Saisie is a Guernsey customary law method of enforcement against real property similar to how an English building society would enforce against a charge. In Guernsey, however, a creditor does not need a bond over the property (similar to a mortgage charge) to bring Saisie proceedings against a debtor. Saisie is a complicated process and takes time; it puts the enforcing creditor to a degree of expense but, more importantly, it carries a certain amount of risk.
Once a creditor has decided to enforce against real property they lose the right to enforce against moveable property, such as possessions or accounts, so careful consideration is necessary as to which route to take.
Importantly, in situations where there is more than one creditor, there can be no guarantee that any particular creditor will be successful at the end of the process. This is because, in the final stages of the Saisie, competing creditors have their claims ranked by the court in order of priority. Creditors are then called in reverse order of priority and asked to decide whether to take possession of the property or to surrender their claim. The first creditor who chooses to take the property must then pay off higher-ranking creditors in full within 15 days.
Therefore, unless a creditor can be confident that:
- their claim has the highest priority (commonly lending banks with a registered bond); or
- the property will fetch more on sale than the value of their claim
and they have the funds to pay any possibly higher ranking claims in full, in cash and within 15 days, Saisie proceedings are not entirely straightforward or without risk.
A brief overview of the procedural steps is as follows:
- Before commencing Saisie proceedings, the creditor must obtain judgment on the debt.
- The creditor would then apply to the Royal Court for a preliminary vesting order ("PVO") against the property, which requires good service of the papers on the debtor.
- Once the PVO is granted the creditor must instruct HM Sergeant to notify the debtor in writing of the order.
- Once the PVO is granted the debtor retains ownership of the property but the creditor gains the right to make use of the property. The creditor also gains the right to evict the debtor, which is usually done as soon as the PVO is granted, but requires a separate application to court.
- The creditor must then apply to the court to appoint a Commissioner (usually a Jurat) to certify an account of all sums due to the creditor, including projected costs and interest up until the Saisie proceedings have completed.
- The next stage is a further court hearing where the creditor applies to a special monthly sitting of the court known as the "Plaids d'Heritage" for an interim vesting order ("IVO"). At this stage, the debtor's interest in the property comes to an end and title is vested in the creditor for the benefit of all claimants against the property. Any income in respect of the property is held for the party who eventually elects to take the property and the creditor should ensure the property is secure and insured.
- Once the IVO is granted, the creditor must instruct HM Sheriff and must notify the debtor in writing of the making of an IVO.
- The creditor would then request that the court office opens a register of claims and would give notice in the local press (in the "Gazette Officielle" notices) on two occasions, once in each of two successive weeks that the register has opened. The notice invites any other creditors who wish to make a claim against the property to register their claim at the court office. The register remains open for 28 days from the date of the second notice.
The creditor must register their own claim against the property as there is no automatic registration. Once the 28 days has expired, the creditor must then summons each of the registered claimants to attend before a Commissioner appointed by the court to decide the order of priority between the competing claims.
Prior to the marshalling hearing, the creditor is required to produce a draft marshalling report which sets out the proposed order of priority between claims. The Commissioner will then confirm the contents of the report and set a date for a final vesting order ("FVO") hearing before the next Plaids d'Heritage court sitting. If the only claim registered is the creditor's then they may apply immediately for an FVO.
- The final stage in Saisie proceedings is an application to the court for an FVO.
Starting with the lowest priority claim, each registered claimant is asked whether they choose to take the property on the condition they pay in full all higher ranking creditors or to surrender their claim against the property and so each creditor must calculate the cost and benefit to them of either accepting the property or surrendering their claim. The creditor who chooses to take the property is granted the FVO and the property is vested in them 'for an estate of inheritance' which is the Guernsey equivalent of a freehold title. They also become liable to pay any higher ranking creditors the full amount of their claims in cash within 15 days.
Traditionally, the successful creditor is entitled to keep or sell the property as they wish and is under no obligation to return to the debtor any surplus in any proceeds of sale. However, current practice is for financial institutions such as banks to return any surplus to the debtor and the court often requires those creditors to give undertakings to this effect.
Each of the above stages involves advocates fees and other costs. For example, service fees by HM Sergeant are up to £140 per document served, publication fees in La Gazette Officielle are approximately £500 and court fees are approximately £150 for opening the register of claims and registering an interest. court hearing fees are approximately £250-350 per hearing, depending upon the amount of debt.
