Quadrant Chambers’ Post

Transcript

Hello, My name's Tom Macy Dare. I'm a barrister here at Quadrant Chambers. I specialize in commercial law and I have particular experience in applying for interim remedies. My qubit torque is called. What is the CHABRA jurisdiction? Chapter jurisdiction is an important aspect of the court's power to grant interim remedies in civil proceedings. It takes its name from a Court of Appeal decision from the 1990s, TSB and Chabra, which is one of the first cases where the power was recognized and exercised by the courts. What exactly is the Chabra jurisdiction? It's the power to grant an interim remedy. Against a person known as the non cause of action defendant. Against whom the person applying for the remedy has no substantive cause of action. Let me give you an example that will make it clear. In fact, what I'm going to do is start off with an example that doesn't involve the chamber jurisdiction. Then I'll change it slightly and hopefully things will become clear. So suppose we've got two people, and we'll call them for convenience, Miss Creditor. And Miss Dettor. And Miss Creditor and Miss Debtor are parties to a contract with each other and under the contract, Miss Debtor owes a lot of money to Miss Creditor. Miss Creditor may want to bring. Legal proceedings to enforce that debt. And she knows that Miss Dettor has plenty of assets, but she's worried that Miss Debtor will get wind of the legal proceedings. And then dissipate those assets in an attempt to make herself judgment. Proof. A familiar pattern for anyone that's involved in civil litigation. Now, to protect herself from the risk of dissipation, Miss Creditor, who's the claimant, can apply to the court. For a freezing injunction against Miss Dettor and that's an interim remedy which the Court grants in support of and ancillary 2 Miss Creditors substantive claim against Miss Debtor for the contract debt. O That ancillary function of the interim remedy is important. It reflects a fundamental principle that the courts can't grant interim remedies in a vacuum. They have to be ancillary to a substantive claim. Now let's change our example slightly. Same situation as before, except now none of miss debtors assets. That's the defendant. None of missed debtors assets are in her own name. Big house, fancy car. The bank account full of cash. They're all in the name of her boyfriend, who I'm going to call Stooge. Another familiar situation, familiar pattern. Now, in that situation, Miss Creditor may think it's still worth suing Miss Dettor. She thinks she can prove that those assets really belong to Miss Debtor and that Stooge is just holding on to them as a nominee or as a trustee for Miss Dettor. And so the idea is that if Miss Creditor gets judgment against Miss Dettor, she ought to be able to enforce that judgment against Miss Debtors assets which are in the hands of Stooge. But here's the problem. How does Miss Creditor stop Stooge from dissipating those assets before she can get her judgment against Miss Dettor? And enforce it against those assets. She may get a freezing injunction against Miss Dettor, but that probably won't be much good against Stooge. Can she get a freezing injunction directly against Stooge to freeze miss debtors assets in Stooges hands? And the answer is yes under the courts Chabra jurisdiction. Even though Miss Creditor has no substantive claim against Stooge. She can get a freezing injunction against Stooge in support of and ancillary 2, her substantive claim against Miss Dettor. And for that reason, the basic rule I mentioned earlier, which is that interim remedies can't exist in a vacuum, isn't violated. Now, what I've just outlined is the classic paradigm case of the court granting an interim remedy under its chamber jurisdiction. And in that example, the interim remedy was a freezing injunction. Now, in practice, almost every time the court exercises its Chabra jurisdiction, it does so by granting a freezing injunction. That's what this is really all about. Now, I began this talk by describing the Chabra jurisdiction as a power that the court possesses, but it's not an independent, separate power. It's part of the courts more general power to grant interim injunctions and other interim remedies which are sometimes called by different names, but which are really just specialized forms of interim injunctions. And that general power to grant interim remedies is, in theory, almost limitless. The court can grant an interim injunction in its discretion whenever it considers it just and convenient to do so. Provided, of course, that the respondent is amenable to the court's jurisdiction, either because he's physically present in England or because proceedings can be served on him out of the jurisdiction under the CPR. Although that power is theoretically. Very Broads in practice. The courts have developed various principles over the years to guide judges when they're deciding whether or not it is just inconvenience to grant an interim injunction. In a particular situation that's also the true in the case of the courts Chabra jurisdiction, although the relevant principles are very much in the process of development now generally in order to get a freezing injunction against a non cause of action defendant so. A Chabra injunction. What you have to demonstrate is first of all a good arguable case. That your non cause of action defendant. That's stooge. If you remember my previous example holds assets. Which would be amenable to some process. Ultimately enforceable by the courts by which those assets can be made available to satisfy a judgment against the substantive defendant. That's Miss Debtor in my example. Now one way you can do that is to show a good arguable case that the assets held in the name of that non cause of action defendant. Are in truth the assets of Miss Debtor, and that's the example I started off with earlier, but there are other ways in which you can do so too. So, for example, suppose that Miss Dettor is actually a company Debtor limited, and suppose that it's on the verge of insolvency. And suppose that stooge remember he was our non cause of action defendant. In this example, Stooge is a director and a shareholder who's received payments from that company while it was on the verge of insolvency. In that situation, if a liquidator was appointed over debt are limited. He might be able to recover those payments from Stooge for the benefit of the company's creditors, including our friend Miss Creditor. So Miss Creditor can apply to the court for a Chabra freezing injunction. Against Stooge. In support of an ancillary 2 her substantive claim against Debtor Limited, the company. On the basis that stooges assets Stooge, the director who's taken the money from the company. Those assets are amenable to a process ultimately enforceable in the courts. That's the liquidators claim. As a result of which, those assets may be available to refill Debtors coffers and then in turn, be available to satisfy any judgment which Miss Creditor may obtain against the company. In that situation, the court can freeze Stooges assets under its Chabra jurisdiction even though Miss Creditor has no substantive claim against Stooge and even though Stooges assets are in no sense the property of Debtor Limited, the substantive defendant. What the course is doing in that situation? Is freezing Stooges assets to prevent him from making himself judgment proof against Debt Unlimited? The substantive defendant, so that debt are limited, in turn, can be put in a position to pay any judgment that Miss Creditor has or obtains against it. And that is the courts CHABRA jurisdiction in 10 minutes. Thank you.