MASTER WAS RIGHT TO SET ASIDE AN EXTENSION OF TIME FOR SERVICE OF THE CLAIM FORM: ANOTHER CLAIMANT’S ACTION BITES THE DUST

The judgment of Mr Justice William Davis  in  Qatar Investment And Projects Holding Co & Anor v Phoenix Ancient Art S.A. [2021] EWHC 2243 (QB) adds to the many, many, cases on this blog that deal with the dangers relating to service of the claim form.  The claimant obtained an extension of time for service of the claim form.  That extension was set aside. The judge upheld the decision to set aside the extension. The claimant’s action (issued at the edge of the limitation period) is now struck out.  This case highlights one of the many dangers in relation to service of the claim form. An unserved claim form is a very dangerous thing. An order extending time can be set aside. It is a well established principle that a claimant cannot rely on the “false sense of security” argument when responding to an application to set aside an extension of time.

“The Claimants had issued the claim form days before the expiry of the limitation period. Therefore, it was incumbent on them to act promptly.”

WEBINAR ON SERVICE OF THE CLAIM FORM

This case will be considered with the many other cases relating to service of the claim form in a webinar on the 24th September 2021 “Service of the Claim Form: Key cases and issues”. Booking details are available here. 

 

THE CASE

The claimant obtained an ex parte order extending time for service of the claim form. The order was obtained on 22 July 2020, service took place on the 8th September 2020. The defendant applied for an order setting aside the aside of extension of time.  The Master granted the defendant’s application.   The claimant appealed against that decision.

THE LEGAL PRINCIPLES GOVERNING APPLICATIONS TO EXTEND TIME FOR SERVICE OF THE CLAIM FORM

The judge reviewed the principles governing extensions of time for service of the claim form.  There are very specific principles relating to extensions of time for the claim form, even when the application is made ahead of the time for expiry of service.

    1. The application made in this case was within the period specified by rule 7.5. Thus, the Claimants were not subject to the provisions of rule 7.6(3) whereby the court could not make an order if the Claimants could not show that they had taken all reasonable steps to comply with rule 7.5. There is a wealth of authority on the application of rule 7.6(2). The Master was taken to much of it. So was I. The authorities were subjected to a comprehensive review by the Court of Appeal in Al-Zahra (PVT) Hospital and others v DDM [2019] EWCA Civ 1103 at [49] to [54]. In his judgment Lord Justice Haddon-Cave drew in particular on the principles established in Hashtroodi v Hancock [2004] 1 WLR 3206Hoddinott v Persimmon Homes (Wessex) Limited [2008] 1 WLR 806 and Cecil v Bayat [2011] EWCA Civ 135. I do not propose to rehearse the principles in any detail. Rather, I shall set out the essential propositions which emerge from the authorities and from Lord Haddon-Cave’s review thereof.
(i) The court’s power to extend time has to be exercised in accordance with the overriding objective i.e. the case must be dealt with justly.
(ii) It will always be relevant to determine and evaluate the reason why the claim form was not served within the relevant period. An application to extend time cannot be dealt with justly without knowing why the claim form was not served within time.
(iii) Where a very good reason is shown for the failure to serve within the specified period, an extension of time will usually be granted. The weaker the reason, the more likely it is that the court will refuse to grant the extension.
(iv) Time limits are to be adhered to unless there is a good reason for a departure. The time limits are generous and the claim form does not have to contain full details of the claim.
(v) An applicant who is seeking the court’s help to overcome a genuine problem will generally be entitled to an extension. That is not the case where an applicant has merely left service too late. Whether the limitation period has expired will be of considerable importance.
(vi) Where an application is made before the expiry of the relevant period but a limitation defence of the defendant will be prejudiced, the claimant must show, at the very least, that they have taken reasonable steps.
(vii) The strictness with which the jurisdiction is applied is of general application. Save in exceptional cases, a good reason is required to extend time. The general regime is a strict one. That will particularly be the case where limitation is involved.
Lord Justice-Haddon Cave identified a recurrent theme in all of the authorities, namely the strict approach that CPR 7.6 was intended to introduce to the grant of extensions of time for the service of claim forms.

THE MASTER’S DECISION

The judge set out the reasons for the Master’s decision.
    1. One ground of appeal is that Master Gidden’s judgment failed to give adequate reasons for his conclusion. He had heard an application in chambers akin to an application to strike out for want of prosecution. His judgment was delivered ex tempore. That does not mean that he was absolved from giving reasons. In a case such as this the Master must set out his reasons in sufficient detail to show the appellate court the principles on which he acted and the reasons which led to his decision. Equally, the reasons need not be elaborate. Nor do they need to reflect every argument put before him by counsel. All that is necessary is that the judgment shows all concerned the basis on which he acted.
    1. The judgment began with a brief rehearsal of the procedural history. The Master then set out the tests which he proposed to apply. To persuade him to set aside the extension of time, the Defendant company had to establish that there was no good reason for the Claimants’ failure to serve the claim form within the time permitted under the rule. He said that this required scrutiny of the conduct of the Claimants. Had they taken all reasonable steps to comply with the rules for service within the time allowed?
    1. The Master referred to the procedure involving the FPS and the suspension of that service from 16 April 2020. He noted the argument of the Claimants that they had only an abbreviated time prior to this suspension so that, with hindsight, it could be said that an extension of time was inevitable. He further recorded the concession of the Claimants that they had taken no steps prior to May 2020 but that there were good reasons to justify this, namely the assumption that the Defendant company’s solicitors would accept service within the jurisdiction. The judgment then rehearsed the steps taken once it became apparent to the Claimants that they would have to serve the claim form outside the jurisdiction.
    1. The Master then turned to consider this question: did the Claimants take all reasonable steps to comply with the rules such as to establish good reason not to have served the Defendant company by 22 July? He referred to the need to apply the principles which emerged from the authorities, i.e. the authorities to which I have already referred. He took into account the following factors: the claim was issued 2 days prior to the expiry of the limitation period, the importance of the expiry of limitation being considerable; the claim was sizeable which meant that an enhanced degree of care and conduct was necessary; the public health emergency meant that nothing should have been left to chance; the Claimants took an over-optimistic view of the approach that would be taken by the Defendant company, such optimism not being justified by what was known of the company’s attitude to a proposed standstill agreement; the Claimants took no active steps in the period between the issue of the claim and early May 2020. Those factors led the Master to conclude that “the Claimants simply failed to grasp the nettle of what had to be done in the time permitted by rule and in keeping with the circumstances that prevailed in order to successfully accomplish what needed to be done”.
  1. The Master considered the issue of limitation as follows. “The Defendant’s limitation defence should not be circumvented by an extension of time save in exceptional circumstances….I am not persuaded that the circumstances in the case can be considered so exceptional as to perforate an otherwise strict regime. There is….no basis to exercise a discretion in the Claimants’ favour.” The Master rejected the argument that he should exercise his discretion based on a balance of hardship. He referred to the principles which emerged from the authorities from Hashtroodi to Al-Zahra. He said that the Claimants’ undoing lay in the lack of activity in the period up to early May 2020.

 

THE CLAIMANT’S UNSUCCESSFUL APPEAL

The claimant’s appeal against the Master’s decision was unsuccessful. The judge held that there were no grounds for impugning the Master’s exercise of their discretion. In any event the judge would have exercised his discretion in the same way.

    1. This is an appeal from a decision of the Master in relation to an interlocutory application. For the Claimants to succeed, they first must show that Master Gidden made an error of law or principle or that his decision was outside the generous width of his discretion.
    1. The first error of law or principle which the Claimants submit was made by Master Gidden concerns the test to be applied in order to extend time. It is said that he should have directed himself that the decision to extend was one to be taken in accordance with the overriding objective. This was what was required by reference to rule 7.6(2). Instead, by referring to the need to show a good reason for the delay and/or to the Claimants having to show that they had taken all reasonable steps, the Master applied the test applicable to an application for a retrospective extension under rule 7.6(3). The Master did not identify either sub-rule within rule 7.6 in his judgment. The argument that he used the test applicable when a retrospective extension is sought comes only from the language used in the judgment.
    1. This argument is without substance. The overriding objective requires any application under rule 7.6(2) to be dealt with justly. That term has to be applied in very many contexts within the CPR. It will require the use of different criteria depending on the context. It is clear from the authorities reviewed in Al-Zahra, in particular Hashtroodi and Cecil v Bayet, that good reason for the extension must be shown in all cases and that, in cases where an extension will impinge on limitation, at the very least reasonable steps must be shown to have been taken by the party seeking the extension. In the context of rule 7.6(2), application of the overriding objective involves those elements. The failure of the Master to use the words “overriding objective” was of no consequence since he applied the correct test as required by the authorities.
    1. The other error of law or principle on which the Claimants relied in writing, albeit that it was not stressed in Mr Stewart’s oral submissions, was that the Master failed to give adequate reasons for his conclusions. At paragraph 28 above I set out the requirements to be met by a judgment in circumstances such as arose here. I have rehearsed in summary form the terms of the judgment delivered by Master Gidden. That judgment dealt concisely and accurately with the matters relied on by each party and with the relevant evidence. It explained the test being applied by the Master in determining the application. It set out the factors which led the Master to conclude that the test was not met. The judgment does not leave any doubt as to the basis for his decision.
    1. The proposition that the decision of Master Gidden fell outside the generous width of his discretion is based essentially on three factors: his failure to make any or any proper allowance for the fact that service out of the jurisdiction via the FPS was severely affected from 16 March 2020 and was suspended altogether by 16 April 2020 thus rendering service out of the jurisdiction impossible in any event from that date; his illogical reasoning in relation to the effects of the pandemic, i.e. suggesting that the Claimants should have anticipated the effects before they were generally recognised; his failure to mention at all the evidence that the FPS in May 2020 had advised a colleague of Mr Tapper that applications should be made for lengthy extensions to the time for service and that on 30 June 2020 the FPS had advised Mr Tapper to await the outcome of the application for an extension of time before submitting documents for service.
    1. The difficulties with the FPS did not begin until the middle of March 2020 and the service was not suspended until the middle of April 2020. The Claimants had issued the claim form days before the expiry of the limitation period. Therefore, it was incumbent on them to act promptly. It is quite correct for Mr Stewart to say that the Claimants had 6 months in which to serve the claim form out of the jurisdiction. It is necessary to emphasise that the rule permits 6 months to serve out of the jurisdiction, not the better part of 6 months before taking any steps to discover what needs to be done to serve out of the jurisdiction. Reasonable steps in the context of this case would have involved the Claimants at an early stage informing themselves of the processes by which service out of the jurisdiction would be effected. Had they done so, the problems with the FPS, about which they knew nothing at all until late June 2020, could have been overcome. It also is correct that the Claimants had 4 months to serve within the jurisdiction. However, as the Master observed, the Claimants took an optimistic view of the attitude of the Defendant company’s solicitors to accepting service which was wholly unwarranted given the history of the case in the period preceding the issue of the claim form. Reasonable steps would have been for the Claimants to establish as soon as the claim form had been issued whether the solicitors would accept service since, if they would not, service out of the jurisdiction would be required. It has been argued that this would not have been appropriate given that negotiations were continuing. The only evidence before the Master on this was hearsay evidence, i.e. what had been said by Mr Latamie. This evidence was vague in the extreme and of little (if any) weight. Master Gidden made it very clear in his judgment that the Claimants’ lack of activity between issue and early May 2020 (in relation to which he had no proper evidence) was a critical factor in his reasoning. Master Gidden gave proper weight to the issues with the FPS. In reality, those issues were not of the significance argued for by the Claimants.
    1. The paragraph of the judgment dealing with the effects of the pandemic is not the easiest part of the judgment to understand. However, the Master was entitled to observe that the pandemic did not come wholly out of the blue. It was something in the general public consciousness by early March 2020. As I have indicated, a critical factor in the Master’s reasoning was the total lack of activity between 22 January 2020 and 5 May 2020. It was not illogical for him to refer to the need to leave nothing to chance given what was unfolding from early March. In fact, by doing nothing for another 2 months, the Claimants did take a risk.
    1. It is correct to observe that the Master did not refer specifically to the evidence of the information provided by the FPS to a colleague of Mr Tapper about which Mr Tapper learnt towards the end of June 2020. Nor did he mention that the FPS had advised Mr Tapper to await the outcome of the application to extend before submitting documents. This evidence could not have affected the decision of the Master given the basis on which he made it. There was no need for him to refer to it. The lack of such reference does not begin to vitiate the decision.
Conclusion
    1. Since there is no reason for me to conclude that the Master fell into any error of law or principle or for me to find that the decision was outside the scope of his discretion, the appeal must fail.
  1. Even if there had been a proper basis upon which to impugn the Master’s decision and/or exercise of his discretion so as to require me to remake the decision, I am in no doubt that I would have reached the same conclusion as Master Gidden essentially for the same reasons. I would have had to consider the most recent witness statement of Mr Pulford. This sought to deal with what had occurred between January and May 2020. What Mr Latamie may have said no longer formed part of the evidence. Certainly no effort was made to put any flesh on the very inadequate bones of the earlier hearsay evidence. Rather, Mr Pulford said that he had “a high degree of confidence that, were it not for the effect of Covid-19, the two letters sent….on 7 May 2020 and 15 May 2020….would have been sent sooner.” No reason is given for the expression of high confidence. No details are given of what would have been done in relation to service of the claim had there not been a pandemic. With great respect to Mr Pulford, I would not have been able to give much weight to the evidence in his third statement. Certain it is that it would not and does not tip the balance in favour of the Claimants.