Clause 88
Tribunals, Courts and Enforcement Bill [Lords]

John Bercow (Buckingham, Conservative)

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.’.

Brooks Newmark (Braintree, Conservative)

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?

Vera Baird (Parliamentary Under-Secretary, Department for Constitutional Affairs; Redcar, Labour)

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.

Henry Bellingham (Shadow Minister, Constitutional Affairs; North West Norfolk, Conservative)

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 (Parliamentary Under-Secretary, Department for Constitutional Affairs; Redcar, Labour)

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.”

Henry Bellingham (Shadow Minister, Constitutional Affairs; North West Norfolk, Conservative)

I am grateful for that explanation, on which basis I beg to ask leave to withdraw the amendment.

Simon Hughes (Shadow Secretary of State for Constitutional Affairs & Shadow Attorney General, Constitutional Affairs; North Southwark and Bermondsey, Liberal Democrat)

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 (Parliamentary Under-Secretary, Department for Constitutional Affairs; Redcar, Labour)

Has the hon. Gentleman returned to amendment No. 136, which we discussed this morning?

Simon Hughes (Shadow Secretary of State for Constitutional Affairs & Shadow Attorney General, Constitutional Affairs; North Southwark and Bermondsey, Liberal Democrat)

No. I meant amendment No. 138.

Vera Baird (Parliamentary Under-Secretary, Department for Constitutional Affairs; Redcar, Labour)

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 (Shadow Secretary of State for Constitutional Affairs & Shadow Attorney General, Constitutional Affairs; North Southwark and Bermondsey, Liberal Democrat)

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 (Parliamentary Under-Secretary, Department for Constitutional Affairs; Redcar, Labour)

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.

Simon Hughes (Shadow Secretary of State for Constitutional Affairs & Shadow Attorney General, Constitutional Affairs; North Southwark and Bermondsey, Liberal Democrat)

That is the issue.

Vera Baird (Parliamentary Under-Secretary, Department for Constitutional Affairs; Redcar, Labour)

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 (Shadow Secretary of State for Constitutional Affairs & Shadow Attorney General, Constitutional Affairs; North Southwark and Bermondsey, Liberal Democrat)

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.