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242 Singapore Academy of Law Journal (2003) is nonetheless a good illustration of the type of balancing exercise which the court may undertake when deciding whether to make an order in favour of a 3 rd party creditor. In this case, the husband’s creditor (in respect of his business debts) had obtained a charging order under Section 1(a) of the Charging Orders Act 1979 46 in respect of the husband’s interest in the matrimonial home. The wife had obtained a decree nisi before the charging order had been obtained. When the wife discovered the existence of the charging order, she applied for it to be discharged, or, in any event, not enforced until the hearing of her application for ancillary relief. The registrar ordered that the charging order was to be subject to any order made in the ancillary proceedings and further ordered, in the ancillary proceedings, that the husband’s interest in the matrimonial home was to be transferred to the wife. The registrar’s order was upheld on appeal by the judge, and subsequently by the English Court of Appeal. It was held that the court had to strike a balance between “the normal expectation of the creditor and the hardship to the wife and children if an order is made” (per Fox LJ, at page 562 d-e). The Court of Appeal discussed various factors which had been considered by the court below in its decision: “(1) She had been previously cheated by her husband. The judge did not expressly decide this issue of fact, but in any event it can have little or no significance when weighed in the balance against the rights of the judgment creditor. (2) She was not a party to the debt incurred by the husband and never agreed to the debt being incurred. (3) The judgment creditor could, if he had wished, have asked for the debt to be made a charge on the house before he advanced the money. (4) The judgment creditor was the partner of the husband and knew of the husband’s wife and children and home. Points (2), (3) and (4) are all points which it was legitimate for the judge to consider…Finally, he considered the point that the effect of a charging order absolute would (on the figures) be to transfer the whole of the husband’s interest in the house to the judgment creditor, leaving the wife with nothing to claim against in the divorce proceedings. The judgment creditor, if the 46 There is no equivalent of this section in Singapore. A creditor in Singapore who wishes to recover his debt may apply for a writ of seizure and sale to sell the debtor’s interest in the immovable property under Order 47 Rule 4 of the Rules of Court. However, if the immovable property is in joint names of the debtor and another person, the creditor may only attach and sell the debtor’s share of the immovable property, not the entire immovable property.
15 SAcLJ Matrimonial Assets and the 3 rd Party 243 charging order absolute were discharged, would still have his judgment debt. However, since the husband had no assets other than his share in the house, without a charging order, or some other method of reaching that share (e.g. bankruptcy), that judgment debt was likely to be worthless. Counsel for the judgment creditor was justified in saying that this point was merely restating the problem: on the figures in this case it was all or nothing.” (per Balcombe LJ at page 558 b-e) “The court is required, under the 1979 Act, to consider all the circumstances of the case. One of those circumstances is the position of the creditor; to prevent him recovering his debt against the only property of the debtor which is available may cause great hardship to him. The creditor has put in no evidence of hardship in the present case, but other cases may be very different.” (per Fox LJ at page 563 f-g) (emphasis added) 54 On the facts, since the creditor had put in no evidence as to his circumstances, the Court of Appeal held that the judge had been entitled to decide that the hardship to the wife if the charging order was not varied (in the manner that it was by the registrar) was an overwhelming factor outweighing the creditor’s interests. 47 55 In the light of the foregoing, it is submitted that the factors which should be included for consideration by the court when deciding whether to make the repayment order 48 are: I Purpose of the debt 56 If the debt was taken for the benefit of the family, or if it was taken to acquire assets (even those considered as luxuries) or to generate income (business debts, for example) which, if the assets had some value, and profit had been made, would have been included in the pool of matrimonial assets available for division, then that should be a factor in favour of making the repayment order. II Other party’s knowledge of and consent to the debt 57 If the other party knew of and consented to the debt being taken out, that should be a factor in favour of making the repayment order. 47 48 See para (2) of the holdings at p. 546. The list of factors is not meant to be exhaustive, but only to highlight the key factors to be taken into account.
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