B2/ 2000/2156

Neutral Citation Number: [2001] EWCA Civ 1790
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CARDIFF COUNTY COURT
(HIS HONOUR JUDGE MASTERMAN)
                                   Royal Courts of Justice
                                  Strand
                                  London WC2
 
                             Monday, 12th November 2001

B e f o r e :

LADY JUSTICE HALE

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LORD JUSTICE RIX

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SEOIRSE TREABHAR ROPAIGEALACH
Appellant

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ALLIED IRISH BANK PLC
Respondent

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(Computer Aided Transcript of the Stenograph Notes of
Thomas Bernal Reporting Limited
190 Fleet Street, London EC4A 2AG
Telephone No: 020 7421 4040
Fax No: 020 7831 8838
Official Shorthand Writers to the Court)

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MR P SPENCER (instructed by Messrs Hutton's, Cardiff FC10 3DD) appeared on behalf of the Appellant
MR D QUEST (instructed by Dolmans, Cardiff CF10 3DS) appeared on behalf of the Respondent

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J U D G M E N T
Monday 12th November 2001
1.	LADY JUSTICE HALE: This is an appeal with the permission of Tuckey LJ from the order of His Honour Judge Masterman in the Cardiff County Court on 18th April 2000 dismissing an appeal from a charging order absolute made by the district judge. It is therefore a second appeal. It raises a short but not unimportant point of practice in the county courts in relation to charging orders. If an order for payment of a judgment debt by instalments is made after a charging order nisi, but before that charging order has been made absolute: (1) is there jurisdiction to make the charging order absolute at all? (2) if there is such jurisdiction what effect should the instalment order have on the exercise of the court's discretion?
2.	The appellant was the claimant in an action against the respondent bank which he lost. Costs were ordered against him. These were eventually taxed and the appropriate notices issued on 8th July 1999 for a sum of approximately £12,500. A charging order nisi was obtained ex parte on 8th November 1999. The date for consideration of whether it should be made absolute was listed for 25th November but adjourned for lack of court time.
3.	On 12th January 2000 Deputy District Judge Garland-Thomas made an order for payment of the debt by instalments of £35.10 per month. It is worth noting that at that rate it would take between 29 and 30 years to pay off even the £12,500, let alone any further interest that might accrue upon that judgment debt.
4.	On 18th February 2000 District Judge Carson made the charging order absolute. As I have already said His Honour Judge Masterman dismissed the appellant's appeal on 18th April 2000.
(1) The jurisdiction question
5.	This depends upon section 86 of the County Courts Act 1984. Subsection (1) reads as follows:
“Where the court has made an order for payment of any sum of money by instalments, execution on the order shall not be issued until after default in payment of some instalment according to the order.” 
6.	Subsection (3) provides:
“Except so far as may be otherwise provided by [rules of court] made for those purposes, execution or successive executions may issue if there is any such default for the whole of the said sum of money and costs then remaining unpaid or for such part as the court may order either at the time of the original order or at any subsequent time; but except so far as may be otherwise provided by such rules, no execution shall issue unless at the time when it issues the whole or some part of an instalment which has already become due remains unpaid.” 
7.	A charging order is execution for this purpose.
8.	It has been held by this court that a charging order nisi cannot be made at all if an instalment order has been made before that date: see Mercantile Credit Company Limited v Huxtable, Independent, 17 March 1987, The Times, 1 April 1987, one of a series of similar cases decided by this court on 11th March 1987. In that case it was not only held that, as a matter of discretion, a charging order should not be made in such circumstances; Lord Justice Purchas also said:
“... if it were necessary so to hold, I would hold that there was not jurisdiction in the court to make a charging order as long as the instalments were being regularly paid by the judgment debtor.” 
9.	Parker LJ reinforced that conclusion on the jurisdiction point. There had been argument about the effect of the provision in section 1(1) of the Charging Orders Act 1979: this refers to a charge “for securing the payment of any money due or to become due under the judgment or order.” This indicates that a charging order may be made in advance of the money actually becoming payable, but Parker LJ took the view that in this circumstance this catered for the situation provided for in section 86(3) of the 1984 Act; that is that on default of any of the instalments the court could order that the whole became due and subject to the charging order.
10.	Mr Spencer who has appeared for the appellant puts the jurisdiction point very simply. “Execution” in section 86(1) refers to any form of execution. For this purpose a charging order nisi and a charging order absolute are to be treated as two separate forms of execution. A charging order nisi is, as it was described in Roberts Petroleum Limited v Bernard Kenny Limited [1983] 2 AC 192 at 809 precarious until it is made absolute; and there is a discretion whether or not to make it absolute when the matter comes back before the court.
11.	However, the important question is when execution is “issued”. There is, as Mr Quest has put it on behalf of the respondent, only one charging order. It is issued nisi, in other words unless a good cause is shown why it should not continue, and it is then made absolute. A charging order absolute takes effect from the date of the charging order nisi: see Haly v Barry (1868) LR 3 Ch 452 which is still good law on this point. There is an obvious analogy here with a freezing order. This is made ex parte with a return date when it may or may not be confirmed, discharged or varied; but there is only one freezing order unless of course a completely fresh one is made.
12.	I therefore conclude as a matter of statutory construction that there is jurisdiction to make a charging order absolute if a charging order nisi has been obtained before the instalment order was made. It is also tolerably clear that there is nothing wrong in principle with a charging order and an instalment order coexisting. I draw that conclusion from the passage in the White Book, October 2001, at page 1213, sc 50.1.20, which points out that:
“Section 1(1) of the Charging Orders Act 1979 empowers the court to order a charge 'for securing the payment of any sum due or to become due' under a judgment or order. Hence, when a judgment debt is payable by instalments, the High Court has power to make a charging order to secure the whole debt and not merely arrears of instalments, and, indeed, there is power to make an order where there are no arrears. The fact, however, that a debtor is up to date in complying with an order by instalments is likely to be a relevant factor in the exercise of the Court's discretion to make or refuse a charging order... Mercantile Credit Company Limited).” 
13.	From that it would appear that section 86(1) of the County Courts Act is an exception to what would otherwise be the case. Furthermore, as Mr Quest points out, an instalment order provides for the method of payment of a judgment debtor. A charging order gives security for the eventual payment of that debt. In a case such as this, where under the instalment order the debt will not be payable for many years (if at all), there is all the more reason to secure its eventual payment in this way.
(2) Discretion
14.	This leads on to the question of discretion. The matters which are relevant to the exercise of the court's discretion are set out in section 1(5) of the 1979 Act, which provides:
“In deciding whether to make a charging order the court shall consider all the circumstances of the case and, in particular, any evidence before it as to -
(a) the personal circumstances of the debtor, and
(b) whether any other creditor of the debtor would be likely to be unduly prejudiced by the making of the order.” 
15.	It is clear that the court can take into account what has happened since the charging order nisi in deciding whether to make it absolute. Haly v Barry decided to the contrary on this point but was disapproved by this court in Burston Finance Limited v Godfrey [1976] 1 WLR 719. Burston Finance Limited v Godfrey was approved on this point by the House of Lords in the Roberts Petroleum case. Those cases were concerned with the effect of the later insolvency of the judgment debtor. Roberts Petroleum held, in effect, that one judgment creditor should not be able to steal a march on the other unsecured creditors by getting a speedy charging order nisi and thereby pre-empting the statutory insolvency scheme. That of course is all relevant to the matters in section 1(5)(b) of the 1979 Act. There was an argument on this point in the court below but it has not been maintained before this court.
16.	As far as this instalment order is concerned, therefore, it would fall to be considered principally under subparagraph (a) the personal circumstances of the debtor. The circuit judge did not expressly refer to the relevance of the instalment order in the exercise of the discretion. The district judge, however, did do so in the following terms:
“I have then to look at the personal circumstances of the debtor, about which I had been given information and evidence. I have also to look to the fact that there is an instalment order now in being. Were I to make a charging order absolute, that instalment order will still remain in being, and it is open to the defendant to continue paying that.” 
17.	When the district judge says “the defendant” he means the appellant to this court, who was the claimant in the basic action. The quotation continues:
“Indeed the claimant [by whom he means the respondent who was the defendant in the basic action] made the submission that the claimant would not seek to enforce sale of the property whilst those instalments were being paid. Of course, whether or not the property should be sold is a matter for a separate action were there any attempt made to seek to enforce by sale the charging order absolute.” 
18.	Mr Spencer has very fairly accepted that the district judge was there taking into account the relevant factors in the exercise of his discretion. He is driven, therefore, to argue that as a matter of principle an instalment order and a charging order should not as a general rule coexist.
19.	For the reasons that I have already explained it is impossible to sustain the contention that as a matter of principle they should not coexist. Indeed one can think of many circumstances in which it would be entirely sensible and satisfactory from both parties' points of view for them to do so. That being so I see no ground upon which this court could interfere with the exercise of the discretion which primarily rested with the district judge in this case. 
20.	For those reasons I would dismiss this appeal.
21.	 LORD JUSTICE RIX: I agree. On the first point, that of jurisdiction, the statutory word found on a number of occasions in section 86 of the County Courts' Act 1984 is “issue”. What that section is referring to is the issuing of execution. One asks the question: when does execution issue in connection with a charging order nisi which is confirmed and made absolute? It is in my judgment when the order nisi is made and there is no separate and additional issue of execution when the order is made absolute. My Lady has referred to the analogy of a freezing order which in my judgment is entirely in point.
22.	As to the second matter debated before the court, that of discretion, this was considered by District Judge Carson in my judgment perfectly adequately. It was not separately considered by His Honour Judge Masterman, but it does seem to me that there is in any event force in Mr Quest's submission that the matter was presented before the learned judge on specific points, which he details in the course of his judgment. First, the point of jurisdiction; second, the question of consideration of other creditors and third (or as he says last), the point raised about the possible technical insolvency of the appellant.
23.	In my judgment there may well be, depending upon all the circumstances of the case, good reason to make absolute a charging order nisi when a lengthy instalment order has been made. As Mr Quest submitted, the more time is given to a judgment debtor the more reason there will be for security.
24.	It seems to me that for those reasons the exercise of discretion in this case cannot be faulted and therefore it must follow that this appeal must be dismissed.
(Appeal dismissed; respondents' costs summarily assessed at £4,500; personal liability of Appellant to meet any part of costs to be decided by the costs judge; application for permission to appeal to the House of Lords refused).