Jersey Unreported Judgments

[2005]JRC035C

royal court

(Samedi Division)

 

31st March 2005

 

 

 

 

 

Application by the Plaintiffs to reserve and/or vary the Master's order of 28^th March '04 dismissing the action.

 

Advocate M. R. Renouf for the Plaintiffs

Advocate R. J. MacRae for the Defendant

The First and Second Parties Cited did not appear and were not represented.

 

judgment

bailiff:

History

1.        The defendant in this action, Citadel Trust Limited, is a trust company registered in Jersey.  It is the trustee of a trust known as the Wells Settlement.  The defendant holds, through a nominee (M R Nominees Limited) 5,000 shares in a company called Fairsands Limited.  Fairsands Limited owns development land at Dover Beach, Christchurch, in Barbados.  These shares are subject to an option to purchase conferred upon the plaintiffs in this action by an agreement dated 1st December 1995. 

2.        By clause 3.1 of the option agreement, the plaintiffs were given the right to exercise the option for a period of twenty-six months, ending on 31st January 1998.  During January 1998, all three plaintiffs gave notice of their intention to exercise their option to purchase.  Enquiries on behalf of the plaintiffs revealed that the shares in question were subject to a registered mortgage.  There is a dispute between the parties as to whether this was an encumbrance preventing completion.  According to the defendant, only two of the plaintiffs were ready to proceed to completion on the first date which was fixed for this purpose; on the second planned completion date, 26th March 1998, only one of the plaintiffs attended ready to complete.  According to the plaintiffs, the defendant failed to provide satisfactory evidence of the discharge of the mortgage.  On 16th and 23rd March 1998 the defendant had imposed a deadline of 26th March for the plaintiffs to complete the purchase, failing which the defendant would regard the option as having lapsed.  On 27th March 1998, the defendant notified the plaintiffs that, in view of the plaintiffs' failure to complete on 26th March, it regarded the option as having expired.

3.        On 17th August 1998 the plaintiffs instituted proceedings against the defendant seeking to enforce the option and obtained an interim injunction from the Bailiff preventing the defendant from disposing of or otherwise dealing with the shares in Fairsands Limited.  On 25th August 1998, the plaintiffs began separate proceedings in Barbados, but those proceedings were stayed on 4th March 1999 by the High Court of Barbados, pending the outcome of the Jersey action. 

4.        The defendant filed its answer in the Jersey action on 2nd October 1998.  On 16th October 1998, the defendant applied for further and better particulars which were ordered by the Master on 8th December.  On 12th January 1999, the defendant applied for security for costs, and on 14th January, made a further request for further and better particulars.  On 18th January, the plaintiffs filed a reply.  On 1st February, the plaintiffs issued a summons seeking a stay, but this was subsequently withdrawn.  On 18th February 1999, by consent, the Court made an order for security for costs.  On 1st March, the defendant applied by summons for relief in relation to a failure to pay the security for costs.  On 4th March 1999, the Master made a further order in that respect.  No further procedural steps in the action have taken place since that time. 

5.        From August 1999 onwards, various negotiations and correspondence have sporadically ensued.  We will refer to those exchanges again below. 

6.        On 26th February 2004, the Master issued a circular pursuant to Rules 6/20(3) and 6/21(13) of the Royal Court Rules 1992, stating that the Court intended to dismiss the actions listed in the schedule, and requiring any party objecting to dismissal to issue a summons showing cause why such action should not be struck out.  Amongst the actions listed in the schedule was action no 98/115 between the plaintiffs and the defendant.  The circular was received by the firm of Carey Olsen, the legal advisers of the plaintiffs, on 27th February 2004.

7.        The practice of Carey Olsen was to have the schedule photocopied by a secretary and passed to the fee-earner allocated the task for reviewing it for the firm.  That legal assistant received the photocopied schedule, but unfortunately did not notice that the secretary had erroneously copied only the odd-numbered pages of the schedule.  Action number 98/115 was listed on an even-numbered page.  The legal assistant emailed those partners in the firm responsible for the actions on that part of the schedule which he had received; but six actions, including this one, were overlooked.  No action was therefore taken and, on 26th March 2004, action number 98/115, inter alia, was struck out by the Master pursuant to rule 6/20(3) and rule 6/21(13).  When the list of actions struck out on that day was examined by the legal assistant, he compared it, not with the original circular and schedule, but with the list of actions mentioned in his email to the partners.  He was not therefore alerted to the fact that this action had been struck out. 

8.        The matter was eventually noticed by Advocate Lakeman on 7th May 2004.  Between 7th and 14th May another legal assistant in Carey Olsen telephoned the Master to enquire as to the appropriate way in which to proceed.  The Master advised the legal assistant that, having exercised his discretion to strike out, he was functus officio, and that it was inappropriate for the matter to come back before him.  He advised that an application should be brought before this court seeking leave to appeal against his decision to strike out the action.  That advice was not taken and, on 14th May 2004, a summons was issued, returnable before the Master, to show cause why the following orders should not be made -

1.        That pursuant to the Court's inherent jurisdiction, action PL98/115, having been dismissed by the Master by an Act of the Court dated 26th March 2004, in accordance with Rule 6/20(3) of the Royal Court Rules 1992 (as amended), be reinstated;

2.        That pursuant to Rule 1/5 of the Royal Court Rules 1992 (as amended) and/or the Court's inherent jurisdiction, the Plaintiffs be granted an extension of time in which to make the application at point 3 herein;

3.        That action PL98/115 should not be dismissed pursuant to Rule 6/20(3) [sic] the Royal Court Rules 1992 (as amended);

9.        It was not until 20th October 2004 that the plaintiffs notified the defendant and the Judicial Greffe that they would not be pursuing their application before the Master, but would be applying to this Court.  On 5th November 2004, the plaintiffs issued a summons in more or less identical terms to that set out above, but returnable before this Court.  They also issued a notice of appeal seeking an extension of time within which to give notice of appeal and, subject to obtaining such an extension, seeking to reverse or vary the Master's order of 26th March 2004, dismissing the action. 

The grounds relied upon before for the Royal Court

10.      Mr Renouf, who appeared for the plaintiffs, advanced his argument on two alternative bases.  First, he submitted that the Master (and thus this Court) had an inherent jurisdiction to reinstate the action notwithstanding that it had been dismissed.  Secondly, he submitted that the Court had, on appeal from the Master's decision, a discretion to allow the action to continue.  He characterised the matter as one where a multi-million dollar contractual action had been dismissed due to a photocopying mistake by the plaintiffs' legal advisers.  Mr MacRae, who appeared for the defendant, does not accept that characterisation of the issues. 

Inherent jurisdiction to reinstate

11.      On the first submission advanced by Mr Renouf, we make two preliminary observations.  First, there is a distinction between an action which has been dismissed automatically, by the application of the relevant rule to the expiration of some time period on the one hand; and an action which has been dismissed as the result of the exercise of a judicial discretion on the other.  This distinction finds expression in the Rules.  Rule 6/20(2) of the 1992 Rules provides -

"where an action has been adjourned sine die, if at the expiration of five years from the date on which it was first so adjourned, no further steps have been taken, the action shall be deemed to have been withdrawn."

That is a form of "automatic" dismissal.  No discretion is involved.  The action "shall be deemed to have been withdrawn".  By contrast, Rule 6/20(3) provides -

"where at the expiration of five years from the date on which any action was set down on the hearing list, the trial of the action before the Royal Court has not been completed, the Court may, of its own motion, after giving not less than twenty-eight days' notice in writing to all the parties to the action, order that the action be dismissed."

Under this Rule, and under Rule 6/21(13) to which we shall come below, there is an exercise of judicial discretion; "... the Court may ... order that the action be dismissed ...". 

12.      The second preliminary observation is that the Rules make no provision for the reinstatement of an action which has been dismissed pursuant to any of the limbs of Rule 6/20 and 6/21.  This may be contrasted with the provision in Rule 9/3 enabling a default judgment to be set aside.

13.      Some discussion took place during oral argument on the case of Crocksford -v- Le Claire [1994 JLR304].  This was a case of "automatic" dismissal under Rule 6/22.  The Court held that the only means whereby the action could be reinstated was by recourse to the Court's inherent jurisdiction, and that it could, pursuant to that jurisdiction, exercise a discretion to reinstate such an action in exceptional circumstances.  This is not such a case. 

14.      Ebor SA -v- Incat Construction (Holdings) Limited [2001 JLR280] was a case where an action was dismissed pursuant to Rule 6/20(3).  Counsel for the plaintiffs submitted that Ebor was wrongly decided and it is, therefore, necessary to look at that judgment in some detail.  In Ebor the action was commenced in December 1992, pleadings were exchanged, and all procedural activity ceased in July 1993.  In June 1999, after the requisite twenty-eight days' notice had been given, the action was dismissed to pursuant to Rule 6/20(1).  We interpose to state that Rule 6/20(1) has now been repealed, but it was in substantially the same terms as the current Rule 6/20(3), except that it referred to the pending list rather than to the hearing list.  Nothing turns upon that for these purposes.  In January 2001, more than eighteen months after the dismissal of the action, the plaintiff issued a summons requesting that the action be reinstated, submitting that the Court had jurisdiction to do so, either under Rule 1/5 or under its inherent jurisdiction.  The defendant contended that Rule 1/5, which dealt with the extension of time periods, was not suitable for overturning a judicial act and that, in the absence of any Rule of Court, it would be going too far for the Court to resort to inherent jurisdiction to find such a power.  The Court dismissed the summons holding that it did not have jurisdiction under Rule 1/5 and that it was only in exceptional circumstances that it would be appropriate to resort to inherent jurisdiction to set aside a judicial act.  The Master concluded, at page 63 -

"I have come to the conclusion that I do not have the jurisdiction to entertain the present application.  What the plaintiff is doing, in reality, is asking me to overturn the decision of June 18th 1999 dismissing the action.  I do not consider that I have the power to do so.  It is only in exceptional circumstances that such a power may be exercised.  See Alsford -v- Alsford, nee Boyd and Blenheim Trust Co. Limited -v- Morgan, none of which apply here."

15.      Counsel for the plaintiffs contended that the Master had been wrong.  He placed considerable reliance upon the English case of Rastin -v- British Steel PLC [1994] 1WLR 732 which had been cited by the Master but, in counsel's submission, wrongly applied.  Counsel made two points.  (i)  The absence of a Rule allowing reinstatement did not conclusively exclude an inherent jurisdiction to do so.  (ii) The distinction between cases involving automatic dismissal and those involving a judicial act was not crucial in the context of ascertaining whether there was an inherent jurisdiction to reinstate. 

16.      In relation to that first point, counsel drew attention to the decision of the Court of Appeal in Bastion -v- Finance & Economics Committee [1991 JLR 370] where the Court invoked an inherent jurisdiction to supplement the relevant Rule of Court and to allow it to order the production of further and better particulars in the context of an administrative appeal.  Neil J A stated, at page 382, -

"One feature of the inherent jurisdiction is that it can exist alongside an identical or similar Rule of Court.  The Court does not lose its power because a rule is made (though there may be many cases where the Court will have no need to look outside the text of the Rule).  Striking out pleadings is the classic example of overlap of powers.  The fact that Rules of the Supreme Court in England make express provision for striking out and dismissing an action or pleading has been held not to displace the Court's inherent power to do so.  As Sir Jack Jacob said in his lecture (loc. cit., at 50):  "The inherent jurisdiction of the Court is a most valuable adjunct to the powers conferred on the Court by the Rules."  In our judgment, the Royal Court had the power, under its inherent jurisdiction in this case, to order the Committee to supply further and better particulars of allegations in the Committee's case."

17.      This decision must, however, be read in the light of subsequent decisions of the Court of Appeal to which Mr MacRae referred us.  Counsel cited Mayo -v- Cantrade [1998 JLR 173] where Smith J A stated at page 188 -

"In our view, the vital clue to the nature of inherent jurisdiction in its procedural setting, ... is necessity.  The Court has a particular procedural power because it has to have it to be a Court in any meaningful sense.  On this basis, the power to require the attendance of witnesses, whether to testify or to produce documents, the power to control abuse of the process of the Court, the power to dismiss claims for want of prosecution, the power to issue practice directions, the power to decide who may or may not appear before the Court, the power to correct errors in its own orders and many other powers, may all be recognised as derived from a single pool, not of powers, but of power drawn upon as necessity dictates."

The doctrine of necessity laid down in Mayo -v- Cantrade has been followed in Jones -v- Attorney General [2000 JLR 103] and other subsequent cases.  It is difficult to see how the Court can find an inherent jurisdiction to reinstate an action which has been dismissed if the second ground upon which counsel for the plaintiff relies, namely an appeal to this court, is available to him. 

18.      In Rastin, the English Court of Appeal held that where an action brought in the county court had been struck out under the automatic procedure prescribed by Order 17, rule 11(9) of the County Court Rules 1981 for failure to request the fixing of a hearing date, the county court had jurisdiction under Order 13, rule 4 to extend time retrospectively for the making of that request and thereby to reinstate the action.  Lord Bingham MR stated at page 738 -

"For the defendants it is argued that automatic striking out under Ord. 17, r. 11(9) amounts to a deemed dismissal of the action for want of prosecution.  The action is then dead and there is no jurisdiction to revive it.  Particular attention is drawn to the fact that striking out is a result which is under the Rules to follow automatically and not as a result of judicial order.  Attention is drawn to the Civil Justice Review (1988) (Cmnd. 394), ch. 4, pp. 39-41, paras. 220-228, and to the recommendation that the courts should be actively involved in monitoring the progress of actions. It is pointed out that Ord. 17, r. 11 contains no express provisions, such as is found, for instance in Ord. 21, r. 1(3), that the court may restore proceedings which have been struck out, on application or of its own motion.  The time limits laid down are, it is submitted, generous; if a plaintiff cannot meet them he can apply under paragraph (4) of the rule for the six month period to be extended;  but once the action has been automatically struck out that result must be intended to be final. 

We see considerable force in the defendants' submissions, but we reject them for four reasons.  (a)  The authorities do in our view establish that the court's general power under Ord. 37, r. 4 will not be treated as excluded unless it is excluded expressly.  There is here no express exclusion.  (b) The contrast with Ord.  9, excluded unless it is excluded expressly.  There is no express exclusion.  (b)  The contrast with Ord.  9, r. 10 is in our view persuasive.  That is a very clear exclusion of Ord.  13, r. 4.  We attach less significance to Ord, 21, r. 1(3), which applies where a plaintiff's action is struck out on his failure to appear at the hearing.  The rule may exist to make clear that the court can act of its own motion.  (c) While the Civil Justice Review may have envisaged an automatic and final striking out at a certain stage, it also envisaged that a plaintiff would be given express notice before this occurred.  Ord. 17, r.  11 provides for no such notice (other than through the Rules themselves).  It seems unlikely that the draftsman intended to provide an irrevocable penalty without also providing this important safeguard.  (d)  Hard cases are bound to arise in which plaintiffs, otherwise largely blameless, fail, perhaps through accident or mischance, to comply with the rule.  We do not think it can have been intended to deprive the court of all power to give a remedy in appropriate cases.

We accordingly agree with the majority of the judges in the cases before us in holding that the court does have jurisdiction under Ord. 13, r. 4 retrospectively to extend time for requesting a hearing date following an automatic striking out of the action under Ord. 17, r.11(9)."

19.      This passage makes it clear, in our judgment, that -

(i)        no question of inherent jurisdiction arose in Rastin; the Court of Appeal held that relevant Rule would be employed to extend time retrospectively so as, in effect, to reinstate the action; and

(ii)       the Court of Appeal did draw a clear distinction between cases involving an automatic striking out and those where notice had been given to the parties. 

20.      It seems to us that the Master did not misapply the decision in Rastin.  On the contrary, he referred to the very passage from the judgment of the Master of the Rolls which we have cited above, and reached the same conclusion that we have recorded at paragraph 19 (ii) above.  There is an important distinction between an automatic dismissal and one which involves the exercise of judicial discretion.  Once a court has pronounced judgment and the order has become effective, the court cannot reopen the matter and substitute a different decision in place of the one which has been recorded.  A court can of course apply the slip rule, but it cannot amend or revoke the substance of the judgment.  That can only be done on appeal.  In our judgment, Ebor was correctly decided by the Master.  It follows that the first of Mr Renouf's principal submissions must be rejected.  There is no inherent jurisdiction to reinstate an action which has been dismissed pursuant to Rule 6/20(3) or Rule 6/21(13). 

Appeal against the Master's decision

21.      The second principal submission of Mr Renouf was that the Court had, on appeal from the Master's decision, a discretion to set aside the order dismissing the action.  Unfortunately, the plaintiffs have compounded their difficulties by failing to comply with the relevant time limit for bringing such an appeal.  Rule 15/2(2) provides that notice of appeal shall be given to the Greffier and to the every other party to the proceedings within ten days of the order or decision complained of.  The order dismissing the action was made on 26th March 2004, and notice of appeal should have been lodged by 5th April.  The summons seeking an extension of time within which to appeal was not in fact issued until 5th November 2004, seven months later. 

22.      The first question is therefore whether the Court should grant an extension of time under Rule 1/5 within which to lodge the notice of appeal.  In Taunton -v- Planning & Environment Committee (April 18th 2000, unreported), Southwell J A, applying an earlier judgment of the Court of Appeal in Barker -v- Barclays Bank PLC, held that in exercising his discretion to allow an enlargement of time, he would consider (a) the extent of the delay, (b) any explanation for it, (c) the prospects of the success of the appeal, and (d) the risk of prejudice to other parties to the proceedings.  In Taunton, the four months' period allowed by the Rules for filing the appellant's case expired on 6th December 1999.  The summons was not issued until 22nd March 2000, although Southwell J A accepted that the personal circumstances of the advocate for the appellant allowed him to take the view that the delay was no more than two months.  The explanation given was that the advocate was too busy to deal with the matter.  An extension of time was refused. 

23.      In Hickman -v- Hickman [1987 JLR 602], this Court refused to enlarge time for filing the appellant's case when the four months' period had expired and a further seven weeks had elapsed. 

24.      In this case, the extent of the delay is considerable and no explanation has been given for it.  That is all the more extraordinary in that the plaintiff's lawyers were advised by the Master in May 2004 that he considered himself to be functus officio, as he was, and that the Plaintiff's only remedy was to seek to appeal to this Court.  Time limits are important and are to be observed.  The failure to file a summons seeking an extension of time for seven months against the background of a limit of ten days, and to offer no explanation for the delay, seems to us inexcusable and would by themselves, justify a refusal to extend time.  In deference to the other arguments advanced by counsel in relation to the merits, we will however deal with those submissions. 

25.      We observe in passing that this action had not been set down for hearing and that no jurisdiction to dismiss pursuant to Rule 6/20(3) therefore arose.  The only jurisdiction vested in the Master to dismiss the action after notice arose from Rule 6/21(13).  Rule 6/21 places a duty upon a plaintiff, within one month after the time limit for filing pleadings has expired, to issue a summons for directions.  This Rule was introduced, amongst other changes, to ensure that civil litigation is conducted in a timely and cost-effective manner.  Delay is the enemy of justice, and Rule 6/21 was designed to make it clear to plaintiffs and to their legal advisers that there is a duty to keep the train of litigation moving and to ensure that it does not get stuck in a siding.  Rule 6/21(13) allows the Court, of its own motion, after five years in effect to call upon the plaintiff to justify the delay and, in default of justification, to bring the litigation to an end.  In practice, the Master will give notice to the parties, as he gave notice to the plaintiffs in this case, that "Any party objecting to an action being dismissed must do so by issuing a summons to show cause why the action should not be struck out".  The burden is on the objecting party.  On any such application being made, the Court should not exercise its discretion on principles similar to those relevant to an application to cure a procedural defect in the ordinary course of an action.  That would pay insufficient regard to the fact that this provision is intended to be a draconian power of last resort where the plaintiff has failed for five years to comply with his obligation to seek the directions of the Court.  Nor should the Court treat the application as the obverse of an application to dismiss for want of prosecution, with particular attention being paid to any prejudice (or absence of prejudice) suffered by the defendant.  The whole purpose of Rule 6/21 is to ensure the diligent prosecution of the case by the plaintiff.  It must be borne in mind in the future that on 31st October 2003 the Master sent a circular letter to all members of the legal profession stating that "the Bailiff has indicated the wish of the Royal Court to ensure that existing actions progress as quickly as is reasonably practicable.  Furthermore in relation to new actions it is the expressed wish of the Royal Court that all parties and their advisers should seek to have actions disposed of within twelve months of their commencement wherever that is possible".  That letter was followed by a further circular from the Master on 26th February 2004 where it was stated - "It should not be assumed that the Master will readily agree to an action being allowed to continue.  He will require the applicant to convince him that this is appropriate".  This is the background against which applications under Rule 6/20(3) and Rule 6/21(13) are to be considered.

26.      We find helpful, and we respectfully adopt and adapt for our purposes another passage in the judgment of Lord Bingham M R in Rastin -v- British Steel PLC [1994] 1 WLR 732 at 740 -

"[An application] should not succeed unless the plaintiff (in which expression we include his advisers) is able to show that he has, save in his failure to comply with [the rule], prosecuted his case with at least reasonable diligence.  That does not mean that there is no room to criticise any aspect of his conduct of the case, but that overall he is innocent of any significant failure to conduct a case with expedition, having regard to the particular features of the case.  The plaintiff's failure to comply with the rule can never be justifiable, but he must in all the circumstances persuade the court that it is excusable."

27.      In our judgment, applying these principles to the facts of this case, it was quite inexcusable to take no procedural steps in the action between March 1999 and March 2004.  It is true that during this period, negotiations to settle the dispute were continuing with greater or lesser energy at different times.  However, as Hamon, Commissioner, stated in Croxford -v- Le Claire 1994 JLR 304 at 313 "Active negotiations cannot be a sufficient reason for a delay".  A plaintiff's remedy in circumstances where negotiations for settlement are proceeding is to comply with Rule 6/21 and to make an application for directions, or to seek a stay.  These plaintiffs did nothing.

28.      This is not therefore a case, in our judgment, where an important claim has been dismissed as a result of a trivial photocopying mistake.  Even if an application had been made by summons to the Master in response to the circular letter in February 2004, we can see no valid grounds upon which a striking out might have been resisted. 

29.      The plaintiffs' summons and application for an extension of time within which to lodge a notice of appeal are accordingly dismissed. 

Authorities

Royal Court Rules 1992: Rule 6/20 (3); 6/21 (13).

Crocksford -v- Le Claire [1994 JLR304].

Ebor SA -v- Incat Construction (Holdings) Limited [2001 JLR280].

Rastin -v- British Steel PLC [1994] 1WLR 732.

Bastion -v- Finance & Economics Committee [1991 JLR 370].

Mayo -v- Cantrade [1998 JLR 173].

Jones -v- Attorney General [2000 JLR 103].

Hickman -v- Hickman [1987 JLR 602].