Can a charging order be made in relation to sums not yet crystallised?
Posted on 30th Aug, 2011
Once again, this case involved a complex factual matrix. Within the substantive litigation, suffice it to say that a charging order absolute had been made in favour of the Respondents over a property owned by the Applicant (Monte Developments Limited) (“the Company”). During the course of the continuing litigation, the Company appointed administrators.
The administrators of the Company then applied for the charging order to be discharged. At the same time, the Respondents made various applications, in essence because they were arguing that the administrators had not got on with the process of the administration, including the sale of the property owned by the Applicant.
As a preliminary point, the Hon Mr Justice Floyd concluded that there had been no jurisdiction to make a charging order which covered either unassessed costs or sums not yet the subject of a judgment or order.
From a straight costs point of view, interest in this judgment ends here. However, the presiding judge then looked at whether or not the charging order should be set aside. The judge’s examination began with a consideration of whether the Company was, in fact, solvent at the time when the charging order had been made. If the Company had been insolvent, the Respondents would have gained an advantage over other unsecured creditors which would not be right. If the Company was not insolvent, this factor would not come into play.
The Company’s financial position was considered carefully and the Hon Mr Justice Floyd concluded that it had, in fact, been insolvent at the relevant time. Having reached this conclusion, it was clear that there was a real risk that keeping the charging order in place would operate to the disadvantage of the Company’s creditors as a whole. As a result, the charging order was set aside.
Monte Developments Limited (in administration) v (1) Court Management Consultants Limited (2) Paul Grant Jackson (3) Patricia Mary Jackson [2010] EWHC 3071 (Ch)