Siebe Gorman & Company Ltd v Pneupac Ltd
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE EVELEIGH,LORD JUSTICE TEMPLEMAN |
| Judgment Date | 12 October 1981 |
| Judgment citation (vLex) | [1981] EWCA Civ J1012-3 |
| Docket Number | 81/0440 |
| Court | Court of Appeal (Civil Division) |
| Date | 12 October 1981 |
[1981] EWCA Civ J1012-3
The Master of the Rolls
(Lord Denning)
Lord Justice Eveleigh
and
Lord Justice Templeman
81/0440
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(MR. JUSTICE FARQUHARSON)
Royal Courts of Justice.
MR. PATRICK PHILLIPS, Q.C. and MRS. M. ANYADIKE-DANES (instructed by Messrs. Ashurst Morris Crisp & Co.) appeared on behalf of the Appellants.
THE HON. CHRISTOPHER BATHURST, Q.C. and MR. J. BALDWIN (instructed by Messrs. Mortimer Rabin & Co.) appeared on behalf of the Respondents.
This is a case of much interest to practitioners. It concerns the effect of an order which has been drawn up and expressed to be "by consent".
In March 1980 the plaintiff firm issued a writ against the defendants in respect of a transaction in goods. The claim was for some £160,000. The defendants put in their defence and counterclaim. Pleadings were duly closed. Lists of documents were exchanged in the ordinary way. Neither side wasted time unduly.
Then on the 18th December, 1980 the defendants took out a summons for discovery of specific documents. It was supported by an affidavit in the usual way. The defendants said that they had information that certain documents were in the plaintiffs' possession which they had failed to disclose. The master was very busy. The return date was the 10th March, 1981.
The defendants by their summons asked "for an Order that the Plaintiffs do within ten days from the date of such Order make and file an Affidavit…" The defendants then added this request in the summons: "And that in default of complying with the Order the Plaintiffs claim against the Defendants be struck out". It should be noted that this was the first summons for discovery. It is unusual in a first summons to insert such a "peremptory" clause.
On the 4th March, 1981—six days before the summons for discovery was due to be heard—an application was made to fix the date for the trial of the action. It was fixed for the 1st March, 1982. It was expected to last five days. The plaintiffs' solicitors wrote to the defendants' solicitors on the 4th March confirming the date of the trial and explaining the plaintiffs' difficulties with regard to discovery of documents. They said that their clients' managing director had died, that they had moved premises, and so forth.
At all events, the summons for discovery came on for hearing on the 10th March, 1981. Solicitors on each side went before the master. The only evidence we have before us of what happened is contained in the affidavit of Mr. Hood, a partner in the firm of Mortimer Rabin & Co., the defendants' solicitors. He said:
"It was expressly agreed between myself on behalf of the Defendants and Mr. Smyth of the Plaintiffs' Solicitors, just prior to attending before Master Elton on the Summons, that in return for the Plaintiffs consenting to the Order sought I would agree, on the part of the Defendants, to request the Master to order the time period of ten days to run from the date of the mutual inspection of documents". It is to be noticed that the "peremptory" clause was not mentioned.
The agreement was recorded in a letter from the plaintiffs' solicitors to the defendants' solicitors dated the 10th March, 1981. They said:
"We refer to the Hearing of the Summons this morning and confirm that the Master made an order in the terms of your Summons with the exception that our client is to provide the Affidavit referred to but not in 10 days of the Order but 10 days after we see the documents called for in our letter to you of 4th March, 1981.
"We confirm that it has been arranged with your Mr. Hood that he will attend at these offices on Monday, 16th March, 1981 at 2.30 p.m. when we shall inspect each other's documents and be given the opportunity of taking copies".
So, as the inspection took place on the 16th March, the ten days would be up on the 26th March.
The defendants then quickly did something which is very unusual—they drew up the order. They entered it on the 16th March, 1981. It contained the clause taken from the summons:
"And that in default of complying with this order the plaintiffs' claim against the defendants herein be struck out". They served a copy on the other side on the 18th March. They said in their letter:
"We enclose by way of service upon you a copy of the Order made. We look forward to hearing from you within the time laid down by the Order".
The last day for the affidavit was the 26th March, 1981. On that day the plaintiffs' solicitors wrote saying that they were aware that their time for complying with the order was about to expire, but they were instructed by their clients that there were very great difficulties in producing the documents. They said:
"The writer telephoned Mr. Hood this afternoon but we understand he is away for the rest of this week. We ask in view of the trial date in March 1982 for an extension of a further 3 weeks within which to comply with the Order of Master Elton on 10th March.
"Kindly let us know immediately if your instructions are to oppose this request".
On the 27th March, 1981 (when the plaintiffs were one day late) the answer came back from the defendants' solicitors:
"Further to your letter of the 26th March, inspection of the relevant documents took place on 16th March 1981. Accordingly the time allowed by the Master for compliance with his Order for an Affidavit has now elapsed.
"In the circumstances, upon the instructions of our clients, we referred your letter to our counsel, who has advised that the effect of the Master's Order is that your clients claim has now been struck out".
That must have been a shock to the plaintiffs' solicitors. They had written a courteous letter for an extension of time, only to be presented with a bombshell.
On the 1st April, 1981 the defendants' solicitors took out a summons for the costs of the action. On the 12th May the plaintiffs' solicitors took out a summons before the master for an extension of time. On the 27th May the master made an order extending the plaintiffs' time for compliance for seven days from that date. He made no order on the defendants' application for costs.
The defendants appealed to the judge. He allowed the appeal, although he said he did so with some reluctance. He felt that the consent order meant that the parties had come to an agreement which evidenced a contract. He said that the plaintiffs were in default and that the action should be struck out. He awarded the defendants their costs. Now there is an appeal to this court.
We have had a discussion about "consent orders". It should be clearly understood by the profession that, when an order is expressed to be made "by consent", it is ambiguous. There are two meanings to the words "by consent". That was observed by Lord Greene, M.R. in the case of Chandless-Chandless v. Nicholson (1942) 2 King's Bench 321 at page 324. One meaning is this: The words "by consent" may evidence a real contract between the parties. In such a case the court will only interfere with such an order on the same grounds as it would with any other contract. The other meaning is this: The words "by consent" may mean "the parties hereto not objecting". In such a case there is no real contract between the parties. The order can be altered or varied by the court in the same circumstances as any other order that is made by the court without the consent of the parties. In every case it is necessary to discover which meaning is used. Does the order evidence a real contract between the parties? Or does it only evidence an order made without objection?
We were referred to several cases. In Huddersfield Banking Co. Ltd. v. Henry Lister & Son Ltd. (1895) 2 Chancery 273 there was a consent order dealing with a large amount of machinery and plant. Everyone had agreed that it should be sold on certain terms. That was clearly a contract between the parties with which the court would not interfere except on the same grounds as any other contract. In Purcell v. F.C. Trigell Ltd. (1971) 1 Queen's Bench 358 the correspondence (which is set out in the facts of the case) showed that there was a real contract agreed between the parties that, unless a particular order for interrogatories was complied with, the matter should be struck out. In that case I said that "the court has a discretion to vary or alter the terms of the order for interrogatories"—even though made by consent. There is a case mentioned in the White Book, Australasian Automatic Weighing Machine Co. v. Walter (1891) Weekly Notes 170. That concerned an order by consent to transfer shares. Again it was a case in which there was a real contract between the parties. Equally, in The Intervale Group of Company Ltd. v. Christopher John Knighton on the 30th June, 1976 (Bar Library), Lord Justice Bridge, after analysing all the facts, came to the conclusion "that there was here an unconditional binding contract in law between the parties that the order of the 10th February should be made, as it was". Lord Justice Scarman added that, in the circumstances of the case, "from my Lord's analysis of the facts, there was here a contract". The most recent case was in the same category, see Chanel Ltd. v. F.W. Woolworth & Co. Ltd. (1981) 1 Weekly Law Reports 485. It seems to me that all those cases can be—and should be—explained on the basis that there was a real contract between the parties evidenced by the order which was drawn up.
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