Court name
Court of Appeal of Turks and Caicos Islands
Case number
CL-AP 7 of 2016
CL-AP 8 of 2016

Harris v. Caribbean Building Materials Ltd. (CL-AP 7 of 2016, CL-AP 8 of 2016) [2017] TCACA 10 (15 June 2017);

Law report citations
Media neutral citation
[2017] TCACA 10
Coram
Mottley, P
Stollmeyer, JA
Weekes, JA

IN THE COURT OF APPEAL

TURKS AND CAICOS ISLANDS

CIVIL APPEAL No. 7 of 2016

BETWEEN:

MARTHA HARRIS

APPELLANT

AND

CARIBBEAN. BUILDING. MATERIALS.AND.SUPPLIES.LIMITED RESPONDENT

AND

CIVIL APPEAL No 8 of 2016 PRINCIE HARRIS

APPELLANT AND

CARIBBEAN BUILDING MATERIALS AND SUPPLIES LIMITED RESPONDENT

BEFORE:

The Honourable Mr. Justice Mottley,              President

The Honourable Mr. Justice Stollmeyer,         Justice of Appeal

The Honourable Mdme Justice Weekes,        Justice of Appeal

APPEARANCES:

Mr Guy Chapman for Martha Harris

Mr Martin Green for Princie Harris

Mr John Rutley Jr for Caribbean Building Materials and Supplies Limited

20 February 2017; 15 June 2017

JUDGMENT

Stollmeyer JA.

[1]           On 20 February 2017 we heard these appeals together, allowed them both, and set aside the orders made by the Judge below. We ordered that the Respondent, Caribbean Building Materials and Supplies Limited ("CBMS") pay Martha Harris's costs below and of the appeal, to be taxed if not agreed and ordered that there be no order as to Princie Harris's costs of the appeal. This is the written judgment.

[2]           The appeals are against the decisions and orders of Mr Justice Schuster of 29 February 2016. CBMS had applied on 08 January 2016 for an order, inter alia, granting leave pursuant to Order 20 rule 5 of the Civil Rules 2000 to amend its pleadings by adding Martha Harris ("MH") as a party to its proceedings against Princie Harris ("PH"), her husband. CBMS had already obtained a default judgment against PH on a claim for moneys due and owing to it by PH and asked for this order in its attempts to identify or quantify Martha Harris's share in the property known as 1 Hiatus Close, Providenciales (the Property)

[3]           Justice Schuster granted leave to amend and ordered that:

1              MH be added as a defendant in the proceedings to assist the Court to determine the beneficial interest of the Property;

2              PH to pay CBMS costs of the day, to be assessed and taxed by the Registrar if not agreed, and that the costs be paid into Court within 15 days of 29 February 2016;

3              if those costs were not so paid, then CBMS was at liberty to apply for a penal notice but only in relation to non-payment of the costs ordered under 2 above;

4              an evaluation of the Property be arranged to provide the Court with the true market value of the property in question, over which a Charging Order Nisi had been granted;

5              PH pay the costs of the evaluation within 15 days of it being completed and in default that CBMS be at liberty to apply for a penal notice.

[4]           Each of MH and PH appeal the Orders made against them. There was also an Order that time for hearing the application be abridged which was granted, but there is no appeal against this.

[5]           The outcome of this appeal turns on whether a Court can order a person to be joined in proceedings as a defendant after judgment has been obtained against another party, and attempts have been made to enforce payment of that judgment. It is concerned with the procedure to be adopted by a judgment creditor when attempting to enforce a judgement by way of a Charging Order.

Background

[6]           The litigation between CBMS and Princie Harris has been prolonged and in parts is difficult to discern, but for present purposes can be summarised as follows.

[7]           CBMS sued PH in Action No CL 132 of 2008 for US$182,385.56 and on 29 January 2010 obtained judgment in default of intention to defend in that amount together with interest computed at US$54,715.15. Interest on the judgment continues to accrue at the rate of 2% per month.

[8]           On 30 November 2012 PH was examined as a judgment debtor under the provisions of Part 5. IV of the Civil Procedure Ordinance Chapter 4:01 but the hearing was adjourned to allow settlement negotiations. These bore no fruit, but the examination has not been completed.

[9]           On 09 October 2015 CBMS obtained a Charging Order Nisi under the provisions of Section 39 of the Civil Procedure Ordinance in relation to the Property. An application to have the Order Nisi made Absolute was made on 16 December 2015 but has not been determined

[10]         It appears that there is another action based in debt against PH brought by Provo Building Supply Company Limited in Action CL 32 of 2002 and that judgment in default of intention to defend was obtained on 03 September 2002. PH was subsequently examined as a judgment debtor relative to this judgment debt.

[11]         It also appears that Justice Schuster was under the impression that this action and CL 132 of 2008 had been consolidated, but Counsel before us agreed that this was not so. These proceedings are therefore of no relevance to the present appeal.

[12]         There are also divorce proceedings between PH and MH in which it appears that no property issues arise. Again, however, these proceedings are not relevant to this appeal, except that the issue of beneficial ownership of the Property underlies CBMS's application of 08 January 2016 to add MH as a party to CL 132 of 2008. The reason for this, according to what we have been told during the course of the appeal, is that the Harris' have demonstrated little or no inclination to have any property issues determined by the Court determining their respective interests in the Property which we understand to be a house standing on a parcel of land relative to which Martha Harris holds a Conditional Purchase Lease from the Crown. They are apparently content to leave matters as they are.

[13]         It is in this setting that CBMS made its application of 08 January 2016.

The Grounds of Appeal

[14]         The following grounds can be extracted from the Notice of Intention to Appeal filed on behalf of MH 23 March 2016:

1              the Court was functus officio at the time the Orders were made, and the Orders would in any event transform an action for a debt into a claim against her founded in trust and property;

2              the claim CBMS wishes to make against her relates to a Conditional Purchase Lease of Crown Land, but CBMS has not taken any steps in relation thereto;

3              Justice Schuster's Ruling of 29 February 2015 refers to another action to which CBMS made no reference in its application;

4              the Ruling lacks the clarity expected of a judgment;

5              Justice Schuster did not consider the submissions made on her behalf.

[15]         On behalf of PH it is contended that:

1              the award of costs against him after he had not opposed the application was capricious, unreasonable and was made without inviting argument;

2              the Order for an evaluation report was made for no obvious reason and was not the subject of any application or argument, and was unreasonable in the circumstances;

3              the Order was in any event ultra vires because the Court was functus officio at the time it was made.

Analysis

[16]         Order 20 rule 5 is headed "Amendment of writ or pleading with leave" and the relevant part reads as follows:

"5(1) Subject to Order 15, rules 6, 7 and 8 and the following provisions of this rule, the Court may at any stage of the proceedings allow the plaintiff to amend his writ, or any party to amend his pleading, on such terms as to costs or otherwise as may be just and in such manner (if any) as it may direct."

(2)……….

(3)…………….

(4)……………

(5)…………..

[17]         Order 15 is headed "Causes of action, Counterclaims and Parties". Rule 15(6) is headed "Misjoinder and nonjoinder of parties" and the relevant part reads as follows:

"6(1)      

6(2) Subject to the provisions of this rule, at any stage of the proceedings in any cause or matter the Court may on such terms as it thinks just and either of its own motion or on an application -

(a)…………..

(b) order any of the following persons to be added as a party, namely

(i)            any person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon, or

(ii)           any person between whom and any party to the cause or matter there may exist a question or issue arising out of or relating to or connected with any relief or remedy claimed in the cause or matter which in the opinion of the Court it would be just and convenient to determine as between him and that party as well as between the parties to the cause or matter."

6(3)…………

[18]         It is clear that a court has the discretion to grant leave to amend the pleadings under the provisions of Order 20 rule 5. That grant of leave, however, is subject to the provisions of Order 15 rule 6(2).

[19]         Order 15 rule 6(2) provides that a Court can grant leave to amend at any stage of the proceedings in any cause or matter. That, however, is also subject to certain limitations. They are at sub-rules 6(2)(b)(i) and (ii).

[20]         Rule 6(2)(b)(i) permits the addition of a party if that person ought to have been joined or whose presence is necessary to ensure that all matters in dispute in the matter or cause can be effectively and completely determined and adjudicated upon. Rule 6(2)(b)(ii) permits the addition of a party if there is a question or issue, a dispute, between that person and anyone already a party to the cause or matter.

[21]         These provisions speak for themselves. They limit the circumstances in which a party can be added to an existing cause or matter. "Cause or matter" has been held to mean the action as it stands between the existing parties (Amon v Raphael Tuck & Sons Ltd [1956] 1 QB 357 at 369) and adding a party can clearly be done during the course of determining liability, but not if it results in adding a new cause of action (Raleigh v Goschen [1898 1 Ch 81), nor if the person sought to be added is only indirectly interested in the cause or matter (Moses v Marsden [1892] 1 Ch 487). See also Charlesworth v Relay Roads Ltd [1999] 4 All ER 397; [2000] 1 WLR 230 and Noga v Abacha [2001] 3 All ER 513 That, however, is not the issue since CBMS does not seek to have MH added as a party for the purpose of determining liability on the original action.

[22]         The issue is whether adding a party as a defendant to the action can be ordered after judgment has been obtained for the purpose of enforcing the judgment.

[23]         Counsel for CBMS referred the Court to a number of authorities to support the submission that MH can be added as a party to the action at this juncture, principally the judgments in Kooltrade Ltd v XTS Ltd and Others (Smith Bernal Transcript of Hearing 10 December 2001, 2001 Lexis Nexis citation 2007); Salim Shalabayev v JSC BTA Bank [2016] EWCA Civ 987; and Rosseel v Oriental Commercial Shipping (UK) Ltd [1991] EGCS 94 CA.

[24]         In Kooltrade Pumfrey J made extensive reference to the judgment of Aikens J in C Inc PLC v Mrs L. and Another [2001] EWHC 550 Comm. In the latter (where, as Pumfrey J noted, the facts " ... are not entirely straightforward ...'') the Plaintiff obtained a default judgment against Mrs L and then a freezing order against her assets in aid of execution. The judgment remained unsatisfied and Mrs L having taken the position that she had no assets, and that she was trustee or agent of all the family assets of her husband in whose name the assets were held, C Inc then obtained a freezing order against the husbands assets and permission to serve the order and the proceedings on him. It is apparently accepted that a freezing order can in certain circumstances be made against a third party and Aikens J came to the view that there was a dispute between Mr L and Mrs L as to ownership of the assets. Mr L applied to set aside that order on the ground that the Court had no power to join him under the provisions of the English Civil Proceedings Rules Part 19.

[25]         C Inc then applied to set aside the judgment it had obtained against Mrs L and for permission in the re-opened action to join Mr Las a second defendant to the claim for the original debt.

[26]         In the course of his judgment, Aikens J expressed the view that"... the word 'proceeding' should be given a broad interpretation in CPR .... It should embrace all stages of an action from the time it had started until it finally becomes complete or moribund. There are many proceedings in which a judgment is obtained but is not satisfied. At that stage, further action may be needed in order to enforce the judgment. The proceedings have not finished at that point. A Claimant may wish to appoint a receiver by way of equitable execution to get any assets of the Defendant to satisfy the judgment, or he may wish to obtain a freezing order in aid of execution. The proceedings must continue in those instances. In my view the proceedings against Mrs L are still continuing."

[27]         Aikens J concluded that 'proceedings' included disputed matters related to execution. Further, the Court had the power to add Mr L as a party to the existing proceedings under the English CPR Part 19.2(a) and (b) and did so for the purpose of deciding the issue of the freezing order made against him, since the freezing order was itself to be regarded as being a part of the enforcement process. Aiken J did not decide C Inc's application to set aside the judgment.

[28]         As Pumfrey J pointed out in Kooltrade, Charleswoth and Noga had restated the long standing rule that re-opening a cause of action could not take place after final judgment had passed. It should be noted that both of these latter judgments were delivered after the introduction of Part 19 of the English Civil Proceedings Rules and what some regard as the ameliorating influence of "the overriding objective".

[29]         Returning to Kooltrade, Pumfrey J relied on the conclusion of Aikens J although he expressed doubt as Aikens J interpretation of Part 19 of the CPR, and, in part, concluded ". the Court does have power in a proper case to join a party who has not been previously a party for the purposes of execution. How that joinder is to take place, I am not confident, but in any event that is not the question in the present case. The present case concerns an amendment of the claim form, and an amendment of the Particulars of Claim, and, I suppose, re-pleading on behalf of the defendants a further reply, disclosure, and a trial." He concluded that the application was wholly misconceived and dismissed it on the basis that there was no power to amend a cause of action in which judgment had already been obtained by the addition of new parties, and by the seeking of fresh relief.

[30]         Pumfrey J drew attention to the "... old Ord 45 of the Rules of the Supreme Court which deals in general with the enforcement of Judgments and Orders, that the proceedings are taking place not in the proceedings commenced by the claim form, but in, and under, the Judgment, and that the enforcement proceedings and the entitlement to start them, continue them, and bring them to an end derives not from the original claim form, but from a duly entered judgment." For the present purposes, Order 45 of the English RSC is in the same terms as Order 45 of the Civil Rules 2000, except that the latter makes no provision for the obtaining of Charging Orders.

[31]         What CBMS seeks to do here is enforce its judgment against PH. It does not say that MH is liable on the original debt, nor does it wish to pursue execution against her in an attempt to recover the existing judgment debt. It does not allege that there are assets in her name which are in fact assets of PH. It does not seek to enforce its judgment any assets she may have. What they wish to do is ascertain the beneficial ownership of 1 Hiatus Close as part of its efforts to obtain payment of the judgment debt by way of enforcing the Charging Order it now holds. What it wishes, and needs in reality, is MH as a witness to give evidence of ownership.

[32]         In Shalabayev, Mr Shalabayev had himself applied to be joined as a respondent to the Bank's application to have an interim charging order made final as a means of enforcing a judgment it had obtained against Mr Ablyazor. The charging order related to a property registered in the name of Bensbourogh Ltd which Mr Shalabayev claimed to own and he wanted ownership of the property determined by the Court. This, it should be noted, is in stark contrast to the position in the present case where MH has made no effort to take part in the proceedings relating to the Charging Order CBMS has obtained, but it remains open to her, of course, to apply to be joined in those proceedings if she thinks it necessary to protect whatever beneficial interest she may have in the Property (if any), should she wish to do so.

[33]         In Shalabayev the Court of Appeal not only ordered that Mr Shalabayev be added as a party to the charging order proceedings, but also that Bensbourogh Ltd be added to protect whatever interest it might have. It is authority for the proposition that the proper procedure and forum for determining the beneficial ownership of a property subject to a charging order is within the charging order proceedings.

[34]         Rosseel is a judgment of the English Court of Appeal and was concerned with the enforcement of a Charging Order made under the provisions of the English Charging Orders Act, 1971 and the Rules of the Supreme Court in force in 1991. The provisions of that Act and that Order 50 are different to those of Section 39 of the Civil Procedure Ordinance Chap 4:01 and the Rules of the Supreme Court 1965 Order 50 (particularly the latter) which are applicable in the present case.

[35]         Rosseel had obtained an arbitration award against Mr Bokhari, among others, and subsequently obtained leave to enforce the award in the same manner as a judgment of the High Court. It then obtained a Charging Order ex parte in respect of a property in West Sussex contending that beneficial ownership of it was vested in Mr Bokhari under the provisions of the English Order 50 rule 1(2). An order made under this rule is one to "... shew cause ... for further consideration of the matter ...". Order 50 rule 3(1) provides for the Court, " ... on further consideration of the matter... to either make an order absolute with or without modifications or shall discharge it". There is no equivalent provision in Section 39 of the Civil Procedure Ordinance or Order 50 RSC 1965. That Charging Order was discharged on the application of two members of the Hitta family who claimed to be the beneficial owners.

[36]         Before the Court of Appeal was Rosseel's appeal against the order to discharge the Charging Order. It allowed the appeal and directed that an issue be tried as between Rosseel and the Hittas as to whether the latter were entitled to beneficial ownership, and further, that the Charging Order proceedings be adjourned to await the outcome of that issue.

[37]         It is apparent that the facts in Rosseel are again different to those in the present case, in particular that the persons claiming beneficial ownership came into the Charging Order proceedings voluntarily, unlike the position here. Rosseel is therefore of no assistance to CBMS on the issue of whether MH should have been joined as a defendant to the action.

[38]         None of C Inc, Kooltrade, Shalabayev nor Rosseel assist CBMS in its application to have MH added as a defendant to the original action. What they do, however, is provide authority to support the position that a Court can grant leave to add a party to the proceedings even if this is applied for after judgment has already been obtained and where that party is being added in the proceedings to enforce the judgment debt, not as a defendant to the original action.

[39]         The ground that the Court was functus officio therefore fails.

[40]         The question then arises whether it was proper for the Court to add MH as a defendant to the existing action in the circumstances of this case. If it was not, then it not be necessary to deal with the other grounds of the appeal. This requires a brief examination of the procedure for obtaining and enforcing a Charging Order under the provisions of Section 39 of the Civil Procedure Ordinance and the Rules of Court.

Charging Orders

39.          (1) For the purposes of this section—

"charging order" is an order referred to in subsection (2);

"creditor" is a person to whom a judgment or order of the Court requires payment of a sum of money to be made by another person;

"debtor" is the person who is required to pay a sum of money to another person under a judgment or order of the Court;

"filing" and "registration" have the same meaning as in section 2 of the Registered Land Ordinance.

(2)           Where the Court makes an order or judgment requiring a debtor to pay a sum of money to a creditor, the Court may make a charging order in the prescribed form charging such property as may be specified in the charging order to secure the payment of any money due or to become due under the order or judgment.

(3)           The property which may be charged by a charging order shall be any interest held by the debtor in land including any interest held by him beneficially under a trust.

(4)           A charging order may be made with or without conditions.

(5)           The charge shall be completed by its registration as an encumbrance, by the registration of the creditor as its proprietor and by filing the charging order.

(6)           A creditor may enforce a charging order by selling the interest charged and sections 75 and 76 of the Registered Land Ordinance shall apply in respect of the sale.

(7)           Where a charging order has been made the Court on the application of the debtor or of any person interested in the property charged may discharge or vary the charging order."

[41]         Order 45 of the Civil Rules 2000 deals with "Enforcement of Judgments and Orders: General" but makes no provision relative to Charging Orders. Instead, there is a Practice Direction of 21 June 2001 issued by the then Chief Justice which, in relation to Charging Orders, sets out:

"CHARGING ORDERS

4.             Section 157A of the Civil Procedure (Amendment) Ordinance 1999 [now Section 39 of the Civil Procedure Ordinance] provides for Charging Orders as a means of enforcing judgment debts. However, no formal rules have been made to supplement the statutory provisions.

5.             Until formal rules of Court are made, Order 50 of the English Rules of the Supreme Court 1965, as it stood immediately before the repeal of those Rules and insofar as it concerns Charging Orders, will apply with any necessary modifications."

[42]         The provisions of Order 50 as it stood in 1965 are not easily interpreted insofar as Charging Orders are concerned. It appears, however, that the application should be made by way of a summons within the existing proceedings.

[43]         That, and the manner in which a Charging Order is to be enforced, is not a matter for this court to decide in this appeal. That falls to the Supreme Court, but from Shalabayev and Rosseel, as well as Walton v Allman [2015] EWHC 3325 (Ch), to which we were also referred, it is clear that where the circumstances require an examination of the title and the quantifying of any interest(s) in the property charged, then those are matters properly to be dealt with and determined in the context of the Charging Order proceedings or on an application for an order for sale of the property. Matters such as those would appear to fall within the scope of Section 39(4) of the Civil Procedure Ordinance, for example, which provides for an order being made with - or without - conditions. Walton provides at paragraphs 44 et seq a useful analysis of the procedure in England which has obviously been refined over the years, but it is based on a very different statutory regime and rules of court.

[44]         In short, bringing MH into the matter is one to be pursued in the context of the Charging Order proceedings which are now pending. The decisions in C Inc and Kooltrade are founded on differing circumstances and Part 19 of the CPR, and do not assist CBMS, nor are they conclusive as to the issue of the appropriate manner and proceedings for determining ownership of a property subject to a Charging Order. They can both be distinguished. Shalabayev, Rosseel and Walton, on the other hand, are decisions involving addition of a party in Charging Order proceedings. They are of assistance on the issue and are to be preferred.

[45]         In summary, it is not possible to add a person to an action as a defendant after judgment has been entered for the purpose of determining whether that person is liable on the original claim. It may be possible, however, to add a person to proceedings within an action taken with a view to enforcing an existing judgment. Regrettably, the procedure adopted by CBMS in the present case was incorrect and the Judge below fell into error.

[46]         In the event, the appeals were allowed for the reasons set out above and the orders made by the Judge below were set aside. In the circumstances there is no need to deal with the other grounds of appeal.

[47]         As to the issue of costs, Counsel for CBMS did not contest the argument that MH should have her costs of the appeal, but submitted that there should be no order in favour of PH since he had not paid the costs of CBMS obtaining its default judgment.

[48]         Having heard Counsel further on this issue, it was ordered that Caribbean Building Materials and Supplies Limited should pay Martha Harris's cost of the appeal and below, to be taxed if not agreed, and that there be no order as to the costs of Princie Harris's appeal.

Stollmeyer JA

I Agree

Mottley P

I agree

Weekes JA