On taking a “step” in proceedings [2022] EWHC 496 (Ch)


HHJ Williams, sitting as a Judge of the High Court, has recently given judgment in Fairpark Estates Ltd and others v Heals Property Developments Ltd [2022] EWHC 496 (Ch).  Dismissing the Defendants’ appeal against the refusal of their application to stay the proceedings under section 9 of the Arbitration Act 1996, the Court found that the Defendants had taken steps in the proceedings “to answer the substantive claim” for the purposes of subsection 9(3) by:

(i) giving final undertakings in response to the Claimant’s application for an interim injunction; and

(ii) obtaining the Claimant’s agreement to a second extension of time to file their defence under CPR 2.11 after the first extension had been embodied in a consent order.

In the case of the first, the Judge found that the wording of the undertakings had settled the claim for injunctive relief because there was nothing left to be referred to arbitration, but had not affected the Defendants’ right to seek a stay on the claim for damages under section 9 of the 1996 Act.  Adopting dicta in Republic of Mozambique v Credit Suisse [2020] EWHC 2012, the Judge held that it was possible to separate the two claims and correct to do so on the facts of the case having regard to the observations of Sales J in Bilta (UK) Ltd v Nazir [2010] EWHC 1086 (Ch) that the right to refer to arbitration should not be “lost with undue ease”.

In the case of the second, the Judge held that the extension invoked the jurisdiction of the Court for the purposes of the second requirement in Capital Trust Investments Ltd v Radio Design [2002] EWCA Civ 135 because the Court could have refused to extend time notwithstanding the parties’ agreement under CPR 2.11.  The agreement could not be properly viewed as a private arrangement between the parties and amounted to a “step” because the Defendants had not expressly reserved their rights prior to this agreement; see Ford’s Hotel Co Ltd v. Bartlett [1896] AC 1.

The case provides a timely reminder of the need to consider section 9 even during the heat of an interlocutory skirmish or when running out of time to file a defence.

Clifford Darton QC acted for the successful Claimant instructed by Mr. Brian Donnan and Ms. Claire Iacovou of Edward Harte Solicitors.

A copy of the judgment can be found here.