High Court allows last-minute application for extension of time to comply with unless order

A recent High Court decision provides helpful guidance on the treatment of applications for an extension of time to comply with a procedural deadline, where the application is made at the very last minute - or in this instance, more precisely, the last three minutes: Lloyds Developments Ltd v Accor HotelServices UK Ltd [2024] EWHC 941 (TCC).

The decision illustrates the difference between an "in-time" application to extend time and one that is made out of time. Where the application is made before the deadline has expired (even if only just barely) the court will consider it in the light of the court's overriding objective of dealing with cases justly and at proportionate cost. That includes the need to enforce compliance with rules and orders – a consideration which is particularly significant in the context of an unless order, as there are strong public policy reasons to ensure that unless orders are complied with. But the court will not apply the more stringent three-stage test for obtaining relief from sanctions under CPR 3.9 (as set out in the Denton case, outlined here) unless the application is made after the deadline has expired.

Although the court granted the extension sought in this case, it was critical of the claimant's conduct in applying at the last minute, with an application form that was defective in failing to set out the reasons for the application. This was despite the fact that the claimant must have known well in advance of the deadline that there was a significant risk such an application would be required. Nonetheless, the court was prepared to remedy the procedural error in the application form, so that it was validly made before the deadline, and ultimately to grant the application to extend time.

Of course, a party who files a last minute application to extend time will always be at the mercy of the court, which may not take such a forgiving approach as in the present case. At the very least, there will be the risk of criticism and costs sanctions, if not outright refusal – which will be fatal where the order in question is an unless order that could result in the claim or defence being struck out. The message, as ever, is to comply with procedural deadlines, and to apply for more time as soon as it's clear there's a risk of being late.

Background

The underlying case relates to a contractual dispute between the claimant building owner and the defendant hotelier.

Trial was fixed for March 2024 with a time estimate of three weeks, but as a result of changes in the claimant's case, the defendant successfully applied for the trial to be adjourned. The claimant was ordered to pay the defendant's costs of the application, which were summarily assessed at £120,000. The claimant failed to pay by the stated deadline.

The court made an unless order which required the claimants to pay the sum owed (plus interest) by 4pm on 8 March 2024, failing which the claim would be struck out and judgment entered against the claimant.

At 3:57pm on 8 March, the claimant filed an application for an extension of time to comply with the unless order. The application notice did not set out the reasons for the application but stated "witness statement to follow". The witness statement was filed the following day.

At 4:26pm on 8 March, the defendant filed an application for judgment to be entered against the claimant under the terms of the unless order. The claimant paid the sums owed under the unless order on 15 March.

Decision

The High Court (Jefford J) ruled that the interests of fairness and justice, on balance, required that the claim be allowed to continue. The court therefore granted a seven-day extension of time for the claimant to comply with the unless order.

The first question was whether the application should be treated as an "in time" application, having been made three minutes before the deadline expired, or whether it made out of time. The defendant contended that the application on 8 March was not validly made as it did not comply with CPR 23.6, which requires an application notice to state "briefly, why the applicant is seeking the order". The defendant argued that a statement that evidence will follow does not suffice.

The claimant accepted that the application did not comply with CPR 23.6, but relied on CPR 3.10. That rule provides that, where there has been an error of procedure, the error does not invalidate any step in the proceedings unless the court so orders and the court may make an order to remedy the error. The defendant argued that CPR 3.10 did not apply, as it is only concerned with steps other than the application itself, such as an order made as a result of the application, and in any event the failure to submit reasons for the application was a conscious decision rather than a procedural error.

In the judge's view, CPR 3.10 was relevant. There was no reason to limit the rule in the way suggested by the defendant; the court has a general power to rectify the procedural error in question. Further, an error does not need to be accidental. It can simply amount to a failure to comply with a particular rule or practice direction.

While the judge said it was unfortunate that no steps were taken sooner to prepare the application, there was no reason for it to be treated as invalid. The application was made in circumstances where the witness statement could reasonably be anticipated to follow in short order, and this in fact turned out to be the case. The claimant's administrators had a settled intention to apply for an extension of time, and the reasons for the application were fully set out in the witness statement.

Accordingly, the court ruled that the application was an "in time" application, and should not be treated as an application for relief from sanctions under CPR 3.9. The judge referred to the case of Everwarm Ltd v BN Rendering Ltd, which set out the relevant principles:

"(a) An application for an extension of time allowed to take a particular step in litigation is not an application for relief from sanctions provided that the applicant files his application notice before the expiry of the permitted period…

(b) This is the case even if the court actually deals with the application after the expiry of the relevant period…

(c) 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…

(d) An in-time application for an extension of time is neither an application for relief from sanctions nor is it closely analogous to one…

(e) An unless order is an order of last resort. There is a powerful public interest in ensuring that parties recognise the importance of complying with unless orders…

(f) However, the power to extend time for compliance with a court order pursuant to rule 3.1(2)(a) does not distinguish between routine court orders on the one hand and unless orders on the other.

(g) 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."

The judge commented that there were various factors militating in favour of not granting the application for an extension of time. It was significant that the application was to extend time to comply with an unless order. As the judge noted in Everwarm, there are strong public policy reasons for ensuring compliance with unless orders. In the present case, the claimant also had a history of failing to comply with court orders, which made a failure to comply with a further court order, let alone an unless order, all the more serious. The application was submitted at the very last minute, despite the fact it would have been obvious to the claimant for some time that there was a significant risk it might have to make such an application. And the failure to comply resulted from a deliberate decision on the part of the administrators, which the judge said was a strong factor against granting the extension.

However, the court ultimately ruled that these factors did not tip the balance in favour of rejecting the application. The sums payable under the unless order were paid only seven days after the due date, and the payment (or not) of costs could have had no impact on the progress of the case to trial. Although there was a strong public interest in ensuring compliance with unless orders, the overriding objective required cases to be dealt with expeditiously and fairly. That raised the question of whether it was just and fair to refuse an extension where the non-compliance has had no impact on the progress of the case, but a refusal would mean judgment being entered against the claimant. On balance, and bearing in mind the administrators' explanation for their decisions, the judge exercised her discretion to grant the extension.

The judge noted that, in any event, she would have reached the same conclusion if she had found the application should be treated as an application for relief from sanctions. She did however comment that it was unlikely that any further application of this nature, ie a last minute application seeking further time to comply with an unless order, would be granted in this matter.