The office of the Sheriff pre dates Norman times. The laws governing their activities are complex. While the Law Reform commission made a number of recommendations in 1988 on changing the law, none of these have yet been implemented.

When a creditor obtains a judgement against a debtor for monies which are due, and if the debtor does not pay the monies within a reasonable period of time it is open to the creditor to employ the services of a sheriff to carry out "execution" of the judgement.

Execution Procedure

If judgement is awarded through the High Court, then the execution order which is directed to the Sheriff is known as a writ of fieri facias ("fi fa"); in the Circuit Court it is known as an execution order against the goods, and in the District Court the decree of the court itself is sent to the Sheriff for execution.

The execution procedure is carried out in Dublin and Cork by Sheriffs and in other counties by County Registrars. For the sake of convenience, the expression "Sheriff" is used in this article as meaning both Sheriff and County Registrars. This article also assumes that the debtor is a Limited company.

What can be seized?

The Sheriff may seize any goods, chattels, growing crops and any money, bank notes, cheques, bills of exchange, promissory notes, bonds or securities for money belonging to the debtor.

The Sheriff can not take property belonging to third parties, such as property acquired under hire purchase. Stock which is subject to Reservation of Title claims is a more complex area.

A return will be made stating the outcome of the Sheriff’s attempts at execution. If no goods have been taken, the return will state "nulla bona". A sale of any goods seized will then be arranged for the best price obtainable in the circumstances.

After deducting fees, expenses and poundage, the balance of the proceeds of sale will be paid over to the judgement creditor, up to the amount of his debt.

If the execution is for £20 or upwards, then under Section 292 of the 1963 Companies Act ("the Act"), the Sheriff must, after the sale, hold the proceeds for 14 days to allow for notice of a winding up of the company to be served on him. If such notice is served within that time, he must, after the deduction of his costs, pay the balance to the liquidator, who is entitled to retain it as against the execution creditor. If, however, the Sheriff receives notice of the winding up before the sale or the completion of the execution by the receipt or the recovery of the full amount of the levy, he must deliver the goods or any money received to the liquidator without deducting the costs of execution.

Revenue Sheriff

The Income Tax Act 1967 provides for a Sheriff to seize a tax payers chattels and such a Sheriff is given all the rights and powers of a Sheriff levying execution under fi fa. The Revenue believe they are empowered to confer Sheriff’s powers under the act to somebody other than the Sheriff or the County Registrar, and they have done so for some counties outside Cork and Dublin.

A major advantage of the Income Tax Act 1967 to the Revenue is that unpaid taxes can be collected by a Revenue Sheriff without the need for judgement being given against the tax payer.

How to deal with the Sheriff?

Before the Sheriff makes a visit, it is normal for him to contact the debtor by letter requesting his proposals for payment.

At this stage the debtor, and its business advisors, should consider whether the company is insolvent, and if so should cease trading to avoid the directors being made personally liable for reckless trading. If the company is insolvent and has no prospect of its fortunes reviving then the directors should take immediate steps to place the company into liquidation. A copy of the notice to creditors convening the creditors meeting pursuant to section 266 of the Act should be sent at the earliest opportunity to the Sheriff. Provided the Sheriff receives this notification within the appropriate time frame then the judgement creditor, pursuant to section 291 of the Act, is not entitled to retain the benefit of any execution. The purpose of section 291 is to prevent any one creditor being preferred over another. Another alternative open to the debtor is to invite the bank to appoint a Receiver if the bank has the appropriate debenture.

If the debtor considers that his business is viable, but is just suffering from short term cash flow difficulties, then the debtor should open up dialogue with the Sheriff and present positive proposals for settling the debt. If no such possible proposals are forthcoming, then the Sheriff will visit the premises to seize whatever assets he can. As with any dispute, it is better to keep open the lines of communication. At a minimum, the debtor should negotiate a schedule of deferred payments.

For further information please contact Jim Stafford or Tom Murray on 01 661 4066 or jim.stafford@frielstafford.ie or tom.murray@frielstafford.ie