Dealing with Bailiffs

Unlawful Storage Fees Charged by Bailiffs for Vehicle Seizure

In recent years, there has been a notable increase in the imposition of storage fees by enforcement agents and vehicle compounds following the seizure of motor vehicles under Schedule 12 of the Tribunals, Courts and Enforcement Act 2007. These charges, often presented as a fait accompli to the unwary debtor, have become a substantial source of profit for enforcement companies, who in many cases operate in collusion with storage operators and scrap dealers to maximise their commercial return. Yet a close reading of the relevant statutory framework and case law reveals that most of these storage fees are not lawfully recoverable.

The legal test for recovering disbursements

The statutory starting point is Regulation 8(2) of the Taking Control of Goods (Fees) Regulations 2014. It provides that enforcement agents may only recover disbursements that are both "reasonably and actually incurred." This sets out a conjunctive two-part test. First, the disbursement must be "actually incurred," meaning there must be a real outlay of money by the enforcement agent. Secondly, that disbursement must be "reasonable," judged by objective standards and not by the enforcement agent’s subjective belief. This provision strictly limits what may be recovered from the debtor and therefore acts as a safeguard against the imposition of artificial or inflated charges.

When the vehicle is no longer bound

A frequent abuse occurs when vehicle compounds demand storage fees before releasing the vehicle. This often happens after the debt has already been paid, which renders the goods no longer bound by the warrant. Paragraph 50(3) of Schedule 12 confirms that once the amount outstanding is paid, the controlled goods cease to be bound. Paragraph 6(3)(a) further confirms that no new right of control may be exercised in relation to them. Consequently, retaining the vehicle and demanding money constitutes an unlawful interference with goods, amounting in some cases to conversion or extortion. The debtor may apply to the court to restrain such conduct or seek damages under common law and tortious remedies.

Storage fees are not exceptional disbursements

In Mulwanyi v London Borough of Croydon and Newlyn Plc, Central London County Court, 7 April 2017, an application for exceptional disbursements under Regulation 10 was rejected. The court found that storage fees for a motor vehicle did not qualify as an exceptional disbursement under the Regulations. This case underscores the principle that unless the enforcement agent can demonstrate payment and necessity, such charges are irrecoverable.

False claims of disbursement

In practice, most bailiffs do not pay the storage operators directly. Instead, they arrange for the compound to demand the fee from the debtor and then falsely claim this was a disbursement. If no money has passed from the enforcement agent to the storage provider, then the fee has not been actually incurred. The remedy for the debtor lies in compelling the enforcement agent to disclose the flow of money under pre-action protocol obligations (see Rule 6 of the Practice Direction – Pre-Action Conduct and Protocols), and if they fail or refuse, commencing proceedings either through the small claims track (CPR Part 27) or by applying for a fee assessment under CPR 84.16.

Entitlement to costs or litigant in person expenses

It is well established that where a debtor brings a successful claim challenging fees that were not properly recoverable, they are entitled to their costs under CPR 44.2. If the debtor is acting in person, then pursuant to CPR 46.5 and Practice Direction 46.5 paragraph 3.1, they may claim litigant-in-person costs. These are distinct from disbursements and provide for remuneration of time reasonably spent in conducting litigation.

Misuse of auctioneer’s commission

An additional layer of illegality arises when the storage operator purports to act as an auctioneer and seeks to deduct auctioneer’s commission exceeding the limits prescribed by Regulation 9. Where goods are sold on eBay or other online platforms, the storage operator is plainly acting as a vendor and not an auctioneer. In that context, the enforcement agent is limited to recovering 7.5% of the sum realised by the sale pursuant to Regulation 9(4). Attempts to add a further 15% auctioneer’s fee are entirely without foundation in law and constitute an unauthorised profit.

VAT charges must be proven

VAT is another frequent point of contention. It is settled law that VAT is not recoverable from debtors unless it has been paid by the enforcement agent, not the bailiff company. This principle was reiterated by Master Fontaine in Davenport v Edgoose (6 July 2020, EWHC), confirming that VAT cannot be claimed unless evidenced by a VAT invoice, evidence of the actual payment and the bailiff must be in the HMRC public register of VAT registrants.

Restitution and tortious claims

Where a debtor has paid unlawful storage fees under pressure or due to duress, a claim in restitution may lie for recovery of the sum on the basis of unjust enrichment. Alternatively, a tortious claim for conversion may arise if the vehicle was unlawfully detained following extinguishment of the right of control.

Cash payments and regulatory concerns

It is also relevant that in many cases, vehicle compounds insist on payment in cash. This circumvents normal consumer protections such as chargebacks and invites further scrutiny. Such practices may warrant reporting to Trading Standards or the Financial Conduct Authority, depending on whether the conduct amounts to commercial fraud.

Conclusion and remedies

In conclusion, the law does not permit bailiffs or their associated storage operators to impose or retain storage fees unless they can satisfy the strict criteria set out in Regulation 8(2) of the 2014 Regulations. The debtor should make an immediate written demand for evidence of the payment, supported by bank statements or accounting records, and failing a satisfactory response, commence proceedings to recover the sum unlawfully obtained. The debtor may seek to recover the fees themselves, any VAT surcharges, and their costs of the proceedings. Claims should be brought against the instructing authority, whether a creditor or local council, in accordance with established principles of agency and accountability. The courts have consistently demonstrated an unwillingness to allow the enforcement of fees not properly incurred, and the relevant regulations provide clear and enforceable rights for debtors to recover what has been taken from them unlawfully.