Safin (Fursecroft) Ltd v The Estate of Dr Said Ahmed Said Badrig (Deceased)

This appeal concerns the principles governing the exercise of the court’s discretion to extend the time for complying with a consent order.

It is an appeal from an order dated 25 July 2014 of His Honour Judge David Mitchell, sitting in the Central London County Court, extending the time for the defendant, the respondent to this appeal, to comply with certain conditions contained in a consent order dated 10 January 2014 (“the Consent Order”) granting the defendant relief from forfeiture of a lease of residential premises at Flat 26, Fursecroft, George Street, London W1H 5FL (“the Flat”).

The Judge granted permission to appeal. He considered that that the case raises an important point of principle or practice and so directed under CPR 52.14(1)(a) that any appeal be heard by the Court of Appeal.

There is a long factual background to these proceedings, the consent order and the order of 25 July 2014. Much of it is contained in the several witness statements made in these proceedings by the parties as well as the judgment handed down by Judge Mitchell on 25 July 2014. For the purpose of this appeal, the following short summary of the factual background is sufficient.

The appellant, Safin (Fursecroft) Limited (“Safin”) is the leasehold owner of the building in which the Flat is situated. By a sub-underlease dated 17 August 1970 (“the Lease”) the Flat was demised for a term of 63 years and 75 days from 1 April 1970. On 19 January 1979 Dr. Said Ahmed Said Badrig (“Dr Badrig”) was registered as the proprietor of the Lease. Dr. Badrig died in 2002 but this fact remained unknown to Safin until some considerable time later. There has been no grant of probate or letters of administration in respect of Dr Badrig’s estate.

On 21 February 2012 Safin commenced proceedings for possession of the Flat against “the Estate of Dr Said Ahmed Said Badrig (Deceased)” (“the defendant”) for non-payment of rent and service charge, and for breaches of covenants in the Lease as to use and occupation, prohibiting assigning, underletting and parting with possession, and against alterations. Safin claimed in the proceedings to be entitled to forfeit the Lease by virtue of those breaches and to have done so by the issue and service of the proceedings. The arrears of rent and service charge claimed amounted to £22,770.29.

By an order dated 5 April 2012 Dr Badrig’s son, Hossni Said Badrig (who calls himself Badrick in some of the witness statements) (“Mr Badrig”) was appointed to represent Dr Badrig’s estate pursuant to CPR 19.8(2)(b)(ii).

On 27 June 2012 District Judge Price made an order for possession of the Flat on or before 25 July 2012, and for payment by the defendant to Safin of £22,770.29, interest and assessed costs by 4pm on 25 July 2012. The order provided that, if the defendant filed and served an application for relief from forfeiture by 4pm on 25 July 2012, the order would be stayed.

The defendant applied for relief from forfeiture by an application dated 23 July 2012.

Directions were given for the service of witness statements, for permission to appoint a joint surveyor expert, for inspection of the Flat, and for the application for relief from forfeiture to be listed with a time estimate of two days.

The two day hearing listed to start on 25 February 2013 was vacated due to Mr Badrig’s ill health. The hearing was re-listed for 14 and 15 January 2014. An application by Mr Badrig to vacate that hearing on the ground of Mr Badrig’s ill health was refused.

On 10 January 2014, two days before the trial of the defendant’s application for relief from forfeiture, the parties and their respective legal representatives attended a settlement meeting. Mr Badrig was advised by a barrister at the meeting. At the conclusion of that meeting the parties agreed the Consent Order. It provided for relief from forfeiture if certain specified conditions were satisfied. The Consent Order was as follows, so far as relevant:

“AND UPON the Defendant, through Mr Hosni Badrig, undertaking to the Court, and to the Claimant, not to commit further breaches of clauses 2(ix) (the alteration covenant), 2(x) (the alienation covenant), and 2(xxviii)(the user covenant) of the Lease

IT IS BY CONSENT ORDERED THAT

1.

if the Defendant complies with all of the conditions in paragraph 2 below, by the specified dates, the Defendant shall be relieved from forfeiture, and shall hold the Property under the Lease;

2.

the conditions referred to in paragraph 1 of this order are the following:

(a)

the Defendant shall pay:

(i)

the arrears of rent and service charges under the Lease, in accordance with paragraph 3 below; and

(ii)

the Claimant’s costs, in accordance with paragraph 5 below:

by 4.00 pm on 6^th March 2014

(b)

the Defendant, through Mr Hosni Badrig, shall:

(i)

repair all dislodged brickwork to the lightwell relating to the Property, at the Defendant’s own expense, by 4pm on 10^th April 2014

(ii)

to arrange and produce appropriate certification for all works done to the Property, including those to be done pursuant to paragraph 2(b)(ii) above, to comprise:

(1)

building control certification, issued by Westminster Building Control, to show full conformity of the reinstatement works, by 4.OOpm on 10^th April 2014

(2)

a certificate from a competent and duly certified electrical engineer confirming the electrical installations are fully compliant with current regulations, such certification to be provided by 4pm on 6th March 2014

(iii)

throughout the period between the/date of this order and the date when the Defendant shall be relieved from forfeiture, fully comply with his undertaking to the court as contained in the recitals above.

(c)

the Defendant shall pay the costs sums agreed or determined pursuant to paragraph 4 below within 56 days of such agreement or determination as the case maybe

(d)

in accordance with paragraph 6 below the Defendant shall pay ongoing damages for its use and occupation of the Property (equal to the rent and service charge which but for the Lease’s forfeiture would otherwise become due on l April and on October of each year) in the half yearly sum of £6,480.96; such sum becoming due (without need of invoice) on 1 April 2014, 1October 2014 and on the same days of each subsequent year until such time as the Defendant shall be relieved from forfeiture.

3.

The Defendant shall pay the arrears of rent and service charge of £45,432.76 by 4.00 p.m. on 6 March 2014

4.

The Defendant shall pay the Claimant’s costs of and occasioned by the Defendant’s application for relief from forfeiture to be assessed and paid on an indemnity basis, and to be subject to a detailed assessment if not agreed

5.

The Defendant shall pay £35,000 on account of costs ordered to be paid under paragraph 4 above, by 4 pm on 6 March 2014

6.

Pending the Defendant being relieved from forfeiture pursuant to paragraph 1 above, the Defendant shall pay the Claimant damages for its continuing use and occupation of the Property such payment being made on 1 April and 1 October of each year in the half yearly sum of £6,480.96

7.

If the Defendant fails to comply with any of the conditions in paragraph 2 of this order (time being of the essence), then his application for relief from forfeiture shall be dismissed, without further application by the Claimant, and the stay ordered in paragraph 5 of the order of DJ Price dated 27 June 2012 shall be lifted.”

On 5 March 2014 the defendant made an application for an order (1) setting aside the consent order on the grounds that Mr Badrig had been medically unfit to enter into it at the time and had been badly advised, or alternatively (2) extending time for compliance with the conditions in the Consent Order. That application was served on Safin on the evening of 6 March 2014.

The defendant did not make the payments required by the Consent Order by the 6 March 2014 deadline.

Safin applied on 7 March 2014 for a warrant of possession. The date for execution of the warrant was fixed for 28 April 2014.

On 8 April 2014 Judge Mitchell dismissed the defendant’s application on the papers but gave permission for an application for an oral hearing. The defendant applied for an oral hearing on 10 April 2014.

On 22 April 2014 there were transferred into Safin’s solicitors’ client account the funds required to pay the rent and service charge arrears and the on account costs due under the consent order. There was a subsequent payment of a small sum in respect of intereset.

On 26 April 2014 District Judge Langley made an order suspending Safin’s warrant of possession pending the oral hearing of the defendant’s application of 5 March 2014.

On 17 July 2014 the defendant served the building regulations and electrical certificates required by paragraph 2(b)(ii) of the consent order.

The defendant’s application was heard by Judge Mitchell on 23 July 2014. At the start of the hearing the defendant abandoned the application to set aside the consent order on the grounds of incapacity.

Judge Mitchell took time to consider his judgment, which he delivered on 25 July 2014.

He began by referring to the long running litigation by Safin against the defendant, of which the present proceedings are the third piece of litigation. He said that the earlier cases concerned the defendant’s failure to pay rent and service charges for the Flat.

The Judge set out the history of the present proceedings. He said that it was quite clear that, whilst the litigation had meandered in the past, after the Consent Order was signed the defendant had made a much greater effort to resolve the litigation.

Having set out the terms of the Consent Order, the Judge said that all the matters in it had been addressed but they had not been addressed within the specified timetable. He referred to the “careful analysis of the facts” which had been given by Mr Jonathan Gaunt QC, the defendant’s counsel. That analysis stated all the steps that had been taken by Mr Badrig to comply with the Consent Order. The Judge said that he did not wish to repeat the analysis but only to summarise it, which is what he did.

He referred to Mr Badrig’s assertion that the lightwell work was done in February 2014 although Safin’s solicitors did not confirm that it was satisfactory until a letter from them dated 14 April 2014; and said that, so far as concerned unauthorised alterations, Mr Badrig’s case was that he and his father had not altered the Flat but he did carry out remedial work.

As regards the payments of arrears of rent, service charge and costs, the Judge noted that they were paid by 17 March 2014 (although, as pointed out in the hearing of the this appeal, they were in fact not transferred to Safin’s solicitors until 22 April 2014 and not received by Safin itself until 26 April 2014) and that he had paid some interest in respect of the late payment and also that he paid an instalment for October 2014 in advance. He referred to Mr Badrig’s assertion that he could have paid on the due date if Safin had been agreeable to a meeting with a prospective purchaser of the Flat, but the Judge acknowledged that Safin’s solicitors were “heartily fed up” with the defendant by this time and did not enter into further negotiations. The Judge added that, apart from anything else, Mr Badrig had a number of different legal advisors (he thought five), which simply did not help when trying to resolve disputes.

The Judge considered that Mr Badrig did everything he reasonably could to get the electrical and building regulations certificates in time.

The Judge said that it was accepted that all the things required by the Consent Order had been done and that the dispute was in relation to the timescale. He said that it was accepted that the court has jurisdiction to extend time but that was not the case before the Civil Procedure Rules (“the CPR”). He said that the question was whether he had power to extend time on the particular facts of the case and, if he did, whether it would be a proper exercise of his discretion to do so.

The Judge referred to a number of authorities, including in particular Pannone v Aardvark Digital Ltd [2011], [2011] EWCA Civ 803, [2011] 1 WLR 2275, Siebe Gorman & Co. Ltd v Pneupac Ltd [1982] 1 WLR 185, Weston v Dayman [2008] 1 BCLC 250, Ropac Ltd v Inntrepreneur Pub Co. Ltd [2001] LTR 10, Tigner Roche & Co. Ltd v Sprio (1982) 126 Sol. Jo. 525.

The Judge observed that the defendant’s application for an extension of time was made within the period of the Consent Order, before the time limits had expired. He referred to the submission of Mr Nathaniel Duckworth, Safin’s counsel, that the Consent Order embodied a contract of compromise and as a matter of law and principle the defendant should be held to the bargain. The Judge agreed unequivocally that the Consent Order was a real contract between the parties. The Judge referred to the wording of clause 7 of the Consent Order which, he said, was an extremely clear provision. He also referred to Mr Duckworth’s submission that, if Safin had gone to court, it might actually have achieved more. He said that Mr Duckworth was clearly right in his submission that the fact that it was a consent order was a fact to be borne in mind when making a decision whether or not to extend time. He referred to Mr Duckworth’s submission that further time was requested before the agreement was reached on 10 January 2014, and Safin actually refused that, and to Mr Duckworth’s emphasis on the fact that time was made of the essence by virtue of paragraph 7 of the Consent Order. He referred to Mr Duckworth’s submission that, if the court were to interfere with the consent order, it would be stripping Safin of a contractual right; and also that all the matters were within the reasonable contemplation of the parties – indeed they were specifically dealt with: the raising of funds and the obtaining of certificates. He referred to Mr Duckworth’s criticism of Mr Badrig’s failure to give details about finance offers he turned down on the grounds that the loans were too expensive or the terms too onerous. The Judge said that there was no doubt that historically Mr Badrig had approached the litigation in an inefficient way. He said it had been wasteful of Safin’s solicitor’s time, Safin’s time and court time and that the defendant had been penalised for that in costs, at least so far as Safin was concerned.

The Judge, having referred to necessity of the need to do justice set out in CPR 1.1, said that the power to extend time did exist and he proposed to exercise his discretion and give the defendant the opportunity of obtaining relief from forfeiture on the terms that he had not only agreed but had carried out, albeit out of time. He said in paragraphs [19] and [20]:

“19.

… [Mr Badrig] has not only paid the rent but various works have been done, a certificate has been obtained. He has paid a substantial sum towards the costs. 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 he has fulfilled his side of the bargain and where money was paid late he has, as I understand it, he has paid interest; certainly he should do if he has not already done so. Equally, not to extend time would give the landlord … an unjustified windfall. This is a flat valued at £1,050,000 and [the defendant’s counsel] submits forcefully that that would be an unjustified windfall.

20.

As I have indicated, I am quite satisfied I have the power. I am well aware that it should be used sparingly. Indeed, I am aware that during his argument Mr. Duckworth very ably … said that he knew of no case where this power had been exercised which indicates the sparing nature of it, but it seems to me this is a case where in order to do justice, in my judgment, it is appropriate to extend time and by doing so I appreciate interfere with what the parties had agreed.”

Mr Stephen Jourdan QC, leading counsel for Safin on this appeal, stated in the course of his submissions that Safin had no complaint about the way the Judge had treated the conditions as to the provision of electrical and building regulation certificates as having been duly satisfied. Safin’s complaint is as to the Judge’s extension of time for the other conditions.

Mr Jourdan referred in his oral submissions to a large number of reported cases, including Chandless-Chandless v Nicholson [1942] 2 KB 321, Starside Properties Limited v Mustapha [1974] 1 WLR 816, Siebe Gorman & Co Ltd v Pneupac Ltd [1982] 1WLR 185, Innterepreneur Pub Co (CPC) v Langton [2000] 1 EGLR 34, Ropac Ltd v Inntrepreneur Pub Co CPC Ltd [2001] L&TR 10, Fivecourts Ltd v J R Leisure Development Co Ltd [2001] L&TR 5, Ferrotex Industrial Ltd v Kremikovotzi Corporation [2001] EWCA Civ. 138, S v S (Ancillary Relief: Consent Order) [2002] EWHC 223 (Fam), [2003] Fam 1, Di Placito v Slater [2003] EWCA Civ 1863 [2004] 1WLR 1605, Pannone LLP v Aardvark Digital Limited [2011] EWCA Civ 803, [2011] 1WLR 2275, O’Sullivan v Andrews [2012] EWHC 4327 (QB), and Guaranty Trust Co of New York v Hannay & Co [1915] [2 KP 536, 563 (as quoted in JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2015] EWCA Civ 139 at [45]).

I do not propose to set out Mr Jourdan’s detailed references to those cases. It is sufficient to state Mr Jourdan’s following propositions, for which he said they are authority.

First, it is an essential condition of relief from forfeiture for non-payment of rent that the arrears are paid within a specified period.

Secondly, where relief from forfeiture is given subject to compliance with conditions to be satisfied within a specified time, the court does have jurisdiction to extend the time but will not do so lightly. There must be good grounds and, if the tenant has been slack or casual, the court will scrutinise an application for extension of time with particular care.

Thirdly, where the order for relief is in a consent order, but time has not been made of the essence, then the court will only extend the time if there have been exceptional circumstances. Exceptional circumstances in this context means circumstances subsequent to the agreement which, by virtue of their type or gravity, were not intended to be covered and were not anticipated.

Fourthly, where relief has been given in a consent order and the parties have agreed that time is of the essence for compliance with specified conditions, the parties have agreed the allocation of risk in respect of the inability to satisfy the conditions within the time specified so that to refuse to extend the time is merely to respect the parties’ contract. In such circumstances the court has no jurisdiction to extend the time in the sense that, according to settled principles, the discretion can only be exercised one way.

Applying those principles to the facts of the present case, Mr Jourdan submitted that, while there is jurisdiction in the present case to extend the time for compliance with the conditions in the Consent Order, the court’s discretion could only be exercised against an extension of time according to settled practice. That is because the Consent Order gives effect to a contract between the parties substantively disposing of the dispute, and the contract allocated the risk of non-compliance with the specified conditions.

Mr Jourdan submitted that, if that was wrong, then the court could only grant an extension if there had been exceptional circumstances, in the sense of supervening circumstances subsequent to the Consent Order which were not intended to be covered and were not anticipated when the parties’ agreement was made. No such circumstances had in fact occurred in the present case since the parties had specifically negotiated the time limits with knowledge of the difficulties that might occur in achieving satisfaction of the conditions.

Mr Jourdan further submitted that, in any event, paragraphs 19 and 20 of the Judge’s judgment disclosed that the Judge had only taken two matters into account in deciding to extend time, namely that an extension would be an interference with what the parties had agreed and that Safin would otherwise obtain a windfall. Mr Jourdan submitted that the Judge ought to have taken into account the following matters, but did not do so, or, if he did take then into account, he gave insufficient weight to them: (1) The contract came at the end of a long period of litigation, with numerous court hearings, and was intended to draw a line in respect of a tenant Safin no longer wanted. The defendant had sought relief in relation to a forfeiture which had been effected in July 2012, one and a half years before the Consent Order. The arrears were very long standing, stretching back over a number of years. Mr Badrig’s witness statement in support of the application for relief from forfeiture had stated that he expected to discharge all the arrears by the end of September 2012. There is a strong public interest in bringing an end to litigation and complying with the court’s order. (2) The parties specified in the Consent Order that time was to be “of the essence” and indicated it was “the last chance saloon” for Mr Badrig. (3) There had been no change of circumstances. (4) Contrary to what the Judge said, there would be no financial windfall for Safin if the defendant’s application to extend time was refused. It was exactly what Safin was entitled to receive under the contract between the parties. (5) The time limit had been specifically negotiated at a meeting at which Mr Badrig was professionally represented. Mr Badrig had wanted more time. Safin refused, and there was an agreement accordingly. In effect, Mr Badrig bought off the risk of shorter time limits being imposed by the court on a hearing of the defendant’s application for relief from forfeiture in return for longer time limits but which would be strictly enforced. (6) Mr Badrig’s evidence about why he did not pay on time were unsatisfactory. The burden was on the defendant to explain why the money could not be obtained. Mr Badrig had merely made bold assertions but without providing details, for example, about the terms of the loans which he stated had been available only on unacceptable terms. On 17 March 2014 his bank account was credited with £338,000. Mr Badrig did not explain why he could not have obtained that sum sooner. Although Mr Badrig had three bank drafts on 17 March 2014, he did not transfer the money until 22 April 2014 and there is no good reason for having failed to do so.

I do not consider that the Judge, in granting the defendant an extension of time, made any error of principle or wrongly took into account matters he ought not to have done or wrongly failed to take into account matters that he should have done or that his decision was outside the range within which reasonable disagreement is possible.

Pannone is clear authority that CPR r.1.1 (the CPR are a new procedural code with the overriding objective of enabling the court to deal with cases justly), r.1.2 (the court must seek to give effect to the overriding objective when it exercises any power given to it by the CPR), r.1.4 (the court must further the overriding objective by actively managing cases) and r.3.2(a) (the court may extend the time for compliance with any order) conferred on the Judge a real discretion whether or not to extend the time in the Consent Order and not merely a discretion which, as Mr Jourdan submitted, could only properly be exercised as a matter of settled practice as well as on the facts by refusing an extension.

Prior to the CPR, under the former Rules of the Supreme Court (“the RSC”), the court’s power to vary a consent order depended on which of two types of consent order was in issue. As Lord Denning MR explained in Siebe Gorman (at p.189), where the consent order gave effect to a real contract between the parties, the court would only interfere on the same grounds as any other contract (such as misrepresentation or mistake); where, on the other hand, the consent order was no more than an order to which the parties did not object, the order could be altered or varied by the court in the same circumstances as any other order made by the court without the consent of the parties.

It was Neuberger J in Ropac, who first expressed the viewthat, following the coming into effect of the CPR, the court had a discretion to extend time limits in both types of consent order.

So far as relevant to this appeal, the facts in Ropac were as follows. A landlord claimed summary judgment for possession for arrears of rent. Following negotiations, the landlord and the tenant agreed the terms of a consent order, which provided that unless the tenant on or before 9 December 1998, time being of the essence, paid to the landlord the sum of £1,137.46, representing the balance of the outstanding rents for the period 1 April 1998 to 30 November 1998, there should be an order for possession and for arrears of rent, mesne profits, interest and costs. The tenant having failed to pay the sum on the specified date, a possession order was made in favour of the landlord. The tenant applied for a stay of the possession order and for relief of forfeiture. Both were refused by the master. The tenant appealed. The tenant issued a second application seeking an extension of time for compliance with the consent order and for relief from forfeiture. That application and the appeal were heard together by Neuberger J.

At that hearing counsel for the landlord accepted that the court could grant the tenant relief from forfeiture on terms that the tenant paid all the arrears of rent, amounting to some £70,000, within a reasonable time. She said, however, that there was no jurisdiction to grant the tenant an extension of the time for compliance with the consent order.

Neuberger J held that the court’s case management powers under the CPR Part 3 included power to extend time under the consent order even though it provided that time was of the essence. He said (at [26]) that under the RSC, the consent order would have been in sufficiently clear terms to have merited interference by the court only in circumstances which would justify interference with a contract but the approach in the CPR is more flexible and the court does have jurisdiction to extend time in such a case. He said (at [30]) that he reached that conclusion “with some hesitation”. He said that the overriding objective in CPR Rule 1.1 is a fundamental and overriding feature of the CPR which “amounts virtually to a public interest factor, which governs the whole of the CPR, and which was not present in the RSC”. In that connection, he referred to the provisions of the CPR governing case management powers and, specifically, the terms of r.1.4 (1) that the court must further the overriding objective by effectively managing cases. He concluded as follows (at [31]) on the question of jurisdiction:

“To my mind, the CPR therefore give the court rather more wide-ranging, more flexible powers than the RSC. In my judgment, those powers are to be exercised not merely to do justice between the parties, but in the wider public interest. Further, the objection to deal with a case justly must, as I see it, sometimes (albeit rarely) require the court to override an agreement made between the parties in the course of, and in connection with, the litigation. I consider that that means that the court has greater power to interfere than before. Having said that, I should add this. Where the parties have agreed in clear terms on a certain course, then, while that does not take away its power to extend time, the court should, when considering an application to extend time, place very great weight on what the parties have agreed and should be slow, save in unusual circumstances, to depart from what the parties have agreed.”

In the event, Neuberger J decided that he should not extend the time for compliance with the consent order, primarily because the landlord accepted that the tenant was entitled to have relief for forfeiture on terms that the tenant paid all the rent due and owing. He said (at [33] that in those circumstances, rather than considering extending time under the consent order, the proper course for him to take was to offer the tenant the opportunity of obtaining relief from forfeiture on terms that it paid all the rent within a reasonable period, failing which the lease would be forfeited and the tenant must vacate.

Pannone concerned an extension of time for complying with a consent order requiring the claimant to file and serve its Reply and Defence to Counterclaim by no later than 1pm on Monday 26 October, and which stated that, if the claimant did not do so, the claim would be struck out and the defendant would have permission to enter judgment on its Counterclaim. The claimant served its Reply to Defence and Counterclaim by an email sent at 1:02pm and filed the same at court by a fax sent at 1:06pm. The District Judge made an order extending the time, and that was upheld on appeal to the Deputy High Court Judge. The Court of Appeal dismissed the appeal. The principal judgment was given by Tomlinson LJ, with whom the other two members of the court agreed.

Tomlinson LJ said (at [4]) that it was not ultimately argued on the appeal that there was no power to extend time under CPR r.3.1(2)(a) where the relevant order has been made by consent but, since the directors of the defendant had appeared in person on the appeal and initially seemed to argue that the power was unavailable in that case, and since it had not before been decided by the Court of Appeal whether the power was available in relation to a consent order, it was appropriate to approach the matter from first principles.

Tomlinson LJ referred to the two types of consent order described by Lord Denning MR in Siebe Gorman at p.189. He said (at [27]) that, although Lord Denning’s observations were made in the context of the old RSC, and the distinction between the two types of consent order are no longer relevant so far as concerns jurisdiction to grant relief from the “agreed” consequences of non-compliance with an order, the distinction remains of importance in the context of the court’s exercise of its discretionary power. He said there is a world of difference between a case management decision made at the instance of one party to which the other party makes no objection, such as occurred in the Siebe Gorman case, and a genuine settlement of a substantive dispute as to the parties’ rights. He said that, where a settlement is embodied in an order of the court, it can rarely be appropriate for the court to intervene further than to the extent to which the contract can, by its own terms or pursuant to general contractual principles, be modified or discharged in the light of changed circumstances.

Having referred to CPR r.3.1(2)(a), r.3.8 and r.1.1(1), Tomlinson LJ said (at [29]) that he agreed with the conclusion which Neuberger J had reached “with some hesitation” in Ropac as to the change made by the CPR on the jurisdiction of the court to alter a time provision in a consent order. He observed (in [30]) that, unlike the consent order in Pannone, which concerned an agreed modus vivendi in relation to a case management decision in preparation for trial, the consent order in Ropac represented the compromise of a substantive dispute.

Although Tomlinson LJ agreed with Neuberger J on the issue of jurisdiction, there was an important aspect of the exercise of the discretion on which he qualified what Neuberger LJ said in Ropac. That concerned Neuberger J’s statement at the end of paragraph [31] of Ropac that the court should be slow, save in unusual circumstances, to depart from what the parties have agreed. Having referred to Ferrotex and certain observations of Tuckey LJ in that case, Tomlinson LJ said as follows (at [32]):

“The presence of “unusual circumstances” is plainly not a prerequisite of the jurisdiction to extend time or to grant relief, which is expressed in the CPR in general terms. In the Ropac case … Neuberger J was, if I may respectfully so put it, feeling his way in the light of the newly introduced procedural code, and he was certainly not, I think, intending to formulate a rule as to the circumstances in which an extension of time might be granted in the face of a consent order. I think he meant no more than to emphasise that appropriate weight should be given to the parties' agreement.”

Tomlinson LJ said (at [33]) that the weight to be given to the consideration that an order is agreed will vary in accordance with the nature of the order and therefore the agreement: where the agreement is the compromise of a substantive dispute or the settlement of proceedings, that factor will have very great and perhaps ordinarily decisive weight, and where the agreement is no more than a procedural accommodation in relation to case management, the weight to be accorded to the fact of the parties’ agreement as to the consequences of non-compliance, while still real and substantial, will none the less ordinarily be correspondingly less, and rarely decisive. He continued:

“Everything must depend on the circumstances, and CPR r.3.9(1) prescribes that on an application for relief from a sanction for a failure to comply with a court order the court will consider all the circumstances, including those enumerated in the following sub-paragraphs. Beyond noting that where an order is made by consent, that is one of the circumstances which the court will take into account, it is not I think necessary to impose any further gloss on the Rules, which are already adequately drafted so as to ensure that all proper considerations must be taken into account.”

Tomlinson LJ also referred to a decision of Ramsey J in Chiu v Waitrose Ltd [2011] EWHC 1356 (TCC), in which Ramsey J reviewed the cases to which Tomlinson LJ had referred. He quoted from the judgment of Ramsey J including a passage in which Ramsey J said that the court will be slow to extend time or grant relief from sanctions in relation to an agreed order made in a consent order and will generally hold the parties to the terms of the consent order but that there will be unusual cases where it will be just to extend time or grant relief from a sanction. Tomlinson LJ said (at [34] that, consistently with what he had said earlier, he did not think that it was incumbent on Ramsey J to identify unusual circumstances before being prepared to grant the relief sought. He also doubted whether it can or should be asserted with confidence that the court will “generally” hold parties to the terms of the consent order. He continued:

“No doubt that is the starting point of the debate but, particularly in relation to a case management decision such as under consideration in this case and before Ramsey J, an approach that the parties will “generally” be held to the terms of a consent order is in my view over-prescriptive and capable of detracting from the need to assess what, in the circumstances, is the weight appropriately to be given to the factor of consent.”

Lloyd LJ, having agreed that the appeal in Pannone should be dismissed for the reasons given by Tomlinson LJ, said (at [38]) that the appeal provided an opportunity for the court to hold that there is a power of the court to extend the time specified in a consent order, adding that the power is not “limited in any prescriptive way by reference to the existence of “unusual circumstances”. He said that the fact that the order is made by agreement is one of the circumstances of the case which the court is to have regard under r.3.9, and it may be an important factor, but it is not inherently decisive so as to render it unnecessary and irrelevant to examine the other relevant circumstances.

Arden LJ only stated that she agreed with both judgments.

Mr Jourdan emphasised, as is undoubtedly correct, that the consent order under consideration in Pannone was a case management decision rather than an agreement resolving the substantive dispute between the parties. Strictly, therefore, what the Court of Appeal said in that case about consent orders which dispose of the substantive dispute between the parties is not binding as precedent.

Despite the anomaly of paragraph 7 of the Consent Order in the present case, which appears to have envisaged a continuing half life for the defendant’s application for relief from forfeiture, I am content to view the Consent Order as one which gave effect to a contract of the parties disposing of the substantive dispute between them rather than a case management decision to which the parties consented.

I do not agree, however, with Mr Jourdan’s submission that we should not apply the reasoning of the Court of Appeal in Pannone in the present case. It seems to me perfectly plain that both Tomlinson LJ and Lloyd LJ were stating unequivocally in Pannone that, not only is there jurisdiction under the CPR to extend any time limits in a consent order, including an order which resolved the substantive dispute between the parties and even where the parties have stated expressly that time is of the essence, but also that the discretion is not limited to the existence of “unusual circumstances”. Rather, the weight to be given to the fact of the parties’ agreement will depend on all the circumstances, of which the fact that the agreement was one disposing of the substantive dispute rather than a case management decision will always be highly important and often decisive.

In view of the care and detail of the Court of Appeal’s analysis in Pannone of both types of consent order discussed in that case, previously described by Lord Denning in the passage in Siebe Gorman quoted above, we should accept and apply that analysis in the present case unless satisfied that the Court of Appeal in Pannone failed to take into account relevant law and argument. The underlying thrust of Mr Jourdan’s submissions is that Tomlinson LJ did fail to do so.

The Court of Appeal in Pannone did not refer to case law on the power of the court to discharge or vary undertakings to the court, which is relied upon by Safin on this appeal. Di Placito, in which the Court of Appeal considered Eronat Tabbah [2002] EWCA Civ 950 and especially the observations of Mance LJ at paragraphs [20] and [21] of that case, is authority that the discretion of the court to discharge or modify a time limit contained in a voluntary undertaking can only be exercised if there are “special circumstances”. As was explained in paragraph [31] of Di Placito by Potter LJ, with whom the other two judges of the court agreed, that means that the discretion is not simply a discretion at large but is to exercised only in a situation where circumstances have subsequently arisen which, by reason of their type or gravity, were not circumstances intended to be covered or which ought to have been foreseen at the time the undertaking was given.

Potter LJ said (at [33]) that in relation both to undertakings given to the court required by, or offered to, the court independently of the agreement of the other party (as in the case of undertakings required by, or offered to, the court as the price of obtaining a particular form of relief) and undertakings which are part of a collateral bargain between the parties (as, for example, part of, or pursuant to, the freely agreed comprise of an action) the question is whether there are “special circumstances” in the sense of circumstances so different from those which may properly be regarded as contemplated or intended to be governed by the undertaking at the time it was given that it is appropriate to release the undertaker from the burden of his undertaking.

I do not consider the line of authority about the jurisdiction to discharge or modify voluntary undertakings, and Di Placito in particular, to be relevant to the present case any more than it was relevant to the analysis in Pannone. The jurisdiction to discharge or modify undertakings is an inherent jurisdiction of the courts. It does not depend on, and it predates, the CPR. It is not necessary to explore in any detail on this appeal the reasons for the case law’s more restrictive approach to the exercise of such an inherent jurisdiction when compared to the exercise of the court’s case management powers under CPR 3.2(a) to extend the time for compliance with any court order, even a consent order. One explanation may be that an undertaking to the court carries a special seriousness reflected in the fact that an application for committal for breach of an undertaking may be made even though the order containing the undertaking is not endorsed with a penal notice. Another may simply be that the inherent jurisdiction was developed in the light of the potentially serious consequences for even relatively minor non-compliance with an undertaking to the court but the principles for its exercise were developed at a time when, as shown by what Lord Denning MR said in Siebe Gorman (at p. 189), there was no power to vary an order which embodied or gave effect to a contract save on the ordinary grounds on which the court would be able to interfere with any other contract. If that is the reason, then it will be a matter for consideration, but not on this appeal, whether a less restrictive approach is now appropriate in view of the overriding objective in CPR 1.1 to deal with cases justly.

Tomlinson LJ also did not refer to the line of authority, of which S v S forms part and which is relied on by Safin, limiting the grounds for setting aside a consent order for ancillary relief in divorce proceedings to (1) cases in which there was at the date of the order an erroneous basis of fact, such as misrepresentations or misunderstandings as to position or assets, and (2) cases in which there has been a material or unforeseen change in circumstances after the order so as to undermine or invalidate the basis of the consent order, known as a supervening event.

Again, I do not consider that line of authority, and S v S in particular, to be relevant. The facts in S v S bear no comparison with those of the present case. A more appropriate analogy to the present case would be an application for an extension of time in divorce proceedings to pay a lump sum specified in an order or in an agreement. The court can extend time in such a case under its inherent jurisdiction where a lump sum order made  pursuant to the Matrimonial Causes Act 1973 s 23(1)  is to be payable at one time  or,  in relation to a lump sum payable by instalments,under  its statutory power to grant such an extension under the Matrimonial Causes Act 1973 ss. 31 and 35. The court has greater latitude to vary the order as to timingin such a case than the limited circumstances of a supervening event as specified in S v S at [4].

The other cases cited by Mr Jourdan on this issue provide no assistance.

In Fivecourts Gray J refused to extend the time specified in a consent order for carrying out certain work on the demised property as a condition of relief from forfeiture. Gray J, who had only a Lawtel note of Neuberger J’s decision in Ropac, stated that the court had jurisdiction to extend the time but would only do so in “exceptional circumstances”. He concluded, on the particular facts of the case, that it would be wrong not to enforce the terms of the consent order. So far as concerns the point of principle as to whether the court can only extend the time in a consent order, including one disposing of the substantive dispute, if “unusual” or “exceptional” circumstances are shown, what Gray J said on the basis of Ropac has been overtaken by the judgments in Pannone.

In Ferrotex the Court of Appeal refused to extend the time within which the appellant was required to provide security for the respondents’ costs of the appeal under the terms of an “unless” order made by consent. The court did not consider it necessary to consider Neuberger J’s decision in Ropac because the parties had not expressly or impliedly agreed by the consent order to oust the jurisdiction of the court to extend time for compliance with the order if the circumstances justified it. On the facts, the court was not persuaded that time should be extended under its inherent jurisdiction. Once again, so far as concerns both the existence, and the manner of exercise, of the court’s power under the CPR to extend time limits in a consent order, Ferrotex has been overtaken by Pannone (in which Ferrotex was cited, as mentioned above).

O’Sullivan v Andrews [2012] EWHC 4327 is a very short unreserved judgment of Mr Justice Eady, in which he refused to extend the time for paying the debt due to the claimant specified in a consent order giving effect to a negotiated settlement of the substantive dispute between the parties. The transcript of the judgment does not contain any elaboration of the facts. Eady J referred to Pannone and to S v S. It appears from the transcript that counsel for the claimant relied on the fact that there was no material change of circumstances after the date of the order such as to justify the court’s intervention. Eady J said that the matters to which attention had been drawn by the defendant’s counsel were matters which were very much before the parties’ attention at the time of the agreement and the consent order. There is no clear indication, however, from the short judgment that Eady J thought that what was said in Pannone was subject to the approach in S v S in the case of a consent order which gave effect to a contract to settle the substantive dispute between the parties. If and insofar as Eady J did think that, I respectfully consider that he was wrong.

For all those reasons Judge Mitchell was entirely correct in the present case to consider that he had power to extend the time limits in the Consent Order and that his discretion should be exercised in accordance with the principles and guidance in Pannone.

He rightly acknowledged that the power to extend time should be exercised sparingly in such a case as the present. He was also right, however, to take into particular account that the context was one in which a tenant sought relief from forfeiture, as Neuberger J had done in Ropac. It is well established that the court regards a condition of re-entry under a lease as merely being security for the rent. That is why, where the court has granted relief from forfeiture on condition of payment of arrears of rent or other action by the tenant by a specified date, the court will grant further time if it would be just and equitable to do so. As Lord Greene MR said in Chandless-Chandless (at p.323):

“The court, in exercising its jurisdiction to grant relief in cases of non-payment of rent is, of course, proceeding on the old principles of the court of equity which always regarded the condition of re-entry as being merely security for payment of the rent and gave relief if the landlord could get his rent. If an order of this kind, in which relief is granted on terms to be observed within a limited time, is to be treated as one which the court has no jurisdiction to modify in point of time even though circumstances justify modification, then the order becomes as vicious as the original forfeiture clause itself. I hold the view without hesitation that notwithstanding the omission of the words “liberty to apply” an order of this kind, which gives relief on terms to be performed within a specified time, is one in respect of which the court retains jurisdiction to extend that time if circumstances are brought to its notice which would make it just and equitable that extension should be granted.”

Lord Greene MR observed (at pp. 324-325) that a tenant who obtained relief on conditions has to show good grounds to get further indulgence and that tenants must not think that they are entitled to be slack or casual about the performance of terms of the order. He continued, however:

“but in a case where on all equitable grounds a period limitation ought in fairness to be extended and its extension will do no more than apply the principle that the condition of re-entry is nothing more than security for the rent, there is no reason why equity should not lend its aid notwithstanding the original order.”

A similar approach was taken in Starside Properties in the context of a contract for the sale of a house, under the terms of which the defendant’s breaches of the contract entitled the plaintiff to rescind the contract and forfeit the deposit and other sums paid by the defendant. The defendant was in occupation of the house as a licensee pending completion. In proceedings by the plaintiff the county court judge made an order for possession and postponed it for three months to enable the defendant to raise the money to buy the property at the contract price. The defendant, having failed to pay within the three months, applied to the court for a further extension of time. The Court of Appeal allowed the defendant’s appeal from the decision of the county court judge that he had no jurisdiction to vary the order.

Edmund Davies LJ said (at pp. 823-824) that, certainly in relation to the jurisdiction of the court to vary an order granting an extension of time by granting a further extension, no distinction is to be drawn between cases of relief against forfeiture for non-payment of rent and other cases where the relief against forfeiture is sought. He said the following (at p.824):

“The common feature in all these cases is that a penal provision is involved and the court grants relief against the forfeiture which would otherwise follow from it in such circumstances as justice requires, and it grants relief on such terms as are equitable in those circumstances. If it should later appear that the relief by way of an extension of time first granted ought to be extended, and that in fairness to the other party that can be done, I see no difficulty in holding that the court has the jurisdiction to do that which the justice of the case is seen to require. Naturally enough, the court will scrutinise with particular care an application for further relief and will be more reluctant to grant it than in the case of a first application, but that goes to the likelihood of the later application succeeding and not to the court's jurisdiction to entertain it.”

In the context of relief from forfeiture Mr Jourdan referred to Inntrepreneur Pub Co (CPC) v Langton [2000] 1 EGLR 34 but I cannot see how that case can be of any assistance. It was a decision of Arden J refusing relief from forfeiture. It turned on its own facts, in particular that the matters relied upon by the tenant to persuade the court that she would be able to raise the money to pay the arrears of rent were too uncertain.

Critical facts in the present case, relevant to the exercise of the power to extend the time limits in the Consent Order in the context of relief from forfeiture, were that the application for the extension was made before expiry of the time limits; all the conditions in the Consent Order had been satisfied by the time the application was heard; and the forfeiture was in respect of a long lease of residential premises, the value of which was almost £1m more than the £90,000 or so due to Safin. I consider that Judge Mitchell was fully entitled, in the light of those factors, to exercise his discretion in favour of extending the time limits.

I do not accept that the Judge’s decision was fatally flawed by the various matters which Mr Jourdan submitted were not taken into account or were not given sufficient weight. It is elementary that the Judge’s decision must be read as a whole. He specifically referred in his judgment to the long running litigation between the parties over the defendant’s failure to pay the rent and service charge, the clear terms of paragraph 7 of the Consent Order stating that time was of the essence for complying with the conditions, Mr Gaunt’s account of all the steps taken by Mr Badrig since the Consent Order was made, the fact that Safin might have achieved more if it had contested the application for relief from forfeiture rather than enter into the Consent Order, Mr Duckworth’s contention that nothing that had occurred since the Consent Order which had not been within the reasonable contemplation of the parties, and Mr Duckworth’s submission that the defendant had failed to give sufficient details about the loan offers he turned down or to give good reasons for turning them down.

With respect to Mr Jourdan, it is obvious that the Judge had all those matters in mind when he stated his conclusion, emphasising as he naturally did at that point the particular factors which tipped in favour of an extension. He was not obliged to re-state one by one all those points to which he had already referred in his judgment provided it was reasonably clear, as it was, that he had them in mind.

For those reasons I would dismiss this appeal.

I agree.

I also agree.