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18 August 2015
In Safin (Fursecroft) Limited v The Estate of Dr Said Ahmed Said Badrig (Deceased)(1) the Court of Appeal considered the principles that apply to an application for extension of time for compliance with obligations set out in a consent order. In particular, it considered whether it has discretion to extend time limits in a consent order that recorded the terms on which a dispute had been settled and where time was of the essence.
Safin (Fursecroft) Limited commenced proceedings against the estate of Dr Badrig for possession of a flat. Badrig, who died in 2002, had held a long lease of the flat. The deceased's son was appointed to represent the defendant estate.
On April 5 2012 an order was made to forfeit the lease and for the estate to pay arrears of rent and service charges amounting to £22,770.29. The defendant applied for relief from forfeiture and the order was stayed, with trial being set for January 2014.
Two days before trial, the parties settled the dispute. The terms of the settlement were recorded in a consent order that provided for relief from forfeiture if certain conditions were satisfied. In particular, the consent order required the outstanding rent arrears and costs to be paid and for certain works to be carried out to the flat by March 6 2014, and time for compliance with the conditions was of the essence.
On March 5 2014 the defendant sought permission to extend the time limits for compliance with the consent order. The conditions were not satisfied by March 6 2014 (ie, the following day) and a warrant of possession was sought with a date for execution of the warrant fixed. The defendant was eventually able to satisfy the conditions set out in the consent order before the date of execution.
At the hearing of the application for an extension of time, the judge allowed the extension on the basis that:
"It is quite clear [the claimant] has got what it wanted, albeit after something of a struggle, but it seems to me that it would be unjust not to extend the time given that [the defendant] has fulfilled his side of the bargain and where money paid late he has… paid interest."
The claimant appealed this decision on the following grounds:
The appeal was dismissed. The Court of Appeal concluded that, even though the extension related to a consent order disposing of the substantive matters in dispute, it had jurisdiction to vary the order and to extend time accordingly. The court held that the judge had properly exercised his discretion in this regard.
The leading authority of Pannone LLP v Aardvark Digital Limited(2) was considered and applied, in particular that:
This case can be distinguished from Pannone insofar as the relevant provision in the consent order considered in that case did not deal with an agreement between the parties to dispose of the dispute, but rather was procedural concerning a modus vivendi case management in preparation for trial. As such, the Court of Appeal in that case recognised that where the purpose of a consent order is to dispose of a substantive dispute, its terms are likely to carry significant weight, such that the court might well not exercise its discretion to grant relief from sanctions.
In this case, the Court of Appeal acknowledged that the discretionary power to extend time should be exercised "sparingly"; there were, however, critical features in this case that supported relief from forfeiture. For instance, the defendant had applied for extension of forfeiture within the time limits (ie, before March 6 2014), all of the conditions in the consent order had been satisfied by the time that the case was heard and forfeiture was in respect of a long lease of residential premises, the value of which was almost £1 million more than the £90,000 due to the claimant.
The present case is therefore important and interesting (unsurprisingly, it leapfrogged from the county court to the Court of Appeal), since it considers the issue of whether – and if so, under what circumstances – a court should effectively intervene to vary a settlement agreement, the terms of which are recorded in a consent order. This decision is an interesting reminder to all practitioners of the court's wide discretionary powers in extending time limits.
For further information on this topic please contact Sarah Bishop or Geraldine Elliott at RPC by telephone (+44 20 3060 6000) or email (email@example.com or firstname.lastname@example.org). The RPC website can be accessed at www.rpc.co.uk.
(1)  EWCA Civ 739.
(2)  EWCA Civ 803.
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