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Commercial Law - Interfering with Interim Consent Orders

By : Stephen Lennard

The article discusses the jurisdiction of the court under the CPR to vary interim orders made by consent.

Disposal of litigation by consent is recognised to be a good thing. Long before the CPR the machinery for civil justice has always encouraged parties to reach settlements of their disputes without recourse to hearings which consume the time of the courts and, voraciously, the costs of the litigants. This is no less true of interim hearings than of a final trial. Moreover the pressure to agree interim orders has been intensified by the advent of the summary costs regime. But what powers do the courts retain to intervene when the parties have agreed to dispose of an interim issue by consent?

The answer has for some time depended on the type of consent order into which the parties have entered. Lord Denning in prefacing his judgment in Siebe Gorman Limited v Pneupac Limited [1982] 1 WLR 185 CA by pronouncing that the case would be "of much interest to practitioners" first articulated the concept of the two meanings of consent order. The first meaning is that the words "by consent" evidence a real contract between the parties. In such a case the court would only interfere subsequently on the same grounds as it would with any other contract, for example, fraud, mistake or other vitiating factor. The second meaning is that the words really convey no more than that the parties do not object to the order the court is making. In this case there is no real contract between the parties at all and the order can be altered or varied by the court in the same circumstances as any other order that is made by the court without consent.

The determination of into which category a consent order falls will then require in every case an examination of which meaning was being used and, in some instances, an investigation of the negotiations between the parties leading to the consent order. Perhaps the most frequently encountered situation where the court is asked to vary a consent order concerns the time agreed for performance. Well intentioned, in abundant good faith, and confident of compliance, a party agrees by a fixed date to serve a statement of case or a witness statement or pay some money or carry out some act. Then circumstances arise, as circumstances tend to do, and performance is not going to be achieved. Will the court intervene to assist?

The CPR no less than the RSC provides the courts with the clearest jurisdiction to extend time - CPR 3.1(2)(a) - for compliance with a court order. If the examination of the consent order leads to the conclusion that it was in the second Siebe Gorman category, no problem is envisaged. The court manifestly has a jurisdiction that it may choose to exercise on the facts. But what about the first category - the true or genuine consent orders founded on contract - has the advent of the CPR extended the court's powers?

The answer seems to be yes - Ropac Limited v Inntrepreneur Pub Co [2000] Times Law Reports 21 June. Mr Justice Neuberger concluded that the consent order before him - for the payment of money by a tenant in order to avoid delivery up of possession - was a Siebe Gorman category one order yet he had jurisdiction to extend time. He did so on the basis that: 1) there was a public interest governing the CPR which was lacking to an extent under the RSC 2) the duty to manage cases, which clearly incorporated CPR 3, was governed by the obligation under CPR 1.4 to further the overriding objective by active case management. Accordingly the CPR "gave the court wider ranging and more flexible powers to be exercised not merely to do justice between the parties but in the wider public interest and that meant that the court had greater power to interfere than before. However where the parties had agreed in clear terms on a certain course then while it did not take away the court's power to extend time, the court should place very great weight on what the parties had agreed and should be slow save in unusual circumstances to depart from what the parties had agreed."

The unusual circumstances he may have had in mind would include, for example, where following a genuine consent order by which a party agreed to perform an act by a certain date an accident befell him as he left court rendering him incapable of any action at all let alone performing in time the act in question. However, on the facts before him, Mr Justice Neuberger concluded that, while he had jurisdiction to vary the consent order, he declined to do so, perhaps not least because the parties had agreed expressly that time was of the essence.

Further evidence of the post- CPR survival of the Siebe Gorman categories of consent order emerges more recently from the Court of Appeal in Chaggar v Chaggar [2002] Lawtel 30 October. Having found that there was a category one genuine contract form of consent order, the terms of the order left open the possibility that the mechanics of a sale would be worked out by directions of the court and accordingly the case was one "that was far from a case where the court was unable to interfere with the terms agreed by the parties."

The practical lessons for those concerned with consent orders seem tolerably clear. If acting for the defaulting party, do not abandon hope even if the consent order was a genuine contract; instead look hard for unusual circumstances to trigger the exercise of the jurisdiction. If acting for the righteous on the other hand, do not too eagerly advise your innocent client that, the defaulter having agreed in plain terms to do something which he has failed to do, judgment, possession or untold riches will necessarily be his; the court can still intervene.