ANOTHER CASE OF SERVICE OF THE CLAIM FORM GOING AWRY: GO ON – DICE WITH PROCEDURAL DEATH: WHAT COULD POSSIBLY GO WRONG?

When lecturing at the Zenith Chambers personal injury course this Thursday I only offered one prediction for civil procedure: “I’ll be here next year talking about claim form cases reported over the previous 12 months where things have gone wrong.”  Less than 24 hours later (and from a court 500 yards away)  I was – unfortunately –  proved to be right. We have already looked at the judgment in Mark v Universal Coatings & Services Ltd & Anor [2018] EWHC 3206 (QB) in the context of delay in serving the particulars of claim and medical report.  However the case also contains an important lesson for both claimants and defendants in relation to applying for an extension of time to serve the claim form – one of the riskiest things you can do in civil litigation.   In many cases  – such as this one-  the claimant is reliant upon the defendant making mistakes, which is never a comfortable position.

“Where a party issues protective proceedings hard up against the expiry of the limitation period, it is expected to pursue those proceedings promptly and effectively; and if it subsequently seeks and obtains orders extending time for the service of the Claim Form or Particulars of Claim without notice to the other party, it dices with procedural death.  These simple propositions should be known to all professionals conducting litigation.”

THE CASE

The claimant issued a claim for personal injury damages against three defendants. After issue his solicitors obtained an extension of time.  Upon proceedings being served one of the defendants (the third defendant) was the only defendant to acknowledge service stating that it intended to contest jurisdiction.   The defendants applied to strike out the proceedings. The third defendant succeeded on the grounds that the extension of time for serving the claim form should never have been granted.   The first and second defendants had not ticked the relevant box and/or filed defences, they were unable to take the jurisdictional point.

APPLYING FOR AN EXTENSION OF TIME TO SERVE THE CLAIM FORM

The claimant had obtained an extension of time for service of the Claim Form.  At that stage there was only one defendant. The claim form was amended and service took place on three defendants.  What is surprising here is that only one of those defendants took the appropriate step

WHAT THE DEFENDANTS SHOULD HAVE DONE: DISPUTE THE JURISDICTION

A defendant who wishes to take a point as to service (including an extension of time for service of the claim form) should only make an application under CPR Part 11 to dispute jurisdiction. This is hardly new law,  see Hoddinott v Persimmon Homes [2007] EWCA Civ 1203.  This involves stating, in the acknowledgement of service, that the defendant was going to dispute jurisdiction.  Only one of the defendants in this case did this (the third defendant). Consequently  the third defendant was successful in having the action against it struck out.  The claimant did not appeal the finding in relation to the third defendant. The first and second defendant, therefore, had to rely on different grounds which, ultimately, were unsuccessful.

1. On 29 September 2016, the Defendants jointly served a “Position paper” setting out the grounds upon which they each intended to rely in support of their contention that the claim should be struck out or summary judgment should be entered in their favour. In that Position paper, all three Defendants indicated that they wished to challenge the jurisdiction of the court but only the Third Defendant, being the only party that had ticked the appropriate box in the Acknowledgment of Service (see paragraph 17 above) pursued this argument in the court below and it was abandoned on behalf of the First and Second Defendants.

WHAT TWO OF  THE DEFENDANTS DID WRONG

In fact two of the defendants did not state they were going to dispute jurisdiction in the acknowledgement of service, rather they filed a defence stating that they challenged the extension. In filing a defence they were accepting jurisdiction – hence these defendants could not take the point.

1. 1. On 24 February 2016, the Claim Form was amended pursuant to CPR 17.1 to add the Second and Third Defendants as defendants and, two days later on 26 February 2016, the Claim Form was served on all three Defendants together with Particulars of Claim. It appears that, before the judge below, there was an issue as to the validity of the amendment of the Claim Form to add the Second and Third Defendants but, if so, that issue was not pursued on the appeal before me. No medical evidence or schedule of loss were served with the Particulars of Claim and there was no explanation in the accompanying letter as to why the medical report and schedule were not included.

   2. The service of the Claim Form is acknowledged by the three Defendants in March 2016. The form for Acknowledgment of service includes the follow:

“Tick the appropriate box

1. I intend to defend all of this claim      

2. I intend to defend part of this claim    

3. I intend to contest jurisdiction            

If you do not file an application to dispute the jurisdiction of the court within 14 days of the date of filing this acknowledgment of service, it will be assumed that you accept the court’s jurisdiction and judgment may be entered against you.”

In its acknowledgement of service dated 14 March 2016, the Third Defendant ticked box 3 indicating an intention to contest jurisdiction. However, the First and Second Defendants simply ticked box 1 indicating an intention to defend all of the claim.

1. 1. On 24 March 2016, two things happened. First, the Third Defendant, having indicated in his Acknowledgment of Service an intention to contest jurisdiction, issued an application to strike out the claim or for summary judgment. On the same day, the First Defendant served its defence. At paragraph 21 of that defence, the First Defendant pleaded:

“The First Defendant submits that the Claimant’s failure to comply with CPR 16 PD 4.2 and 4.3 is an abuse of process and/or is otherwise likely to obstruct the just disposal of the proceedings; as a consequence the First Defendant submits that the Claimant’s claim should be struck out pursuant to CPR 3.4(2).”

CPR 16 PD 4.2 and 4.3 are set out in paragraph 33 below.

1. 1. So far as the Second Defendant is concerned, it made an application to extend time for service of the Defence on 21 April 2016, an application to which, I understand, the Claimant consented, and the Second Defendant then served its Defence on 31 May 2016. In that Defence, the Second Defendant takes five preliminary points in paragraph 1.

(i) It is pleaded that the Second Defendant reserved the right to contend the Claim Form had not been validly amended to join the Second Defendant so that the claim against the Second Defendant is a nullity.

(ii) Secondly, the Second Defendant reserved the right to contend that the Claim Form had been served out of time against it.

(iii) Thirdly, the Second Defendant reserved the right to contend that these proceedings should be struck out for failure to comply with the CPR and/or practice directions in that the Claimant had failed to serve a schedule of loss and a copy of a medical report with the Particulars of Claim.

(iv) Fourthly, the Second Defendant reserved the right to contend that the proceedings against it are statute barred within the provisions of the Limitations Act 1980.

(v) Fifthly, the Second Defendant pleaded that the Claim Form contained a deliberate understatement of the value of the claim, so stated in order to pay a reduced issue fee and/or to stop the limitation period from running and that this amounted to an abuse of process whereby the Claimant should be struck out.

THE FIRST AND SECOND DEFENDANTS’ WOES GO BEYOND THAT

By failing to adopt the correct procedure the first and second defendants lost what was clearly a cast-iron defence to the claimant’s claim. However it gets worse (for them). The circuit judge found that the extension of time should not have been granted and that, although the first and second defendants could not take the point as to jurisdiction, the continuance of the action was an abuse of process. This decision was overturned on appeal.

“In the present case, it seems to me that the fact, as the learned Judge found, that the court had been deliberately or, at best, recklessly misled by the Claimant’s solicitor into granting the initial extension of the time for service of the Claim Form, played a significant part in the decision below. However, in my judgment Mr Walker is right to contend that there were other potential explanations for the discrepancy between the statement of Ms Butler and the statement of Mr Taylor which the learned Judge could have considered. In particular, Mr Taylor’s statement raised question marks because he referred to a review taking place following the transfer of the case to Neumans in October 2015 (see paragraph 28 above). However, Mr Taylor did not take over the conduct of the case until April 2016 and until then, conduct of the case remained with Ms Butler. Thus, there was no significant “regime change” in October 2015 and it seems to me that there is no proper basis upon which the court could find that it had been misled by Ms Butler, and certainly not without the matter being further investigated and the court hearing oral evidence about it”

APPLYING FOR AN EXTENSION OF TIME TO SERVE THE CLAIM FORM IS SIMPLY GAMBLING – NO MORE NO LESS

It is difficult to emphasise how dangerous a step this is.  A defendant (who makes the correct application) can always apply to set the extension aside.  In this case the third defendant succeeded.  The claimant cannot rely on a “false security” argument that the court granted the application and therefore the claim form was not served.

In Hoddinott –v- Persimmon Holdings  [2007] EWCA Civ 1203, where Dyson L.J. stated

50. Thus if a claimant applies for and obtains an extension of time for service of the claim form without giving notice to the defendant, he does so at his peril. He should know that an order obtained in such circumstances may be set aside. He can take no comfort from the fact that the court has made the order. He cannot be heard subsequently to say that it was the court’s fault that the order was made”

DICING WITH PROCEDURAL DEATH

The position is set out simply, and graphically, in the judgment of Mr Justice Stuart-Smith in Lincolnshire County Council v Mouchel Business Services Ltd & Anor [2014] EWHC 352 (TCC)

“Where a party issues protective proceedings hard up against the expiry of the limitation period, it is expected to pursue those proceedings promptly and effectively; and if it subsequently seeks and obtains orders extending time for the service of the Claim Form or Particulars of Claim without notice to the other party, it dices with procedural death.  These simple propositions should be known to all professionals conducting litigation.  They were established long before the recent reforms of the Civil Procedure Rules.” 

AND THE LESSON FOR DEFENDANTS – IS AN OBVIOUS ONE: USE PART 11

The fact that two out of three defendants got this basic issue wrong is not a great surprise. This kind of mistake is one I see often in my own practice.  In fact even the third defendant in  took an unnecessary chance it is reported that it made an application to strike out rather than an application under CPR Part 11.  There is a risk that making the wrong kind of application could lead to the court finding that the CPR Part 11 has not been followed and the defendant has submitted to the jurisdiction.