England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE FC2 96/7264/G

(LORD JUSTICE OTTON )

Royal Courts of Justice

Strand

London WC2

Wednesday 26 February 1997

B e f o r e:

THE MASTER OF THE ROLLS

(LORD WOOLF)

LORD JUSTICE PETER GIBSON

LORD JUSTICE SWINTON THOMAS

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PAUL ANTHONY SMITH

Plaintiff/Respondent

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COSWORTH CASTING PROCESSES LIMITED

Defendant/Applicant

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(Computer Aided Transcript of the Palantype Notes of

Smith Bernal Reporting Limited, 180 Fleet Street,

London EC4A 2HD

Tel: 0171 831 3183

Official Shorthand Writers to the Court)

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MR P DOWNES (Instructed by Messrs Connell Smith, Worcester) appeared on behalf of the Applicant.

MR S MONTY (Instructed by Messrs Everatt & Co, Worcester, WR11 4EU) appeared on behalf of the Respondent.

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J U D G M E N T

(As approved by the Court)

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©Crown Copyright

JUDGMENT

LORD WOOLF, MR: I will ask Lord Justice Swinton Thomas to give the first judgment.

LORD JUSTICE SWINTON THOMAS: This is an application made by the defendant to set aside an order made by Otton LJ on 17 September 1996 granting leave to the plaintiff to appeal from an order made by His Honour Judge Morris in the Worcester County Court on 22 August 1995. In granting leave, Otton LJ said:

"I gave leave only because this appears to be an appropriate case for reviewing Ferreira with a view to circumscribing its application."

Mr Downes, in the course of his forceful submissions, places stress upon the learned Lord Justice's use of the word "only". He submits that by using that word it is reasonably clear that Otton LJ overlooked the point which Mr Downes makes, that the plaintiff was out of time with the service of his notice of appeal from the District Judge to the judge.

The reference to Ferreira is a reference to Ferreira v The American Embassy [1996] 1 WLR 536. Mr Downes accepts that the grant of leave by the single Lord Justice is in all ordinary circumstances conclusive and can only succeed in setting aside if he shows that in due time the appeal could not succeed. He invited our attention briefly to the relevant authorities, The Iran Nabuvat [1990] 1 WLR 1115 and First Tokyo Index Trust Ltd v Morgan Stanley Trust Co [1995] Times Law Reports 500.

On 22 August 1995 His Honour Judge Morris ordered:

1. Leave to appeal against an order of District Judge Vincent of 15 February 1995, declaring that the action was struck out by virtue of Order 17 rules 3(d) and 11 of the County Court Rules on 28 January 1995, was refused.

2. The appeal against the order of Deputy District Judge Freeman of 27 April 1995, dismissing the Plaintiff's application to reinstate the action, be dismissed.

I can relate the facts giving rise to the judge's order comparatively shortly for the purpose of this application. The plaintiff was an employee of the defendants. He alleges in his Particulars of Claim that on 27 August l990 he sustained an accident at work when he slipped carrying a heavy weight, and that his accident was caused by the negligence and/or breach of statutory duty of his employers. That is denied by the defendants.

The Particulars of Claim were issued on 10 August l993. There is an issue between the parties as to the date of the service of the Defence. The defendants allege that it was delivered on 8 October 1993 and the plaintiff alleges that it was delivered on 9 November. The District Judge found that it was served on the earlier date. That finding was challenged by the plaintiff. The dates are relevant to the application of the relevant automatic directions in this case. The automatic directions apply to the case as a result of the provisions of Order 17. Order 17 rule 9 provides that the action must be set down for trial within 15 months of the close of pleadings. If no application is made to set the case down for hearing then the action is automatically struck out, hence the importance of the date when the pleadings were closed.

It is clear that the provisions are intended to be draconian, as was underlined by the Master of the Rolls, Sir Thomas Bingham, in Rastin v British Steel [1994] 1 WLR 732. However, there was a directions order made by the District Judge on 20 July 1994 when he ordered, amongst other matters, that:

"That the action shall be listed for trial upon the filing of a joint Certificate of Readiness signed by or on behalf of both parties containing a time estimate in hours."

The plaintiff submits that that order overtook the provisions of the automatic directions in relation to setting the action down for trial.

The plaintiff's solicitors issued an application for further directions dated 5 January 1995. The plaintiff submits following Ferreira, that this application included by implication a request for a hearing date to be fixed in the event of the application for an extension of time being refused. On 15 February of that year District Judge Vincent found that the action was struck out under the provisions of the automatic directions. The plaintiff's solicitors immediately applied for an order reinstating the action under the provisions of Order 13 rule 4. That application was refused by District Judge Freeman on 27 April and, as I have said, the plaintiff's appeal against that order was dismissed by Judge Morris.

In the proposed appeal there are three issues:

1. Was His Honour Judge Morris wrong to refuse to exercise his discretion to extend time to appeal against the order of District Judge Vincent of 15 February 1995?

2. Was the judge wrong to find that the action had been struck out pursuant to the provisions of Order 17?

3. Was the judge wrong to refuse to reinstate the action?

Mr Downes concedes that the plaintiff has an arguable case in respect of issue 2, but he submits that he has no arguable case in respect of the first issue, in which case the second would not arise. He submits further that the plaintiff has no arguable case in respect of the third issue.

As I have indicated, Mr Downes submits, so far as Otton LJ's order was concerned, that the Lord Justice overlooked the judge's exercise of discretion in refusing to grant leave to appeal out of time.

In the judgment refusing leave to appeal out of time, Judge Morris did not indicate that he was purporting to exercise a wide discretion, but he did so on the basis that there was no material before him in respect of which he could exercise his discretion. In reaching that conclusion, he relied, as does Mr Downes, on the well-known case of Savill v Southend Health Authority [1995] 1 WLR 1254. Mr Downes submits that Savill is binding on this court and, that being so, any appeal to the this court is bound to fail.

The headnote to Savill reads:

"The discretion of the court can only be exercised upon the material before the court.

Where, therefore, the notice of appeal against the dismissal of the plaintiff's claim for want of prosecution was issued five days out of time, the judge refused to extend the time under the RSC., Ord 3 r.5, because no explanation for the delay had been given, and the plaintiff appealed:-

Held, dismissing the appeal that, although the delay was short, the judge in exercising his discretion to refuse to extend the time for appealing did not act contrary to principle."

On page 1256 Balcombe LJ said:

"When the partner in the plaintiff's solicitors who was present before the judge gave oral evidence before him she was unable to give any explanation for the delay."

Accordingly, in that case there was evidence but no explanation.

Balcombe LJ continued on page 1257 by saying:

"One therefore starts with the principle that if the court is asked to exercise a discretion there must be some material before it upon which that discretion can be exercised."

It is relevant, in my view, that the word used by Balcombe LJ therein is the word "material".

On page 1258, Balcombe LJ referred to Costellow v Somerset County Council [1993] 1 WLR 256 and the passage in the judgment of the Master of the Rolls, Sir Thomas Bingham, as follows:

"The first principle is that the rules of the court and the associated rules of practice, devised in the public interest to promote the expeditious dispatch of litigation, must be observed....The second principle is that a plaintiff should not in the ordinary way be denied an adjudication of his claim on its merits because of procedural default, unless the default causes prejudice to his opponent for which an award of costs cannot compensate."

Balcombe LJ continued:

"Of course, it is apparent, when you state those two principles like that, that they are in conflict. The court is always having to achieve some sort of a balance between them."

On page 1259 Balcombe LJ said:

"I have to say that the authorities are not all entirely easy to reconcile. I prefer to go back to first principles and to the statement made by Lord Guest in the Ratnam case [1965] 1 WLR 8, 12 that in order to justify a court in extending the time during which some step in procedure requires to be taken, there must be some material on which the court can exercise its discretion. He went on to say, and it is worth repeating:

´If the law were otherwise, a party in breach would have an unqualified right to an extension of time which would defeat the purpose of the rules, which is to provide a timetable for the conduct of litigation.´

It seems to me that that statement applies as much to a minimal delay as it does to a substantial delay. Realistically, the court may be satisfied with an explanation for a minimal delay, even possibly forgetfulness, which it would not accept for a substantial period of delay. Nevertheless, there must be some material on which the court can exercise its discretion. There was no such material before the judge. In my judgment, therefore, it cannot be said, as this court would have to say, that in exercising his discretion to refuse to extend the period of time to appeal in the case he was acting contrary to principle. It seems to me that he was acting in accordance with the principles laid down by Lord Guest. I would dismiss this appeal.

Mann LJ said:

"I agree. The Rules of the Supreme Court are the rules for the conduct of litigation. They are there for the benefit of plaintiffs and the protection of the defendants. Here, the rule was not complied with. We are asked to exercise our discretion to waive the application of the rule. There is no material put before us on which we should grant a waiver. I do not see how one can exercise a discretion without material upon which to consider it. If I went beyond that point I would regard the way in which this litigation has been conducted as entirely antipathetic to the exercise of discretion. "

Mr Downes places reliance upon those passages. He submits, as I have indicated, that we are bound by them. There was in fact no evidence from the plaintiff before the judge. Order 59 rule 14 provides that on an application to this court for leave to appeal out of time the notice must include the reasons why the application was not made within the permitted time.

There does not appear to be an equivalent provision in the County Court Rules. Nonetheless, in my view, there clearly ought to be evidence placed before a judge if he is to be asked to exercise his discretion. Having said that, it should be noted, as I have stressed, that Balcombe and Mann LJJ in Savill did not refer to evidence upon which the judge could exercise his discretion, but to material.

Balcombe LJ in the course of his judgment referred to the judgment of Sir Thomas Bingham in Costellow v Somerset County Council to which I have referred. As Balcombe LJ indicated, it is not altogether easy to reconcile the general principles referred to in Savill and those referred to in Costellow. Leave to appeal on that issue has been granted in a number of cases, in addition to the case of Royal Bank of Scotland and Douglas referred to in Mr Monty's skeleton argument.

Since Savill and Costellow were decided there have been other relevant decisions in this court. In particular, Letpak Ltd and Others v Harris , 8 November 1996, and The Mortgage Corporation Limited v Sandoes and Others , transcript of 26 November 1996, to which Mr Downes invited our attention. It is quite right, as Mr Downes has stressed, that those two cases related to a failure by the relevant party to comply with an order as to the exchange of witness statements with the result that the party was barred from calling evidence.

In The Mortgage Corporation Limited , Millet LJ set out some general principles. He said:

"I now turn to the facts of the present case to a more general matter. This court is acutely aware of recent events and the growing jurisprudence in relation to the failure to observe procedural requirements. There is a need for clarification as to the likely approach of the court in the future to non-compliance with the requirements as to time contained in the rules or directions of the court. What I say now goes beyond the exchange of witness statements or expert reports; it is intended to be of general import. The Master of the Rolls and the Vice Chancellor, as Head of Civil Justice, have approved the following guidance as to the future approach which litigants can expect the court to adopt to the failure to adhere to time limits contained in the rules or directions of the court:

1. Time requirements laid down by the Rules and directions given by the Court are not merely targets to be attempted, they are rules to be observed.

2. At the same time the overriding principle is that justice must be done.

3. Litigants are entitled to have their cases resolved with reasonable expedition. Non-compliance with time limits can cause prejudice to one or more of the parties to the litigation.

4. In addition the vacation or adjournment of the date of trial prejudices other litigants and disrupts the administration of justice.

5. Extensions of time which involve the vacation or adjournment of trial dates should therefore be granted only as a last resort.

6. Where time limits have not been complied with the parties should cooperate in reaching an agreement as to new time limits which will not involve the date of trial being postponed.

7. If they reach such an agreement they can ordinarily expect the court to give effect to that agreement at the trial and it is not necessary to make a separate application solely for this purpose.

8. The court will not look with favour on a party who seeks only to take tactical advantage from the failure of another party to comply with time limits.

9. In the absence of an agreement as to a new timetable, an application should be made promptly to the court for directions.

10. In considering whether to grant an extension of time to a party who is in default, the court will look at all the circumstances of the case including the considerations identified above."

It is clear from the first part of that passage that the court, with the approval of the Master of the Rolls, intended those principles to be of general application. Mr Downes submits that, despite that, they cannot apply to an extension of time for leave to appeal. For that proposition he relies again on Savill and the other authorities to which he referred.

It would not be appropriate, in my view, on an application of this nature, for this court to say anything about that submission, save and except that the extent to which those general principles should apply to extension of time for leave to appeal is a matter which should be considered by this court.

Further, although it is true that there was no evidence before the judge, it may be arguable on behalf of the plaintiff that there was material before him which would have enabled him to exercise his discretion in favour of the plaintiff. In paragraph 1 of the notice of appeal the plaintiff relies on the fact that his reason for the failure to lodge an appeal against Judge Vincent's order within the prescribed time limit was the adjournment of the first application in order to apply to reinstate the action, the hearing of that application taking place on 27 April 1995.

Mr Downes tells us that that explanation was not an explanation put forward to the judge. It may also be true that the plaintiff took the wrong course in making his application for reinstatement as opposed to appealing against Judge Vincent's order. Whether those facts amount to sufficient material for the exercise of a discretion are a matter of argument but, nonetheless, they were material which was before the court.

The primary question that arises on this narrow issue is whether the judge applied the correct principles in the exercise of his discretion. In my view, there are matters to which I have referred which are properly arguable on those issues. For my part, I could not say that this appeal will inevitably fail. Having refused to set aside Otton LJ's grant of leave to appeal in respect of issues (1) and (2), detailed at the outset of this judgment, it will not be appropriate in my judgment to set aside the grant of leave in respect of issue (3).

I would dismiss the application to set aside Otton LJ's orders.

LORD JUSTICE PETER GIBSON: I agree.

LORD WOOLF, MR: I agree entirely with the judgment which has been given by Lord Justice Swinton Thomas. I only add to what has been said in order to give some general guidance as to applications for leave to appeal and applications to set aside such leave. The guidance which I propose to set out is largely a matter of common sense. It was because it was appreciated that this application might make it appropriate to give general guidance, that it has been heard by a three judge court whereas normally an application of this nature would be heard by two Lords Justices only.

The guidance is as follows:

1. The court will only refuse leave if satisfied that the applicant has no realistic prospect of succeeding on the appeal. This test is not meant to be any different from that which is sometimes used, which is that the applicant has no arguable case. Why however this court has decided to adopt the former phrase is because the use of the word "realistic" makes it clear that a fanciful prospect or an unrealistic argument is not sufficient.

2. The court can grant the application even if it is not so satisfied. There can be many reasons for granting leave even if the court is not satisfied that the appeal has any prospect of success. For example, the issue may be one which the court considers should in the public interest be examined by this court or, to be more specific, this court may take the view that the case raises an issue where the law requires clarifying.

3. When leave is refused, the court gives short reasons which are primarily intended to inform the applicant why leave is refused. Where leave is granted, reasons may be given which are intended to identify for the benefit of the parties and the court hearing the appeal why it was thought right to give leave. There may be only one issue that the judge or judges giving leave felt it was necessary to draw to the attention of the parties and the court hearing the appeal. It is a misconception to assume that because only one aspect of the proposed appeal was mentioned in any reasons which were given, that leave was granted under a misapprehension that there were not other issues to be determined on any appeal unless the reasons make this clear.

4. When leave is granted, the applicant does not need to know more than that he has the leave which he needs and therefore that he is entitled to proceed with the proposed appeal. The intended respondent has no entitlement to receive reasons as to why the application has been granted, in the same way that he does not normally have any right to be heard on the application which is usually made ex parte.

5. The heavy onus on a respondent who seeks to set aside leave is dealt with in the judgment of my Lord which has just been given. I would only add that, before making such an application, the respondent must bear in mind that the fact that the appeal has no realistic prospect of success does not necessarily mean that leave should not have been given. The applicant will be required to establish that there was no good reason for giving leave, which may not be the same thing.

6. In addition, it should be borne in mind prior to making such an application that this court is likely to be very unsympathetic to it being made if it will in effect involve the parties in exactly the same expense as determining the appeal itself, and will not necessarily save the time of the court but risk the court having to have two hearings when only one would be necessary if there was no application to set aside. It is appreciated that any litigant will feel aggrieved by being faced with delay in waiting to have an appeal heard which has no prospect of success. However, the only consequence of applications such as this having to be heard is to delay the hearings of appeals the determination of which serves some purpose. There are circumstances where an application to set aside leave is fully justified, but the present application does not fall within that category.

With regard to the last item of guidance, I would emphasise that I do accept what Mr Downes said to this court, that he gave very conscious and careful consideration as to the desirability of making the application. I fully accept that was done.

LORD JUSTICE PETER GIBSON: I agree with the guidance given by my Lord, The Master of the Rolls.

LORD JUSTICE SWINTON THOMAS: I also agree.

Order: Application dismissed with costs. Appeal to be listed for hearing at first available opportunity.