Kaur v Randhawa

For enforcement purposes, money received into a third party’s bank account remains the debtor’s money where the third party holds it as nominee or bare trustee. The account holder’s name does not prevent a third party debt order. An interim third party debt order is unnecessary where the funds are already frozen and the relevant parties are before the court. In such circumstances the court may make a final order against the bank for the debt, together with applicable interest and costs. Indemnity costs may be justified by deliberate evasion of an order and dishonest evidence.

The wife sought enforcement of an order requiring the husband to pay her a lump sum of £80,000. She applied for a final third party debt order against sums frozen in a bank account held in the name of the husband’s brother. The husband and brother claimed that the money belonged to the brother and represented an alleged debt owed by the husband.

The court rejected their evidence, found that sale proceeds belonging beneficially to the husband had been paid into the brother’s account, and determined the wife’s enforcement and costs applications.

1. Final third party debt order. The court rejected the husband’s and brother’s evidence that the husband had paid the wife £40,000 in cash and that the brother was owed £100,000. The alleged debt was fictitious. The sale proceeds were unquestionably the husband’s money. Their receipt into the brother’s account was immaterial because, in strict legal terms, the brother was either a nominee or a bare trustee for the husband.
2. Procedure. A final third party debt order was made against the bank for £108,854.28. This comprised the £80,000 principal, £8,454.28 statutory interest from 5 February 2014 to 2 June 2015, and £20,400 in costs. An interim order was unnecessary because the money was already frozen and the husband and brother were before the court. The interim procedure is used effectively on an ex parte basis to freeze money pending the final hearing.
3. Costs and ancillary directions. The husband’s and brother’s disgraceful conduct justified indemnity costs. The freezing order remained in place until the balance of the costs award had been ascertained and paid, subject to variation to permit execution of the third party debt order. The committal application under section 5 of the Debtors Act 1869 was adjourned generally. The judgment and court bundle were directed to be sent to the DPP to consider possible perjury proceedings.