England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CARDIFF COUNTY COURT
(HIS HONOUR JUDGE MASTERMAN)

		Royal Courts of Justice The Strand London Wednesday 29 August 2001

Wednesday 29 August 2001

1. LORD JUSTICE TUCKEY: This is an application for permission to appeal from an order made by His Honour Judge Masterman in the Cardiff County Court on 18 April 2000, dismissing appeals by the applicant, Mr Ropaigealach, from orders made by district judges in that court earlier that year.
2. Mr Ropaigealach needs permission to appeal out of time since his application was made within 28 days, but not within 14 days as the rules now require. His explanation for that failure is that he was unaware that the rules had changed, having had previous experience in this court. In the circumstances I think that is a sufficient reason, having regard to the merits of this application with which I will deal in a moment, to extend time, which I do.
3. The appeals follow the applicant's unsuccessful proceedings against the respondent bank which resulted in the bank obtaining judgment for about £12,500 against the applicant for their costs. On 8 November 1999, the bank obtained a charging order nisi over the applicant's beneficial interest in a property in Cardiff Bay. This order was made absolute by District Judge Carson on 18 February 2000. In the meantime, however, on 12 January 2000, Deputy District Judge Garland-Thomas had made an order requiring the applicant to pay off the judgment debt by instalments of £35.10 per month, and ordered him to pay the bank's costs assessed at £206.80.
4. The applicant appealed District Judge Carson's order and the earlier costs order to His Honour Judge Masterman. His principal contention was, and is, that there was no jurisdiction to make the charging order absolute because he was admittedly not in default of the earlier instalment order. Alternatively, the charging order absolute should not have been made for this reason and/or because this unduly prejudiced his other creditors.
5. The power to make charging orders to enforce judgment debts comes from the Charging Orders Act 1979. Section 1(5) of that Act 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."

6. So the making of such orders is very much a matter for the discretion of the court. Procedurally the court first makes a charging order nisi on a without notice application by the judgment creditor, and it is then for the judgment debtor to show cause why it should not be made absolute: see Order 50, rules 1 and 3 for the procedure in the High Court. But if the charging order is made absolute, the order takes effect from the date when the order nisi was made.
7. In support of his jurisdiction argument, the applicant relies on section 86(1) of the County Courts Act 1984 which provides:

"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."

8. This court had to consider the provisions of that section in Mercantile Credit Company Limited v Huxtable and others (CA unreported, 11.3.87). In that case the judgment creditor had obtained a charging order nisi after the court had ordered the judgment debtor to pay off the judgment debt by instalments. As the judgment debtor had complied with the instalment order, the County Court had refused to make a charging order absolute as a matter of discretion. The judgment creditor appealed and the court dismissed the appeal, saying that it was well within the court's discretion to refuse to make a charging order where the judgment creditor had been faithfully paying the instalments ordered by the court. It was not therefore necessary for this court to decide whether the court had jurisdiction to make such an order, but Stocker LJ, with whom Parker LJ agreed, said at page 10 of the transcript:

".... the section of the County Courts Act which enforces execution of payment by instalments under Section 86 must apply to Section 1 of the 1979 Act, and 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. In other words, he held that the making of a charging order was "execution on the order" within the meaning of section 86(1) of the County Courts Act 1984. If it had been necessary for the court to decide, he would have held that there was no jurisdiction to make a charging order so long as the instalment order was being complied with.
10. The District and County Court Judges in this case distinguished the Mercantile Credit case on the ground that the instalment order in that case had been made before the charging order nisi. This distinction, His Honour Judge Masterman said, made the applicant's argument fallacious because (relying on Hailey v Berry [1868] LR 3 Ch 452) a charging order absolute takes effect from the date of the order nisi.
11. There is no doubt about when a charging order takes effect, but in Hailey v Berry it was suggested that the court was not entitled to have regard to things which had happened after the order nisi was made. This suggestion was expressly disapproved by the majority of this court in Burton Finance Ltd v Godfrey [1976] 1 WLR 719.
12. I think there can be no doubt that before making a charging order absolute the court can take into account things which have happened after the order nisi has been made. Whether that means that section 86(1) precludes the court from making the order absolute where an instalment order has been made and there is no default is, I think, arguable. If it does not, the fact that such an order has been made and complied with must, as the Mercantile Credit case shows, be something which the court should take into account when deciding whether to make the order absolute. It appears that neither the District nor the County Court Judge in this case did so once they had decided that the court had jurisdiction to make the order.
13. This is a second appeal, but I think the points I have referred to are sufficiently important points of principle and/or practice to justify permission being given in this case. Charging orders are fairly heavy weapons in the court's enforcement armoury and so the way in which they are deployed merits the attention of this court in an appropriate case. In saying this, I should simply add, so that the applicant is under no illusions about the matter, that merely because I take that view does not mean that he will necessarily succeed on the appeal. If he fails, he will be at risk of having to pay further costs to the bank.
14. I do not think his other points about the making of the charging order absolute add anything to his case. If the court had no jurisdiction to make the order, they are irrelevant. If the court had jurisdiction but should have had regard to the instalment order, the other matters the applicant relies on will have to be considered by the court before deciding whether the charging order should be made absolute. Standing on their own these points do not, in my judgment, justify granting permission to appeal since they essentially involve an attack on the exercise of discretion. Nor for the same reasons do I think permission to appeal from the costs order made at the time of the instalment order should be granted. This order was made on the applicant's application for a stay of the judgment against him and was not therefore dependent upon the outcome of the bank's application for a charging order.
15. For the reasons I have given I will give the applicant permission to appeal on ground (B) of his three grounds of appeal, which I think sufficiently covers the points I have referred to in this judgment, but refuse permission on grounds (A) and (C).
16. Mr Ropaigealach, you are obviously used to appearing on your own, and I am not saying that you should not do so in this court. It is possible, having got permission to appeal, that you might be able to get some form of legal assistance. If I may say so, your skeleton argument puts the point very clearly, but it may be that you would be well advised to obtain legal assistance if you can. I only throw the thought out for your consideration.
17. THE APPLICANT: Thank you.