England and Wales Court of Appeal (Civil Division) Decisions

Sayers v Clarke Walker (a firm) [2002] EWCA Civ 645 (14th May, 2002)

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN’S BENCH DIVISION
Buckley J

		Royal Courts of Justice Strand, London, WC2A 2LL
		14th May 2002

Lord Justice Brooke :

1. There was before the court a renewed application by the defendants for an extension of time for appealing and for permission to appeal against two orders made by Buckley J on 12th October and 17th October 2001, the first as to liability in this action and the second as to costs. The defendants’ notice of appeal, which included an application for an extension of time pursuant to CPR 3.1(2), was not effectively lodged at this court until 20th December 2001. On 22nd January 2002 Sedley LJ refused to grant an extension of time, saying that the application appeared to him to be irretrievably out of time. This three-judge division of the court was convened because the case raised a question as to the principles on which an appeal court should grant an extension of time under the CPR appeals regime on an application made after the original time for appealing has expired.
2. This is a professional negligence action, brought by the claimant Michael Sayers against Clarke Walker, a firm of accountants, in relation to what he claimed were shortcomings in the advice they gave him in 1989 in connection with his purchase of 90% of the issued share capital of the company which employed him. At the trial the judge found that the defendant firm had been retained by both parties to the transaction for the purpose of dealing with formalities and of acting as facilitators to implement an agreement which had already been reached.
3. He dismissed Mr Sayers’s claim that the defendants had been negligent in some informal advice they had given him about the reasonableness of the price he had agreed to pay. On the other hand, he found that their retainer had been wide enough to cover advice on a tax structure for the transaction they should have advised him to use, and that their failure to give him any such advice was negligent and sounded in damages.
4. The judge handed down his reserved judgment on 12th October, and the defendants wish to appeal against his findings on causation. There was a further hearing on 17th October when the judge made a ruling on the costs of the action, against which the defendants also wish to appeal. He also made rulings about the amount of the award which the defendants do not wish to challenge. He directed the parties to try and reach agreement on the figures which should appear in the court order in consequence of his rulings. If they could not reach agreement, they should return to court within 28 days. In the event the figures were agreed, and the order was drawn up and sealed on 16th November 2001.
5. CPR 52.4(2) states, uncompromisingly, so far as is material:

“The appellant must file the appellant’s notice at the appeal court within (b) …14 days after the date of the decision of the lower court that the appellant wishes to appeal.” (Emphasis added)

This marks a change of practice from RSC O59 r 4(1), which provided:

“Except as otherwise provided by this Order, every notice of appeal must be served under rule 3(5) not later than 4 weeks after the date on which the judgment or order of the court below was sealed or otherwise perfected.” (Emphasis added)

6. The defendant’s solicitor, Mr Gildener, seems to have been not wholly familiar with the effect of this change of practice. He was later to complain that the CPR gave him no guidance as to how parties were to deal with a situation whereby the “decision” of the court was established in a piecemeal fashion over the course of a number of hearing dates, where the order was not yet perfected, and where there were still issues to be concluded. He therefore spoke to counsel, and on counsel’s recommendation he telephoned the Civil Appeals Office on 22nd October to clarify the situation. We do not know exactly how he described the position to the member of that office’s staff to whom he spoke. He has, however, produced a contemporary attendance notice recording that she “confirmed” that the 14-day time limit for appealing a decision ran from the date the order was sealed. Mr Anderson, who appears for the defendants, rightly accepted that lawyers must do their work themselves and that they should not be able to depend on advice given to them by whoever is at the end of a telephone when they ring up an appeal court office. On the other hand, he said that this was an incident which we should take into account when we decided how we should exercise our discretion on the application by his clients for an extension of time.
7. In the mistaken belief that time for appealing did not start to run until the order was drawn up and sealed on 16th November, Mr Gildener’s firm did not attempt to file the appellants’ notice until 26th November. This would have been well within the 14-day period permitted under the rules. On this occasion they paid the appropriate fee, only to be told that their notice was out of time. A member of his firm then telephoned the Civil Appeals Office for clarification and explained the circumstances surrounding the case. She asked whether the notice was indeed out of time, given the delayed sealing of the order. Again, we do not know exactly what she said, or how it was understood. At all events she maintains that the assistant to whom she spoke, after checking with her superior, told her that the notice was not out of time, and that it could be filed within 14 days of 16th November.
8. The firm’s outdoor clerk then tried to file the notice again the following day, only to be told that it was out of time and that the defendants should make an application for an extension of time (see CPR 52.6(1)). It appears that Mr Gildener was away on holiday while all this was happening, but on his return on 3rd December he wrote a long letter to the Civil Appeals Office setting out the history, as he saw it, and inviting them to confirm that the notice had indeed been filed in time and that it could now be issued. On 13th December he received a reply to the effect that his letter had been referred to Deputy Master Joseph, who had made a direction in these terms:

“There are certain inaccuracies in [the solicitors’] letter of 3rd December. Let me deal with them first.

1. The time limit for filing an appellant’s notice is clearly set out in CPR 52.4(2)(a) and (b) as being 14 days after the date of the decision of the lower court that the appellant wishes to appeal, in the absence of any other period being directed by the Court. Therefore, it is entirely right that time is calculated from the date of the decision as shown in the order, which is 17th October 2001. If the parties felt there would be difficulties in complying with the deadline for filing an Appellant’s Notice the appropriate course would have been to ask the Judge to extend time pursuant to CPR 52.4(2)(a).

2. The Court will often accept an Appellant’s Notice when an order has not yet been drawn on the basis of an undertaking supplied by the Solicitors lodging it …

3. I cannot speak for what may or may not have been said in conversations between the solicitors and members of staff in the Registry. It is however, quite wrong for solicitors to attempt to rely on such conversations for the purpose of interpretation of legal practice which they, as lawyers, should be expected to know. They should also be expected to realise that CPR 52 made radical changes from the old RSC Order 59, one of which was that time now runs from the date of the decision NOT the date of the seal on the order (paragraphs 6, 7, 8, 9, 10, 11).

For the reasons I have given this appellant’s notice has been filed out of time.”

9. The defendants’ solicitors received this letter on 17th December. They did not seek a review of this decision pursuant to CPR 52.16(5). They were wise not to do so, and I take this opportunity of endorsing the correctness of the deputy master’s ruling and the reasons he gave for it. Instead they filed their application for an extension of time for appealing on 20th December, nearly ten weeks after Buckley J’s ruling on liability, and nine weeks after his ruling on costs.
10. Under the pre-CPR regime the practice of this court was conveniently summarised in note 59/4/17 of the 1999 edition of the Supreme Court Practice in these terms:

“It is entirely in the discretion of the Court to grant or refuse an extension of time. The factors which are normally taken into account in deciding whether to grant an extension of time for serving a notice of appeal are : (1) the length of the delay; (2) the reasons for the delay; (3) the chances of the appeal succeeding if time for appealing is extended and (4) the degree of prejudice to the potential respondent if the application is granted (see CM Stillevoldt BV v El Carriers Inc [1983] 1 WLR 297 …) …

Where the delay in serving notice of appeal is short and there is an acceptable excuse for it, an extension of time will not be refused on the basis of the merits of the intended appeal, unless the appeal is hopeless: Palata Investments Ltd v Burt & Sinfield Ltd [1985] 1 WLR 942. In Norwich & Peterborough Building Society v Stead [1991] 1 WLR 449 and Mallory v Butler [1991] 1 WLR 458 the Court of Appeal held that:

…

(4) The settled practice of the Court is to assess and take into account the merits of the proposed appeal in deciding whether or not to grant an extension of time for appealing (subject to the qualification in the Palata case (above)).”

11. Until October 1982 there was a six-week time limit for appealing to the Court of Appeal against final orders and a two-week time limit for appeals against interlocutory orders. This led to ancillary litigation over the status of the order being appealed, and an amendment to RSC O 59 r 4(1) was thefore introduced providing for a standard time-limit of four weeks for appealing against all orders, except as otherwise provided.
12. The authors of the report on the Review of the Court of Appeal (Civil Division) (September 1997), which I will call “the Bowman report”, suggested that these arrangements should be reformed in a fairly radical way. In addition to recommending a “common starting point”, being the date when the order was made (see para 5 above), they expressed the view at p 82 that the four week period was too short for appeals against final decisions and that it should be extended to six weeks. In this context they took into account not only their recommendation that a skeleton argument should now accompany the grounds of appeal but also the consideration that the present four-week period was often not quite long enough to allow for the preparation of transcripts. On the other hand, they recommended that the time limit for seeking leave to appeal against procedural decisions should be reduced to seven days.
13. They also recommended a new, much tougher regime in relation to the sanctions for non-compliance with time limits for appealing. They said (at p 91, para 54):

“For the system to work effectively, it is important that all rules and procedures are complied with strictly. In some Federal Circuits in the United States very little leeway is given if parties do not comply with the rules. Once this is clear, parties seem to find it easier to meet deadliness and other requirements. It is time this approach was applied in the [Court of Appeal].”

14. After noting with some concern that it was relatively easy to obtain an extension of time in which to apply for leave to appeal, and after quoting the Van Stillevoldt criteria (see para 10 above), they continued (at p 92, paras 56-57):

“We do not believe that whether an appeal has a realistic chance of succeeding should be relevant. There should be realistic time limits. There should be a strong presumption that time limits should not be extended save in exceptional circumstances.

A similar view should be taken about all the rules of the Court of Appeal. If they are not complied with, the applicant or appellant should be at risk of having his or her case dismissed or at least being penalised in costs.”

15. In the event, the Civil Procedure Rules Committee decided when formulating CPR 52.4(2)(b) to pay less attention to the need to provide more realistic time limits for appeals against final decisions to the Court of Appeal and more attention to the desirability of having a single set of rules for all civil appeals governed by CPR Part 52, whether procedural or final, and whether the “appeal court” (see CPR 52.1(3)(b)) is a circuit judge, a High Court judge or the Court of Appeal. This approach had the merit of eliminating most of the wrangling about the status of the decision appealed against which had led to the 1982 change to RSC O59 r 4(1) (for which see para 11 above).
16. In order to accommodate the difficulties which a 14-day time limit might present in heavy cases, the practice direction to CPR 52 (“CPR 52PD”) lists (at para 5.6) the documents which must be filed with the appellant’s notice but provides (para 5.7) that “where it is not possible to file all the above documents, the appellant must indicate which documents have not yet been filed and the reasons why they are not currently available”. This procedure enables the appeal court to apply pressure on an appellant to file all the necessary documentation (including any necessary transcripts) as soon as reasonably practicable.
17. Extensions of time are now governed by CPR 52.6 which provides that:

“(1) An application to vary the time limit for filing an appeal notice must be made to the appeal court.

(2) The parties may not agree to extend any date or time limit set by –

(a) these rules; or

(b) the relevant practice direction;

(c) an order of the appeal court or a lower court.

(Rule 3.1(2)(a) provides that the court may extend or shorten the time for compliance with any rule, practice direction or court order (even if an application for an extension is made after the time for compliance has expired)).”

CPR 52PD para 5.2 provides:

“If an appellant requires an extension of time for filing his notice the application must be made in the appellant’s notice. The notice should state the reason for the delay and the steps taken prior to the application being made.”

18. It must not be assumed that this provision sets out all the information a court may be likely to require in every case when deciding whether it is just to extend time for appealing in the face of non-compliance with the mandatory requirements of CPR 52.4(2). The court’s general power to extend the time for compliance with a rule (even if an application for extension is made after the time for compliance had expired) is contained in CPR 3.1(2)(a), and in deciding how to exercise that power the court must of course take into account the overriding objective in CPR 1.1. The question then arises whether the Civil Procedure Rules give any further guidance to judges as to how they should exercise their discretion when making orders under CPR 3.1(2)(a), or whether, uncharacteristically, the way is left wide open for the creation of judge-made check-lists of the type recently deplored by this court in the judgment of Jonathan Parker LJ (with whom Pill and Tuckey LJJ agreed) in Audergon v La Baguette [2002] EWCA Civ 10 at [107]:

“Inherent in such an approach, as it seems to me, is the danger that a body of satellite authority may be built up … leading in effect to the rewriting of the relevant rule through the medium of judicial decision. This would seem to me to be just the kind of undesirable consequence which the CPR were designed to avoid.”

19. In very many cases a judge will be able to decide whether to extend or shorten a period of time for complying with a rule, practice or direction without undue difficulty after considering the matters set out in CPR 52PD para 5.2. In more complex cases, of which this is undoubtedly one, a more sophisticated approach will be required.
20. The philosophy underpinning CPR Part 3 is that rules, court orders and practice directions are there to be obeyed. If a sanction is imposed in the event of non-compliance, the defaulting party has to seek relief from the sanction on an application made under CPR 3.8, and in that event the court will consider all the matters listed in CPR 3.9, so far as relevant. Similarly, if an application is made under CPR 3.6 to set aside a judgment obtained under CPR 3.5, the court will consider all the matters listed in CPR 3.9 unless it is shown that the right to enter judgment had not arisen at the time when it was entered (see CPR 3.6(3) and (4)).
21. In my judgment, it is equally appropriate to have regard to the check-list in CPR 3.9 when a court is considering an application for an extension of time for appealing in a case of any complexity. The reason for this is that the applicant has not complied with CPR 52.4(2), and if the court is unwilling to grant him relief from his failure to comply through the extension of time he is seeking, the consequence will be that the order of the lower court will stand and he cannot appeal it. Even though this may not be a sanction expressly “imposed” by the rule, the consequence will be exactly the same as if it had been, and it would be far better for courts to follow the check-list contained in CPR 3.9 on this occasion, too, than for judges to make their own check-lists for cases where sanctions are implied and not expressly imposed.
22. It follows that when considering whether to grant an extension of time for an appeal against a final decision in a case of any complexity, the courts should consider “all the circumstances of the case” including

(a) the interests of the administration of justice;

(b) whether the application for relief has been made promptly;

(c) whether the failure to comply was intentional;

(d) whether there is a good explanation for the failure;

(e) the extent to which the party in default has complied with other rules, practice directions and court orders;

(f) whether the failure to comply was caused by the party or his legal representative;

(h) the effect which the failure to comply had on each party; and

(i) the effect which the granting of relief would have on each party.

In the case of a procedural appeal the court would also have to consider item (g), “whether the trial date or the likely trial date can still be met if relief is granted”.

23. In the Autumn 2001 edition of Volume 1 of the White Book Service 2001 reference is made on p 46 to the unreported judgment of Lightman J in Commissioners of Customs and Excise v Eastwood Care Homes (COT 18 January 2000: The Times 7 March 2000) in which he was concerned with an application for an extension of time for appealing beyond that permitted by RSC O91 r 6(3). That case was decided in the period between the introduction of the main body of the Civil Procedure Rules in April 1999 and the introduction of the new appellate regime in CPR Part 52 in May 2000. I can understand why Lightman J created his own check-list of matters which should be taken into account in an application of this kind, some of which, as he said at paragraph 8 of his judgment, were specified in the rules and some of which were not. For the reasons set out in paragraph 18 above, however, judge-made check-lists of this kind are to be avoided wherever possible. Lightman J was, however, correct to say (at para 8 of the transcript of his judgment) that each application must be viewed by reference to the criterion of justice. He was also correct (at para 9) to say that one of the important features in deciding what justice requires is to bear in mind that time limits are there to be observed, and that justice may be seriously defeated if there is any laxity in that regard.
24. Having identified the criteria we must apply, I now turn to the merits of this application.
25. I do not consider that item (a), the interests of the administration of justice cast very much light either way. On the one hand there is an interest in rules being obeyed and the resources of the court not being taken up with ancillary disputes of this kind. On the other hand, the overriding objective is to deal with cases justly, so that resource considerations should not carry very much weight if fairness demands that an extension of time should be granted. Although the new regime has removed the absolute right to appeal against a final judgment in a case like this, they have given effect to the principle that a litigant should be allowed to have such a judgment reviewed by an appeal court provided that he can show that he has a real, and not a fanciful, prospect of success.
26. The application for relief (item (b)) was not made promptly in the strict sense, in that the time for appealing the order made on 12th October expired on 26th October, and the application for an extension of time was not made until 20th December. However, in the peculiar circumstances of the present case it was made very soon after the defendants’ solicitors received notice of the deputy master’s direction on 17th December.
27. The failure to comply was certainly not intentional (item (c)), and there was an explanation for the failure which even if it could not be categorised as “good” (item (d)) was certainly one which would incline a court in these fairly early days of the CPR appellate regime to be merciful, everything else being equal. The failure to comply was caused by the defendants’ legal representative (item (f)) and not by the defendants themselves.
28. Item (e) needs more detailed consideration on the facts of this case. It entitles the appeal court to take into account the extent to which the party seeking an extension of time has failed to comply in the past with other rules, practice directions and court orders. This introduces a factor which was never considered by the Court of Appeal in pre-CPR days.
29. We have been furnished by Mr Goodfellow with a note describing the procedural history of this action. It seems to have been started in 1994, and in September 1994 Mr Sayers’ solicitors entered judgment in default of defence. The existence of this judgment appears to have come to the attention of the defendants’ solicitors by the end of 1995, but they seem to have been very dilatory in producing an affidavit and draft defence in support of an application to set aside the judgment which they eventually made in July 1996, so that the judgment was not finally set aside until March 1997, with costs being ordered in favour of Mr Sayers.
30. The later procedural history of the action appears to have been marked by delays on the part of the defendants, in non-compliance with court orders. In June 1998 they were five and a half weeks late in providing discovery by list, after two previous extensions of time had been granted. Under an order made in April 1998 witness statements were to be provided by 25th June 1998, a timetable which slipped because of the delay in providing discovery. Mr Sayers, however, was ready to exchange witness statements in March 1999, but the defendants repeatedly requested extensions of time. They eventually delivered their witness statements on 1st September 2000, the day when the guillotine imposed by an “unless” order was due to fall. The history of the relevant events is set out in items 15 to 30 of the “detailed chronology of the defendants’ defaults and delays” which Mr Sayers’s advisers have prepared.
31. I would not place any great weight on the subsequent delays in the preparation and exchange of experts’ reports. Although Mr Sayers’s advisers complained of delay on the part of the defendants, they had been more than two months late in serving their own experts’ report, apparently because one of their client’s former accountants was claiming a lien on the papers he held and was only willing to make them available on terms.
32. Mr Anderson drew our attention to certain criticisms of the claimant’s conduct of the action in the judgment the judge delivered on 17th October 2001, but he made no very determined attempt to challenge any of the events set out in the detailed chronology with which we have been supplied, and it certainly appears from that chronology that the defendants, for the most part in pre-CPR days, had a bad record of non-compliance with court orders.
33. Turning to item (h), the effect of the defendants’ failure to comply with the rule has been to create a number of false dawns for Mr Sayers and his wife. The defendants evinced an early intention to seek permission to appeal and then failed to file their appeal notice (and serve it on Mr Sayers’s solicitors) within the permitted time, thereby raising hopes that they would not appeal after all. They compounded this failure by informing Mr Sayers’s solicitors on 6th December that they had lodged the papers at the Court of Appeal at a time when they knew the court had rejected the papers. When the true position was ascertained on 10th December Mr Sayers’s hopes were raised once again, only to be dashed ten days later when they received notice that the correct papers had been lodged. So far as Mr Sayers is concerned, his life was put “on hold” for all this time. His solicitors had estimated his costs at £290,000, and he had a judgment in his favour for over £68,000 (which was duly paid) and 60% of his costs of the action. Although the defendants had not sought any form of stay they were declining to pay him any sum on account of costs. Quite apart from the worry this continuing delay would have caused him, it was exacerbated for him by the depressive illness from which his wife is now suffering. Her general practitioner believes that the worries of her husband’s litigation was a major precipitating cause of this illness, which is unlikely to abate until the litigation process has been resolved.
34. So far as the defendants are concerned, the effect of their failure to comply with the rule means that they cannot appeal unless they obtain the relief they are now seeking. In cases where the arguments for granting or refusing an extension of time were otherwise evenly balanced, a court will have to evaluate the merits of the proposed appeal in order to form a judgment on what the defendants will be losing if time is not extended. The pre-CPR rule in the Palata Investments case (see para 11 above) is no longer relevant, because the court will not now entertain any appeal unless it is satisfied that there is a real prospect of success (or there is some other compelling reason for entertaining it). The consequence of the new requirement for permission to appeal is that if other factors militate towards the refusal of an extension of time, the likely prospects of success will have to be weighed in the balance. In other words the consequence of the appellants’ failure to comply with the rule will be more serious for them if the court thinks that it is more probable than not that their appeal will succeed if it is allowed to proceed than if its prospects of success are smaller, even though they are just past the threshold at which it can be said that they are “real” rather than fanciful. In the present case I will consider the merits of the proposed appeal in Part II of this judgment.
35. Finally, so far as the checklist is concerned, the effect which the granting of relief would have on the defendants is that if they go on to obtain permission to appeal they will have a chance of challenging the judgments entered against them. As to Mr Sayers, on the other hand, he will not only be relieved, if relief is refused, of the additional burden imposed on him by the defendants’ refusal to make him a payment on account of costs. He is also now having to borrow to finance his continuing legal costs, and the interest running on the costs order will not afford full compensation for their delayed receipt. The reason for this is that the interest on his borrowing will not be tax deductible, whereas the interest on the costs will be fully taxable.
36. After taking all these matters into account, I consider that this is a case in which this court ought, in the exercise of its discretion, to grant the extension of time sought by the defendants. Although I have great sympathy for Mr Sayers, and although a number of the matters I have considered point in his favour, it would in my judgment be a disproportionate response for the court to deny the defendants the opportunity of seeking to persuade us that they should be permitted to appeal, given the circumstances in which they came to delay filing their appellants’ notice and the other peculiar features of this history.
37. I should add, for completeness, that we were invited by Mr Anderson to consider the judgment of Peter Gibson LJ in Alliance and Leicester plc v Slayford (CAT 12 October 2000). The facts of that case were so very different, and the arguments addressed to us were so very different, that the citation of this unreported authority did not really assist us.
38. So far as the merits of the proposed appeal are concerned, Mr Goodfellow has delivered to us some cogent written submissions setting out reasons why we should not grant permission to appeal. The hearing on 18^th April, which lasted more than an hour, was occupied entirely with oral submissions on the matters with which this judgment is concerned. I consider that fairness demands that a further 30-minute hearing should be fixed as soon as possible at which we will hear Mr Anderson’s oral submissions on the merits of the proposed appeal. We do not require Mr Goodfellow to attend this hearing. If he does attend, we will not necessarily invite him to address us, because we have a clear understanding of the arguments with which he seeks to resist the granting of permission.
39. For the avoidance of doubt, this is a judgment which sets out general guidance on matters of practice, and the restrictions on citation that are contained in paragraph 6.1 of the Practice Direction (Citation of Authorities) [2001] 1 WLR 1001 do not apply to it.

Lord Justice Kay:

40. I agree.

Sir Christopher Staughton:

41. I also agree.