In Gulf International Bank v Al Ittefaq Steel Products Co and others  EWHC 2601 (QB), the High Court set out the factors that must be taken into account by the court when exercising its discretion to extend time for payment of sums due following an admission.
In this case, the Defendants had admitted certain claims and applied for an extension of time in which to pay the sums owed. They were trying to restructure arrangements with their creditors, following previously failed attempts to reschedule the debt, and claimed that if the extension sought was granted then there was a real prospect that a rescheduling arrangement would be finalised.
The Defendants’ application was made under CPR 14.9 and 14.10. Under the former provision a defendant who makes an admission may request time to pay, and the rule sets out the relevant procedure and consequences. The latter provision sets out the procedure to follow if the defendant’s request is not accepted by the claimant. The court also has a power to postpone payment of sums in respect of which a creditor is entitled to judgment under CPR 40.11, and a power to give time to pay as part of the execution process by which judgments are enforced.
In his judgment, Field J stated that there were no cases dealing with how the discretion conferred on the court by CPR 14.10 is to be exercised. He therefore took into account decisions by the court dealing with applications under CPR 40.11. It was held that the court had to have regard to the interests of the relevant parties, and that liability to pay will not usually justify a pre-execution extension of time. An insolvent debtor (as the Defendant was in this case) must bear the usual consequences of its insolvency.
The judge noted that while the interests of other creditors will be relevant, these are matters for specialist insolvency proceedings and will therefore only rarely be a justification for an extension of time under CPR 14.10 or 40.11. Even then, an extension will usually only be granted for a relatively short period of time and only where the judgment debtor is solvent. Further, the court will give careful consideration to awarding interest to compensate the judgment creditor for having been temporarily deprived of its money.
In this instance, the Defendants’ application was refused.