Tuesday 10 September 2013

The Argument

The Argument

I recently had a case which caused me to ask myself the question - can parties lawfully agree to extend time for service of points of dispute?

The answer appears obvious, but it is not.  In fact, far from it.

The case concerned a dispute over whether or not the parties had agreed to extend time for service, but in the course of argument the point developed into that posited above.  The case in which I argued this point concerned DA proceedings which commenced before 1st April 2013, but little turns on this, as the law appears to be the same for proceedings commenced after that date.

Here’s how it goes.

CPR  47.9(2) states the period for service of Points of Dispute is 21 days after the date of service of the notice of commencement.  In default of service, CPR 47.9(3) prescribes that a party “may not be heard further in the detailed assessment proceedings unless the Court gives permission”.

Let’s assume you’re late with service of the Points, but you’ve agreed an extension with the other side.  You do so on the basis that you’re allowed to under CPD 35.1 :

“The parties may agree under rule 2.11 (Time limits may be varied by the parties) to extend or shorten the time specified by rule 47.9 for service of the points of dispute.  A party may apply to the appropriate office for an order under rule 3.1(2)(a) to extend or shorten that time.”

So CPR 47.9 doesn’t kick in.  Right? 


CPD 35.1 expressly (and, insofar as variation by the parties is concerned, only) refers to the power contained in CPR 2.11CPR 2.11 entitles the parties to vary, by written agreement, “the time specified by a rule or by the court for a person to do any actunless the Rules or a practice direction provide otherwise or a court orders otherwise.

The problem is this - the Rules do provide otherwise.

CPR 3.8 (3) confirms that:

(3)      Where a rule, practice direction or court order –

(a) requires a party to do something within a specified time, and
(b) specifies the consequence of failure to comply,

the time for doing the act in question may not be extended by agreement between the parties.

The fact that CPR 2.11 is subject to CPR 3.8 is obvious from a reading of the provisions set out above.  That this is correct is made clear by that parenthesised reference to CPR 3.8 after the body of CPR 2.11
The remaining question, then, is whether CPR 3.8(3) applies to CPR 47.9.

In my view, that is unarguable.  The paying party is required to do something (i.e. – at the risk of stating the obvious - serve Points of Dispute) within a specified time, and the Rule specifies the consequences of the failure to comply (i.e. not being heard further).

Given the wording of CPR 47.9, it might have been open to argue that as the consequence was qualified (by “unless the Court gives permission”), it was not, in fact, a sanction it all (as it is a discretionary, as opposed to automatic, consequence).  That argument, however, appears to be foreclosed by the judgment in Primus Telecommunications Netherlands BV v Pan European Ltd [2005] EWCA Civ 273 (at paras 58 and 59)Primus concerned CPR 32.10 (consequences of failing to serve a witness statement or summary), but the relevant wording is identical to CPR 47.9.  Primus was subsequently applied in Papa Johns (GB) Ltd v Doyley [2011] EWHC 2621(QB).

Very recently, Turner J. has reiterated this point in terms - see MA Lloyd & Sons Ltd v PPC International Limited [2014] EWHC 41 (QB) at [18] and [19].

Accordingly, there is a clear conflict between the power in CPD 35.1 (now, with minor but inconsequential amendment, CPD 8.1) and the Rules themselves.

As Practice Directions are not able to override the CPR (See May L.J. in Godwin v Swindon Borough Council [2001] EWCA Civ 1478 at [11]), the provisions referred to above which purport to permit the parties to agree to extend time for service of the points of dispute must be of no effect.

This means that the sanction in CPR 47.9 applies, irrespective of whether there has been a purported agreement to extend time, unless the paying party applies for relief from sanctions under CPR 3.9.

Until recently, one could have approached such an application with an air of confidence.  However, after Mitchell v NGN Ltd [2013] EWCA Civ 1537 (and the stream of litigation applying it), it would be a brave Solicitor that did.  Indeed, in MA Lloyd, Turner J. appeared to indicate that even if parties agreed to an extension, a Court would not necessarily "rubber stamp their reciprocal procedural indulgences" (para 27).  Whether the situation would be the same where the parties have (quite understandably) been led to believe that the indulgence was permitted in the first place remains to be seen.

So, what is the nature of the sanction?

The sanction to which the paying party is automatically subject is not being “heard further in the detailed assessment proceedings.”   One assumes that this means that the paying party can no longer participate, by contributing to a joint statement or being represented at the hearing.

What, then, of the Points of Dispute that are filed late?  It appears that a paying party may rely upon them (as they predate – indeed prompt – the debarral of further participation), but only in the sense that a Costs Judge may take them into account in assessing the Bill.

The result is unfortunate, as it appears that, until the Rules are changed, as in my view they need to be, the paying party is required to make a prospective application to Court for an extension of time to avoid the automatic sanction in CPR 47.9.

Of course, in many cases, that application should be a mere formality, but it is regrettable that, given the words in the Practice Direction, it needs to be made in the first place.

The views here are my own.  If anybody has an answer to this conundrum, I would be grateful to hear it!

Paul Hughes
Kings Chambers
10th September 2013
Updated 22nd January 2014