Chaudri v Khan

Permission to bring a second appeal should be granted where the proposed appeal raises an important point of principle or practice, or another compelling reason, and has a real prospect of success. Questions concerning whether statutory changes alter the interest rate on an existing judgment debt, and whether the discretion under Civil Procedure Rules 1998 Part 40.8(1)(b) is confined to the court that entered judgment, were sufficiently arguable. The court did not determine either issue on the merits. It accepted that the latter discretion might be exercisable when interest was first raised.

A default judgment for unpaid wages was entered against Mr Khan in 1990. A charging order was later made over the jointly owned home of Mr and Mrs Khan. After an application for sale, the County Court ordered sale and subsequently considered the amount required to discharge the judgment debt.

On 27 April 2006, HHJ Ann Campbell held that interest ran at 15 per cent from the date of judgment and declared the sum required to discharge the charging order. The application to the Court of Appeal concerned permission for a second appeal on two questions: whether the interest rate should vary when the statutory judgment rate changed, and whether the court could reduce the period for which interest ran under Part 40.8.

1. Permission granted. The application satisfied the second-appeal threshold: the proposed appeal raised important points of principle capable of affecting other cases, and the arguments had a real prospect of success. Permission was granted on both questions.
2. Interest rate. The County Court had regarded Rocco Giuseppe & Figli v Tradax Export SA as binding. The Court of Appeal would not itself be bound by that High Court decision. The proposed argument was that section 17 of the Judgments Act 1838 supplied the governing obligation, while section 44(1) of the Administration of Justice Act 1970 merely provided a mechanism for varying the rate. It was arguable that the relevant statutory instrument went beyond that power by limiting the changed rate to judgments entered after its commencement. The court did not decide that Tradax should be overruled, but held that the challenge could not be said to have no real prospect of success.
3. Date from which interest ran. The court agreed that Part 40.8(1)(b) of the Civil Procedure Rules 1998 conferred a discretion to order that interest begin on a date other than the date judgment was given. It was arguable that this discretion was not confined to the court which entered judgment and could be exercised, at least, when the question of interest was first raised. Powell v Herefordshire Health Authority, 27 November 2002, concerned a different route under Part 40.8(1)(a), but provided contextual support for the argument.
4. If the point succeeded, the matter might require remittal because the County Court had not exercised the discretion. The 11-year delay between the charging order and the application for sale might justify reducing the period for which interest ran, but the court expressly left that issue undecided. The appeal was to be heard by three Lords Justices, including judges with commercial and Chancery experience. Order: application granted.

1. Court of Appeal (Civil Division): On 18 July 2006, granted permission to bring a second appeal on the two judgment-interest issues.
2. Reading County Court, HHJ Ann Campbell: On 27 April 2006, held that interest ran at 15 per cent from 28 February 1990 and made a consequential declaration of the amount required to discharge the judgment debt and charging order.
3. Reading County Court, district judge: On 25 July 2005, ordered sale of the property after one month.