Everwarm Ltd v BN Rendering Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Alexander Nissen |
| Judgment Date | 30 July 2019 |
| Neutral Citation | [2019] EWHC 2078 (TCC) |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Docket Number | Case No: HT-2018-000172 |
[2019] EWHC 2078 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Alexander Nissen QC
(sitting as a Deputy High Court Judge)
Case No: HT-2018-000172
Iain Quirk (instructed by Harper Macleod LLP) for the Claimant
Catherine Piercy (instructed by Goodman Derrick LLP) for the Defendant
Hearing dates: 19 July 2019
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr Alexander Nissen QC
Mr Alexander Nissen QC:
Introduction
By an application dated 11 July 2019, the Defendant, BN Rendering Limited (“BN”) applies for an extension of time within which to comply with an “unless” order made by O'Farrell J on 5 July 2019. It raises an interesting question about the interface between CPR 3.1 and CPR 3.9 in circumstances where, before its expiry, further time is sought for compliance.
The Claimant, Everwarm Limited, (“Everwarm”) resists the application. The application was heard on 19 July 2019 and, at the time, I stated my decision to allow the extension but indicated that my reasons for doing so would follow. These are those reasons.
Everwarm is a company which provides energy efficiency advice and related services including the provision of external building insulation. BN is a company which provides external insulation products and services. From around December 2013, Everwarm engaged BN as a subcontractor to install insulation to a number of residential property projects. In these proceedings, Everwarm contends that, pursuant to contractual provisions, it has provided BN with a binding Assessment of the amount due to BN on each Project and that these Assessments show that BN has been overpaid by £798,468. BN disputes the application of these contractual provisions and contends that, for a variety of reasons, it is owed money from Everwarm in the sum of £1,957,905.
The original Orders
The circumstances in which the original Orders came to be made are as follows. On 21 May 2019 Everwarm applied to the Court for an Order that BN be required to provide security for costs in respect of its Counterclaim against Everwarm. The application was contested on various grounds including lateness of the application. In that context, it is relevant to mention that the trial of the action, including most of the Counterclaim, was due to take place from 19 July 2019 for six days. The part of the Counterclaim which was not to be heard concerned the detail of any valuation disputes arising in respect thereof. At the conclusion of the hearing of the application, which took place on 13 June 2019, Cockerill J ordered the Defendant to provide security for costs in the amount of £145,000 by payment into court or by provision of a guarantee. I do not have a transcript of the hearing but it appears to be common ground that immediately after the oral decision of principle was made, BN sought and was given three weeks within which to comply. Accordingly, the Order records that BN was required to provide security for costs by either of the two means within 21 days of 13 June 2019. It is common ground that this would have required compliance by 4 July 2019.
In the first instance, it is not usual for an Order for security to have a sanction attached to it were such security not provided and this Order had no sanction attached to it.
Very shortly before the time for compliance would have expired, namely on 3 July 2019, BN applied to the Court for an extension of the time within which it was required to comply. The application requested that it be determined without a hearing. It was supported by the fourth witness statement of Ms Boland-Shanahan. It explained why BN would not be able to comply and asked for a further 8 days within which to do so i.e. until 12 July 2019. The witness statement briefly explained the steps that BN
had been taking since the original Order was made. Everwarm's solicitors responded by letter dated 4 July 2019 opposing the application outright but, in the alternative, cross applied seeking the issue of an Unless Order requiring compliance by 11 July 2019, one day earlier than the date sought by BN. Everwarm submitted that there could be no slippage beyond that date because, otherwise, it would have no costs protection going into the trial starting on 19 July 2019.
The application was determined on paper by O'Farrell J. She acceded to Everwarm's cross-application and ultimately 1 issued an Order dated 5 July 2019 which stated:
“Unless the Defendant makes provision for security for costs in the sum of £145,000 by way of payment into Court or a guarantee from a first class UK bank in accordance [with] Mrs Justice Cockerill's Order dated 13 June 2019 by 4:00pm on Thursday 11 July 2019 its Counterclaim will be stuck out and judgment on the Counterclaim will be entered for the Claimant.”
I define this as the “Unless Order”. As the matter was determined by O'Farrell J on paper, no reasons for the decision were given. But Mr Quirk, appearing for Everwarm, properly accepted that a factor which would have influenced both the making of the Unless Order and the time provided for compliance with it was the proximity of the trial date. Indeed, that point had been made in the letter opposing the application.
The Present Application
At 3:30pm on 11 July 2019, i.e. just before the expiry of the relevant deadline for compliance with the Unless Order, BN applied to the Court for a further extension of time within which to comply with the Unless Order of O'Farrell J, namely a further 7 days, until 4pm on 18 July 2019. On this occasion, the application asked for an oral hearing. The application was supported by the second witness statement of Mr John Gordon dated 11 July 2019. In short, he explained that BN was doing all it could to comply with the Unless Order but required a further 7 days within which to comply.
As it happened, there was an oral hearing already taking place between the parties on 12 July 2019 in respect of Everwarm's application to amend its Particulars of Claim. There was insufficient time (and, had it been relevant, insufficient notice) for the application for an extension to be heard on that day so it was adjourned to be heard at 2pm on 19 July 2019. This had already been notionally fixed as the first day of trial but was, in practice, set aside as a reading day.
In the intervening period each of the following occurred:
(a) As directed, both parties provided written submissions in respect of the application with or as part of their skeleton openings for the trial. These were received on 16 July 2019 in respect of Everwarm and 17 July 2019 in respect of BN;
(b) Everwarm provided the sixth witness statement of Carolyn Morgan dated 18 July 2019 in opposition to the application;
(c) At 3.25pm on 18 July 2019, BN paid the sum of £145,000 into Court.
Arising out of (c), it therefore followed that if the application for more time was wholly successful, BN would, in the event, have complied with the Unless Order, as varied.
Once the payment into court had been made, BN's solicitors wrote to Everwarm's solicitors asking them to abandon their opposition to the application. However, Everwarm's solicitors refused to do so. The application was therefore fully contested. At the hearing, Ms Piercy represented BN. As I have said, Mr Quirk represented Everwarm. I am grateful to them both for their submissions.
The Effect of the Unless Order
Mr Quirk pointed out that in Marcan Shipping (London) Ltd v Kefalas [2007] EWCA Civ 463 at [34] Moore-Bick LJ said this:
“[34] In my view it should now be clearly recognised that the sanction embodied in an “unless” order in traditional form takes effect without the need for any further order if the party to whom it is addressed fails to comply with it in any material respect. This has a number of consequences, to three of which I think it is worth drawing particular attention. The first is that it is unnecessary, and indeed inappropriate, for a party who seeks to rely on non-compliance with an order of that kind to make an application to the court for the sanction to be imposed or, as the judge put it, “activated”. The sanction prescribed by the order takes effect automatically as a result of the failure to comply with its terms.”
What impact does BN's prior application for an extension of time have on this automatic consequence, given that it was made before the expiry of the time limit? Mr Quirk submitted that, as at the date of the hearing, the Counterclaim stood automatically struck out but that, if the Court was to accede to the application for more time, it would in retrospect treat the Counterclaim as if it had never been struck out. I agree that is a sensible approach.
The Test – the Submissions and the Authorities
It was apparent that a key point which separated the parties was whether the application for more time should properly be treated as one made pursuant to CPR 3.9 (relief from sanctions) as contended by Everwarm or whether it should properly be regarded as one made pursuant to CPR 3.1 as contended by BN. No point was taken as to the form of wording used in BN's application. Rather, it was Everwarm's case that, however the application itself was worded, as an “unless” order had been made, the appropriate test to be applied in determining it was to ask whether BN should be granted relief from sanctions applying the principles in CPR 3.9. By contrast, BN relied on the application of the overriding objective in CPR 1.1. The alternative tests proposed by the parties were, doubtless, influenced by a...
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