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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Chabba v Turbogame Ltd [2001] EWCA Civ 1073 (6 July 2001) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/1073.html Cite as: [2001] EWCA Civ 1073, [2001] NPC 110, (2001) 82 P & CR DG24

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE READING COUNTY COURT

		Royal Courts of Justice Strand, London, WC2A 2LL Friday 6th July, 2001

MR. JUSTICE WALL:

What follows is the judgment of the Court.

1. This is an appeal by Jatiender Kumar Chabba (the appellant) against a decision of HH Judge Appleton sitting in the Preston County Court on 7 December 2000 and made in proceedings under Part II of the Landlord and Tenant Act 1954 (the Act of 1954) in which the appellant was the Claimant and a company called Turbogame Limited (Turbogame) was the Defendant.
2. The facts are not in issue, and for the purposes of this appeal fall within a very narrow compass. The Appellant is the tenant of shop premises at 16 Adelaide Street in Blackpool. Turbogame is his landlord. The lease was due to expire on 15 December 1999. The Appellant wished to obtain a new tenancy under Part II of the Act of 1954. There was an exchange of notices under section 26, and on 20 April 2000, within the time-frame laid down by the Act of 1954, the appellant's solicitors issued a claim form for a new tenancy pursuant to section 24(1). The appellant had a legal right to a new tenancy, and the parties expected to be able to negotiate its terms.
3. Unfortunately, the appellant's solicitors did not serve the claim form on Turbogame's solicitors until 6 July 2000 which was outside the two-month period for service laid down by the rules. On 14 August 2000, within four months of the date of issue, they applied for an extension of the time for service of the claim form, which they obtained from the district judge on 9 October 2000. Turbogame successfully appealed that decision to HH Judge Appleton, whose decision setting aside the district judge's order was given on 7 December 2000. Permission to appeal to this court was given, on the papers, by Buxton LJ on 26 January 2001.
4. The essential question is whether the district judge had jurisdiction to enlarge the time for service. This turns on the interpretation of, and the interrelationship between, four rules in the Civil Procedure Rules (CPR). The first is CCR rule 43.6(3), incorporated into the CPR by Section B of the Practice Direction to CPR rule 8, which covers applications for new tenancies under section 24 of the Act of 1954. This reads -

(3) A claim form under this rule must be served within 2 months after the date of issue whether served within or out of the jurisdiction and CPR rule 7.5(2) and (3) will not apply.

5. The rules within the main body of CPR relating to service of claim forms and extensions of time for service are CPR rule 7.5 and 7.6, which read as follows: -

7.5 Service of a claim form

(1) After a claim form has been issued, it must be served on the defendant.

(2) The general rule is that a claim form must be served within 4 months after the date of issue.

(3) The period for service is 6 months where the claim form is to be served out of the jurisdiction.

7.6 Extension of time for serving a claim form

(1) The claimant may apply for an order extending the period within which the claim form may be served.

(2) The general rule is that an application to extend the time for service must be made –

(a) within the period for serving the claim form specified by rule 7.5; or

(b) where an order has been made under this rule, within the period for service specified by that order.

(3) If the claimant applies for an order to extend the time for service of the claim form after the end of the period specified by rule 7.5 or by an order made under this rule, the court may made such an order only if -

(a) the court has been unable to serve the claim form; or

(b) the claimant has taken all reasonable steps to serve the claim form but has been unable to do so; and (c) in either case, the claimant has acted promptly in making the application.

(4) An application for an order extending the time for service -

(a) must be supported by evidence; and

(b) may be made without notice.

6. Finally, CPR rule 3.1(1) and (2) state:

3.1 The court's general powers of management

(1) The list of powers in this rule is in addition to any powers given to the court by any other rule or practice direction or by any other enactment or any powers it may otherwise have.

(2) Except where these Rules provide otherwise, the court may –

(a) extend or shorten the time for compliance with any rule, practice direction or court order (even if application for extension is made after the time for compliance has expired)

7. It is, we think, common ground that the court's powers under CPR rule 3.1(2)(a) only fall to be considered if, as the appellant seeks to argue, either CPR rule 7.6 does not apply to an application to extend the time for service of a claim form under Part II of the Act of 1954; alternatively, CPR rule 7.6 does apply and the appellant can bring himself within CPR rule 7.6(2)(a). Certainly, if the application is caught by CPR 7.6(3) the appellant cannot look to CPR 3.1 as a means of escape: - see Kaur v CTP Coil Limited (2000) Times, 10 July, a decision of this court.
8. For completeness, Mr. Grantham, counsel for Turbogame, helpfully drew our attention to the fact that since the matter was before the judge, CCR rule 43.6(3) has been amended: - see the Civil Procedure (Amendment) Rules 2001 (No. 256 (L.7)). The new rule (rule 56.3(3)) states that in a claim under section 24 of the Act of 1954

The claim form must be served within 2 months after the date of issue and rule 7.5 and 7.6 are modified accordingly." (our emphasis) .

This rule comes into effect on 15 October 2001. If it had been in force at the material time, it is accepted that it would have been conclusive in Turbogame's favour.

9. The failure to serve the claim form in time appears to have occurred because the appellant's solicitor did not look at CCR rule 43.6(3) but relied instead on the form provided by the court, headed "Notice of Issue (non-money claim)" which accompanied the claim form when it was returned to the appellant's solicitors for them to serve the proceedings on Turbogame. This document is dated 2 May 2000, and contains "notes for guidance" in the following terms: -

The claim form must be served on the defendant within 4 months of the date of issue (6 months if you are serving outside England and Wales). You may be able to apply to extend the time for serving the claim form but the application must generally be made before the 4 month or 6 month period expires.

10. .. As is immediately apparent, the "Notes for Guidance" are in fact misleading, because, whilst pursuant to CPR rules 7.5(2) and 7.5(3) the general rule is that a claim form must be served within 4 months after the date of issue (where service is to be effected within the jurisdiction) and within 6 months (where the claim form is to be served out of the jurisdiction), CCR rule 43 rule 6(3) provides (1) that a claim form in relation to proceedings under section 24 of the Act of 1954 must be served within 2 months after the date of issue whether served within or out of the jurisdiction and (2) that CPR rule 7.5(2) and (3) will not apply.
11. The deputy district judge who heard the application to extend the time for service on 9 October 2000 plainly took the view that the Rules permitted him to exercise a discretion. His judgment is short and robust:

Sitting in the Blackpool County Court today it seems to me that the error which undoubtedly the claimant has made stems from a slip of the Court Office here in Blackpool, and [while] I appreciate what you say about the Rules, Mr. Boyne [Turbogame's solicitor] it does seem to me that it would be unjust if this court were now not to give leave to the claimant to serve his document and proceed accordingly I shall make an order in favour of the claimant.

12. The order made by the deputy district judge was that time should be extended to cover the date of actual service. He reserved the costs to the final hearing and gave permission to appeal
13. Before Judge Appleton both parties were represented by the same counsel who appeared before us. Both produced skeleton arguments for the judge, who thus had the benefit of full argument. He found that the application was governed by CPR rule 7.6, and in particular was caught by rule 7.6(3). Turbogame accepted that the appellant had acted promptly in making the application (CPR rule 7.6(3)(c)); it was, however, conceded by the appellant (as it had to be) that that neither of the very limited escape routes offered by CPR rule 7.6(3)(a) and 3(b) applied. Since these were the only bases for extending time which were permitted by rule 7.6(3), Judge Appleton held that the district judge was wrong to take the view that a discretion to extend time existed. He accordingly allowed the appeal and set aside the order of the deputy district judge.
14. The judge's reasoning begins with the obligation on a claimant to comply with any special provisions contained in the Schedules, Rules, Practice Directions or any Act relating to the claim. That led him to CCR rule 43.6(3). He then disapplied CPR rule 7.5(2) and (3). That left CPR rule 7.5(1) which merely states the general proposition that, once issued, a claim form must be served. CPR rule 7.5(1) and CCR rule 43.6(3), read together, reinforced his view that the rules required the claim form to be served within 2 months. He then moved to CPR rule 7.6, and held that the general rule as to the time for service (4 months) did not apply, because CPR rule 7.5(2) had been excluded. The claimant could not bring himself in this case within CPR rule 7.6 (2)(a) since he was out of time on his two months. In these circumstances the "only if" provisions of rule 7.6(3) removed any discretion and accordingly the court could not extend the time.
15. The Notice of Appeal advances three arguments –

1. The Judge erred in law in finding that CPR 7.6(3) applied to the application for an extension of time in this case.

2. The judge erred in law in failing to find that rule 3.1(2)(a) and / or 7.6(1) applied to the application for an extension of time in this case.

3. The judge was wrong in failing to exercise his general discretion pursuant to rule 3.1(2)(a) and / or rule 7.6(1) to grant an extension of time in this case.

16. Miss Ewins, for the appellant, in clear and well argued submissions, put her case on alternative bases. Her primary submission was that CPR 7.6(3) does not apply to cases where an extension of time is sought for service of a claim form under Part II of the 1954 Act. Her fall-back position was that if her primary submission was wrong and CPR rule 7.6(2) and (3) governed all applications for extensions of time for serving a claim form, the time within which such an application may be made under Part II of the Act of 1954 without falling foul of CPR rule 7.6(3) is four months, not two. Accordingly, since the application to extend the time in the instant case was made within four month of proceedings being issued, the court has a discretion to extend the time, and the judge was wrong to hold that it did not.
17. Miss Ewins placed a heavy emphasis on the words "specified by rule 7.5" in rule 7.6(2)(a) and 7.6(3). She submitted that because CCR rule 43.6(3) expressly disapplies rules 7.5(2) and (3) in cases under Part II of the 1954 Act, and because no time is identified in CPR rule 7.5(1), there is no period of time "specified by rule 7.5" in CPR rule 7.6. She argues from this that CPR rule 7.6 simply does not apply, and (since she accepts that the claim form in this case was not served in time) the court is thrown back on its general powers of management in CPR rule 3.1(2) which give the court a discretion to extend time.
18. Alternatively, Miss Ewins argued that if CPR rule 7.6 does apply to a claim form issued under Part II of the 1954 Act, 7.6(2)(a) must be read literally, and since the only periods of time specified by CPR rule 7.5 are 4 and 6 months, those periods apply to an application to extend the time for service of a claim form issued under Part II of the 1954 Act notwithstanding the fact that CPR rule 43.6(3) requires such a claim form to be served within 2 months.
19. Miss Ewins further argued that the judge's construction of CPR rule 7.6(3) leads to an absurd result because it would make it read: "If the claimant applies for an order to extend the time for service of the claim form after the end of the period specified by CPR rule 7.5(1)…… ", when there is no time specified in CPR rule 7.5(1). This, she submitted, represented at the very least a substantial lacuna in the rules, even if it did not have the primary consequence for which she argued.
20. For Turbogame, Mr. Grantham, in an equally attractive and well-structured argument, seized on the words "the general rule" in both CPR rule 7.5(2) and 7.6(2). He submitted that the existence of a general rule implied, of necessity, the existence of exceptions to it. CPR rule 43.6(3) was, he argued, such an exception. It followed that the disapplication of CPR rule 7.5(2) and (3) by CPR rule 43.6(3) related only to the periods of time referred to: thus the two month period specified by CPR rule 43.6(3) should be read into CPR rule 7.5. On this construction, the reference in CPR rule 7.6(2)(a) and (3) to the period "specified in rule 7.5" could only be understood in the instant case as a reference to the period of service for a claim form in proceedings under Part II of the 1954 Act, that is, two months.
21. Mr. Grantham sought to support his argument by a reference to the amendment to the rules set out in paragraph 8 above. Whilst we agree with him that the amended rule achieves the result for which he is contending in this appeal, we think it dangerous to rely on amendments as an aid to construction, since it could just as easily be argued that the amendment to rule 43.6(3) is a recognition that in its current form it does not achieve the objective for which Mr. Grantham argues; hence the need for the amendment. There is on any view a substantial difference between modifying a rule (the amendment) and disapplying it (the original rule).
22. As to the lacuna, Mr. Grantham submitted, consistently with his argument on the applicability of CPR rule 7.6(3), that it should be filled in the instant case by reading CCR 43.6(3) into CPR rule 7.5; and, generally, by holding that CPR rule 7.6(3) should apply whenever an application is made to extend time for service of a claim form the period for service of which is not expressly stated in CPR rules 7.5(2) or (3) but which is applied for after the time for service of the particular claim form has expired. He argued that such an approach is dictated by the need for consistency; the need in some cases to have stricter periods for service; and the need overall to avoid delay.
23. It is common ground that if CPR rule 7.6(3) applies in this case, there is no judicial discretion to exercise and the appeal will fall to be dismissed. The first question, therefore, is whether or not we get to discretion.
24. Although we think the arguments finely balanced, we find ourselves unable to accept Miss Ewins' first ground of appeal, namely that CPR 7.6(3) (and, necessarily, CPR 7.6(2)) do not apply to an application to extend the time for service of a claim form under Part II of the Act of 1954. It is, we think, clear from the Schedule to CPR Practice Direction 8 that proceedings under the Act of 1954 are designed to be part of the inclusive code, and in our judgment it would be anomalous if individual proceedings were excluded from it. CPR rule 43.6(3) limits the disapplication of CPR rule 7.5 to sub-rules (2) and (3): CPR 7.5(1) continues to apply. We were not referred to any other parts of the CPR in which a claim under Part II of the 1954 Act departed from the standard procedure.
25. We are, however, persuaded that Miss Ewins' fallback position is sound. It is plain from CCR rule 43.6(3) that in so far as service of the claim form is concerned (1) the form must be served within 2 months and (2) the general rule as to service within 4 months within the jurisdiction and 6 months out of the jurisdiction does not apply. However, CPR rule 7.6 deals with extensions of time for serving a claim form, and in our judgment it does not follow as a matter of construction from CCR rule 43.6(3) with its disapplication of CPR 7.5(2) and (3) that a party in a claim under Part II of the Act of 1954 who serves a claim form later than two but within four months of issue falls foul of CPR rule 7.6(3).
26. In our judgment, the phrase "within the period for serving the claim form specified by rule 7.5" in CPR 7.6(2)(a) and 7.6(3) can only mean within 4 or 6 months. It is not legitimate to read the terms of CCR rule 43.6(3) into CPR rule 7.5. The word used in CPR rule 7.6(2)(a) and 7.6(3)is specified. The only periods specified in CPR 7.5 are four and six months. Mr. Grantham's construction of the rules – and that given to them by the judge – requires us to construe the word "specified", as though it read "incorporated into rule 7.5 by CCR rule 45.6(3)". We find ourselves unable to do this.
27. To put the matter another way, we do not believe that, as the rules are currently drafted, the court is required to treat the disapplication of CPR rule 7.5(2) and (3) contained within CCR rule 43.6(3) which relate to service (CPR rule 7.5)) as also applying to extensions of time for serving a claim form, to which the general rule (4 months) applies. Since the application in the instant case was made within 4 months, the appellant, in our judgment, is within 7.6(2)(a): 7.6(3) does not apply and it is open to the court to exercise its power under CPR rule 3.1 to grant an extension of time.
28. We are conscious that this construction of the rules produces a difference, in cases under Part II of the 1954 Act, between the time allowed for service (two months) and the time within which an application can be made to extend the time for service without the guillotine of CPR rule 7.6(3) descending. However, whilst it is not easy to divine the intention of the rule makers, in terms of construing the rules we see nothing so objectionable in having a uniform period of 4 months within which applicants who have instituted proceedings should be able to apply to the court to extend the time for service as to render that construction of the rules untenable. An application for such an extension can, after all, be refused if it is without merit, and in the instant case such a construction of the rules enables us, in our judgment, to do justice between the parties.
29. We hasten to add, however, that whilst we feel able to interpret the rules in this way in the instant case, the position will, in our judgment, be different once the amended rule (56.6(3)) is in place after 1 October 2001. The modification of rule 7.5(2) and (3) to incorporate a reference to 2 months for service must, we think, mean that the 2 month period will be incorporated into CPR 7.6(2) and (3). Thus the arguments which have succeeded in this case are, in our judgment, unlikely to succeed after 1 October 2001.

Discretion

30. .. There was some argument before us as to whether or not the judge exercised a discretion. In our judgment he did not, since his finding that CPR 7.6(3) applied, with its "only if" provisions, effectively prevented him from doing so.
31. It follows that we can remit the matter to the judge for him to consider the exercise of discretion in the light of this court's decision: alternatively it is open to us to exercise our own discretion. We think we should take the latter course. There is no dispute on the facts: no oral evidence has been given below, and we are therefore in as good a position as the judge to exercise the discretion. Such a course also has the beneficial effect of saving costs, and neither side has opposed out taking it.
32. Miss Ewins advanced a number of reasons why the discretion of the court should be exercised to extend time. These were: -

1. the Notice of Issue from the court expressly stated that the claim form had to be served within four months of issue and that this misled the claimant's solicitors;

2. the fact that there was therefore no intention not to comply with the rules and there was a good explanation for the failure;

3. the fact that the claimant has complied with the rules in other respects;

4. the fact that the effect on the appellant and the respondent if an extension of time were not granted would be very different and inequitable – whereas the claimant would lose the protection of the 1954 Act and thus would be prevented from continuing with negotiations for a new lease on a level playing field the defendant would receive a windfall in that it would be able to dispose of the tenancy elsewhere or demand an inflated price from the claimant;

5. even though ordinarily the reason why claim forms should be served within the prescribed time is so that the parties are certain as to their respective positions, there was no uncertainty in this case. The claimant had put in his section 26 notice, the defendant landlord had put in its counter-notice in which it stated (as it was obliged to in the circumstances) that it did not contest the grant of a new lease. Negotiations thus had continued on that basis. The issue of the application notice in such circumstances was undertaken, as the defendant landlord must have realised would occur, merely to protect the tenant's position

6. The application was made promptly. This fact was conceded by the defendant at first instance and was accepted as a fact by the circuit judge.

7. There was no evidence that the defendant would be prejudiced if time were accepted.

33. As to the first of these arguments, Mr. Grantham submitted that a solicitor should not rely on notes that are intended for general guidance and that to permit an extension of time on this ground would be to condone the solicitor's failure to familiarise himself with the rules. Mr. Grantham submits that items 2 and 3 are immaterial. As to item 4, he argues that this an insufficient basis to exercise discretion and that the appellant will not be losing a level playing field; rather the level playing field of the market will be restored. As to 5, the exchange of notices did not free the appellant from the need to issue and serve his claim in time. Whilst item 6 was correct, the absence of prejudice to Turbogame relied upon in item 7 was not a basis for granting indulgence to the appellant.
34. On the exercise of discretion under the Rules of the Supreme Court, we were referred to Singh v Duport Harper Foundries Ltd [1994] 2 All ER 889, a decision of this court in relation to the previous Rules of the Supreme Court, within which were references to another decision of this court under the Act of 1954, Ward-Lee v Lineham [1993] 2 All ER 1006, in which the default in relation to service had been the failure of the court to serve the originating application, and in which the court exercised its discretion to extend the time.
35. In giving the leading judgment in Singh v Duport Harper Foundries Ltd., Farquharson LJ said at p.896:

In exceptional circumstances and where the interests of justice so require the court will entertain an application to extend the validity of a writ under the provisions of Ord. 2, rule 1 and Ord. 3, rule. 5. Before the court will extend the validity of the writ the applicant must show that there is good reason for such an extension, and where appropriate provide a satisfactory explanation for the failure to apply during the period of the original validity.

36. The overriding objective of the CPR is to enable the court to deal with cases justly. In our judgment, it would not be doing justice in the instant case if this court were to exercise its discretion by refusing to allow an extension of time for the service of the claim form. Whilst we do not condone the solicitor's failure to know and apply the rules, the misleading nature of the notes for guidance provided by the court is a factor which can properly be taken into account and which explains the failure to serve the document in time. It would not, we think, on the facts of this case be doing justice if the court compounded the error on the form with a refusal to allow the appellant an extension of time in which to serve his claim form.
37. We are also strongly influenced by the fact that, if an extension of time is not granted, the appellant will lose his right to have the terms of his new tenancy determined by the court in the absence of agreement. As was pointed out in argument, the Act of 1954 is designed to assist small businesses to renew their tenancies without being disadvantaged by the greater bargaining power of their landlords and the exigencies of the market. Mr. Grantham, in argument, fairly acknowledged the force of this point.
38. We also bear in mind that notices had been duly served, the claim had been issued, the delay in service was small, and as soon as the appellant's solicitors realised their mistake, they moved to rectify the position. The prejudice suffered by Turbogame, if time is enlarged, will be the closing off of their adventitious escape from the 1954 Act.
39. Accordingly, the cumulative effect of the reasons advanced by Miss Ewins is, in our judgment, sufficient to make it appropriate for the court to exercise its discretion in the appellant's favour to extend the time for service of the claim form.
40. Before parting with this case, we would like to make it clear that nothing in this judgment should be taken in any way as derogating from the propositions that strict obedience to the Civil Procedure Rules by practitioners is imperative, and that failure to do so will not be condoned. In particular, the messages from this case seem to us to be the following: -

(1) the profession must be aware of the time limits for service in each category of litigation and must serve proceedings promptly and within those time limits;

(2) after 1 October 2001 in cases under the Landlord and Tenant Act 1954 failure to serve the claim form within two months will bring into play CPR 7.6(3) with results likely to be fatal to the application if service is late; and

(3) The Notes for Guidance contained in the form N205C "Notice of issue – non money claims" are misleading and the use of the form in its current state should be discontinued.

41. For the reasons which we have attempted to give, therefore, we would allow this appeal and extend the time for service of the claim form.
42. In a sensible move to save costs, the parties have adopted the court's suggestion that this judgment should be handed down in open court without the need of either side's attendance and that it should make provision for costs subject (but only if necessary) to further argument.
43. The district judge's order will be restored. The appellant is to have his costs in this court and before the circuit judge. We assess the costs in this court in the amount of the appellant's revised statement, which appears to us proper in all respects, at £3198.49. There will be liberty to either side to apply within 14 days of the handing down of this judgment if a different order is sought. The appellant is also to be at liberty within the same period to submit his bill of costs in the county court appeal for inclusion in the court's order by agreement. Failing agreement, there will be an assessment.
ORDER: Appeal allowed and time extended for the service of the claim form; district judge's order restored; Respondent to pay the Appellant's costs assessed in the sum of £3,198.49; liberty to apply. (Order does not form part of approved Judgment)