Adam Walker was successful in the Court of Appeal on 17 April 2018 in a case relating to the test to be applied under CPR r.40.9A in respect of when it is appropriate to make orders for the payment of judgments by instalments.

Following the dismissal of a claim for an injunction and damages brought by the Appellant against the Respondents, an interim cost order was made against the Appellant which went unsatisfied.  The Respondents served a statutory demand which the Appellant unsuccessfully applied to have set aside and a further costs order was made against the Appellant.  The Appellant then applied to have the costs orders varied to permit payment by instalments pursuant to CPR r.40.9A, which application was granted by a District Judge on the basis that it was ‘reasonable and proportionate’ to make an order in the sum requested by the Appellant, taking into account her limited means and on the basis that the instalment order would not impede the Respondents’ ability to present a bankruptcy petition.

The Respondents appealed against the District Judge’s order and their appeal was allowed on the basis that the District Judge’s order was perverse as it did not service the interest on the principal and even ignoring interest it would have taken 13 years to pay off the principal judgment sums and as varying an order to replace it with one for the payment of the judgment by instalments required exceptional circumstances.  The Circuit Judge rejected the Appellant’s argument that it was open to the Respondents to apply to have the order varied in the future upon there being a change in the Appellant’s circumstances, as the evidence indicated that there was no more than a possibility of a change in her circumstances at some time in the future.

The Appellant appealed to the Court of Appeal contending that the Circuit Judge was wrong as exceptional circumstances were not required for the making of an order by instalments, as it was open to the Respondents to apply under CPR r.40.9A to vary the instalments order and contending that the District Judge’s order ought not to have been disturbed.

The Court of Appeal (Patten LJ and Floyd LJ) determined that while the test may not be one of exceptional circumstances, the discretion must be exercised in such a way that the rights of the judgment creditor were properly weighed in the balance and given predominance.  Where a judgment debtor could not really pay anything substantial towards the judgment debt then the court should not interfere with the judgment creditor’s rights to select the means by which enforcement might be achieved.  The District Judge was wrong to assume that the making of an instalments order would not interfere with the bankruptcy proceedings that were already in motion.  The order of the District Judge did not even keep pace with the interest accruing on the principal sum and could not be reinstated.  The Appellant’s appeal was dismissed.

Reported as Diana Loson v (1) Brett Stack (2) Newlyn Plc [2018] EWCA Civ 803.

The case can be found reported on Lawtel 17/4/2018, Document No. AC5002516.

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