Cavell USA Inc & Anor v Seaton Insurance Company & Anor

Where an order is made without a hearing under the Civil Procedure Rules, an objecting party may apply to set it aside. The court hearing that application must reconsider the underlying application de novo, rather than conduct a limited appellate review. Although a contested stay application should ordinarily be heard orally, dealing with it on paper does not necessarily breach natural justice where the rules provide an effective right to apply for the order to be set aside. An extension of time for a prospective jurisdiction challenge will be rare without a need for further preparation and requires good reason. Case-management powers concerning such a challenge do not ordinarily extend to staying the whole proceedings.

The claimants applied to set aside an order made by Field J on a paper application. The order had stayed the English proceedings and extended time for the defendants, who had not submitted to the English jurisdiction, to challenge jurisdiction under Part 11.

The underlying dispute concerned English proceedings arising from an exclusive jurisdiction clause and related proceedings in New York. The defendants sought the stay pending determination of a New York motion to dismiss. The central issues were whether the paper order should be set aside, the correct approach on that application, and whether there was good reason to extend time or stay the proceedings.

1. The order was set aside. The defendants’ application for a stay was dismissed.
2. Under Part 23.8(c) of the Civil Procedure Rules 1998, the court had discretion to determine an application without a hearing. The Commercial Court Guide indicated that, where a party objected to a paper determination, proceeding in that way should occur only in an exceptional case. A contested stay application was ordinarily suitable for an oral hearing. Nevertheless, the procedure did not itself breach natural justice because the objecting party had a right under the applicable Practice Direction and Part 3.3(5) to apply to set aside the order.
3. That application had to be heard de novo. The court was required to reconsider the merits of the underlying application, rather than conduct a limited review based on the submissions previously available to the judge who made the paper order.
4. The court’s powers to extend time for a Part 11 jurisdiction challenge were not confined to allowing additional preparation time. However, absent such a need, an extension would be granted only in rare cases and where good reason was shown. The limited case-management powers available in relation to a prospective challenge by a party that had not submitted to the jurisdiction could not properly be used to stay the entire proceedings.
5. The costs incurred in New York and the possibility that the New York motion might clarify the jurisdiction challenge did not amount to good reason. Under sections 32 and 33 of the Civil Jurisdiction and Judgments Act 1982, any New York judgment would not bind the English court or the claimants at the Part 11 stage. Construction of the Term Sheet, including its exclusive jurisdiction clause, was quintessentially a matter for the English court. There was therefore no sufficient basis for extending time, still less for maintaining the stay.

On 20 February 2008, Field J made the order on paper, staying the proceedings and granting the defendants the relief sought. The present court reconsidered the underlying application de novo, set aside that order and dismissed the defendants’ application.