Neglected Proceedings - Lifting the Stay imposed by r.15.11

Author: Simon Hill
In: Article Published: Thursday 27 September 2018

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A claim will be automatically stayed under CPR r.15.11(1) where the claimant allows 6 months to pass from the end of the period for filing a defence, without the claimant applying for or having judgment entered (judgment in default or summary judgment), in circumstances where no defendant has served or filed an admission or filed a defence or counterclaim. Where the claim has been stayed under r.15.11(1), r.15.11(2) permits the claimant (‘any party’)[1] to apply to Court for an order lifting the stay. This article will consider when and in what circumstances, the stay will be lifted. In particular, it will consider three recent cases on r.15.11(2), Football Association Premier League Ltd v O’Donovan [2017] F.S.R. 31 (‘Premier League’), Citicorp Trustee Co Ltd v Al-Sanea [2017] EWHC 2845 (Comm)(‘Al-Sanea’) and McLinden v Lu, unreported 30 April 2018, (‘McLinden’). 

Civil Procedure Rules r.15.11

CPR r.15.11 provides that:

Where—

(a) at least 6 months have expired since the end of the period for filing a defence specified in rule 15.4;

(b) no defendant has served or filed an admission or filed a defence or counterclaim; and

(c) the claimant has not entered or applied for judgment under Part 12 (default judgment), or Part 24 (summary judgment), the claim shall be stayed.

(2) Where a claim is stayed under this rule any party may apply for the stay to be lifted.’

Rule 15.11 is structured into two parts. In the first part, r.15.11(1) prescribes the circumstances in which the stay will be imposed. The imposition of the stay is not by the Court by court order, but rather it is imposed by the rules themselves. Where the prescribed circumstances arise, the stay is imposed automatically, without intervention from the Court. In the second part, r.15.11(2) permits any party to the claim to apply to have the stay lifted. Inferentially therefore the Court is empowered to accede to the application and order the matter be unstayed. When drafting r.15.11(2), the Civil Procedure Rules Committee elected not to specify the test to be applied by the Court when faced with a r.15.11(2) application, nor did it specify expressly what factors/circumstances ought (and ought not) to be taken into account when resolving a r.15.11(2) application. Rather, it has been left to the Courts to fashion the test to be applied, and also to identify the relevance and weight of various factors which may feed into that test. Though some small steer might be gleaned from Practice Direction 15, paragraph 3.4, which directs that any application under CPR r.23 to lift the stay imposed by r.15.11(1) '...should give the reason for the applicant’s delay in proceeding with or responding to the claim.'

The Authorities 

The first reported case on r15.11(2) is Premier League, a decision of Chief Master Marsh. The salient facts in Premier League were that the governing body of the association football competition known as the Premier League, issued proceedings on 25 May 2016 against a pub licence holder (the first defendant), alleging that the licence holder had infringed its copyright in respect to corporate logos and onscreen graphics, by screening football matches to customers in the pub though a live feed. No admission, acknowledgment of service nor defence was filed. 6 months passed with no application/request for judgment being made. On 27 December 2016, r.15.11(1) imposed an automatic stay. The application was issued at some point prior to 18 January 2017 hearing. 

In his judgment handed down on 3 February 2017, Chief Master Marsh sought to identify how the Court ought to approach an application under r.15.11(2) to lift a r.15.11(1) stay. At paragraph 11, he said:

‘The purpose served by CPR 15.11 is not immediately obvious other than, perhaps, it encourages claimants to make a decision about what steps to take to pursue a claim and renders inactive claims that might otherwise lie merely somnolent on the court file. It might also, perhaps more in theory than in reality, provide comfort to a defendant that no further action in the claim can be taken save with the court’s permission. However, it seems to me that the rule is not intended to place an especially heavy burden on the claimant to discharge before the court will agree to the stay being lifted. In the usual way, the court must weigh the competing interests of the parties in the balance. 

Applying the facts in Premier League to this weighing of '...competing interests of the parties in the balance', Chief Master Marsh said, at paragraph 11:

Here, there is an adequate explanation of the delay and the claimant has a claim with real prospects of success. These two factors are closely linked because the claimant wishes to amend its claim to bring it into line with changes that have occurred since the claim was issued. The delay has been largely caused by steps being taken to give effect to those changes. So far as the merits are concerned, having already dealt with a considerable number of similar claims, I am aware that most other similar claims have not been contested. In any event, the amended claim demonstrates a claim based upon reasonable grounds. Added to that, there has been an almost complete lack of engagement by the first defendant and part of the delay has been caused by the defendant himself. On the other side of the balance, there is no obvious prejudice to the defendant caused by the delay of six months and I note that steps were taken to revive the claim within that period. In all the circumstances I am satisfied that it is appropriate to lift the stay.

From this it is possible to discern that, when applying the test of ‘appropriateness’, Chief Master Marsh considered the following as some of the important factors in the balance:

  1. Whether the claimant had an adequate explanation for the delay;
  2. Whether the claimant’s claim had (at least) a real prospects of success;
  3. The defendant’s behaviour, and including his engagement with the court process, and whether any delay was caused by the defendant’s actions; 
  4. The nature and extent of any prejudice the defendant would suffer in the event that the stay is lifted;
  5. Whether any attempts were made by the claimant, within the 6 months, to ‘revive’ the claim. 

The second authority is Citicorp Trustee Co Ltd v Al-Sanea [2017] EWHC 2845 (Comm)(‘Al-Sanea’) a decision of Peter MacDonald Eggers QC sitting as a High Court Judge. He heard a number of applications, including an application under r.15.11(2). The facts in Al-Sanea were complex, but for present purposes it is sufficient to note that on 12 October 2016 two claims were issued against two defendants.  Service was affected on 20 January 2017. Very significant efforts were then made by the claimants to bring the existence of the proceedings to the attention of the defendants. At paragraph 43, the Deputy High Court Judge said, 

‘In these circumstances, I have no hesitation in holding that the Claimants have done all that was reasonably required to bring the proceedings to the attention of [the Defendants]’.

The defendants in Al-Sanea did not engage at all with the Court process. The period for filing the defence expired on 3 February 2017. When 6 months was allowed to pass (to 3 August 2017) without judgment being entered or application/request made for judgment, r.15.11(1) was triggered and a stay was imposed (see paragraph 54). On 4 September 2017, 1 month later, the claimants applied to lift the stay under r.15.11(2).

In approaching the application, the Deputy High Court Judge applied the reasoning in Premier League. At paragraphs 56 to 58, the Deputy High Court Judge noted the submissions, and then determined the application. He said:

‘[Counsel for the Claimants] submitted that the stay should be lifted because (a) the delay in issuing the application after the stay was short, (b) the delay is reasonably explicable, (c) there would be no prejudice to the Defendants, and (d) the Claimants' claims plainly have a good prospect of success.

I have no hesitation in ordering that the stay be lifted. The delay in issuing the application after the imposition of the stay was short…The current applications were issued on 4th September 2017, one month after the stay took effect. The delay leading to the imposition of the stay, such as it was, was explained … that the interim period was taken up by the steps taken to serve the proceedings on the Defendants and to bring them to the attention of the Defendants, by consultations with the Certificateholders, who had the real economic interest in the transaction, and by taking legal advice with respect to the interaction between the English proceedings and the proceedings in the KSA.

In addition, I cannot see that there is any prejudice to the Defendants. By contrast, there would be considerable prejudice to the Claimants if the stay were not lifted, especially as, as I decide below, the Claimants have valid claims against each of the Defendants.’

Here then, were factors similar to those that proved relevant to the determination in Premier League. Particular weight was given in Al-Sanea to:

  1. the reason for the delay leading to the stay being imposed;
  2. the length of delay in applying to have the stay lifted; 
  3. the reason why the application to lift the stay was not made earlier. What were the claimants actions and why. 
  4. The respective balance of prejudice, between granting and dismissing the r.15.11(2) application; 

The last of the three authorities is McLinden v Lu (‘McLinden’), 30 April 2018 (unreported), a decision of Butcher J. In McLinden, the claim form was served on the defendant on 7 June 2017 and by 3 July 2017 the defendant had failed to file an admission, defence or acknowledgement of service. The claimant not having requested/applied for judgment in default, r.15.11(1) automatically imposed a stay on 3 January 2018. On 9 April 2018, just over 3 months later, the claimant applied for an order lifting the stay. 

When considering the correct approach on a r.15.11(2) application, Butcher J stated that he drew ‘assistance’ (paragraph 6) from Premier League and Al-Sanea cases[2]before quoting expressly paragraph 11 in Premier League.  He then applied the principles from the Premier League and Al-Sanea cases[3].

Firstly, Butcher J in McLinden noted that the application to lift the stay was unopposed. At paragraph 7, he said: 

‘…the first point to note is that the application to lift the stay has not been opposed by the Defendant. That of itself is a significant point in relation to the determination as to what is the appropriate course.

Secondly, Butcher J looked at what else had been going on in the litigation. On 14 June 2017, the claimant had obtained a freezing order against the defendant (continued on 28 June 2017), with the order being served on the defendant on 2 November 2017. Moreover, as Butcher J put it at paragraph 3:

‘During the period between the failure of the Defendant to [file either an admission or defence or an acknowledgement of service within 23 days] and the imposition of the stay which occurred on [3 January 2018], there have been steps taken in the action of which the Defendant was or certainly ought to have been aware.’[4]

Thirdly, the Judge took into account whether, after 3 January 2018, the defendant had thought that the claim against him had been abandoned, and also whether there was any good reason for the claimant failing to issue his r.15.11(2) application sooner. Central to both these factors was the existence of a letter sent by the defendant to the claimant, after 3 January 2018. Butcher J noted this, at paragraph 4:

‘It is also significant to record that after the imposition of the stay on [3 January 2018], on [15 January 2018] the Claimant received a letter from the Defendant saying that he would be hearing from her solicitors in relation to the Oxford property, Westminster Way. That has the significance that, firstly, it indicates that the Defendant did not at that stage think that the claim against her had gone away and, secondly, it gave rise to what the Claimant says was or appeared to him to be a possibility that the case might be resolved and for that reason he allowed a certain amount of time to pass in order to see whether there would indeed be a resolution. In fact nothing happened.

He considered the length of the delay until the r.15.11(2) was issued, and whether its length was ameliorated by the claimant’s actions during that time. At paragraph 7, he said:

It is true that in relation to the extent of the delay there has been a period of some four months after the imposition of the stay. On the other hand, in context, that was not a period in which the claim was simply somnolent. There were steps being taken during that period in relation to the claim, in the sense that there was service of the freezing order. It is clearly not the case that the Defendant believed – she certainly had no good reason to believe – that the claim had been abandoned.

Accordingly, although the period of four months is, as I say, longer than that in the two cases which have been cited, it does not seem to me that the period is one which precludes the grant of a lifting of the stay.

A further reason was tendered for why time was allowed to pass before the r.15.11(2) application was made - that the claimant was not aware of the r.15.11(1) stay rule itself. That was not a particularly good reason, as Butcher J said, at paragraph 9:

As to the explanation for the delay which is given, which is that the Claimant did not know of the existence of the rule, that may be said, in a sense, not to be a particularly good reason given that the rule has existed for some time. 

The Court distinguished ignorance of the rule, from a deliberate decision to delay applying (perhaps for tactical reasons) - with the latter likely to render an application to lift a stay, less meritorious. Butcher J said, at paragraph 9:

On the other hand, this was not a case of some tactical decision or deliberate choice not to take steps within that period. It was a situation in which the claim was being progressed in the way that I have referred to, even though there was not actually the making of an application for default or summary judgment as required by the rules. In those circumstances, the explanation which is given is again one which I do not consider should preclude the grant of a lifting of the stay...'

Lastly, the balance of prejudice to the respective parties from acceding, or dismissing, the application, proved an important factor. Butcher J said, at paragraph 10:

'...I can discern no prejudice to the Defendant in the lifting of the stay. The Defendant has not been engaging with the litigation and there is no clear reason to think that the Defendant will be in any worse position by reason of the matter being dealt with now than she would have been if the application for summary judgment or default judgment had been issued before [3 January 2018]. On the other side, there would be significant prejudice to the Claimant if the stay were not lifted. The claim has at least reasonable prospects of success as indeed has been considered to be the position by Popplewell J in the grant of the freezing order, and it is a claim for a significant amount - some £300,000. In those circumstances, it seems to me that the prejudice to the Claimant would very considerably outweigh any possible prejudice to the Defendant…

In conclusion, Butcher J in McLinden applied the ‘appropriate’ test and acceded to the r.15.11(2) application, stating at paragraph 10 that:

‘Here, it seems to me that the balance is clearly in favour of a lifting of the stay' and 

'…in those circumstances, it seems to me that the appropriate order is for the stay to be lifted[5].’

As will be apparent, factors that proved important in Premier League and Al-Sanea were also important in McLinden. The relevant factors in McLinden, included: 

  1. Whether the application to lift the stay was opposed by the defendant;
  2. The extent of the delay between the stay being imposed, and the application to lift the stay;
  3. Whether between the stay being imposed and the application to lift the stay being made, the claim was simply somnolent;
  4. Whether the defendant believed, or perhaps had good reason to believe, that the claim had been abandoned;
  5. Whether the delay before applying to lift the stay was because of some tactical decision or deliberate choice, taken by the claimant, not to take steps within that period, or whether delay resulted from the claimant being ignorant of r.15.11(1) and its automatic stay provision;
  6. The balance of prejudice as between acceding to, or dismissing the application to lift the stay;
  7. Whether the claim had at least reasonable prospects of success and the size of the claim.

Costs of the Application to Lift the Stay

One view might be that granting an order lifting a stay is an indulgence, akin to the Court granting a party relief from sanctions. Consequentially, the party seeking the Court’s indulgence, the applicant, ought to pay the other side’s costs of the application, unless the other side’s resistance to the applicant had been unreasonable [6]. Consistent with such a view, Butcher J in McLinden provisionally [7]considered that the successful applicant/claimant ought to pay the costs of the respondent/defendant. At paragraph 11, Butcher J said: 

‘In circumstances…where the stay has come about only by reason of the Claimant's failure to comply with the six month period, it would seem to me…that the Claimant should bear the costs of that application.

SIMON HILL © 2018

BARRISTER

33 BEDFORD ROW

NOTICE: This article is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of Chambers or by Chambers as a whole.


[1]The CPR permits any party to apply to lift the stay, but almost always it will be the claimant rather than the defendant seeking a lifting of the stay. CPR r.15.11(2) reads‘Where a claim is stayed under this rule any party may apply for the stay to be lifted’.

[2]In McLinden v Lu (‘McLinden’), 30 April 2018 (unreported), Butcher J said, at paragraph 6: 

‘In relation to the principles applicable to the lifting of a stay under CPR 15.11(2) assistance may be obtained from two recent cases. The first is the decision of Peter McDonald Eggers QC sitting as a High Court Judge in Citicorp Trustee Co Ltd v Al-Sanea [2017] EWHC 2845 (Comm) and the second is the judgment of Chief Master Marsh in Football Association Premier League Ltd v O'Donovan [2017] EWHC 152 Ch. The decision of Mr MacDonald Eggers in effect applied the reasoning of Chief Master Marsh in the Premier League case and, accordingly, I need refer only to the terms of that judgment. In the relevant paragraph Chief Master Marsh said the following…’ 

before quoting paragraph 11 of Chief Master Marsh’s judgment. 

[3]Butcher J in McLinden v Lu, 30 April 18 (unreported) quoted paragraph 11 of Football Association Premier League Ltd v O'Donovan [2017] F.S.R. 31, and said, at paragraph 7 ‘Turning then to the question of the application of those principles to the stay in the present case…

[4]In McLinden v Lu, 30 April 2018 (unreported) at paragraph 2, Butcher J explained what was in paragraph 2 to the 29 November 2016 order permitting service of the jurisdiction. He said:

‘The order granting permission to serve the claim form out of the jurisdiction was granted on 29 November 2016. Paragraph 2 of that order allowed 23 days to the Defendant to file either an admission or defence or an acknowledgement of service. The action was then commenced on 8 December 2016.

In paragraph 3 of the McLinden judgment, the phrase ‘…take the steps referred to in para.2 of the order…’ in ‘During the period between the failure of the Defendant to take the steps referred to in para.2 of the order and the imposition of the stay which occurred on [3 January 2018], there have been steps taken in the action of which the Defendant was or certainly ought to have been aware.’therefore means file either an admission or defence or an acknowledgement of service within 23 days. 

[5]A further statement that the balance fell clearly in favour of lifting the stay, was made by Butcher J at paragraph 7, where he said:

…considering the matters which were considered by Chief Master Marsh and by Mr MacDonald Eggers in the two cases I have referred to, I consider that the balance is clearly in favour of lifting the stay in the present case.’ 

[6]See for instance Lakatamia Shipping Co Ltd v Su [2014] 3 Costs L.R. 532, where Hamblen J where the Court found that the respondent (claimant) to an application for relief from sanction ought to pay the ‘bulk’ (paragraph 8) of the applicant (defendant)’s costs of the application. This was because the respondent had unreasonably resisted the application for relief from sanction, since ‘…this was a clear case for relief in accordance with the guidance given in the Mitchell case.’ (paragraph 5). While the whole (short) judgment repays reading, paragraph 6 and 7 are noted here:

‘The claimant submitted that, in every case where the other party is seeking relief from sanctions, the so-called “innocent” party is entitled to come before the court and to argue that there should be no such relief and that the court should stick to the sanction originally imposed. In my judgment, that is a mistaken approach. The CPR  is *535  quite clear that parties should conduct litigation in areasonable and realistic manner, an approach which is echoed in the Commercial Court Guide – see, for example, A1.4. In this court we expect parties so to conduct themselves. In my judgment, in vigorously opposing this application at a hearing, the claimant failed to do so.

I also consider that it is important that the message goes out that when a party applies for relief from sanctions, the other party should not assume that it is going to get a free costs ride in opposing that application. If the court considers that it was unreasonable to do so, then there will be cost consequences, and I consider that that is what should occur in this case. The Mitchell guidance was provided in order to help to avoid endless satellite litigation. If parties consider that they can always come to court to oppose any application for relief, then there will be no end to that satellite litigation.’

[7]The view was expressed subject to hearing submissions from the applicant/claimant. The full quote in McLinden v Lu, unreported 30 April 2018, paragraph 11 is:

‘In circumstances, however, where the stay has come about only by reason of the Claimant's failure to comply with the six month period, it would seem to me, subject to anything that Mr McLinden may say about it, that the Claimant should bear the costs of that application.’ 

There is no subsequent reference to costs in the later addendum judgments. It therefore appears that Mr McLinden (who was a litigant in person) did not say anything on costs to dissuade Butcher J from making the order provisionally indicated.