Alawiye & Anor v Mahmood (t/a Amsons) & Anor

For an interim third-party debt order against a bank, a judgment creditor need not prove that the judgment debtor’s account remains open and in credit on the application date. Evidence that the account previously existed and was previously in credit may suffice, provided there are no contrary indications.

The court should adopt a practical approach because the judgment creditor will rarely know the debtor’s banking arrangements and the interim order itself helps establish whether a present debt exists. The creditor should provide any additional information reasonably available and bears the risk of costs if no debt exists. The same reasoning may permit an order where the account was formerly overdrawn, although that point was obiter.

The judgment creditor appealed from Master Bowles’ dismissal of an application for an interim third-party debt order against National Westminster Bank plc. The creditor had proved that the judgment debtor had previously held an identified account with the bank and that a cheque drawn on it had been honoured. The issue was whether that evidence sufficed without proof that the account still existed and remained in credit.

The appeal was heard by Mr Justice Lindsay in the Chancery Division. The court also considered the proper approach where the judgment debtor’s account had previously been overdrawn.

1. Appeal allowed. Master Bowles’ order was set aside and the matter was remitted to a Master to make the appropriate order under CPR 72.4(2).
2. The requirements governing an interim third-party debt order must be applied with commercial practicality. Although the application must state the creditor’s belief that the bank owes money to, or holds money for, the judgment debtor, the creditor will ordinarily lack detailed knowledge because banking information is confidential.
3. Evidence that an identified account previously existed and was previously in credit, such as an honoured cheque drawn on that account, may suffice to support an interim order where there are no contrary indications. The creditor should add any available information tending to show that the account remains open or that the debtor continues to have means, but such additions are not essential.
4. The interim stage exists to establish whether a present debt exists and, if so, to preserve it pending determination of the final order. Requiring proof of credit on the precise application date would substantially undermine third-party debt recovery. The creditor remains exposed to costs if the order reveals that no debt exists.
5. Obiter, similar reasoning may permit an interim order where the account was formerly overdrawn, provided there is no indication that the bank is not, overall, indebted to the judgment debtor. In that situation, a Master may properly require additional information suggesting that the debtor is not without means.
6. The judgment creditors’ appeal costs were ordered to be their costs in the application, subject to detailed assessment if not agreed.

• High Court (Chancery Division): appeal from Master Bowles’ order dated 1 November 2005 allowed; the order was set aside and the matter remitted to a Master.