Creditors beware - damages can be awarded to Judgment Debtors!
- patricia0727
- Aug 5, 2024
- 3 min read
Updated: Aug 7, 2024
Material Facts
Mr Burton was fined by a Magistrates' Court, leading to a debt owed to the MOJ.
The MOJ engaged an enforcement agent, Mr Allen, to execute a warrant of control to recover the debt from Mr Burton.
Mr Allen clamped Mr Burton's hire-purchase vehicle despite being shown evidence that Mr Burton did not have a beneficial interest in the vehicle.
The clamping of the vehicle was a breach of the statutory procedure under the Tribunals, Courts and Enforcement Act 2007.
Mr Burton incurred costs for alternative transport during the 29 days his vehicle was clamped.
The Law
Tribunals, Courts and Enforcement Act 2007, Schedule 12 - Schedule 12 outlines the procedure for enforcing a writ or warrant of control by taking control of a debtor’s goods. This procedure, often referred to as the Schedule 12 procedure, is the mandatory method for such enforcement actions and is supplemented by detailed provisions in the Taking Control of Goods Regulations, the Fees Regulations, and the Certification Regulations, as well as Civil Procedure Rules (CPR) 84 and 85.
Case law on the measure of damages for loss of use of a vehicle, including :
Lagden v O'Connor - By a 3-2 majority, the appeal by O'Connor was dismissed. Lagden was entitled to recover the full credit hire charges from Helphire as damages for loss of use of his vehicle and;
Beechwood Birmingham Ltd v Hoyer Group UK Ltd - The finding that the claimant failed to mitigate by hiring a replacement vehicle instead of using one from its own stock should not be disturbed. An award of damages based on the credit hire rate was illogical after finding that external hire was unnecessary. For a corporate claimant, the loss is financial and should be quantified by approximating the actual loss, distinct from an individual's claim for inconvenience. The appropriate measure is an award based on interest on the capital value of the damaged vehicle and depreciation over the repair period. The appeal was allowed and the award of £12,000 general damages was set aside, with the matter remitted to recalculate damages based on interest on the capital value of the vehicle and depreciation, unless the parties could agree a suitable figure.
Submissions of the Parties
Mr Burton contended that the creditor (MOJ) could be ordered to pay damages solely by virtue of being the creditor, as per paragraph 66 of Schedule 12.
The MOJ argued that it could only be liable if it had caused or contributed to the loss suffered by Mr Burton.
The Ruling and Court Rationale
The court found that paragraph 66 of Schedule 12 expressly provides for the court to order the creditor to pay damages for losses suffered by the debtor due to a breach by the enforcement agent, without any requirement for the creditor to have caused or contributed to the loss. The reasonable belief defence in paragraph 66(8) further demonstrates that the creditor's liability is solely dependent on the enforcement agent's breach.
The court rejected the MOJ's arguments that common law principles of agency or vicarious liability should restrict the creditor's statutory liability, as paragraph 66 creates an independent statutory power to order damages against the creditor.
On the measure of damages, the court held that Mr Burton was entitled to both general damages for loss of use as well as special damages for alternative transport costs, following the guidance in Beechwood. However, general damages should be based on a broad assessment of inconvenience rather than spot hire rates.
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