Knocking on debt's door
25 June 1996
28 August 2014
27 March 2014
7 January 2014
Letter from America: NY High Court to address continuing vitality of ‘separate entity’ rule for international banks with New York branches
1 August 2014
31 January 2014
Not long ago, the decision over whether to use the High Court or county court for debt recovery was easy. With limited exceptions, claims over £600 were made in the High Court - it was quicker, had better control of paperwork and had a sheriff who was more successful in enforcement than his county court counterpart, the bailiff. However, things changed with the advent of the Courts and Legal Services Act 1990 and its related legislation.
The increase in the county courts' jurisdiction over debt and the corresponding rise in High Court issue fees, plus a decrease in recoverable fixed costs on debts of up to £3,000 and on costs recoverable on fieri facias meant that debt collectors had to think twice about the right forum for action.
Clients had to been advised that although still the swifter and more effective venue, particularly in terms of enforcement by execution against goods, the High Court was now much more costly. Clients also ran the risk of having their action struck out of the High Court on smaller debt matters.
Later on, although it became less likely that an action would be struck out because it was issued in the High Court, an application to transfer the matter from the central office or district registry to another registry was more likely to be transferred down to the county court unless the claim exceeded £25,000. The convention that a plaintiff should have conduct of matters up to the summons for directions was dropped more often than not.
On transfer to the county court, the complicated provisions of Order 17 Rule 11 came into play and the simple debt case you had been asked to deal with for a small fixed fee became something quite different.
The client eventually came to terms with the new legislation and debt recovery moved out of the High Court and into the province of the county court, seen by hardliners as a further strengthening of the 'Debtors' Charter' which had started with the abolition of imprisonment for non-payment of debt.
The direct effect of many of these changes has been to impose a larger burden of volume debt recovery work on the county court, which in turn has caused further delays in processing matters. The Lord Chancellor's Department alleviated some of these problems for high-volume users by introducing a Summons Production Centre and the County Court Bulk Centre for handling post-issue work. But many clients were still left with the more problematic route of enforcement through the county court's bailiff.
High Court sheriffs still have the incentive to expedite and maximise recoveries to obtain larger poundage. And there is no doubt that a significant number of trade debt clients still prefer the High Court route.
However, many clients have also cautiously welcomed the Lord Chancellor's plan to increase creditors' access to enforcement by sheriffs while simultaneously increasing the efficiency and effectiveness of the bailiff service for those who continue to use it.
Clients now wait for Lord Woolf's review of debt, due to be delivered in July after the Woolf committee's involvement in access to justice reform.