Nelson v Greening & Sykes (Builders) Ltd.

A charging order is not a nullity merely because it was made without prior notice, of the court’s own motion, or against a person who had not formally become a party. Such matters may make the order irregular or provide grounds for an appeal or an application under the Civil Procedure Rules, but they do not invalidate the order. A person interested in property subject to a charging order may apply under section 3(5) of the Charging Orders Act 1979 to vary or discharge it. An application based solely on nullity is misconceived.

Mr Nelson and Ms Hanley sought permission to appeal against an order of Lindsay J dated 1 December 2003. Mr Nelson separately sought permission to appeal against an order of Lewison J dated 5 February 2004. Both judges had dismissed applications seeking to set aside charging orders made by Peter Smith J on the ground that they were nullities. The applicants relied on alleged procedural defects, including lack of notice, the making of the orders of the court’s own motion, and Ms Hanley’s alleged status as a non-party. Chadwick LJ had previously held that the nullity argument was misconceived and adjourned the matter so that the statutory route under section 3(5) of the Charging Orders Act 1979 could be considered. The central issue was whether the charging orders were nullities or had to be challenged by appeal or another available procedure.

Disposition

Lord Justice Jonathan Parker gave the judgment of the court, with Lord Justice Kennedy agreeing. The applications for permission to appeal were dismissed. The costs were summarily assessed at £1,864.

1. The applications before Lindsay J and Lewison J had been advanced and decided solely on the basis that Peter Smith J’s charging orders were complete nullities. They were not applications under section 3(5) of the Charging Orders Act 1979 to vary or discharge the orders, nor applications under the Civil Procedure Rules to set aside or vary valid orders.
2. The charging orders were not nullities. The fact that Ms Hanley might not have formally become a party did not invalidate orders made in proceedings which could affect third-party interests. The nature of a charging order explained why the 1979 Act provided a route for an interested third party to apply for variation or discharge.
3. Any procedural defects in making the orders, including lack of notice or making them of the court’s own motion, could not possibly render them nullities. Such defects had to be pursued by appeal or, where appropriate, by an application under the Civil Procedure Rules.
4. The court did not determine the merits of any possible application under section 3(5) or the Civil Procedure Rules. It decided only that the orders were not nullities. That conclusion was plainly correct, so any appeal against the decisions of Lindsay J and Lewison J would be bound to fail.

• Court of Appeal (Civil Division) — In [2004] EWCA Civ 791, the court dismissed the applications for permission to appeal against the orders of Lindsay J and Lewison J, with costs summarily assessed at £1,864.
• High Court, Chancery Division — Lindsay J, on 1 December 2003, and Lewison J, on 5 February 2004, held that the charging orders made by Peter Smith J were not nullities and dismissed the respective applications. Permission to appeal was refused.