Mr Justice Nugee :
- This is another case which concerns the practical implications of the changes to the CPR as a result of the reforms recommended by Sir Rupert Jackson ("the Jackson reforms"), and the "new more robust approach" laid down by the Court of Appeal in Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537 ("Mitchell").
- The claim is an unfair prejudice petition brought under s. 994 of the Companies Act 2006 in relation to the affairs of the Sixth Respondent ("the Company"). The other Respondents (who I will refer to as "the Respondents" since the Company takes no active role in the proceedings) apply for an extension of time for service of their Defences. The Petitioner not only opposes that, but by cross-application seeks an order that the Respondents be debarred from defending.
Background
- It is not necessary to say much about the underlying claim. The Respondents are the registered holders of the shares in the Company, and are all members of the same family. The First and Third Respondents and the Petitioner ("Prakash", "Kiran" and "Dilip") are brothers, and three of the children of the late Mr Keshavlal Patel (who died in 1999) and his wife, the Fifth Respondent ("Mrs Patel"); the Second and Fourth Respondents are the wives of Prakash and Kiran respectively.
- The Company was acquired by the family in 1983 and runs a hotel business. Dilip was formerly the managing director of the Company and ran the hotel but in the light of differences between him and his brothers resigned that position in January 2010. Lengthy correspondence ensued between December 2010 and January 2013 but it did not resolve matters, and on 5 June 2013 Dilip issued the Petition. His complaints, primarily directed at his brothers Prakash and Kiran, can be summarised as being (i) that although he is the registered legal owner of certain shares in the Company he claims to have an entitlement in equity to further shares from various of the Respondents as a result of an agreement made in 1992 (called "the 10% Shareholding Agreement" in the Petition) under which it is said that all the family members agreed he should have a 10% shareholding in the Company; (ii) that it was also agreed that he would derive the same total income from the Company or other family businesses as his father and brothers (this being called "the Equal Total Income Policy" in the Petition); (iii) that in breach of those agreements he has neither received the extra shares he claims, nor the same income as Prakash and Kiran; and (iv) that on the contrary he has been excluded by them from management of the Company, and dividends on his shares have been withheld. He seeks a variety of relief, including an order that Prakash and Kiran purchase his shares.
- Even before issue of the Petition, Prakash and Kiran had made an open offer that they, or the Company, should purchase his shares at a fair value without discount for a minority shareholding, such value to be determined by an independent expert if not agreed, the intention being that this would be a complete answer to the allegations of unfair prejudice in accordance with the principles set out by Lord Hoffmann in O'Neill v Phillips [1999] 1 WLR 1092 at 1107-8. Dilip however complains that this proposal ignores his claim to further shares under the 10% Shareholding Agreement. I should add that the Respondents do not deny the agreement as such, but deny it was a legally binding and enforceable contract, and in any event say that it has been fully satisfied by Mrs Patel transferring half her shares to Dilip so that he does indeed already own more than 10% of the Company.
- In these circumstances the First to Fourth Respondents, who are separately represented from Mrs Patel, on 24 July 2013 applied, among other things, for the issue whether Dilip was entitled to any further shares in the Company to be tried as a preliminary issue, the hope being that if they succeeded on that issue, it would then be possible to have the Petition as a whole struck out or dismissed.
- That application was heard by Mr Murray Rosen QC sitting as a Deputy High Court Judge. On 13 December 2013 he made an Order duly directing the trial of preliminary issues as to whether the Respondents were subject to an obligation to recognise and give effect to an entitlement by Dilip to receive the shares which he claimed, and various consequential matters designed to resolve whether, if so, the failure to recognise his entitlement was itself unfairly prejudicial conduct or might be taken into account in granting relief in the event that the affairs of the Company had otherwise been conducted in an unfairly prejudicial manner.
- He also gave directions for the trial of those issues, as follows:
(1) Paragraph 2(a) provided that Dilip was to serve by 27 December 2013 a document identifying the paragraphs of the Petition on which relied.
(2) Paragraph 2(b) provided:
"The First to Fifth Respondents shall by 14 February 2014 serve and file a Defence in relation to the preliminary issues."
(3) Dilip was to serve a Reply if so advised by 28 March 2014.
(4) A CMC was to be fixed for the first convenient date after 11 April 2014 (at which further directions might be given).
(5) The trial itself, with an estimate of 10 days, was to take place in a 3 month window starting on 1 January 2015.
- On 20 December 2013 Dilip served a document in compliance with paragraph 2(a) of Mr Rosen's Order. This was a one-page document simply identifying the paragraphs on which he relied. The Petition extended to 125 paragraphs over 45 pages, and this document identified paragraphs 1-45, 53-74, 78-90 and 116-120 as relied on, a total of 85 out of the 125. The effect was to include a substantial amount of background leading up to the 10% Shareholding Agreement in 1992, starting with a (brief) reference to a business run by Mr Patel in Mombasa from 1952 to 1972 and tracing the development of various informal partnerships between him and one or more of his sons from 1972 onwards. The omitted paragraphs are largely those that deal with the failure to implement the Equal Total Income Policy, the non-payment of dividends, the events leading up to the resignation of Dilip as managing director, and his complaints of exclusion.
- Under paragraph 2(b) of Mr Rosen's Order the Respondents' Defences were due on 14 February 2014. On 29 January 2014 the solicitors acting for the First to Fourth Respondents, Charles Fussell & Co ("CF"), sent a letter by e-mail to Dilip's solicitors, AR Legal ("AR"), and to Hasu Kaneria ("Hasu"), another brother who holds a power of attorney from his mother Mrs Patel and is assisting her in the litigation, explaining that their counsel had been heavily engaged on another matter and would not be able to deal with the Defence until after the deadline. They asked for a 14-day extension to 28 February 2014. On 30 January 2014 Hasu wrote to AR and CF saying that because of Mrs Patel's need to keep her costs under control she needed to change counsel and was now represented by Mr Clive Wolman. He was unavailable due to another matter due to be heard between 3 and 14 February and asked for a 28-day extension for Mrs Patel's Defence to 14 March 2014.
- AR did not reply.
- On 5 February 2014 CF followed up with a further letter saying that although Hasu had confirmed his consent to their request they had not had a response from AR. They also suggested that it would be sensible for all Defences to be served together and therefore suggested an extension for the First to Fourth Respondents' Defences to 14 March as well. They enclosed a draft consent order providing for an extension to 14 March for the Respondents' Defences (and a consequential extension of time for the service of Dilip's Reply from 28 March to 25 April).
- On 10 February 2014 AR replied to both requests. In the letter to CF they said that the Respondents had already caused various delays during the course of proceedings and that Dilip would therefore not agree to an extension. In the letter to Mr Wolman they simply said that Dilip would not consent to an extension.
- CF issued an application the next day, 11 February. Although issued only by the First to Fourth Respondents, it sought an order in the same form as the draft consent order, that is providing for an extension of time for Mrs Patel's Defence as well as their own to 14 March 2014; and Mrs Patel has associated herself with the relief sought. The parties have therefore treated it as if it were an application by all the Respondents, which seems to me sensible, and I will therefore refer to it as the Respondents' application.
- In a letter to AR of the same day, CF said they were most disappointed to see that after delaying for almost two weeks before responding, Dilip had refused consent. They added:
"Had you refused permission for an extension as soon as we had made the request, we might have been able to make other arrangements."
As it was they had had little choice but to put in an application for an extension. They again invited AR to consent to the application, which had been issued with a request for it to be dealt with without a hearing.
- AR's response also on 11 February was to reply that they opposed the application, that they wanted it dealt with at a hearing, and that it should be listed before a Judge as opposed to a Registrar with a time estimate of 1½ hours. They enclosed a list of counsel's dates to avoid which showed the counsel concerned (Mr Colm Nugent) as unavailable the rest of February and up to 22 March. On 14 February they gave dates for an alternative counsel (unnamed) who was unavailable the rest of February and up to 7 March.
- On 3 March 2014 AR themselves issued an application, seeking an order debarring the Respondents from defending the preliminary issues. It attached a draft order which would have the effect of deciding the preliminary issues in Dilip's favour (that is in effect declaring (a) that the Respondents were subject to an equitable obligation to give effect to Dilip's claimed entitlement to further shares in the Company; (b) that the failure to give effect to such entitlements was unfairly prejudicial conduct by Prakash, Kiran and Mrs Patel; and (c) that that obligation should be taken into account in granting relief under the Petition) and ordering the Respondents to pay Dilip's costs of the preliminary issues.
- On Friday 14 March 2014 the Respondents served their Defences. Mrs Patel's was served at 15.26. The First to Fourth Respondents' was not served until 21.44, and as correctly pointed out by Mr Nigel Jones QC, who appears for Dilip, this means that it is deemed to be served the next working day, namely Monday 17 March: see CPR r 6.26.
- There is one other development which is of some relevance and that is that although Mr Rosen directed that a CMC be listed on the first convenient date after 11 April, the CMC has in fact been listed in a 3 day window starting on 18 June. Mr Jones told me this happened on 14 January. The trial itself, which Mr Rosen directed to be listed in a 3 month window starting on 1 January, has been fixed for 16 March 2015.
- Both the Respondents' application and Dilip's application came before me on 25 March 2014 sitting as the Applications Judge, although due to shortage of time (a point I will revert to) only the Respondents' application was in fact argued.
- The Respondents' case in summary is that this is an appropriate case for an extension. It is not an application for relief from sanctions and should not be treated as if it were, and the guidance in Mitchell has no direct application. Dilip's case is that Mitchell makes it clear that orders of the Court are to be complied with, that it is no longer sufficient simply to say that there is no prejudice to the other party in an extension, that a party applying for an extension of time has to show a good reason for it, and that in the light of the guidance in Mitchell no good reason has here been shown.
Do the Mitchell principles apply ?
- In these circumstances there was a lively debate between counsel (in the main between Mr Patrick Harty, who appeared for the First to Fourth Respondents, and Mr Jones) as to whether the Mitchell principles apply to the Respondents' application.
- The Petition is an unfair prejudice petition to which the Companies (Unfair Prejudice Applications) Proceedings Rules 2009/2469 ("the Unfair Prejudice Rules") apply. By rule 2(2) of the Unfair Prejudice Rules, the CPR apply to such proceedings "with any necessary modifications". It has not been suggested to me that there are any modifications necessary in the circumstances of the present case.
- The Respondents' application is therefore made under CPR r 3.1(2)(a) which provides:
"Except where these rules provide otherwise, the court may –
(a) extend or shorten the time for compliance with any rule practice direction or court order (even if an application for extension is made after the time for compliance is required)."
In the present case the application was issued before the time for compliance had expired. I will refer to this as an "in-time" application, and to one which is made after the time for compliance has expired as an "out-of-time" application. I think this slightly preferable to the terms "prospective" and "retrospective" as in a case such as the present even though the application was issued in time, it has come to be heard well after the time for compliance has expired and is to that extent itself retrospective.
- Mitchell was a case of an application for relief from sanctions under CPR r 3.9. As is by now well known, one of the amendments to the CPR as a result of the Jackson reforms is that CPR r 3.9(1), which had previously contained a check-list of 9 matters to which the Court would have regard on an application for relief from sanctions, has been replaced by a much shorter version of the rule. This reads as follows:
"On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need –
(a) for litigation to be conducted efficiently and at proportionate cost; and
(b) to enforce compliance with rules, practice directions and orders."
- Part of the guidance given by the Court of Appeal in Mitchell (at [36]) was that this change to CPR r 3.9, with its explicit mention of these two matters:
"reflected a deliberate shift of emphasis. These considerations should now be regarded as of paramount importance and be given great weight. It is significant that they are the only considerations which have been singled out for specific mention in this rule."
See also at [37] where the Court of Appeal said that other circumstances should (in general) be given less weight than the two considerations which are specifically mentioned; and at [50] where they refer to the "particular importance" of these two elements.
- This forms the setting in which the Court of Appeal laid down the principles that should be applied on an application for relief from sanctions. These principles have recently been summarised by Leggatt J in Summit Navigation Ltd v Generali Romania Asigurare Reasigurare SA [2014] EWHC 398 (Comm) ("Summit") as follows (at [39]):
"i) On an application for relief from a sanction under CPR 3.9, it is usually appropriate to start by considering the nature of the non-compliance. If the non-compliance can be regarded as trivial or insignificant, the court will usually grant relief provided that an application is made promptly [40].
ii) If the non-compliance cannot be so regarded, the court should consider why it occurred and will still be likely to grant relief if there is a good reason for it [41].
iii) Good reasons are likely to arise from circumstances outside the control of the party in default [43]; by contrast, inefficiency or incompetence of a party's solicitors – for example, where a deadline is simply overlooked – is unlikely to amount to a good reason [41].
iv) Where the non-compliance is not trivial and there is no good reason for it, the court is still required by CPR 3.9 to consider "all the circumstances of the case, so as to enable it to deal justly with the application" [37] + [49]. However, relief should not usually be granted in such cases because the circumstances which should generally be given greatest weight are the two factors specifically mentioned in the rules [49] + [58]."
Although of course no substitute for the full guidance given by the Court of Appeal, this seems to me an admirably succinct and accurate summary of the Mitchell principles.
- In a case where what is before the Court is an application for relief from sanctions under CPR r 3.9, there is no doubt that it is the duty of the Court to follow the Mitchell principles. This is a deliberate change in approach, characterised by the Court of Appeal at several places in their judgment as a "new approach" (see for example [40], [46], [47], [51]), and consciously intended to be a "tougher, more robust approach" (per Lord Dyson MR in the 18th implementation lecture on the Jackson reforms, cited and endorsed at [38]-[39]).
- Mr Harty accepted that a similar approach was applicable in a case where an out-of-time application for an extension of time was made. I do not propose to take up time in this judgment with discussing this question in any great detail, as it is not the case before me and was not in dispute, but there is certainly authority to that effect. Notably in Mitchell itself the Court of Appeal said, when discussing the decision of Andrew Smith J in Raayan Al Iraq Co Ltd v Trans Victory Marine Inc [2013] 2696 (Comm) ("Raayan"), that the claimant's (out-of-time) application for a two day extension of time for service of its particulars of claim was "in substance" an application for relief from sanctions, and that he had been at fault in not applying the new approach (at [49]-[51]); see also the later decision (also of Andrew Smith J) in Associated Electrical Industries Ltd v Alstom UK [2014] EWHC 430 (Comm) ("AEI"), which was another case of an out-of-time application for an extension of time for serving particulars of claim, where he did apply the Mitchell principles (see especially at [18], [20]-[22]); and that of Turner J in Webb Resolutions Ltd v E-Surv Ltd [2014] EWHC 49 (QB) ("Webb"), in which he held that a party in default seeking an out-of-time extension for making a renewed application for permission to appeal (under CPR r 52.3(5)) would have to satisfy the same tests as were applied to the default in Mitchell (at [22]). There is nothing new in this: see Sayers v Clarke Walker [2002] EWCA Civ 645 ("Sayers"), which was another case of an out-of-time application for an extension of time for appealing, where Brooke LJ had said that it was appropriate to have regard to the check-list then contained in CPR r 3.9.
- One can readily see that, at any rate in cases such as these, there is a close analogy to an application for relief from sanctions: the party applying to the Court has necessarily already failed to comply with a time limit laid down by the rules, and is therefore, as Turner J says, in default. If the extension is refused the practical effect is that the claimant (or appellant) cannot take his claim (or appeal) forward at all, and so although there may be no explicit sanction for failure to comply with the time limit, there is an implicit one. This is the explanation given by Brooke LJ in Sayers (at [21]) as follows:
"… the applicant has not complied with CPR 52.4(2), and if the court is unwilling to grant him relief from his failure to comply through the extension of time he is seeking, the consequence will be that the order of the lower court will stand and he cannot appeal it. Even though this may not be a sanction expressly "imposed" by the rule, the consequence will be exactly the same as if it had been…"
I therefore have no difficulty with accepting that the Mitchell principles apply to such an application; I would only caution against any assumption that the same will necessarily be true for all out-of-time applications for an extension of time. There may be cases where the analogy to an application for relief from sanctions is less close and this approach inappropriate; there is always a risk in laying down universal rules that other cases might arise, the precise circumstances of which have not been foreseen. But I do not intend to pursue this point further, as that is not this case.
- This case by contrast is one of an in-time application for an extension. Mr Jones submitted that once it was accepted that the Mitchell principles applied to an out-of-time application for an extension, it was illogical not to apply the same approach to an in-time application for an extension. I do not agree. Of course if time is due to expire on 14 February, there is little practical difference between an application made on 13 February (or 11 February as in this case) and one made on 15 February. Realistically it is unlikely that an application made on 11 February could be heard before 14 February, and even if the Court could in theory hear it immediately, it would no doubt usually already be too late for the applicant to comply with the original time limit: that is after all the reason why the application is made. One can see the strict logic of saying that in such a case the realistic position is that unless an extension is granted the applicant is inevitably going to fail to comply with the time limit, and should be treated in the same way as one who has already failed to do so.
- But this is not the approach that has been adopted as a matter of precedent, and I can see sound practical and policy reasons for not doing so. So far as precedent is concerned, in Robert v Momentum Services Ltd [2003] EWCA Civ 299 ("Robert"), the Court of Appeal expressly held that an in-time application for an extension of time (in that case for service of the particulars of claim) was not, and should not be treated as, an application for relief from sanctions. Dyson LJ (with whom Hale LJ and Sir Andrew Morritt V-C agreed) referred to what Brooke LJ had said in Sayers and continued (at [33]):
"It is clear that Brooke LJ treated Sayers as a relief from sanctions case, or at least closely analogous to such a case. That is because the time for appealing had already expired when the application for an extension of time was made. I see no reason to import the rule 3.9(1) check lists by implication into rule 3.1(2)(a) where an application for an extension of time is made before the expiry of the relevant time limit. There is a difference in principle between on the one hand seeking relief from a sanction imposed for failure to comply with a rule, practice direction or court order, where such failure has already occurred, and on the other hand seeking an extension of time for doing something required by a rule, practice direction or court order before the time for doing it has arrived. The latter cannot sensibly be regarded as, or even closely analogous to, a relief from sanctions case. If the draftsman of the rule had intended that the check list set out in rule 3.9(1) should be applied when the court is exercising its discretion under CPR 3.1(2)(a) in such a case, then he could and, in my judgment, would have said so. By not spelling out a check list in rule 3.1(2)(a), it seems to me that the draftsman was intending that the discretion should be exercised by simply having regard to the overriding objective of enabling the court to deal with cases justly including, so far as practicable, the matters set out in rule 1.1(2)."
- Mr Harty submitted that there was nothing in Mitchell, or the new approach there endorsed, which affected the decision in Robert. Robert was cited in argument in Mitchell, but the Court of Appeal did not refer to it in their judgment and could not sensibly be regarded as departing from it (even if it was open to them to do so). He referred me to the fact that Robert is still cited in the most recent edition of the White Book (Civil Procedure 2014, editor-in-chief Jackson LJ), at §3.1.2 with an editorial comment that it is likely that the distinction between Sayers and Robert remains good law, namely that it is easier to persuade the Court to grant an in-time application for an extension than an out-of-time one.
- I accept this submission. It seems to me that unless and until a higher Court has said that the approach in Robert is no longer to be followed, I am bound by that decision (i) to regard an in-time application for an extension of time as neither an application for relief from sanctions, nor as closely analogous to one, and (ii) to exercise the discretion under that rule by applying the overriding objective rather than the terms of CPR r 3.9.
- However, one of the other changes caused by the Jackson reforms was to the overriding objective itself. In its current version it now reads as follows (with the amendments in bold):
"(1) These Rules are a new procedural code with the overriding objective of enabling the court to deal with cases justly and at proportionate cost.
(2) Dealing with a case justly and at proportionate cost includes, so far as is practicable –
(a) ensuring that the parties are on an equal footing;
(b) saving expense;
(c) dealing with the case in ways which are proportionate –
(i) to the amount of money involved;
(ii) to the importance of the case;
(iii) to the complexity of the issues; and
(iv) to the financial position of each party;
(d) ensuring that it is dealt with expeditiously and fairly;
(e) allotting to it an appropriate share of the court's resources, while taking into account the need to allot resources to other cases; and
(f) enforcing compliance with rules, practice directions and orders."
The new sub-paragraph (f) of course reflects the change to the wording in the new CPR r 3.9.
- In these circumstances it seems to me that the position was well put by Turner J in Kagalovsky v Balmore Invest Ltd [2014] EWHC 108 (QB) ("Kagalovsky") at [10]:
"There is no reason to doubt that the ratio of this decision [ie Robert] remains good law but the emphasis which Dyson LJ (as he then was) placed in that case upon the importance of the ingredient of prejudice occasioned by the delay in the exercise of the court's discretion must now be seen in the light of the Jackson reforms. Furthermore the overriding objective applied in Robert has now been reformulated to include considerations calculated to achieve the enforcement of compliance with rules, practice directions and orders."
- Unlike the new CPR r 3.9 however, it can be seen that the reformulated overriding objective does not give the same prominence to the considerations set out in the new sub-paragraph (f). The guidance given by the Court of Appeal in Mitchell as to the effect of these matters being singled out for specific mention (namely that they should be regarded as "of paramount importance" and "given great weight": see paragraph 26 above) therefore does not, it seems to me, apply. They are doubtless important considerations, but they do not have the same paramount status.
- I should add that the Court of Appeal in Mitchell did say something very briefly about in-time applications. At [41], having explained that overlooking a deadline, whether on account of overwork or otherwise, was unlikely to be a good reason for obtaining relief from sanctions, and that solicitors should not take on too much work and expect to be able to persuade a court that this is a good reason for failure to meet deadlines, they added:
"But the need to comply with rules, practice directions and court orders is essential if litigation is to be conducted in an efficient manner. If departures are tolerated, then the relaxed approach to civil litigation which the Jackson reforms were intended to change will continue. We should add that applications for an extension of time made before time has expired will be looked upon more favourably than applications for relief from sanction made after the event."
Both Mr Harty and Mr Jones sought to extract support for their submissions from the final sentence. Mr Harty suggested that the Court of Appeal were there reflecting and endorsing the approach in Robert which had been cited to them; Mr Jones that the message was that the Mitchell approach should be applied but in a slightly less strict way, so that if there were a reason which was not quite a good reason under Mitchell it might be a good reason for an in-time extension – a sort of Mitchell light.
- I think I should be cautious about trying to read anything into the Court of Appeal's judgment that is not there. The appeal with which this part ([34]-[58]) of the judgment in Mitchell is concerned was an appeal against a refusal by the Master to grant relief from sanctions under r 3.9, and there is no doubt, as I have already said, that the guidance given by the Court of Appeal is given in that context. Throughout this part of the judgment there are repeated references to such matters as defaults, failures and non-compliance. I do not read the judgment in Mitchell as intended also to give guidance, beyond this brief statement, as to the approach to be adopted for in-time applications for an extension of time; and it would I think be wrong to seek to place any great reliance on this one sentence.
- It does however seem to me entirely consistent with the conclusion that I have already come to, namely that the Mitchell guidelines do not apply directly to in-time applications; that Robert remains good law, binding on me, and is authority for the proposition that an in-time application should not be treated as if it were an application for relief from sanctions, but should be judged against the overriding objective; that in applying the overriding objective, the Court should now have regard to the fact that it has been reformulated to add explicit reference to the matters in sub-paragraph (f); but that, unlike in the case of relief from sanctions, these considerations are not to be given paramount status.
- Mr Jones pointed out that Mitchell in fact dealt with two appeals, only the second of which concerned the Master's refusal (by Order of 25 July 2013) to grant relief from sanctions. The first was her decision (by Order of 18 June 2013) to apply a sanction in the first place, which was dealt with by the Court of Appeal at [26]-[33]. This is factually correct, but I do not see that it adds anything to the analysis. The appeal against the first Order was not concerned with an in-time application for an extension any more than the appeal against the second was; and it too involved a party who was by then already in default. In effect the two Orders taken together constituted the Court's reaction to Mr Mitchell's failure without good reason to file his costs budget in time; and the only reason this was dealt with on two occasions rather than one was because Mr Mitchell was not in a position to ask for relief on the first occasion, his solicitors not having then produced any evidence in support of such an application: see at [32]. Thus although it is true that only the second appeal strictly speaking involved the question of relief from sanctions, I do not think there is anything in the first appeal which has any more application to the present case, or would lead me to a different conclusion.
- As a matter of authority therefore I am not persuaded that the Mitchell guidelines apply to the Respondents' application.
Practical and policy considerations
- I have referred above to practical and policy considerations. I mention them here because it is apparent that there is an inevitable tension between the aim of dealing with cases efficiently and at proportionate cost and the aim of promoting a new culture in which a relaxed approach to litigation involving non-compliance with rules, practice directions and orders is not to be tolerated.
- So far as policy is concerned, there are repeated indications in the cases that if a party gets into time difficulties, the appropriate thing to do is to approach the other side for consent to an extension, failing which to make an in-time application to the Court. I have already referred to the guidance of the Court of Appeal in Robert that such an application should not be regarded as if it were an application by a party in default for relief; and of the Court of Appeal in Mitchell that in-time applications will be looked on more favourably than applications for relief. Other relevant judicial statements in the authorities put before me are as follows.
- In Smailes v McNally [2013] EWHC 1562 (Ch) ("Smailes") Henderson J granted an in-time application for an extension of time for disclosure. This case was admittedly decided before Mitchell but Henderson J was addressed on the impact of the changes to the overriding objective and said (at [52]) that the Court would scrutinise an application for extension more rigorously than before the Jackson reforms and must firmly discourage any easy assumption that an extension would be granted simply on the ground that it would not involve prejudice to the other side. He continued:
"53. On the other hand I think it is important not to go to the other extreme, and not to encourage unreasonable opposition to extensions which are applied for in time and which involve no significant fresh prejudice to the other parties. In cases of that nature, considerations of cost and proportionality are highly relevant, and the wider interests of justice are likely to be better served by a sensible agreement, or a short unopposed hearing, than by the adoption of entrenched positions and the expenditure of much money and court time in preparing for and dealing with an application that could have been avoided.
54. I would also observe that, although all court orders mean what they say, and must be complied with even if made by consent, there are some orders relating to the completion of specified stages in preparation for trial (such as disclosure, the exchange of witness statements or a timetable for expert evidence) where there may still be so many imponderables when the order is made that the date for compliance cannot sensibly be regarded as written in stone. Everything will always depend on the circumstances of the particular case, and the stage in the proceedings when the order is made, but in many such cases it should be understood that there may be a need for reasonable extensions of time or other adjustments as the matter develops. It would, I think, be unfortunate if the new and salutary emphasis on compliance with orders were to lead to a situation where, in cases of the general type I have described, a reasonable request for an extension were to be rejected in the hope that the court might be persuaded to refuse any extension at all."
- In AEI, Andrew Smith J said at [24] that AEI's solicitors did not take any steps to comply with the deadline for service of the particulars of claim and continued:
"…they could easily have asked Pinsent Masons for an extension of time long enough before 29 October 2013 (for example, in reply to the emails of 18 and 25 October 2013) so as to allow them to apply to the court before 29 October 2013 if necessary. The application would have been decided without a hearing and, as Mr Benzie realistically acknowledged, almost certainly have been granted, assuming that it was supported by a sufficient explanation of the need for an extension. However, by the time that Clyde & Co asked Pinsent Masons for an extension late on 29 October 2013, any application would have had to have been made retrospectively. Clyde & Co must have known this, and there is no explanation why the request was made so late. I do not debate whether this amounts to intentional non-compliance with the CPR: on any view it displays indifference to compliance."
He reverted to the point at [31] where he said:
"If difficulties in investigating the claim do justify the particulars being late, a timely request for an extension should have been sought from Alstom and if necessary a timely application to the court should have been made."
- In Mitchell itself, one of the points made by Master McCloud in her judgment refusing relief, not adversely commented on by the Court of Appeal, was that there had been "no attempt to apply for extra time": see at [13].
- In Summit Leggatt J was not considering an application for an extension of time but an application for the lifting of a stay imposed when security for costs had not been provided in time. But he criticised the defendants for seeking to rely on Mitchell to turn to their tactical advantage the claimants' short delay in providing security by arguing that the action should be permanently stayed: see at [1], [53] and [54]. At [53] he referred to the defendants as not having adopted a constructive approach but as having "cited Mitchell and cried foul". At [54] he concluded:
"the defendants' stance disregarded the duty of the parties and their representatives to cooperate with each other in the conduct of proceedings and the need for litigation to be conducted efficiently and at proportionate cost. It stood Mitchell on its head."
- The consistent message from these authorities is that a party who needs more time for a procedural step in existing proceedings should not just ignore the problem but should ask the other side for consent, and if consent is not forthcoming, should make an in-time application for an extension; and conversely that the other side should respond positively and in a spirit of co-operation to reasonable requests for consent rather than "cry foul" and seek to take opportunistic advantage of the other party's difficulties.
- Mr Jones pointed to Kagalovsky as an example of an in-time application for an extension where nevertheless the Mitchell guidelines were in effect applied. But that was another case where the extension of time sought was that for bringing an appeal under CPR r 52.4. In that context Turner J relied, among other matters, on the notes to CPR 52.4 in the White Book which referred to "a clear policy decision in favour of finality". An intending appellant will usually have had a judicial hearing and have lost, and has a short time to make up his mind whether to initiate an appeal or not, failing which the other party is entitled to assume that the proceedings (or that part of them) are over; moreover the preparation and serving of an appellant's notice will not usually be a very time-consuming task in itself. One can see that the considerations which are applicable in such a case may be rather different from a case such as the present where what is in issue is a procedural step in ongoing proceedings and there has been no judicial determination of anything. I do not question the appropriateness of the approach Turner J took in that case, but it does not follow that the same applies to this case; it is an illustration of the fact that what the overriding objective requires differs depending on the circumstances.
- Other cases on which Mr Jones relied were: Webb, which as I have said was an out-of-time application for an extension of time (paragraph 29 above); Samara v MBI & Partners UK Ltd [2014] EWHC 563 (QB), which was an application to set aside a judgment in default where ex hypothesi the applicant was in default and needed relief from the sanction of having had judgment entered against him; and Hague Plant Ltd v Hague [2014] EWHC 568 (Ch) which was an application to amend that HHJ Behrens dismissed on the ground that the amendments would be disproportionate. I do not find that particular decision of any assistance in the very different circumstances of this case.
- Leggatt J made another point in Summit which is that to apply the Mitchell guidelines indiscriminately to all applications to the Court risks blurring useful distinctions between different kinds of order. In that case, the order for security for costs provided for a stay if the security were not provided but it was not an "unless" order. Leggatt J said that there was a significant difference between an order that provided for a stay on failure to provide security (which he accepted was a "sanction" within the meaning of CPR r 3.9), and an unless order that provided for the claim to be struck out unless security was provided: see at [31]. To apply the Mitchell guidelines in precisely the same way to both cases would be to "collapse the important distinction" between those two different kinds of order: see at [34].
- If this is the case when considering two different forms of order imposing sanctions of differing seriousness, then in my judgment it is even more clearly the case when considering a form of order such as that made here by Mr Rosen which contains no sanction of any kind. As Mr Harty aptly put it, to apply the Mitchell guidelines to an in-time application such as in the present case would in effect erode the distinction between an ordinary order directing a timetable and an unless order, and turn every order specifying a time for taking a step into an unless order. I do not see any reason to suppose – and as I read Mitchell, there is nothing there to suggest – that this was the intention of the changes to the rules brought about by the Jackson reforms. It would run the risk that ordinary orders setting out timetables would indeed become "trip wires", which is not the intention of the Jackson reforms: see the 18th implementation lecture by Lord Dyson MR at para 26 (cited and endorsed in Mitchell at [38]-[39]).
- Rather the policy, as I understand it, is one of requiring parties to take orders seriously. As Mr Harty put it, the addition of sub-paragraph (f) to the overriding objective is about respect for rules and orders: it is intended to promote a culture of compliance rather than what Andrew Smith J described in AEI as "indifference to compliance". But making an in-time application for an extension where necessary is respecting the rules: it is recognising that unless such an application is made, the party will be in default and treating this with the seriousness that it requires. It is not the same as indifference to compliance, or non-compliance.
- So far as practicalities are concerned, it is not difficult to see that if the Mitchell guidelines apply to in-time applications, there is a risk in every case that a request for an extension, however unobjectionable in itself, may be declined by the other party in the hope of persuading the Court to refuse an extension and thereby gain a significant advantage: see the comments of Henderson J in Smailes at the end of [54], and of Leggatt J in Summit at [53]-[54].
- My experience in the present case has been the same. As the facts show, a request for an extension was first made by CF to AR on 29 January (and by Hasu on 30 January), and repeated on 5 February, but not replied to by AR until 10 February. Had AR agreed to the request, it would not have cost either side anything (save for the cost of a few letters), and would have had no practical impact on the orderly progression of the proceedings to trial, the CMC having been fixed for mid-June 2014 and the trial itself for March 2015. Nor would it have been necessary to trouble the Court, so it would have had no impact at all on other court users. Even if AR had not consented but required an application to be made, a short unopposed application to the Registrar could have been dealt with without significant disruption to other court users (or substantial cost to the parties). This is in complete contrast to Mitchell where the effect of the default was not only to cause the initial hearing to be abortive, but to require the Court to vacate a half day appointment in order to hear the application for relief, time which had been allocated to deal with claimants who had been affected by asbestos-related diseases: see at [39].
- As it is however, the decision to contest the application has led to an expensive and time-consuming hearing. The two applications were listed together in the Interim Applications list with a combined time estimate of 1½ hours. As explained in the Chancery Guide (at paragraphs 5.11 and 5.12) an application estimated for 2 hours or more is not suitable to be heard in the Interim Applications list but will be heard as an application by order, and for this purpose the 2 hour maximum time estimate includes the judge's pre-reading time, time in court and time for judgment. In the event, due to the number of matters in the list, it was not possible for me to begin to hear the application until about 3 pm, and despite a significant amount of pre-reading overnight, the application took some 3 hours to hear, even though the argument was confined to the Respondents' application, and Dilip's cross-application was not reached. By that time there was no possibility of my giving a judgment immediately, not least because I still had an urgent without notice application waiting.
- Since I had the benefit of three counsel, and as will already be apparent, I was referred to a considerable number of authorities (and treated to a careful analysis of them), I do not find it at all surprising that the hearing took that long, but it is a matter of comment that an apparently simple request for an extension of time to serve a statement of case has required over half a day of a judge's time in court, not to mention the time spent pre-reading, and further time writing a judgment out of court such that if properly estimated it should not have been heard in the Interim Applications list at all. As it is, one of the results of being heard there is that the parties could not expect to receive a judgment until after I had finished sitting as the Applications Judge on 4 April.
- The length and complexity of the hearing naturally also has an impact on the costs of the application. Dilip's costs alone, according to his schedule of costs, are over £66,000 (including VAT); the Respondents' costs are very much lower but nevertheless the total costs on all sides exceed £80,000. Again it is a matter of comment that what could have been disposed of by agreement or at a short unopposed hearing at virtually no cost to anyone has led to the parties spending sums of this order.
- On the other hand I am not blind to the realities. If Dilip can indeed successfully oppose the Respondents' application, the prize will be well worth having. It is (at the lowest) well arguable that the consequence of refusing the application would be that the Respondents would be unable to serve any Defences at all, and should therefore be debarred from defending, with the result that Dilip would achieve victory in the preliminary issues by default. I do not propose to consider whether that would in fact follow or not, as this is the subject-matter of Dilip's cross-application which has not been argued and where the Respondents take a number of objections to the relief sought, but it is certainly a real possibility. I have seen an informal note made by Hasu of Mr Rosen's judgment in which he said that the extra shareholding which Dilip claims by virtue of the 10% Shareholding Agreement might be worth as much as £4 to £5 million on the basis of one estimate; my note is that before me Mr Harty indicated that the amount in issue was rather more modest but was still more than £1m. If this is right, one can well see that it is entirely rational for Dilip to invest a substantial amount of time and money in opposing the Respondents' application in an attempt to obtain the extra shareholding without having to go to trial or produce any evidence in support of his claim. It is hardly surprising therefore that he has done just that. Nor is it surprising that the Respondents, who are at risk of losing the preliminary issues (and hence 10% of what appears to be a valuable company) without the chance of proving their case at all, should invest substantial time and money of their own in the face of Dilip's opposition.
- I would myself have thought that similar considerations are likely to apply in any case where the effect of refusing an extension would be to leave a party either without a pleaded case or the evidence needed to prove it. If the Mitchell guidelines are applicable, even in a slightly watered down version, to an in-time application for an extension, there are likely to be more cases where an extension is refused, or at least where the other party thinks there is a real chance of persuading the Court to do so. In Mitchell the Court of Appeal expressed the view (at [48]) that once it was well understood that the Courts will adopt a firm line on enforcement, litigation would be conducted in a more disciplined way and there should be fewer applications under CPR r 3.9. It is not for me to question that view, and in any event I would be bound to follow the Mitchell guidelines in an application for relief under r 3.9, whatever the practical consequences. But it does not follow that the same is true of applying the Mitchell guidelines to an in-time application under CPR r 3.1(2)(a), and for the reasons I have attempted to give, it seems to me that there is a risk that doing so would mean that instead of parties adopting an attitude of reasonable co-operation in an attempt to make litigation run smoothly, there will be a culture of aggressive non-cooperation which may lead to more, longer and more expensive opposed applications.
- For these reasons, which are essentially those advanced by Mr Harty in his able and well argued submissions, the Mitchell guidelines do not in my judgment apply (either directly or in a slightly watered down version) to an in-time application for an extension of time, at any rate of the kind in the present case. Instead such an application is to be decided by reference to the overriding objective, as reformulated to include the new sub-paragraph (f), but without giving it paramountcy.
Application of the Overriding Objective
- I can now consider the application of the overriding objective to this case.
- The first aim of the overriding objective is to enable the Court to deal with cases justly. So far as justice between the parties is concerned, I have no hesitation in saying that it requires that an extension be granted. To refuse the extension would, or at any rate might, have the result that the Respondents would lose the preliminary issues by default, and thereby lose assets which on the material before me appear to be worth over £1m (and may be worth anything up to £4 to £5 million) without a trial and without the opportunity to put forward their evidence, however strong that evidence might be and however unfounded the claim in reality is.
- I have not been asked to, and do not have the material to, form any view, even preliminary, as to where the merits lie; but I can see simply by reading the pleadings that there are significant issues as to whether Dilip's claim under the 10% Shareholding Agreement is a good one. Leaving aside entirely the question whether this was a binding agreement, or is otherwise relevant to the claim of unfair prejudice or the relief sought, it is apparent on the face of the Petition that as a result of (i) a deed of variation of Mr Patel's will in 2001 supplemented by transfers from Mrs Patel to Dilip in 2002 under which he acquired 1250 £1 deferred shares and (ii) a transaction in 2008 under which he acquired 1250 US$0.01 ordinary shares in place of Mrs Patel, Dilip is already the registered owner of more than 10% of the shareholding in the Company (in fact as I understand it 1250 out of 7500 of each of the classes of shares (ordinary and deferred), which is 16.67%). This makes the proposed defence that any claim Dilip might have under the 10% Shareholding Agreement has already been fully satisfied as a result of these transactions one that cannot be dismissed on its face as fanciful. To be deprived of the possibility of running this (and other) defences as the penalty for being late in service of the Defences seems to me a very steep, and wholly disproportionate, penalty to impose, and prima facie unjust to the Respondents.
- Save for one point, it has not been suggested, nor could it realistically be, that there is any prejudice at all to Dilip in the Respondents' Defences being served on 14 March rather than 14 February. As matters have turned out, the CMC is not due to be heard until 18 June at the earliest, so the service of the Defences on 14 March has given Dilip ample time to know, well before the CMC, what defences he is facing, and ample time to prepare a Reply before the CMC. In fact he probably had a good idea of what the defences would be even before issuing his Petition as the parties wrote lengthy pre-action letters to each other in which I am told (I have not myself checked) that the issues in the Petition were fully canvassed. And since the trial of the preliminary issues is now fixed for March 2015 (and was never going to take place before January 2015) it cannot be suggested that the late service will have the slightest impact on the parties having sufficient time to prepare for trial.
- The one point of prejudice that Mr Jones relies on is that it is said (in his written submissions) that Dilip and his legal team had organised themselves to prepare a Reply within the 6-week window commencing 15 February, and that a further 6-week window is now required – the Respondents' legal team are not the only barristers heavily engaged on other matters. In oral argument however, Mr Jones accepted that he was not suggesting that there was a particular problem or that he could point to anything specific, nor was there any evidence before me of anything specific: it was more, Mr Jones said, the general point that changes in a timetable always create some prejudice as one cannot assume that one 6 week period is necessarily like another.
- I accept the general point that it cannot be automatically assumed that as long as Dilip's team has 6 weeks to prepare its Reply, it does not matter which 6 weeks it is. But Mr Jones' acceptance that he was not suggesting that there was in fact any particular problem robs this point of almost all its force. I will proceed on the basis that any actual prejudice to Dilip is minimal.
- I accept entirely Mr Jones's submission that the absence of any significant prejudice to the other party is no longer to be regarded (if it ever was) as sufficient reason by itself to grant an extension of time regardless of other considerations. But it does not seem to me to follow that it has ceased to be of any relevance. Dealing with the case justly in my view requires the Court to weigh up the respective disadvantages to both sides of granting or refusing the application, and the fact that there is no, or no readily discernible, disadvantage to Dilip in granting the extension, and potentially overwhelming prejudice to the Respondents in refusing it, is to my mind a very material consideration. It may be noted that in Mitchell the Court of Appeal said (at [57]):
"We wish to highlight the fact that there was no evidence to show what prejudice (if any) the claimant would suffer as a result of a refusal to grant relief."
Mitchell was not a case where Mr Mitchell stood to lose his entire case as a result of the application being refused: he did stand to lose the ability to recover costs from the Defendant, but whether he would in fact do so or not depended on the terms of his CFA, which the Master had not seen and was not prepared to make assumptions about (see the citation from para 56 of her judgment at [16]). The fact that the Court of Appeal chose to highlight the lack of evidence of prejudice would tend to suggest that where there is evidence of prejudice to the applicant, this remains a material consideration even where the application is for relief from sanctions and the Mitchell guidelines apply; and it must in my judgment be highly relevant when applying the overriding objective of dealing with cases justly.
- It is apparent however from Mitchell that the requirement to deal with cases justly is not confined to a consideration of what is just as between the parties, but extends to the "needs and interests of all court users": see at [39]. See also at [51] where in commenting on the observation of Andrew Smith J in Raayan that he did not accept that the change in approach meant that relief from sanctions should be refused "even where injustice would result", they said:
"It seems to us that, in making this observation, the judge was focusing exclusively on doing justice between the parties in the individual case and not applying the new approach which seeks to have regard to a wide range of interests."
- However in the present case I do not see that granting the extension will have any impact on other court users at all. It is true that having to deal with an opposed application has taken up the time of the Court. The practical effect of that is that one litigant waiting to make a without notice application had to wait until 6 pm until he could be heard rather than 3 pm; and my time has been taken up writing this judgment instead of writing others. But I regard it as unrealistic to regard that as caused by the Defences being served in March rather than February. It is caused by Dilip's decision to mount a full-scale opposition to the application. I have already said that I regard that as an entirely rational attempt to win his case without having to prove it at trial, but however understandable it is, I do not think Dilip can rely on the fact that he has chosen to oppose the application as itself a reason for refusing it. To do so would simply increase the temptation for those asked to consent to extensions to refuse to do so and argue at length why they should not be granted.
- In my judgment therefore the overall aim of dealing with the case justly in CPR r 1.1(1) points only one way, which is to grant the extension.
- The other aim in CPR r 1.1(1) is that of dealing with the case at proportionate cost. This does not seem to me in the present case to point either in favour or against an extension. The extension itself would not cause any significant extra costs to be incurred. It will not cause the CMC or trial date to slip, or impose such tight deadlines on the remainder of the preparation for trial as to increase the costs of doing so. As set out above, the application has indeed been fought at very considerable expense but again I regard this as a matter that is not caused by the proposed extension as such, but by Dilip's decision to oppose it with such vigour. This as I have said is a rational and understandable decision in a case where the potential prize would appear to far outweigh even the substantial costs incurred, but it cannot be a reason why the extension should not be granted, nor indeed did Mr Jones suggest it was.
- So much for the aims set out in CPR r 1.1(1). I now consider the particular matters listed in CPR r 1.1(2). Sub-paragraph (a) refers to ensuring that the parties are on an equal footing. Save that it could be said that it is unequal to award victory in the case to Dilip without his having to prove any facts, and to take away the Respondents' ability to defend themselves without being able to prove any, I do not see that this has any particular relevance here. Sub-paragraph (b) (saving expense) and (c) (dealing with the case proportionately) do not I think add anything to what I have already said about the aim of dealing with the case at proportionate cost. Sub-paragraph (d) refers to ensuring that it is dealt with expeditiously and fairly. So far as "expeditiously" is concerned I have already said that granting the extension will have no impact on the hearing date either for the CMC or the trial itself; so far as "fairly" is concerned, I do not see that this is any different from dealing with it justly, which I have already dealt with. Sub-paragraph (e) refers to allotting to the case an appropriate share of the court's resources: I have already in effect referred to this under the heading of justice to other court users. In short, I do not see that any of these considerations points towards refusing the extension.
- That leaves sub-paragraph (f), which I will set out again for the sake of convenience:
"enforcing compliance with rules, practice directions and orders."
I have already said that the message I discern from the cases is that parties should respect the rules and orders of the Court and if they get into time difficulties should ask the other party for consent to an extension, and failing that make an in-time application for an extension. This is what the Respondents have done, and they are not to be treated as if they were in default and applying for relief from sanctions.
- However I accept that the new culture exemplified by Mitchell means that parties cannot expect to get an extension simply by asking for it. They do have to explain to the Court why they need it, and the Court will scrutinise the reasons put forward. Here that means looking at why the extension was sought.
- So far as the First to Fourth Respondents are concerned, Mr Jones submitted, echoing a comment in AR's letter of 10 February, that this was not the first time they had caused delay. He referred me to the leisurely pace at which the pre-action correspondence was conducted, but I do not think the pre-action delays are of any significance in this case. It is understandable that parties who are also family members and co-owners of a business should take time to try and resolve matters in correspondence rather than rush into court. And the delays do not seem to have been all on one side: Mr Jones' chronology shows that Dilip had the responses to his first pre-action protocol letter by May 2011 but did not send a second letter until July 2012; and he had the responses to his second letter by January 2013 but did not issue his Petition until June 2013.
- Mr Jones then submitted that this was not the first time that the First to Fourth Respondents had failed to comply with Court Orders. The facts are as follows. The Petition first came before the Court on 25 July 2013 when Mr Registrar Jones gave directions (by consent) for the hearing of the First to Fourth Respondents' application for the trial of preliminary issues. Among other matters he directed that the Petition stand as Points of Claim; that any evidence in response to the application be filed and served by Dilip by 30 September 2013; and any evidence in reply by 14 October 2013.
- In the event Dilip was not ready to serve evidence by 30 September. At 11.41 on that day AR sent an e-mail to CF and Hasu saying that regrettably they would require another 14 days or so to finalise their statement and that they would naturally consent to the First to Fourth Respondents having 14 days from the date of service of their statement to serve their evidence in reply. No attempt was made to explain why more time was needed but AR did point out that the hearing date was not until December and that no prejudice would be incurred by this "slight delay". CF replied on 2 October, having taken instructions, consenting to the 14 day extension on the basis of a corresponding 14 day extension for evidence in reply, but saying that his clients had asked him to emphasise that any further extensions would be agreed to only if there were a justifiable reason.
- Dilip served his evidence on 14 October. That meant the evidence in reply was due on 28 October. On 22 October CF wrote to AR saying that Prakash was abroad until the end of October and asking for an extension for a further 3 weeks to 18 November. On 25 October AR replied reluctantly agreeing to the extension but expressing surprise that an extension was sought on the basis of a lengthy stay abroad when Prakash must have known of the timetable.
- On 18 November (the day the evidence was due) CF wrote again saying that unfortunately the evidence was not finalised as had been hoped, their counsel being heavily engaged on other matters, and that the evidence would be served on 20 November. AR replied the same day pointing out CF had failed to comply with its own deadline, but reluctantly agreeing to a further extension to 12 noon on 20 November, failing which they would apply for an unless order. I assume (although it is not in fact in evidence) that CF met this revised deadline.
- Mr Harty protested at Mr Jones' characterisation of this as a "failure to comply" with Court Orders: since the timetable was extended by agreement, and his clients met the amended timetable, they were not in breach of any Order. This seems to me a semantic point: Mr Harty is no doubt right that by obtaining AR's consent (albeit given reluctantly) to the extension, the First to Fourth Respondents were not in default. But Mr Jones is right that they did fail to adhere to the timetable set out (by consent) in Mr Registrar Jones' Order. However the force of his criticism is somewhat undercut by the fact that Dilip also failed to adhere to this timetable, and without attempting to give any explanation at all. This does not warrant the inference that the First to Fourth Respondents were repeatedly dragging their feet and delaying the proceedings. It might be said that both sides were adopting a rather more relaxed attitude to the timetable than should now be regarded as appropriate; but neither side was in breach, and the extensions of time (on both sides) had no impact on the overall progress of the proceedings, or on any other court users, as nothing could be done until after the hearing of the application for preliminary issues, which had been listed in a 3 day window from 11 December and which took place as planned. In the circumstances it might also be regarded as an example of sensible co-operation between the parties. I do not think this history is of any particular significance in considering the present application.
- So far as the present application is concerned, the position is this. The First to Fourth Respondents were represented by Mr Andrew Thompson of Counsel before Mr Rosen. He appears to have agreed the timetable embodied in Mr Rosen's directions – there is nothing in Hasu's note of the hearing to suggest that it was contentious. He knew at the time that he had a trial starting in January, but did not know quite when it would start or how long it would last. In the event it lasted from 22 January to 14 March, which was longer than anticipated: Mr Harty also told me that Mr Thompson's leader was ill. It was not until 29 January that CF asked for an extension on the ground that their counsel was heavily engaged in another matter. In the event CF instructed Mr Harty to assist Mr Thompson, and it was finally signed off after Mr Thompson's trial finished at midday on 14 March. Mr Harty also relied on the fact that the CMC was fixed for June as showing that "the need for a tight timetable fell away".
- There are undoubtedly aspects of this history which are not fully explained and which indicate a more relaxed attitude to the need to comply with Court Orders than that demanded by the Jackson reforms. I should make it clear that I have not heard from Mr Thompson, and that Mr Jones did not seek to ascribe blame to anyone in particular, but it is nevertheless somewhat surprising that Mr Thompson was happy to agree to the timetable he did on 13 December, when he knew that he had a trial in January. I am quite prepared to accept that the trial turned out to be heavier than expected, but it would seem surprising if a trial which in the event lasted from 22 January to 14 March was ever going to be a minor affair, and I am left without any clear explanation as to when Mr Thompson initially envisaged that he would do the work. Second, the likely shape of Mr Thompson's trial was presumably reasonably apparent at least by the time it started on 22 January (and one would have thought some time before that), but CF did not ask AR for consent until 29 January. By that stage they had had the document identifying the paragraphs on which Dilip relied since 20 December, and even allowing for Christmas and New Year, one would have thought that between them the legal team could have seen the problem looming earlier than they did. Third, as to the suggestion that the fixing of the CMC in June meant that "the need for a tight timetable fell away", (i) this seems to me a rather surprising characterisation of a timetable which was intended to give the Respondents from 27 December to 14 February (that is 7 weeks) for a defence and in fact (because Dilip served his document 7 days early) gave them 8 weeks – I would have thought "generous", or at the very least "reasonable" was a more apt description – and (ii) it fails to appreciate that whatever the reason for a timetable being fixed, once it has been fixed, the parties are under a duty to comply with it. To treat it as unimportant simply because the CMC has been fixed later than anticipated suggests a failure to appreciate the respect for orders that is now required. Fourth, no real explanation has been given why the First to Fourth Respondents, who initially asked for an extension for 14 days to 28 February, needed an extension to 14 March: the fact that Mrs Patel had asked for such an extension and the suggestion that the Respondents' Defences should be served at the same time does not seem to me an adequate reason. Fifth, as pointed out by Mr Jones, the Defence was in fact served late even assuming the extension asked for was granted as it was sent after 4.30 pm on 14 March and hence was deemed to be served on the next business day on 17 March.
- Mr Harty said that the document served by Dilip identifying 85 out of the 125 paragraphs in the Petition as relied on in connection with the preliminary issues was not what had been envisaged and required substantially more work than had been anticipated. A similar point was made by Mr Wolman on behalf of Mrs Patel, as I will come to. The force of this is however to my mind substantially undercut by (i) the fact that the matters in dispute between the parties did not come as a surprise on 20 December: the parties had engaged in substantial pre-action correspondence, and even if this did not cover everything in the Petition, the Respondents had had the Petition itself since June 2013, and as Mr Jones submitted presumably considered it with some care before issuing their application for preliminary issues; (ii) the fact that to my mind it was always optimistic to think that Dilip would only refer to a few selected paragraphs: the claims he makes in his Petition can be divided into the claim over the 10% Shareholding Agreement, the claim over the Equal Total Income Policy, the non-payment of dividends, and the exclusion from management, and it was I think predictable that Dilip might seek to rely on the history which formed the background to his case on the 10% Shareholding Agreement; indeed the very fact that the parties agreed, or submitted without protest, to a time estimate of 10 days for the preliminary issues suggests to me that they knew or could reasonably have anticipated that the trial would not be a narrowly focused one; and (iii) the fact that even if Dilip's document did refer to many more paragraphs than anticipated, CF had this on 20 December as I have already referred to but took no step to ask for an extension for over another month. And when they did, they did not refer to this point at all, which suggests that it was not the driving consideration.
- So far as Mrs Patel is concerned, she too was represented by counsel at the hearing before Mr Rosen, namely Mr Peter Irwin (instructed on a direct access basis). At some date she instructed Mr Wolman, also on a direct access basis, in his place. On 30 January Hasu wrote to AR to the effect that due to her need to keep her costs under control it was regrettably necessary for her to change counsel and that she was "now" represented by Mr Wolman, who was however unavailable due to being involved in another matter that was due to be heard between 3 and 14 February. The letter did not say, and I do not believe I have any information, as to when Mr Wolman was first instructed, but I assume it was in January.
- Hasu made a witness statement in support of the Respondents' application, but this did not in fact give any further explanation of the circumstances in which Mrs Patel came to change counsel or the time difficulties that Mr Wolman was in. Instead it complained that the effect of Dilip identifying 85 out of the 125 paragraphs of the Petition was that he had not produced either "points of claim" (under rule 5(b) of the Unfair Prejudice Rules), or a concise statement of the facts on which he relied, and asked the Court to require him to do so. Such an application was not in fact made before me, although Mr Wolman repeated the complaint that Dilip had not produced points of claim or a concise statement of facts. He also told me that when he came to look at the case on 12 February, it was quite clear that he could not deal with it in 48 hours.
- Again I consider this history leaves questions unanswered. Apart from the reference to needing to keep costs down, I have no real explanation as to why it was necessary for Mrs Patel to change counsel, something that one would expect to tend to duplicate costs. Nor do I know when Mr Wolman agreed to take the case on, or whether he knew when he did so that there was an existing Order, agreed or submitted to by Mrs Patel's counsel, requiring service of a Defence by 14 February, or when he expected to be able to do the work. And Mr Wolman can scarcely say that the number of paragraphs of the Petition which he would need to plead to was greater than he had anticipated as by the time he was instructed in January 2014, Dilip's document identifying 85 paragraphs had been served. One assumes he looked at the existing pleadings before agreeing to take it on, in which case one would have expected him to know what he was letting himself in for. To leave it until 12 February to discover the size of the task would appear very risky. And in any event the suggestion that it was on 12 February that he discovered that more time would be needed does not explain why Hasu was writing asking for more time on 30 January. I do not underestimate the difficulties for a litigant of limited means finding affordable counsel willing to act on a direct access basis, or the difficulties for counsel in dealing with the competing demands of practice, but all this suggests that I do not have a full picture. As to the suggestion that there had not been points of claim, this seems to be just wrong, as Mr Registrar Jones's Order of 25 July 2013 directed (by consent) that the Petition stand as Points of Claim, which satisfies rule 5(b) of the Unfair Prejudice Rules. As to the complaint that Dilip's pleading was not sufficiently narrowly focused, to a large extent Mr Wolman has dealt with that by not pleading to those paragraphs of the Petition which he maintains are irrelevant to the preliminary issues.
- To my mind therefore there is some force in Mr Jones' criticisms of the reasons put forward for an extension both by the First to Fourth Respondents, and by Mrs Patel. I accept that sub-paragraph (f) of CPR r 1.1(2) is engaged, and that the rigorous scrutiny which is required has exposed some shortcomings in the attitude taken by the Respondents.
- Nevertheless I accept that both sets of Respondents did by the end of January genuinely need an extension; they did ask for an extension by consent which elicited at first no reply from AR (a failure for which no explanation has been given); and they have made an in-time application. It is not their fault that although issued on 11 February it was not in the event heard until 25 March; and indeed AR's letters indicating the (un)availability of their counsel rather blunt the accusation of delay by the Respondents.
- As I have said, in applying the overriding objective, sub-paragraph (f) is not given the paramount status that it has in an application under r 3.9. As I understand it, this means that I have to weigh up the desirability of reinforcing the new culture of not tolerating "the relaxed approach to civil litigation which the Jackson reforms were intended to change" (Mitchell at [41]) with the substantial and prima facie unjust prejudice to the Respondents in not being able to serve their Defences.
- I have already said that I regard the penalty of losing the ability to defend the claim as a wholly disproportionate penalty to impose. In circumstances where Mr Rosen's Order set out a timetable but did not specify any sanction for failing to comply with it, where there are no adverse consequences of any substance of granting the extension either to Dilip, or to the timetable for hearing the preliminary issues, or to other court users, and where the adverse consequences to the Respondents of refusing it are so overwhelming, it seems to me that despite the matters I have referred to, the least injustice is caused by granting an extension of time sufficient to enable the Defences that have been served to stand, and the issues to be tried on their merits in March 2015 as intended, rather than to enable Dilip to obtain the relief he seeks without a trial.
- It is accepted by Mr Jones that in that case Dilip's cross-application falls away. I will hear counsel on the appropriate form of Order and any consequential matters.
