Celador Radio Ltd v Rancho Steak House Ltd (Equitable Interpleader - Enforcement)

Rules 85.4 and 85.5 of the Civil Procedure Rules provide the ordinary procedure for disputes over controlled goods, but they do not address every enforcement situation. In particular, they do not provide a complete mechanism where a third-party claim is disputed and the claimant then fails to issue the required application.

In that gap, a court exercising merged legal and equitable jurisdiction may grant equitable interpleader relief, provided that the rules do not cover the situation and the equitable procedure is proportionate. The court may make an unless order requiring evidence of title. If the third party defaults, it may declare the judgment debtor entitled to the goods and permit their disposal in execution. Determining title provides firmer protection for an enforcement officer than an injunction which leaves title unresolved.

High Court Enforcement Officers applied for directions in two enforcement matters. In Riaz v Designer Collection Europ Ltd, a third party claimed ownership of goods taken into control but failed to issue the application required by CPR 85.5. In Celador Radio Ltd v Rancho Steak House Ltd, third parties claimed money paid during enforcement, but likewise failed to commence the required application.

The applications raised a recurring procedural problem. CPR 85.4 and 85.5 regulate notices and applications concerning claims to controlled goods, but do not state what an enforcement officer should do where the third-party claimant does not issue the application or where no time limit is specified. The central issue was whether the court could deploy equitable interpleader relief and, if so, what directions should be made.

1. The court made directions in both applications. The third parties were given 14 days from service of the order to file and serve evidence setting out the basis of their rival claims to title. If they defaulted, they were debarred from relying on evidence of title contradicting that advanced by the High Court Enforcement Officer.

2. CPR 85.4 and 85.5 place the procedural burden on the person claiming the controlled goods. They do not provide a complete solution where a third-party claimant fails to issue the application required by CPR 85.5. The resulting uncertainty may leave goods in storage, frustrate swift enforcement and generate unnecessary cost.

3. An order purporting merely to prevent a future claim, while leaving ownership unresolved, is jurisdictionally doubtful and may not protect the enforcement officer. Equitable interpleader is a firmer solution because it determines ownership and binds the third party.

4. The enactment of CPR Part 85 and the revocation of RSC Ord. 17 did not abolish the court’s ability, in an appropriate case, to grant equitable relief where the rules provide no remedy. The statutory and procedural scheme should be used where it covers the situation. Equitable relief is a fallback where it does not.

5. If the third party filed evidence and was not debarred, the HCEO was to seek directions for determining title, managing the dispute and addressing the payments required by paragraph 60(4)(a) of Schedule 12 to the Tribunals, Courts and Enforcement Act 2007, with the application then proceeding under CPR Part 85. Costs were reserved in that event. If the third party defaulted, the HCEO was entitled to a declaration that the judgment debtor held title and to dispose of the goods in execution, subject to the order.

6. The court indicated that HCEOs may in future apply, where Part 85 does not meet the case, for an evidence-supported unless order leading to a declaration on default. The approach should preserve the HCEO’s neutrality and avoid disproportionate procedure.