Heals Property Developments Ltd v Fairpark Estates Ltd and Others
| Jurisdiction | England & Wales |
| Neutral Citation | [2022] EWHC 496 (Ch) |
| Year | 2022 |
| Court | Chancery Division |
2021 Dec 16; 2022 Feb 28
Judge
Arbitration - Stay of judicial proceedings - Step in proceedings - Claimant’s action against defendants comprising distinct proprietary and monetary claims - Consent order providing for extension of time for filing of defence and containing undertakings by defendants - Parties subsequently agreeing to further extension of time - Defendants applying for stay on ground proceedings covered by arbitration clause - Whether defendants debarred from applying for stay by virtue of having taken “step in the proceedings” - Whether defendants’ entering into consent order or requesting further extension of time constituting “step in the proceedings” - Whether permissible to grant stay in relation to monetary claims only -
The claimant and the defendants entered into a joint venture agreement under which the claimant agreed to purchase plots of land and the defendants agreed to develop them. The claimant subsequently contended that the defendants had breached the joint venture agreement by instructing a contractor to continue to occupy the site after the contractor had been dismissed by the claimant. Accordingly the claimant issued proceedings against the defendants, seeking (i) possession and injunctive relief in relation to the site and (ii) damages, and applied for an interim injunction to recover and secure the site. By a consent order the parties later extended the time for filing a defence and counterclaim and the defendants undertook not to occupy or permit works to be commenced on the site. The parties later agreed a further extension of time for the filing of a defence and counterclaim. On the day that the further extension was due to expire, the defendants made an application for an order staying the proceedings on the grounds that the claim was covered by an arbitration clause in the joint venture agreement. The judge refused the application, holding that by entering into the consent order and/or agreeing the further extension of time for filing their defence and counterclaim, the defendants had taken steps in the proceedings to answer the substantive claim and, therefore, by section 9(3) of the Arbitration Act 1996F1, were debarred from bringing a stay application.
On the defendants’ appeal—
Held, dismissing the appeal, that there was no authority or principle to the effect that a stay under section 9 of the Arbitration Act 1996 could not be granted in respect of part only of the proceedings; that, therefore, a party who had debarred himself under section 9(3) of the 1996 Act from seeking a stay under section 9 as regards one element of a claim could, in principle, seek a stay under section 9 as regards other elements of the claim; that, therefore, since there were two distinct elements to the claim being advanced by the claimant in the present case, namely (i) the proprietary claims and (ii) the monetary claims, the fact that the defendants might be debarred under section 9(3) from seeking a stay in respect of the proprietary claims would not prevent them from seeking a stay in respect of the monetary claims; that, in so far as the proprietary claims were concerned, the defendants’ giving of the undertakings contained in the consent order, which effectively disposed of those claims, constituted a “step in the proceedings” for the purposes of section 9(3) since it demonstrated an election on the part of the defendants to abandon their right to a stay of those claims under section 9 and had the effect of invoking the jurisdiction of the court; that it followed that the defendants were debarred from seeking a stay of the proprietary claims; that, in so far as the monetary claims were concerned, the defendants’ agreeing by way of the consent order to an extension of time for any defence and counterclaim did not constitute a step in the proceedings for the purposes of section 9(3) since it did not demonstrate an election on the part of the defendants to abandon their right to a stay of those claims under section 9; that, however, the defendants’ requesting the further extension of time for filing a defence and counterclaim did constitute a step in the proceedings for the purposes of section 9(3) since it demonstrated an election on the part of the defendants to abandon their right to a stay of the monetary claims under section 9 and had the effect of invoking the jurisdiction of the court; that, in particular, although it would be unusual for the court to seek to override an agreement made by the parties to extend the time for filing a defence and counterclaim, the court would nevertheless retain jurisdiction since it retained control over the proceedings and the timetable for progressing the case; that it followed that the defendants were debarred from seeking a stay of the monetary claims; and that, accordingly, the defendants’ application for a stay had been rightly dismissed (post, paras 50, 54, 57–58, 69, 70, 72, 75).
The following cases are referred to in the judgment:
Bilta (UK) Ltd v Nazir
Brighton Marine Palace and Pier Ltd v Woodhouse [
Capital Trust Investments Ltd v Radio Design TJ AB [
Eagle Star Insurance Co Ltd v Yuval Insurance Co Ltd [
Ford’s Hotel Co Ltd v Bartlett [
Jet2Holidays Ltd v Hughes
Mozambique (Republic of) v Credit Suisse International
Nokia Corpn v HTC Corpn
Patel v Patel [
Roussel-Uclaf v GD Searle & Co Ltd [
The following additional cases were cited in argument or were referred to in the skeleton arguments:
A v B
ET Plus SA v Welter
Ives & Barker v Willans [
Mayor and Commonalty and Citizens of the City of London v Sancheti
Reichhold Norway ASA v Goldman Sachs International [
Singh v Dass
Societé Commerciale de Reassurance v Eras International Ltd [
Ssangyong Motor Distributors Ltd v Daewoo Cars Ltd (unreported) 23 April 1999, Wright J
Tennero Ltd v Arnold (Practice Note)
APPEAL from Deputy District Judge Caun
By a claim form dated 17 July 2020 the claimant, Heals Property Developments Ltd, commenced proceedings against the first to fourth defendants, Fairpark Estates Ltd, Simon Harvey, Henry Wilson and Andrew George, seeking (1) possession and injunctive relief to recover and secure land owned by it on Beaufit Lane, Pinxton, Nottingham, (2) damages from all the defendants in relation to certain work carried out by the fourth defendant on the land, and (3) damages from the first and second defendants for breach of a joint venture agreement. The claimant also applied for an urgent interim injunction to recover and secure the land. By a consent order dated 24 September 2020, the claimant and the first to third defendants agreed to stay the claim for a period of six months to allow the parties to complete the Pre-Action Protocol, with the defendants giving an undertaking not to occupy the site or permit works to be commenced on the site. Following expiry of the stay, by an agreement the claimant and the first to third defendants agreed to an extension of time in order for the defendants to prepare and file a defence and counterclaim, expiring on 19 May 2021.
By an application notice dated 19 May 2021, the first and second defendants applied for an order staying proceedings (1) under section 9 of the Arbitration Act 1996 on the ground that the claimant’s claims were covered by an arbitration clause in the joint venture agreement between them and the claimant, alternatively (2) under the court’s inherent jurisdiction. The third defendant, who was not a party to the joint venture agreement, only sought a stay under the court’s inherent jurisdiction. By a decision dated 23 August 2021, Deputy District Judge Caun refused the first and second defendants’ application under section 9 on the basis that, having previously entered into a consent order and/or thereafter agreeing a further extension of time, they had taken steps in the proceedings to answer the substantive claims within the meaning of section 9(3) of the Arbitration Act 1996, such that they were prevented from applying for a stay. The judge also refused the defendants’ application to exercise the court’s inherent jurisdiction to grant a stay.
By an appellant’s notice and pursuant to permission granted by the judge on 18 October 2021 the first and second defendants appealed on the grounds that the judge had erred in holding that: (1) their undertaking was a requisite step which had deprived them of their right to apply for a stay in respect of the claimant’s proprietary claims; and (2) their agreement to the consent order and their agreement to a further extension for filing a defence and counterclaim were requisite steps depriving them of their right to apply for a stay in respect of the claimant’s monetary claims. The third defendant contended that if the first and second...
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