A bank holds a deposit that two people claim. A warehouse holds goods claimed by the consignor and the consignee. A Sheriff seizes goods and a stranger says they are his. Order 14 Division 7 of the National Court Rules 1983 solves the problem.
Rule 51
“claimant” means a person making a claim to property in dispute.
“execution creditor” means a person on whose behalf process is issued.
“process” means process for execution issued by or under the authority of the Court.
“property in dispute” means any debt or property which is the subject of proceedings under this Division.
“sheriff” includes any officer charged with the execution of process.
“stakeholder” means an applicant under Rule 52.
Rule 52
Where —
(a) a person is under a liability (otherwise than as a sheriff) in respect of a debt or other personal property; and
(b) he is sued, or expects to be sued, in any court, for or in respect of that debt or property by two or more persons making adverse claims,
the Court may, on his application, grant relief by way of interpleader.
“Or expects to be sued” — the stakeholder need not wait to be sued. A threatened claim is enough.
“In any court” — the competing claims need not both be in the National Court.
“Otherwise than as a sheriff” — Rule 52 is stakeholder’s interpleader. Where the Sheriff has seized goods under a writ and a stranger claims them, that is sheriff’s interpleader, a separate species arising out of enforcement.
Note also “debt or other personal property”. Interpleader is not the procedure for competing claims to land.
Rules 53 and 54
Rule 53 — where the stakeholder has already been sued in the Court for the property, the application is by motion in those proceedings. The stakeholder must serve notice of the motion on each party who claims any interest, and serve it personally on each claimant who is not a party.
Rule 54 — otherwise, the stakeholder shall commence proceedings by summons, joining each claimant as a defendant.
Rule 53(2)(b) requires personal service on a claimant who is not already a party. That is because the order sought will bind them — potentially barring their claim altogether under Rule 56.
Under Rule 54, every claimant is joined as a defendant, so the ordinary rules of service apply to each.
Rule 57 — the condition of relief
(1) The Court may dismiss the application or direct entry of judgement against the applicant unless satisfied that the applicant —
(a) claims no interest in the property in dispute except for charges or costs; and
(b) does not collude with any claimant.
(2) This does not affect the Court’s power in other cases to dismiss the application or direct judgment against the applicant.
Interpleader exists to protect someone caught between competing claims — not to give a party a tactical advantage. A person with their own claim to the property, beyond charges or costs, is not a stakeholder and must litigate in the ordinary way.
The consequence of failing Rule 57 is severe: the application may be dismissed and judgment directed against the applicant. So a bank or warehouse considering interpleader should first satisfy itself that it asserts no interest of its own and has taken no side.
The exception for charges or costs is important in practice: a warehouse claiming storage charges, or a solicitor claiming a lien, does not lose the protection.
Rule 55
The Court may make such orders and directions as it thinks fit for the hearing and determination of all matters in dispute — and in particular may:
(i) where proceedings are pending in the Court against the applicant, order that any claimant be added as a defendant in addition to or in substitution for the applicant, or order that those proceedings be stayed or dismissed;
(ii) where proceedings are pending in any other court, restrain the further continuance of those proceedings;
(iii) order the applicant to pay or transfer any or all of the property into Court or otherwise dispose of it;
(iv) where a claimant claims by way of security for debt, order the sale of the property and the application of the proceeds;
(v) on request by any party, summarily determine any or all questions of fact or law;
(vi) make orders for the settlement and trial of issues;
(vii) make such order, or direct the entry of such judgement, as the nature of the case requires.
Together they produce the result the stakeholder wants: the money or goods go into Court, the stakeholder is substituted out of the proceedings, and the claimants fight each other.
Paragraph (ii) is the power to restrain proceedings elsewhere — essential where the stakeholder faces claims in two courts. Compare stays generally.
Rule 58 allows an order to be made in any two or more pending proceedings at once, the minute being entitled in all of them and binding on all the parties. Rule 59 applies Order 10 Division 2 to the trial of any issue directed, and Rule 60 allows the trial court to direct such judgement finally disposing of all questions as the case requires.
Rule 56
(1) Where a claimant has been given due notice of the hearing and does not appear, or does not comply with an order made on the application, the Court may order that the claimant and those claiming under him be barred from prosecuting his claim against the applicant and those claiming under him.
(2) Such an order shall not affect the rights of the claimants amongst themselves.
This is why service matters so much. A claimant properly notified who stays away can be barred permanently from pursuing the stakeholder.
Sub-rule (2) is the limit: the bar protects the stakeholder, not the other claimants. Rights between claimants are unaffected, so a barred claimant may still have a claim against whoever received the property.
Sources
- National Court Rules 1983 — O 10 Div 2; O 13; O 14 rr 51–60
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.