COST BITES 14: TIME FOR PAYMENT OF COURT AWARD THERE SHOULD BE EVIDENCE TO SUPPORT ANY APPLICATION FOR FURTHER TIME

We are returning to the judgment in Vitol SA v Genser Energy Ghana Ltd [2022] EWHC 1955 (Comm) Ms Lesley Anderson QC (sitting as a Deputy High Court Judge).   It is quite common for a party ordered to pay costs to seek additional time to pay.  This judgment reminds us that a party seeking such an extension should normally provide evidence.  On the facts of this case, however, evidence was not necessary as the difficulties in relation to the mechanics of payment had been part of the evidence in the case.

“if a party wishes to persuade the court that a period greater than 14 days should be allowed for payment, it is necessary that that application is supported by proper evidence.”

THE CASE

The claimant had obtained a judgment after a trial.  The defendant sought an extension of time for payment of the damages.

THE JUDGMENT ON THE EXTENSION OF TIME FOR PAYMENT

The judge held that evidence was normally necessary to obtain such an extension.  However the issues in relation to the mechanics of obtaining payment had been ventilated during the course of the trial itself.  She was, therefore, able to grant the extension sought.

1. 1. The usual rule is that judgment debts must be paid within 14 days of the relevant order – see CPR 1998 rule 40.11. However, it is clear that the Court has a discretion to make a different order. Genser seeks a different order (namely that it be permitted until 2 September 2022 to make payment) on the following grounds. As appeared in the evidence before me at the trial, Genser has a substantial finance facility with a syndicated group of lenders who act through a Senior Agent. Genser says that it is unable to discharge the sums ordered to be paid by it to Vitol without first obtaining the consent of the Senior Agent because the liabilities exceed its authority to make payment without that consent and because the payments would constitute expenditure which is outside the budget approved by the Senior Agent. Essentially, whilst Genser does not anticipate any problem obtaining that consent, it requires time to do so.

1. 1. Vitol opposes Genser’s request. It submits that the principles which apply to an application for an extension of time for payment of a judgment debt were set out in Gipping Construction Limited v Eaves Limited [2008] EWHC 3134 (TCC) at [11] as follows:

… the normal rule is that judgment sums should be paid within 14 days unless the judge otherwise orders. The judge has an absolute discretion. It seems to me that the following principles or practice can and should apply. First, if a party wishes to persuade the court that a period greater than 14 days should be allowed for payment, it is necessary that that application is supported by proper evidence. Secondly, it is much better generally that, if there is a genuine problem about the defendant paying, or being able to pay, that that is a matter first fully discussed on a “without prejudice” or even open basis between the parties. Ultimately, of course, the court can be asked to rule upon it, but it is much better if commercial parties meet and discuss the issue between themselves and it would only be if they were unable to agree that the court should consider an alternative longer period. It is unlikely that mere inability to pay will suffice to justify the extension of the normal fourteen day period; usually, inability to pay is no defence and an insolvent debtor must take the usual consequences of its insolvency.“

1. 1. Vitol’s position is that, at least in the post-trial correspondence, Genser had provided no adequate explanation for the request for additional time, let alone supported it with proper evidence.

1. I am, exceptionally, here satisfied that it is appropriate to give Genser until 2 September 2022 to make the payments. Although Genser has not put in separate evidence in support of the application for an extension of time, I had heard evidence in the course of the trial which supports the matters which are now relied on by Genser, in particular, as to its funding arrangements and that those facilities were subject to consents by the Senior Agent. Whilst, it is right to note that even now Genser has not identified with any precision how long obtaining that consent will take, I am willing to infer that it is likely to be weeks rather than days. This is not case where Genser is unable to pay, rather that there are constraints about making the payments.