F1PART 40CHARGING ORDER, STOP ORDER, STOP NOTICE
CHAPTER 1GENERAL
Application of this Part40.1.
This Part contains rules which provide for a creditor to enforce a judgment or order by obtaining—
(a)
a charging order (Chapter 2);
(b)
a stop order (Chapter 3); or
(c)
a stop notice (Chapter 4),
over or against the debtor’s interest in an asset.
Interpretation of this Part40.2.
In this Part—
“the 1979 Act” means the Charging Orders Act 1979;
“creditor” means the person to whom payment of a sum of money is due under a judgment or order or a person who is entitled to enforce such a judgment or order;
“debtor” means the person against whom a judgment or other order for payment of a sum of money was given, made or ordered, as the case may be;
“interim charging order” means an interim charging order made in accordance with rule 40.5; and
“securities” means securities of any of the kinds specified in section 2(2)(b) of the 1979 Act.
CHAPTER 2CHARGING ORDERS
Scope of this Chapter40.3.
This Chapter applies to an application by a creditor for a charging order under section 1 of the 1979 Act.
Application for a charging order40.4.
(1)
An application for a charging order may be made without notice.
(2)
An application must be made to the family court or to the High Court, as appropriate and as specified in section 1 of the 1979 Act.
(Her Majesty’s Courts and Tribunals Service publishes information to identify the appropriate location of the family court or High Court to which an application for a charging order should be sent.)
(3)
A creditor may apply for a single charging order in respect of more than one judgment or order against the same debtor.
(4)
The application must—
(a)
be in the form and contain the information required by Practice Direction 40A; and
(b)
be verified by a statement of truth.
Interim charging order40.5.
(1)
An application for a charging order will initially be dealt with by the court without a hearing.
(2)
The court may make an interim charging order—
(a)
imposing a charge over the debtor’s interest in the asset to which the application relates; and
(b)
fixing a hearing to consider whether to make a final charging order as provided by rule 40.8.
Service of an interim charging order40.6.
(1)
Copies of the interim charging order, the application and any documents filed in support of it must, not less than 21 days before the hearing, be served by the creditor on the persons listed in paragraph (3).
(2)
The creditor must either—
(a)
file a certificate of service in relation to each person served not less than 2 days before the hearing; or
(b)
produce a certificate of service at the hearing.
(3)
The persons to be served in accordance with paragraph (1) are—
(a)
the debtor;
(b)
if the order relates to an interest in land, any co-owner;
(c)
the debtor’s spouse or civil partner (if known);
(d)
such other creditors as are identified in the application or as the court directs;
(e)
if the order relates to an interest under a trust, on such of the trustees as the court directs; and
(f)
if the interest charged is securities, then—
(i)
in the case of stock for which the Bank of England keeps the register, the Bank of England;
(ii)
in the case of government stock to which sub-paragraph (f)(i) does not apply, the keeper of the register;
(iii)
in the case of stock of any body incorporated within England and Wales, that body;
(iv)
in the case of stock of any body incorporated outside England and Wales or of any state or territory outside the United Kingdom, which is registered in a register kept in England and Wales, the keeper of that register; and
(v)
in the case of units of any unit trust in respect of which a register of the unit holders is kept in England and Wales, the keeper of that register.
Effect of interim charging order in relation to securities40.7.
(1)
If a debtor disposes of their interest in any securities while they are subject to an interim charging order which has been served on them, that disposition will not, so long as that order remains in force, be valid as against the creditor.
(2)
A person served under rule 40.6(3)(f) with an interim charging order relating to securities must not, unless the court gives permission—
(a)
permit any transfer of any of the securities; or
(b)
pay any dividend, interest or redemption payment relating to them.
(3)
If a person acts in breach of paragraph (2), that person will be liable to pay to the creditor—
(a)
the value of the securities transferred or the amount of the payment made (as the case may be); or
(b)
if less, the amount necessary to satisfy the debt in relation to which the interim charging order was made.
Further consideration of the application40.8.
(1)
If any person objects to the court making a final charging order, that person must—
(a)
file; and
(b)
serve on the creditor,
written evidence stating the grounds of objection, not less than 7 days before the hearing.
(2)
At the hearing, the court may—
(a)
make a final charging order confirming that the charge imposed by the interim charging order continues, with or without modification;
(b)
discharge the interim charging order and dismiss the application;
(c)
decide any issues in dispute between the parties, or between any of the parties and any other person who objects to the court making a final charging order;
(d)
direct a trial of any such issues, and if necessary give directions; or
(e)
make such other order as the court considers appropriate.
(3)
If the court makes a final charging order which charges securities, the order must include a stop notice unless the court otherwise orders.
(Chapter 4 of this Part contains provision about stop notices.)
(4)
Any order made at the hearing must be served by the creditor on all the persons on whom the interim charging order was served.
Discharge or variation of order40.9.
(1)
Where an application is made to discharge or vary a charging order, the court may direct that—
(a)
any interested person be joined as a party to such an application; or
(b)
the application be served on any such person.
(2)
An order discharging or varying a charging order must be served, by the person who applied for that order, on all the persons on whom the charging order was required to be served.
CHAPTER 3STOP ORDERS
Interpretation40.10.
In this Chapter, “stop order” means an order of the High Court not to take, in relation to securities specified in the order, any of the steps listed in section 5(5) of the 1979 Act.
Application for a stop order40.11.
(1)
The High Court may make a stop order relating to securities, on the application of any person claiming to be beneficially entitled to an interest in the securities.
(2)
An application for a stop order must be made—
(a)
by application in existing proceedings; or
(b)
by a Part 19 application if there are no existing proceedings in the High Court.
(3)
The application must be served on—
(a)
every person whose interest may be affected by the order applied for; and
(b)
the person specified in rule 40.6(3)(f).
Stop order relating to securities40.12.
(1)
A stop order relating to securities may prohibit all or any of the following steps—
(a)
the registration of any transfer of the securities;
(b)
the making of any payment by way of dividend, interest or otherwise in respect of the securities; and
(c)
in the case of units of a unit trust, any acquisition of, or other dealing with, the units by any person or body exercising functions under the trust.
(2)
The order must specify—
(a)
the securities to which it relates;
(b)
the name in which the securities stand;
(c)
the steps which may not be taken; and
(d)
whether the prohibition applies to the securities only or to the dividends or interest as well.
Variation or discharge of order40.13.
(1)
The court may, on the application of any person claiming to have a beneficial interest in the securities to which a stop order relates, make an order discharging or varying the order.
(2)
An application seeking the variation or discharge of a stop order must be served on the person who obtained the order.
CHAPTER 4STOP NOTICES
General40.14.
In this Chapter, “stop notice” means a notice issued by the court which requires a person or body not to take, in relation to securities specified in the notice, any of the steps listed in section 5(5) of the 1979 Act, without first giving notice to the person who obtained the notice.
(Her Majesty’s Courts and Tribunals Service publishes information to identify the appropriate court location to which to send a request under rule 40.15 or rule 40.18 or an application under rule 40.19.)
Request for a stop notice40.15.
(1)
The High Court may, on the request of any person claiming to be beneficially entitled to an interest in securities, issue a stop notice.
(A stop notice may also be included in a final charging order, by either the High Court or the family court under rule 40.8(3).)
(2)
A request for a stop notice must be made by filing—
(a)
a draft stop notice; and
(b)
written evidence which—
(i)
identifies the securities in question;
(ii)
describes the applicant’s interest in the securities; and
(iii)
gives an address for service for the applicant.
(A sample form of stop notice is annexed to Practice Direction 40A.)
(3)
If a court officer considers that the request complies with paragraph (2), the court officer must issue a stop notice.
(4)
The applicant must serve copies of the stop notice and the applicant’s written evidence on the person to whom the stop notice is addressed.
Effect of a stop notice40.16.
(1)
A stop notice—
(a)
takes effect when it is served in accordance with rule 40.15(4); and
(b)
remains in force unless it is withdrawn or discharged in accordance with rule 40.18 or 40.19.
(2)
While a stop notice is in force, the person on whom it is served—
(a)
must not—
(i)
register a transfer of the securities described in the notice; or
(ii)
take any other step restrained by the notice,
without first giving 14 days’ notice to the person who obtained the stop notice; but
(b)
must not, by reason only of the notice, refuse to register a transfer or to take any other step, after the person has given 14 days’ notice under paragraph (2)(a) and that period has expired.
Amendment of a stop notice40.17.
(1)
If any securities are incorrectly described in a stop notice which has been obtained and served in accordance with rule 40.15, the applicant may request an amended stop notice in accordance with that rule.
(2)
The amended stop notice takes effect when it is served.
Withdrawal of a stop notice40.18.
(1)
A person who has obtained a stop notice may withdraw it by serving a request for its withdrawal on—
(a)
the person or body on whom the stop notice was served; and
(b)
the court which issued the stop notice.
(2)
The request must be signed by the person who obtained the stop notice, and that person’s signature must be witnessed by a practising solicitor.
Discharge or variation of a stop notice40.19.
(1)
The court may, on the application of any person claiming to be beneficially entitled to an interest in the securities to which a stop notice relates, make an order varying or discharging the notice.
(2)
An application to discharge or vary a stop notice must be made to the court which issued the notice.
(3)
The application must be served on the person who obtained the stop notice.
Practice Direction40.20.
Practice Direction 40A makes provision for the procedure to be followed when applying for an order under section 23 of the Partnership Act 1890.