Vanuatu Abattoirs Ltd v Livestock Development Authority [2000] SBHC 19; HC-CC 184 of 1999 (9 May 2000)

HIGH COURT OF SOLOMON ISLANDS

Civil Case No. 184 of 1999

VANUATU ABATTOIRS LIMITED

–v-

LIVESTOCK DEVELOPMENT AUTHORITY

High Court of Solomon Islands
(F. O. KABUI), J)

Date of Hearing: 8th May 2000
Date of Judgment: 9th May 2000

Mrs L. Tepai for the Plaintiff
Defendant not in Court

JUDGMENT

(Kabui, J): This is an application by ex parte Summons brought by the Plaintiff against the Defendant. The Orders sought in the Summons are in these terms:-

1. that the Defendant’s interest in the fixed term estate in Parcel Number 191-057-4 (“the Property”) be charged to the favour of the Plaintiff until the payment of VT1,792,269 debt and VT291,244 interest and $180.00 costs due on the said judgment of this Court dated June 10, 1999;
   
2. that the Sheriff or an officer of the High Court issue a written order prohibiting the Defendant from alienating or any person or party from receiving the Property by way of purchase, gift or otherwise;
   
3. liberty to apply to this Court for further orders;
   
4. costs of this application be paid by the Defendant; and
   
5. any other relief this Court deems fit to make.
   

Order 1 above is basically meant to be an Order to charge the Defendants fixed-term interest in Parcel No. 191-057-4 (“the property”) in favour of the Plaintiff’s claim. It is capable of creating a charge over the Defendant’s property.

On 25^th May 1999, the Plaintiff filed a Writ of Summons against the Defendant together with a Statement of Claim claiming the sum of VT1,792,269 being payment for the supply of 16,0002.4 kilogrammes of beef delivered to the Defendant on or about 14^th December 1994 based upon a verbal contract entered into between the Plaintiff and the Defendant on 13^th December 1994. The Plaintiff also claimed interest plus cost. A true copy of the Writ of Summons was served upon the Defendant on 26^th May 1999. The Defendant having failed to enter an appearance to the Writ, the Registrar of the High Court formally entered a default judgment against the Defendant on 10^th June 1999. The interest as calculated by the Registrar of the High Court is VT291,244 plus SI$180.00 costs.

What is a charging Order?

I will not do any better in this regard, than to quote the words of Bernard C. Cairns in his book, Australian Civil Procedure, 1981 at pages 536-537 in explaining the application of a charging order. The learned author states –

In brief a charging order is a remedy which is available to a judgment creditor to obtain what amounts to an equitable charge over shares and securities owned by the judgment debtor. If the judgment is not satisfied, the creditor may rely on the charge to obtain an order for sale. He may also apply for the appointment of a receiver, who recovers the profits of the property under charge.

The property which may be made the subject of a charging order varies, but commonly it comprises stocks and shares, and analogous orders, referred to as stop orders, apply to money held in court. A stop order merely provides that the funds in court may not be dealt with without reference to the judgment creditor. It does not create a charge over the funds to which it relates.

The rules provide a procedure for the creditor to apply for a charging order. At first the application is for an order nisi. It is made without notice to the debtor so that he cannot dispose of his assets. As with garnishees, the court has a discretion whether to grant a charging order. In the normal course this discretion is exercised when the application is made for the order absolute. The court may refuse the order if it would be unjust to grant it.

The order nisi prevents dealings within the property or securities to which it is applicable. As already mentioned, the binding force of the order absolute is different. It puts the judgment creditor in the same position as if the debtor had granted him an equitable charge. In law the charge created by the order is enforceable in the same way as an equitable charge, and has the same priority in relation to other interests that an equitable charge would have in relation to those interests.

A regards a charging order on real property (land), the learned author at page 530 states -

“Real property is liable to be sold under a writ of fi. fa. in just the same way as personal property. In some cases the debtor may have only an equitable interest in realty. If so, that interest can be made the subject of a charging order, or the court may appoint a receiver by way of equitable execution.”

It is therefore clear that an equitable interest entitles the creditor to ask the Court for a charging order in relevant cases.

The Position in Solomon Islands

There appears to be no provision in the High Court (Civil Procedure) Rules 1964, (the High Court Rules) governing the procedure for applying for charging orders both in the case of securities, stocks, shares as personal property and land as real property. Order 46 of the Supreme Court 1883 as published in The Annual Practice 1961, Volume 1 was not reproduced in the High Court Rules. Order 46 appears in The Supreme Court Practice 1973, Volume 1, as Order 50 of the Rules of the Supreme Court 1965.

The relevant part of Order 50 is in these terms –

“1. The power to make an order under section 35 of the Administration of Justice Act, 1956 imposing a charge on land or interest in land of a judgment debtor shall be exercisable by the Court.

2. Any such order shall in the first instance be an order to show cause, specifying the time and place for further consideration of the matter and imposing the charge until that time in any event.
   
3. An application for an order under the said section 35 may be made ex parte.
   
4. The application must be supported by an affidavit –
   
   • (a) identifying the judgment or order to be enforced, and stating the name of the judgment debtor on whose land or interest it is sought to impose a charge and the amount remaining unpaid under the judgment or order at the time of the application;
     
   • (b) specifying the land on which, or an interest in which, it is sought to impose a charge; and
     
   • (c) stating that to the best of the information or belief of the deponent the land or interest in question is the judgment debtor’s and stating the sources of the deponent’s information or the grounds for his belief.
     
5. Unless the Court otherwise directs, a copy of the order must, at least 7 days before the time appointed for the further consideration of the matter, be served on the judgment debtor and if the judgment debtor does not attend on such consideration proof of service must be given;
   
6. On the further consideration of the matter the Court shall, unless it appears (whether on the representation of the judgment debtor or otherwise) that there is sufficient cause to the contrary, make the order absolute with or without modifications;
   
7. Where on the further consideration of the matter it appears to the Court that the order should not be made absolute, it shall discharge the order ...”
   

I believe this position remained exactly the same up to 1979 when the Charging Orders Act, 1979 was enacted and came into force in England. Section 1 of that Act now forms the basis of Order 50 of the Rules of the Supreme Court 1965 as published in The Supreme Court Practice 1995, Volume 1. Although there are a number of amendments the 1965 position remains the same in substance. That is to say, the procedure in the main remains the same and charging orders for both personal and real property is still the regime as the position was in the Rules of the Supreme Court 1883 as of 1961 through to 1979 as published in 1995.

This Case

This case must therefore be dealt with under Order 71 of the High Court Rules. The application by the Plaintiff is accordingly dealt with in accordance with the practice in force for the time being in the High Court of Justice in England under Order 71 of the High Court Rules. This means that the Order in the first instance, as it is in England, must be an Order to show cause. The Order can only be made absolute after giving time to the Defendant to show cause why the Order should not be made absolute or that it should be discharged. Applying the current and relevant practice in the High Court of Justice in England, I am prepared to grant the application sought by the Plaintiff on the basis of affidavit evidence filed by the Plaintiff pursuant to Order 71 of the High Court Rules. I therefore grant a charging order in the form of a show cause order in favour of the Plaintiff. The terms of the show cause order may be those terms in Form 75 specified in The Supreme Court Practice 1973, Volume 2 at page 34. Counsel for the Plaintiff will draw up these terms for the Court for signing.

F. O. Kabui
Judge