“APPROPRIATE COURT” TO IMPOSE CHARGING ORDER OVER FUNDS PAID INTO COURT PURSUANT TO COURT OF APPEAL’S ORDER

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In

A v B [2019] EWHC 953 (Comm) (15 March 2019)

the Commercial Court granted a judgment creditor a Final Charging Order over funds paid into court by the judgment debtor in separate proceedings, although the Court of Appeal had ordered the payment in.

The judge held that he had jurisdiction to make the Final Charging Order because the court in which the funds had been lodged for the purposes of section 1 of the Charging Orders Act 1979 was the Commercial Court.

This judgment illustrates how sums paid into court in separate proceedings may be vulnerable to a charging order and is of interest for its analysis, in that context, of “the appropriate court” for the purposes of section 1 of the Charging Orders Act 1979.

Section 1(1) of the Charging Orders Act 1979 provides that, where a High Court judgment requires a debtor to pay money to a creditor, “the appropriate court” may impose on any of the debtor’s property a charge for securing the payment due, or becoming due, under the judgment.

If the property to be charged is a fund in court, section 1(2) defines “the appropriate court” as “the court in which that fund is lodged”.

Here, a judgment creditor had obtained an arbitration award against the judgment debtor and sought an Final Charging Order over money that the Court of Appeal had ordered the judgment debtor to pay into court as a condition of granting the judgment debtor permission to appeal against a Commercial Court judgment obtained by another company against the judgment debtor.

The judgment creditor had also issued an application under CPR 72.10 for payment out of the money in court, primarily so that if any other party sought payment out, it would be notified.

The court held that the effect of the Court of Appeal requiring the judgment debtor to pay the company’s judgment sum into court was that if the judgment debtor’s appeal was dismissed, the company would be able to enforce against that sum.

The Commercial Court was the court in which the fund was lodged, because it was to stand as security for the payment of a Commercial Court judgment.

The judge rejected the judgment debtor’s submission that the charging order application was otiose in light of the CPR 72.10 application.

The remedies provided by the Charging Orders Act 1979 and CPR 72.10 were cumulative, not exclusive, and by obtaining an Final Charging Order, the judgment creditor would achieve priority over any other creditor except the company.