In Viner -v- Volkswagen Group Limited  EWHC 2006 (QB) Senior Master Fontaine refused the claimants’ application to extend time for service of the claim form. A link to the judgment is available from the Law Society Gazette article on the case available here.
“The line of authorities commencing with Hashtroodi are well known to civil practitioners and a deliberate decision not to serve the claim form within the period of validity must, in my judgment, be characterised as incompetent, as it puts at risk the ability to continue the Claimants’ claims”
The claimants brought an action against the defendants relating to diesel emissions from cars. Various extensions to extend time for service of the claim form had been agreed by the defendant VWUK. The claimant applied for a further extension of time. This was the application being considered by the Master.
The Master considered the history of the litigation in detail. She refused the claimants’ application.
Whether There was a Good Reason Not to Serve the Claim Form
38. I find that there was no good reason not to serve the claim form within its period of validity. Although this was not expressly conceded, it was accepted that the claim form could have been served within the period of validity and the correspondence makes that entirely clear.
39. The reasons why the claim form was not served on VWUK advanced by Mr Whittle in his evidence are, in my judgment, simply not credible. Despite the late service, I have taken into account Whittle 3, although served very late, because I do not consider that its contents prejudice VWUK, and because it also demonstrates that lack of credibility in the evidence relied upon in support of the application. I do not make such a finding lightly against a member of the legal profession, (Mr Whittle is a Chartered Legal Executive and Senior Manager of YL) but Mr Whittle, who has been involved in the group litigation throughout, must know that the reasons given cannot be correct, for all the reasons advanced on behalf of VW.
40. First, in Whittle 1 at Paragraph 14, Mr Whittle says that “it is appropriate that dialogue is entered into with the parties to seek to establish an agreed approach as to how to such a claim.” (I assume the missing word may be ‘progress’) and “To facilitate such dialogue it is necessary that a sufficient extension of time is be [sic] granted to ensure that any such communications can be reached their appropriate conclusion.” The emphasis on time for continuing dialogue does not ring true in circumstances where there had been dialogue about the terms on which discontinuance could be effected for some considerable time, since 15 February 2018, and where Freshfields’ offer of a seven day extension had been refused with an assertion that service would be effected “within the service deadline”. In any event, the claim form could have been served and an application made for a stay if was thought that further time for discussion might be fruitful.
41. In Whittle 3, at Paragraph 35, Mr Whittle again relies on needing further time “to consider entering into further dialogue regarding the claim, and to consider the Defendant’s stance that any claim against VWUK must be within the GLO.” That is a disingenuous statement in the light of the correspondence sent by Freshfields, throughout the period since the claim had been brought within the GL application, asking what the Claimants’ intentions were and seeking particulars of the claims alleged, and where Freshfields had sent numerous letters reminding YL of the need to decide what was intended with regard to the claim before the GL application was determined, and YL failed to engage. The same applies to the suggestion at Paragraph 26 that time was needed to liaise with members of the group litigation steering committee. YL had had ample time to do this during the period when they were being pressed by Freshfields to engage with them on the intentions with regard to the claim. It also appears to be inconsistent with the statement in Whittle 1 at Paragraph 9 that:
“As matters stand, it is the above named Claimants intention to proceed with a claim against VWUK, but that such a claim would not form a part of the GLO….” (My emphasis)
42. At Paragraph 35 of Whittle 3, Mr Whittle also relies upon “the Defendant’s changed position”, namely its wish to know the Claimants’ intentions where no claim had been pleaded in the GPOC, and its unwillingness to grant further extensions. Again, this is disingenuous when considered against the correspondence where Freshfields had asked repeatedly for particulars of the claims, for information regarding the Claimants’ intentions as to whether the claims would be proceeded with under the GLO, and in circumstances where YL had stated in evidence and in open correspondence that the Claimants had no cause of action against VWUK. Mr Whittle makes no mention of any of this. He refers at Paragraph 32 of Whittle 3 to the Claimants’ “unwillingness to drop a meritorious claim” without explaining to the court how such an assertion can be reconciled with the previous assertions that the Claimants had no cause of action against VWUK. He fails to explain, if the claims in this action are meritorious, but where he considers (if this be so) that there are good reasons to stay the claims until the outcome of the group litigation, why an application for a stay was not made within any of the group litigation hearings during 2017 and 2018.
43. Counsel on behalf of the Claimants characterised the failure to serve as a “misjudgement” on the part of the Claimants’ solicitor. The position here is indeed different from those cases where the claimant’s solicitor unintentionally misses a deadline, or where solicitors are ‘waiting for developments’, such as in Collier -v- Williams and Hoddinott. There was a deliberate decision not to serve the claim form, and there was no good reason not to do so.
44. The proper course would have been either to: i) serve the claim form, and if thought appropriate apply for a stay of proceedings. That would have brought the matter before the court, which could have considered whether the claim should be included within the scope of the GLO, the other Claimants’ legal representatives could have considered whether the claim should be pleaded within a GPOC or not, and it might have been possible to identify the other claims against VWUK in the County Courts at the same time.; or ii) apply to the court under CPR 38.6(1) for a different order than the default position when a notice of discontinuance is served.
45. Either of those steps would have been obvious to a competent litigation practitioner. It was a serious misjudgement to take the course adopted, and no proper explanation has ever been given as to why it was thought appropriate. The line of authorities commencing with Hashtroodi are well known to civil practitioners and a deliberate decision not to serve the claim form within the period of validity must, in my judgment, be characterised as incompetent, as it puts at risk the ability to continue the Claimants’ claims. This is particularly the case where Freshfields offered a seven day extension to serve and it was refused.
Whether the court should exercise its discretion to grant the extension
46. The court must exercise its discretion under CPR 7.6(2) in accordance with the overriding objective in CPR 1.2(b): Hashtroodi at §17-18. In view of the conclusion I have reached that there was no good reason not to serve the claim form within its period of validity, and that the explanation given for the failure is not credible, the Claimants have a substantial hurdle to overcome to persuade the court that the discretion should be exercised in their favour. In Hashtroodi, Dyson LJ held, at §35:
“…where there is no reason to serve other than the incompetence of the claimant’s legal representatives. Although this is not an absolute bar, it is a powerful reason for refusing to grant an extension of time.” And at
§36; “The absence of any explanation for the failure to serve is, on the facts of this case, decisive.” 47. In Collier -v- Williams, at §131 commenting on the guidance in Hashtroodi, Dyson LJ said: “If, as in the present case, there is no reason to justify the failure to serve the claim form in time, it should not normally be necessary to go further.”
48. And in Hoddinott, at §40, Dyson LJ referred to “the general principle” that:
“…where there is no good reason for the failure to serve the claim form within the four months’ period, the court still retains a discretion to grant an extension of time, but is unlikely to do so.”
49. The grounds in favour of granting the extension are as follows:
i) The claim is included in the group litigation and can be managed by the court within that litigation without interfering with the progress of the group litigation.
ii) There are other extant claims in the County Court against VWUK and other future claims likely to be brought so that there is no prejudice to VWUK in permitting these claims to be dealt with under the GLO.
iii) The cut-off date in the group litigation is not until 7 December 2018, so the claim can still be included in the group litigation.
iv) There is no question of an ambush as VWUK have known of the existence of this claim since it was issued in January 2016, and are, in general terms, aware of the nature of the allegations made.
v) It is most likely that limitation is not an issue in relation to claims in tort, and limitation may not be an issue in relation to some or most contractual claims. (See Paragraph 54 below for further discussion on this issue).
50. The circumstances which indicate that discretion should not be exercised in favour of granting the extension are as follows: –
i) There is no claim against VWUK in the GPOC.
ii) YL’s refusal to provide any details in correspondence of the claims alleged against VWUK despite repeated requests. Indeed, it was only in leading counsel’s skeleton argument for the purposes of this application, and in oral submissions at the hearing, that it was indicated that the grounds for the claims in the claim form and the proposed intended additional claims related to the fact that VWUK was the publisher of publicity materials, including websites, concerning vehicles within this jurisdiction, where it is alleged that VWUK made representations to customers about emissions from VW vehicles which were false.
iii) Allegations are made of fraud and dishonesty without being identified in a pleaded case or in correspondence.
iv) The failure of YL to bring this matter to the attention of the court at any of the hearings before the GLO application or at the GLO application hearing, despite repeated reminders of the need to do so by Freshfields, who did bring this to the attention of the court as indicated by counsel.
v) The likelihood that there will be no material disadvantage to the Claimants, save for costs consequences, if an extension is refused, given the repeated confirmation that there was no intention to pursue claims against VWUK, and a willingness to discontinue the claims provided there was no liability for costs.
51. It is apparent from the authorities mentioned, particularly Hoddinott at §58 and Malcolm-Green at §38, that the Claimants must point to exceptional circumstances which merit the exercise of the discretion in their favour. The Claimants rely primarily on the existence of the group litigation proceedings. However that reliance is at odds with the assertion in Whittle 1 at Paragraph 9 that: “such a claim would not form a part of the GLO” (see Paragraph 41 above), and the suggestion in correspondence that an application would be made for a stay of the proceedings until the group litigation had concluded. Where the Claimants have had over a year, and opportunities at four listed hearings, to bring this claim to the attention of the court, and failed to do so despite Freshfields’ repeated exhortations to YL, when applying the overriding objective the group litigation does not, in my judgment, constitute exceptional circumstances on which the Claimants can rely to justify granting the extension sought.
52. In those circumstances, I consider that all the circumstances and the weight of the factors against granting the extension, lead me to the conclusion that in applying the overriding objective it is appropriate to refuse to grant the extension requested.
53. I place particular weight on the following factors:
i) The failure to bring this claim to the attention of the court during the group litigation proceedings, when there was every opportunity to do so, and no explanation given for that failure. It is also entirely unclear whether this issue was brought to the attention of the other solicitors on the steering committee in whose names the GPOC was issued, so that consideration could be given to including such claims in the GPOC. It is also unclear what the position will be in relation to other claims against VWUK and whether they be dealt with separately or under the umbrella of the GLO. This should have been a matter which the court was able to deal with at the hearing in March 2018. It may have been that the court would have decided it would be appropriate to stay the claims pending the determination of the claims against the remaining Defendants, but that was a matter to be considered in the context of the GLO application and not separately. No explanation has been provided for this failure by YL.
ii) The failure to engage with Freshfields, or, presumably, other claimant solicitors in the group litigation: see Whittle 3 Paragraph at 36 where it is indicated there has not been liaison with members of the steering committee, [B7/39.9], and also the lack of any claims against VWUK in the GPOC) on the appropriate course to take in the group litigation in respect of claims against VWUK.
iii) The failure to provide any details in correspondence, or even adequately at the hearing of this application, of the claims against VWUK. This is of course particularly of concern when allegations of fraud and dishonesty are made. Indeed, it was only in leading counsel’s skeleton argument for the purposes of this application that it was indicated that the grounds for the claims in the claim form and the proposed intended additional claims related to the fact that VWUK was the publisher of publicity materials, including websites, concerning vehicles within this jurisdiction where it is alleged that VWUK made representations to customers about emissions from VW vehicles which were false. Although VWUK, and Freshfields, were of course fully familiar with the claims made against other Defendants, as VWUK did not sell to consumers it was difficult to identify without explanation what claims would be made. The fact that no claims were made against VWUK in the GPOC called out for an explanation.
iv) The acceptance in correspondence that there were no claims that would be continued against VWUK, supported by the willingness to enter into a consent order discontinuing the claims, throws doubt on the later assertions that the claims are ‘viable’. In any event, even if there are viable claims, but good commercial grounds for not pursuing them in the context of the claims made against all other Defendants in the group litigation, the Claimants have had ample opportunity to explain that to VWUK and to the court and have not done so.
54. The issue of limitation, although clearly an important factor in the court’s decisions on many applications under CPR 7.6(2), has not been of particular relevance here. I do not have sufficient information, in the absence of a pleaded case, and where there is some dispute between the parties on the issue, to reach a concluded view. However, I have considered whether, as seems most likely, if there are not, other than perhaps de minimis, issues of limitation, this would be a factor that would ‘tip the balance’ in favour of granting the extension, as in Hoddinott. Assuming therefore in the Claimants’ favour that there are no limitation defences available to VWUK in this claim, that is no a factor that would persuade me, applying the overriding objective, to grant an extension. The factors in favour of refusing to grant relief are, in my judgment, overwhelming in this case. Conduct
55. YL’s conduct in correspondence with Freshfields and in relation to aspects of the application has been inconsistent, non-engaging and generally unhelpful. But I accept the submissions of the Claimants’ leading counsel that matters of conduct in relation to the application itself are not factors that I should take into account, and have not taken into account, in the exercise of discretion in the application, but rather factors which relate to my determination on costs. In so far as I criticise the credibility of Mr Whittle’s evidence, I do so in the context of my conclusion that it fails to make out the basis for a good reason for a failure to serve, rather than as forming any part of the exercise of my discretion.
56. The usual order would be that VWUK would be entitled to their costs of the application, and the costs of the claim. Since the draft judgment was provided to the parties and the opportunity provided to the parties to make further submissions in relation to the basis of assessment, those costs have been agreed.
Steven Brooks, Manager at Your Lawyers
The judgment is in my view, and in the view of junior counsel, deeply unfair. It contains several inaccuracies and erroneous conclusions. As an example:
• The judgment incorrectly asserts that the claimants had confirmed that they had no cause of action against VW UK. The claimants had in fact never asserted that there was “no cause of action” against VW UK.
• The judgment incorrectly states that an allegation of fraud and dishonesty was maintained against the defendant.
• The judgement erroneously criticises the claimants for failing to engage with the defendants and (as has been presumed in the judgment) with the other claimant solicitors in the group litigation. Such criticism bypasses the lengthy correspondence between Your Lawyers and Freshfields. The judgment also omits reference to the claimants’ evidence that dialogue had actually commenced with the other members of the steering committee.
• In criticising the rejection of the defendant’s offer of a 7 day extension of time for service, the judgment disregards and fails to acknowledge that the extension on offer only related to service of the Claim Form and excluded any extension for service of the Particulars of Claim. The offered extension was therefore meaningless, as it would in any event require the claimants to make an application for relief.
• In criticising the claimants’ desire to collaborate with the defendant on the issue prior to service, the judgment completely disregards the fact that it was the defendant who first suggested that dialogue was necessary.
• The judgment is critical as to the time on which the second witness statement in support of the claimants’ application was served. That criticism does not acknowledge that the statement was prepared in response to the defendant’s witness statement which was received by email at 01:19am on the Saturday morning (hence deemed served on the following Monday). The defendants served their witness statement very late, having been in receipt of the claimant’s application for 3 weeks, and afforded the claimants one working day in which to respond. Against that background, the second statement in support of the claimants’ application was prepared and emailed in response on the Monday, at around 6pm (i.e. the day that the defendant’s statement was deemed served). Despite this chronology of events, the judgment criticises the claimants for taking a full day to draft a witness statement in response.