Greater care should be taken by our rule-makers in imposing conditions for compliance at which people routinely fail.
Our attention was caught recently by an EG headline concerning allegedly deficient record-keeping for a crowdfunding scheme to renovate French chateaux. The co-founder was reported as saying “It’s true that paperwork is not our thing” (presumably it sounds better in French).
But is paperwork really anybody’s thing? Our experience in determining disputes under the Commercial Rent (Coronavirus) Act 2022 is that parties in the real world frequently got the little procedural things wrong, often with the unfortunate result that their substantive dispute could not proceed. Of the 64 disputes that were referred to us, very many of them failed through inadvertent non-compliance with the statutory preconditions for making a reference to arbitration.
A typical example is provided by a reference to arbitration where the applicant did not include its supporting evidence with its formal proposal. The requirement to do so is spelt out in section 11(3) of the 2022 Act; it is emphasised in the departmental guidance; and it is repeated in the referral form that applicants to our arbitration scheme must complete. Despite all this encouragement, many applicants fell at this first hurdle.
Those applying under the 2022 Act were intelligent people who will often have run a successful business (represented in some cases by experienced solicitors or surveyors). They were hardly likely to be those for whom “paperwork is not their thing”. The drafters of the Act and the supporting guidance clearly thought that their stipulations as to how an application should properly be made could be followed with comparative ease. They could not have been more wrong.
Typical trip-ups
We in Chambers are commonly instructed in cases where something has gone similarly wrong. Often, the cause is a notice that fails to comply with the procedure spelt out in a lease. The consequences are out of all proportion to the utterly trivial deficiency: a lease for which the tenant has no use continues ruinously for another five years, just because the notice failed to include a meaningless form of words (Siemens Hearing Instruments Ltd v Friends Life Ltd [2014] EWCA Civ 382; [2014] 2 EGLR 41), or a notice to quit served by a landlord was evaded by a tenant who had actually received the notice, but who had assigned his oral tenancy, without telling his landlord, to a company of which he was the secretary (Turner and others v Thomas and another [2022] EWHC 1239 (Ch); [2023] EGLR 6), thus denying his landlord the ability to recover possession.
But at least leases are private contracts, into which parties may be said to have entered with their eyes open. Not so in the case of legislation and court procedural rules, where parties, often with little or no experience of litigation, have to battle through complex written provisions. Two examples make the point.
First, in Peterson and another v Howard de Walden Estates Ltd [2023] EWHC 929 (KB); [2023] PLSCS 78, a representative of the claimants’ solicitors attended at the counter of the Central London County Court to issue a leasehold enfranchisement claim. The counter had been moved from its normal location because renovation works were under way, and the court staff at the temporary counter said they were only accepting bankruptcy papers. The representative had instead to lodge the relevant papers in the court post box, including a covering letter giving authority for the court to deduct the court fee of £308 from the firm’s account. Unfortunately, that fee had increased to £332 in about September 2021. The court staff did not process the issuing of the claim form, but instead returned it to the claimants’ solicitors under cover of a letter of 24 March 2022, saying that it could not issue the claim because of the incorrect amount of the fee, and had no jurisdiction to correct the mistake and retrospectively validate the claim form, because it was not an error “in procedure” within the meaning of rule 3.10 of the Civil Procedure Rules. As a result, the claimant was out of time to make his enfranchisement claim.
And secondly, in The Kingsbridge Pension Fund Trust v Downs [2017] UKUT 237 (LC); [2017] PLSCS 127, an agricultural succession case, it took a number of trips to the First-tier Tribunal and the Upper Tribunal (Lands Chamber), spread over six years, to achieve a workable interpretation of when the “livelihood condition” in section 50(2)(a) of the Agricultural Holdings Act 1986 had to be satisfied.
Time and again, parties become fatally enmeshed in arguments as to process, with the result that their substantive dispute cannot then be determined. This ordinarily leaves the erring party with an expensive bill and no justice, while the other party, no matter how unmeritorious, skips off scot-free. Is there a remedy for this?
Searching for answers
We do not propose a legislative approach where there are no time limits, or at any rate no sanctions for breaching such limits: the world of business depends on certainty, to allow people properly to order their affairs. But we do suggest, as a worthwhile alternative expedient, an approach to drafting that recognises that people in the real world (and not just the parties, but also their advisers) frequently just get things wrong, even if they are normally adept at paperwork.
Accordingly, our drafters might well consider that they should include a presumption that time is not of the essence of their stipulations unless the parties agree that it should be so (to borrow a rent review idea); and that a failure to comply with a stipulation should not be fatal: rather that it should be subject to relief (to borrow a forfeiture idea). Such an approach would be more consistent with how most people think justice ought to work.
Guy Fetherstonhaugh KC and Cecily Crampin are barristers at Falcon Chambers
