DEFENDANT GRANTED AN EXTENSION OF TIME WHEN IT WAS FIVE YEARS LATE: DENTON PRINCIPLES APPLIED

Until yesterday I do not recall seeing many cases where a defendant required an extension of time in order to make an application under CPR Part 11.  However, like London buses, they seem to travel in pairs.  In Apollo Ventures Co Ltd v Manchanda [2021] EWHC 3210 (Comm) Sir Nigel Teare granted an extension of time of almost five years in an application for a stay under Part 11. 

 

THE CASE

The claimant issued proceedings against a number of defendants in 2016.  The defendant served a defence in 2018.  The claims against the other defendants were struck out in January 2021.  In May 2021 the remaining defendant made an application for a stay on the grounds that Thailand was the appropriate jurisdiction to hear the claim.

THE APPLICATION FOR AN EXTENSION OF TIME

On any view the defendant’s application was made late.  The application was made in May 2021, it should have been made by June 2016.  Nevertheless the court, considering the Denton criteria, granted an extension of time and the action was stayed.

THE JUDGMENT ON THIS ISSUE
The application for an extension of time
    1. However, it is common ground that CPR 11(4) requires an application to stay proceedings to be made within 14 days (or 28 days in the Commercial Court) after filing an Acknowledgment of Service. That time limit expired in June 2016.
    1. Logically, therefore, the first issue between the parties to be decided is whether the Defendant can obtain the necessary extension of time in which to make his application for a stay.
    1. It is also common ground (by reason of the analysis in several authorities to which it is unnecessary to refer) that whether or not it is appropriate to extend time depends upon an application of the Denton principles. The first stage is to assess the seriousness and significance of the breach of the CPR. The second stage is to consider why the breach occurred. The third stage is to evaluate all the circumstances of the case with a view to dealing justly with the application. The jurisdiction which the court is exercising is that conferred by CPR 3(9). The court must have regard in particular to the need for litigation to be conducted efficiently and at proportionate cost and to the need to enforce compliance with the rules, practice directions and orders.
The seriousness and significance of the breach of the CPR
    1. It was recognised by Lord Collins in Texan Management Limited and others v Pacific Electric Wire & Cable Company Limited [2009] UKPC 46 at paragraph 70 that CPR Part 11 does not sit easily with applications for stays. “For example circumstances may change and a defendant may wish to apply for a stay well after the proceedings have been commenced…..” In the present case there has been a change of circumstances; first, additional proceedings were commenced in Thailand in 2018 and 2019 and, second, the claims against the other Defendants were struck out in January 2021 with the result that there is, on the Defendant’s case, no reason why the court cannot now conclude that Thailand is clearly and distinctly the more appropriate forum for determination of the Claimant’s claim against the Defendant.
    1. If the delay from June 2016 is considered then there has obviously been a serious and significant delay. However, in reality there were no grounds to seek a stay until Butcher J. struck out the Claimant’s claims against the other Defendants. It was only then that the Defendant was able to say that the reason why David Foxton QC dismissed the application to set aside service out of the jurisdiction no longer applied, thereby presenting the Defendant with the opportunity to seek a stay on forum non conveniens grounds.
    1. The delay from 15 January 2021 until 6 May 2021 was a little under 4 months. Whilst time was required to appreciate the significance of the striking out of the claims against the other Defendants, to obtain legal advice as to the merits of seeking a stay, and to prepare the evidence in support of an application for a stay it is not obvious that those steps would take a little under 4 months. I consider that at least 6 weeks would be required and so there was a delay of about 2 months or more. In the context of the CPR, and having regard to the express terms of CPR rule 3(9), that must still be regarded as a serious and significant delay.
Why did that delay occur?
    1. There is no evidence to explain that delay. I cannot therefore accept that there was good reason for the delay. It is common ground that this does not spell the end of the application. But the absence of an explanation is one of the circumstances to be borne in mind at the third stage of the Denton principles.
All the circumstances of the case; dealing justly with the application
    1. It is in this context that deciding this application raises novel issues. Counsel for the Claimant has been assiduous in his consideration of the many cases in which an application has been made to extend the time for seeking a stay on forum non conveniens grounds. He has submitted, without opposition, that where there has been a submission to the jurisdiction an extension of time has only been granted where the delay has been very short. Long extensions of time have only been permitted where there has been no submission to the jurisdiction. Counsel for the Defendant accepted that there has been no reported case in which following a submission to the jurisdiction a long extension of time has been granted to allow an application for a stay to be granted. However, counsel for the Claimant accepted that a submission to the jurisdiction was not a bar to a successful application.
    1. Where there has been a submission to the jurisdiction that will obviously be a relevant factor to take into account. However, the weight to be given to that factor will depend upon all the circumstances of the case. For example, if as a result of the submission the parties have prepared for trial and have incurred substantial costs in doing so and the trial is shortly to take place considerable weight will be given to the submission and its consequences. In such a case an extension of time may well be refused, notwithstanding the strength of the argument that another jurisdiction is clearly and distinctly the more appropriate forum. If, however, nothing has happened after the submission to the jurisdiction and there is a strong case for saying that some other forum is clearly and distinctly the more appropriate forum then an extension of time may well be granted.
    1. What then are the circumstances of the present case? In December 2016 the Claimant entered judgment in default. That judgment was set aside in January 2018 by Lionel Persey QC. Pleadings were exchanged in early 2018 (see above) but little further was done by the Claimant to proceed with the claim with the result that in October 2019 Phillips J. (whilst dealing with an application to allow a sale of property to proceed, notwithstanding the WFO) directed that the Claimant must file a witness statement showing cause why the WFO should not be discharged. That was done and in July 2020 the CMC took place.
    1. At that CMC directions were given by Christopher Hancock QC. There was to be a short stay until 17 August 2020 to allow the parties to resolve or narrow their disputes. Disclosure was to take place by October 2020, witness statements were to be exchanged by December 2020 and experts’ reports were to be exchanged by January 2021. A 10-day trial was to be fixed for a date not before 1 May 2021.
    1. However, none of these steps took place because it was also ordered that security for costs in the sum of £500,000 be provided by the Claimant to the other Defendants by 24 August 2020. That security was not provided. Phillips LJ refused permission to appeal from the order for security on 28 September 2020. Ultimately, Butcher J. struck out the claims against the other Defendants in January 2021. Permission to appeal from that order was refused by Males LJ on 14 September 2021.
    1. Those are the circumstances in which counsel for the Defendant submitted that the claim against him was “almost back to square one“. That is on the basis that the claim against him must be re-pleaded and new directions for a trial are required. I think it is an exaggeration to say that the claim against the Defendant is back to square one. The claim against him has been pleaded. What is required is a pleading which removes the claims against the other Defendants. Directions are required for trial but the parties, having been through a CMC in July 2020, must have a good idea of what disclosure and evidence is required. It can however be said that the claim against the Defendant in this court will not be ready for trial for some time.
    1. This is a case where it appears that the Defendant now has a cogent case that Thailand is clearly and distinctly the more appropriate forum. Dealing with the application for an extension of time justly requires that weight be given to that factor. It is a good reason in favour of the grant of an extension of time.
    1. If a stay were to be granted the costs already incurred by the Claimant will be, in counsel’s memorable phrase, “sunk”. That is said to be a serious head of prejudice, all the more so if the Claimant also has to pay the Defendant’s costs of the stayed action in this court. Such prejudice is said to be a good reason against the grant of an extension of time.
    1. Counsel for the Defendant raised a number of arguments against this suggestion.
    1. First, it was said that there was reason to believe that the Claimant’s costs were excessive. Reliance was placed on a comment to this effect by Christopher Hancock QC which was incorporated in his order of 10 August 2020. However, there is no doubt that substantial costs must have been incurred by the Claimant.
    1. Second, it was said that the costs incurred by the Claimant related to both the claim against the Defendant and to the claim against the other Defendants which had been struck out. Counsel for the Claimant said that the Defendant was the lead Defendant and so most of the costs must have related to the claim against him. Whilst there is probably force in this suggestion no attempt has been made to quantify the costs of the claim against the Defendant as opposed to those costs which were incurred in order to advance a claim against the other Defendants. It seems likely, however, that a substantial sum will be “sunk” as a result of the stay.
    1. Third, it was said that it did not lie in the Claimant’s mouth to complain about wasted costs because such wastage flowed from the striking out of the claim against the other Defendants which only came about by reason of the Claimant’s failure to provide security for costs as ordered by the court. The Claimant therefore only has itself to blame for the sunk costs. There does appear to me to be force in this point and it goes some way to lessen the weight to be accorded to the costs factor relied upon by the Claimant.
    1. Weighing up those two factors, one in favour of an extension of time, and the other against an extension of time, I consider that the case for an extension of time is the stronger. Moreover, if an extension of time is granted and a stay subsequently granted, the Claimant will be able to pursue its claim against the Defendant in Thailand. The Claimant must obviously wish to do that because it issued proceedings against the Defendant in Thailand in 2018 whilst it was already advancing its claim against the Defendant here. Thus the orders sought by the Defendant will not bring an end to the claim against him.
    1. It was suggested by counsel for the Claimant that the claim in England had the advantage that proprietary claims could be advanced against assets held in this country by one or more of the former Defendants. However, the proceedings in Thailand are also against the former Defendants and if judgment were obtained against them such judgment could be enforced here against assets held here by the former Defendants.
    1. I must also bring into account the circumstance that the Defendant has not explained why he delayed from January 2021 until May 2021 before making this application. That is a reason against the extension of time. However, having regard to the other circumstances of the case I would regard a refusal of an extension of time as being disproportionate to the Defendant’s two months’ delay in making this application.
  1. In my judgment, and having considered all the circumstances of this case, the just way of dealing with the application for an extension of time is to grant it. If exceptional circumstances are required to justify an extension where there has been a submission to the jurisdiction then the dismissal of the proceedings against the other Defendants, where the existence of such proceedings was a reason for keeping the claim against the Defendant in this jurisdiction, provides such circumstances.