Ferrotex Industrial Limited & Anor v Banque Francaise De L'Orient

An agreement embodied in a consent order does not, without clear express or implied words, exclude the court’s jurisdiction to extend time for compliance. The party’s agreement to the time limit remains an important consideration.

Relief from the automatic dismissal imposed by an unless order requires a proportionate balancing exercise under Civil Procedure Rules, CPR 3.9(1). The court must consider all the circumstances, including finality, the administration of justice, disruption to hearing arrangements, the explanation for default, prior compliance and the effects on both parties. A prompt but poorly prepared, unintentional default may still justify refusal. Deliberate non-compliance because a party dislikes the order, without good explanation, is a compelling reason to refuse relief.

Two applications to extend time for providing security for appeal costs were heard together. In the Ferrotex proceedings, Bulgarian corporate appellants had agreed a consent order requiring a bank guarantee by 10 July 2001, failing which their appeal against dismissal of their claim would stand dismissed. The guarantee was issued after the deadline.

In the Zappia proceedings, the appellants sought to challenge Blofeld J’s refusal to permit extensive amendments to a professional-negligence claim against their former solicitors. A contested order required payment of £50,000 into court by 3 July 2001, with automatic dismissal of the appeal on default. The appellants deliberately did not provide the ordered security.

The central issue was whether relief from the sanctions imposed by the unless orders should be granted.

Disposition

The Court of Appeal unanimously refused both applications. Each appeal therefore remained dismissed under the relevant unless order.

1. Jurisdiction in Ferrotex. Lord Justice Tuckey held, with whom Lord Justice Peter Gibson agreed, that the consent order embodied a real contract conditional on the court making the order. That did not itself prevent an extension of time. Jurisdiction would be excluded only if the parties had expressly or impliedly agreed to exclude it. Although time was important, the correspondence disclosed no such agreement. The Court did not decide whether the Civil Procedure Rules conferred a wider power to override a consensual arrangement, a possibility tentatively suggested in Ropac Ltd v Inntrepreneur (2001) L & TR 93.

2. Applicable approach. Where an interlocutory unless order provides for automatic dismissal of an appeal, the Court must conduct a balancing exercise under CPR 3.9(1), taking account of all the listed matters and the overriding objective, including proportionality. An agreed time limit and the finality intended by an unless order are material considerations, but do not displace that exercise.

3. Ferrotex application. The default was unintentional and the application was prompt. Refusal would deprive the appellants of an appeal with a real prospect of success. However, they had agreed an unusually short deadline because the listed hearing was imminent; their inadequate preparation and failure to alert the banks to the deadline provided no good explanation; the hearing slot had been lost; and their litigation history included delay and non-compliance. Those matters outweighed the factors favouring relief.

4. Zappia application. The failure was intentional. Mr Zappia disliked the security order, disinstructed solicitors who urged compliance, and did not provide the ordered payment. That was not a good explanation. Those features alone justified refusal, particularly given the prejudice of reviving an appeal seeking substantially to enlarge serious allegations against the respondent.

• Court of Appeal (Civil Division) — Refused the applications for extensions of time and relief from the automatic dismissal of both appeals.
• High Court, Commercial Court — Dismissed the Ferrotex claim after an eight- or nine-day trial. Permission to appeal was subsequently granted by Brooke LJ.
• High Court — Blofeld J refused the Zappia appellants permission to make extensive amendments to their claim. Permission to appeal was subsequently granted by Kay LJ.