In Safin (Fursecroft) Limited v The Estate of Dr Said Ahmed Said Badrig (Deceased), 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.
The claimant, Safin (Fursecroft) Limited commenced proceedings against the Estate of Dr Badrig for possession of a flat. Dr 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 5 April 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 down for January of 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 6 March 2014, and time for compliance with the conditions was of the essence.
On 5 March 2014, the defendant sought permission to extend the time limits for compliance with the consent order. The conditions were not satisfied by 6 March 2014 (i.e. 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 prior to 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 basis that:
- It was an essential condition for relief from forfeiture for non-payment of rent that the arears were paid within the specified period;
- Although the court has jurisdiction to extend time there must be good grounds, and where the time limit is in a consent order (and time is not of the essence) there must be exceptional circumstances subsequent to the agreement which were not intended or anticipated; and
- To refuse to extend time would be to respect the parties' underlying contractual intention under the consent order.
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 was considered and applied, in particular that:
- The court does have jurisdiction to extend time limits in a consent order, even in cases where the parties have agreed expressly that time is of the essence; and
- The court's discretion is not limited to situations where there are "unusual circumstances".
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 then 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 i.e. before 6 March 2014, all the conditions in the consent order had been satisfied by the time the case was heard and forfeiture was in respect of a long lease of residential premises, the value of which was almost £1m more than the £90,000 due to the claimant.
The present case is an important and interesting one (not surprisingly, it was 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.