Even when people apply to court, it still has the
opportunity to persuade them to take a different course rather than
rely on its adjudication powers. There is therefore already every
opportunity for what the hon. Gentleman
desires.
Simon
Hughes:
I shall push the Minister a little further, if I
may. I am thinking of a situation whereby, today or tomorrow, she, I or
you, Mr. Bercow, go to Lambeth county court or Westminster
county court in the context of an enforcement proceeding. I am trying
to establish whether the court official who first dealt with the
case—the listing officer who handled the paperwork—would
say, from the beginning and as a matter of course, to applicants,
debtors or creditors, “Are you aware that there is someone who
may be able to help you with this?” If the problem were with a
debtor, would the official ask whether the debtor was aware of the
existence of money advice centres and ascertain whether the debtor had
spoken to such a centre? Would the official inform that person of the
centre’s opening
times?
We all know
that, with a bit of advice, people can often get out of a hole. For
instance, people can be persuaded to transfer their bank or credit
company obligations to a credit union that will not charge an annual
percentage rate of 27.5 per cent. So is there an assumption in all
parts of the court system—county courts and High
Courts—that people should be proactively pointed towards money
advice and resolution before the case is listed? Creditors might want
people to go straight to court, so are court officers obliged to
consider alternatives—I hesitate to use the term “cooling
off
period”?
Vera
Baird:
There is nothing to stop debtors from switching
their debt to a credit union if they want to. I cannot see what that
has to do with the courts. People might or might not know that they can
do
it.
Vera
Baird:
But the court may not know whether a credit union
exists in the area. They do not exist in every
area.
Various piloted
pre-action protocols are on the go that involve more or less formal
offers of mediation, as the case may be. There are, of course, civil
procedure rules that create a general duty on all parties coming to
court to settle before the hearing. They are backed up with the ability
to make an adverse costs order so that, if the creditor had not taken
the steps to which the hon.
Gentleman referred, the situation might be deemed unreasonable and
produce an adverse consequence if there was an obvious way out of the
difficulty. At various stages in the procedures, the court will send
notices about where advice is available. Sometimes, it is available at
the court itself. Realistically, every effort is made to ensure that
the court is, as it is intended to be, only a last resort. I hope that
my explanation has satisfied the hon. Gentleman, because I have nothing
more to say about the
clause.
Simon
Hughes:
I am grateful to the Minister. We do not have
different objectives. I am keen on the matter. Perhaps those who
administer our courts will read the report of our proceedings. If they
are not in one of the famous pilot areas, they might reflect on whether
their processes give the maximum opportunity for people to be pointed
in the direction of other court processes that can resolve the issue. I
shall reflect on what the hon. and learned Lady said. Obviously, we can
return to the matter.
Question put and agreed
to.
Clause 88
ordered to stand part of the
Bill.
Clause 89
ordered to stand part of the
Bill.
Clause 90Application
for information about action to recover judgment
debt
Question
proposed, That the clause stand part of the
Bill.
Mr.
Bellingham:
I have a quick question about the clause. This
part of the Bill is headed “Information requests and
orders”. Given the title of the clause 90, I am intrigued by the
wording of the provision because it states that a person who is the
creditor in relation to a judgment
debt
“may apply to the
High Court or a county court for information about what kind of action
it would be appropriate to take in
court”.
In my experience
of such issues, albeit many years ago, I should not have thought that
there was any need to apply to the court for the information. It should
be readily available anyway. Is the clause simply a back-up measure for
that small number of extremely rare cases when the information is not
readily available so that, if a creditor wants to enforce a debt, he
would have to take the matter to court by way of an application to find
the information? Will the Minister elaborate on the
process?
Vera
Baird:
It is the gateway for creditors to get the
information request or the order that they need. Asthe hon.
Gentleman rightly pinpointed, it is not about the creditor being
advised about what is available as a route to recovery. The clause
opens up the possibility of obtaining information that will undoubtedly
steer the way forward for the judgment creditor. If the court can
supply, for example, a new employer, the obvious way forward would be
to attach the earnings. However, if a new address or a new national
insurance number was available under the provisions to follow, that
would
point in another direction to a different enforcement. The clause is a
gateway provision to enable requests for information to be
made.
Question put
and agreed
to.
Clause 90
ordered to stand part of the
Bill.
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