Interpool Ltd (Judgment Creditor) Respondent) v Anthony John Galani (Judgment Debtor) Appellant) Quelonia Shipping Inc. (Intervenor) Appellant)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE PURCHAS,LORD JUSTICE NOURSE |
| Judgment Date | 04 December 1987 |
| Judgment citation (vLex) | [1987] EWCA Civ J1204-5 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | 87/1254 |
| Date | 04 December 1987 |
[1987] EWCA Civ J1204-5
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(HIS HONOUR JUDGE ODDIE, sitting as a Deputy Judge of the High Court)
Royal Courts of Justice.
Lord Justice Purchas
and
Lord Justice Nourse
87/1254
No. 18 of 1986
and
MR. DAVID OLIVER, Q.C. and MR. PAUL GIROLAMI (instructed by Messrs. Richards Butler) appeared on behalf of the (Intervenor) Appellant.
MR. MICHAEL JONES (instructed by Messrs. Clifford Chance) appeared on behalf of the (Judgment Debtor) Appellant.
MR. JEFFREY GRUDER (instructed by Messrs. Birkbeck Montagu's) appeared on behalf of the (Judgment Creditor) Respondent.
Mr. Oliver, Mr. Jones and Mr. Gruder, we shall grant leave to appeal, and I am going to invite Lord Justice Nourse to deliver the first judgment.
This is an appeal from a decision of His Honour Judge Oddie, sitting as a judge of the Queen's Bench Division in chambers, given on the 12th June, 1987 by which he allowed an appeal by the judgment creditor from an order of Master Turner discharging a charging order nisi on a large house in Hampstead, which is registered in the name of the intervenor. The judge ordered that the charging order be reinstated and that the hearing of the application to make it absolute be adjourned until the determination of an issue which he directed to be tried. The issue is whether the judgment debtor has any and, if so, what beneficial interest in the house. Now the intervenor and the judgment debtor have appealed to this court, contending that the learned judge was in error in directing that issue to be tried. They say that he ought to have discharged the charging order without more ado.
The material facts are these. The judgment debtor is Mr. Anthony John Galani. He has said in evidence that in the mid to late 1970s his business interests collapsed and that what money and assets he had were lost or sold. He says that his liability to the judgment creditor, Interpool Limited, stems from those days. In July 1982, when they were living in Paris, the house in question, No. 31 Winnington Road, London, N.2, was purchased by the intervenor, a Panamanian company called Quelonia Shipping Inc., for the occupation of the judgment debtor, his wife and children. The purchase was duly completed, and on the 11th October, 1982 the intervenor was registered at Her Majesty's Land Registry as the proprietor with title absolute. In 1984 the judgment debtor and his family left Paris and moved into occupation of the house. They have lived there ever since. On the 21st October, 1985 the High Court of Paris entered judgment for the judgment creditor against the judgment debtor in a sum which, together with interest, amounted, at the date of its registration in England on the 9th May, 1986 under the Foreign Judgments (Reciprocal Enforcement) Act 1933,to some U.S. $14 million or over £9 million sterling. The judgment debtor disputes neither the amount of the judgment nor the validity of its registration nor its enforceability in England against his assets here. What is hotly disputed both by him and the intervenor is the suggestion that his assets include a beneficial interest in the house, that being the only basis on which a charging order could properly be made against him.
The principal positive evidence on which the judgment creditor, through Mr. Gruder, relies in order to establish that the judgment debtor has a beneficial interest in the house is threefold: first, the house was purchased for the judgment debtor and his family to live in; secondly, they have lived in it since 1984; thirdly, he and his wife were actively engaged in its purchase. The first two of these facts are admitted, indeed asserted, by the judgment debtor and the intervenor. As to the third, they say that the judgment debtor and especially his wife were initially involved in the negotiations for the house and throughout maintained a close interest, since it was they who were going to be living there. A piece of documentary evidence which might support the judgment creditor's case is a report to the vendor of the property from his estate agents dated the 10th July, 1982, ten days before contracts were exchanged in the name of the intervenor. That named the purchaser as "Mr. D. Galani (or Company to be formed)". That evidence is not at all conclusive, and against it it is pointed out, first, that it is Mrs. Galani's first name which is Desponia, whereas the judgment debtor's initials are A.J.; and, secondly, that the intervenor was not formed in order to acguire the house; it had been incorporated in 1980.
I shall come back to the evidence sworn on behalf of the judgment creditor later, but I will say straight away that those three facts were in my view sufficient to found the charging order nisi.
The principal evidence on the other side is that of the judgment debtor himself and his wife's uncle, Mr. Pandelis Margaronis, who says that he is the beneficial owner of the entire authorised and issued share capital of the intervenor and has produced a share certificate in support of that claim. The evidence of these two deponents is to the following effect:
(1) The entire beneficial interest in the house belongs to the intervenor and neither the judgment debtor nor his wife has or has ever had any beneficial interest in it.
(2) Neither the judgment debtor nor his wife holds or has ever held any shares or any office or position in the intervenor or any other interest in it, nor has either of them ever had any authority to act on its behalf.
(3) The whole of the funds required to meet the purchase price of the house and the conveyancing fees and expenses came from a numbered Swiss bank account of Mr. Margaronis and belonged entirely to him. None of those funds came from or belonged to the judgment debtor or his wife.
(4) There has been no dealing in the beneficial ownership of the house since its purchase and transfer to the intervenor.
(5) Mr. Margaronis' object in causing the intervenor to purchase the house as a home for the judgment debtor and his family is described by the judgment debtor in paragraph 9 of his affidavit where, after referring to the collapse of his business interests, he says:
"Mr. Margaronis (and other members of my wife's family) has made no secret of the fact that his priority, since then, has been to protect my wife and our children. Mr. Margaronis has, I believe, little faith in my ability to manage affairs and has kept me at a distance from my wife's family's monies. It is my association through marriage with my wife's family which has enabled me to survive. The extent of my dependency is reflected in the fact that I was excluded from the discussions between my wife and Mr. Margaronis when the terms on which my family and I would occupy the property were settled. My wife informs me, however, and I verily believe, that it was agreed that although no rent as such would be payable for our occupation she was to be, and is, responsible for all outgoings such as rates, electricity bills, etc., and was to be responsible for the upkeep of the house. Monies for this were to be and have been provided by Mr. Margaronis. I have been extended the courtesy and respect (as head of my own family) to see some of those monies pass through my accounts."
In paragraph 2(iii) of his affidavit Mr. Margaronis says:
"There is not and has never been any question of Mr or Mrs Galani having any beneficial interest in the property. I have supported my niece and, out of my concern for her, her family to a substantial extent since the business failures of Mr. Galani, and he, as my niece's husband, has benefited from that support. As part of that support they and their children reside at the property subject to the continuing permission of myself and Quelonia."
That evidence of the judgment debtor and Mr. Margaronis is relied on by their counsel as being a credible explanation which is entirely consistent with, and indeed which strongly supports, their case that the judgment creditor does not have and has never had a beneficial interest in the house.
The power of the court to make a charging order is contained in the Charging Orders Act 1979. By section 1(5) it is provided that 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 two matters which do not arise at this stage. The combined effect of section 2, subsections (l)(a)(i) and (2)(a) is to enable a charge to be imposed by a charging order on any interest held by the debtor beneficially in land. Accordingly, it is clear that if the judgment debtor in this case has a beneficial interest in the house a charging order can be made in respect of it.
The procedure for obtaining a charging order under the Act is prescribed by Order 50 of the Rules of the Supreme Court. Rules 1 and 2 deal with the obtaining of an order nisi and service of notice of it on the interested parties. Rule 3(1) is in these terms:
"On the further consideration of the matter the Court shall either make the order absolute, with or without modifications, or discharge it."
The first question which arises on this appeal is as to the principles by which the court ought to be guided in deciding whether an issue should be directed to be tried as a step in the further consideration of the matter for which rule 3(1) provides. That is a question on which there is no direct authority,...
To continue reading
Request your trial