Applications for time extensions not the same as relief from sanctions

Nissen: Defendant made bona fide efforts to comply

Applications for time extensions to take a particular step in litigation are not applications for relief from sanctions provided they are made within the permitted period, the High Court has ruled.

Alexander Nissen QC, sitting as a deputy High Court judge, said this was the case even if the court deals with the application, in this case to comply with an unless order, after the relevant period had expired.

“Although there may be little practical difference between an application made just before the expiry of the permitted period and one made just after it had expired, the law has sound practical and policy reasons for distinguishing between the two.”

Delivering judgment in Everwarm v BN Rendering [2019] EWHC 2078 (TCC), Mr Nissen said energy efficiency advisors Everwarm argued that external insulation specialists BN had been overpaid by almost £800,000. BN claimed it was owed over £1.9m by Everwarm.

Mr Nissen said the case raised a question about “the interface between CPR 3.1 and 3.9” where, before expiry of a deadline set by an ‘unless’ order, further time was sought for compliance.

The defendant applied for a time extension the day before the deadline for providing security for costs was due to expire.

The day after the deadline expired, a High Court judge approved an extension for providing the security, backed by an unless order striking out the defendant’s counterclaim if it did not comply in time.

Half an hour before the new deadline, the defendant applied for an extension of a further week but the hearing could not be held until the day after the notional new deadline. Half an hour before that deadline, the defendant complied by paying £145,000 into court.

BN’s solicitors then wrote to Everwarm’s solicitors asking them to abandon their opposition to the extension application. However, Everwarm’s solicitors refused to do so.

Mr Nissen said unless orders were orders “of last resort” and there was a “powerful public interest” in ensuring that parties complied with them.

However, he said the power under rule 3.1(2)(a) to extend time for compliance with court orders did not distinguish between routine orders and unless orders.

“Accordingly, when determining an in-time application for an extension of time for compliance with both routine court orders and ‘unless’ orders, the court applies the overriding objective.

“Where an extension of time is sought in respect of an ‘unless’ order, it is not an application which should be treated either as, or akin to, an application for a relief from sanctions case pursuant to rule 3.9 even if, as is likely, the date for the sanction to be engaged will have passed by the date upon which the application for further time is heard.

“An in-time application to extend time for compliance with an ‘unless’ order which was in fact heard before the expiry of the time limit could not properly be regarded as one for relief from sanctions. It therefore makes no sense to treat the same application differently because the hearing of it takes place after the sanction would otherwise have bitten.”

The judge said he was satisfied on the evidence that “bona fide attempts were made by BN to comply with the order for security” made by the High Court. The fact that the payment was eventually made supported the conclusion that BN was “not stalling or seeking to avoid the need to comply”.

In contrast, Mr Nissen said that now security had been provided, “which is the very thing which the court ordered, Everwarm’s pursuit of its objection to further time should be regarded as the deployment of a weapon”.

He said that, even if CPR 3.9 applied and the case did involve relief from sanctions, he considered it “one of those rare cases in which it would be appropriate to grant relief”.

Mr Nissen agreed to extend time for compliance with the unless order.

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