Sequestration

General

Sequestration is in the nature of contempt.  It is not applicable to criminal cases. It is a form of civil execution, exclusively. Sequestration is particularly appropriate against corporate defendants. It may issue for breach of a negative or positive obligation under a judgment. It requires prior service on the party who is subject to the judgement or order. It is founded on disobedience of the order. Where a party wilfully disobeys the judgment or order and leaves the jurisdiction, the court may dispense with personal service.

Sequestration is an enforcement process available against the property of a person who is in contempt of court, by having disobeyed an existing court order.  When assets are sequestered, they remain in possession of the sequestrator until the court orders what will be done with them. In the case of a bank balance, it may be ordered to be paid into court. The property or assets must be those of the defendant. Certain types of assets cannot be seised in this way.

Sequestration requires an application to the court and a court order. Sequestration continues until the person in default clears his contempt and the court orders release of the assets. A sequester may then apply to the court for discharge.

Unlike the methods of enforcement against assets, mentioned in others chapters, the process the primary purpose of seizing the asset is to compel obedience of the court order. The order does not convert the assets concerned into the creditor’s ownership. Nonetheless, the court may authorise payment to the creditor of the sequestered assets or it may order the sequestered property to be sold.

The sequester is an officer of the court and owes duties to the court. He is deemed to act on the instructions of the creditor who may, therefore, be liable for his acts to a third party who suffers injury.The sequester will have to give security by entering a bond. He must render accounts of his receipts and payments.

Sequestration may be used in respect of money judgments, where the money is to be paid within a certain time limit or is to be paid into court. It is not available under an ordinary judgment to pay a debt.  It is also available to enforce orders for recovery of an asset, other than land and money.

Sequestration arises on willful disobedience of a court order. It is generally available where an order is made that something be done within a particular time. The order carries a penal endorsement providing that if its terms not complied with, the person to whom the order is directed will be subject to sanction.

Order for Sequestration

Generally, the original order which requires that act to be done within a time limit must be served personally on the defendant.  However, leave may be obtained to proceed with sequestration if it can be shown the defendant is aware of the order and is evading service.

An order for sequestration may be issued out of the court offices without leave/court order in most cases. Leave to issue is required to enforce against the company which is willfully disobeying an order.  The order for sequestration may be made against the corporate assets or against the property of directors or officers.

Under the Superior Court Rules, an application is made to the Master to approve the proposed sequestrator.  An order is made providing for their obligations to account and provide security.  A certificate must issue from the Master approving the terms.

The order for sequestration allows a sequestrator to enter a property for the purpose of receiving rents of the property and taking possession of goods.  This may include monies, bank balances, goods, chattels, rents and profits of real estate and of personal movable property.

Sequestration is not available against assets which are held on trust by the defendant, or are subject to a security interest in favour of other parties or are inalienable by statute or public policy.

The order binds the assets concerned from its time issue.  The order does not constitute a charge or give the creditor any interest in the asset concerned.

A sequestrator owes duties to the court. He has common law duties of care to the person against whom the order is made.  The rules and principles in respect of court-appointed receivers apply to sequestrators.

Upon the person in default purging his in contempt, the sequestration may complete. The person affected may apply to the court for discharge of the sequestration and a direction that sequestrators cease possession and pass final accounts. Monies or assets held net of sequestrators costs and expenses are repaid to the person concerned.