Emmott v Michael Wilson & Partners Ltd

Civil Procedure Rules 1998 Part 72.10 provides a procedure for a judgment creditor to seek payment of money standing to the judgment debtor’s credit in court. It does not confer an automatic right to payment. Where a legal issue is raised, the court must decide whether to make an order under the applicable legal principles.

Money in court is not thereby immune from competing proprietary claims. A judgment debtor may raise a third party’s interest even if that third party has not intervened. However, a purported fixed charge over a current account is inconsistent with permission for the chargor freely to operate that account. A chargee which acquiesces in payment to such an account cannot rely on the charge to defeat the judgment creditor’s claim.

Mr Emmott held an enforceable judgment debt against Michael Wilson & Partners Ltd (“MWP”) arising from an arbitration award. He applied under Civil Procedure Rules 1998 Part 72.10 for payment of about £317,000 held by the Court Funds Office to MWP’s credit.

The fund comprised sums paid into court in separate litigation involving the Assaubeyev parties. The Court of Appeal had ordered those sums to be paid out to MWP. HHJ Waksman QC ordered payment to Mr Emmott. MWP appealed, contending that the fund was subject to a fixed charge in favour of Kazholdings Incorporated (“KHI”). KHI then applied, shortly before the appeal hearing, to intervene and adduce further evidence.

The central issues were the construction of Part 72.10, the character of the money in court, the effect of KHI’s alleged security, and whether KHI’s asserted interest could defeat Mr Emmott’s enforcement application.

1. Appeal dismissed. Although the judge had applied incorrect principles on two issues, the Court of Appeal exercised its own judgment and held that the order for payment to Mr Emmott should stand.

2. Part 72.10 of the Civil Procedure Rules 1998 is a procedural route by which a judgment creditor may seek payment of money in court. It does not make payment automatic. Its place within Part 72 shows that, where a judgment debtor, third party, or other claimant raises a legal issue, the court must determine that issue under the applicable legal principles. The money is not a special fund immune from other claims.

3. The judge was wrong to treat money paid into court as necessarily equivalent to unencumbered cash. Following the order for payment out, MWP was entitled to the fund. It was therefore an asset of MWP and money standing to its credit in court. The court accepted the property analysis in Halvanon Insurance Co Ltd v Central Reinsurance Corporation [1988] 1 WLR 1122.

4. Assuming that KHI held a fixed charge over the fund, KHI had nevertheless agreed that MWP could continue operating its specified HSBC current account. That freedom was inconsistent with a fixed charge over the account balance, applying In re Spectrum Plus Ltd [2005] 2 AC 680. KHI had acquiesced in payment to that account and was precluded from asserting an interest capable of defeating Mr Emmott’s claim.

5. The judge was also wrong to hold that MWP could not raise KHI’s alleged interest. A judgment debtor may, and where appropriate must, raise a beneficiary’s or other third party’s rights; the court must take them into account even if the third party does not intervene. That did not assist KHI. Its late intervention and proposed evidence lacked merit, explanation, and any justification for not being advanced below. The application to intervene was refused.

• Court of Appeal (Civil Division) — in [2017] EWCA Civ 367, dismissed MWP’s appeal and upheld the payment order in favour of Mr Emmott.
• Commercial Court — on 3 February 2016, HHJ Waksman QC ordered that the Court Funds Office fund standing to MWP’s credit be paid to Mr Emmott under Part 72.10, with costs.