Debt Advice Handbook (13th edition)Chapter 12: Action in the county court: possession of goods and property 1. Recovering goods on hire purchase or conditional sale
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1. Recovering goods on hire purchase or conditional sale
A creditor requires a court order to repossess goods on hire purchase or conditional sale if at least one-third of the total cost has been paid (see here or here) or if the client has paid less but has refused to allow the creditor to enter private property in order to take back the goods.
The creditor must first serve a default notice and include in the section on what action may be taken that goods can be repossessed. See here for further information about default notices. In these cases, the ’Consumer Credit Act procedure’ applies.
    •The claim must be started in the county court hearing centre for the district in which the client either lives or carries out her/his business (or did when s/he made her/his last payment).
    •The court fixes a hearing date when it issues the claim form (Form N1 – see here), and notice of the hearing date is given when the claim form is served.
    •The particulars of claim (containing the prescribed information – see here) must be served with the claim form.
    •The claim form and particulars of claim are accompanied by Forms N1(FD) (note for defendants), N9C (admission unspecified amount and non-money claims) and N9D (defence/counterclaim). There is no acknowledgement of service.
Unless the client is merely disputing the amount s/he has already paid, you should obtain specialist advice on any other potential defences. If the client disputes the claim, the court will either:
    •deal with the case at the hearing; or
    •allocate the case to a track (see here) and make directions; or
    •give directions to enable it to make a decision on allocation.
The client’s response
The client is not required to file either an admission or a defence, but s/he should do so as the court can take account of a failure to do so when deciding on its order for costs in the case – eg, if an unnecessary hearing has to take place as a result. The creditor cannot request a default judgment. If the client fails to respond, the hearing must still go ahead.
The client can admit the claim on Form N9C and make an offer. The court can then make an order for the return of the goods, which is suspended provided the client makes payments in accordance with her/his offer (a ‘time order’).1s130(1) CCA 1974
The statement of means is similar to that on Form N9A (see here).
The client should complete Form N9C by:
    •indicating whether or not s/he still has the goods in her/his possession;
    •admitting liability for the claim; and
    •offering to pay the unpaid balance of the total price. This figure is contained in the particulars of claim.
The admission should be returned to the court, not sent to the creditor. A copy is sent by the court to the creditor.
If the creditor accepts the amount admitted and the offer of payment, it informs the court, which enters judgment and sends a copy to the client (Form N32(2) HP/CCA). No one need attend the hearing. If nothing is heard from the court, the client should attend the hearing. If the creditor does not accept the amount admitted or offer of payment, or the client does not respond, the hearing proceeds.
 
1     s130(1) CCA 1974 »
Negotiating before the hearing
Always try to negotiate with the creditor before the court hearing. Most creditors prefer to receive payments rather than repossess secondhand goods. Resuming the contractual payments is often enough to persuade the creditor to withdraw or adjourn the court action. If no agreement can be reached, a hearing takes place and the client should attend, with a financial statement indicating her/his ability to pay. A court is unlikely to accept a long-term substantial reduction in payments (eg, £20 a month when the contractual agreement is for £120), but may accept a short-term reduction – eg, £20 a month for three months, then £120 a month. Unless an application for a time order is made (including completing Form N9C – see here) or the hearing is adjourned, the court appears to have no power to make an order for payment of less than the contractual instalments.
Decisions the court can make
The court has a general power to adjourn for a short period if required, but only does so if there are compelling reasons (see here).
If the client can make an offer of payment in respect of the outstanding balance which the court finds acceptable, it orders the return of the goods but suspends the order, provided the payments are maintained.1s135 CCA 1974 If there is no acceptable payment offer, the court orders that the goods be returned without giving the client the option of paying for them. The judgment is on Form N32(1) and gives the delivery date for the client to return the goods. If the goods are no longer in the client’s possession, the court cannot order their return.2s135(2) CCA 1974 The creditor must then obtain a judgment for the outstanding balance due under the agreement, or the client could apply for a time order once the default or arrears notice has been issued (see here). Note: selling or disposing of goods before completing the payments due under the agreement is an offence. In such circumstances, rather than returning the N9C (which requires the client to state whether or not s/he still has the goods in her/his possession), the client may prefer to make any offer of payment by email or letter supported by a financial statement.
If the client does not make payments or fails to return the goods as ordered, it is arguable that the creditor cannot just repossess the goods if they are ’protected’ (see here). The creditor should instead ask the court to issue a warrant of delivery (see below).
Note: returning the goods to the creditor is not the end of the matter. The creditor sells the goods and sets the proceeds of the sale against the remaining balance due. There may well be a shortfall that the client is liable to pay. The creditor must apply to the court for a further hearing date to obtain an order for payment of the money.3CPR PD 7B, para 3.3
If the client’s circumstances change, s/he can apply to vary the order.
 
1     s135 CCA 1974 »
2     s135(2) CCA 1974 »
3     CPR PD 7B, para 3.3 »
Warrant of delivery
A warrant of delivery is a document that allows a county court enforcement agent (a bailiff) to remove goods that are the subject of a hire purchase or conditional sale agreement if the court has ordered that the goods be returned to the creditor. It is issued by the court following a request from the creditor that the client has not returned the goods as ordered by the court or is in breach of a suspended return of goods order. The warrant may allow the client to pay the value of the goods as an alternative to allowing them to be taken by the bailiffs. Whilst the bailiff cannot force entry into the client’s home in order to remove the goods, it is open to the creditor to take contempt of court proceedings in order to require the client to comply with the order to return the goods, although in practice it is highly unlikely a creditor would resort to this.1r83.27 CPR The client can apply for the warrant to be suspended and for delivery of the goods to be postponed (see here). It is always worth approaching the creditor to negotiate an agreement before applying back to the court.
 
1     r83.27 CPR »