SANCTIONS: EXTENDING TIME AND DISPUTING THE JURISDICTION: PART 11 AND THE MITCHELL CRITERIA

The claimant objected to the application for a stay on the grounds that it was made late.  Blair J observed:
“18. There is then the procedural argument which took up much of the time at the hearing. In support of its application for judgment in default of defence, S.E.T. relies on the fact that the application under CPR Pt 11 disputing the court’s jurisdiction was made late. As noted above rule 11(4), which applies in the Chancery Division where these proceedings were commenced, provides that the application has to be made within 14 days after filing an acknowledgment of service. The application made by F&M was either a day late, or 16 days late, depending on whether time starts from the date of filing the acknowledgement of service, or the date when the acknowledgement of service should have been filed. (This is not a matter I have to determine in this case.)

19. Since the application was late, it follows, S.E.T. submits, that rule 11(5) applies. By this rule, if the defendant does not make the application within the period specified in rule (4), “he is to be treated as having accepted that the court has jurisdiction to try the claim”. Therefore, S.E.T. submits, rule 11(9), by which a defendant who makes an application disputing the court’s jurisdiction need not serve a defence before the hearing of the application, does not apply. Consequently, S.E.T. submits, the court should not hear the challenge to its jurisdiction, and S.E.T. is entitled to succeed on its application for judgment in default of defence.

20. On its part, F&M makes three responses to S.E.T.’s procedural submission:

(1) First, it is submitted that as a matter of law Article 27 of the Judgments Regulation is mandatory, and procedural time limits in the Civil Procedure Rules (or any other domestic jurisdiction) cannot preclude a challenge under Article 27 which is in fact well grounded.

(2) Alternatively, the court should retrospectively grant it an extension of time to make the Pt 11 challenge under CPR Pt 3.1(2)(a). By extending time until 3 May 2013 when the challenge was in fact filed, the provision in Pt 11(5) by which F&M is to be treated as having accepted that the court has jurisdiction to try the claim will not apply.

(3) Alternatively, F&M seeks relief against  sanctions  under CPR Pt 3.9.

21. S.E.T. disputes each of these contentions. It accepts that in principle the court has power to grant relief against  sanctions , but submits that no proper application has been made in that respect, since under rule 3.9(2), an application for relief must be supported by evidence.

Discussion and conclusion

22. There are two fundamental issues which arise for decision. The first is whether F&M’s time for challenge to the jurisdiction should be extended so that its application, which was slightly late, should nevertheless be treated as made in time, so that it is not deemed to have submitted to the court’s jurisdiction. The second is whether this court should defer to the Cyprus proceedings, either on the basis that a stay is mandatory (Article 27 of the Judgments Regulation) or on discretionary grounds (Article 28).

23. F&M’s first submission is that the time limit in CPR Pt 11(4) does not preclude a challenge under Article 27 which is in fact well grounded. This is based on the decision of the Court of Appeal in The Alexandros T[2012] EWCA Civ 1714, and reflects the wording of the Regulation. Article 27 provides that where it applies, “… any court other than the court first seised shall of its own motion stay its proceedings …”. It was held that the stay was mandatory, and that if the article applied, the court had to give effect to it even where, as was the position in that case, reliance on the article had been disavowed in the court below.

24. However, that view was rejected on appeal to the Supreme Court ([2013] UKSC 70). At [121], Lord Clarke made it clear that the time limit under CPR Pt 11(4) was not (in the court’s view) contrary to EU law. He said:

“In my judgment, there is no sensible basis upon which it can be said that the time limit under CPR 11(4), which can in an appropriate case be extended under CPR 3.1(2)(a), is contrary to EU law. The time limit satisfies the principle of equivalence because it is the same rule that applies in all cases. It fulfils a legitimate aim, namely making sure that points going to whether the proceedings are to be tried on their substantive merits in England are taken promptly and without unnecessary costs. It satisfies the principle of legal certainty because parties need to know where they stand. The absence of a time limit would allow a litigant to take the point years afterwards. Moreover, the time limit does not render the right to apply for a stay under Article 27 (or Article 28) impossible or excessively difficult to exercise. It allows sufficient time for the point to be raised, especially given the express rule permitting an extension of time in appropriate cases.”

25. It is true, as F&M points out, that the Supreme Court did not regard this conclusion as acte clair (see [123]) and that it would (if necessary) have referred an appropriate question to the Court of Justice of the European Union. However, the fact that the issue can ultimately be resolved authoritatively only by the CJEU does not mean that the decision in The Alexandros T is not binding in the meantime. It is plainly binding on this court, and I take the rule to be, therefore, that notwithstanding the mandatory language of Article 27, CPR Pt 11(4) and (5) may apply so as to bar a challenge which is late under the rules, and deem the applicant to have submitted to the jurisdiction.

26. The question, therefore, is whether this is such a case. In The Alexandros T, the challenge was years late. In the present case, the challenge was days late, and on one view, only one day late. Although S.E.T. relied upon  Mitchell  v News Group Newspapers Limited [2013] EWCA Civ 1537 in support of its contention that the time limit should be applied despite the slight infraction, in my view that authority supports the opposite conclusion. At [40], the court expressly refers to the situation where a party has narrowly missed a deadline as one in which the court will usually grant relief. Where there is a genuine dispute as to jurisdiction, one would normally expect an extension to be agreed.

27. Furthermore, it is relevant that the CPR in this context is concerned with civil procedure not in the purely domestic context, but with the relationship between proceedings carried on at the same time in different member states of the EU. The mutual recognition of judgments under the Judgments Regulation includes rules as to lis pendens and related actions intended (among other things) to preclude inconsistent judgments. Though the CPR Pt 11(4) time limit is not objectionable under EU law (see The Alexandros T, ibid, at [121]), the context may (in my view) operate as a factor when considering whether to extend time. This is because a case might be heard in England which might otherwise not have been had the jurisdiction application been on time. This was the approach adopted by Beatson J in Polymer Vision R & D Limited v Van Dooren [2011] EWHC 2951 (Comm) at [79] based on Texan Management Ltd v Pacific Electric Wire & Cable Company Ltd [2009] UKPC 46, and I would follow the same approach.

28. The Polymer case was one in which the court ordered an extension of time by way of relief against  sanctions  under CPR Pt 3.9. In the present case, S.E.T. objects that no such application can be entertained by the court because it is not “supported by evidence” as required by the rule. S.E.T. argues that an application for relief against  sanctions  is the only route available to F&M to obtain an extension of time, and since it is closed, there can be no extension.

29. It is right to say that there is no witness statement explaining why the challenge to the court’s jurisdiction was made late. This may be because of the odd course which these proceedings have taken to date, as noted above. This includes the fact that both sides changed solicitors a few days before the hearing. (F&M sought an adjournment, which was opposed by S.E.T., and which I refused.) Obviously, save in unusual circumstances, the court will require a proper explanation as to why the application was late.

30. As a matter of law, however, I reject S.E.T.’s submission that the sole route available to a defendant in the position of F&M is an application for relief against  sanctions  under CPR Pt 3.9. This question is covered by authority. In The Alexandros T at [121] cited above, the Supreme Court stated expressly that the time limit under CPR 11(4) “can in an appropriate case be extended under CPR 3.1(2)(a)”. Such an extension is made pursuant to the court’s general powers of management, and an order extending time may be granted retrospectively (White Book 3.1.2).

31. In an appropriate case therefore, the court may extend the time limit for challenging the jurisdiction by exercising its powers under CPR 3.1(2)(a). In asking the court to exercise this power, F&M suggests that had the proceedings been initiated in the Commercial Court in the first place, F&M’s then solicitors, an experienced commercial firm, would not have breached the time limit. This is not accepted by S.E.T. because of a lack of evidence.

32. The main point, in my view, is that though the application was late, it was not very late. The application pursued by S.E.T. for judgment in default of defence was made in ignorance of the fact that a challenge to the jurisdiction had already been made, but it is not suggested that this was the fault of F&M. S.E.T. does not suggest that it has suffered any prejudice. In the circumstances, I do not think that the court should lightly countenance an outcome which requires it to enter judgment in England without considering whether a stay is mandated under the Judgments Regulation in favour of the court in Cyprus. In my view, the principled approach is to extend F&M’s time for challenging the jurisdiction under CPR 3.1(2)(a) until 3 May 2013, when the application was issued. I shall therefore proceed to consider the jurisdiction challenge.”

(Ultimately, however both the application for judgment and the application for a stay were dismissed).

COMMENT

This decision may be very specific to Part 11 applications.  However it is important to note:

• The observations at paragraph 26 about the appropriate approach where a party has “narrowly missed a deadline”.
• The observation that time can be extended under Part 11 under CPR 3.1.(2)(a) and did not necessarily involve a relief from sanctions hearing.

It remains one of the mysteries of litigation at the present when a party can apply under CPR 3.1.2(a) (which gives the court power to retrospectively extend time) as opposed to CPR 3.9 (relief from sanctions).  On the face of it Part 11 is clear that a failure to act within the 14 days means a party has accepted the jurisdiction

THE PRECISE TIME FOR MAKING AN APPLICATION UNDER PART 11

Note also the “open” question about when the 14 days to make the application under Part 11 runs from.

The rule states

“(4) An application under this rule must –

(a) be made within 14 days after filing an acknowledgment of service; and

(b) be supported by evidence.”

• It remains unclear whether the 14 days runs from the actual date of the filing of the acknowledgment of service, or 14 days after the last date upon which the acknowledgment could have been filed.
• As ever, if in doubt, assume the shortest period.