The Appellant applied to dismiss the Respondents’ Counterclaim for long delay under Rule 4.33, known as the “drop dead rule”, arguing that nothing had been done for over three years to significantly advance the Counterclaim. They argued that the Counterclaim was a separate Action, and advances in the Claim were not advances in the Counterclaim.

A Chambers Judge struck out the Counterclaim for delay under Rule 4.33 but left the Claim intact. The Appellant appealed that decision.

Overturning the lower Court’s finding, the Court of Appeal found that the Claim and Counterclaim were closely connected, arising from the same or related transactions, with overlapping parties and pleadings. The Court wrote: “Rule 4.33, like its predecessor R. 244.1, requires consideration of whether there has been a significant advance in the action as a whole, rather than an advance in relation to the parties that have brought the application to dismiss for long delay”.

The Counterclaim was not treated as an independent Action, as evidenced by shared case management and the lack of any application to sever the two Actions. The Court emphasized that the functional approach under Rule 4.33 requires examining whether steps taken in the claim significantly advanced the counterclaim in substance and effect, rather than focusing on formalistic distinctions.

The Counterclaim was not the type of claim that was intended to be dismissed by the drop dead rule.