Poor administrative handling by courts caused woman loss of over £3,700

What happened

A company issued a small claim against Mrs T and she paid more than £3,700 when an enforcement officer visited her home. Mrs T was unaware of the small claim and the subsequent court proceedings. She disagreed that she owed any money. She said that she paid the money under pressure because she felt intimidated, but then took steps to get it back.

The Insolvency Act 1986 requires funds collected by enforcement officers to be held for 14 days before they are released to creditors.

Mrs T immediately contacted two courts concerned in the case several times but court staff gave her confusing and conflicting advice that delayed the application process. After she applied to one of the courts, Mrs T was granted a halt to the proceedings, referred to as a 'stay of execution'. Unfortunately, HMCTS did not identify that this was urgent and did not tell the enforcement officers, who sent the money to the company after the statutory 14-day period.

Shortly after, a judge at a third court that was closer to Mrs T's home processed her application to set aside the judgment. Mrs T contacted the enforcement officers but was told the money had been sent to the company. Efforts to recover the money from the company were unsuccessful.

Mrs T complained to HMCTS and the enforcement officers, but both organisations denied responsibility for sending the money to the company.

What we found

We partly upheld this complaint. We did not uphold the complaint about the enforcement officers. As they did not receive the 'stay of execution' from HMCTS, they acted in line with their processes when they released the money.

HMCTS should have identified that the 'stay of execution' was urgent, and should have made sure that the enforcement officers were aware of it. Its failure to do this meant the money was released, when it should have been retained and returned directly to Mrs T.

The courts gave conflicting advice and HMCTS's complaint handling was inadequate, adding to Mrs T's frustration.

Putting it right

We asked HMCTS to return Mrs T to the financial position that she would have been in, had the errors not occurred. We also recommended a substantial payment to recognise the distress and inconvenience caused by the fact that it took four years to resolve this complaint. The stress had a significant impact on Mrs T's family relationships. We also asked HMCTS to apologise and to make systemic changes to clarify the process.

Following our investigation, HMCTS apologised to Mrs T for the shortcomings we found. It paid Mrs T the money she had paid the enforcement officers, and interest on this sum. It also refunded fees she paid when she tried to get the money back from the company plus interest. In addition, it paid her £1,000 to recognise the distress and inconvenience it had caused.

HMCTS agreed to carry out systemic improvements to make sure that courts are clear on enforcement officers' processes and to take steps to prevent this situation happening again.