On 5 October 2022, the Plaintiff initiated proceedings for the recovery of legal fees amounting to US$111,061.90 from the Defendant (the Husband). Payments totalling US$21,750 were received from July 2015 to August 2021. The Plaintiff claimed additional interest, bringing the total amount outstanding to US$209,337 as of 5 October 2022. On 18 July 2024, the Registrar entered default judgment for US$270,435.09 plus costs. Subsequently, a charging order nisi was granted on 12 November 2024, charging the Defendant's sole property, parcel 61113/162 in Long Bay Hills, Providenciales (the Property).
The Property, the family home, was solely registered in the Defendant's name. Divorce proceedings were commenced by the Interested Party (the Wife) on 16 October 2023, with a Decree Absolute granted on 7 January 2025. The Wife petitioned for full ownership of the Property on a 'clean break' basis due to the Defendant not paying the mortgage for over a year. RBC Royal Bank (Bahamas) Limited commenced proceedings on 8 September 2023 for a sale by private treaty due to non-payment.
On 5 December 2024, the Judge set aside the first charging order nisi, ordering the Plaintiff to serve the application on the Wife. On 14 January 2025, a new charging order nisi of US$289,085.55 was entered. The further consideration of the charging order was to be heard alongside the matrimonial financial claim and RBC's application on 23 January 2025, and later dates.
By 11 March 2025, the parties had agreed that the Defendant would transfer his interest in the Property to the Wife. The Wife had a financing offer from Scotiabank (Turks and Caicos) Limited to pay out RBC.
However, the validity of the Plaintiff's claim and the charging order application remained to be resolved, particularly under scrutiny due to anomalies in the debt calculation. The Court identified several discrepancies in the Plaintiff's calculations. Differences in figures, unexplained compound interest, and inconsistent statement of receipts and disbursements were highlighted. The Wife and her counsel questioned the accuracy of these calculations, noting procedural irregularities and potential overstatement of debt.
Held: In light of the financial and legal complications, and taking into account the welfare of the minor child, the Court discharged the charging order nisi.
The Court referred the parties to Harman v Glencross [1986] Fam 81; [1986] 1 ALL ER 545 and First National Securities Ltd. v Hegarty [1985] Q.B. 850, and considered the principles to be taken into account when there are competing claims between a non-debtor spouse and the judgment creditor.
The applicable principles taken from the above authorities are that the Court must consider the position of the creditor from the perspective of commercial law and not matrimonial law. The application was made after the presentation of the Wife’s petition for divorce, in which the claim for a property adjustment order was set out. Therefore, there are 2 interests which need to be balanced, the rights of the Wife (and in particular the need to provide for any child of the marriage) and the position of the judgment creditor. The court considered prioritizing the Wife’s interest in the matrimonial home against the Plaintiff’s charging order. The Court looked at all the circumstances of the case and also took into consideration the apparent anomalies in the amount of the default judgment.
The Court also reviewed sections of the Civil Procedure Act and Registered Land Act regarding enforcement of charging orders. It raised concerns about limitations in law related to the sale of property by public auction versus private treaty, and the practical difficulties judgment creditors might face when only one owner’s interest is charged.