Posts Tagged ‘charging order’

Charging order over share in the family home: striking the balance

February 3, 2016

In Melco Crown Gaming (Macau) Ltd v Wong Yam Tak ([2016] HKEC 237) title to the family home was in H’s name but W had an equal beneficial interest under a common intention constructive trust. M was granted a charging order nisi in May 2013 and (having been duly registered) this had priority over a consent order made in July 2013 in matrimonial proceedings ordering H to transfer his interest in the property to W ([43] Deputy Judge Yee).

The normal practice would be for the court dealing with ancillary relief in the matrimonial proceedings also to deal with the charging order. Here, however, there was unlikely to be any further application for ancillary relief ([48] – [49]).

Section 20(3) of the High Court Ordinance requires the court to consider all the circumstances of the case when considering whether or not to make the charging order absolute. It has to consider the personal circumstances of the debtor and whether any other creditor of the debtor would be likely to be unduly prejudiced by the making of the order. The factors to be borne in mind and the orders that might be made were considered by the English Court of Appeal in Kresmen v Agrest ([2013] EWCA Civ 41). There is a need to strike a balance between the expectations of the creditor and the hardship to W and the children. In Melco, W’s daughter was adult and independent so only W’s interest in having a roof over her head was relevant.

Here, even if the charging order over H’s share were made absolute, Melco could not expect to succeed in an application for an order for sale ([57]). Thus, a fair balance could be struck by making the order absolute. W would remain in exclusive occupation of the property ([58] – [59]).

Michael Lower

Does a charging order sever a joint tenancy?

February 4, 2015

In Ho Hai Kwan v Chan Hon Kuen ([2015] HKEC 132, CFI) the question was whether there had been an equitable severance of a joint tenancy by virtue of a charging order in respect of the property against one of the co-owners. Was it an act operating on the joint tenant’s share? There were obiter dicta in previous Court of Appeal decisions (Malahon Credit Co Ltd v Siu Chun Wah Alice and Fortis Bank v Yu Kam Hoi Herman) to suggest that this was the case. In this case, it was successfully argued that a charging order did not have this effect. The argument was that a charging order (enforceable in the same way as an equitable charge by virtue of section 20B(3) of the High Court Ordinance) does not confer any title on the person who obtained it but merely creates an encumbrance ([19]). Thus, a charging order had no effect on the four unities of the joint tenancy and was insufficiently final and irrevocable; there was no alienation ([20] – [31]). The charging order did not sever the joint tenancy ([58]).

Michael Lower