Charging orders are the third of the means listed in Order 13 Rule 2(1) of the National Court Rules 1983 for enforcing a money judgment. Unlike levy, which seizes and sells, a charge secures the creditor against an interest without taking it.
Rule 66
An application under section 24 of the Partnership Act 1951 — procedure against partnership property for a partner’s separate debt — shall be made —
(a) if the judgement is a judgement in proceedings in the Court — by motion on notice in the proceedings; or
(b) if the judgement is not a judgement in proceedings in the Court — by originating summons joining the judgement debtor and his partners as defendants.
(2) An application by a partner of the judgement debtor, made in consequence of the creditor’s application, shall be by motion on notice in the proceedings in which the judgement creditor applies.
A creditor holds a judgment against one partner personally. The partnership’s assets belong to the firm, not to that partner alone, so they cannot simply be seized. Section 24 allows the partner’s interest in the partnership to be charged instead, leaving the firm’s business intact.
Paragraph (b) is worth noting: the procedure is available even where the judgment was not obtained in the National Court — by originating summons joining the debtor and the partners.
The Partnership Act 1951 is not available on PacLII at the time of writing. Order 13 Rule 66 of the National Court Rules, set out here, governs the procedure; the substantive power to charge a partner’s interest is in section 24 of that Act, which should be consulted in its current form.
The originating summons or notice of motion, and any order made, shall be served on — (a) the judgement creditor; (b) the judgement debtor; and (c) such of the partners of the judgement debtor as are within Papua New Guinea.
(4) A document so served shall have effect as if served on all the partners.
Partners abroad need not be served. Service on those within Papua New Guinea operates as service on all — which prevents a firm with an overseas partner from frustrating the process.
Note that the partners are entitled to be heard: sub-rule (2) contemplates a partner making their own application in response. Their interest is real, since a charge on one partner’s share affects the firm.
Rule 67
Where there are funds in Court and —
(a) the interest of any person in the funds has been mortgaged, charged or assigned; or
(b) a person having an interest in the funds is a debtor under a judgement or order of the Court,
the Court may, on application by the mortgagee, chargee, assignee or creditor, make an order prohibiting the transfer, sale, delivery out, payment or other dealing with the whole or any part of the funds or of the income of the funds, without notice to the applicant.
(7) “Funds” includes effects.
It does not take the money. It prevents the funds being dealt with without notice to the applicant — so the applicant learns before the money leaves and can act.
Money reaches the Court in many ways: a payment into Court under Order 8 Division 6; a fund ordered to be paid into Court or otherwise secured under Order 14 Rule 10(3); proceeds of a court-ordered sale of land; money paid in by a garnishee; and damages held for a disabled person under Order 5 Rule 32.
Anyone with a charge over, or a judgment against, the person entitled to those funds may seek a stop order.
Rule 67(2) to (6)
(2) (a) If there are proceedings in the Court relating to the funds — by motion on notice in those proceedings; (b) if there are none — by originating summons joining as defendants all persons whose interests may be affected.
(3) The notice of motion or originating summons (a) shall be served on each person whose interest may be affected; but (b) shall not be served on any other person.
(4) The Court may, on terms, dispense with the joinder of any person as defendant and dispense with service on any person.
(5) The Court may order the applicant to pay the costs of any party to any proceedings in which the funds are in Court, or of any person interested in the funds.
The application shall not be served on any other person. That is a deliberate confidentiality protection: the existence of funds in Court, and of a charge over them, is not to be advertised to people with no interest.
Sub-rule (5) is a warning to applicants. The costs of others interested in the funds may be visited on the applicant — so a stop order sought without good reason is not costless.
When a charging order is the right step
| Debtor holds | Route |
|---|---|
| Goods, vehicles, land | Levy of property — O 13 Div 4 |
| Money in a bank, or wages | Garnishee — O 13 Div 7 |
| An interest in a partnership | Charge under Partnership Act s 24 — O 13 r 66 |
| An interest in funds in Court | Stop order — O 13 r 67 |
| An income-producing business | Receiver — O 13 r 2(1)(d); O 14 Div 3 |
| Nothing you can identify | Find out first |
Neither a charge on a partnership interest nor a stop order puts money in the creditor’s hands immediately. They protect the creditor’s position so that when the interest is realised — on dissolution of the partnership, or on the funds being paid out — the creditor is secured and is notified.
Where you need money now, garnishee or levy are the faster routes. Where the debtor’s only asset is a share in a firm or an interest in a fund, a charging order may be the only one available.
Note finally that under Order 13 Rule 18(1)(e), a writ of execution against property in the hands of a receiver appointed by the Court or of a sequestrator requires leave.
Sources
- National Court Rules 1983 — O 5 r 32; O 8 Div 6; O 13 rr 2, 18, 66, 67, Divs 4, 7, 8; O 14 rr 10, 17–23, Div 5
- Partnership Act 1951 — s 24; not available on PacLII
Before relying on anything here, read the current text of the National Court Rules 1983 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.