OVERSEAS and Commercial Developments Ltd v (1) David COX (2) DESKBOUND Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE SEDLEY,Lord Justice Dyson,LORD JUSTICE DYSON |
| Judgment Date | 25 April 2002 |
| Neutral Citation | [2002] EWCA Civ 635 |
| Docket Number | B1/2001/1845 |
| Court | Court of Appeal (Civil Division) |
| Date | 25 April 2002 |
[2002] EWCA Civ 635
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE MEDWAY COUNTY COURT
(His Honour Judge Nash)
Royal Courts of Justice
Strand
London WC2
Lord Justice Sedley and
Lord Justice Dyson
B1/2001/1845
Ms S Kennedy-McGregor (instructed by Messrs Max Bitel Greene, London N1) appeared on behalf of the Appellant Claimant.
Mr V Chapman (instructed by Messrs John Collins & Partners with Edward Harris & Son, Swansea) appeared on behalf of the Respondent Defendants.
Lord Justice Dyson will give the first judgment.
This is an appeal from the decision of His Honour Judge Nash, sitting at Medway County Court, whereby on 1 August 2001 he dismissed the appeal of Overseas and Commercial Developments Limited ("OC") from the refusal by District Judge Caddick on 31 January 2001 to lift the automatic stay imposed on these proceedings pursuant to paragraph 19 of the Practice Direction to Part 51 of the Civil Procedure Rules. In order to understand the short issue that arises on this appeal, it is necessary to set out some of the unusually complex history of these proceedings.
Mrs Lunnon was the registered freehold owner of plot 7, Strood Dock Terminal, Kent ("the premises"). She agreed to sell the premises, or part of them, to David John Cox for £68,000, and in early 1991, pending the exchange of contracts, she allowed him to enter into occupation and to conduct his business of the sale of oils and waste disposal. He paid her £38,000 over a period of time, but contracts were never exchanged. He did not pay the balance of the purchase price, nor did she return the sum that he had paid to her. In July 1993, anticipating his impending bankruptcy, Mr Cox purported to transfer his business assets to Deskbound Limited.
On 15 April 1994, Mrs Lunnon entered into a contract to sell the freehold of the premises to OC. A bankruptcy order was made against Mr Cox on 24 May 1994. In August 1994, Mrs Lunnon and OC started the proceedings in which the current appeal arises. They claimed possession and mesne profits from Mr Cox and Deskbound. Mr Cox did not serve a defence and, following his failure to comply with an "unless" order in relation to the service of a defence, he was debarred from defending the proceedings. Deskbound did, however, serve a comprehensive defence and counterclaim denying the plaintiffs' right to possession. It claimed relief arising from an alleged proprietary or equitable estoppel in favour of Mr Cox (which, it claimed, enured to its benefit as Mr Cox's successor in title), and an estoppel in its own favour on the grounds that the plaintiffs had stood by and allowed it to enter the premises in 1993 and carry out improvements. That relief included a claim for rectification of registered titles K376551 and K583371 so far as necessary to give effect to the other relief claimed.
Mrs Lunnon died on 1 April 1995, and her personal representatives were substituted as plaintiffs in her place. On 25 September 1995, the personal representatives and OC applied for an order striking out Deskbound's defence and counterclaim and for security for costs. On 8 March 1996, both applications were dismissed.
On 24 May 1997, Mr Cox was discharged from bankruptcy. On 20 November 1997, the plaintiffs applied to the court for directions. Directions were given on 9 January 1998. These were standard directions for disclosure of documents, witness statements, expert reports and setting down. The directions in relation to disclosure were complied with, although not before an unless order was made against Deskbound. The other directions were not complied with, and the action was never set down.
On 5 August 1998, a creditor's petition was presented by HM Customs and Excise against Deskbound, and a winding-up order was made on 15 September 1998. On 7 September 1998, Deskbound and Mr Cox had entered into a written agreement by which Deskbound purported to assign to Mr Cox "the sole right to continue the action in the courts at his own cost as successor in title to Deskbound". The claimants did not become aware of this assignment until some time in 2000. It is by virtue of this written agreement that Mr Cox now claims that he is entitled to defend the claim, since he is debarred from defending in his own right.
On 24 February 1999, the winding up of Deskbound was completed. Early in 2000, Mrs Lunnon's personal representatives transferred their interest in the premises to OC. On 24 March 2000, OC issued applications to the court (a) for the removal of the personal representatives as claimants, and (b) for an order striking out Deskbound's defence and counterclaim and for a possession order on the grounds that Deskbound had been wound up. In his turn, on 24 July 2000, Mr Cox applied for an order substituting himself as defendant for Deskbound by virtue of the agreement of 7 September 1998. These were the three applications that came before District Judge Caddick on 31 January 2001. On 26 January, Mr Cox made an application under section 127 of the Insolvency Act 1986 for an order authorising the disposition of property effected by the agreement of 7 September 1998. On 31 January, the Official Receiver indicated that he would not oppose the section 127 application. That application has not, however, yet been determined by the court.
The judgments below
When the three applications came before the district judge, he drew the attention of the parties to the fact that, since the proceedings had not come before a judge between 26 April 1999 and 25 April 2000, they were automatically stayed by virtue of paragraph 19(1) of the Practice Direction to CPR Part 51. Surprisingly, this point had been overlooked by both parties. It was suggested on behalf of OC that paragraph 19(1) did not apply, but the district judge held that it did, and there is no challenge to that part of his decision.
The district judge then considered whether to lift the stay. He applied the considerations set out at CPR 3.9(1), which provides: "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 including —
(a)the interests of the administration of justice;
(b)whether the application for relief has been made promptly;
(c)whether the failure to comply was intentional;
(d)whether there is a good explanation for the failure;
(e)the extent to which the party in default has complied with other rules, practice directions and court orders and any relevant pre-action protocol;
(f)whether the failure to comply was caused by the party or his legal representative;
(g)whether the trial date or the likely date can still be met if relief is granted;
(h)the effect which the failure to comply had on each party; and
(i)the effect which the granting of relief would have on each party."
In going through each of the considerations in turn, the district judge was applying the correct approach: see paragraph 42 of Woodhouse v Consignia (unreported decision of this court of 7 March 2002).
In relation to consideration (a), the district judge said this (page 13C):
"It is said that it would be wasteful of the resources of the parties and of the court if I were not to lift the stay, because all that they would do would be to issue again and incur lots of costs again. It may well be that they could issue again. Of course, it is not a foregone conclusion in view, as Mr Chapman rightly points out, of the growing body of case law dealing with the situation of re-issue when there has been a strike out or refusal to lift a stay. Arguments as to abuse and the disposal of any costs orders that have already been made in the previous proceedings, and matters of that kind, will come into play. The claim is not statute-barred, so of course the claimants could try again, subject to any application to block that. That would, I accept, mean further costs. Although, having said that, it would also involve, I would imagine, so far as I can see from the proceedings, something of a simplification: any fresh proceedings would be simply Overseas and Commercial v Mr Cox, claimants would proceed correctly in relation to pre-bankruptcy mesne profits, a defendant would then raise such defences as he could, particularly by then having been to the Companies Court and seen whether he can rely on that agreement with the company subject to the winding-up petition in September 1998.
The most important feature, however, under (a) to which I give weight is the delay on the part of the claimants. Extraordinary delay, and something which is the very kind of thing that the Woolf reforms were aimed against."
In relation to (b), the district judge made the point that the application to lift the stay was made nine months after the proceedings had become subject to the automatic stay. As for (c), the delay in making the application to lift the stay was not intentional. As for (d), the explanation that the automatic stay provisions had been overlooked was not a good explanation. As for (e), the district judge said that there was no evidence that, if the claimants had brought the proceedings before a judge during the one year period, they would have been in default. I think that he was generous to OC here, because the relevant consideration is the extent to which OC had complied with other rules etc, and there was plenty of evidence that OC had not so complied.
As regards (f), the...
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...District Judge Bird gave for saying that the 2003 proceedings were an abuse was that in Overseas and Commercial Developments v Cox [2002] EWCA Civ 635, this court had held, following Buckland v Palmer, that subsequent proceedings for the same relief following a stay under CPR Part 51 of ear......