AGREEING EXTENSIONS OF TIME: REFUSAL TO AGREE CONTRARY TO THE OVERRIDING OBJECTIVE HAS CONSEQUENCES IN COSTS

June 5, 2017 · by · in Applications, Costs, Extensions of time

When should a party agree an extension of time? In Emmanuel -v- The Commissioners for Her Majesty’s Revenue and Customs [2017]  EWHC 1253 (Ch)  Her Honour Judge Karen Walden Smith made some telling observations .

“… in my judgment the Appellant ought to have agreed to the short extension of time being sought by HMRC. The Appellant’s refusal to cooperate was contrary to the overriding objective and, it would seem, that the stance taken was for a tactical advantage. The Appellant takes the costs consequences of not succeeding on the point.”

 

THE CASE

The appellant sought to set aside a bankruptcy order on the grounds that he had not been properly served. The Registrar refused the application, the judge was considering the appeal.  The appeal was dismissed. The judge considered the issue of costs.  HMRC was the petitioning creditor, during the proceedings it had sought an extension of time.

THE JUDGMENT ON COSTS

“Costs
    1. The Appellant challenges the costs orders made by the Registrar.
    2. With respect to the costs of the strike out application, these costs quite properly fell upon the Appellant as the Appellant had withdrawn the application to strike out in the course of the hearing and the Appellant is therefore liable for any costs incurred by HMRC in defending its position.
    3. Further, in my judgment the Appellant ought to have agreed to the short extension of time being sought by HMRC. The Appellant’s refusal to cooperate was contrary to the overriding objective and, it would seem, that the stance taken was for a tactical advantage. The Appellant takes the costs consequences of not succeeding on the point.
    4. In Hallam Estates Ltd v. Baker [2014] EWCA Civ 661, Jackson LJ stated:
” … 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.
  1. HMRC’s request for an extension was made in advance of the deadline. The Appellant delayed responding to the request until very shortly before the deadline for the evidence elapsed. While there was a delay in the providing of HMRC’s evidence, that delay did not prejudice the hearing on 11 May 2016 and the Appellant was able to file evidence in response before that hearing, on 28 April 2016. The Appellant’s evidence of the assured shorthold tenancy and the evidence from the probation service, which evidence led HMRC to indicate that it would not oppose the application to annul, could have been provided by the Appellant at an earlier date.
  2. With respect to the costs of the annulment itself, I do not find that there is any basis for interfering with the decision of the Registrar. Most importantly, the Appellant failed in his application (despite the lack of opposition from HMRC and the Trustees). As I have already set out the Registrar’s decision not to grant the application is not a decision that this Court will interfere with. The Registrar concluded that HMRC could not, doing all that was reasonable, have identified the property at 93 Croydon Road as a property that HMRC ought to have been serving the statutory demand and petition upon, HRMC could not have discovered this address and had done all that was reasonable to bring the statutory demand and bankruptcy petition to the Appellant’s notice. The Appellant did not even provide evidence of where he was living until approximately 10 months after his arrest and I cannot agree with the submission made on behalf of the Appellant that there should be no order as to costs because of the conduct on both sides. Once HMRC knew about the alternative residence, it acknowledged that the demand and petition is unlikely to have come to the Appellant’s attention. HMRC therefore acted appropriately. It was for the Registrar to decide, on all the evidence available to him, that the annulment should not be granted in the interests of all the creditors. HMRC was entitled to its costs incurred by reason of the Appellant making that unsuccessful application.
  3. With respect to the Trustees’ costs, there is nothing to impugn the decision of the Registrar which was, again, a proper exercise of his discretion.”
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