16 April 2014Print This Post

High Court: Mitchell guidance does not govern ‘in time’ applications for extension

High Court: in-time applications should be judged against overriding objective

The Mitchell principles do not apply to an extension of time application made before the date for compliance has passed, the High Court has ruled.

The important decision by Mr Justice Nugee said that otherwise there was a risk that every order specifying a time to take a step would effectively become an unless order.

Kaneria v Kaneria & Ors [2014] EWHC 1165 (Ch) concerns an unfair prejudice petition brought under section 994 of the Companies Act 2006, to which the CPR apply.

There was to be a trial of a preliminary issue but the various defendants knew they would be unable to meet the deadline laid down to serve their defences, and so after trying and failing to agree an extension with the claimant, applied to the court before the deadline. This was vigorously opposed by the claimant.

After what the judge described as a “lively debate” on whether Mitchell applied to ‘in-time’ applications for extension, he ruled that it did not; rather Robert v Momentum Services Ltd [2003] EWCA Civ 299 was still good law. In that case, the Court of Appeal expressly held that an in-time application for an extension of time was not, and should not be treated as, an application for relief from sanction.

Instead the application should be judged against the overriding objective, Nugee J said. While the court should have regard to the fact that it was modified under the Jackson reforms to add explicit reference to the need to enforce compliance with orders, “unlike in the case of relief from sanctions, these considerations are not to be given paramount status”.

Looking at the broader practical and policy considerations, Nugee J said: “The consistent message from [the] authorities is that a party who needs more time for a procedural step in existing proceedings should not just ignore the problem but should ask the other side for consent, and if consent is not forthcoming, should make an in-time application for an extension; and conversely that the other side should respond positively and in a spirit of co-operation to reasonable requests for consent rather than ‘cry foul’ and seek to take opportunistic advantage of the other party’s difficulties.”

He also noted that there had been no sanction attached to the deadline and that to apply the Mitchell guidelines to an in-time application such as this “would in effect erode the distinction between an ordinary order directing a timetable and an unless order, and turn every order specifying a time for taking a step into an unless order”.

He continued: “I do not see any reason to suppose – and as I read Mitchell, there is nothing there to suggest – that this was the intention of the changes to the rules brought about by the Jackson reforms. It would run the risk that ordinary orders setting out timetables would indeed become ‘trip wires’, which is not the intention of the Jackson reforms…

“Rather the policy, as I understand it, is one of requiring parties to take orders seriously… making an in-time application for an extension where necessary is respecting the rules.”

The judge also recognised the danger of any request for an extension, however unobjectionable, being declined by the other party in the hope of persuading the court to refuse it and “thereby gain a significant advantage”.

He said this was his experience in this case. Agreeing the request for an extension would have cost little and had “no practical impact on the orderly progression of the proceedings to trial”. Instead, there was a three-hour hearing that generated costs of over £80,000.

At the same time, the judge recognised that if the claimant could successfully oppose the application, “the prize will be well worth having”. This strengthened the argument that Mitchell should not apply to in-time applications: “It seems to me that there is a risk that doing so would mean that instead of parties adopting an attitude of reasonable co-operation in an attempt to make litigation run smoothly, there will be a culture of aggressive non-cooperation which may lead to more, longer and more expensive opposed applications.”

Applying the overriding objective, Mr Justice Nugee ruled that the extension should be granted, as it would cause “the least injustice”. He said losing the ability to defend the claim was “a wholly disproportionate penalty to impose”.

By Neil Rose

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