Loson v Stack and another [2018] EWCA Civ 803 (17 April 2018)

The Court of Appeal has recently upheld a High Court decision to set aside an order to pay a judgment creditor’s costs by instalments, as the judgement debtor had not provided any evidence of a realistic repayment schedule. Meaning that, as a result, the creditor could proceed to exercise their rights of enforcement by whatever means they so wished.

By way of background, the creditors obtained costs order against the judgement debtor. By way of enforcing payment of the same, a statutory demand and bankruptcy petition was issued by the creditor for payment of the principal judgement plus interest and costs. The judgement debtor then obtained an Order from the County Court to make contributions of the order for costs by way of instalments.

In return, the creditor then applied to set aside the instalment order on the basis that the Order rendered the bankruptcy petition debt no longer due and payable. It was considered by the High Court that the interests of both parties had not been considered properly and accordingly set aside the instalment order in favour of the creditors.

Upon this decision, the judgement debtor appealed the High Court’s ruling which was later dismissed by the Court of Appeal. It was held that judgement debtor had no ability to pay the costs order and he failed to provide any evidence of an ability to repay at all. The High Court was; therefore, right to set the instalment order aside.

It would appear that consideration for both Civil Procedure Rules 40.9A and/or 40.11 should be taken when applying for an instalment order as the Court will expect that a debtor provides evidence that the judgement creditor could expect to receive the principal amount plus interest within a reasonable timeframe. The Courts are unlikely to interfere with the creditor’s right to enforce the judgement by the reasonable means available to them.

It is also useful Court of Appeal authority that a bankruptcy petition, based on a debt which is due and payable at the time the petition was presented, may continue to be sought by a creditor even where the circumstances of the debtor subsequently change.

Case: Loson v Stack and another [2018] EWCA Civ 803 (17 April 2018).

Our specialist lawyers in our Dispute Resolution and Insolvency Department at Chadwick Lawrence would be delighted to discuss matters with you to allow them to gain a complete understanding as to how they can assist you.

If you would like to receive some further information, please do not hesitate to call 0113 225 8811 or email zoeallen@chadlaw.co.uk