"Don’t pay - we’ll take it away"…but who does get the proceeds of enforcement action?

A recent High Court decision has considered the interesting scenario of who gets paid first

Getting paid is always a hot topic but a recent High Court decision has considered the interesting scenario of who gets paid first where more than one creditor has obtained a court judgment and is pursuing enforcement through the High Court Enforcement Officer (HCEO).

So what is the order of priority between competing creditors? Is it the first creditor to lodge their writ of control with the HCEO or the creditor whose HCEO secures payment or seizes goods most quickly?

In Court Enforcement Services Ltd v Burlington Credit Ltd [2019] EWHC 1920 (QB) (19 July 2019) the High Court has held that, contrary to the mantra “possession is nine tenths of the law” in fact, where two creditors have issued separate writs of control, priority will be given to the creditor whose writ is first received by a HCEO rather than to the creditor whose HCEO receives the fruits of the writ from the debtor first.

In June of this year, the Registry Trust reported that there has been a 12 percent increase in county court judgments against businesses in England and Wales during the first quarter of 2019, the total number of CCJs issued being 35,779 with a combined total value of £107.2 million. This figure represents a rise of six percent when compared with the same period in 2018. It is essential therefore for businesses to maintain scrupulous financial hygiene and to act quickly, if payment is not forthcoming, in order to reduce the risk of getting their fingers burnt.

The decision in Court Enforcement Services Ltd is a valuable lesson to businesses faced with non payment which don’t want to lose out to non-paying customers. At Weightmans we have considerable experience in successfully advising large clients and OMB’s in relation to the collection of monies that are due to them whether that arises from trading terms or from judgments obtained after complex High Court litigation. This case and the direction of travel highlighted by the Registry Trust’s report serve as a reminder to businesses not to put off until tomorrow what needs to be done today in terms of pursuing monies due to their business.

If you have any questions or would like to discuss any aspect of this article, please contact Robert Jones, Partner at robert.jones@weightmans.com.

Share on Twitter