Petroleo Brasilieiro SA v ENE Kos 1 Ltd

A direction to pay into court ordinarily has the meaning and effect prescribed by the applicable procedural rules, unless the order clearly provides otherwise. Under Court Fund Rules 1987, the effective date for lodging a cheque is its receipt by the Court Funds Office, not clearance of the funds, unless the Accountant General determines a later date. That rule applies equally to sterling and foreign-currency cheques. A court may dismiss an appeal despite an error below where undisputed later evidence means that the claim is bound to succeed and allowing the appeal would serve no useful purpose.

The dispute arose from the withdrawal of a vessel under a charterparty after advance hire was not paid by the stipulated date. In resisting summary judgment, the charterer relied on a possible case that the owner had waived its right to withdraw.

Field J conditionally refused summary judgment. The condition required the charterer, by 5 pm on 27 February 2009, to pay US$500,000 into court or provide satisfactory security. The charterer lodged a US-dollar cheque at the Court Funds Office before the deadline, but the funds cleared later. Field J held that cleared funds had been required and entered summary judgment.

The charterer appealed. The central issues were whether lodging the cheque complied with the condition and, if it did not, whether relief should have been granted.

1. The appeal was dismissed. The court held that the charterer had in fact complied with the payment condition. Nevertheless, later undisputed evidence meant that it had no reasonable prospect of establishing waiver of the owner’s right to withdraw. The claim was therefore bound to succeed at trial, so allowing the appeal would achieve nothing and would generate unnecessary further costs.

2. Per Dyson LJ, an order requiring a party to pay money into court ordinarily invokes the meaning and effect given by the Civil Procedure Rules 1998 and the Court Fund Rules 1987. The words used by Field J did not expressly or by necessary implication impose a different requirement, such as receipt of cleared funds by the deadline.

3. Rule 16(6)(ii) made the effective date of lodgment of a cheque the date of its receipt in the Court Funds Office, unless the Accountant General selected a later date. The reference was to receipt of the cheque itself, not to clearance of the proceeds into the Accountant General’s bank account. The rule promoted certainty and accorded with the general rule that a cheque is conditional payment from delivery, becoming actual payment if honoured.

4. The same conclusion applied to the US-dollar cheque. Foreign-currency payment by cheque was an approved method in practice, and rule 38 did not create a separate rule on the effective date of lodgment. The effective date was therefore 27 February 2009.

5. The arguments concerning summary judgment discretion and relief from sanctions did not arise. Dyson LJ would in any event have rejected them on the facts. Arden LJ made provisional observations that a clear order may restrict payment to permitted methods or make its effect conditional on value being received by a stated date. Dyson LJ and Waller LJ expressed no opinion on those observations.

• Court of Appeal (Civil Division) — Dismissed the appeal, although it held that the US-dollar cheque had been validly lodged in time: [2009] EWCA Civ 1127.
• High Court of Justice, Queen’s Bench Division (Commercial Court) — Field J conditionally refused summary judgment on 13 February 2009. On 8 April 2009, he held that the condition had not been met because the funds had not cleared by the deadline and entered summary judgment.