Time out

District Judge Stephen Morley considers the opportunities for a stay of civil proceedingsThe glossary to the Civil Procedure Rules 1998 (CPR) defines a stay as imposing 'a halt on proceedings, apart from taking any steps allowed by the rules or the terms of the stay.

Proceedings can be continued if a stay is lifted.'The power to grant a stay gives the court the opportunity to create a metaphoric 'time out' within the proceedings and is specifically listed under CPR rule 3.1(2)(f) as one of its general powers of management, as well as being featured within some of the rules.

The grant of a stay suggests the need for a pause in the proceedings and, as such, at first glance rests uneasily with the emphasis in the rules on proceeding expeditiously and remorselessly towards trial.To rectifyHowever, a stay can be usefully employed to give one of the parties an opportunity to rectify a problem within the proceedings in circumstances where a court might be reluctant to wield the proverbial big stick of a peremptory order.

Thus in SMC Engineering (Bristol) Ltd v Fraser (2001) The Times, 26 January, CA, it was held that where a firm of solicitors acting for the claimant had previously acted for the defendant, it might be appropriate to direct a stay in the proceedings until a different firm had been appointed.To settleThe role of the stay within the CPR marks a recognition that there is place in the overriding objective to consider settlement without doing so against a background of a litigation timetable.

In situations where the court gets wind of a possible settlement there is no reason to prevent the court from applying rule 3.1(2)(f) and imposing a short stay.

Indeed the possible imposition of a stay for the purposes of settlement features specifically within rules 26.4 and part 56.The claimant having snarled in the direction of the defendant by issuing a claim and the defendant having snarled back by filing a defence, the CPR recognise that at this stage the parties may wish to ponder the wisdom of resolving the dispute by litigation.

The provisions of rule 26.4(1) thus provide that a party may, when filing the completed allocation questionnaire, make a written request for the proceedings to be stayed while the parties try to settle the case by alternative dispute resolution or other means.Rule 26.4(2) goes on to state that the court will stay the proceedings for one month where all parties request it or the court on its own initiative considers that such a stay would be appropriate.

It is perhaps hard to envisage the court being inclined to stay where one of the parties has indicated a lack of interest in settlement, but the provision is there nonetheless and might well be appropriate where, say, the claimant has in his allocation questionnaire asked for a stay, but the defendant has failed to file an allocation questionnaire or left blank the appropriate section in his allocation questionnaire.The court can extend the stay (rule 26.4(4)) which will generally be only for four weeks (practice direction 26.3(2)) although more than one extension may be granted.

The onus is on the claimant to notify the court if a settlement is reached within the period of stay, and if no settlement is reached the file will be referred to a judge for his directions.To negotiate, draft, amend, redraft...The incorporation within the rules of a stay for the purposes of a settlement appears again in part 56, which deals with lease renewals under section 24 of the Landlord and Tenant Act 1954.Where an application for a new tenancy is made, the defendant under rule 56.3(4) must file and serve a notice that he wishes the claim to be stayed for three months to facilitate negotiation of a new tenancy or, where he intends to contest the claim, his acknowledgment of service.

If the defendant wishes a stay then the court has no option but to order a stay for three months (rule 56.3(5)).

However, the displeased claimant may file a notice requesting that the stay be lifted (rule 56(6)), in which case the court will have no alternative but to lift the stay and give further directions.Unlike the provisions in rule 26 there is nothing in part 56 dealing with extensions of the initial stay period.

However, equally, there is nothing that precludes the court from extending the stay if presumably satisfied that the parties are still locked in negotiations that may produce a settlement.NappingRule 15.11 provides that a claim is automatically stayed where, having issued and served a claim, the claimant fails to apply for summary judgment or judgment in default once six months have expired from the end of the period during which a defence should have been filed but no defence or admission has been filed.

It is hard to believe but this does happen to forgetful claimants, and - which is even harder to believe - it also happens to their solicitors.Not payingWhere proceedings are partly discontinued and the claimant fails to pay the defendant's costs under rule 38.6 (within 14 days of the agreement or order) then rule 38.8 comes into play.

The court may stay the remainder of the proceedings on the defendant's application until the claimant satisfies his liability.Similar sentiments are incorporated in rule 3.4(4) which applies where the claimant has had a case struck out together with an order for costs against him and has failed to pay these costs but in a spirit of unbridled optimism has issued fresh proceedings based on similar facts.

The court may stay proceedings until the costs of the first action are paid.

A much more common scenario may be where the defendant has successfully obtained a sizeable costs order arising from an interlocutory application which remains unsatisfied.

The temptation could well be for the now somewhat aggrieved defendant to apply for a stay pending settlement.

The terms of rules 3.4(4) and 38.8 might be viewed as legitimising the principle in the right circumstances of staying an action until outstanding costs have been paid and a sizeable unmet interlocutory costs order might be seen by the court as constituting such circumstances.

It would be interesting to assess the reaction of the court to a request from a brave defendant to exercise its case management powers to order a stay in such a situation.Automatic stayAny proceedings issued prior to 26 April 1999, that did not come before a judge either at a hearing or on paper by 25 April 2000, shall be automatically stayed (practice direction 51, paragraph 19).

Merely writing a letter to the court, which was placed before a judge, does not amount to bringing proceedings before a judge to avoid a stay - Reliance National Insurance Company (Europe) Limited and another v Ropner Insurance Services Limited [2000] EWCA CIV 304.What about our costs?A defendant in an action that has been stayed for reasons that relate to some default by a claimant may initially be tempted to sit back, relax and enjoy the reprieve from the litigation process.However, sooner or later the defendant will grow restless and want not only the threat of the litigation removed but also an order for costs in his favour.

The only way of achieving this will be by way of application under rule 3.4 for a strike-out.

The risk of such application is that it might revitalise the claimant into making a counter-application for the stay to be lifted.

Certainly, if the claimant adopts a passive response to a strike-out application then there should be no difficulty in securing a strike-out, with a resultant order for costs.

If, however, the application is resisted then the court will need to consider all the circumstances for the delay and no doubt assess those circumstances in the context of the overriding objective - Biguzzi v Rank Leisure plc [1999] 4 All ER 934.District Judge Stephen Morley sits at Edmonton County Court