Times Travel UK Ltd & Anor v Pakistan Internation Airlines Corporation

A court may make a financial conditions order affecting an application under the slip rule. Such an order is not confined to wholly exceptional circumstances. The applicant bears the burden of showing that the proposed conditions would stifle the application. General assertions of financial difficulty are insufficient; specific evidence of inability to pay or raise funds is required. If the application would not be stifled, the question is one of case management under CPR Rule 3.1. The court should weigh the potentially substantial effect of a successful slip-rule application, the parties’ financial circumstances, and the risk of prejudice or wasted costs. A stay of the application, rather than automatic dismissal, may be an appropriate sanction for non-compliance.

Travel agents brought proceedings against Pakistan International Airlines Corporation concerning unpaid commission or remuneration. Warren J ordered an account and inquiry, following which the Deputy High Court Judge entered judgment for substantial sums. The defendant alleged that the sums had been miscalculated and applied under CPR Rule 40.12 to correct the order.

The claimants sought financial conditions requiring payment of the uncontested judgment debt and payment into court of the contested debt, with dismissal or a stay if the conditions were not met. The central issues were whether such conditions were legally permissible, whether they would stifle the defendant’s application, and what conditions and sanction were appropriate.

1. The application was allowed in part. The defendant’s slip-rule application was made subject to payment of the uncontested judgment debts by 6 p.m. on 1 September 2020. Failure to comply would result in a stay of that application. No condition was imposed in respect of the contested judgment debts, and no stay was granted against enforcement of those debts.

2. Riva Bella v Tamsen Yachts [2011] EWHC 2338 (Comm) did not establish that a slip-rule application could never be made subject to financial conditions, or that wholly exceptional circumstances were required. It concerned the distinct question whether an applicant should be prevented from being heard because of alleged contempt arising from non-payment of a disputed sum. The present question was whether proposed conditions would stifle the application.

3. The burden lay on the defendant to establish that the conditions would stifle its application. Evidence that liabilities substantially exceeded assets, that the airline industry was experiencing severe difficulties, and that the defendant’s circumstances were poor did not establish inability to pay or raise funds. More specific evidence was required.

4. Once stifling had not been established, the order was a matter for the court’s general case-management powers under CPR Rule 3.1. Relevant considerations included the substantial sum at stake, the possibility that the slip-rule application might substantially reduce the judgment debt, the financial difficulties affecting both parties, and the need to avoid wasted costs.

5. A stay was preferable to dismissal because non-compliance should not automatically extinguish the defendant’s application. Any application to lift the stay would fall to be considered in the light of the circumstances then prevailing.

The underlying proceedings resulted in an account and inquiry ordered by Warren J. Judgment was subsequently entered for the claimants following the account. The defendant had also made an out-of-time application to the Court of Appeal for permission to appeal, which had not been determined at the date of this judgment.