CIVIL PROCEDURE BACK TO BASICS 64: THE AUTOMATIC STAY (EASY TO FORGET ABOUT)
Here we look at the automatic stay imposed by CPR 15.11.
This is one of those rules than can be overlooked and could, if ignored, cause major procedural difficulties.
(a) at least 6 months have expired since the end of the period for filing a defence specified in rule 15.4;
(b) no defendant has served or filed an admission or filed a defence or counterclaim; and
(c) the claimant has not entered or applied for judgment under Part 12 (default judgment), or Part 24 (summary judgment),
the claim shall be stayed”
RELEVANT CASE LAW
The judgment in Citicorp Trustee Company Ltd & Anor v Al-Sanea & Anor  EWHC 2845 (Comm) shows that it is normally not difficult to lift that stay. The key point is to know about the rule and that proceedings are stayed. This could be more important in cases where there is a considerable, unexplained delay, or the application to lift the stay is opposed.
Proceedings were served on or soon after 20th January 2017 (calculated in accordance with CPR rule 6.14). The period for filing a defence would expire 14 days later on or soon after 3rd February 2017. Accordingly, the Claimants’ claims were stayed on or soon after 3rd August 2017.
The claimant applied to lift the stay.
THE JUDGE’S CONSIDERATION OF THE CASE LAW
Mr Peter MacDonald Eggers QC reviewed the case law.
CPR rule 15.11(2) permits the Court to lift the stay. In Football Association Premier League Ltd v O’Donovan  EWHC 152 (Ch);  FSR 31, Chief Master Marsh said, at para. 11, in respect of this rule:
“The purpose served by CPR 15.11 is not immediately obvious other than, perhaps, it encourages claimants to make a decision about what steps to take to pursue a claim and renders inactive claims that might otherwise lie merely somnolent on the court file. It might also, perhaps more in theory than in reality, provide comfort to a defendant that no further action in the claim can be taken save with the court’s permission. However, it seems to me that the rule is not intended to place an especially heavy burden on the claimant to discharge before the court will agree to the stay being lifted. In the usual way, the court must weigh the competing interests of the parties in the balance. Here, there is an adequate explanation of the delay and the claimant has a claim with real prospects of success … So far as the merits are concerned, having already dealt with a considerable number of similar claims, I am aware that most other similar claims have not been contested. In any event, the amended claim demonstrates a claim based upon reasonable grounds. Added to that, there has been an almost complete lack of engagement by the first defendant and part of the delay has been caused by the defendant himself. On the other side of the balance, there is no obvious prejudice to the defendant caused by the delay of six months and I note that steps were taken to revive the claim within that period. In all the circumstances I am satisfied that it is appropriate to lift the stay.”
Mr Robins on behalf of the Claimants submitted that the stay should be lifted because (a) the delay in issuing the application after the stay was short, (b) the delay is reasonably explicable, (c) there would be no prejudice to the Defendants, and (d) the Claimants’ claims plainly have a good prospect of success.
I have no hesitation in ordering that the stay be lifted. The delay in issuing the application after the imposition of the stay was short. Mr Robins suggested it was a delay of less than a month. The current applications were issued on 4th September 2017, one month after the stay took effect. The delay leading to the imposition of the stay, such as it was, was explained by Mr Godden in his first witness statement, at para. 87, where he stated that the interim period was taken up by the steps taken to serve the proceedings on the Defendants and to bring them to the attention of the Defendants, by consultations with the Certificateholders, who had the real economic interest in the transaction, and by taking legal advice with respect to the interaction between the English proceedings and the proceedings in the KSA.
IT IS DANGEROUS TO ASSUME THAT ANY APPLICATION TO LIFT THE STAY WILL BE GRANTED AS OF RIGHT
Compare and contrast with the application to lift a stay granted in Part 8 proceedings by His Honour Judge Pearce in the case of Lyle -v- Allianz Insurance plc (Liverpool CC 21st December 2017). The claimant issued under Part 8 and obtained a stay. Some 3 years later the court refused to lift the stay – the action could not proceed. It was therefore struck out. A copy of the judgment is available Lyle v Allianz
THE FACTS IN LYLE
The claimant was injured in an accident in September 2011, liability was not in dispute.
- The claimant issued proceedings under Part 8 and obtained a stay. The stay was granted on the 10th July 2014 and was a general stay with no limit as to time.
- The stay was effective for several years, during which the claimant obtained further medical evidence.
- In March 2017 the claimant then obtained an order from a District Judge (I assume that this was without a hearing) that the stay be lifted and the action proceed as a Part 7 claim.
- The defendant sought an order from the District Judge setting aside the order lifting the stay.
- The District Judge granted the Defendant’s application and the application by the claimant to lift the stay was refused. Consequently the claim was struck out.
- The claimant appealed that decision to His Honour Judge Pearce.
- The Circuit Judge upheld the District Judge’s order refusing to lift the stay and striking out the action.
- The order upheld the exercise of the District Judge’s discretion. The Circuit Judge found that the court had a power to lift the stay and allow the action to proceed as a Part 7 claim. On the facts of this case it was not appropriate for the court to exercise its discretion to lift the stay.
KEY POINTS OF THE LYLE DECISION
- The judge found that it was open to the claimant to believe that the action was within the Protocol limit (then £10,000) when proceedings were issued and a stay obtained.
- During the period of the stay it must have become obvious to the claimant’s solicitors that the action had a larger value. At that time they were under a duty to notify the court and transfer the matter to a Part 7 claim.
- All the judges involved held that there is a power for the court to order that proceedings issued under Part 8 could be continued as Part 7 proceedings (contrary to the commentary in the white book). (See paragraphs 20 and 21 of the attached judgment).
- The issue in this case was whether the court should exercise its discretion to lift the stay and allow the action to continue when there had been excessive delay and there was no appropriate explanation for the delay, or the conduct during that delay.
- The claimant’s lawyers used the stay period to obtain further medical evidence, without any reference to the defendants. There was an extensive period where actions were being taken without the defendant being informed.
- The court was entitled to find that the way in which this action had been conducted was an abuse of process. The appropriate response was to refuse to lift the stay. The action was, consequently, struck out.
The courts have not considered a case under CPR 15.11 that is as extreme as Lyle. It would be surprising if a different test, or different outcome, was reached.