Principles to be applied when making a charging order absolute

In Chan Miu Cheung v Prague Enterprises Ltd ([2012] 3 HKLRD 414) the plaintiff had obtained charging orders nisi against properties owned by D1 and D2. Yuen J as she then was (the hearing took place in 1999) explained the principles to be applied when determining whether or not to make charging orders absolute. The court ‘has both the right and the duty to take into account all the circumstances of a particular case (whether they arose before or after the making of the order nisi) and it should exercise its discretion so as to do equity, so far as possible, to all the parties involved, ie the judgment creditor, the judgment debtor and / or other unsecured creditors.’ (para. 19)

The defendant has the burden of showing why orders nisi should not be made absolute (para. 27). The defendants had not discharged this burden. It was, in principle, inequitable for the plaintiff to have kept a prior charging order nisi extant until the application to make the current order absolute had been launched. Yet the defendants’ own ten month delay in fixing a date for the hearing of their own application to discharge the prior order nisi meant that it was difficult to show that the plaintiff’s action in this regard had caused them any prejudice (para. 22). The plaintiff had an interest in the charging order even though most of the sum due to the plaintiffs represented costs and was subject to a charge in favour of the Legal Aid Department (para. 24). The defendants claimed that they had a right to set-off their claims against the plaintiff; this failed since the defendants had not produced enough material to show that an inquiry into this matter would be worthwhile. Nor was there any real explanation as to why the defendants had delayed for a long time in taking any further action in respect of their claims (paras. 30 – 32).

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