Blight v Meredith & Ors

A court-ordered sale of charged shares may be made to the chargees themselves. A transfer at the market price, coupled with crediting that price against the secured judgment debt, is a sale even though no cash changes hands.

The equitable-execution jurisdiction under Senior Courts Act 1981, section 37, may be used where justice requires it to enforce a judgment against an asset not presently available to legal execution. It can require a judgment debtor to exercise, or delegate the exercise of, a power to obtain funds. Once the election creates a debt due from the third party, that debt may be attached.

The claimants sought to enforce a judgment debt against the defendant. They held charging orders over his Bowleven Plc shares and had obtained an order for their sale. The shares were transferred to two claimants at market value, with a corresponding credit against the debt.

The defendant contended that this was not a sale and that the shares had to be sold only after a charged leasehold property. The claimants also sought to enforce against the defendant’s right to elect for a tax-free 25% pension lump sum. District Judge Lynda Nightingale had ordered steps to complete a share sale and discharged a third party debt order. The central questions were whether the share transaction was a sale and whether the court could compel or authorise the pension election.

1. Permission to appeal was granted and the appeal allowed. The transfer of the charged shares to two claimants was a sale within the earlier order. A sale is a transfer of property for a price, and the price may consist of a set-off or credit against a liquidated cross-debt. The shares passed at market value and the defendant received credit against the judgment debt. The court order did not prohibit the chargees from purchasing at a court-ordered sale.

2. The related share and property sale orders did not require the leasehold property to be sold first. The provision making the share order subject to the property order addressed double accounting, not timing. In any event, the court varied the orders to state expressly that the shares and property could be sold in either order, and that the broker could sell shares to any claimant by transfer in return for market-value credit.

3. The court held that section 37 of the Senior Courts Act 1981 gave jurisdiction to grant ancillary injunctive relief and equitable execution where just and convenient. Applying Tasarruf Mevduati Sigorta Fonu v Merrill Lynch Bank and Trust Company (Cayman) Limited [2011] UKPC 17, the court treated the defendant’s power to elect for the pension payment as sufficiently akin to an asset. The jurisdiction was not confined to property presently subject to legal execution.

4. Field v Field [2003] 1 FLR 376 should not be accepted as preventing such relief. Its treatment of an injunction compelling a pension election as an impermissible free-standing enforcement procedure was inconsistent with the Privy Council’s reasoning.

5. The defendant was ordered to delegate the election to the claimants’ solicitor, up to the balance of the judgment debt. If he failed to do so, the solicitor was authorised to make the election in his name. Once that election created a debt due from Canada Life, the third party debt order was restored to take effect. Liberty to apply was granted.

• High Court (Chancery Division): Permission to appeal was granted. The appeal from District Judge Nightingale’s order of 24 March 2011 was allowed.
• District Judge Lynda Nightingale: Ordered the claimants’ solicitor to take steps to finalise the share sale and discharged the third party debt order concerning the defendant’s pension election.