In Griffin Underwriting Ltd v Varouxakis (Free Goddess), the parties agreed a litigation moratorium following the filing by the defendant of an acknowledgment of service indicating that he intended to contest jurisdiction. At the time of entering the moratorium, the defendant had one day left in which to bring his challenge.
The moratorium was for an indefinite period, terminable on 48 hours’ notice. The claimant duly gave notice six months later. The defendant, however, did not issue his jurisdictional challenge for a further six months.
Was his application in time?
General rules on time extensions
CPR 2.11 provides that:
Unless these Rules or a practice direction provide otherwise or the court orders otherwise, the time specified by a rule or by the court for a person to do any act may be varied by the written agreement of the parties.
(Rules 3.8 (sanctions have effect unless defaulting party obtains relief), 28.4 (variation of case management timetable – fast track) and 29.5 (variation of case management timetable – multi-track), provide for time limits that cannot be varied by agreement between the parties).
CPR 3.8(4) allows parties to extend, by prior written agreement, the time to do any act which is otherwise required within a specified time by a rule, practice direction or court order and for which consequences for failure to comply are specified. An example of this would be CPR 32.10 which provides that a failure to serve a witness statement within the time specified by the court means that the witness may not be called to give oral evidence without the court’s permission.
Under CPR 3.8(4), an extension of up to a maximum of 28 days is permitted, provided it does not put at risk any hearing date. In Griffin, the court observed some tension between the uncapped provisions of CPR 2.11 and the more limited allowance under CPR 3.8.
Commercial Court rules on time extensions
CPR 58 and its Practice Direction contain specific provisions in relation to proceedings in the Commercial Court. Of particular relevance to this dispute was paragraph 7 of PD 58, which provides that:
“7.1 If the parties, in accordance with rule 2.11, agree in writing to vary a time limit, the claimant must notify the court in writing, giving brief written reasons for the agreed variation.
7.2 The court may make an order overriding an agreement by the parties varying a time limit.”
The requirement to notify the court of any agreement between the parties pursuant to CPR 2.11 is mandatory. Interestingly, no reference is made to CPR 3.8, although given the cross-reference to it in CPR 2.11 and the obligatory nature of paragraph 7 of PD 58, the sensible view would be to take the same approach and notify the court of any agreement concluded between the parties pursuant to CPR 3.8(4).
Out of time
Fatal to the defendant’s application was a failure by the parties to follow the requirements of paragraph 7 of PD 58. This rendered the moratorium ineffective to extend time for the defendant to challenge jurisdiction. Males J held that:
- It is important that the court retains control of the proceedings and has at least the opportunity to consider whether to override any agreement between the parties (as it may do pursuant to paragraph 7.2 of PD 58).
- It is not open to the parties to agree an indefinite extension of time without notifying the court. To hold otherwise would deprive the court of control and mean there is no effective sanction for non-compliance.
Males J concluded: “as Hobhouse J used to say in the days long before the CPR, in this court it takes three to make an agreement.”
There is a risk that parties may overlook CPR 58 and its Practice Direction, as happened here. The notification requirement is not the only way in which the procedure in the Commercial Court may differ from other courts. There are, for example, special provisions in relation to the timetable for interim applications, depending on the length of the hearing required, and different dates for serving the particulars of claim and filing the acknowledgment of service.
Males J’s decision is a stark reminder of the need to comply with the rule’s provisions and the serious consequences of failing to do so. If one were to alter the facts of the case such that the claimant had sought a similar moratorium prior to issue of its claim and with the limitation period about to expire, it could have seen its claim time-barred.
While this case centred on Commercial Court procedure, it should not be forgotten that other courts have particular requirements as well, including in relation to time extensions. Take, for example, paragraph 15.35 of the Chancery Guide, which requires notification to the court if the parties agree to extend the time limit specified in the Notice of Provisional Allocation (Form N149C). In light of the requirements in both the Chancery and Commercial Courts, it would be sensible always to consider notifying the court of any extension of time agreed between the parties and, if necessary, to embody this in the form of a sealed consent order.
Perhaps at some point there will be a consolidation of procedure across the Business and Property Courts, but until then the message must be: always check the rules and court guides for any special provisions.