Altomart Ltd v Salford Estates (No.2) Ltd (No 1)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Moore-Bick,Lord Justice Ryder,Mr. Justice David Richards |
| Judgment Date | 29 October 2014 |
| Neutral Citation | [2014] EWCA Civ 1408 |
| Docket Number | Case No: A2/2014/0743 |
| Court | Court of Appeal (Civil Division) |
| Date | 29 October 2014 |
[2014] EWCA Civ 1408
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MANCHESTER DISTRICT REGISTRY
(His Honour Judge Bird)
Claim No. 2141 of 2014
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Moore-Bick
Lord Justice Ryder
and
Mr. Justice David Richards
Case No: A2/2014/0743
Mr. Peter Knox Q.C. (instructed by Vyman Solicitors Ltd) for the respondent
Miss Lesley Anderson Q.C. (instructed by Woodcocks Haworth & Nuttall) for the appellant
Hearing date: 29 th July 2014
This is an application for an extension of time in which to file a respondent's notice under CPR 52.5(2)(b). An application of this kind would normally be determined by a single judge in advance of the hearing of the appeal, or by the court at the hearing, but in this case the Vice-President directed that it be heard in advance by a full court in order to give guidance on the approach to be adopted to applications of this kind in the light of the court's decision in Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537, [2014] 1 W.L.R. 795. At the conclusion of the hearing we announced our decision to grant the application and indicated that we would give our reasons for doing so at a later date. I now give my reasons for concurring in that order.
In order to put the matter in context it is necessary to describe briefly the nature of the proceedings and the events which have occurred since His Honour Judge Bird made the order dated 4 th March 2014, which is the subject of the appeal.
On 29 th April 1974 a lease was executed of premises comprising part of a shopping precinct in Salford, Greater Manchester. The appellant, Salford Estates (No. 2) Ltd ("Salford"), is the successor in title of the original landlord; the respondent, Altomart Ltd, is the successor in title of the original tenant. As tenant Altomart undertook to pay in addition to the rent service charges and sums expressed as insurance rent. The lease contained an arbitration clause couched in wide terms and in due course a dispute arose which was referred to arbitration. Following the publication of an award in its favour, on 3 rd February 2014 Salford presented a winding up petition against Altomart claiming the amount due under the award, a sum due in respect of service charges and a sum due in respect of insurance rent. By the time the petition was presented Altomart had already sent Salford a cheque in respect of the sum due under the award, which was cashed immediately on receipt.
Once it learned that Salford had started winding up proceedings Altomart applied to have the petition stayed or dismissed on the grounds that the amount due under the award had been paid and that there was a bona fide and substantial dispute about the amounts said to be due in respect of service charges and insurance rent. The disputes in relation to those claims, it was said, should be referred to arbitration, but in any event made it inappropriate for the petition to proceed.
In support of its argument that the disputes should be referred to arbitration Altomart relied on Rusant Ltd v Traxys Far East Ltd [2013] EWHC 4083 (Ch) in which Warren J. had held that section 9 of the Arbitration Act 1996 applies to proceedings in the form of a winding up petition and that once a dispute falling within the arbitration clause has arisen, it must be referred to arbitration regardless of its merits. The judge expressed some doubt about the correctness of that decision, but decided that he ought to follow it in the interests of consistency. He concluded that there was no bona fide and substantial dispute in relation to either the service charges or the insurance rent, but stayed the winding up petition in order for the matter to be determined in arbitration in accordance with the decision in Rusant v Traxys.
With the permission of the judge Salford appealed against that decision. Its notice of appeal is dated 6 th March 2014 and was served on 10 th March 2014. Accordingly, time for filing a respondent's notice expired on 24 th March 2014. At that stage junior counsel (who had not appeared on behalf of Altomart below) was asked to consider whether a respondent's notice should be filed. He advised that there were no grounds for doing so and as a result no further steps were taken in that respect. Altomart's skeleton argument was due to be filed by 22 nd April 2014 and in the absence of junior counsel on holiday Mr. Peter Knox Q.C. was instructed at short notice to settle it. He took the view that there were grounds for challenging the calculation of both the services charges and the insurance rent claimed by Salford and that, if the court on appeal held that the dispute should not be referred to arbitration, Altomart should ask the court to uphold the judge's order on those grounds. It is unnecessary for the purposes of this application to describe in any greater detail the nature of Altomart's case, which was fully set out in the skeleton argument filed on 22 nd April 2014 and served on Salford the same day. On 24 th April 2014 the substantive appeal was listed for hearing on 10 th or 11 th November 2014. On 29 th April 2014 Altomart filed a respondent's notice formally setting out the additional grounds on which it wished to rely. At the same time it applied for the necessary extension of time.
Salford opposed Altomart's application for an extension of time relying on the court's more rigorous approach to compliance with the rules in accordance with the guidance given by this court in Mitchell. The question thus arose whether those principles ("the Mitchell principles") apply to an application of this kind. Mr. Knox submitted that the decision in Mitchell was primarily concerned with applications under CPR 3.9 for relief from specified sanctions. A good example is an order which directs that the claim be struck out in the event of failure to comply with its terms: see Marcan Shipping (London) Ltd v Kefalas [2007] EWCA Civ 463, [2007] 1 W.L.R. 1864. He accepted, however, that similar principles apply in cases where the consequences of a failure to comply with the Rules or an order of the court automatically results in the termination of the proceedings, for example an application to file a notice of appeal out of time. However, he submitted that although in some cases the Rules impose a specific sanction for non-compliance, in most cases they prescribe how proceedings are to be conducted without prescribing the consequences of a failure to comply. For example, CPR 15.4 contains general rules prescribing the time for filing a defence, but contains no sanction for failing to do so. (The claimant may be entitled to enter judgment in default, but that is a matter for him.) Mr. Knox submitted that in cases of that kind it is for the court to decide whether time should be extended having regard to all the circumstances of the case and in accordance with the overriding objective. Since rule 52.5(2)(b), with which this appeal is concerned, prescribes no sanction for a failure to file a respondent's notice in time, it is for the court to decide, having regard to all the circumstances of the case, whether to extend time for doing so. The fact that the order can include terms that will prevent the respondent suffering undue prejudice is usually of considerable significance. However, he submitted that even if the Mitchell principles do apply to an application of this kind, in the light of the further guidance given in Denton v T.H. White Ltd, Decadent Vapours Ltd v Bevan and Utilise T.D.S. Ltd v Davies [2014] EWCA Civ 906 it would not be appropriate to refuse relief having regard to the seriousness and significance of the default and the circumstances of the case as a whole.
Miss Anderson Q.C. submitted that where there has been a failure to file a respondent's notice in time, the consequent need to obtain an extension of time to enable the grounds to be argued is, or is at any rate analogous to, a sanction and that the application should attract the same degree of rigorous scrutiny. She submitted that the courts have now become less tolerant of failures to comply with the Rules and have adopted a more robust attitude towards them. She submitted that the delay in this case had not been adequately explained and was by no means insignificant. The appellant would be prejudiced by having to deal with additional arguments that had not been raised below or at the proper time. The court should have regard to the importance of adhering to the Rules. It should therefore take a robust approach and refuse the application.
Do the Mitchell principles apply to an application of this kind?
Although the principles governing the court's approach to applications for relief from sanctions have been explained and refined in Denton, it is convenient in this case to continue to refer to them as the Mitchell principles, since that is how they were referred to in the course of argument. Since the present application is simply an application under rule 3.1(2)(a) for an extension of time, albeit one made after the time prescribed by the rules had already expired, and is not an application for relief from any sanction imposed by the rules, practice directions or any order of the court, the first question for consideration is whether the Mitchell principles apply at all. Rule 3.8(1) provides as follows:
"Where a party has failed to comply with a rule, practice direction or court order, any sanction for failure to...
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