Civil Trials Bench Book — Procedure generally

Interpleader is a procedure by which a person, faced with competing claims in respect of personal property (which he does not claim as his own), can protect himself from the uncertainty and expense of separate legal proceedings with each claimant by applying to the court to compel the claimants to settle, between themselves, their entitlements to the property: Ritchie’s at [r 43.1] ff and see Australian Customer Target Information Co Pty Ltd v Cabool Holdings Pty Ltd [2003] NSWSC 753 at [9]–[10].

Part 43 of the UCPR, which applies in all courts, provides for the discretionary grant of relief by way of interpleader in two situations relating to disputed property.

Disputed property means any debt or other personal property in respect of which a stakeholder or the Sheriff is being sued, or expects to be sued, by two or more persons in proceedings before a court: r 43.1.

The first situation, referred to as stakeholder’s interpleader, is where a stakeholder, that is a person who is under a liability in respect of a debt or other personal property (r 43.1), is sued or expects to be sued by two or more claimants in relation to disputed property: r 43.2(1).

It is a prerequisite to the grant of such relief that the stakeholder has filed an affidavit with the application for relief to the effect that the applicant claims no interest in the subject matter in dispute other than for charges or costs (r 43.2(3)(a)), is not in collusion with any claimant (r 43.2(3)(b)), and is willing to transfer the subject matter in dispute into court or, if the court so requires, to give security to the value of the subject matter to the satisfaction of the court: r 43.2(3), (4).

If the stakeholder has been sued in proceedings in the court in respect of the disputed property, the application is made by motion in the proceedings; otherwise, it is to be made by separate proceedings joining each claimant as a defendant: r 43.2(2)(a) and (b). As to service, see r 43.2(3)(c).

The second situation, is where the Sheriff takes or intends to take possession of any disputed property under a writ of execution: r 43.3.

A claimant in respect of the property, or the proceeds of sale or value of the property, may give notice of his or her claim to the Sheriff: r 43.3(1). As to the mandatory contents of such a claim, see r 43.3(2).

On receiving a notice of claim, the Sheriff must serve the notice on the execution creditor: r 43.3(3).

If a claimant does not give a notice of claim within a reasonable time, the court, on application by the Sheriff, may restrain the claimant from commencing or continuing proceedings against the Sheriff in respect of anything done or omitted to be done in execution of any writ of execution after the time when the claimant might reasonably have given a notice of claim: r 43.4(2).

As to procedure and service, see r 43.4(3) and (4).

Should an execution creditor serve a notice of admission on the Sheriff in respect of any disputed property, the Sheriff must withdraw from possession of the disputed property: r 43.5(2).

However, the court may, on application by the Sheriff, restrain the claimant from commencing or continuing proceedings against the Sheriff in respect of anything done, or omitted to be done, by the Sheriff in execution of the writ of execution in relation to the disputed property: r 43.5(3).

As to procedure and service, see r 43.5(4) and (5).

If an execution creditor on whom a claim is served does not, within four days after service of the notice, serve a notice of admission on the Sheriff and the claim is not withdrawn the court may make an order granting relief by way of interpleader: r 43.6.

As to procedure and service, see r 43.6(3) and (4).

In respect of applications for either stakeholder’s interpleader or sheriff’s interpleader, the court may make such orders and directions as it thinks fit for the hearing and determination of all matters in dispute: r 43.7(1). Rule 43.7(2) sets out a number of specific powers but does not limit r 43.7(1). Rule 43.7(2)(b) confers a power to stay proceedings in any other court in which the applicant is sued in respect of the disputed property.

A stay of proceedings in another court may be lifted by the court by which it was granted or by the court in which the stayed proceedings are pending: r 43.7(3).

If a claimant after due notice does not appear at the hearing or comply with an order made in the proceedings, the court may order that the claimant and those claiming under the claimant, be barred from prosecuting the claim against the applicant: r 43.8.

If multiple proceedings are pending in the court in respect of any or all of the disputed property, the court may make an order in any two or more of those proceedings: r 43.10.

Subject to any order or direction of the court, Pt 6 of the CPA and Pt 43 of the UCPR, with any necessary modifications, extend to the trial of any question that the court directs to be tried in any proceedings for relief by way of interpleader: r 43.11(1).

The court before which a question is tried may make such order, or give such judgment, as the case requires, including an order or judgment finally disposing of all questions arising in the proceedings: r 43.11(2).

Interpleader is not available in respect of a claim for unliquidated damages: Ingham v Walker (1887) 3 TLR 448. It is available in respect of a contingent debt that is due but not immediately payable: Reading v School Board for London (1886) 16 QBD 686 at 688.

The applicant for an interpleader order must establish an expectation that, if not already sued, a claim will be made. It must appear that there is a real foundation for the expectation: Watson v Park Royal (Caterers) Ltd [1961] 2 All ER 346 at 352.

The remedy is discretionary (r 43.7) and may be defeated by delay: Watson, above, at 352.

A claim for charges and costs will not defeat the entitlement of an applicant to an interpleader order (r 43.9) and see Wilson v Grace Bros Pty Ltd (1948) 66 WN (NSW) 21.

The court may dismiss an application by a stakeholder or give judgment against the stakeholder, unless it is satisfied that the stakeholder claims no interest in the disputed property, except for charges or costs, and is not in collusion with any claimant: r 43.9(1).

The court may require the Sheriff to satisfy the court that the Sheriff claims no such interest and has not so colluded. If not satisfied as to these matters, the court may dismiss the interpleader application: r 43.9(2).

For interpleader to be granted, the competing claims must be adverse: LJ Hooker Ltd v Dominion Factors Pty Ltd [1963] SR (NSW) 146; Olsson v Dyson (1969) 120 CLR 365 at 369. A separate claim against the applicant may defeat the application: Australian Customer Target Information Co Pty Ltd v Cabool Holdings Pty Ltd, above, at [11]. So, too, the identification of the applicant with the interests of either party or otherwise intermeddling in the proceedings: Smith v Nixon (1885) 7 ALT 74. The granting of indemnity does not necessarily defeat the application: Crothers v Grant [1934] VLR 120.

Generally a stakeholder who comes to the court promptly when faced with conflicting claims and has been guilty of no conduct which has increased costs will be entitled to costs, so far as the fund will permit: In re McPherson [1929] VLR 295 at 301; Cook v ANZ Bank (unrep, 16/6/95, NSWSC). Generally all participants in the interpleader proceedings will be entitled from the fund to the costs of presenting reasonable evidence and submissions concerning how the fund should be distributed: Westpac Banking Corporation v Morris (unrep, 2/12/98, NSWSC) at 5. However this entitlement is lost if issues are raised that increase costs and fail: Morris, above, at 5.

Note:

It may be appropriate to stay these or other proceedings.

If there are no existing proceedings in the court in which the application is made, there should be an order as to which of the claiming parties is to be the plaintiff and which the defendant. Such an order should also be made if it is not appropriate, in the particular case, to add the claimant as a defendant.

Where the disputed property is physical property, there should be an order as to how it is to be held or disposed of in the meantime.

Legislation

Rules