YOU CAN AGREE TO EXTEND TIME NOW: BUT SHOULD YOU AGREE TO EXTENSIONS?

Mediatelegal

Parties can agree to extend time from the 5th June.  I have already written on the dangers of the system.  However, if the dangers can be sidestepped, should a litigator agree to extend time.

THE HEATED DEBATE: SHOULD PARTIES AGREE EXTENSIONS?

This issue has already been the subject of some heated debate on twitter. Some responses being that agreements should be made as a matter of common sense; other that no agreement should ever be made.  Some people are predicting the growth of “unreasonably refusing extensions” satellite litigation.

WHERE DO YOU PUT YOUR MONEY? (OR YOUR CLIENT’S MONEY!)

If I were to put a bet on which judge is most likely to have influence on this issue (which I will not) there is no doubt that it would be Jackson L.J.  His views were made totally clear in Hallam Estates -v- Baker   [2014] EWCA Civ 661

“By way of digression I comment that rule 3.8 will shortly be amended so that in the ordinary way parties can, without reference to the court, agree extensions of time up to 28 days, provided that this does not put at risk any hearing date. A variety of circumstances may arise in which one or other party (however diligent) may require a modest extension of time. Under rule 1.3 the parties have a duty to help the court in furthering the overriding objective. The overriding objective includes allotting an appropriate share of the court’s resources to an individual case. Therefore legal representatives are not in breach of any duty to their client, when they agree to a reasonable extension of time which neither imperils future hearing dates nor otherwise disrupts the conduct of the litigation. On the contrary, by avoiding the need for a contested application they are furthering the overriding objective and also saving costs for the benefit of their own client.”  (emphasis added).”

COULD THERE BE COSTS PENALTIES IF A PARTY UNREASONABLY REFUSES AN EXTENSION?

This is possible.  In Lakatamia Shipping -v- Nobu Su [2014] EWHC 796 (Comm) Hamblen J awarded costs against a party who had, he had unreasonably, opposed an application for relief from sanctions. The claimant had to apply for, and obtained, relief from sanctions following a very minor breach.  The defendant opposed the application and was ordered to pay the bulk of the costs. The judge observed:-

  1. The claimant submits, nevertheless, that the defendant should pay all of the costs of the application because the need for those costs all flowed from its original default and that they should therefore be paid by the defendant. The defendant submits that it should be paid the bulk of its costs because it succeeded on the application at the hearing and the claimant’s conduct in positively opposing the application was in all the circumstances unreasonable.
  1. In relation to court’s discretion as to costs, I have been referred to CPR44.3 and the relevant matters set out in CPR44.3(4), which include (a) the conduct of all the parties, and (b) whether a party succeeded on part of its case. In relation to the parties’ conduct, CPR44.4(5) states that that includes whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue ((5)(b)), and the manner in which that has been done ((5)(c)).
  1. I accept that the starting point in a case such as this is that the defendant had to apply to the court to seek relief from sanctions. It needed to seek the court’s indulgence and it needed to persuade the court that this was an appropriate case for relief. In those circumstances, in my judgment, ordinarily the applicant should pay the costs of making that application, including supporting evidence. I also consider that it was reasonable for the claimant to set out the position before the court in relation to the procedural history and to correct any statements in the supporting evidence of the defendant that it considered to be incorrect or incomplete. It did this in the witness statement of Mr Gardener, which set out the history but did not positively oppose the application. I also accept that, given the importance of the application (the claim in this case involves some $45 million), the application is one which was always likely to be made orally before the court, and the original application was listed with a half hour estimate. Against that background, I consider that the defendant should pay the costs of its own application and of the claimant’s costs of its witness statement.
  1. However, the bulk of the costs which have been incurred in relation to this application relate to the hard fought half day hearing. For that purpose, both sides put in extensive skeletons and the claimant’s position in the skeleton was vigorously and positively to oppose the grant of any relief, and it was this opposition which necessitated a hearing that took a full half day before the court. The claimant’s position was not simply one of setting out the history and ensuring the court had the full picture, but was one of positive opposition, in which opposition it failed, and by some margin. In my judgment, the hard fought contested hearing should not have been necessary because, once the factual materials were fully set out, this was a clear case for relief in accordance with the guidance given in the Mitchell case. This was, on any view, a trivial breach and the guidance in the Mitchell case is that usually in those circumstances relief will be granted. Although there was a prior history of non-compliance, as stated in my judgment, even if one accepts everything that was said by the claimant about that, it did not come close to being a sufficiently compelling circumstance to justify the continuation of the sanction for such a trivial breach. I take the view that the opposition at the hearing was unreasonable in all the circumstances and that that was the cause of the substantial costs of the hearing, and in those circumstances, in the exercise of my discretion, the bulk of the costs relating to the hearing should be paid by the claimant.
  1. The claimant submitted that, in every case where the other party is seeking relief from sanctions, the so-called “innocent” party is entitled to come before the court and to argue that there should be no such relief and that the court should stick to the sanction originally imposed. In my judgment, that is a mistaken approach. The CPR is quite clear that parties should conduct litigation in a reasonable and realistic manner, an approach which is echoed in the Commercial Court Guide – see, for example, A1.4. In this court we expect parties so to conduct themselves. In my judgment, in vigorously opposing this application at a hearing, the claimant failed to do so.
  1. I also consider that it is important that the message goes out that when a party applies for relief from sanctions, the other party should not assume that it is going to get a free costs ride in opposing that application. If the court considers that it was unreasonable to do so, then there will be cost consequences, and I consider that that is what should occur in this case. The Mitchell guidance was provided in order to help to avoid endless satellite litigation. If parties consider that they can always come to court to oppose any application for relief, then there will be no end to that satellite litigation.
  1. For these reasons, I have reached the conclusion, in the exercise of my discretion, that the defendant should pay the costs of making the application, the costs of the witness statements, including those of Mr Gardener, and a proportion of the costs of the hearing, since it would have had to have come to court anyway, but that the bulk of the costs of the hearing should be paid by the claimant.   (Emphasis added).

SO UNREASONABLE REFUSALS TO EXTEND TIME BY AGREEMENT COULD BE DANGEROUS

  • It would be imprudent for anyone to assume that it is always reasonable to refuse applications to extend time.
  • If the court thinks a party has behaved unreasonably in refusing to extend time it may order that party to pay the costs of any application.
  • If you are refusing an application to extend you may have to justify it.
  • Jackson L.J. is quite clear that in agreeing to reasonable extensions litigators are not in breach of any duty to their client.
  • Jackson L.J. is also clear on the point that reasonable agreements to extend further, rather than hamper, the overriding objective.