Third-Party Enforcement Payments: No Discharge Without Agency, and “Return” Defeats Later Ratification
1. Introduction
In 56 Fellows Road Ltd v ABC Block Management Ltd [2026] EWCA Civ 401, the Court of Appeal
(Lady Justice Elisabeth Laing, with whom Lord Justice Newey and Lord Justice Cobb agreed) considered whether a card payment
taken by a High Court Enforcement Agent (“HCEA”) from the personal bank account of a company director extinguished a company’s
judgment debt.
The respondent judgment creditor had obtained judgment on a counterclaim against the appellant company (“the company”).
Enforcement proceeded by writ of control. An HCEA attended at the director’s home and took payment by debit card
(including enforcement fees). The director then pursued complaints (including a Form E4 complaint) asserting the enforcement
was unlawfully directed at him personally. Ultimately, Direct Collections Bailiffs Limited (“DCBL”) entered into an agreement
with the director under which the same sum was “returned” to him, and the Form E4 proceedings were withdrawn.
When the creditor later sought to enforce by charging order, the central issue became the effect of the initial payment:
did it discharge the company’s judgment debt, or was it a personal payment later unwound such that the debt remained outstanding?
2. Summary of the Judgment
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The Court of Appeal dismissed the company’s appeal and upheld the decision granting the charging order.
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On the facts, the director’s payment was made personally, not as agent for (or on account of) the company.
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The later DCBL agreement was properly construed as a return of that personal payment, not a separate compensation payment.
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Because the payment had been returned, any subsequent attempt by the company to “ratify” the original payment (via later
internal company minutes) was too late to discharge the judgment debt.
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The Court also indicated that “proceeds from the exercise of an enforcement power” in paragraph 50(1) of Schedule 12 to the
Tribunals, Courts and Enforcement Act 2007 means proceeds from the lawful exercise of the power; on the director’s case,
DCBL was obliged to return the money to him.
3. Analysis
3.1 Precedents Cited
The Court relied on the approach in Gestmin to fact-finding: contemporaneous documents are often a more reliable guide
than later recollection. This was significant because there was no trial and no cross-examination; the Court treated the emails,
complaints and the settlement agreement as decisive indicators of what capacity the director was acting in when paying.
Court Enforcement Services Limited v Marston Legal Services Limited [2020] EWCA Civ 588; [2021] QB 129 (“Marston”)
Marston provided the modern appellate framework for enforcement by writ of control under Schedule 12, including that
“proceeds” can include “bank money” (such as a card payment). The Court accepted it was common ground that the card payment here
was “bank money” and therefore capable, in principle, of being “proceeds” within the statutory scheme.
Bone v Williamson [2024] EWCA Civ 4; [2024] 1 WLR 3235
Cited as part of the Court of Appeal’s recent trilogy on Schedule 12 enforcement, reinforcing that this case sat within a
well-developed statutory context, even though the outcome depended primarily on facts and inference.
Burton v Ministry of Justice [2024] EWCA Civ 681; [2025] KB 66 (“Burton”)
Burton was cited for the important proposition that a judgment creditor is strictly liable for misbehaviour
of an HCEA appointed to enforce that creditor’s judgment. While the appeal did not turn on creditor liability for misconduct, the
citation framed the broader legal environment: enforcement agents act within a statutory scheme for which the creditor may bear
responsibility.
3.2 Legal Reasoning
(a) The factual question: what capacity did the payer act in?
The company argued that the director’s payment discharged the company debt because he paid on the company’s behalf (and could
authorise himself to do so). The creditor argued the director paid personally, and the company’s debt remained unpaid.
The Court’s reasoning was anchored in the director’s own contemporaneous account:
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In the Form E4 complaint and related correspondence, he repeatedly asserted the debt was the company’s but the money was taken
from his personal account, and that he paid under pressure “from my own personal account which has nothing to do
with the Debtor”.
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He pursued chargebacks and repeatedly sought assurances that DCBL would not pass funds to the creditor if the
chargeback failed—conduct inconsistent with an intention to discharge the company’s liability.
Against that documentary record, a later attempt to re-characterise the payment as corporate (including internal minutes
“retrospectively authorising” the payment as on the company’s behalf) was treated as an ex post facto reconstruction rather than
evidence of the original capacity in which payment was made.
(b) Third-party payment, agency/ratification, and the effect of repayment
The judgment endorsed (and applied) the principle (also referenced via Chitty on Contracts) that a debt is not discharged
by payment from a third party unless that party pays as agent for or on account of the debtor, with
the debtor’s authority or subsequent ratification. Critically, where the creditor (or relevant recipient) repays
the sum to the third party, the payment is treated as “at an end” and the debtor cannot later ratify it to achieve discharge.
The Court concluded that the director’s payment was not made as the company’s agent. Further, the DCBL agreement was a “return” of
that sum to him; therefore, even if ratification were theoretically possible, it was too late once the money had
been returned.
(c) Construction of the DCBL settlement: “return” not “compensation”
The company sought to characterise the later payment to the director as separate compensation for misconduct, leaving the
original enforcement payment intact as discharge of the judgment debt. The Court rejected this as inconsistent with:
- the agreement’s repeated use of the word “return”;
- the identical amount being paid back;
- the overall correspondence showing DCBL’s position eventually aligned with the director’s: the money was personal and should
be returned.
(d) Schedule 12, paragraph 50: “proceeds” and lawfulness
Paragraph 50(1) of Schedule 12 to the Tribunals, Courts and Enforcement Act 2007 provides that proceeds from exercising an
enforcement power must be used to pay the amount outstanding. The Court reasoned that “proceeds” must mean proceeds of the
lawful exercise of the power. On the director’s consistent case—that the enforcement wrongly extracted money from
a non-debtor personally—DCBL was not required to treat the payment as enforceable proceeds payable onwards to the creditor; rather,
DCBL was obliged to return it.
3.3 Impact
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Practical clarification for enforcement disputes: the decision reinforces that whether an enforcement payment
discharges the judgment debt can turn on the payer’s capacity (debtor/agent/true third party) as evidenced contemporaneously.
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Limits on “retrospective authorisation”: companies (especially those operated by a sole director) may attempt
to re-frame personal payments as corporate; this case cautions that such steps may fail where the payment has been treated and
unwound as personal.
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Settlement drafting and characterisation: where an agreement describes money as being “returned”, courts are
likely to treat it as undoing the original payment, with consequences for discharge and ratification arguments.
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Charging order litigation: creditors seeking charging orders can rely on this case to resist “paid already”
defences where the only payment was from a third party later refunded, or where documentary evidence points away from agency.
4. Complex Concepts Simplified
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Writ of control: a High Court enforcement instrument authorising enforcement officers/agents to take control of
and sell a debtor’s goods (or obtain payment) to satisfy a judgment debt.
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HCEO / HCEA: a High Court Enforcement Officer (HCEO) is authorised to enforce writs; a High Court Enforcement
Agent (HCEA) is appointed to use the Schedule 12 procedure on the ground.
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“Bank money”: non-cash payment methods (e.g., card payments) treated as capable of being “proceeds” of
enforcement (as recognised in Marston).
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Agency and ratification: a third party can discharge a debtor’s liability only if paying as the debtor’s agent
(authorised in advance) or if the debtor later ratifies the act. But if the payment is unwound (money returned), later
ratification cannot revive discharge.
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Chargeback: a banking process by which a cardholder disputes a card transaction and seeks reversal. In this
case, the existence and duration of chargeback attempts supported the inference that the payment did not operate as an
immediate, settled discharge of the judgment debt.
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Form E4 complaint: a procedural mechanism for complaints about the conduct of a certificated enforcement agent;
here, it formed part of the factual matrix leading to the settlement agreement and the “return” of funds.
5. Conclusion
[2026] EWCA Civ 401 is a fact-driven but important appellate confirmation that an enforcement payment made by a
person other than the judgment debtor does not, without agency (or timely ratification), discharge the debtor’s liability—especially
where the money is later “returned” under a settlement agreement. The decision underscores the primacy of contemporaneous documents
in determining the payer’s capacity, and it resists attempts to re-label a personal payment as corporate after the event to defeat
subsequent enforcement.