Section 64 – Enforcement of pledge: general
286.This section sets out, as a general rule, that a pledge can only be enforced using the methods provided for by the Act.
Example
Barry lends David £1,000, and in exchange David grants a statutory pledge over a vintage car worth £100,000. The Act does not permit the forfeiture of encumbered property, and it is therefore unlawful for Barry to require in the event of a default that the car is forfeited to him so that he receives a windfall worth £99,000.
287.Subsections (2) and (3) have the effect that a pledge may be enforced in any lawful manner where the secured obligation is defaulted upon, or in such circumstances are as agreed in writing by the provider and the secured creditor. For example, the parties might agree in writing that the pledge will be enforced only if a certain number of days have elapsed without the default being remedied.
288.Subsection (4) requires the secured creditor to conform to reasonable standards of commercial practice. Similar provision can be found in regulation 24 of the International Interests in Aircraft Equipment (Cape Town Convention) Regulations 2015 (S.I. 2015/912). What is unreasonable for the purposes of subsection (4) will differ from case to case, but might include taking an excessively long period to complete an enforcement procedure.
289.Subsection (4) does not, however, specify to whom the duty to conform to reasonable standards is owed, and so the general law will apply. The duty might for example be owed to any of the provider, the debtor (if different), another creditor, or an office-holder such as the liquidator of a limited company. See also the analogous duties in sections 68(2), 70(2) and 71(2) on the enforcing creditor to obtain the best reasonably attainable value where encumbered property is sold, let or licensed.
290.Subsection (5) provides that the ability to enforce a pledge is subject to section 55(3) (the prohibition on enforcing a pledge against a motor vehicle before it is transferred to a purchaser or hirer), section 65 (the requirement to serve a pledge enforcement notice) and section 66 (the requirement for a court order in certain cases).
