SAS Institute Inc v World Programming Ltd

Where a payment falls within the statutory scheme imposed by the Protection of Trading Interests Act, a creditor cannot appropriate it to avoid the statutory consequences if that appropriation would defeat or circumvent the scheme. A defensive appropriation made after the statutory counterclaim has been raised is impermissible in equity and under the statutory policy. A debtor may appropriate payments made by third parties towards the judgment debt where the debtor has the relevant ability to deal with the debt. An appropriation requires communication to the recipient, although it need not be express. Interest ordinarily runs from the date on which the debtor knows the amount payable.

The judgment concerned consequential issues arising from an earlier enforcement judgment. The court had held that a United States liability judgment was unenforceable in England for reasons including inconsistency with the Protection of Trading Interests Act and that World Programming Ltd had a counterclaim under section 6 in respect of non-compensatory sums paid under that judgment.

The parties disputed whether SAS Institute Inc could appropriate recoveries to compensatory damages, whether World Programming Ltd had itself appropriated payments, whether appropriations communicated through Notices of Partial Satisfaction were timely and effective, and how interest on the judgment debt should be treated.

1. Statutory operation. A payment received by SAS on account of the United States judgment would prima facie fall within section 6 of the Protection of Trading Interests Act. An appropriation removing the payment from that scheme would have to precede, or be contemporaneous with, payment.
2. Creditor appropriation. Although the common law recognises a contingent creditor’s right to appropriate where the debtor has made no appropriation, that right was barred here as a matter of law. Permitting SAS to appropriate recoveries to compensatory elements would substantially defeat or circumvent the statutory counterclaim. A defensive appropriation was independently inequitable once World Programming Ltd had raised its section 6 counterclaim.
3. Debtor appropriation. World Programming Ltd could appropriate payments made by its customers towards the judgment at large. The fact that the money was paid by third parties did not prevent appropriation where the debt remained one with which World Programming Ltd could deal. Its pleadings sufficiently expressed the necessary intention; no formal or specifically focused appropriation was required.
4. Communication and timing. On the alternative assumption that SAS retained a right to appropriate, some communication to World Programming Ltd was required. A visible entry in a jointly available account might suffice, but a private and uncommunicated book entry would not. The Notices of Partial Satisfaction were too late to effect appropriation.
5. Interest. Interest ran from the date when the debtor knew how much it had to pay, rather than necessarily from the date of a sealed order. For future payments it ran from receipt. The requested variation of the statutory interest rate was refused.

First-instance consequential determination following the court’s earlier enforcement judgment. No appellate history was stated.