Court of Appeal

Published November 5, 2009

ENE Kos 1 Ltd v Petroleo Brasilieiro SA

Before Lord Justice Waller, Lady Justice Arden and Lord Justice Dyson

Judgment October 30, 2009

The effective date of a payment into court where payment was made by cheque, whether a sterling cheque or a foreign currency cheque, was the date when the cheque was lodged in the court fund office.

The Court of Appeal so stated when dismissing the appeal of Petroleo Brasilieiro SA against a decision of Mr Justice Fieldon [2009] EWHC 1843 (Comm)) to grant summary judgment in a claim by ENE Kos 1 Ltd for a declaration that withdrawal of its vessel charted to Petroleo for failure to pay hire charges was lawful and valid.

The judge initially declined summary judgment on condition that the defendant, who was seeking to challenge the claim, paid into court by 5pm on February 27, 2009, the sum of US$500,000. The defendant deposited a US dollar cheque with the court fund office by that date.

The judge subsequently granted summary judgment on the ground that cleared funds must be held by the court fund office on the specified date.

Mr Christopher Hancock, QC, for Petroleo; Mr Bernard Eder, QC, for ENE.

LORD JUSTICE DYSON said that the meaning and effect of the order had to be judged by reference to the relevant rules and applied to cheques generally.

Rule 16(6)(ii) of the Court Funds Rules (SI 1987 No 821) relating to sterling cheques was clear and unequivocal. The effective date of lodgement was the “date of receipt in the court funds office”.

That avoided uncertainty and the real possibility of injustice to the paying party and was consistent with the general law as to the effective date of payment where payment was made by cheque.

Rule 38 of the 1987 Rules which provided for the lodging of foreign currency was silent on the subject of the effective date of lodgement of a foreign currency cheque. But the question of the effective date of lodgement was dealt with by rule 16(6)(ii). There was no reason for reading that provision as being limited to sterling cheques.

Accordingly, the effective date of lodgement of any cheque was the date of its receipt in the court funds office unless the accountant-general had determined that it was a later date. The accountant-general had not made any such determination.

Lady Justice Arden and Lord Justice Waller agreed.

Solicitors: Thomas Cooper; Ince & Co.

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