Re Kinsela, Russell Vero Hope Ex Parte Butterell, Arthur William v Russell Kinsela Pty Ltd (in liquidation) and Russell Kinsela Funderal Fund Pty Ltd (in liquidation)
[1984] FCA 101
•09 APRIL 1984
Ex Parte: ARTHUR WILLIAM BUTTERELL
And: RUSSELL KINSELA PTY. LIMITED (IN LIQUIDATION) and RUSSELL KINSELA FUNERAL
FUND PTY. LIMITED (IN LIQUIDATION)
No. N.S.W. 1125 of 1983 (Previously No. 90 of 1983/X)
Bankruptcy - Execution
3 FCR 524 / 53 ALR 557
IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY
Beaumont J.(1)
Bankruptcy - Avoidance, under s. 118(9) of the Bankruptcy Act, 1966, of a charging order made within six months of presentation of petition.
Bankruptcy Act, 1966, ss. 30, 118.
Haly v. Barry (1868) LR 3 Ch App 452-con.
Brereton v. Edwards (1888) 21 QBD 488-con.
Roberts Petroleum Ltd. v. Bernard Kenny Ltd. (1983) AC 192-con.
Bankruptcy - Administration of property - Effect of bankruptcy on antecedent transactions - Restriction of rights of execution creditor - Avoidance of charging order made within six months of presentation of petition - Interim order outside statutory period - Final order within statutory period - Bankruptcy Act 1966 (Cth), s. 118(9) - Judgments and orders.
Execution - Time from which operative - Charging orders - New South Wales - Avoidance of charging order made within six months of presentation of bankruptcy petition - Interim order outside six month period - Final order within period - Judgment Creditors' Remedies Act 1901 (N.S.W.) Pt V - Bankruptcy Act 1966 (Cth), s. 118(9).
The Bankruptcy Act 1966 (Cth), s. 118(9) provides:
". . . wherethe charge or charging order, as the case may be, is void as against the trustee in the bankruptcy."
(a) a creditor has, within 6 months before the presentation of a petition, or after the presentation of a petition, (sic) against a debtor obtained a charge or charging order against property of the debtor; and
(b) the debtor subsequently becomes a bankrupt on, or by virtue of the presentation of, the petition,
The trustee in bankruptcy sought to set aside charging orders made in favour of the respondents pursuant to the provisions of the Judgment Creditors' Remedies Act 1901 (N.S.W.) Pt V. Interim charging orders were made outside the time limit prescribed in s. 118(3) whilst final charging orders were made within that period.
Held: (1) As the initial charging order had been expressed to be "until further order of the court", it was an interim order and once the final charging order was made the initial order ceased to operate.
Haly v. Barry (1868) LR 3 Ch App 452; Brereton v. Edwards (1888) 2 1 Q.B.D. 488, distinguished.
Roberts Petroleum Ltd v. Bernard Kenny Ltd (1983) AC 192, considered .
(2) Therefore, the operative charging order was the final order and since that order fell within the prescribed statutory period in the Bankruptcy Act 1966 (Cth), s. 118(3), it was liable to be avoided by virtue of the provisions of s. 118(9).
Observations concerning the effect of a charging order nisi subsequently made absolute.
Haly v. Barry (1868) LR 3 Ch App 452 at 456-457; Brereton v. Edwar ds (1888) 21 QBD 488, applied.
Sydney, 1984, April 3, 9. #DATE 9:4:1984
APPLICATION.
Application by the trustee of a bankrupt estate seeking relief pursuant to the provisions of the Bankruptcy Act 1966 (Cth), s. 118(9).
C. Urquhart, for the applicant and the petitioning creditor.
J.A. Farmer, for the respondent.
Solicitors for the applicant: Fitzgerald & Associates.
Solicitors for the respondent: Hunt & Hunt.
B.A.G.
1. Make orders 1.A, 1.B, 2.A and 2.B as asked.
2. Order that the respondents pay the applicant's costs. Make no order for the costs of Mr. Kinsela.
Orders accordingly.
This is an application brought by the applicant as trustee of the bankrupt estate of Mr. Kinsela. In the first instance, the applicant seeks relief pursuant to s. 118(9) of the Bankruptcy Act, 1966 ("the Act") which, so far as material, provides:
" . . . where
(a) a creditor has, within 6 months before the presentation of a petition, or after the presentation of a petition, (sic) against a debtor obtained a charge or charging order against property of the debtor; and
(b) the debtor subsequently becomes a bankrupt on, or by virtue of the presentation of, the petition, the charge or charging order, as the case may be, is void as against the trustee in the bankruptcy."The proceedings arose out of certain charging orders made in favour of the respondents in the Supreme Court of New South Wales in March and April 1983 pursuant to Part V of the Judgment Creditors' Remedies Act 1901 (N.S.W.).
The applicant seeks the following relief: "1.A. A declaration that the Charging Order made by His Honour Mr. Justice Lusher in the Supreme Court of New South Wales on 22nd April, 1983 in matter No. 12502 of 1982 between Russell Kinsela Pty. Limited (In Liquidation) as plaintiff and Russell Kinsela as defendant is void as against the applicant as trustee of the bankrupt estate of Russell Vero Hope Kinsela. 1.B. A declaration that the Charging Order made by Mr. Lazar, Deputy Prothonotary, in the Supreme Court of New South Wales on 31st March, 1983 in matter No. 12502 of 1982 between Russell Kinsela Pty. Limited (In Liquidation) as plaintiff and Russell Kinsela as defendant is of no force and effect as against the applicant as trustee of Russell Vero Hope Kinsela. 2.A. A declaration that the Charging Order made by His Honour Mr Justice Lusher in the Supreme Court of New South Wales on 22nd April, 1983 in matter No. 12503 of 1982 between Russell Kinsela Funeral Fund Pty. Limited (In Liquidation) as plaintiff and Russell Kinsela as defendant is void as against the applicant as trustee of the bankrupt estate of Russell Vero Hope Kinsela. 2.B. A declaration that the Charging Order made by Mr. Lazar, Deputy Prothonotary, in the Supreme Court of New South Wales on 31st March, 1983 in matter No. 12503 of 1982 between Russell Kinsela Funeral Fund Pty. Limited (In Liquidation) as plaintiff and Russell Kinsela as defendant is of no force and effect as against the applicant as trustee of the bankrupt estate of Russell Vero Hope Kinsela . . . "
Orders 1.A and 2.A are sought pursuant to the general provisions of s. 118(9); Orders 1.B and 2.B are sought pursuant to s. 30 of the Act, for reasons which will appear later.
The facts surrounding the charging orders obtained by the first respondent are on all fours with the circumstances in which the second respondent obtained its orders. Hence, in order to resolve the legal questions raised for determination, it is sufficient to refer only to the position of the first respondent.
On 29 March 1983, the first respondent obtained a judgment in the Common Law Division of the Supreme Court of New South Wales against Mr. Kinsela for a certain amount together with interest and costs. On 31 March 1983, the first respondent (wrongly described as "the defendant") filed in that Court a notice of motion seeking the following order, inter alia: "1. The equitable interest the Defendant Russell Vero Hope Kinsela has or is entitled to in The Russell Vero Hope Kinsela Trust shall stand charged with the payment of the amount for which judgment has been recovered together with interest thereon together with a sum in respect of the Plaintiff's costs either as may be agreed upon between the parties or as may be taxed . . . "
On the same day, 31 March 1983, the Deputy Prothonotary made the following order: "THE COURT ORDER (sic) that:-
1. Until further order of the Court the equitable interest the defendant Russell Vero Hope Kinsela has or its (sic) entitled to in the Russell Vero Hope Kinsela Trust shall stand charged with the payment of the amount for which judgment has been recovered together with interest thereon together with a sum in respect of the Plaintiff's costs either as may be agreed upon between parties or as may be taxed.
2. The Official Liquidator of the Plaintiff company serve personally within 5 days of the date hereof:-
(i) Russell Vero Hope Kinsela
(ii) James S. Cumming
With a copy of the following documents:-
(i) Interim Order No. 1 made herein.
(ii) Notice of Motion filed herein and returnable before the Court on 8th April 1983.
(iii) Affidavit of J.W. O'Brien sworn 31st March, 1983 and filed herein excluding the exhibits marked with the letters 'B' and 'C' as referred to in the said Affidavit of J.W. O'Brien. ORDERED: 31st March 1983
ENTERED: 31st March 1983."
On 22 April 1983, pursuant to the aforesaid notice of motion, Lusher, J. made orders as follows:
"THE COURT ORDERS that:
1. The equitable interest the Defendant, Russell Vero Hope Kinsela has or is entitled to in the Russell Vero Hope Kinsela Trust shall stand charged with the payment of the amount for which judgement has been recovered together with interest thereon together with the sum in respect of the Plaintiff's costs either as may be agreed upon between the parties or as may be taxed.
2. The Defendant, Russell Vero Hope Kinsela be restrained from alienating, transferring or disposing in any manner whatsoever his equitable interest in the Russell Vero Hope Kinsela Trust.
3. The Defendant, Russell Vero Hope Kinsela be restrained from receiving any monies in respect of his rights as a beneficiary under the Russell Vero Hope Kinsela Trust without first paying to the Official Liquidator of the Plaintiff Company such sums as by Order of this Court stand charged pursuant to Section 27 of the Judgement (sic) Creditors' Remedies Act, 1901.
4. James S. Cuming as Trustee of the Russell Vero Hope Kinsella Trust be restrained from distributing to the beneficiary Russell Vero Hope Kinsela any monies received by the said Russell Vero Hope Kinsela pursuant to the terms of the Russell Vero Hope Kinsela Trust without first paying to the Official Liquidator of the Plaintiff Company such sums as by Order of this Court stand charged pursuant to Section 27 of the Judgement (sic) Creditors' Remedies Act, 1901.
5. The Defendant, Russell Vero Hope Kinsela pay the Plaintiff's costs in respect of this Notice of Motion and in respect of the Notice of Motion returnable 31 March 1983 when Interim Charging Orders were made by the Registrar."On the previous day, 21 April 1983, Mr. Kinsela signed an authority pursuant to s. 188 of the Act, naming the applicant as the trustee. On 21 October 1983, the applicant applied for a summary sequestration order on the ground that the meeting of creditors called pursuant to the authority had not, within four months from the date on which the creditors' meeting was called, passed one of the special resolutions referred to in s. 204(1). On 12 December 1983, a sequestration order was made against the estate of Mr. Kinsela pursuant to s. 221(1)(c). By s. 221(3), the making of an application under that section is, for the purposes of the Act, deemed to be equivalent to the presentation of a creditor's petition against the debtor.
It will be seen, then, that a question arises as to the date when the charging order was made for the purposes of s. 118(9): the interim order made by the Deputy Prothonotary fell outside the statutory six month period whereas the order made by Lusher, J. fell within the period. According to the applicant the only charge now operating is the order made by Lusher, J. On the other hand, the respondents fasten upon the interim order made by the Deputy Prothonotary as the material charge for present purposes.
In resolving the question, no particular assistance is to be gained from the provisions in the Act: s. 118(12) merely defines a "charging order" as "a charging order made by a court in respect of a judgment".
Reference should be made to the statutory context in which the question arises. Charging orders are dealt with by Part V of the Judgement Creditors' Remedies Act, 1901 (N.S.W.) as follows: "27.(1) If any person against whom any judgment has been entered up in the Supreme Court or in a District Court -
(a) has any stock or shares of or in any public company (whether incorporated or not), or any deposit in any bank of New South Wales, standing in his name in his own right, or in the name of any person in trust for him; or
(b) has or is entitled to any equity of redemption or other equitable interest, a Judge of the Supreme Court or the District Court, as the case may be, on the application of any judgment creditor may order that such stock shares or deposit, or such equity of redemption or equitable interest, or such of them or such part thereof respectively as he thinks fit, shall stand charged with the payment of the amount for which judgment has been so recovered and interest thereon.
(2) Such order shall entitle the judgment creditor to all such remedies as he would have been entitled to if such charge had been made in his favour by the judgment debtor:
(3) Provided that no proceedings shall be taken to have the benefit of such charge until after the expiration of three months from the date of such order.
28. Every such order charging any such stock shares or deposit -
(a) may be made in the first instance ex parte and without any notice to the judgment debtor; and
(b) shall be an order to show cause only; and
(c) shall restrain such company and the accountant and cashier of such bank from permitting the transfer or disposal thereof.
29. If after notice of such order to any person to be restrained thereby or, in case of a corporation, to any authorised agent of such corporation, and before such order is discharged or made absolute, such person or corporation permits any such transfer or disposal to be made, such person or corporation shall be liable to the judgment creditor for the value or amount of the property so charged or so transferred or disposed of, or such part thereof as may be sufficient to satisfy his judgment.
30. No disposition by the judgment debtor in the meantime shall be valid or effectual as against the judgment creditor.
31. Unless the judgment debtor within a time to be mentioned in such order shows to a Judge of the Supreme Court or the District Court, as the case may be sufficient cause to the contrary, such order shall, after proof of notice thereof to the judgment debtor, his attorney or agent, be made absolute.
32. Any such Judge may upon the application of the judgment debtor or any person interested discharge or vary such order and award such costs upon such application as he thinks fit."(The nature of a charging order made under s. 27 of the Judgment Creditors' Remedies Act was analysed by Master Allen in Australia & New Zealand Banking Group Ltd. v. Greig (1980) 42 FLR 387 at pp 394-395 but nothing turns on its peculiar character for present purposes.)
By Part 47, Rule 1 of the Rules of Court of the Supreme Court of New South Wales, it is provided that an application for a charging order shall be made by motion in the proceedings. No other provision of the Rules is material for present purposes.
In the present case, jurisdiction to make the charging orders made by the Deputy Prothonotary and by Lusher, J. was conferred by s. 27 of the Judgment Creditors' Remedies Act: the interest charged was an equitable interest of the kind contemplated by s. 27(1)(b), and thus s. 28 and subsequent provisions dealing with stocks, shares or deposits were not applicable.
It is true that s. 27 does not, in terms, refer to the possibility that an order made thereunder may be for a limited period only, as distinct from a final or permanent order. But, in my view, the Court had power to make an interim order of the kind made by the Deputy Prothonotary, since there must be implicit in the statutory power to make a final, permanent order, the power to make a provisional or interim order, limited as to time (cf. Coles v. Wood (1981) 1 NSWLR 723; and as to the powers of the Deputy Prothonotary, see Schedule E to the Supreme Court Rules). In other words, the Deputy Prothonotary understandably adopted the usual course of not making a final charging order in the first instance (see Halsbury's Laws of England 4th Ed. vol. 17 para. 566 at p 351 (footnote 4 referring to Baker v. Tynte 121 ER 335)).
The order made by the Deputy Prothonotary on 31 March 1983 was expressed to be made "until further order of the Court"; it was thus properly described as an "interim" order. At the time the interim order was made, a notice of motion was filed seeking a charging order. The notice of motion, which was directed to be served upon the parties interested, was returnable on a later date. At a later date, a final order was made by Lusher, J. In those circumstances, it is plain that the order made by the Deputy Prothonotary was interim or provisional only in the sense that it was to operate only until a further order was made in the application. That event did occur in that Lusher, J. made his final order on 22 April 1983: thereupon, the interim order ceased to operate.
It follows, in my view, that on 22 April 1983, the order of the Deputy Prothonotary ceased to operate. Since that order thereafter lacked any effective operation, the applicant is, in my opinion, entitled to a declaration to that effect pursuant to the jurisdiction conferred by s. 30 of the Act. It further follows, in my view, that on 22 April 1983, the order of the Deputy Prothonotary was replaced by the order of Lusher, J. and the latter order then became the only operative order for present purposes. Since that order fell within the prescribed statutory period, it is liable, in my opinion, to be avoided by virtue of the provisions of s. 118(9).
The respondent sought to circumvent this result by reliance upon an early line of English authority which established that, under English legislation, a charging order nisi, when it is afterwards made absolute, takes effect for some purposes from the date of the order nisi (see Haly v. Barry (1868) L.R. 3 Ch. App. 452; Brereton v. Edwards (1888) 21 Q.B.D. 488). In Haly v. Barry, supra, a creditor recovered judgment against his debtor and issued a fi.fa. Shortly afterwards the debtor died. The creditor entered a suggestion on the record, entitling him to have execution against the executrix, and obtained a charging order nisi upon shares belonging to the debtor. After the order nisi had been obtained, but on the same day, a decree was made for administration of the debtor's estate. The order nisi not having been made absolute, the plaintiff in the administration suit applied for an injunction to restrain further proceedings by the judgment creditor. It was held that an injunction ought not to be granted since a charging order, when made absolute, operates from the making of the order nisi. Sir W. Page Wood, L.J. said (at p 456): "The important question is, whether the Vice-Chancellor's decision was wrong, on the ground that as the creditor had not fully placed himself in possession of the property, the Court will consider that it is too late to lay hold of it and bring it into the common stock for the benefit of all the creditors. Observe the creditor's position. He had sued out a writ, and done all he could do under a fi.fa. Then the stat. 1 & 2 Vict. c.110, comes in to help him as to property not liable to be taken in execution:- (His Lordship here read the 14th and 15th sections.) It is obvious that throughout these sections one order only is spoken of, which is at first to be an order nisi, and is afterwards to be made absolute. Ought then a creditor to be interfered with who has pursued his remedies with such diligence. He has obtained a charging order, subject only to this, that cause may be shewn against making it absolute. I think that, consistently with the scope and spirit of the Act, we must hold that it is liable to be defeated only by something prior to it, shewing that it ought not to have been made, and not by anything subsequent to it. The case is very similar in principle to those in which a creditor has by his diligence obtained a personal order against the executor, and this Court has refused to interfere. Here the creditor has done all he could, and has nothing more to do, the onus lies on the other side to shew that the charging order ought not to have been made. I do not think that such a case can be treated as one in which the creditor's title is incomplete."
Sir C.J. Selwyn, L.J. said (at p 457):
"The observation in Warburton v. Hill which has been relied on, may be considered as explained by Scott v. Lord Hastings. The question turns upon this, whether the charging order is to be considered as one or two. It has been urged that there are two orders, and that the first goes for nothing unless followed by the other. The language of the Act appears to me quite opposed to this view, it speaks of one order which is at first an order nisi, and is afterwards made absolute."1. Make orders 1.A, 1.B, 2.A and 2.B as asked.The same conclusion, in a similar context, was reached in Brereton v. Edwards, supra. Lord Esher M.R., after indicating that the point was determined by Haly v. Barry, supra, said (at p 496): "That decision seems to me to amount to this, that the order nisi is the charging order, but that it stands in abeyance until it is made absolute. When, however, it is made absolute the order nisi is the charging order, and it takes effect from the date when it was originally made. The result of this is, that the plaintiffs' charging order is prior in date to the order for payment to the guardians."
Lindley, L.J. said (at p 497): "The next question is, whether the charging order has priority over the order for payment to the guardians, and I think it has. From what date does the charging order take effect? Haly v. Barry shews that the effect of the two orders - the order nisi and the subsequent order absolute - was to charge the fund as from the date of the order nisi, and I can see no difference in principle for this purpose between a charging order made under the statutory power, and a similar order made under the general jurisdiction of the Court. The charging order, when it was made absolute, related back to the date of the order nisi. That order was in effect a charging order made ex parte."
In my opinion, these authorities are concerned only with questions of priority which do not touch the present question. One can readily appreciate why, in point of establishing priority over competing interests, the date of obtaining the order nisi should be regarded as the relevant date: as Sir W. Page Wood, L.J. said in Haly (at p.456), the creditor has by then "done all he could do"; and it would be wrong to defer or postpone his priority to the subsequent date upon which he obtains an order absolute (see also Halsbury's Laws of England, 4th Ed. vol 17 para. 568 p.352).
In any event, in my view, the present case is not, in strictness, one in which the order nisi/order absolute dichotomy is applicable. Rather, all that happened here was that the Deputy Prothonotary made an "interim" order "until further order". On 22 April 1983, Lusher, J. made the final order which was the "further order" already contemplated by the Deputy Prothonotary. Thus, this is a case of the later order supplanting or discharging the earlier order, rather than a case of the subsequent order operating retrospectively to the initial order, as happened in both Haly v. Barry and Brereton v. Edwards.
Support for the approach I have adopted, at least by way of analogy, can, I think, be found in the recent decision of the House of Lords in Roberts Petroleum Ltd. v. Bernard Kenny Ltd. (1983) A.C. 192. There, a question arose as to the power of the High Court to grant a judgment creditor a charging order over land of the judgment debtor pursuant to s.35 of the Administration of Justice Act, 1956 (U.K.). By s.35(1), the Court may, for the purpose of enforcing a judgment, by order impose upon land of the debtor a charge for securing payment of any monies due under the judgment. By s.35(2), such an order may be made either absolutely or subject to conditions as to notifying the debtor or as to the time when the charge is to become enforceable or as to other matters. R.S.C., Ord. 50, rr.1 and 9, were in the following terms: "'1.(1) The power to make an order under section 35 of the Administration of Justice Act 1956 imposing a charge on land or interest in land of a judgment debtor shall be exercisable by the court. (2) Any such order shall in the first instance be an order to show cause, specifying the time and place for further consideration of the matter and imposing the charge until that time in any event. (3) An application for an order under the said section 35 may be made ex parte .... (6) On the further consideration of the matter the court shall, unless it appears (whether on the representation of the judgment debtor or otherwise) that there is sufficient cause to the contrary, make the order absolute with or without modifications. (7) Where on the further consideration of the matter it appears to the court that the order should not be made absolute, it shall discharge the order. '9. ... a master ... shall have power - (a) to appoint a receiver to enforce a charge imposed by an order under rule 1 ...'"
The House of Lords reversed the decision of the Court of Appeal that the authorities established that the insolvency of a company, followed or to be followed inevitably by liquidation, was not enough of itself to justify the court in exercising its discretion by refusing to make a charging order absolute and that there had to be some further factor in the situation, the most common being that a scheme of arrangement had been set on foot by the main body of creditors and had a reasonable prospect of succeeding. The House held that, while each case was a matter for the individual judgment of the court in the circumstances of that particular case, the compulsory winding up of a company, or a resolution of a company in general meeting for voluntary winding up, which brought into operation a statutory scheme for dealing with the assets of the company, was, without more, a "sufficient cause" for not making a charging order nisi over such assets absolute; and that, accordingly, Bristow J. had been correct in holding that the liquidation of the defendants was a sufficient cause for not converting the charging order nisi obtained by the plaintiffs into an order absolute and the order absolute should be discharged.
Lord Brightman, in delivering the principal speech, said (at p 208): "The basic question, therefore, which confronts the court when it is faced with an application by an execution creditor to convert an order nisi into an order absolute in a case such as the present is whether the asset in question should fall outside the statutory scheme which, by virtue of the liquidation, is then in existence, or should be subject to that scheme. In the absence of persuasive authority to the contrary, and it will of course be necessary to consider the authorities, I would myself have thought that the court should exercise its discretion so that the asset falls within the statutory scheme. The purpose of the further consideration of the order nisi is to enable the court to review the position inter partes. At the date of the order nisi the court has made no irrevocable decision. If therefore the statutory scheme for dealing with the assets of the company has been irrevocably imposed on the company, by resolution or winding up order, before the court has irrevocably determined to give the creditor the benefit of a charging order, I would have thought that the statutory scheme should prevail. Unquestionably that would be the position if the winding up order or resolution had preceded the order nisi: see section 228 (compulsory liquidation) and Westbury v. Twigg & Co. Ltd. (1892) 1 QB 77 (voluntary liquidation). To my mind the position should be the same if liquidation commences after the order nisi but before the court has committed itself to a final order. I do not see why a creditor should gain an advantage merely because he has a revocable order for security at the time when the statutory scheme comes into existence. The main thrust of Roberts' argument is that the order nisi imposes an immediate charge, which is correct, and that therefore at the date of the commencement of the liquidation the assets were already outside the statutory scheme. That proposition, by reference to that date, is also correct. The liquidator was unable, at that date, to collect those assets by going into possession, because the receiver was already in possession. But the weakness of the argument to my mind is that Roberts had no more than a defeasible charge at the date of the commencement of the liquidation, so that the right of the receiver to retain the asset as against the liquidator was only a defeasible right. Neither the precarious existence of the charge nor the precarious possession of the receiver seems to me to afford a convincing reason for consolidating the position of the judgment creditor vis-a-vis the general body of unsecured creditors and thereby defeat quoad that asset the statutory scheme which was already in full force and effect. So, unless there is convincing authority pointing to a different conclusion, I would regard the intervention of the statutory scheme as a sufficient and indeed decisive 'cause to the contrary.'"
His Lordship also rejected an argument by the judgment creditor that, by virtue of s.325 of the Companies Act, 1948 (U.K.), it was entitled to retain the "benefit of the execution" since it had "completed the execution" before the commencement of the winding up, saying (at p 213): "The argument of the respondent Roberts is that, on the plain wording of the section, the liquidator would have no right to deny Roberts the benefit of its execution. Roberts had issued execution against Kenny when it applied for and obtained an order nisi. At the date of the order nisi Roberts had received no notice of a meeting having been called at which a resolution for voluntary winding up would be proposed. Roberts had obtained an order for the appointment of a receiver. Therefore in the terms of the section execution was deemed to be completed before the date of the winding up. The argument is formidable but I do not think it is correct. When the section speaks of an execution against land being 'deemed to be completed . . . by the appointment of a receiver' I think that it is looking at a final order of the court effecting such appointment, and not at an order which is made provisionally, ex parte, pending further consideration by the court when the application is heard inter partes. I would expect to find clear words if I am to construe 'completion,' even 'deemed completion,' as comprehending a mere interim appointment of a receiver which is made ex parte and is not a final appointment. 'Completion' of execution infers an element of finality. In the case of an attachment of a debt there must be receipt of the debt. A debt due to the judgment debtor would not be paid to the judgment creditor under a garnishee order which was merely nisi."
In my opinion, this reasoning, emphasising as it does, the provisional or defeasible character of the order nisi, supports the conclusion in the present case that the operative charge for present purposes is the final charging order, if made; it is, therefore, a charging order made by a court in respect of a judgment as stated in s.118(12). Such a conclusion, confined as it is to the statutory context of s.118(9), does not deny that, for other purposes, such as that of competing priorities, the date of the order nisi, and not that of the order absolute, is the relevant date.
In the result, I am of the opinion that the order made by Lusher, J. at the behest of the first respondent should properly be characterised as a charging order made by a court within the statutory period prescribed by s.118(9). As I have said, the position of the second respondent is the same in all material respects. I propose to grant the relief sought.
I make the following orders:
2. Order that the respondents pay the applicant's costs. Make no order for the costs of Mr. Kinsela.
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