National Westminster Bank Plc v Patrick R King
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE DAVID RICHARDS,Mr Justice David Richards |
| Judgment Date | 20 February 2008 |
| Neutral Citation | [2008] EWHC 280 (Ch) |
| Court | Chancery Division |
| Date | 20 February 2008 |
| Docket Number | Case No: HC07C01161 |
[2008] EWHC 280 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice David Richards
Case No: HC07C01161
Paul Henton (instructed by Shoosmiths) for the Claimant
The Defendant did not appear
Approved Judgment
Hearing dates: 29 January 2008
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
The Hon.
Introduction
This application raises an issue of some practical importance. Does the High Court have power under section 40(2) of the County Courts Act 1984 to order the transfer of proceedings to a county court, notwithstanding that the proceedings would otherwise fall outside the jurisdiction of the county court? Section 40(2), as substituted by the Courts and Legal Services Act 1990 with effect from 1 July 1991, provides that subject to certain provisions “the High Court may order the transfer of any proceedings before it to a county court”. Should this provision be read as subject to a qualification that it applies only to those proceedings which the county court would otherwise have jurisdiction to hear and determine? Section 40, as originally enacted, made clear that it was not subject to such qualification.
The claim in this case is to enforce a charging order over the residential property of a judgment debtor by an order for sale.
Jurisdictional limits
I will first refer to the provisions which govern the jurisdiction of county courts in this type of case.
The county courts were created by statute and, as such, their jurisdiction and powers are restricted to those conferred by or pursuant to statute. This is in terms confirmed by section 1(1) of the County Courts Act 1984 (CCA 1984): each county court “shall have such jurisdiction and powers as are conferred by this Act and any other enactment for the time being in force”. Sections 15 to 38 set out the extent of the county courts' jurisdiction and powers as regards a wide variety of claim. Historically a major constraint on their jurisdiction was a financial limit on the value of the claim or property in issue. The “county court limit” is fixed by order in council and was last fixed in 1981 at £30,000. As a result of amendments made by the Courts and Legal Services Act 1990 (the 1990 Act) the financial limit was removed from several categories of claim, including claims in contract and tort and claims for the recovery of land.
The county court limit remains for “equity proceedings” as specified in section 23 of the CCA 1984. Section 23 provides that “A county court shall have all the jurisdiction of the High Court to hear and determine” seven categories of proceedings including:
“(c) proceedings for foreclosure or redemption of any mortgage or for enforcing any charge or lien, where the amount owing in respect of the mortgage charge or lien does not exceed the county court limit.”
Section 3(4) of the Charging Orders Act 1979 provides that:
“Subject to the provisions of this Act, a charge imposed by a charging order shall have the like effect and shall be enforceable in the same courts and in the same manner as an equitable charge created by the debtor under his hand.”
Applications for an order for sale of property which is the subject of a charging order therefore fall within section 23(c), as confirmed by CPR 73.10(2). A county court's original jurisdiction to enforce a charging order is therefore limited to those cases where the debt does not exceed £30,000.
By section 24, a county court's jurisdiction in proceedings to which section 23 and other statutory provisions apply can be extended without limit by the written consent of all parties.
County courts have a more extensive jurisdiction as regards the making of charging orders. They have a largely exclusive jurisdiction to make charging orders to secure any judgment of a county court without limit and any judgment of the High Court not exceeding the county court limit, and they have a concurrent jurisdiction in the case of High Court judgments which exceed the county court limit: section 1 of the Charging Orders Act 1979.
It may seem strange that while county courts have an unlimited jurisdiction to make charging orders, they have a very limited jurisdiction to enforce them. The notes to CPR Part 73.10 in the White Book suggest the reason:
“It is one thing to make a charging order giving security to the judgment creditor and quite another thing to order a sale of the judgment debtor's property. Just as the Court has a discretion whether or not to make the charging order so it has discretion whether or not to order the sale. It would be an extreme sanction and all circumstances would have to be considered. Where the property is the debtor's home the Court will have to consider the provisions of Art.8 European Convention on Human Rights. To order sale is a draconian step to satisfy a simple debt and is likely to be ordered for example, in a case of the judgment debtor's contumelious neglect or refusal to pay or in a case where in reality without a sale the judgment debt will not be paid.”
The position is therefore that while the county courts have a broad, and often exclusive, jurisdiction to make charging orders, their original jurisdiction to enforce charging orders is restricted to cases where the relevant debt does not exceed £30,000, unless the parties agree otherwise under section 24.
There is a possible complication depending on whether the charged property is in the sole name of the debtor on in joint names. Where the charged property is in the sole name of the debtor, the jurisdiction to make an order for sale arises under the inherent jurisdiction of the court, supplemented by section 91 of the Law of Property Act 1925 (the LPA). The county court limit applies in such cases, by virtue of section 23(c) of the CCA 1984. If the statutory power is exercised, it also applies by virtue of section 91(8) of the LPA and article 2(4) of the High Court and County Courts Jurisdiction Order 1991 (the 1991 Order). The court also frequently exercises the powers under section 90 of the LPA to make vesting orders or other orders to facilitate a sale: see Ladup Ltd v Williams & Glyn's Bank Plc [1985] 1 WLR 851 at 855. Again, the exercise of these powers is subject to the county court limit: section 90(3) of the LPA and article 2(4) of the 1991 Order. Sections 90(3) and 91(8) of the LPA were added by the CCA 1984 (Sch 2 Pt II para 3).
Where the charged property is in joint names, for example the debtor and his or her spouse, the charge attaches only to the debtor's beneficial interest in the property, and the jurisdiction to enforce the charging order arises under section 14 of the Trusts of Land and Appointment of Trustees Act 1996. By virtue of article 2(1)(p) of the 1991 Order county courts have an unlimited jurisdiction under section 14. It has been suggested that this leads to the anomalous position that a county court has a limited jurisdiction in the generally simple case of a charge over a property in the debtor's sole name but an unlimited jurisdiction in the generally more complex case of properties in joint names. Some support for this may be derived from the presence in the 1991 Order of article 2(4) restricting jurisdiction under sections 89 to 92 of the LPA and the absence of an equivalent provision for the enforcement of charges under section 14 of the 1996 Act.
This issue does not arise for decision in this case, because the property in question is in the sole name of the debtor and section 23(c) of the CCA clearly applies to the claim to enforce the charge. I should however say that, in my view, the apparent anomaly does not exist. Section 14 of the 1996 Act confers a variety of powers exercisable by the court on the application of a wide variety of applicant. In contrast, section 23(c) is confined to the enforcement of charges. In my view, the general jurisdiction conferred on county courts by article 2(1)(p) of the 1991 Order, which is secondary legislation, is subject to the specific limit on the enforcement of charges contained in section 23(c), which is primary legislation. It would seem that this is the view taken in the CPR: see the sentence in parenthesis in 73.10(2) and 73PD 4.1, neither of which distinguishes between the enforcement of charging orders over properties in the debtor's sole name and properties in joint names.
Provisions for transfers
The provisions for transfer of proceedings from the High Court to a county court are contained in section 40 of the CCA 1984 which provides as follows:
“(1) Where the High Court is satisfied that any proceedings before it are required by any provision of a kind mentioned in subsection (8) to be in a county court it shall-
(a) order the transfer of the proceedings to a county court; or
(b) if the court is satisfied that the person bringing the proceedings knew, or ought to have known, of that requirement, order that they be struck out.
(2) Subject to any such provisions, the High Court may order the transfer of any proceedings before it to a county court.
(3) An order under this section may be made either on the motion of the High Court itself or on the application of any party to the proceedings.
(4) Proceedings transferred under this section shall be transferred to such county court as the High Court considers appropriate, having taken into account the convenience of the parties and that of any other persons likely to be affected and the state of business in the courts concerned.
(5) The transfer of any proceedings under this section shall not affect any right of appeal...
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