“Upon the application of a judgment creditor, the court may make an order (a ‘final third party debt order’) requiring a third party to pay to the judgment creditor – (a) the amount of any debt due or accruing due to the judgment debtor from the third party; or (b) so much of that debt as is sufficient to satisfy the judgment debt and the judgment creditor’s costs of the application.”
“(1) A final third party debt order shall be enforceable as an order to pay money. (2) If – (a) the third party pays money to the judgment creditor in compliance with a third party debt order; or (b) the order is enforced against him, the third party shall, to the extent of the amount paid by him or realised by enforcement against him, be discharged from his debt to the judgment debtor.” (2) If – (a) the third party pays money to the judgment creditor in compliance with a third party debt order; or (b) the order is enforced against him, the third party shall, to the extent of the amount paid by him or realised by enforcement against him, be discharged from his debt to the judgment debtor.”
“A garnishee or third party debt order is a proprietary remedy which operates by way of attachment against the property of the judgment debtor. The property of the judgment debtor so attached is the chose in action represented by the debt of the third party or garnishee to the judgment debtor. On the making of the interim or nisi order that chose in action is (as it has been variously put) bound, frozen, attached or charged in the hands of the third party or garnishee. Subject to any monetary limit which may be specified in the order, the third party is not entitled to deal with that chose in action by making payment to the judgment debtor or any other party at his request. When a final or absolute order is made the third party or garnishee is obliged (subject to any specified monetary limit) to make payment to the judgment creditor and not to the judgment debtor, but the debt of the third party to the judgment debtor is discharged pro tanto”
“It is not in my opinion open to the court to make an order in a case, such as the present, where it is clear or appears that the making of the order will not discharge the debt of the third party or garnishee to the judgment debtor according to the law which governs that debt. In practical terms it does not matter very much whether the House rules that the court has no jurisdiction to make an order in such a case or that the court has a discretion which should always be exercised against the making of an order in such a case. But the former seems to me the preferable analysis, since I would not accept that the court has power to make an order which, if made, would lack what has been legislatively stipulated to be a necessary consequence of such an order … It is of course true, as the judgment creditor argued and as was accepted in SCF Finance Co Ltd v Masri (No 3)[1987] QB 1028 , 1044, that the legislation has from the beginning stipulated that the third party or garnishee should be within the jurisdiction but not that the debt to be attached should be within the jurisdiction. This seems to me a point of very little weight. The language used in 1854 has, until very recently, been reproduced with remarkably little change, and I think it rather unlikely that Parliament in 1854 was directing its mind to garnishees served within the jurisdiction but owing debts to the judgment debtor abroad. Since no order attaching a foreign chose in action has been made in any reported case, there can have been no pressing need for the Rules Committee to clarify any suggested ambiguity in the rules.”
“It is common ground that all property, whether tangible or intangible, has a situs for legal purposes. It is further common ground that … a third party debt order is a proprietary remedy, which, when complied with, operates to discharge the debt and to release the debtor from his obligation. Since it involves dealing with property, the English courts do not have jurisdiction to make such an order in respect of debts situated outside the jurisdiction, unless by the law applicable in that place an English order would be recognised as discharging the liability of the third party to the judgment debtor.”
“…a garnishee order is of the nature of an execution, and is governed by the lex fori; and by international law an execution which has been carried into effect in a foreign country under foreign law, and has taken away part of a man’s property, is not recognized as binding. There can be no doubt that under the rules of international law the Dresdner Bank could not set up, in an action in Berlin, the execution levied in this country in respect to this debt. If we consider the converse case it is clear, to my mind, that we should take that view of a similar transaction occurring abroad. That being the case, we must consider whether the Court should refuse to permit this execution on the ground that the effect might be that the bank might be called on to pay the debt a second time in Germany.”
“In the first place, there is no doubt that a debt or liability arising in any country may be discharged by the laws of that country, and that such a discharge, if it extinguishes the debt or liability, and does not merely interfere with the remedies or course of procedure to enforce it, will be an effectual answer to the claim, not only in the courts of that country, but in every other country. This is the law of England, and is a principle of private international law adopted in other countries … Secondly, as a general proposition, it is also true that the discharge of a debt or liability by the law of a country other than that in which the debt arises, does not relieve the debtor in any other country …”
“Mr. Dicey, at p. 318 of his treatise on the Conflict of Laws, points out the rule of law that debts or choses in action are generally to be looked upon as situate in the country where they are properly recoverable or can be enforced. On the facts of this case the debt of the bank to Nadel would be properly recoverable in Germany. That being so, it must be taken that the order of this Court would not protect the bank from being called on to pay the debt a second time. That is a good reason why the order should not be made, for to make it would be inequitable and contrary to natural justice … Order XLV., r. 7, provides, that payment by a garnishee is to be a valid discharge as against the debtor, liable under a judgment or order, to the amount paid or levied, although such proceeding may be set aside or the judgment or order reversed, but that provision cannot affect the rights of a person who is not within the jurisdiction of the Court and is not subject to its jurisdiction.”
“The decision of that question depends upon where the debt sought to be attached is situate. If the debt is situate, or in other words if it is properly recoverable, in this country, then it would be discharged by payment under an order of our Courts and the garnishee need have no fear of being required to pay it a second time; but if the debt is situate, that is properly recoverable, in a foreign country, then it is not discharged by payment in this country under an order of the Courts of this country, and the debtor may be called upon to pay it over again in the foreign country. There is no doubt as to the effect of payment made under a garnishee order here. It is clearly a discharge pro tanto of the debt … Now when a debt payable in this country is discharged by a Court of competent jurisdiction in this country what is the result? It is clearly expressed by Bovill C.J. in Ellis v. M'Henry …”
“The plaintiffs sued a foreigner who though resident out of the jurisdiction appeared in the proceedings. The plaintiffs having got judgment by an order of the Court now seek to get execution by attaching a debt which to my mind clearly “arises” and “is situate” within the territorial limits of the jurisdiction of the English Courts, if there is any difference between the two expressions. Those Courts have statutory power to order execution to issue against such property, and by our law, and by the principles of private international law, such process when executed has the effect of discharging the person who owes the debt thus attached from further liability to pay it. It follows that the Court would rightly exercise its statutory jurisdiction and discretion by allowing this execution to issue, inasmuch as the effect of the execution will be to discharge the London Merchant Bank, the garnishees, of their debt to the Böhmische Industrial Bank, the judgment debtors. Martin v. Nadel is plainly distinguishable, and its only claim to be considered in this case is by reason of a sentence in the judgment of Vaughan Williams L.J. as reported in the Law Reports, which appears in much the same terms in the three other reports of the case. The sentence in the Law Reports runs thus: “By international law an execution which has been carried into effect in a foreign country under foreign law, and has taken away part of a man’s property, is not recognized as binding.”
“The bank is no doubt indebted to the judgment debtor and the bank is within the jurisdiction. The Order deals with the case where “any other person is indebted to the judgment debtor and is within the jurisdiction.”
“In the present case they have debtor and creditor both resident in and (if for this purpose it is relevant) nationals of Indore. Unless it can be shown that the contract expressly or impliedly provided for payment in Bombay, either solely or it may be primarily, or, which is not suggested, made the debt enforceable only in the Bombay Courts, there is no test of situs which can be suggested, whether in India or elsewhere, which could make the debt not situate in Indore … It appears to their Lordships that there was no evidence to displace the ordinary obligations that would arise in the ordinary course of a business such as this, that on the balance of account Shankarrao was bound to pay Oomkarmal was bound to pay Shankarrao in Indore. That there was not a right to sue Shankarrao in Indore could hardly be contended. It is difficult to think that he could only be sued in Bombay, where he did not reside and had no place of business. In these circumstances, there being no sole or primary obligation to pay in Bombay, and no exclusive right of suit in Bombay and both parties being resident in Indore, it is impossible to displace the decision of the Appellate Court that the debt was situate in Indore.”
“The House was referred to no reported case in which the English court has made a final third party debt order or garnishee order absolute in relation to a foreign debt, although (with one exception) the refusal has been put on discretionary grounds; and discretion has been exercised against the making of an order even where the debt to be attached is situated in this country where it has appeared that the third party, despite the discharge of its debt to the judgment debtor as a matter of English law, may be at risk elsewhere of compulsion to pay a second time … It is not in my opinion open to the court to make an order in a case, such as the present, where it is clear or appears that the making of the order will not discharge the debt of the third party or garnishee to the judgment debtor according to the law which governs that debt … I find myself in close agreement with the opinion of Hill J in Richardson v Richardson[1927] P 228 , subject only to the qualification (of little or no practical importance) that an order may be made relating to a chose in action sited abroad if it appears that by the law applicable in that situs the English order would be recognised as discharging pro tanto the liability of the third party to the judgment debtor.”
“In analysing the authorities, Lord Goff of Chieveley said that the question was always whether it would be inequitable to make the garnishee order absolute. It would generally be inequitable to do so if the garnishee would have to pay the debt twice over. In deciding whether this might happen, the normal assumption was that any foreign court, in accordance with general principles of private international law, would treat the debt as discharged if three conditions were satisfied: (1) the English court had international jurisdiction to enter judgment against the debtor; (2) the situs of the debt was England and (3) the effect of payment under the garnishee order in English law was to discharge the debt. Lord Goff then considered whether this assumption should be made in every case: was compliance with the three criteria both necessary and sufficient? Lord Goff did not express a view as to whether compliance was necessary, although he noted the court in Martin v Nadel[1906] 2 KB 26 had not simply applied the three criteria as a matter of private international law but had considered whether in fact a payment under the garnishee order would be recognised by a court in Berlin as discharging the local debt. This suggests that if the evidence of foreign law had shown that, contrary the general principles of private international law, the foreign court would have treated the debt as discharged, it would have been acceptable to make the garnishee order absolute. But the real issue in the case was whether compliance was sufficient. Lord Goff said, at p 355, that it was not …”
“Rule 112 states that “choses in action generally are situate in the country where they are properly recoverable or can be enforced”
“Taurus’ argument is that in the case of debts the rule chosen and applied by English law is that the situs of a debt is the debtor’s residence, the place where the debt is recoverable. This is a long standing rule which goes back at least to the beginning of the last century. As Mr Pollock correctly put it, its nature and application were explained in detail by Lord Hobhouse in Société Eram Shipping Co Ltd v Cie Internationale de Navigation[2004] 1 AC 260 , 287–288.”
“The rule of law with regard to the locality of simple contract debts is that it is determined by the residence of the debtor at the material moment. That has been well settled for a long time, and I think the reason for that is that it is the residence of the debtor which determines the place where he may be sued, prima facie at all events, and is in general the place where the means of satisfying any judgment may be discovered, but whatever the reason is, there is no doubt that that is the rule”
“The real problem, I think, is not that the rule of law is altered, the rule of law still remains the same and the criterion is the residence of the debtor; but in the peculiar case to which I am referring it is necessary to say which of several residences is for this purpose to be treated as the residence of the debtor. The only way of settling that question that I can see is to take the contract which creates the debt and look at that and see whether, having regard to its terms, the parties have themselves selected for this purpose one of the several residences in question; and if you can find that, then I think that that place which they have selected will be the residence for the purpose of determining the locality of the debt.”
“The question as to the locality, the situation of a debt, or a chose in action is obviously difficult, because it involves consideration of what must be considered to be legal fictions. A debt, or a chose in action, as a matter of fact, is not a matter of which you can predicate position; nevertheless, for a great many purposes it has to be ascertained where a debt or chose in action is situated … the test in respect of simple contracts was: Where was the debtor residing? Now, one knows that, ordinarily speaking, according to our law, a debtor has to seek out his creditor and pay him; but it seems plain that the reason why the residence of the debtor was adopted as that which determined where the debt was situate was because it was in that place where the debtor was that the creditor could, in fact, enforce payment of the debt. I think that is a very material consideration. The result is that in the case of an ordinary individual by that rule for a long time the situation of a simple contract debt under ordinary circumstances has been held to be where the debtor resides; that being the place where under ordinary circumstances the debt is enforceable, because it is only by bringing suit against the debtor that the amount can be recovered.”
“There are complications because, at any rate, according to our law, it is possible in some cases to bring suits against the debtor in a territory where he is not residing by reason of the processes by which we have given our Courts jurisdiction in respect of certain matters to be performed within the jurisdiction, by serving the debtor, resident out of the jurisdiction, with notice of the proceedings, and, therefore, cases doarise where a debt may be enforced in one jurisdiction, and the debtor, being an ordinary living person, resides elsewhere. In respect to those matters, I do not propose to say anything, because that question does not arise here; but the ordinary rule in respect of a debtor is that the debt is situate where the debtor resides, because there the debt can be enforced against him by process of law.”
“A chose in action is no less a chose in action because it is not immediately recoverable by action and their Lordships know of no authority for the view that the situs of a chose in action recoverable in futuro is to be determined either by the residence of the person to whom the obligation is owed or by the physical whereabouts of the document evidencing the right (not being a speciality debt). Indeed, the commissioner has not sought to uphold the Court of Appeal’s decision on the ground upon which that court rested it. The matter falls, in their Lordships' opinion, to be determined by reference to first principles. In the first place, the notion that a debt or other chose in action, because incorporeal, can have no situs was laid to rest by the House of Lords in English, Scottish and Australian Bank Ltd. v. Inland Revenue Commissioners [1932] A.C. 238. It is clearly established that a simple contract debt is locally situate where the debtor resides - the reason being that that is, prima facie, the place where he can be sued: New York Life Insurance Co. v. Public Trustee[1924] 2 Ch. 101 , 114, per Warrington L.J. A debt which is payable in futuro is no less a debt and there is no logical reason why it should, as regard its locality, be subject to any different rule. It is simply a chose in action and like any chose in action is subject to the general rule which is conveniently stated in rule 115 in Dicey and Morris on The Conflict of Laws, 11th ed. (1987), vol. 2, p. 907 as follows: “(1) Choses in action generally are situate in the country where they are properly recoverable or can be enforced.”
“In that situation it is clearly established that the locality of the chose in action falls to be determined by reference to the place - assuming it to be also a place where the company is resident - where, under the contract creating the chose in action, the primary obligation is expressed to be performed: see New York Life Insurance Co. v. Public Trustee[1924] 2 Ch. 101 already referred to; In re Russo-Asiatic Bank[1934] Ch. 720 , 738; and F. & K. Jabbour v. Custodian of Israeli Absentee Property [1954] 1 W.L.R. 139, 146. In the instant case the expressed contractual obligation is to pay after 60 days in Liberia and upon presentation in the city of Monrovia. Their Lordships accordingly see no escape from the conclusion that at the date of the testator’s death the chose in action represented by the promissory note was situate in Monrovia and accordingly was property outside the colony.”
“The general rule stated in Dicey, Morris & Collins on The Conflict of Laws (14th edn), vol. 2, Rule 120 is that ‘Choses in action are generally situate in the country where they are properly recoverable and enforceable’. Although at common law this principle led to the general rule that (with some exceptions that are irrelevant for present purposes) debts are situate where the debtor resides (see Dicey, Morris & Collins, loc cit, at para. 22-026), its application in a case such as this, where the debtor is a corporation and the case is covered by the Lugano Convention, depends, as I see it, upon the debtor’s domicile. That is the primary ground on which a court takes jurisdiction under article 2 of the Lugano Convention. The domicile of a corporation is determined in accordance withsection 42 of the Civil Jurisdiction and Judgments Act 1982 . It depends upon where it has its ‘seat’, and this in turn depends upon where it was incorporated and has its registered or other official address or where its central management and control is exercised.”
“The Divisional Court have refused to make the order absolute, holding that the facts of this case bring it within the decision in Martin v. Nadel, that the Court will not make absolute a garnishee order where it will not operate to discharge the garnishee in whole or pro tanto from the debt; it will not expose him to the risk of having to pay the debt or part of it twice over. That is well established as a principle of discretion on which the Court acts. The question therefore may be stated thus: Is there here any evidence that the London Merchant Bank, if they pay this 9000l. to the Swiss Bank Corporation, will run any substantial risk of being compelled to pay it over again to the Böhmische Industrial Bank by action in Czecho-Slovakia?”
“Thereupon the Court made the order now appealed from, and it is contended that in so doing they exercised their discretion wrongly, for, in the circumstances, such an order was inequitable, since it exposed the appellants to the risk of being compelled to pay a second time whatever they might pay to the judgment creditors here under the order of the Court of Appeal … To these objections I think that two answers may be made. The first is that, so far as Russia is concerned, the risk would be self-sought; the second is that, for any practical purpose, it cannot be estimated and may well be non-existent … As for the view, that foreign Courts generally cannot be expected to recognize judgments obtained here under specific legislation and particular circumstances, that raise an arguable doubt as to their validity, I do not think that this is a ground for a discretionary refusal to make the garnishee order absolute, when once it has been decided here that such judgments have been regularly obtained after an effective submission to the jurisdiction on the part of the defendants. In that case foreign Courts ought to recognize the judgments, and we must presume that they will do so. It is not justice to the garnishor to deny him his regular remedy for fear that, somehow or other, the garnishee, having passed beyond the jurisdiction of the Courts of this country and the protection which the garnishee order will always here afford him, might find himself caught in some foreign Court or country less willing than should be the case to recognize those obligations which arise under the so-called comity of nations. The risk to the garnishee, which it is inequitable to expose him to under a garnishee order absolute, must be a real risk: Sea Insurance Co. v. Rossia Insurance Co. of Petrograd. A mere speculative or theoretical hazard will not do.”
“… it is necessary to identify the applicable principles. I turn therefore to the authorities for guidance. In considering the authorities it is, I think, important to bear in mind that the question at issue is whether it would be inequitable in the circumstances to make a garnishee order absolute, and that it is generally considered inequitable so to do if the garnishee would, in the circumstances, be compelled to pay the relevant debt twice over. So we can see, in the cases, the question being posed whether there was any real or substantial risk that the garnishee, having paid the judgment creditor under a garnishee order absolute in this country, would be required to pay the amount over again in proceedings in a foreign country: see, e.g., Swiss Bank Corporation v. Boehmische Industrial Bank [1923] 1 K.B. 673 , 678, per Bankes L.J. and, at p. 681, per Scrutton L.J.; and Employers' Liability Assurance Corporation Ltd. v. Sedgwick, Collins and Co. Ltd. [1927] A.C. 95 , 112, per Lord Sumner.”
“That principle appears to lead to the conclusion that the English courts should act on the basis of an assumption as to how the foreign court will proceed. That this is indeed so is stated perhaps most clearly in the speech of Lord Sumner in the Sedgwick, Collins case when he said [1927] A.C. 95, 106: “The main question is whether the judgment is one to which, according to the current of English decisions, foreign courts of justice may be expected to give effect. The expectation is not one of fact depending on the probable conduct of the courts of this or that country, but is one of law, based upon the consideration for the judicial proceedings of other countries, which legal administration, wherever situated, ought to adopt and observe in the interest of justice generally.”
“I cannot accept that the mere fact that the exercise of jurisdiction by the foreign court is regarded as exorbitant, or even as very exorbitant, can of itself affect the exercise of the English court's discretion to make a garnishee order absolute. I find myself in agreement with the view expressed by Hobhouse J. that, if the garnishee shows that he is in fact exposed to a real risk of being required by a foreign court to pay the debt a second time, it does not of itself matter that the risk which the garnishee shows to exist is one of being so required by a foreign court which does not have, by English law, or by generally accepted rules of international law, jurisdiction to make such an order. This is because the crucial feature is the reality of the risk. It seems to me, as it did to Hobhouse J., that this is implicit in the speech of Lord Sumner in the Sedgwick, Collins case. I am not of course saying that the absence of such jurisdiction in the foreign court is necessarily irrelevant; because it may go to the reality of the risk in the sense that it may, for example, reduce the likelihood of such a judgment being executed upon assets of the garnishee … But if, for example, there is a real risk that the foreign court will enter judgment against the garnishee in respect of the same debt, and there are assets of the garnishee available for execution of this judgment, that would constitute good grounds for declining to make a garnishee order absolute, notwithstanding that the jurisdiction of the foreign court to enter the judgment was exorbitant in the sense that it did not accord with English ideas, or ideas generally accepted in private international law, or indeed that it was, to English eyes, erroneous in point of law.”
“It is thus settled law that if the garnishee can satisfy the court on evidence that there is a real risk that discharge of the garnishee order would not relieve it of its liability to the judgment debtor then a court ought not to make an order nisi absolute. There is a substantial amount of evidence here which I do not propose to read or indeed summarise other than by saying on that evidence I am quite satisfied there is a real risk that the People’s Court in China may not discharge the liability of the bank to the judgment debtor if the garnishor obtains satisfaction in respect of the debt owed by the bank to the judgment debtor, in other words the bank runs a real risk of double jeopardy. If one wants to look at the evidence in support of that view that I have formed it can; be found in the affidavits of Mr Gao and Mr Chang. In my judgment the evidence is sufficient for me to say there is a real risk. For that reason also, because of the possibility of double jeopardy so as to require the bank to pay the same sum twice, I do not propose to make this order absolute.”
“The debt was a commercial debt with an admitted situs in England. It was properly recoverable in England and the order made by the English court would discharge the debt. The question which arose was the exceptional one whether there was a real and substantial risk that the garnishee, Shell, would nevertheless, in a foreign country, be compelled to pay the debt again. This did not raise a question of jurisdiction or lack of subject matter but more simply the, in that case, difficult question whether it was equitable in the discretion of the court to make the garnishee order. Lord Goff was not expressing a view about the question which the present appeal raises.”
“It is well established that “debts owing or accruing” include debts debita in praesenti solvenda in futuro. The matter is well put in the Annual Practice, 1915, p. 808: “But the distinction must be borne in mind between the case where there is an existing debt, payment whereof is deferred, and the case where both the debt and its payment rest in the future. In the former case there is an attachable debt, in the latter case there is not.”