[6] In In re Hetherington, decd [1990] Ch 1 ('Hetherington'), 10g, Nicolas Browne-Wilkinson V-C surveyed the law, at 10:

'In Baker v. The Queen [1975] A.C. 774, Lord Diplock, after mentioning that the Judicial Committee of the Privy Council does not normally allow parties to raise for the first time on appeal a point of law not argued in the court below, said, at p. 788:

"A consequence of this practice is that in its opinions delivered on an appeal the Board may have assumed, without itself deciding, that a proposition of law which was not disputed by the parties in the court from which the appeal is brought is correct. The proposition of law so assumed to be correct may be incorporated, whether expressly or by implication, in the ratio decidendi of the particular appeal; but because it does not bear the authority of an opinion reached by the Board itself it does not create a precedent for use in the decision of other cases."

That decision was applied in Barrs v. Bethell [1982] Ch. 294, where after quoting the passage I have read from Lord Diplock, Warner J. continued, at p. 308:

"In my judgment, the principle that, where a court assumes a proposition of law to be correct without addressing its mind to it, the decision of that court is not binding authority for that proposition, applies generally. It is not confined to decisions of the Judicial Committee of the Privy Council."

That approach coincides with some words of May L.J. in the recent Court of Appeal case of Ashville Investments Ltd. v. Elmer Contractors Ltd. Q.B. 488, 494, where he said:

"In my opinion the doctrine of precedent only involves this: that when a case has been decided in a court it is only the legal principle or principles upon which that court has so decided that binds courts of concurrent or lower jurisdictions and require them to follow and adopt them when they are relevant to the decision in later cases before those courts. The ratio decidendi of a prior case, the reason why it was decided as it was, is in my view only to be understood in this somewhat limited sense."

Nicolas Browne-Wilkinson V-C in Hetherington, then said at 10:

In my judgment the authorities therefore clearly establish that even where a decision of a point of law in a particular sense was essential to an earlier decision of a superior court, but that superior court merely assumed the correctness of the law on a particular issue, a judge in a later case is not bound to hold that the law is decided in that sense.'

In R (Kadhim) v Brent London Borough Council Housing Benefit Review Board [2001] QB 955 ('Kadhim'), the Court of Appeal (Buxton LJ giving the judgment of the Court of Appeal), subsequently approved this, in paragraph 35. In Kadhim, under the heading 'The rule as to issues assumed without argument', the Court of Appeal said, at paragraphs 33 to 37:

'33 We ... conclude, not without some hesitation, that there is a principle stated in general terms that a subsequent court is not bound by a proposition of law assumed by an earlier court that was not the subject of argument before or consideration by that court. Since there is no direct Court of Appeal authority to that general effect we should indicate why we think the principle to be justified.

34 First, even though it is assumed, on the basis of some observations in the House of Lords in Davis v Johnson [1979] AC 264, that the categories of exemption stated in Young v Bristol Aeroplane Co Ltd [1944] KB 718 are closed, National Enterprises Ltd v Racal Communications Ltd [1975] Ch 397 establishes that that is not so in respect of the present line of authority: see paragraph 31 above. That consideration is reinforced by the fact that Lord Diplock, in expressing his view in Baker v The Queen[1975] AC 774, 788 as cited in paragraph 27 above, did not think that it involved any departure from the orthodox rules of precedent.

35 Second, in each of the authorities cited the rule is in fact stated in general terms, even though the facts addressed may be in a narrower compass. Those statements were, in our respectful view, properly synthesised by Sir Nicolas Browne-Wilkinson V-C in In re Hetherington, decd [1990] Ch 1.

36 Third, we have to remember that it is the reasons that bind, and not the decision. Any formulation of a rule of precedent must be flexible enough to respect that basic truth. That is what led Lord Diplock to say in Baker v The Queen[1975] AC 774, 788c, as cited in paragraph 27 above, that whilst an assumed proposition may be part of the ratio, it does not have precedential value. To hold otherwise would be to come close to permitting the outcome of the case, rather than its reasoning, to dictate its status.

37 Fourth, it is very well recognised that a court can identify a part of the ratio that has not been the subject of argument, and deny it precedential value: see paragraph 22 above. But if it were the case that all parts of the ratio, as defined for instance in paragraph 16 above, bind, then it would seem that the judge would not be free to indicate that one of the assumptions necessary to his decision did not have precedential value. It was recognition of the need to leave judges that freedom, and in an appropriate case to enable a subsequent court equally to conclude that a proposition that was part of the ratio none the less had not been the subject of decision, that led Russell LJ to speak as he did in the last sentence of the extract from his judgment in National Enterprises Ltd v Racal Communications Ltd [1975] Ch 397, 406 cited in paragraph 29 above.'

Under a heading that included 'The ambit of the rule', the Court of Appeal said, at paragraph 38:

'38 Like all exceptions to, and modifications of, the strict rule of precedent, this rule must only be applied in the most obvious of cases, and limited with great care. The basis of it is that the proposition in question must have been assumed, and not have been the subject of decision. That condition will almost always only be fulfilled when the point has not been expressly raised before the court and there has been no argument upon it: as Russell LJ went to some lengths in National Enterprises Ltd v Racal Communications Ltd to demonstrate had occurred in the previous case Davies Middleton & Davies Ltd v Cardiff Corpn 62 LGR 134. And there may of course be cases, perhaps many cases, where a point has not been the subject of argument, but scrutiny of the judgment indicates that the court's acceptance of the point went beyond mere assumption. Very little is likely to be required to draw that latter conclusion: because a later court will start from the position, encouraged by judicial comity, that its predecessor did indeed address all the matters essential for its decision.'

[7] In Bank of Beirut (UK) Ltd v Sbayti [2020] EWHC 557 (Comm), HHJ Mark Pelling QC said, at paragraphs 6 - 8:

'6. The first issue that would have to be determined if the Denton criteria applied is whether or not there had been a serious or significant breach. CPR rule 15.11 imposes a stay after the expiry of a period of six months from the date when a defence should have been filed, with no defence having been filed and no application for summary judgment having been made. The period that has elapsed since the stay was imposed in this case - that is to say, sometime in the summer of 2016 - to the date when the application was issued on 13 December 2019 is, in my judgment, a significant one. There are a number of ways in which the Bank could have addressed the potential problem created by CPR 15.11 including applying for a default or summary judgment, as suggested in para.(c) of the rule, or perhaps by applying for a case management stay after the proceedings had been issued and served, as is very frequently done in cases where it is thought that the most economically sensible way of proceeding is to issue and serve proceedings, perhaps to stop a limitation period expiring, but then allowing either negotiations to continue or part payments to be made. So I am satisfied that the serious and significant breach element of the Denton criteria is satisfied.

7. The next question that has to be asked if the Denton criteria apply is whether or not there is a good reason for the breach occurring. In my judgment, it is manifest that in the circumstances of this case there is a good reason, namely a desire to avoid incurring costs, which would achieve nothing useful, whilst at the same time obtaining payments on an irregular basis from the defendant and guarantor. In those circumstances it is probably unnecessary to consider the third criterion identified in Denton, namely whether in all the circumstances it is appropriate to grant relief, but, in my judgment, in the circumstances as they currently are, it is appropriate to do so, since it is clear that payments being made by the defendant guarantor have now ceased, and in those circumstances it is appropriate that the claimant should now proceed with this litigation, obtain a judgment, if it can, and seek to collect what is due, again if it can.

8. In those circumstances, applying the Denton criteria leads inevitably to the conclusion that the stay should be lifted.

...In those circumstances, I conclude that the Bank is entitled to the order it seeks under CPR Part 15.11(2) and for the stay that applies to be lifted'

[8] In Bank of America Europe DAC v Citta Metropolitana Di Milano [2022] EWHC 1544 (Comm)('Citta'), Foxton J said, from paragraphs 7 to 15, under the headings 'BAE's and MLI's argument' (paragraph 7) and 'Milano's argument' (paragraph 8 to 15):

7. In support of the view that the CPR 15.11 automatic stay is not a sanction and that an application under CPR 15.11(2) does not engage the Denton test, [Counsel for the Claimant] relied upon the following:

i) CPR 3.9 applies in terms only when a sanction is imposed "for a failure to comply with any rule, practice direction or court order." He argues that BAE and MLI did not breach "any rule, practice direction or court order" in failing to apply for summary or default judgment.

ii) The view that an application under CPR 15.11(2) is not an application for relief against sanctions is supported by the observations of Cockerill J (expressed, it must be noted, in deliberately tentative terms) in King v Stiefel [2021] EWHC 1045 (Comm), [44] . When addressing the argument that a defendant who had issued an application for reverse summary judgment was nonetheless in breach of the rules in not serving a defence, she observed:

"To add to this, and to the same effect, there has been some consideration in the authorities of the question of whether CPR 15.11 is a sanction. If it were, it might tend to indicate that not filing a defence is a breach of the rules in and of itself, rather than simply giving the Claimant the initiative as regards applying for default judgment. Those authorities (in particular Football Association Premier League Ltd v O'Donovan [2017] EWHC 152 (Ch), Citicorp Trustee Co Ltd v Al-Sanea [2017] EWHC 2845 (Comm), John McLinden v Shiao Chen Lu [2018] 4 WLUK 569 and Bank of Beirut (UK) Limited v Sbayti [2020] EWHC 557 (Comm) ) tend to indicate that the discretion to lift the CPR 15.11 stay should not be approached as a relief from sanctions application and 'i s not intended to place an especially heavy burden on the claimant to discharge before the court will agree to the stay being lifted '."

iii) The decision of Chief Master Marsh in Football Association Premier League Limited [2017] EWHC 152 (Ch), [10], from which the quotation at the end of [44] of King v Stiefel is taken. The defendant did not appear in that case.

iv) The decisions in Citicorp and McLinden referred to by Cockerill J, in which Peter MacDonald Eggers QC and Butcher J respectively adopted Chief Master Marsh's approach, albeit in proceedings in which (once again) the defendant did not appear. However, Butcher J does appear to treat a claimant who becomes subject to a CPR 15.11 stay as having breached the rules (see the references at [9] to the fact that there had been no "application for default or summary judgment as required by the rules" and at [11] to "the Claimant's failure to comply with the six-month period").

v) In the fourth case to which Cockerill J referred, Bank of Beirut UK v Sbayti [2020] EWHC 557 (Comm), HHJ Pelling QC assumed (without deciding) that the Denton test applied.

8. In support of the contrary view, [Counsel for the Defendant] referred me to the decision of Leggatt J in New Zealand Cricket v Neo Sports [2016] EWHC 3615 (Comm), [8] :

" CPR 15.11(2) expressly provides that, where a claim is stayed under CPR 15.11, any party may apply for the stay to be lifted. Mr Mill accepts, correctly in my view, that the test applicable in such circumstances is the test which applies whenever a party seeks relief from sanctions."

(although, as will be apparent from that quotation, the point was conceded rather than argued).

9. He also relies on the terms of the Practice Direction to CPR 15, paragraph 3.4 of which provides that an application to lift the CPR 15.11 stay "should state the reason for the applicant's delay in proceeding with or responding to the claim ." (emphasis added).

10. Finally, he relied on a line of authority addressing the automatic stay imposed under the transitional arrangements when the CPR were introduced. Paragraph 19 of Practice Direction 51 ( PD51 ) provided:

"(1) If any existing proceedings have not come before a judge, at a hearing or on paper, between 26 April 1999 and 25 April 2000, those proceedings shall be stayed.

(2) Any party to those proceedings may apply for the stay to be lifted."

I will refer to the automatic stay imposed by paragraph 19 of PD51 as a Paragraph 19 stay.

11. In Neo Investments v Cargill International SA [2001] 2 Lloyd's Rep 33, [8], Aikens J noted that counsel for the party seeking to lift the Paragraph 19 stay (Mr Hamblen) had accepted that the stay had been imposed as a result of a failure to comply "with any rule, Practice Direction or court order", the breach in question being "that the case did not come before a Judge either at a hearing or on paper during the period April 26, 1999 to April 25, 2000." That decision, and others to similar effect, were approved by the Court of Appeal in Audergon v La Baguette Ltd [2002] CPR Rep 27, Jonathan Parker LJ observing at [102]:

"There can be no doubt that, in ordinary parlance, the automatic stay imposed by paragraph (1) of the Practice Direction may aptly be described as a sanction. The question explored in argument, however, is whether it is a sanction 'imposed for a failure to comply with any rule, practice direction or court order" within the meaning of CPR r.3.9 .' It seems to me that on the basis of the above authorities that question must be answered in the affirmative."

That decision was followed in Flaxman-Binns v Lincolnshire County Court [2004] 1 WLR 2232, [19] and Woodhouse v Consignia Plc [2002] 1 WLR 2558.

12. [Counsel for the Claimant] sought to distinguish these cases on the basis that CPR 3.9 took a different form when they were decided. It is true that the then-current version of CPR 3.9 sought more comprehensively to identify the factors which might be relevant when considering an application for relief against sanctions. However, in the respect on which [Counsel for the Claimant] particularly relies on the current CPR 3.9 – the reference to "relief from any sanction imposed for a failure to comply with any rule, practice direction or court order " – it was identical.

13. A second possible distinction is that in order to avoid the application of the "sanction" created by paragraph 19 of PD51, all that it was necessary for a claimant (or defendant) to do was to bring the case before the court, giving the court an opportunity to apply its own powers of case management under the new regime. By contrast CPR 15.11 expressly identifies two alternative courses open to a claimant seeking to avoid the imposition of an automatic stay under CPR 15.11, and those steps involve taking courses of action which would ordinarily be regarded as options rather than obligations on the part of a litigating party: entering judgment in default under CPR 12.3 ("the claimant may obtain judgment in default …") or applying for summary judgment under CPR 24 (which requires "an application for summary judgment"). That might suggest that some caution is required before applying the authorities on paragraph 19 of PD51 to CPR 15.11 .

14. However, I do not accept that applications for default or summary judgment are the only means open to a claimant when the defendant has not filed an admission or defence of preventing the automatic stay coming into effect. In particular, it is open to a claimant who has good reasons for doing so to seek to proceed to a full trial on the merits in these circumstances, and the court's power to permit this course under its inherent jurisdiction has been confirmed in a number of first instance authorities including Berliner Bank AG v Karageorgis [1996] 1 Lloyd's Rep 426, Habib Bank Ltd v Central Bank of Sudan [2006] EWHC 1767 (Comm), [8] and Eurasia Sports Ltd v Tsai [2020] EWHC 81 (QB) . In my view, it would also be open to a claimant in this position to apply to the court for a case management stay. That would differ from a CPR 15.11 stay not simply in being the result of a judicial determination rather than the effect of a provision of automatic effect, but because it would be open to the court to require the claimant to keep the court updated at periodic intervals. And, as I have observed, CPR 15.11 will not be engaged at all if another defendant has filed a defence, in which eventuality the case would remain subject to judicial case management in any event.

15. I accept, therefore, that the cases on paragraph 19 of PD51 provide strong support for [Counsel for the Defendant's] argument.'

[9] In Bank of America Europe DAC v Citta Metropolitana Di Milano [2022] EWHC 1544 (Comm), Foxton J said, at paragraphs 24 to 52, under the heading 'Can BAE and MLI satisfy the Denton test?':

'24. As is well-known, the Denton test involves a three-stage enquiry:

(i) An assessment of the seriousness and significance of the breach.

(ii) Considering the reason why the default occurred.

(iii) Consideration of all of the circumstances of the case.

25. Where the parties have sought to deploy certain factors at more than one stage of the Denton test, I have considered the factors in what I have concluded is the most appropriate context.

The seriousness and significance of the breach

26. In support of its contention that the breach was serious and significant, Milano points to:

(i) the period of time which has elapsed since the imposition of the Automatic Stays and the application to lift them (over five years); and

(ii) the significance of that delay in circumstances in which, it is submitted, the purpose of CPR 15.11 is to ensure that a claimant 'should apply for default judgment or summary judgment within six months of becoming eligible to do so', and to avoid 'inactive and effectively dormant cases lying unresolved (contrary to the requirement, as part of the Overriding Objective, for cases to be dealt with expeditiously).'

27. I accept that the period of time between the imposition of the automatic stay and the application for its removal will often be a relevant factor when assessing the seriousness and significance of the breach. However, in considering the position in this case, it is necessary to have regard to the particular context. In particular:

(i) The English Proceedings were essentially defensive actions, commenced in circumstances in which Milano had intimated an intention to commence proceedings impugning the conduct of BAE and MLI in the Italian courts, and they were intended to ensure that the English court was first seised for the purposes of the Brussels Regulation Recast.

(ii) When the English Proceedings were commenced, there was every reason to suppose that Milano did intend to commence proceedings in the Italian courts: see [3(iv)]. However, Milano took no steps to follow through on the allegations in the Letter of Complaint, nor did it stop paying the amounts falling due under the First Swap. That was significant in circumstances in which the allegation made in the Letter of Complaint related to the circumstances in which the First Swap had been entered into and the validity and efficacy of the First Swap.

(iii) In the face of Milano's apparently ambivalent position – formulating its complaints and authorising the appointment of lawyers to litigate them, not withdrawing them, but not commencing proceedings, continuing to make payments and not engaging with the English Proceedings – BAE and MLI were placed in a difficult position. The essential choice they faced was whether to seek judgment in some form on their claims for declaratory relief (as Dexia did) or 'wait and see,' given what must have been seen to be a realistic prospect that Milano would not pursue the allegations in the Letter of Complaint.

(iv) Each of those courses had its difficulties. Seeking judgment, particularly on the merits, ran the risk of triggering action from the currently quiescent Milano, raised the challenge of formulating the language of the final terms of the declarations in circumstances in which Milano had taken no further steps to articulate its claims, and might well have incurred unnecessary costs. So far as the MLI Proceedings were concerned, seeking a default judgment in that case was a good deal more complicated than simply asking the court to give effect to the contractual estoppels in the ISDA Master Agreement, and ran the risk of engaging the court's general concern about the ambit of declaratory relief in default judgment cases ( New Brunswick Railway Co v British and French Trust Corp Ltd [1939] AC 1, 22 and Goldcrest Distribution Ltd v McCole [2016] EWHC 1571 (Ch), [43] ). However, allowing the proceedings to become automatically stayed left them in limbo, removed them from judicial oversight and offered no obvious means of finally resolving them.

(v) In these circumstances, I am satisfied that the course which BAE and MLI should have taken was to seek a case management stay from the court instead of allowing the automatic stay under CPR 15.11 to take effect. However, that decision having been taken, the lapse of time which followed was simply the inevitable consequence of that procedural misjudgment, its duration determined by the amount of time which elapsed before Milano came 'off the fence' (which it did when commencing the Italian Proceedings in April 2021). The position differs in certain respects, therefore, from that which applies where a litigating party is required to take a particular step by a particular date, and there is an ongoing failure to do so, and in which the period for which the breach endures results from a continuing failure to comply.

28. In addition, it is significant in this context that BAE's and MLI's failure to bring the case before the court before the CPR 15.11 stay kicked in has not impacted on a trial or hearing date, or interfered with any directions given by the court, or with Milano's conduct of litigation in which it had taken a conscious decision not to engage (see [56]-[57] below).

29. In these circumstances, while I accept that the breach by BAE and MLI cannot be described as trivial, I am satisfied that the seriousness of the breach cannot be measured by the five-year duration of the Automatic Stays alone. It is, in short, a significant and serious breach, but not one of the most serious or significant kind.

30. In support of its contention that the breach is serious and significant, Milano has also relied on what it says was BAE's and MLI's motivation in allowing the Automatic Stays to come into effect. In my view, that issue is best considered under the second head of the Denton test (particularly as I have found that the Denton enquiry does not end at the first stage, even without the need to consider that issue).

The reason for the breach

31. There is no dispute that BAE and MLI took a deliberate decision not to apply for any form of judgment or for a case management stay, but to allow the CPR 15.11 stay to take effect. Milano submits that this conduct was not only deliberate, but an abusive attempt to 'warehouse' the English Proceedings. It is clear that there are circumstances in which it will be abusive to commence and/or maintain in existence litigation which the claimant has no intention of bringing to a conclusion at that time ( Grovit v Doctor [1997] CLC 1038; [1997] 1 WLR 640 ). The problem has often been encountered in cases in which a claimant wishes to avoid a defence arising under the Limitation Act 1980 but then takes no steps to prosecute the claim, frustrating the policy which the limitation defence was intended to serve of ensuring a degree of finality and protecting parties against the burden of litigating 'stale' claims long after the events giving rise to them occurred.

32. The applicable legal principles on this aspect of abuse of process have recently been reviewed by the Court of Appeal in Asturion Foundation v Alibrahim [2020] EWCA Civ 32; [2020] 1 WLR 1627 from which the following guidance can be derived:

(i) Commencing and maintaining litigation can constitute an abuse of process both when the claimant has no intention of ever bringing the claim to a conclusion, and where the claimant has no present intention to do so, but would do if a particular contingency materialised ([49]).

(ii) However, conduct of the latter kind is not automatically abusive. Whether such conduct will amount to an abuse depends on the reasons for not progressing the claim, and 'the strength of that reason, objectively considered, having regard to the length of the period in question' ([61]).

(iii) If the court decided that the claimant's conduct is abusive, there is then a separate enquiry as to whether the court should strike out the claim in the exercise of its powers under CPR 3.4(2)(b) ([64]).

33. In this case, I am satisfied that BAE's and MLI's decision not to progress the English Proceedings was not abusive. I have explained the reasons why they followed this course at para. 27(iii)–(v) above. The decision reflected legitimate concerns on BAE's and MLI's part, albeit I have concluded that BAE and MLI did not adopt the appropriate means of addressing those concerns. There is a direct connection between those reasons and the length of the inactivity – namely it continued for so long as Milano did not appear to be pursuing or acting upon the matters raised in the Letter of Complaint – and it came to an end when Milano commenced the Italian Proceedings.

34. For that reason, I do not regard the fact that BAE and MLI consciously chose to allow the Automatic Stays to come into effect as determinative of the Denton analysis. Their conduct was far removed from the deliberate flouting of a court order. I agree with HHJ Pelling QC in Bank of Beirut (UK) Ltd v Sbayti [2020] EWHC 557 (Comm), [7] that a desire to avoid incurring unnecessary costs while performance of the disputed obligation continues can be a good reason for not pursuing a claim. I am also satisfied that while BAE's and MLI's conduct involved a deliberate decision, there was no conscious breach of any rule, but (on my analysis) a misunderstanding as to what the rules required.

All the circumstances of the case

35. At this stage of the Denton test, it is necessary to address a number of factors relating to both applicants, and a number of additional points raised only in relation to MLI's application.

Matters relating to both applicants

36. Both sides suggest that they will be prejudiced if their position in relation to the CPR 15.11(2) applications is not upheld:

(i) BAE and MLI contend that the effect of refusing the applications will, in substance, be to strike the claims out. In my view that is right – if the court refuses this application to lift the Automatic Stays, it is difficult to see how the actions could ever be revived, or what useful purpose their continuing existence might have. As Coulson LJ noted in another context in Cable v Liverpool Victoria Insurance [2020] EWCA Civ 1015; [2020] 4 WLR 110, [62], 'if the defendant is seeking to prevent a valid claim going further, then no matter the mechanism by which that debate comes about, the judge must grapple with the central dispute: should the claim be allowed to proceed, or should it be struck out?' Reflecting this reality, if the applications under CPR 15.11(2) are refused, Milano submits that 'the appropriate course would be to dismiss the English [Proceedings] in order to bring them to an end once and for all'.

(ii) In this case, refusing to lift the CPR 15.11 stay and striking the English Proceedings out would entail the loss to BAE and MLI of whatever jurisdictional advantages being 'first movers' was intended to realise within the Brussels Regulation Recast regime. I have not sought (nor am I in a position) to establish what the practical consequences of striking the English Proceedings out might be so far as the Italian Proceedings are concerned. That would be a complex and speculative enquiry, and involve a degree of 'second guessing' of decisions the Italian court might make in respect of proceedings before it. However, I accept that there is a real risk that BAE and MLI's position would be materially worsened. I therefore accept that in this case BAE and MLI would suffer 'considerable' or 'significant' prejudice if the stay is refused (adopting the descriptions in Citicorp, [58] and McLinden, [10]). By contrast, I do not accept that granting the application would occasion any prejudice to Milano beyond that which would inevitably arise in any case in which a CPR 15.11 defendant, who has previously refused to engage with the proceedings, decides to change that stance if the stay is lifted.

(iii) Milano contends that it will be prejudiced if the applications are allowed, because it will have to incur the expense of responding to the English Proceedings in whatever it decides to be the appropriate manner, when it believed that those proceedings had come to an end. I am unable to accept, however, that Milano had formed the view that the English Proceedings had gone away. It is reasonable to infer that Milano would have been aware of the possibility of an application under CPR 15.11(2), and the risk that it might succeed.

(iv) Further, there is no suggestion that Milano would face any additional expense or cost in responding to the English Proceedings now than would have been the case when they were issued, or if the stay had been imposed by the court for a more limited period.

37. I have dealt with Milano's suggestion that this was a deliberate and unacceptable attempt to 'warehouse' claims when addressing the second limb of the Denton test.

38. Milano also submits that neither BAE nor MLI have acted promptly in applying to lift the stay. As far as the period up to 12 May 2021 is concerned (when BAE and MLI became aware of the Italian Proceedings), I have taken this into account when concluding that this was a serious and significant breach, but, for the reasons I have explained, the duration of that delay followed inevitably from the procedural misjudgment which BAE and MLI made. As far as the further 5-month period which elapsed between 12 May 2021 and the making of the present application is concerned, I accept that it was necessary for BAE and MLI to obtain Italian legal and financial advice on the contents and implications of the allegations made by Milano in the Italian Proceedings. The summons was 90 pages and the Invito (served in July 2021) was 107 pages. While I accept that BAE and MLI could have moved more quickly out of the blocks, I do not think the 5-month period is unreasonable.

39. Finally, as I have noted, the CPR 15.11 stay came into effect as a result of the combination of Milano's failure to serve a defence and BAE's and MLI's failure to bring the issue before the court. It would have been open to Milano at any time to bring its own CPR 15.11(2) application (which for understandable reasons, it chose not to do). While this particular feature of CPR 15.11(2) applications cannot be determinative, it is a relevant factor when assessing the overall position, in particularly in answering any suggestion that the delay has prejudiced Milano (cf. Clarke LJ's observations in Asiansky Television v Bayer-Rosin [2001] EWCA Civ 1792, [48] ).

The additional matters relied upon in relation to Mli

40. Milano relies on two further matters relating to MLI. To understand both of them, it is necessary to say a little more about the 2001 Agreement:

(i) It describes itself as an agreement 'for the activity of Rating Advisor' and appointed Dexia and MLI as ratings advisors for a joint fee of €50,000 (Articles 1 and 2).

(ii) By Article 3, Milano 'reserves the right' (but was under no obligation) to entrust MLI and Dexia with co-ordinating the preparation of the EMTN programme to place securities issued by Milano and to appoint MLI and Dexia as joint leadmanagers and joint bookrunners. The issue of whether this option was also facultative on MLI and Dexia's part, or in the nature of a facultative/obligatory arrangement, is in dispute and not something which can be resolved in this application.

(iii) If appointed as joint lead-managers and joint bookrunners, Article 3 stated that part of that role would be 'to provide for any hedging (swap) transactions that should be rendered necessary'. There is obvious scope for argument as to whether this last phrase extends only to swaps entered into in connection with securities placement (as MLI contends) or any swaps (as Milano contends), that being significant because only the Second Swap would fall within the first construction.

(iv) Article 13 provided 'this agreement is governed by Italian law. In the event of disputes, the jurisdiction of Milan is competent.'

(v) Article 3 also recorded the understanding that, if so appointed, MLI and Dexia would waive the fee entitlement in Article 2, while Article 5 provided that MLI and Dexia would not be paid for the performing the roles referred to in Article 3 but would obtain standard market commission on any issuances placed.

41. Against that background, Milano first contends that the English court does not have jurisdiction over the claims asserted in the MLI Proceedings because those claims fall within the exclusive jurisdiction clause in favour of the Italian courts (the IJC) in the 2001 Agreement, with the result that the Italian court has exclusive jurisdiction over those claims under Articles 25 and 31 of the Brussels Regulation Recast. While accepting that 'the court is not being called upon to conclusively determine the jurisdiction issue within the present applications', the court is nonetheless asked by Milano to have regard to the fact that 'the challenge has strong (Milano would say overwhelming) prospects of success.'

42. There are a number of reasons why I do not believe this factor is of assistance at this stage:

(i) The question before the court is whether the Automatic Stays should be lifted. Save in a particularly clear-cut case, I am not persuaded that it would be appropriate for the court to engage in that context with the competing merits of any jurisdictional challenge which Milano might advance if the action proceeds (any more than it would for the court to engage extensively with the merits of the claims for this purpose).

(ii) The issue of whether or not the claims asserted in the MLI Proceedings fall within the IJC is a matter to be determined by Italian law. No evidence of Italian law is before the court.

(iii) Milano's suggestion that it is 'overwhelmingly likely' that the claims in the MLI Proceedings fall within the IJC assumes in its favour the construction argument referred to at [40(iii)] above. It is also not easy to reconcile with the fact that (a) the Letter of Complaint does not refer to the 2001 Agreement and (b) the MLI Proceedings were commenced in response to the Letter of Complaint. At the moment, at least, I can see real scope for argument as to how far the IJC extends to claims relating to MLI's involvement in the First and Second Swaps, and scope for different outcomes for different parts of the MLI Proceedings. However, this part of Milano's argument is premised on an assumption of complete success on the jurisdictional issue.

(iv) Milano accepts that the court could not even form a 'prima facie view' at this hearing on the merits of MLI's reliance on Article 7(2).

(v) Finally, there is a live issue (which I address below) as to whether Milano should be given an extension of time within which to lodge an AOS in order to bring a challenge to the jurisdiction, and whether the court would be required to consider the issue of jurisdiction itself even if no such extension is granted. In my view, it would be wrong in principle to allow Milano to avoid whatever difficulties that aspect of the case might present by arguing its case on jurisdiction in the CPR 15.11(2) context.

43. For these reasons, I am also unable to accept the variation of this argument that it would be pointless to lift the CPR 15.11(2) stay of the MLI Proceedings because 'under Article 31(2) of the Brussels Regulation Recast the English Court would be required to stay the MLI Claim until such time as the Civil Court of Milan has determined its own jurisdiction in respect of the Italian [Proceedings]' and 'it would be pointless to lift the automatic stay only to immediately re-impose another different stay'. In addition:

(i) The argument assumes that the Italian and MLI Proceedings involve (and only involve) the same cause of action: see Recital (22) to the Brussels Recast Regulation. I heard no argument on this issue.

(ii) The argument also ignores the very different nature of the two stays (one which would lead to the final termination of the MLI Proceedings, the other what might be only a temporary hiatus).

44. Second, it contends that MLI behaved inappropriately in commencing the MLI Proceedings and in relation to the evidence it has filed in the English court, and that the court should not 'condone' or 'reward' that behaviour by granting MLI's application to lift the automatic stay. This aspect of Milano's argument has generated a considerable amount of heat, and at times Milano's complaint has been put in rather more wide-ranging terms than the form it took in Mr Ulyatt's submissions.

45. At one point, the complaints appeared to be as follows:

(i) There were no reasonable or proper grounds for certifying in Form N510 that the English court had jurisdiction over the MLI Proceedings under the Brussels Regulation Recast.

(ii) MLI 'concealed the existence and contents of the 2001 Agreement' when completing Form N510 and/or in the Claim Form and Particulars of Claim and did so to avoid having to seek permission to serve the MLI Proceedings on Milano in Italy.

(iii) MLI did not apply for default judgment to avoid 'revealing' the 2001 Agreement.

46. I am satisfied that there is nothing in any of these assertions.

47. As to the first, in circumstances in which Milano had not itself, in the Letter of Complaint, formulated its claims as breaches of the 2001 Agreement, I am not at all surprised that BAE and MLI did not regard the IJC as an obstacle to the commencement of the English Proceedings. As I have indicated, I see obvious scope for argument as to whether any of the claims in the MLI Proceedings fall within the IJC in the 2001 Agreement. Whatever the right answer to that question might ultimately prove to be, I cannot accept that the position was so clear cut (or even close to that) that the relevant certification could not be given. Nor (in circumstances in which the English legal team who would play the principal role in drafting the Claim Form and Particulars of Claim were unaware of the terms of the 2001 Agreement and hence the IJC) can I accept that those documents were drafted with a view to concealing the existence of that agreement, still less that this 'has all the hallmarks of sharp conduct'.

48. As to the second, there was no obligation to file supporting or surrounding documents when serving under CPR 6.33 in 2016 and no duty of 'full and frank disclosure' arose because the act of issuing the claim form did not involve the exercise of a judicial discretion (cf The Varna [1993] 2 Ll Rep 253 ). Further, if, in respect of a 'civil and commercial matter' such as this, the English court did not have jurisdiction in respect of a clam against Milano under the provisions of the Brussels Regulation Recast, it was not open to BAE and MLI to apply for permission to serve out. The English court would simply not have jurisdiction.

49. As to the third, I accept that, before entering default judgment against Milano, it would have been necessary for the court to determine that it had jurisdiction under the Brussels Regulation Recast (Article 28(1)). While this process might have identified a possible argument as to the effect of the IJC in the 2001 Agreement, that seems unlikely given that the existence of the IJC was (as I have mentioned) not known to the London lawyers handling the English Proceedings at that time. In any event, I do not accept that MLI or its legal representatives (Italian or English qualified) were in any way motivated by a desire to conceal the 2001 Agreement from the English court, or that the officers at Freshfields' Milan office sought to conceal the existence of the 2001 Agreement from their English colleagues. In my view it is far more likely that MLI took the same course as BAE did (in relation to whom no such issue could have arisen) in not seeking a default judgment for the same reasons as BAE, and not because of any perceived concern that the IJC was engaged. There is simply no basis for taking what would be the serious step of rejecting the evidence before the court that Mr Taylor, Mr Chapman and Mr Clark of Freshfields honestly and conscientiously believed that the English court had jurisdiction over the MLI Proceedings, that Mr Castellani had concluded that the 2001 Agreement (of which he had seen an unsigned draft) was not engaged by the claims to be advanced in the English Proceedings, and the evidence as to the reasons why MLI did not seek to enter a default judgment. On the contrary, that evidence accords with the inherent probabilities, having regard to the events which had occurred at that time.

50. In Mr Ulyatt's skeleton, a different argument was deployed, namely that in the witness statement filed on 8 October 2021 in support of the application to lift the Automatic Stays, Mr Clark of Freshfields did not exhibit the 2001 Agreement, and while referring to the 2001 Agreement in the body of the witness statement, did not refer to the IJC. The suggestion made is that the witness statement took this form to keep open the possibility that it would not be necessary to draw the existence of the IJC to the court's attention if Milano did not engage with the application. I agree that it would have been the better course to include the 2001 Agreement in the exhibits and to refer in the witness statement to the basis on which Milano was now asserting that the Italian court had jurisdiction. However, I am not persuaded that there was any nefarious intent in those omissions, and I accept Mr Clark's evidence to this effect. The witness statement exhibited an English translation of the Writ of Summons which commenced the Italian Proceedings which dealt comprehensively with the IJC. Even if I had accepted Mr Ulyatt's submission that the failure to deal with the IJC in this witness statement was somehow culpable, the issues relating to the IJC had been thoroughly ventilated by the time the applications to lift the stay were heard, and I would not have regarded this factor as weighing in the balance when determining whether to grant the applications.

51. For these reasons, I have concluded that none of the factors raised with specific reference to MLI assist Milano's argument as to whether the Denton test is satisfied.

Conclusion

52. Pulling these threads together, while I accept that failing to progress the claims and allowing the CPR 15.11 stay to come into effect involved breaches of BAE and MLI's obligations under the CPR of (moderate) significance and severity, I am satisfied that (applying the second and third limbs of the Denton test) it is appropriate to grant the application under CPR 15.11(2) . BAE and MLI were seeking to address legitimate litigation concerns but made a procedural misjudgment as to how best to do so. Refusing the applications would involve significant prejudice to BAE and MLI, whereas granting them would not give rise to significant prejudice to Milano, which is in part the author of any difficulties it may face. BAE and MLI have acted reasonably promptly after learning of the Italian Proceedings, and the additional matters relied upon by Milano as against MLI do not assist.' [subheadings are in italics in the original, but converted to bold in the above, to show the subheadings more clearly]

[10] See for instance Lakatamia Shipping Co Ltd v Su [2014] 3 Costs L.R. 532, where Hamblen J found that the respondent (claimant) to an application for relief from sanction ought to pay the ‘bulk’ (paragraph 8) of the applicant (defendant)’s costs of the application. This was because the respondent had unreasonably resisted the application for relief from sanction, since ‘…this was a clear case for relief in accordance with the guidance given in the Mitchell case.’ (paragraph 5). While the whole (short) judgment repays reading, paragraph 6 and 7 are noted here:

‘The claimant submitted that, in every case where the other party is seeking relief from sanctions, the so-called “innocent” party is entitled to come before the court and to argue that there should be no such relief and that the court should stick to the sanction originally imposed. In my judgment, that is a mistaken approach. The CPR  is quite clear that parties should conduct litigation in a reasonable and realistic manner, an approach which is echoed in the Commercial Court Guide – see, for example, A1.4. In this court we expect parties so to conduct themselves. In my judgment, in vigorously opposing this application at a hearing, the claimant failed to do so.

I also consider that it is important that the message goes out that when a party applies for relief from sanctions, the other party should not assume that it is going to get a free costs ride in opposing that application. If the court considers that it was unreasonable to do so, then there will be cost consequences, and I consider that that is what should occur in this case. The Mitchell guidance was provided in order to help to avoid endless satellite litigation. If parties consider that they can always come to court to oppose any application for relief, then there will be no end to that satellite litigation.’

[11] The view was expressed subject to hearing submissions from the applicant/claimant. The full quote in McLinden v Lu, unreported 30 April 2018, paragraph 11 is:

‘In circumstances, however, where the stay has come about only by reason of the Claimant's failure to comply with the six month period, it would seem to me, subject to anything that Mr McLinden may say about it, that the Claimant should bear the costs of that application.’ 

There is no subsequent reference to costs in the later addendum judgments. It therefore appears that Mr McLinden (who was a litigant in person) did not say anything on costs to dissuade Butcher J from making the order provisionally indicated.