The recent case of Loson v Stack & Anor [2018] EWCA Civ 803 is an unusual instance of the Court of Appeal providing guidance for judges being asked to make a judgment payable by instalments. It serves as a reminder that a robust approach is required to be fair to both creditor and debtor.

Things started innocuously enough, with a parking ticket issued in May 2010 to Ms Loson’s husband, Mr Emezie, while he was driving Ms Loson’s car. Though he challenged the ticket at the Parking Adjudicator and by judicial review, the London Borough of Camden successfully defended it. Yet Mr Emezie failed to pay. In due course, Newlyn plc were instructed as bailiffs to enforce the ticket. One of their bailiffs, Mr Stack, clamped and impounded the car in November 2011. Ms Loson brought these present proceedings against Mr Stack as First Defendant and Newlyn plc as Second Defendant, seeking an injunction to restrain Newlyn from disposing of the vehicle and damages for her loss of use.

After a protracted procedural history, the trial took place in September 2013 before District Judge Jackson in the Central London County Court. She found in favour of the Defendants. The Claimant was ordered to pay the costs of both Defendants, including a payment of £5,000 on account. Once again, various other applications and attempts to appeal followed. In November 2014, the Defendants served on the Claimant a statutory demand on the basis of the interim costs order. The Claimant applied to have the demand set aside. That application was also dismissed in May 2015, and the Claimant was ordered to pay a further £3,000 in costs.

On 30 September 2015, the Claimant issued yet another application. She sought an order under CPR Rule 40.9A for the combined costs orders of £8,000 to be varied so as to be payable at the rate of £50 per month. She filed an income & expenditure calculation showing a disposable income of £67 per month. Her evidence was that she was in the middle of a degree which, once completed, would improve her career prospects and therefore her income.

The Defendants objected to this, on two bases: first, the statutory interest was in fact more than £50 per month, and second, even ignoring interest, this would take some 13 years to clear the debt. They wished instead to be able to issue a bankruptcy petition.

The application was heard by District Judge Wright on 4 February 2016. He accepted that £50 per month was the most affordable by the Claimant. The key part of his judgment (quoted by the Court of Appeal at [10]) was that “My concern today is whether it seems to me reasonable to make an instalment order at £50 per month, and it seems to me that it is reasonable and proportionate to do so, given what I am told about Ms Loson's financial situation.”

The Defendants appealed against the variation. On 8 July 2016, HHJ Luba QC heard and allowed that appeal. The Court of Appeal summarised (at [12]) his key conclusion as being “that the District Judge had applied the wrong test in relation to the exercise of the power contained in CPR 40.9A and that his decision was perverse or irrational in that he appears to have left out of account the fact that when one adds statutory interest to the judgment debts then the instalment of £50 per month will not even discharge the interest accruing on the two costs orders.” In relation to the claim that the Claimant’s circumstances would shortly change and she would be able to afford more, they directly quoted (at [20]) his words: “In my judgment, that will not do. There was no material evidence – and I emphasise evidence as opposed to submissions – before the District Judge that anything was ever going to change.” Judge Wright’s order was set aside, and the £8,000 plus interest reverted to being payable forthwith.

The Claimant appealed against that decision. In April 2018, the Court of Appeal handed down judgment, upholding Judge Luba’s decision. The main judgment was given by Patten LJ.

CPR Rule 40.9A applies only in the County Court, and the court does not appear to have been referred to any authorities on its application. There are some first-instance, High Court authorities on the related Rule 40.11, which relates to the imposition of judgments rather than their variation. The two reviewed at [18-19] suggest that inability to pay is not grounds for extending the time to pay. A debtor who is insolvent should be left to bear the consequences of that. Creditors should be entitled to enforce their judgments as they see fit.

Patten LJ saw that approach as having “an obvious relevance” to the application of Rule 40.9A. He did not go as far as those cases appeared to, noting that neither the wording of the rule nor authority on its interpretation limit the circumstances in which it can apply. He specifically declined to endorse the view that a debtor must be solvent for such an order to be made, or that the circumstances need to be “exceptional”.

He did, however, say (at [23]) that “In a case such as this where the debtor cannot really pay anything, the correct course in my view is for the Court not to interfere with the judgment creditors' right to seek enforcement of the judgment by whatever means are available to them and which they choose to adopt… For the debtor to obtain the benefit of an instalment order, whether originally under CPR 40.11 or by way of variation under CPR 40.9A, the Court must be presented with a realistic repayment schedule backed up by evidence that the creditor can be expected to receive the amount of principal and any interest within a reasonable period of time. To that extent, the interests of the creditor will be paramount.”

Inevitably, the correct course in any individual case will turn on the facts. On this occasion, Patten LJ considered Judge Luba had been right that £50 per month – the most the Claimant could afford – was not a reasonable amount, and therefore dismissed the appeal.

Comment

It is welcome that the Court of Appeal has had a chance to offer this guidance. Points such as this seldom come before higher courts. This guidance will undoubtedly be important going forward; anecdotally, the author has already heard judges citing it.

Not infrequently, judges allow debtors to pay judgments by instalments of whatever they can in fact afford. For example, the author has seen a judge order payments of just £1 per week on the basis that “you can’t get blood out of a stone”. It is submitted that such an approach cannot survive the guidance in this case. If a debtor truly cannot afford to pay in a reasonable time, the answer is not to allow them to pay in an unreasonable one. It is that they are insolvent. Ultimately, as the Court of Appeal reinforced, a creditor is entitled to their money.