CHANGES TO THE LAW OF DISTRESS A GUIDE TO COMMERCIAL RENT ARREARS RECOVERY April 2014 LEGAL GUIDE HERBERT SMITH FREEHILLS SECTION TITLE 01 CONTENTS 01 Changes ot hte awl fo isdtress: Au idge ot commercial rent arrears recovery . 02 02 Can oyu sue RCAR ot ercover usms ude? . 04 03 Taking ocntrol fo ogods – rocpedure nuder Schedule 12 of the Act . 06 04 Entry o nto p remises 14 05 Sale fo ocntrolled ogods 18 06 Summary fo eky ifdferences bteween isdtress and CRAR 22 page HERBERT SMITH FREEHILLS 02 CHANGES TO THE LAW OF DISTRESS: A GUIDE TO COMMERCIAL RENT ARREARS RECOVERY CHANGES TO THE LAW OF DISTRESS: A GUIDE TO COMMERCIAL RENT ARREARS RECOVERY In July 2007 the Tribunals, Courts and Enforcement Act 2007 (the “Act”) received Royal Assent. This paved the way for the historic law of distress for rent to be swept away and replaced by a new, statutory, system. The new system was referred to as “commercial rent arrears recovery” but is now more frequently known by the acronym “CRAR”. Other parts of the Act were brought into force after the Act was given Royal Assent. However there has been considerable delay in bringing into force the provisions relating to CRAR. On 30 July 2013, the Taking Control of Goods Regulations 2013 (the “Regulations”) were laid before Parliament. The Regulations set out the detail behind the provisions in the Act relating to the procedure for taking control of goods including under CRAR. These come into force on 6 April 2014. Although archaic, the common law remedy of distress has provided an effective tool in the armoury of landlords of commercial property seeking to recover unpaid rent from tenants. The ability to distrain has enabled a landlord to take “self-help” measures to recover arrears of any payment reserved as rent by seizing goods from the demised premises to the value of the sums due and selling them to cover the arrears and the landlord’s costs. It is seen as a quick, easy and cheap way of recovering arrears. It is likely that landlords will find the new procedures required to exercise CRAR considerably more cumbersome, time-consuming and costly, and therefore significantly less useful in enabling recovery. Landlords will need to consider whether to use CRAR or whether to seek alternative means of recovering sums due, for example, serving statutory demands or seeking to draw down on a rent deposit. In this guide, we set out in brief terms the key changes when CRAR comes into force. The aim is to explain where the regimes differ and when the new provisions can be used by a landlord to recover commercial rent arrears. We then provide charts with detailed explanations to guide those seeking to use the CRAR process to recover rent arrears through the complex statutory provisions. Finally, at the back of this guide, there is a quick comparison between the old rules and the new position under CRAR. WHAT IS CHANGING? By section 71 of the Act, the common law right to distrain for arrears of rent is abolished. Section 72 and Schedule 12 of the Act create a new statutory right for the landlord under a lease of commercial premises to use the CRAR enforcement procedure set out in the Act. The most significant changes are:CRAR is available to landlords only where 7 days’ rent is due under a lease of commercial premises.CRAR can only be used for the recovery of the sums payable under the lease for possession and use of the premises (together with interest and VAT on those sums) and not for recovery of unpaid service charges or other sums, even if they are reserved as rent. This change is significant and may well mean that exercising CRAR is of limited benefit for a landlord where there are arrears of both principal rent and service charge, as a different means of enforcement will be required to recover the service charge arrears. Where inclusive rents are agreed, it is advisable to agree with the tenant and record which portion of the rent is for possession and use of the premises.CRAR provides for greater regulation over persons authorised to enter the demised premises to take control of goods and the landlord must employ and authorise an “enforcement agent” in writing to exercise CRAR on its behalf (the form of authorisation must include prescribed details).Before entering premises to exercise CRAR, 7 clear days’ (not including a Sunday, bank holiday, Good Friday or Christmas Day) written notice must be given by the enforcement agent to a tenant, removing the element of surprise which was one of the key benefits of distress for landlords. The court may order that a shorter period of notice is given to the tenant if it is satisfied that the debtor is likely to move goods to other premises to escape the effect of CRAR.CRAR can be exercised between 6am and 9pm on any day unless the court orders otherwise and the period may be extended if the premises are open for trade or business during hours that would otherwise be prohibited.CRAR places greater restrictions on the types of goods that may be taken but limits the value of the tools of the trade over which CRAR cannot be exercised to £1,350.Walking possession agreements are replaced by “controlled goods agreements” although the effect is broadly the same.The minimum period between seizure of the goods and sale is extended from 5 days to 7 clear days, and 7 clear days’ notice of the date, time and place of the sale must also be given to the debtor. The comparison table at the end of this guide shows in a little more detail the key differences between distress and CRAR. SUBTENANTS AND THE LAW OF DISTRESS AMENDMENT ACT 1908 Section 6 of the Law of Distress Amendment Act 1908 (the “1908 Act”) has provided landlords with another useful means of obtaining payment of unpaid rents. Under the 1908 Act, if the tenant fails to pay rents but there is a subtenant of all or part of the demised premises, the superior landlord has been able to serve a notice under section 6 of the 1908 Act requiring the subtenant to pay the rents reserved by the sublease directly to the superior landlord until the intermediate landlord’s own rent arrears have been paid. The subtenant is then entitled to deduct those sums from the rent due to his immediate landlord. The provisions of the 1908 Act that relate to recovery of sums from a subtenant of sums due from a tenant are also repealed by the Act, but the Act does contain similar provisions. HERBERT SMITH FREEHILLS 03 CHANGES TO THE LAW OF DISTRESS: A GUIDE TO COMMERCIAL RENT ARREARS RECOVERY (CONTINUED) CHANGES TO THE LAW OF DISTRESS: A GUIDE TO COMMERCIAL RENT ARREARS RECOVERY Where the superior landlord would be able to exercise CRAR against its tenant (the intermediate landlord), and there is a subtenant in place, the superior landlord may instead serve notice on the subtenant requiring the subtenant to pay rent directly to the superior landlord until the sums are paid or the notice is replaced or withdrawn. In contrast to the section 6 notice which is immediately effective once it has been served, the notice under the Act will only take effect 14 clear days after it has been served. The notice must be in writing, be signed by the landlord and must contain the following prescribed information:the superior landlord’s name, reference and contact details and the date of the notice;the amount of rent the superior landlord has the right to recover from its immediate tenant by CRAR (defined as the “notified amount”);that, while the notified amount remains unpaid, the subtenant must pay the sub-tenant’s rent directly to the landlord instead of to its immediate landlord until either:the notified amount has been paid (by payments under the notice or otherwise)the notice is replaced or withdrawn; andthat the landlord may withdraw the notice in accordance with regulation 55. The subtenant can then deduct the sums that it pays to the superior landlord from those sums owed to its immediate landlord. If the subtenant fails to pay its rent to the superior landlord, the superior landlord can exercise CRAR against the subtenant, following the same procedure as set out where CRAR is being exercised on a direct tenant. THE GUIDE In this guide we set out in detail the process that must be followed in order to exercise CRAR. We have set this out in a series of charts, detailing each phase of the process and have provided detailed notes for each phase. The charts should be read in conjunction with the notes that follow. The procedure is complex and technical and considerable detail is contained in the Regulations. We have tried to summarise those elements of the Regulations that we consider are most likely to be relevant to landlords of commercial premises. However, this remains a generic guide and it is recommended that specific legal advice is taken before embarking on exercising CRAR. 04 HERBERT SMITH FREEHILLS CAN YOU USE CRAR TO RECOVER SUMS DUE? CAN YOU USE CRAR TO RECOVER SUMS DUE? Ye s Yes Yes Yes Yes Are you the landlord entitled to the immediate reversion in the property?Section 73 of the Act Is the lease evidenced in writing? Section 74(2) of the Act Does the lease apply to commercial premises? Section 75 of the ActIs the minimum amount of net rent unpaid an amount equal to 7 days' rent?Section 77(3),(4) of the Act; Regulation 52Is the rent:1. due and payable before the notice of enforcement is given; and2. certain, or capable of being calculated with certainty?Section 77(1) of the Act You meet the criteria and may authorise an enforcement agent to exercise CRARIs the lease continuing? If not, does the lease meet the required conditions for exercise of CRAR in respect of an expired lease? Section 75 of the Act13245 HERBERT SMITH FREEHILLS 05 CAN YOU USE CRAR TO RECOVER SUMS DUE? (CONTINUED) CAN YOU USE CRAR TO RECOVER SUMS DUE? CAN YOU USE CRAR? NOTES References to the “Act” and sections within the Act mean the Tribunals, Courts and Enforcement Act 2007. References to the “Regulations” mean the Taking Control of Goods Regulations 2013. 1. LANDLORD: Only the landlord can exercise CRAR. Section 73(1) of the Act defines “the landlord” as the person for the time being entitled to the immediate reversion to the lease. If the lease is owned jointly, any number of the joint owners are entitled to exercise CRAR to recover rent due to all of them: section 73(4). Under sections 73(5) and (6), if the landlord’s interest is mortgaged, the mortgagee is only entitled to exercise CRAR if:the mortgagee has given notice of his intention to take possession or enter into receipt of rents and profits; andthe lease binds the mortgagee. Where a receiver is appointed by the court in relation to the landlord’s interest, the receiver is entitled to exercise CRAR in the name of the landlord: section 73(7). Unless the landlord falls within the definition of an enforcement agent under section 63 of the Act, the landlord must authorise an enforcement agent, in writing, to exercise CRAR on its behalf: section 73(8). Such authorisation must comply with the criteria (as to form and content) set out in Regulation 51 which requires that the authorisation is:in writing;signed by the landlord;includes the following information:the date of the authorisation;the landlord’s name and contact details;the name and contact details of the person authorised to act on behalf of the landlord;sufficient detail to enable the authorised person to identify the commercial premises in respect of which CRAR is to be exercised on behalf of the landlord;the amount of rent owed; andthe period in respect of which the rent is owed. 2. LEASE: A lease means a tenancy in law or equity. The definition includes tenancies at will, but would not include a tenancy at sufferance (where a person who has lawfully occupied premises remains in occupation after the basis of their occupation has terminated without either the agreement or disagreement of the landlord): section 74(1). CRAR cannot be exercised in respect of sums due under licences. 3. COMMERCIAL PREMISES: CRAR is only applicable to commercial premises (section 72(1)). A lease (“Lease A”) is not a lease of commercial premises if the whole or any part of the premises is:sublet under Lease A as a dwelling;sublet under an inferior lease (“Lease B”) as a dwelling; oroccupied as a dwelling (section 75(1)). CRAR will, however, be exercisable if the sub-letting as a dwelling under Lease B is in breach of a superior lease and if the occupation of the premises as a dwelling is in breach of the terms of Lease A or any superior lease (sections 75(4) and (5)). CRAR will also not apply where the demised premises are occupied as a dwelling with another use – a lease which comprises both a retail shop and a flat will not therefore be covered by CRAR if the flat is occupied or the terms of the lease permit occupation as a dwelling: section 75(3). 4. RENT: means the amount payable under a lease for possession and use of the demined premises, together with any applicable interest or VAT: section 76(1). If this amount is not identifiable under the lease, then only the proportion that is reasonably attributable to possession and use of the demised premises is recoverable under CRAR: section 76(3). Rent does not include any sum in respect of rates, council tax, service charge, repairs, maintenance or insurance, even if these amounts have been reserved as rent in the lease: section 76(2). The “net unpaid rent” takes into account any interest or VAT included in the rent arrears and any permitted deductions which the tenant would be entitled to claim: sections 77(5) and (6). CRAR may only be exercised where at least 7 days’ rent is outstanding: Regulation 52. 5. EXPIRED LEASES: Under sections 79(2)–(5), CRAR continues to be exercisable in relation to goods where control was taken before the lease ended. If the following conditions are met, CRAR may be exercised after lease expiry in relation to rent due and payable before the lease ended:The lease did not end by forfeiture;Not more than 6 months has passed since the day the lease ended;The rent was due from the person who was the tenant at the end of the lease;That person remains in possession of any part of the demised premises;Any new lease (which does not need to be in writing) under which that person remains in possession is a lease of commercial premises; andThe person who was the landlord at the end of the lease remains entitled to the immediate reversion. 06 HERBERT SMITH FREEHILLS TAKING CONTROL OF GOODS – PROCEDURE UNDER SCHEDULE 12 OF THE ACT TAKING CONTROL OF GOODS – PROCEDURE UNDER SCHEDULE 12 OF THE ACT No Yes Yes Yes No No 1Is the person taking control of the goods authorised to act as an enforcement agent under section 63(2) of the Act?Sch 12, para 2Are the goods the debtor's goods in which the debtor has a beneficial interest? Sch 12, para 3(2) Are the goods “exempt goods” for the purposes of CRAR? Sch 12, para 4; Reg 4 Is the debtor a child or vulnerable person, or are the goods premises in which a child or vulnerable person is the only person present?Reg 10 Are the goods in question in use at the time the enforcement agent is seeking to take control of them, such that it would likely result in a breach of the peace?Reg 10(2) Enforcement agent may not take control of goodsEnforcement agent may not take control of goodsEnforcement agent may not take control of goodsEnforcement agent may not take control of goodsOnly an enforcement agent may take control of goods and sell them under an enforcement power12345No Yes Yes HERBERT SMITH FREEHILLS 07 TAKING CONTROL OF GOODS – PROCEDURE UNDER SCHEDULE 12 OF THE ACT (CONTINUED) TAKING CONTROL OF GOODS – PROCEDURE UNDER SCHEDULE 12 OF THE ACT Yes Yes No No YesNo YesHave the relevant goods been found on the highway? Reg 11; Sch 12, para 13(1)(b) Enforcement agent may not take control of goods unless the debtor has been given noticeEnforcement agentmay not take control of goodsAre the relevant goods: • animals or livestock;• hazardous or perishable goods or materials;• goods which would pose a risk to public health if the enforcement agent took control; or• any goods mentioned above and contained in the debtor's vehicle?Reg 11Unless the court orders otherwise, has the enforcement agent given a notice of enforcement to the debtor of at least 8 clear days before the agent takes control of the debtor's goods?Sch 12, para 7; Reg 6(1) and (2) Unless the court has ordered an extension of 12 months, will the enforcement agent be taking control of the debtor's goods within 12 months of the date of notice of enforcement?Sch 12, para 8; Reg 9 Enforcement agent may not take control of goods after this prescribed period67 08 HERBERT SMITH FREEHILLS TAKING CONTROL OF GOODS – PROCEDURE UNDER SCHEDULE 12 OF THE ACT (CONTINUED) Yes Yes No No Yes Will the value of the goods be more than the aggregate value of both the arrears outstanding and an amount in respect of future costs?Sch 12, para 12(1)Will the enforcement agent be taking control of goods of a higher value than the amount outstanding when there are enough goods to take control of, which are of a lower value, within a reasonable distance on a highway or on a premises that the enforcement agent has power to enter?Sch 12, para 12(2)Enforcement agent is not entitled to take control of such goods in these circumstancesUnless the court has ordered otherwise, will the enforcement agent be taking control of the debtor's goods between the hours of 6am and 9pm?Reg 13 Enforcement agent may not take control of goods outside the prescribed period8 TAKING CONTROL OF GOODS – PROCEDURE UNDER SCHEDULE 12 OF THE ACT HERBERT SMITH FREEHILLS 09 METHODS OF TAKING CONTROL OF GOODS METHODS OF TAKING CONTROL OF GOODS YesNoNoHas the debtor voluntarily surrendered the keys to the vehicle to the enforcement agent?Reg 18(2)Has the enforcementagent provided additional notice requirements where goods are removed for storage?Reg 32Are the goods, which are being secured on the highway, a vehicle?Reg 18Has the enforcementagent provideda notice in writingas required byRegulation 30?Reg 30The vehicle must be secured by an immobilisation deviceReg 18(2)Has the enforcement agent provided the debtor with a written inventory as soon as reasonably practicable after taking control of goods?Sch 12, para 34; Reg 33141216Has the enforcement agent dealt with the controlled goods with reasonablecare and in the manner required by Regulation 34?Sch 12, para 35; Reg 341711By entering into a controlled goods agreement with the debtorSch 12, para 13(1)(d); Reg 1515Removing the goodsand securing them elsewhereSch 12, para 13(1)(c); Regs 17 and 1913Securing the goods on the highway, either where the enforcement agent finds them or within a reasonable distanceSch 12, para 13(1)(b);Reg 1710Securing goods on the premises where the goods are foundSch 12, para 13(1)(a); Reg 169 10 HERBERT SMITH FREEHILLS METHODS OF TAKING CONTROL OF GOODS TAKING CONTROL OF GOODS – PROCEDURE UNDER SCHEDULE 12 OF THE ACT TAKING CONTROL OF GOODS – NOTES References to the “Act” and sections within the Act mean the Tribunals, Courts and Enforcement Act 2007. References to “Regulations” mean the Taking Control of Goods Regulations 2013. 1. ENFORCEMENT AGENTS: Only “enforcement agents” may take control of goods. Under section 63 of the Act, there are three ways in which a person can act as an enforcement agent:If they act under a certificate under section 64 of the Act;If they are exempt; orIf they act in the presence and under the direction of a person who is either certified under section 64 of the Act or is exempt. Certificates may be issued under section 64 of the Act by a judge assigned to a county court district or by a district judge in prescribed circumstances. Section 64(4) provides that where a person is already certified as a bailiff under section 7 of the Law of Distress Amendment Act 1888, they will also be authorised to act as an enforcement agent under the Schedule 12 procedure. An individual is exempt if they are already either:a constable;an officer of Revenue and Customs;a Court officer or staff;an officer of a government department; ora civilian enforcement officer, as defined in section 125A of the Magistrates’ Courts Act 1980 (sections 63(3), (4) and (5)). It is likely that most landlords will need to instruct an enforcement agent to exercise CRAR on their behalf. A landlord instructing an enforcement agent to exercise CRAR should check that the agent is suitably authorised. 2. DEBTOR’S GOODS: References to goods of the debtor are references to goods in which the debtor has a beneficial interest. It does not, however, include trust property in which either the debtor or a co-owner has an interest which is not vested in their possession: Schedule 12, paragraph 3(2). There is a procedure under Schedule 12, paragraph 60 for a person to make an application to the court claiming that goods over which control has been taken do not belong to the debtor. 3. EXEMPT GOODS: Regulation 4 lists the goods of the debtor which are exempt from CRAR. What follows is a non-exhaustive list of the types of goods which are exempt – specific advice should be sought in individual cases:Items or equipment which are necessary for the debtor’s personal use in their employment, business, trade, profession, study or education, with an aggregate value of no more than £1,350;Clothing, bedding, furniture and household equipment needed to satisfy the basic domestic needs of the debtor, including (but not restricted to) a cooker or microwave, a refrigerator, washing machine, beds and bedding, equipment needed for the medical care of the debtor or members of the debtor’s household and any equipment reasonably required for the care of a person under the age of 18, a disabled person or a person aged 65 or over. Under Regulation 5, where the goods in question are premises occupied by the debtor as the debtor’s only or principal home, those premises are exempt goods under CRAR. 4. CHILD OR VULNERABLE PERSON: Regulation 2 defines child as a person under the age of 16. No definition of vulnerable person is provided. 5. IN USE: means that the item is in the hands of, or being operated by, the person: Regulation 10(3). 6. NOTICE OF ENFORCEMENT: The court may only specify a shorter period of notice where it is satisfied that, if the order is not made, it is likely that goods of the debtor will be moved to other premises or otherwise disposed of, in order to avoid the goods being taken control of by the enforcement agent (Regulations 6(3) and (4)). Regulation 6(1) specifies that at least 7 clear days must be given, however, Regulation 6(2) states that where this period includes a Sunday, bank holiday, Good Friday or Christmas Day that day does not count in calculating the period. Each 7 clear day period will necessarily include a Sunday meaning in effect that at least 8 clear days’ notice must be given, unless the court orders otherwise. A notice of enforcement must be given in writing and contain the following information as required by Regulation 7: (a) the name and address of the debtor; (b) the reference number or numbers; (c) the date of notice; (d) details of the court judgment or order or enforcement power by virtue of which the debt is enforceable against the debtor; (e) the following information about the debt: ( i) sufficient details of the debt to enable the debtor to identify the debt correctly; ( ii) the amount of the debt including any interest due as at the date of the notice; ( iii) the amount of any enforcement costs incurred up to the date of notice; HERBERT SMITH FREEHILLS 11 TAKING CONTROL OF GOODS – PROCEDURE UNDER SCHEDULE 12 OF THE ACT (CONTINUED) METHODS OF TAKING CONTROL OF GOODS ( iv) the possible additional costs of enforcement if the sum outstanding should remain unpaid as at the date mentioned in paragraph (h); (f) how and between which hours and on which days payment of the sum outstanding may be made; (g) a contact telephone number and address at which, and the days on which and the hours between which, the enforcement agent or the enforcement agent’s office may be contacted; and (h) the date and time by which the sum outstanding must be paid to prevent goods of the debtor being taken control of and sold and the debtor incurring additional costs. Regulation 8 specifies the method of giving notice, which must be given by the enforcement agent or the enforcement agent’s office. The notice must be given by one of the following methods:by post addressed to the debtor at the place, or one of the places, where the debtor usually lives or carries on a trade or business;by fax or other means of electronic communication;by delivery by hand through the letter box of the place, or one of the places, where the debtor usually lives or carries on a trade or business;where there is no letterbox, by affixing the notice at or in a place where it is likely to come to the attention of the debtor;where the debtor is an individual, to the debtor personally; orwhere the debtor is not an individual (but is, for example, a company, corporation or partnership), by delivering the notice to—the place, or one of the places, where the debtor carries on a trade or business; orthe registered office of the company or partnership. 7. TIME LIMIT FOR TAKING CONTROL OF GOODS: Where, after giving notice of enforcement, the enforcement agent enters into an arrangement with the debtor for the repayment of the sum outstanding by instalments and the debtor breaches the terms of this arrangement, the 12 month period begins with the date of the debtor’s breach of the arrangement (Regulation 9(2)). Under Regulations 9(3) and (4) the court may only order an extension of 12 months on application by the enforcement agent or the creditor on one occasion and only if the court is satisfied the applicant has reasonable grounds for not taking control of goods of the debtor during the initial 12 month period. 8. HOURS FOR TAKING CONTROL: The enforcement agent may take control of goods of the debtor on any day of the week (Regulation 12) but only during the prescribed hours of 6am and 9pm save in the following circumstances (Regulation 13):when the court, on application by the enforcement agent, orders;when goods are located on the debtor’s premises which are used (whether wholly or partly) to carry on a trade or business and the premises (or part of the premises) are open for the conduct of that trade or business during hours outside 6am to 9pm; orwhen the enforcement agent has begun to take control of goods during the hours of 6am and 9pm, or during such amended hours as permitted, and to complete taking control of goods it is reasonably necessary for the enforcement agent to continue to do so, provided the duration of time spent in taking control of goods is reasonable. 9. SECURING GOODS ON THE PREMISES: Regulation 16 permits an enforcement agent to secure goods of the debtor on the premises on which they are found:in a cupboard, room, garage or outbuilding;in the case of goods on premises (or on a part of the premises) which are not occupied for residential purposes, by the enforcement agent remaining on the premises to guard the goods of the debtor of which the enforcement agent has taken control;by fitting an immobilisation device (which must be provided by the enforcement agent); orif the above methods are not practicable, by securing—the whole of the premises, where the premises are occupied solely for the purpose of a trade or business; orsuch part of the premises, where the premises are occupied for residential and trade or business purposes, that is occupied solely for the purpose of a trade or business. The enforcement agent is not allowed to secure the goods where any person (whether or not the debtor) in occupation of the premises would as a result be deprived of adequate access to essential facilities, including any exempt goods or with adequate means of entering and leaving the premises. Where an immobilisation device is fitted to secure the goods, the enforcement agent must, at the time of the immobilisation, provide a written warning to the debtor, signed by the enforcement agent, and affixed in a prominent position on the immobilised goods. The warning must contain the following information:that the enforcement agent has immobilised the goods;the date and time of immobilisation; 12 HERBERT SMITH FREEHILLS TAKING CONTROL OF GOODS – PROCEDURE UNDER SCHEDULE 12 OF THE ACT (CONTINUED)that the goods have been immobilised because the debtor has failed to pay the sum outstanding;a telephone number, which is available 24 hours every day, for enquiries; andthe reference number or numbers. 10. SECURING THE GOODS ON THE HIGHWAY: The enforcement agent may secure the goods of the debtor by fitting an immobilisation device – see (9) above for further details. 11. NOTICE AFTER TAKING CONTROL OF GOODS ON A HIGHWAY: The enforcement agent must provide a signed written notice containing the following information:the name and address of the debtor;the enforcement agent’s name, the reference number or numbers and the date of the notice;that the enforcement agent has done one or more of the following—taken control of goods on a highway;entered a vehicle on a highway with the intention of taking control of goods;the location on the highway where the enforcement agent has taken control of goods or entered a vehicle;where a vehicle on a highway has been entered with the intention of taking control of goods, the manufacturer, model, colour and registration mark of that vehicle; whether or not the enforcement agent has taken control of goods of the debtor and, if so, the location where and the time when control has been taken of the goods, and:a list of the goods of which control has been taken with a description to enable the debtor to identify the goods correctly, including, where applicable:the manufacturer, model and serial number of the goods;in the case of a vehicle, the manufacturer, model, colour and registration mark of the vehicle; andthe material, colour and usage, and (where appropriate) any other identifying characteristic, of the goods;the amount of the sum outstanding as at the date of the notice;the date and time by which the sum outstanding must be paid to prevent the controlled goods being sold;how and between which hours and on which days payment of the sum outstanding may be made; andthat the controlled goods will be released on payment in full (or may be released on part payment) of the sum outstanding. Regulation 30(2) 12. IMMOBILISATION OF VEHICLES: A vehicle must remain immobilised where it is positioned for a period of not less than 2 hours from the time of immobilisation unless the sum outstanding is paid or an agreement to release the vehicle on part payment of the sum outstanding is made between the enforcement agent and the debtor: Regulation 18(5). After two hours the enforcement agent may remove the vehicle to storage (Regulation 18(6)). 13. REMOVING THE GOODS AND SECURING THEM ELSEWHERE: The enforcement agent must, save in exceptional circumstances, remove the goods and secure them in or at a place which is within a reasonable distance from the place where control was taken of the goods: Regulation 19. 14. ADDITIONAL NOTICE REQUIREMENTS WHERE GOODS ARE REMOVED FOR STORAGE: If goods are to be stored somewhere other than the premises, the enforcement agent must provide the information required under Regulation 30 (see 11 above for further details) together with the following additional information:that the enforcement agent has removed controlled goods to secure storage or for sale;a list of the goods that have been removed;the date on which the goods were removed to storage or for sale;the daily or weekly storage charge payable, where the goods are removed to storage; andthe procedure for collection by or on behalf of the debtor of goods of which control has been taken on payment of the sum outstanding or on part payment of the sum outstanding where an agreement is made between the enforcement agent and the debtor. Regulation 32 15. CONTROLLED GOODS AGREEMENT: is a written agreement under which the debtor:is permitted to retain custody of the goods;acknowledges that the enforcement agent is taking control of them; andagrees not to remove or dispose of them, nor to permit anyone else to, before the debt is paid (Schedule 12, para 13(4)). Under Regulation 14(1), an enforcement agent may enter into a controlled goods agreement with:a debtor who is aged 16 or over;a person, aged 18 or over, who is authorised by the debtor to enter into a controlled goods agreement on the debtor’s behalf; andwhere premises are used (whether wholly or partly) to carry on a trade or business, a person in apparent authority, who is on the premises. METHODS OF TAKING CONTROL OF GOODS HERBERT SMITH FREEHILLS 13 TAKING CONTROL OF GOODS – PROCEDURE UNDER SCHEDULE 12 OF THE ACT (CONTINUED) METHODS OF TAKING CONTROL OF GOODS An enforcement agent may not enter into a controlled goods agreement with the debtor or another person who it appears (or ought to appear) to the enforcement agent does not understand the effect of such an agreement: Regulation 14(2). The agreement must contain the following information:the name and address of the debtor;the reference number or numbers and the date of the agreement;the names of the persons entering into the agreement;a contact telephone number and address at which, and the days on which and the hours between which the enforcement agent or the enforcement agent’s office may be contacted;a list of the goods of which control has been taken with a description to enable the debtor to identify the goods correctly, including, where applicable—the manufacturer, model and serial number of the goods;in the case of a vehicle, the manufacturer, model, colour and registration mark of the vehicle; andthe material, colour and usage, and (where appropriate) any other identifying characteristic of the goods; andthe terms of the arrangement entered into between the enforcement agent and the debtor for the repayment, by the debtor, of the sum outstanding. Regulation 15(3) 16. INVENTORY OF GOODS: The inventory must be signed by the enforcement agent and contain the following information:the name and address of the debtor;the enforcement agent’s name, the reference number or numbers and the date of the inventory;the name and address of the co-owner, if any;that the enforcement agent has taken control of the goods of the debtor or of the debtor and the co-owner as specified in the inventory; anda list of the goods of which control has been taken with a description to enable the debtor or the co-owner to identify the goods correctly, including, where applicable—the manufacturer, model and serial number of the goods;in the case of a vehicle, the manufacturer, model, colour and registration mark of the vehicle; andthe material, colour and usage, and (where appropriate) any other identifying characteristic, of the goods. Regulation 33 17. CARE OF CONTROLLED GOODS: The enforcement agent must keep the controlled goods in a similar condition to that in which the enforcement agent found them immediately prior to taking control of them. The goods must be removed to storage, unless the goods are removed for sale, and such storage must be secure so as to prevent damage to or deterioration of the goods for so long as they remain under the enforcement agent’s control (Regulation 34(I)). 14 HERBERT SMITH FREEHILLS ENTRY ONTO PREMISES ENTRY ONTO PREMISES Is the debtor a child, or is a child or vulner ableperson the only person present in the premiseswhich the enforcement agent proposes to enter?Reg 23For the purposes of CRAR, enforcement agents may enter the demised premises without a warrant. If the premises are not the demised premises,a warrant will be requiredSch 12, para 14Are the premises the demised premises?Enforcement agentmay not enter thepremises in thesecircumstancesEntry without a warrantSch 12, para 14Entry with a warrantSch 12, para 15The enforcement agent isin breach of the provisionsof Schedule 12 and thedebtor may bring proceedingsto order the goods returned tothe debtor or to pay damagesin respect of loss sueredby the breachSch 12, para 66Has the enforcementagent entered thepremises by any door orany usual means bywhich entry is gained tothe premises?Reg 20YesNoYesNoNo1243 HERBERT SMITH FREEHILLS 15 ENTRY ONTO PREMISES (CONTINUED) ENTRY ONTO PREMISES Unless the court has or dered otherwise, will theenforcement agent be entering, re-entering orremaining on the premises between the hours of6am and 9pm on any day of the week?Reg 22Having entered the premises and determined thatthere are no or insucient goods of the debtor onthe premises:(1) Does the enforcement agent have reason to believe that the debtor has subsequently brought goods onto the premises; or(2) Was the enforcement agent prohibited from taking control of particular goods at the time of the agent’s original entry?Sch 12, para 16; Reg 24Has the enforcement agent given notice of itsintention to re-enter the premises, giving not lessthan 2 clear days before the enforcement agent re-enters the premises?Reg 25YesEnforcement agentmay not enter, re-enteror remain on the premises outside theprescribed periodNoEnforcement agentmay not take re-enterthe premises unlessthe debtor hasbeen given noticeYesYesNo56 16 HERBERT SMITH FREEHILLS ENTRY ONTO PREMISES (CONTINUED) ENTRY ONTO PREMISES – NOTES References to the “Act” and sections within the Act mean the Tribunals, Courts and Enforcement Act 2007. References to “Regulations” mean the Taking Control of Goods Regulations 2013. 1. CHILD OR VULNERABLE PERSON: Regulation 2 defines child as a person under the age of 16. No definition of vulnerable person is provided. 2. ENTRY WITHOUT A WARRANT: Under CRAR, the enforcement agent may only enter the demised premises. A warrant is required to enable access to other premises (see note 3 below for further details). S chedule 12, paragraph 17 provides an enforcement agent, in limited circumstances, with a general power to use reasonable force (if necessary) to enter premises or to do anything for which the entry is authorised. This does not, however, include the power to use force against persons: Schedule 12, paragraph 24(2). Schedule 12, paragraph 18 permits an enforcement agent to use reasonable force where:the enforcement agent has power to enter the premises without a warrant, enter premises with a warrant and a power to re-enter premisesis acting under a warrant of control under section 76(1) of the Magistrates’ Courts Act 1980; andthe enforcement agent is entitled to execute the warrant by virtue of section 125A (civilian enforcement officers) or 125B (approved enforcement agencies) of the Magistrates’ Court Act 1980. Where the enforcement agent does not have a general power to use reasonable force, the enforcement agent will need to apply to court for a warrant under Schedule 12 para 20 and Regulation 28. The conditions of which the court must be satisfied before it issues a warrant to use reasonable force to enter premises are as follows:either:the enforcement agent is attempting to recover a debt enforceable under section 127 of the Finance Act 2008; orthe premises are premises to which the goods have been deliberately removed in order to avoid control being taken of them;there are, or are likely to be, goods of the debtor on the premises of which control can be taken;the enforcement agent has explained to the court—the likely means of entry, and the type and amount of force that will be required to make the entry;how, after entry, the enforcement agent proposes to leave the premises in a secure state; andin all the circumstances it is appropriate for the court to give an authorisation, having regard (among other matters) to—the sum outstanding;the nature of the debt. U nder Schedule 12, paragraph 22(2), the court may issue a warrant which requires a constable to assist the enforcement agent to execute the warrant. 3. ENTRY WITH A WARRANT: Before the court can issue a warrant, Schedule 12, paragraph 15 requires the court to be satisfied that:an enforcement power under the Schedule 12 procedure has become exercisable;there is reason to believe that there are goods on the premises that the enforcement power will be exercisable to take control of if the warrant is issued; andit is reasonable in all the circumstances to issue the warrant. I t is unlikely that a warrant would be granted to exercise CRAR. It is more likely that the landlord would need to sue for the debt and then seek execution as the means of enforcement of the judgment against the tenant. 4. ENTRY BY USUAL MEANS: This includes the loading bay to premises where a trade or business is carried on: Regulation 20(a). 5. HOURS FOR ENTERING PREMISES: Under Regulation 21(2) the enforcement agent may enter, re-enter or remain on premises on any day of the week. Regulation 22 also provides that the enforcement agent may enter, re-enter or remain on premises outside the prescribed hours of 6am and 9pm in the following circumstances:when the court, on application by the enforcement agent;where premises are used whether wholly or partly for a trade or business, the enforcement agent may enter, re-enter or remain on the premises (or the part of the premises so used) during any hours when the premises (or part of the premises) are open for the conduct of that trade or business; andwhen the enforcement agent has already entered or re-entered the premises during the hours of 6am and 9pm, or during such amended hours as specified above, the enforcement agent may remain on the premises outside of these hours if it is reasonably necessary for him to continue to search for and take control of goods, inspect controlled goods or remove controlled goods for storage or sale, provided the duration of time spent is reasonable. ENTRY ONTO PREMISES HERBERT SMITH FREEHILLS 17 ENTRY ONTO PREMISES (CONTINUED) 6. NOTICE OF RE-ENTRY: In normal circumstances, Regulation 25(1) specifies that at least 2 clear days’ notice must be given – where this period includes a Sunday, bank holiday, Good Friday or Christmas Day that day does not count in calculating the period: Regulation 25(2). U nder Regulation 25(3) and (4), the court may specify that a shorter period of notice may be given to the debtor where it is satisfied that, if the order is not made, it is likely that goods of the debtor will be moved to other premises, or otherwise disposed of, in order to avoid the goods being inspected or removed for storage or sale. A n otice of re-entry must be given in writing and contain the following information as required by Regulation 26:the name and address of the debtor;the reference number or numbers;the date of the notice;sufficient details of the controlled goods agreement, the repayment terms of which the debtor has failed to comply with, to enable the debtor to identify the agreement correctly;how the debtor has failed to comply with the repayment terms of the controlled goods agreement;the amount of the sum outstanding as at the date of the notice;how and between which hours and on which days payment of the sum outstanding may be made;a contact telephone number and address at which, and the days on which and hours between which, the enforcement agent or the enforcement agent’s office may be contacted;the date and time by which the sum outstanding must be paid to prevent the controlled goods being inspected or removed for storage or sale; andthat the enforcement agent may if necessary use reasonable force to re-enter the premises to inspect the goods or remove them for storage or sale. Regulation 27 specifies the method of giving notice, which must be given by the enforcement agent. The notice must be given by one of the following methods:by fax or other means of electronic communication;by delivery by hand through the letter box of the place, or one of the places, where the debtor usually lives or carries on a trade or business;where there is no letterbox, by affixing the notice at or in a place that it is likely to come to the attention of the debtor;where the debtor is an individual, to the debtor personally; orwhere the debtor is not an individual (but is, for example, a company, corporation or partnership), by delivering the notice to—the place, or one of the places, where the debtor carries on a trade or business; orthe registered office of the company or partnership. ENTRY ONTO PREMISES 18 HERBERT SMITH FREEHILLS SALE OF CONTROLLED GOODS SALE OF CONTROLLED GOODS If the debtor pays the amount outstanding in full after the enfor cement agent has taken control of the goods but before they are sold or abandoned, the enforcement agent must as soon as reasonably practicable make them available for collection by the debtorSch 12, paras 58 and 59The enforcement agent must:(a) Make or obtain a valuation of the controlled goods; and(b) Give the debtor, and separately any co-owner, an opportunity to obtain an independent valuations of the goods within 7 clear days from removing the controlled goods for saleSchedule 12, para 36; Regs 35 and 37Are the controlled goods, which the enforcementagent wishes to sell, securities?A dierent regime is required for the sale of securities – specific legal advice should be soughtReg 36 and Part 4 of theRegulationsYesNo321 HERBERT SMITH FREEHILLS 19 SALE OF CONTROLLED GOODS (CONTINUED) SALE OF CONTROLLED GOODS Unless the debtor and any co-o wner agrees otherwise, the enforcement agent must give notice to the debtor and any co-owner of the date, time and place of sale at least 7 clear days before the sale of the goodsSch 12, para 38-40; Reg 38, 39 and 40Unless the creditor and debtor agree in writing to extend the period, notice of the sale must be given within 12 months beginning with the dayon which the enforcement agent took control of the goodsSch 12, para 40(5) and (6)Unless the court orders another method of sale, the sale must be bypublic auctionSch 12, para 41(1); Reg 41The enforcement agent must apply the sale proceeds as required bySchedule 12, paragraph 504567 20 HERBERT SMITH FREEHILLS SALE OF CONTROLLED GOODS (CONTINUED) SALE OF CONTROLLED GOODS – NOTES References to the “Act” and sections within the Act mean the Tribunals, Courts and Enforcement Act 2007. References to “Regulations” mean the Taking Control of Goods Regulations 2013. 1. PAYMENT OF AMOUNT OUTSTANDING: Where the controlled goods included money, this sum can be used to reduce the amount outstanding and does not need to be returned to the debtor: Schedule 12, paragraph 58(4). I f, after the debtor has paid the amount outstanding in full, the enforcement agent takes further action, the enforcement agent will not be liable unless he had notice, when the step was taken, that the amount outstanding had been paid in full: Schedule 12, paragraph 59(2). I f the enforcement agent has sold the goods, the purchaser will acquire good title, unless, at the time of the sale, the purchaser or the enforcement agent had notice that the amount outstanding had been paid in full: Schedule 12, paragraph 59(4). For these purposes, a person has notice that the amount outstanding has been paid in full if he would have found it out if he had made reasonable enquires: Schedule 12, paragraph 59(5). T he debtor or a co-owner may still bring a claim under Schedule 12, paragraph 66 if enforcement action is taken in breach of paragraph 58. 2. SECURITIES: Schedule 12, paragraph 3(1) defines ‘securities’ as including bills of exchange, promissory notes, bonds, specialties and securities for money. 3. VALUATION: Where the enforcement agent makes the valuation, it must be in writing, signed by the enforcement agent and a copy must be given to the debtor and any co-owner, setting out:the enforcement agent’s name;the reference number or numbers;the date of the valuation; andwhere appropriate, a separate value for each item if goods of which control has been taken. Regulation 35(2) W here the enforcement agent obtains the valuation from a third party, the enforcement agent must:only instruct a qualified, independent valuer;instruct the valuer to make a written valuation and, where appropriate, to value each item of goods separately; andprovide a copy of the written valuation, once made by the valuer, to the debtor and any co-owner of the controlled goods. Regulation 35(3) 4. NOTICE OF SALE: Normally, the minimum period of notice of the date, time and place of sale of the goods is 7 clear days. Notice may be given on the day before the sale of the goods where, if the sale were to take place after the expiry of the 7 clear days, the goods would become unsaleable or their sale value would be extinguished or substantially reduced due to the nature or any characteristic of those goods: Regulation 38(2). The notice of sale must be in writing, signed by the enforcement agent and contain the following information as required by Regulation 39:the name and address of the debtor;the enforcement agent’s name, the reference number or numbers and the date of the notice;the name and address of the co-owner, if any;that the controlled goods may be sold as the debtor has failed to pay the sum outstanding;a list of the controlled goods that may be sold with a description to enable the debtor or the co-owner to identify the goods correctly, including, where applicable—the manufacturer, model and serial number of the goods;in the case of a vehicle, the manufacturer, model, colour and registration mark of the vehicle; andthe material, colour and usage and (where appropriate) any other identifying characteristic, of the goods;that the sale of the controlled goods is conditional on—an offer to purchase the goods being made; andthe reserve price, if any, on the controlled goods being met;that if the conditions in paragraph above are not met the date, time and place of sale will be set out in a further notice;the amount of the sum outstanding as at the date of the notice;the date and time by which the sum outstanding must be paid to prevent the controlled goods being sold;how and between which hours and on which days payment of the sum outstanding may be made; andthe procedure for collection by or on behalf of the debtor or co-owner of goods of which control has been taken on payment of the sum outstanding or on part payment of the sum outstanding where an agreement is made between the enforcement agent and the debtor. R egulation 40 provides that the method of giving notice of the date, time and place of sale is the same as that specified by Regulation 8 (see note 6 of TAKING CONTROL OF GOODS – PROCEDURE UNDER SCHEDULE 12 OF THE ACT). SALE OF CONTROLLED GOODS HERBERT SMITH FREEHILLS 21 SALE OF CONTROLLED GOODS (CONTINUED) 5. EXTENDING PERIOD OF NOTICE: The creditor and debtor may agree, in writing and before the end of the 12 month period after the enforcement agent takes control of goods, to extend the period. The period may be extended more than once but must be extended before the period expires: Schedule 12, paragraph 40(7). 6. SALE BY PUBLIC AUCTION: Regulation 42(1) requires a sale of controlled goods to be by public auction in a public auction house or on an online or internet auction site. Regulation 42(2) allows the sale to be held on premises where the goods found by the enforcement agent where those premises are occupied solely for the purposes of a trade or business, but the sale may not be held on those premises without the consent of the occupier: Schedule 12, paragraph 43(3) and paragraphs 44 and 45. W here the controlled goods are to be sold by public auction, the auction must be conducted by a qualified auctioneer or, where the auction takes place online, an auction provider independent of the enforcement agent: Regulation 43. W here upon the enforcement agent makes an application to the court for a method of sale other than public auction, the court may order sale by:private contract;sealed bids;advertisement; andsuch other method as the court considers appropriate. Regulation 41(1) W here the enforcement agent considers that an enforcement power has become exercisable by another creditor against the debtor, the court may not consider the application until notice of it has been given to the other creditor: Schedule 12, paragraphs 41(4) and (5) and Regulation 41(2). 7. PROCEEDS OF SALE: If there is a co-owner of any of the goods, the enforcement agent must first pay the co-owner a share of the proceeds of those goods in proportion to his beneficial interest: Schedule 12, paragraph 50(6). O nce any co-owner has been paid their share, the remaining sale proceeds must be used to pay the amount outstanding: Schedule 12, paragraph 50(1). I f the proceeds are more than the amount outstanding, the surplus must be paid to the debtor: Schedule 12, paragraph 50(5). PASSING OF TITLE: A purchaser of the controlled goods will acquire good title, with two exceptions which apply if the goods are not the debtor’s at the time of sale:where the purchaser, the creditor, the enforcement agent or a related party (i.e. any other person who acts in exercise of an enforcement power) has notice that the goods are not the debtor’s; andwhere a lawful claimant has already made an application to the court claiming an interest in the goods. Schedule 12, paragraphs 51(3) and (4) A l awful claimant is a person who has a beneficial interest in the goods at the time of sale, other than an interest that was assigned or transferred to him while the property in the goods was bound for the purposes of the enforcement power: Schedule 12, paragraph 51(5). SALE OF CONTROLLED GOODS 22 HERBERT SMITH FREEHILLS SUMMARY OF DIFFERENCES BETWEEN DISTRESS AND CRAR SUMMARY OF DIFFERENCES BETWEEN DISTRESS AND CRAR DISTRESS CRAR Type of occupation Legal or equitable tenancy Written tenancy Type of premises Commercial premises and against goods in the commercial part of mixed use premises Commercial premises only Type of arrears Any monies reserved as rent, e.g. primary rent, insurance rent, service charge interest Only principal rent, VAT and interest thereon Where an inclusive rent is reserved, it will be necessary to calculate the portion of the rent that relates to the use and occupation of the premises as opposed to the services, insurance etc. Ideally this should be agreed with the tenant and recorded. Amount of arrears No minimum amount Minimum of 7 days’ “net unpaid rent” Notice requirements No requirement to serve notice At least 7 clear days’ notice (excluding Sundays and Bank Holidays) will be required before enforcement. This may be reduced (but not dispensed with) with the Court’s permission Service of notice No requirement to serve notice Notice to be served by a certified “enforcement agent” Act of re-entry Carried out by landlord or certified bailiff between sunrise and sunset on any day except Sundays Carried out by enforcement agent between 6am and 9pm on any day of the week. If the business does not operate between those times, the enforcement agent may enter at any time the business is open Means of access Bailiff can gain access to premises through open windows, open skylights etc Enforcement agent must only enter premises through a door or other usual means of access Type of goods Tools of the trade Tools of the trade (i.e. goods necessary for the tenant’s personal use or in connection with employment, business, trade, profession, study or education) up to a value of £1,350 are exempt. Items over this amount may be removed or seized Seizure of goods Walking possession agreement More rigorous Controlled Goods Agreement in prescribed form with prescribed content Subsequent removal of goods following breach of Controlled Goods Agreement No requirements to serve notice At least 2 clear days’ notice (excluding Sundays and Bank Holidays) will be required before enforcement agent can re-enter premises to remove goods Sale of goods At least 5 days between removal of goods and sale After removal, enforcement agent must wait at least 7 clear days before the scale can take place, and must also give the tenant at least 7 clear days’ notice of the sale unless the goods would otherwise become unsaleable of their value substantially reduced HERBERT SMITH FREEHILLS 23 CONTACT HERBERT SMITH FREEHILLS CONTACTS REAL ESTATE DISPUTE RESOLUTION Matthew Bonye Partner T +44 20 7466 2162 [email protected] Frances Edwards Senior Associate T +44 20 7466 2279 [email protected] Rhian Arrenberg Professional Support Lawyer T +44 20 7466 2594 [email protected] SHANGHAI Herbert Smith Freehills LLP Shanghai Representative Office (UK) T +86 21 2322 2000 F +86 21 2322 2322 SINGAPORE Herbert Smith Freehills LLP T +65 6868 8000 F +65 6868 8001 SYDNEY Herbert Smith Freehills T +61 2 9225 5000 F +61 2 9322 4000 TOKYO Herbert Smith Freehills T +81 3 5412 5412 F +81 3 5412 5413 MELBOURNE Herbert Smith Freehills T +61 3 9288 1234 F +61 3 9288 1567 MOSCOW Herbert Smith Freehills CIS LLP T +7 495 363 6500 F +7 495 363 6501 NEW YORK Herbert Smith Freehills New York LLP T +1 917 542 7600 F +1 917 542 7601 PARIS Herbert Smith Freehills Paris LLP T +33 1 53 57 70 70 F +33 1 53 57 70 80 PERTH Herbert Smith Freehills T +61 8 9211 7777 F +61 8 9211 7878 SEOUL Herbert Smith Freehills LLP Foreign Legal Consultant Office T +82 2 6321 5600 F +82 2 6321 5601 DOHA Herbert Smith Freehills Middle East LLP T +974 4429 4000 F +974 4429 4001 DUBAI Herbert Smith Freehills LLP T +971 4 428 6300 F +971 4 365 3171 FRANKFURT Herbert Smith Freehills Germany LLP T +49 69 2222 82400 F +49 69 2222 82499 HONG KONG Herbert Smith Freehills T +852 2845 6639 F +852 2845 9099 JAKARTA Hiswara Bunjamin and Tandjung Herbert Smith Freehills LLP associated firm T +62 21 574 4010 F +62 21 574 4670 LONDON Herbert Smith Freehills LLP T +44 20 7374 8000 F +44 20 7374 0888 MADRID Herbert Smith Freehills Spain LLP T +34 91 423 4000 F +34 91 423 4001 ABU DHABI Herbert Smith Freehills LLP T +971 2 813 5000 F +971 2 813 5100 BANGKOK Herbert Smith Freehills (Thailand) Ltd T +66 2657 3888 F +66 2636 0657 BEIJING Herbert Smith Freehills LLP Beijing Representative Office (UK) T +86 10 6535 5000 F +86 10 6535 5055 BELFAST Herbert Smith Freehills LLP T +44 28 9025 8200 F +44 28 9025 8201 BERLIN Herbert Smith Freehills Germany LLP T +49 30 2215 10400 F +49 30 2215 10499 BRISBANE Herbert Smith Freehills T +61 7 3258 6666 F +61 7 3258 6444 BRUSSELS Herbert Smith Freehills LLP T +32 2 511 7450 F +32 2 511 7772 HERBERTSMITHFREEHILLS.COM 1016E Guide to commercial rent arrears /040414 © Herbert Smith Freehills LLP 2014