Honniball v Cunningham

• Jurisdiction: Ireland
• Judge: Miss Justice Laffoy
• Judgment Date: 27 October 2006
• Neutral Citation: [2006] IEHC 326
• Court: High Court
• Date: 27 October 2006

[2006] IEHC 326

THE HIGH COURT

No. 7654 P/2001

HONNIBALL v CUNNINGHAM

BETWEEN/

CLIFFORD HONNIBALL

PLAINTIFF

AND

BRIAN CUNNINGHAM

DEFENDANT

AND

BPI PROPERTY COMPANY LIMITED AND BY ORDER OF THE COURT BPI PROPERTY COMPANY LIMITED

NOTICE PARTY

RSC O.46 r1

DEBTORS (IRL) ACT 1840 S23

RSC (1905) O.46 r1

WYLIE JUDICATURE ACTS (IRL) (1906)

DEBTORS (IRELANDL) ACT 1840 S24

COMMON LAW PROCEDURE ACT 1853 S132

STATUTE LAW REVISION ACT 1874(2)

NORTHERN BANK v COONEY 1940 IR 207

CONSTITUTION ART 73

CONSTITUTION ART 50

COMMON LAW PROCEDURE ACT 1853 SCH B

COMPANIES ACT 1907

COMPANIES ACT 1963 S33(1)

COMPANIES (AMDT) ACT 1983

MACINTYRE v CONNELL 1851 1 SIM NS 225

NATIONAL LAND BANK LTD v O'DEA 1926 60 ILTR 55

COMPANIES (CONSOLIDATION) ACT 1908 S274

COMPANIES ACT 1963 PART XI

MUNSTER & LEINSTER BANK v O'SHEA 1934 LJ IR 2

INTERPRETATION ACT 2005 S5

INTERPRETATION ACT 2005 S6

RSC O.46 r5

CHANCERY (IRL) ACT 1867 S171

CHANCERY (IRL) ACT 1867 S172

CHANCERY (IRL) ACT 1867 S173

CHANCERY (IRL) ACT 1867 S174

HAUGHEY v MORIARTY 1999 3 IR 1

BAMBRICK v COBLEY 2006 1 ILRM 81 2005/3/573

PROCEEDS OF CRIME ACT 1996 S2

MCK v D (C) UNREP CLARKE 26.5.2006 2006/36/7617

NATIONAL IRISH BANK LTD v GRAHAM 1994 1 IR 215

HOLMES v MILLAGE 1893 1 QB 551

EQUITY:

Remedy;

PRACTICE AND PROCEDURE:

Judgment

Equitable execution - Appointment of receiver - Jurisdiction to appoint receiver byway of equitable execution - Whether receiver can be appointed by way of equitable execution over proceeds of sale of share where share not sold and no sale contemplated - Order varied (2001/7654P - Laffoy J - 27/10/2006) [2006] IEHC 326 Honniball v Cunningham

Execution - Charging order - Meaning of "public company" - Constitutionality of rule allowing party to seek charging order ex parte - Whether court can make order charging share in private company - Whether charging order valid where no time limit provided within which debtor should show cause - Interim order - Non-disclosure - Discretion to discharge interim order for non-disclosure - Joinder of notice party - Whether necessary to join company as notice party where charging order made over share in company - Rules of the Supreme Court (Ireland) 1853, O XLVI - Rules of the Superior Courts 1962 (SI 72/1962) - Rules of the Superior Courts 1986 (SI 15/1986), O 46 - Debtors (Ireland) Act 1840 (3 & 4 Vict, c 105), ss 23 and 24 - Common Law Procedure Amendment Act (Ireland) 1853 (16 & 17 Vict, c 113), s 132 - Statute Law Revision Act 1874 (No 2) (37 & 38 Vict, c 96) - Companies Act 1963 (No 33), s 33(1) - Companies (Amendment) Act 1983 (No 13) - Interpretation Act 2005 (No 23), ss 5 and 6 - Order varied (2001/7654P - Laffoy J - 27/10/2006) [2006] IEHC 326 Honniball v Cunningham

The plaintiff was a judgment creditor of the defendant. The plaintiff averred in an affidavit that the defendant was the sole member of a company and owned the sole issued share in the company. The High Court made an order that a sum stood charged on the defendant’s share in the company and joined the company as a notice party. The High Court also appointed a receiver by way of equitable execution. The applications were made ex parte. The defendant sought to have both the charging order and the appointment of the receiver discharged.

Held by Laffoy J. in declaring absolute the charging order, discharging the order appointing the receiver by way of equitable execution, and discharging the order joining the company as a notice party, that the defendant had not established that the court had no power to make the charging order, nor had the defendant established any other grounds on which the charging order should be discharged. The defendant had no equitable interest in the proceeds of a share sale; rather he was the legal owner of a share which was charged in favour of the plaintiff. There being no property in which the defendant enjoyed merely an equitable interest the appointment of the receiver could not stand. It was not necessary to join the company as a notice party.

Reporter: R.W.

1 Judgment of Miss Justice Laffoy delivered on 27th October, 2006 .

Background in outline

2 The plaintiff is a judgment creditor of the defendant in the sum of €850,000 and costs, when taxed and ascertained, on foot of an order dated 1st May, 2003 made in this Court by Ó Caoimh J. in the substantive proceedings. The plaintiff has averred in an affidavit sworn on 3rd October, 2006 that the defendant is the sole member of BPI Property Company Limited (the Company), a limited liability company registered in the State, and that he owns the sole issued share in the Company. That averment was made by reference to the particulars filed in the Companies Registration Office on behalf of the Company. The averment has not been contradicted by the defendant, who, in an affidavit sworn on 13th October, 2006, has attested to the accuracy of matters averred to in an affidavit sworn by his solicitor, Peter Dempsey, on the same day. In para. 21 of his affidavit Mr. Dempsey averred as follows:

"There is no liability on the part of the Notice Party for any debt to the plaintiff and no distribution on foot of the existing shareholding or sale of same. There is no basis for including the Notice Party as a Notice Party. I am instructed and believe, however, that it has been agreed to issue an additional share(s) of equal value to that presently held by Mr. Cunningham. As of the time of the instant application that issue had not been completed."

3 On 3rd October, 2006 two applications were made to the court on behalf of the plaintiff and dealt with in an order of that day as follows:

4 (1) An application was made pursuant to O. 46, r. 1 of the Rules of the Superior Courts, 1986 (the Rules) for an order charging the defendant's share in the Company. In accordance with O. 46, r. 1 that application was made ex parte. The order made by the court on this application was that, pursuant to s. 23 of 3 & 4 Vict., c. 105, the sum of €920,833.74 (representing the judgment debt and the agreed costs) together with interest thereon stood charged on the defendant's share in the Company. It was also ordered, on the application of the plaintiff, that the Company be joined as a notice party to the proceedings.

5 (2) An application was made ex parte for an order appointing a receiver by way of equitable execution over such distribution as might be made in respect of the share held by the defendant in the Company or, in the alternative, over the proceeds of that share. On foot of that application the court ordered that Frank Murray, solicitor, be appointed receiver by way of equitable execution. The plaintiff's motion for the appointment of a receiver was made returnable for 6th October, 2006.

6 The order also provided that all parties should be at liberty to apply.

7 On this application the defendant seeks to have both the charging order and the appointment of the receiver discharged.

The charging order

8 In considering the nature of the jurisdiction of the court to make an order charging stocks and shares, the starting point is O. 46, r. 1 of the Rules which provides:

"An application for an order charging stock or shares in pursuance of 3&4 Vic. c. 105 and the Common Law Procedure Amendment Act (Ireland) 1853, shall be made by motion ex parte. Such order shall be absolute in the first instance, but the Court may on the application of any person interested, and on such terms as to costs or otherwise as may be just, discharge or vary the same."

9 That rule is a verbatim transposition of the corresponding rule in the 1962 rules.

10 The corresponding rule of the 1905 Rules (O. XLVI, r. 1) provided as follows:

"An order charging stocks or shares may be made by a Divisional Court or by any Judge, and the effect shall be such as is provided by the Act 3& 4 Vict. c. 105, and the Common Law Procedure Amendment Act (Ireland), 1853 (16& 17 Vict., c. 113). The application for such order shall be made by motion ex parte. Such order shall be absolute in the first instance, but the Court or a Judge may on the application of any person interested, and on such terms as to costs or otherwise as may be just, discharge or vary the same."

11 The commentary on that rule in Wylie on the Judicature Acts (Ireland) (1906) discloses that the procedure was changed in 1905, though the effect of the order remained the same. The commentary also discloses that ss. 23 and 24 of 3& 4 Vict. c. 105, the short tile of which is the Debtors (Ireland) Act, 1840 (the Act of 1840) were repealed by the Common Law Procedure Act, 1853 (the Act of 1853), except so far as related to the jurisdiction of a Court of Equity, and by the Statute Law Revision Act, 1874 (2) so far as they are related to the Court of Exchequer. For present purposes, I am assuming that both ss. 23 and 24 of the Act of 1840 and s. 132 of the Act of 1853 are still in force and are the provisions referred to in O. 46, r. 1. In Northern Bank v. Cooney [1940] I.R. 207, Maguire P. stated (at p. 211) that it was common ground that both of the Acts referred to in O. XLVI, r. 1, applied in this country by virtue of Article 73 of the Constitution of the Irish Free State and Article 50 of the Constitution.

12 Section 23 of the Act of 1840, insofar as it is relevant for the present purposes, provides as follows:

"… If any person against whom any judgment shall have been entered up in any of … [the] … superior courts at Dublin shall have any Government Stock, Funds or Annuities, or any Stock or Shares of or in any public company in Ireland (whether incorporated or not), standing in his name in his own right, or in the name of any person in trust for him, it shall be lawful for the Court … on the application of any judgment creditor, to order...