Gulf International Bank v Al Ittefaq Steel Products Co & Ors

Applications for judgment on admissions should ordinarily result in payment within the applicable period. The court has a discretion to allow more time, but pre-execution extensions are exceptional. Mere inability to pay will usually be insufficient, particularly where the debtor is a business entity and insolvency consequences arise. The court must consider the judgment creditor’s interests and the debtor’s position, but the interests of other creditors, employees and suppliers will rarely justify postponement because those interests are ordinarily protected by the relevant insolvency regime. An extension should generally be granted only where the debtor is solvent, the period is relatively short, and there is a realistic prospect of payment of the judgment debt. The evidence must also establish any alleged prospect of a restructuring or other event said to justify postponement.

The claimant brought two claims for repayment of admitted loans and guarantees against companies and an individual guarantor. The admitted sums included approximately US$16.2 million and SAR32 million in the first claim, and US$100 million plus default commission in the second.

The defendants applied under CPR 14.9 and 14.10 for time to pay until 1 January 2011. They relied on their serious financial position, the possible consequences of immediate enforcement, and ongoing negotiations for a restructuring involving numerous financial institutions. The central issue was whether the court should postpone payment of sums for which the defendants accepted liability.

1. Applications granted and refused. The claimant’s applications for judgment on admissions were granted. The defendants’ cross-applications for time to pay until 1 January 2011 were refused.
2. Under CPR 14.10, the court has a discretion to determine the time and rate of payment following an admission where the claimant does not accept the defendant’s proposal. CPR 40.11 also recognises the usual 14-day period for compliance, subject to a different date being specified by the rules, the order or a stay.
3. The discretion must take account of the judgment creditor’s interest in obtaining the benefit of its judgment and the debtor’s position. As explained in Gipping Construction Ltd v Eaves Ltd [2008] EWHC (TCC) 3134 and Amsalem (t/a MRE Building Contractors) v Raivid & Raivid [2008] EWHC (TCC) 3226, inability to pay will ordinarily not justify delaying payment. It is exceptional for the court to interfere with enforcement rights conferred on a judgment creditor.
4. Where the debtor is in a parlous financial situation, the interests of other creditors, employees and suppliers will generally be matters for the applicable insolvency regime. They will only very rarely justify an extension under CPR 14.10 or CPR 40.11. The same approach may apply where insolvency would occur under a foreign regime.
5. The defendants’ evidence did not establish either that the claimant had a real prospect of signing a restructuring agreement by 1 January 2011 or that immediate enforceability would probably disrupt the negotiations. The court therefore declined to postpone payment.