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Enforcement: Charging orders and orders for sale

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28/09/2017

Clear and common case

Walker Morris’ Banking Litigation specialist Sandip Singh explains the recent case of Rai v Ahir (The Shiri Guru Ravidass Sabha Southall) [1], in which the High Court has provided welcome clarification on the practice, procedure and order of realisation for the enforcement of charging orders over multiple properties.

The key facts of the case are straightforward. The claimant was owed a judgment debt which had been secured by way of charging order against properties owned by a number of judgment debtors respectively.  All of the secured properties were marital/family homes.

Practical approach to law and procedure

Master Teverson, in the High Court, clearly set out the correct legal and procedural issues:

  • It is one thing to make a charging order; but another to order a sale.
  • The court has a separate discretion whether or not to order a sale.
  • Where a property is a debtor’s home, the court must consider Article 8 of the European Convention on Human Rights (which gives the right to respect for family and private life).
  • To order a sale is a step of last resort.
  • Where the debtor is a joint beneficial owner, an application for an order for sale should be made under section 14 of the Trusts of Land and Appointment of Trustees Act 1996 (TOLATA). (Section 15 TOLATA sets out the matters to which the court will have regard when determining such an application.)
  • Where the charging order covers multiple properties, and as to the order in which properties are sold, the court’s role is limited to that of controlling enforcement of a joint and several liability. The court is not engaged in assessing conduct.
  • Absent any compelling individual circumstances (such as particular hardship or unfairness, for example), the fairer course is to order all properties to be sold at the same time.

WM Comment

Obtaining a charging over property to secure a judgment debt is not necessarily the end of the story. Claimants seeking to recover monies owed to them often require to compel the sale of secured assets, so as to actually release value.  Enforcement and realisation can amount to another litigation process in itself.  When a debt is secured over more than one property (and, in particular, where the properties are owned by more than one person); and/or where any secured property is a marital or family home, that can result in additional difficulties and cost. Rai v Ahir provides welcome confirmation as to how the court will approach the enforcement process in such cases.

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[1] [2017] EWHC 1255 (Ch)

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