YOU CAN AGREE TO EXTEND TIME – BUT BE VERY CAREFUL: FIVE DANGER POINTS EXPLORED

Mediatelegal

There is some relief for litigators (and the courts to be honest) now that parties (from the 5th June) are allowed to extend time.  However the new rules introduce some potential traps. It is wise to be aware of these now. There are five danger points.

THE RULES

The statutory instrument came into force on the 5th June 2013 it provides.

Amendments to the Civil Procedure Rules 1998
3. In rule 3.8—
(a) in paragraph (3)(b), after “agreement between the parties” insert “except as provided in
paragraph (4)”;
(b) after paragraph (3) insert—
“(4) In the circumstances referred to in paragraph (3) and unless the court orders
otherwise, the time for doing the act in question may be extended by prior written
agreement of the parties for up to a maximum of 28 days, provided always that any such
extension does not put at risk any hearing date.”

DANGER POINT 1: THERE HAS TO BE “PRIOR” WRITTEN AGREEMENT

It appears clear that the agreement has to be made before the date for compliance expires.  Retrospective agreements are not covered by this amendment.

DANGER POINT 2: THE AGREEMENT HAS TO BE “IN WRITING”

This may appear to be a simple requirement. However it exercised the Court of Appeal in Thomas -v- Home Office [2006]  EWCA Civ 1355.  The point in that case was whether the parties could agree to extend time for service of the claim form. The Court of Appeal held that it could.  However such an agreement had to be in writing.  CPR 2.11 states that time limits can be varied by “the written agreement of the parties”.

In the Thomas case the claimant’s solicitor had asked for an agreement orally and the defendant had agreed, orally.  The claimant’s solicitor then wrote confirming the agreement.  There was an issue as to whether this was an  “agreement in writing”, the Court of Appeal held that it was not, Neuberger L.J. stated:

  1. That brings me, then, to the question of what constitutes a “written agreement of the parties”. Clearly, it would encompass a single document signed by both parties. However, contrary to Mr Serr’s submissions, I see no grounds, either in principle or as a matter of language, for limiting it to a single document. I can see no reason why an exchange of letters between the two solicitors concerned, in which the extension of time is agreed, would not constitute a “written agreement”.
  1. An oral agreement which is then confirmed in writing by both sides appears to me also to be within the concept of a “written agreement”. The oral agreement itself would not, of course, be capable of being a written agreement. However, it seems to me that where, following the oral agreement, the two solicitors exchange letters confirming what they have agreed, the exchange of letters amounts to an agreement in writing that they have agreed (albeit orally) an extension of time: to my mind, it would, at best, be no more than a quibble to contend that an agreement in writing that the parties have agreed something orally does not constitute a “written agreement of the parties”. If the oral agreement, because of the very fact that it was oral, could not validly effect a variation, then it seems to me that there is no reason why it cannot be said that the time limit has been “varied by the written agreement of the parties” even though that written agreement was an agreement between the parties that they had orally agreed the variation.
  1. I think things get more difficult where the parties, having orally agreed a variation, each subsequently refer to what has been agreed in correspondence passing between them. An example, albeit of a slightly unusual nature, may be found in the facts of the present case. The claimant’s solicitors effectively confirmed the extension to the 1 April in their letter of 24 February 2005 (and if the defendant’s had replied in a letter confirming this extension, then there would, for the reasons I have just given, have been a written agreement in my view). However, what happened is that, almost four weeks later, the defendant’s solicitor wrote to the claimant’s solicitors in connection with a different matter, namely the expert evidence, and enclosed a letter to the expert in which the solicitor stated that an extension to 1 April 2005 had been agreed.
  1. With some hesitation, I have reached the conclusion that this was simply insufficient to amount to a “written agreement” as contemplated by r. 2.11. First, it seems to me to involve an impermissible stretching of the expression to cover the contents of a letter, whose purpose had nothing whatsoever to do with agreeing, but was merely communicating to a third party what had been orally agreed. Secondly, it appears to me undesirable that the question of whether or not there has been a valid agreement should turn on what a solicitor happens to write in subsequent correspondence which was not intended to bear on the question of agreement at all. To my mind, the concept of a “written agreement between the parties”, particularly in the context of the CPR, involves a document or exchange of documents which is intended to constitute the agreement or to confirm or record the agreement. Because one cannot envisage every possibility which might eventuate, I would not want this to be seen as being entirely prescriptive.
  1. Having said that, it seems to me clear that an oral agreement between two solicitors, subsequently recorded in a letter sent by one solicitor to the other but not replied to by the other, cannot possibly be said to constitute a “written agreement of the parties”. Similarly, an oral agreement between two solicitors, evidenced by an internal confirmatory note by one solicitor, or even by each of the solicitors, cannot constitute a written agreement, unless, of course, the internal notes are exchanged (or, for instance, one solicitor sends its internal note to the other, and the other in some way confirms in writing its relevant contents).”

DANGER POINT 3: A PARTY WITH AN ORAL AGREEMENT CANNOT ARGUE THEIR OPPONENT IS ESTOPPED FROM TAKING THE POINT THAT THE AGREEMENT HAS NOT BEEN MADE IN WRITING

The Court of Appeal mentioned, in passing, an argument that a party who had orally agreed an extension was estopped from relying on the need for the agreement to be in writing.

“The argument that an estoppel can arise from an oral agreement

  1. In the claimant’s notice of appeal and in Mr Grover’s skeleton argument in support, it was contended that, if the facts of the present case mean that there was no sufficient “written agreement” for an extension of time for service of the  claim form  into June 2005, then the defendant was nonetheless estopped from denying that there was such an agreement, or, to put it another way, the defendant was estopped from relying on the time limit contained in r. 7.5, on the basis that there had been an oral representation that the claimant need not serve the  claim form , upon which the claimant had relied by not serving the  claim form  until June 2005.
  1. Such an argument would face obvious difficulty on the basis that it would effectively render nugatory the express requirement of r. 2.11 that any agreement to extend time be “written”. Furthermore, there would be obvious force in the argument that, by entering into an oral agreement to extend time, it could not clearly be said that, without more, the defendant was unequivocally indicating that it would not insist on the strict legal requirement that any such agreement, in order to be effective, be in writing.
  1. In the event, when faced with the reasoning of the House of Lords in Actionstrength Ltd –v- International Glass Engineering IN. GL. EN SpA [2003] UKHL 17 (especially at paragraphs 9, 28, 35 and 52-3), on a not dissimilar estoppel argument in relation to section 4 of the Statute of Frauds 1677, Mr Grover abandoned the point.
  1. In these circumstances, while it is only right to say that, as at present advised, it seems to me that Mr Grover was entirely realistic in abandoning the argument, it is inappropriate formally to rule on it.”

DANGER POINT 4: A WRITTEN AGREEMENT DOES NOT MEAN THAT LATER EXTENSIONS CAN BE AGREED ORALLY

Again this was considered in Thomas:

“23. Before deciding that point, it is, however, necessary to consider an anterior point made on behalf of the claimant, namely that once there has been one variation which is a “written agreement”, any subsequent variation will be valid even if made orally. This argument, as reformulated by Lloyd LJ in argument, is that r. 2.11 is concerned with stipulating that a variation to the time limit in r. 7.5 must be in writing, but that any subsequent variation, being a variation to the time limit agreed in the written variation, is not a variation of the time limit “specified by a rule”.

  1. Ingenious though that argument is, it must be rejected, in my view. First, as a matter of principle, it seems to me little short of ridiculous to conclude that r. 2.11 requires the first variation to be in a “written agreement”, but permits any further variation to be oral, or even to arise implicitly in some way. Secondly, ignoring r. 7.6 for the moment, it seems to me that where a  claim form  is served outside the time limit specified in r. 7.5, the court could only hold that the  claim form  had been validly served if satisfied that there had been a variation (or series of variations) of the time limit, and such variation or variations would all have to satisfy r. 2.11. Thirdly, as pointed out by Jacob LJ, the logic of the claimant’s argument in this connection is that, once there has been one written variation, there could be no further variations, because there would, on this argument, be no express right to vary the initial variation, and the natural effect of the rules I have been discussing is that the only variations (whether by the court or by the parties) to the time limits contained in r. 7.5 are those permitted expressly in the CPR.”

 DANGER POINT 5: THE AGREEMENT MUST BE CLEAR AS TO THE DATE AND TIME OF THE EXTENSION

In Thomas the parties had orally agreed an extension of time of “one month”. There was a dispute as to whether this extension ran from the date of the conversation (as the defendant contended) or the date of expiry of the claim form (as the claimant contended).

Neuberger L.J. observed:

  1. This issue involves deciding what was agreed between Ms Perks of the Treasury Solicitor and Ms Horn of the claimant’s solicitors on the telephone on 19 May 2005. The difficulty of deciding what two solicitors agreed some time ago in a telephone conversation relating to a matter that may not have seemed particularly important at the time highlights the wisdom of the requirement of r. 2.11 that any agreement for an extension of time be in writing, and provides a practical reason, in addition to any reason of principle, why it should not be permissible to rely on an oral arrangement whether in contract, estoppel or any other basis to establish an agreed extension of time.

41. What was written down by Ms Perks and Ms Horn in their respective internal notes appears to be capable of bearing either meaning. The bare reference to “one month” in Ms Perks’s note seems to me, albeit very much on balance, to be more consistent with the one month running from the date of the discussion, whereas the reference in Ms Horn’s note to one “further month” could be said to be, again albeit only on balance, somewhat more consistent with the month in question running from the expiry of the previous period. Little assistance could be gained from any previous communication between the two solicitors in relation to extensions, because, while the earlier subsequent extensions appeared to run from the expiry of the previous extension, the immediately preceding extension of 21 days plainly ran from the date on which it was granted.”

THE SOLUTION: TOTAL CLARITY AND SPECIFY THE EXACT DATE AND TIME

The solution to these issues were set out in the very short judgment of Jacobs L.J.

“48. I agree. I would only add two observations about good practice which, if it had been followed, would have avoided what happened here. First it is always desirable that agreements between solicitors be reduced to writing and – given the ease of communication by email – these days, hardly a burden. Second, when agreements (or court orders) about the date by which a thing is to be done are made, it is always better to specify that date precisely rather than by reference to a period such a week or a month. There is always room for misunderstandings or accidentally fixing a weekend or Bank Holiday if time periods are used. Old hands wisely use “On or before the [blank] day of [blank].”

 BE VERY CAREFUL ON THE FORM AND RECORDING OF AGREEMENTS TO EXTEND

The new rules are welcome, however they do give rise to potential pitfalls.

1.  The agreement must be by an exchange of correspondence (which can include e-mails).

2. The date and time of the extension must be made wholly clear.

3. They do not cover retrospective agreements.