Neglected Proceedings - Lifting the Stay imposed by r.15.11

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 has (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 Certificate holders, 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/summary judgment, 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'[5a]

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.

Update: Bank of Beirut (UK) Ltd v Sbayti [2020] EWHC 557 (Comm)

There is now an additional authority in this area, though it is of limited assistance. The case is Bank of Beirut (UK) Ltd v Sbayti [2020] EWHC 557 (Comm) ('Sbayti') a decision of Judge Mark Pelling QC on 14.2.20 sitting in the Circuit Commercial Court (a specialist court, part of the Business and Property Courts of the High Court of Justice).

The authority is of only limited assistance for a number of reasons:

(1) none of Premier League, Al-Sanea, McLinden, were cited to the Judge. As a result, after stating 'The question ... arises as to whether the stay imposed by CPR rule 15.11 should be lifted in accordance with the power conferred on the court by rule 15.11(2)' (paragraph 4) the Judge wrongly stated that 'There is no case law as to how this ought to be approached.' (paragraph 4)[5b]

(2) the Judge expressly stated that 'the issue has not been fully argued before me' (paragraph 5).

(3) the Judge did not have the benefit of opposing counsel arguing out the matter. The claimant bank was represent by counsel, but the defendant did not attend and was not represented;

(4) the Judge said he was going to approach the legal test 'as if' the Denton critieria applied (from Denton v TH White Ltd [2014] EWCA Civ 906, [2014] 1 W.L.R. 3926), but without deciding that that is the correct legal test. He said, at paragraph 5 '...I propose to approach it as if the Denton criteria applied to the application, though without deciding whether or not that is so...' Reference is made to Independent Schools Council v Charity Commission [2012] Ch 214, wherein it was stated, at paragraph 92,

'...As matter of general law, a decision of a court does not give rise to a legally binding precedent where a point of law has been assumed or not debated even where that point of law is a necessary component of the decision: see per Sir Nicolas Browne-Wilkinson V-C in In re Hetherington, decd [1990] Ch 1, 10g, subsequently approved by the Court of Appeal in R (Kadhim) v Brent London Borough Council Housing Benefit Review Board [2001] QB 955'.[6]

In the author's view, Sbayti is therefore not an authority for the proposition that Denton critieria applies to the question of whether a r.15.11(1) stay should be lifted under r.15.11(2).

It is noteworth though that:

(1) the Judge considered that the Denton criteria, if applied, '...would impose a higher threshold on the [claimant] than would be imposed if one simply approached the exercise as an overall exercise of discretion.' (paragraph 5), and

(2) on the facts, the Judge lifted the stay, despite there being about a 3 year + 3 months delay between the imposition of the automatic stay and the application by the claimant bank to lift it (c.15.9.16 (paragraphs 3 and 1) to 13.12.19 (paragraph 6)). The main reason was that during the period the claim was quiescent (i.e. in a state or period of inactivity or dormancy), the defendant was making the 'various payments' (paragraph 3) towards the debt. These various payments continued after the issue of the claim, through to 31.1.20 (paragraph 3). Thereafter, though further payments were not received, the defendant made various promises (paragraph 4). For the full reasons for lifting the stay on the Denton criteria, see the footnote[7]. Perhaps more importantly than the Judge's conclusion applying the Denton criteria, the Judge also stated that 'If, contrary to the assumptions I have so far made, the Denton criteria do not apply and what is required is simply an exercise of discretion, as the Bank submit is the appropriate approach, then it is manifest that the stay should be lifted, for all the reasons that I have identified. In those circumstances, I conclude that the Bank is entitled to the order it seeks under CPR Part 15.11(2) and for the stay that applies to be lifted.'(paragraph 8)[bold added]

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 [8]. Consistent with such a view, Butcher J in McLinden provisionally [9]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 © 2018-2022

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. 

[5a] 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.’ 

[5b] This does not, it seems, render the decision in Bank of Beirut (UK) Ltd v Sbayti [2020] EWHC 557 (Comm) ('Sbayti') per incurium.

In R (Kadhim) v Brent London Borough Council Housing Benefit Review Board [2001] QB 955 ('Kadhim'), after referring to the per incurium rule, the Court of Appeal said, at paragraphs 18:

'That rule is, however, to be understood in narrow terms. As Sir Raymond Evershed MR put it in Morelle Ltd v Wakeling [1955] 2 QB 379 , 406:

a general rule the only cases in which decisions should be held to have been given per incuriam are those of decisions given in ignorance or forgetfulness of some inconsistent statutory provision or of some authority binding on the court concerned: so that in such cases some part of the decision or some step in the reasoning on which it is based is found, on that account, to be demonstrably wrong." [bold added]

Earlier, the Court of Appeal in Kadhim referred to Young v Bristol Aeroplane Co Ltd [1944] KB 718.

Were Premier League, Al-Sanea, McLinden binding on the Sbayti judge? The judge is Sbayti was sitting in the High Court, and at least McLinden and Al-Sanea were in the High Court before a High Court Judge. But one High Court Judge is of co-ordinate jurisdiction to another High Court Judge. All were sitting as puisne judges.

In Willers v Joyce (No 2) [2016] UKSC 44; [2018] AC 843, Lord Neuberger (delivering the unamimous judgment of 9 Supreme Court Justices), said at paragraph 9:

'So far as the High Court is concerned, puisne judges are not technically bound by decisions of their peers, but they should generally follow a decision of a court of co-ordinate jurisdiction unless there is a powerful reason for not doing so.'

So technically, none of Premier League, Al-Sanea, McLinden were binding on the judge in Sbayti, so the judgment in Sbayti is not rendered per incurium by the the court in Sbayti being referred to them.

[6] In In re Hetherington, decd [1990] Ch 1 ('Hetherington'), 10g, Nicolas Browne-Wilkinson V-C surveyed the law, at 10:

'In Baker v. The Queen [1975] A.C. 774, Lord Diplock, after mentioning that the Judicial Committee of the Privy Council does not normally allow parties to raise for the first time on appeal a point of law not argued in the court below, said, at p. 788:

"A consequence of this practice is that in its opinions delivered on an appeal the Board may have assumed, without itself deciding, that a proposition of law which was not disputed by the parties in the court from which the appeal is brought is correct. The proposition of law so assumed to be correct may be incorporated, whether expressly or by implication, in the ratio decidendi of the particular appeal; but because it does not bear the authority of an opinion reached by the Board itself it does not create a precedent for use in the decision of other cases."

That decision was applied in Barrs v. Bethell [1982] Ch. 294, where after quoting the passage I have read from Lord Diplock, Warner J. continued, at p. 308:

"In my judgment, the principle that, where a court assumes a proposition of law to be correct without addressing its mind to it, the decision of that court is not binding authority for that proposition, applies generally. It is not confined to decisions of the Judicial Committee of the Privy Council."

That approach coincides with some words of May L.J. in the recent Court of Appeal case of Ashville Investments Ltd. v. Elmer Contractors Ltd. Q.B. 488, 494, where he said:

"In my opinion the doctrine of precedent only involves this: that when a case has been decided in a court it is only the legal principle or principles upon which that court has so decided that binds courts of concurrent or lower jurisdictions and require them to follow and adopt them when they are relevant to the decision in later cases before those courts. The ratio decidendi of a prior case, the reason why it was decided as it was, is in my view only to be understood in this somewhat limited sense."

Nicolas Browne-Wilkinson V-C in Hetherington, then said at 10:

In my judgment the authorities therefore clearly establish that even where a decision of a point of law in a particular sense was essential to an earlier decision of a superior court, but that superior court merely assumed the correctness of the law on a particular issue, a judge in a later case is not bound to hold that the law is decided in that sense.'

In R (Kadhim) v Brent London Borough Council Housing Benefit Review Board [2001] QB 955 ('Kadhim'), the Court of Appeal (Buxton LJ giving the judgment of the Court of Appeal), subsequently approved this, in paragraph 35. In Kadhim, under the heading 'The rule as to issues assumed without argument', the Court of Appeal said, at paragraphs 33 to 37:

'33 We ... conclude, not without some hesitation, that there is a principle stated in general terms that a subsequent court is not bound by a proposition of law assumed by an earlier court that was not the subject of argument before or consideration by that court. Since there is no direct Court of Appeal authority to that general effect we should indicate why we think the principle to be justified.

34 First, even though it is assumed, on the basis of some observations in the House of Lords in Davis v Johnson [1979] AC 264, that the categories of exemption stated in Young v Bristol Aeroplane Co Ltd [1944] KB 718 are closed, National Enterprises Ltd v Racal Communications Ltd [1975] Ch 397 establishes that that is not so in respect of the present line of authority: see paragraph 31 above. That consideration is reinforced by the fact that Lord Diplock, in expressing his view in Baker v The Queen[1975] AC 774, 788 as cited in paragraph 27 above, did not think that it involved any departure from the orthodox rules of precedent.

35 Second, in each of the authorities cited the rule is in fact stated in general terms, even though the facts addressed may be in a narrower compass. Those statements were, in our respectful view, properly synthesised by Sir Nicolas Browne-Wilkinson V-C in In re Hetherington, decd [1990] Ch 1.

36 Third, we have to remember that it is the reasons that bind, and not the decision. Any formulation of a rule of precedent must be flexible enough to respect that basic truth. That is what led Lord Diplock to say in Baker v The Queen[1975] AC 774, 788c, as cited in paragraph 27 above, that whilst an assumed proposition may be part of the ratio, it does not have precedential value. To hold otherwise would be to come close to permitting the outcome of the case, rather than its reasoning, to dictate its status.

37 Fourth, it is very well recognised that a court can identify a part of the ratio that has not been the subject of argument, and deny it precedential value: see paragraph 22 above. But if it were the case that all parts of the ratio, as defined for instance in paragraph 16 above, bind, then it would seem that the judge would not be free to indicate that one of the assumptions necessary to his decision did not have precedential value. It was recognition of the need to leave judges that freedom, and in an appropriate case to enable a subsequent court equally to conclude that a proposition that was part of the ratio none the less had not been the subject of decision, that led Russell LJ to speak as he did in the last sentence of the extract from his judgment in National Enterprises Ltd v Racal Communications Ltd [1975] Ch 397, 406 cited in paragraph 29 above.'

Under a heading that included 'The ambit of the rule', the Court of Appeal said, at paragraph 38:

'38 Like all exceptions to, and modifications of, the strict rule of precedent, this rule must only be applied in the most obvious of cases, and limited with great care. The basis of it is that the proposition in question must have been assumed, and not have been the subject of decision. That condition will almost always only be fulfilled when the point has not been expressly raised before the court and there has been no argument upon it: as Russell LJ went to some lengths in National Enterprises Ltd v Racal Communications Ltd to demonstrate had occurred in the previous case Davies Middleton & Davies Ltd v Cardiff Corpn 62 LGR 134. And there may of course be cases, perhaps many cases, where a point has not been the subject of argument, but scrutiny of the judgment indicates that the court's acceptance of the point went beyond mere assumption. Very little is likely to be required to draw that latter conclusion: because a later court will start from the position, encouraged by judicial comity, that its predecessor did indeed address all the matters essential for its decision.'

[7] In Bank of Beirut (UK) Ltd v Sbayti [2020] EWHC 557 (Comm), HHJ Mark Pelling QC said, at paragraphs 6 - 8:

'6. The first issue that would have to be determined if the Denton criteria applied is whether or not there had been a serious or significant breach. CPR rule 15.11 imposes a stay after the expiry of a period of six months from the date when a defence should have been filed, with no defence having been filed and no application for summary judgment having been made. The period that has elapsed since the stay was imposed in this case - that is to say, sometime in the summer of 2016 - to the date when the application was issued on 13 December 2019 is, in my judgment, a significant one. There are a number of ways in which the Bank could have addressed the potential problem created by CPR 15.11 including applying for a default or summary judgment, as suggested in para.(c) of the rule, or perhaps by applying for a case management stay after the proceedings had been issued and served, as is very frequently done in cases where it is thought that the most economically sensible way of proceeding is to issue and serve proceedings, perhaps to stop a limitation period expiring, but then allowing either negotiations to continue or part payments to be made. So I am satisfied that the serious and significant breach element of the Denton criteria is satisfied.

7. The next question that has to be asked if the Denton criteria apply is whether or not there is a good reason for the breach occurring. In my judgment, it is manifest that in the circumstances of this case there is a good reason, namely a desire to avoid incurring costs, which would achieve nothing useful, whilst at the same time obtaining payments on an irregular basis from the defendant and guarantor. In those circumstances it is probably unnecessary to consider the third criterion identified in Denton, namely whether in all the circumstances it is appropriate to grant relief, but, in my judgment, in the circumstances as they currently are, it is appropriate to do so, since it is clear that payments being made by the defendant guarantor have now ceased, and in those circumstances it is appropriate that the claimant should now proceed with this litigation, obtain a judgment, if it can, and seek to collect what is due, again if it can.

8. In those circumstances, applying the Denton criteria leads inevitably to the conclusion that the stay should be lifted.

...In those circumstances, I conclude that the Bank is entitled to the order it seeks under CPR Part 15.11(2) and for the stay that applies to be lifted'

[8] See for instance Lakatamia Shipping Co Ltd v Su [2014] 3 Costs L.R. 532, where Hamblen J 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 quite clear that parties should conduct litigation in a reasonable 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.’

[9] 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.