Friday, 15 March 2019

Agreeing An Extension to the Limitation Period

It is unusual for this blog to grapple with a thorny procedural issue. The estimable Gordon Exall has that field well and truly covered. It is even more unusual for me to comment on a decision under the Inheritance (Provision for Family and Dependants) Act 1975. But a concerned solicitor has written to me about a recent decision of Mostyn J in Cowan v Foreman and ors [2019] EWHC 349 (Fam) and I do not want to shirk the challenge.

Mostyn J was considering an application under s.2 of the 1975 Act. By s.4:

"An application for an order under section 2 of this Act shall not, except with the permission of the court, be made after the end of the period of six months from the date on which representation with respect to the estate of the deceased is first taken out." 

The claimant's application had been made well out of time but the parties had reached a so-called "stand-still agreement". The executors solicitors had written that the executors 

"will not take a point on the six-month deadline having passed pending receipt of a letter of claim"

Mostyn J observed at [34]:

"I was told that to agree a stand-still agreement of this nature is "common practice". If it is indeed common practice, then I suggest that it is a practice that should come to an immediate end. It is not for the parties to give away time that belongs to the court. If the parties want to agree a moratorium for the purposes of negotiations, then the claim should be issued in time and then the court invited to stay the proceedings while the negotiations are pursued. Otherwise it is, as I remarked in argument, simply to cock a snook at the clear Parliamentary intention."

Earlier in his judgment he had noted at [4]:

"A robust application of the extension power in section 4 would be consistent with the spirit of the overriding objective, specifically CPR 1.1(2)(d) ("dealing with the case expeditiously"), 1.1(2)(e) ("allotting the case an appropriate share of the court's resources") and 1.1(2)(f) ("enforcing compliance with rules"). It would also echo the ever-developing sanctions jurisprudence exemplified by Denton & Ors v TH White Ltd & Ors [2014] EWCA Civ 906, [2014] 1 WLR 3926. The fact that the time limit is contained within the statute rather than in a procedural rule is also of significance." 

Similar agreements are common practice also in personal injury and clinical negligence litigation. The limitation period is also governed by statute and the court has a discretion to disapply that period. There is statutory guidance under s.33 of the Limitation Act 1980 as to the exercise of that discretion, but the discretion is unfettered, just as is the discretion under s. 4 of the 1975 Act which Mostyn J was considering.

Does this judgment mean that litigators would be taking an unacceptable risk by agreeing an extension of the limitation period prior to issue? Should they issue and then apply to the court for extensions of time for service, or apply for a stay?

Gordon Exall has posted on the pitfalls of the alternatives to an agreed extension: here. In another post he reported on adverse costs consequences for a claimant who did not seek an agreed extension but issued and then sought an extension of time for service from the court. See here.

NHS Resolution has given advice about agreeing extension - you can find it here

It should be noted that in Cowan, the stand-still agreement was reached several months after the expiry of the six month limitation period. Although Mostyn J's comments might apply equally to a stand-still agreement reached before expiry of the primary limitation period, they would surely carry less force. 

In Ellis v Heart of England NHS Foundation Trust [2018] EWHC 3505 (Ch) HHJ McKenna sitting in the High Court held that there was no justification for importing the principles applicable to an application for relief from sanctions (Mitchell, Denton etc.) into the the exercise of the s. 33 discretion. Mostyn J thought otherwise in the context of the 1975 Act.

Furthermore, the case law on exercise of the discretion under s. 4 of the 1975 Act is not necessarily applicable to the exercise of the s. 33 discretion. In Chief Constable for Greater Manchester Police v Carroll [2017] EWCA Civ 1992 at [42] the Court of Appeal stressed the importance of the reason for the delay. If the entire period of delay (from the expiry of the primary limitation period) is "covered" by a prior agreement between the parties, then I cannot imagine many (any?) circumstances in which the court would not exercise the s.33 discretion in favour of a claimant. 

Would the issue even arise? If a defendant does not take the point that a claim has been made "out of time", can the Court do so of its own motion?  The 1975 Act says that an application under s.2 "shall not except with the permission of the court be made ..." Thus an application for permission has to be made. Under the Limitation Act 1980 the court will usually only be required to consider exercising a s.33 discretion if the defendant contends that the claim has been brought out of time. The 1980 Act bars the claimant from Perhaps Cowan will encourage defendants to take the point more often.

Don't panic, but do ensure that agreements are in writing, clearly worded, and are reached prior to the expiry of the primary limitation date. The NHSR advises that the wording of an agreement should be that the [proposed defendant] "agrees that in any subsequent issue about limitation, we will not rely upon any period of time that elapses between the date of this correspondence
and ...." either a fixed date or the withdrawal of the agreement. This reflects the fact - as Cowan reminds us - that these are not agreements to extend a limitation period fixed by law, but rather agreements not to take a point on limitation, and which can be relied upon when seeking the benefit of the court's discretion if the point is taken.

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