RELIEF FROM SANCTIONS WHEN CLAIMANT WAS ONE YEAR LATE IN SERVING PARTICULARS OF CLAIM (BUT THERE IS A LITTLE MORE TO THIS…)
In Excotek Ltd v City Air Express Ltd & Anor  EWHC 2615 (Comm) Mr Justice Henshaw granted a claimant relief from sanctions when it applied to serve Particulars of Claim over a year late. However the parties had agreed to a general stay of proceedings but the claimant had failed to embody this in a consent order. The overall context of the case is very important in terms of the judge’s determination of the Denton criterial.
” In my view, Excotek’s breach cannot be regarded as trivial, because it deprived the court of the opportunity to consider whether or not the stay sought by the parties should be granted or not. However, it is nonetheless relevant to consider whether it can properly be described as serious or significant in the sense discussed in the passage from Denton quoted in § 51 above. In my view it was not.”
The claimant brings proceedings in the Commercial Court. The parties agreed an extension of time for service of the Particulars of Claim. The claimant’s solicitor forget to draft and file a consent order.
AN ORDER WAS REQUIRED
The judge set out the reason why an order was required.
25. An order was required because, although parties are permitted to agree extensions of time “for a person to do any act” (CPR 2.11), Practice Direction 58 § 7 states that in Commercial Court proceedings any such agreement must be notified to the court in writing, with reasons. Males J stated in Griffin Underwriting v Varouxakis  1 WLR 2529 that:
“It is not open to the parties to agree an indefinite extension of time without notifying the court. To hold that the moratorium was effective despite the failure to comply with the notification requirement would deprive the court of control and would mean that there was no effective sanction for non-compliance. Or as Hobhouse J used to say in the days long before the CPR , in this court it takes three to make an agreement.” (§ 47)
THE CLAIMANT’S APPLICATION FOR RELIEF FROM SANCTIONS
Nothing happened, procedurally, for 12 months after the stay was agreed. The defendant took the point that the particulars of claim had not been served and indicated that any application for a retrospective extension of time would be resisted.
THE RELEVANT PRINCIPLES: WHY THE CLAIMANT REQUIRED AN EXTENSION OF TIME
35. Excotek’s application for an extension of time and Chaucer’s application for a stay are governed by essentially the same principles. The question is whether the claim should be allowed to proceed or should be struck out, having regard to the principles governing situations where Particulars of Claim are not served on time.
36. It is common ground that unless the court grants a retrospective extension of time or stay, the Particulars of Claim were not served in accordance with the 28-day time limit set out in CPR 58.5. Excotek submits that it would not follow that the service was invalid, because under CPR 3.10:
“Where there has been an error of procedure such as a failure to comply with a rule or practice direction –
(a) The error does not invalidate any step taken in the proceedings unless the court so orders; and
(b) the court may make an order to remedy the error.”
37. However, although the CPR specifies no explicit sanction for failure to serve particulars of claim on time, Edwards-Stuart J in North Midland Construction plc v Geo Networks Ltd  EWHC 2384 (TCC) § 68 stated that the effect of a failure to do so is “as if the action becomes stayed”, with the practical consequence being equivalent to strike out, “because the starting of a second claim for the same cause of action while the first action is still in existence would probably amount to an abuse of the process of the court”. That statement is consistent with the note in White Book § 7.4.3 that:
“Where the particulars of claim are not served in time in accordance with r.7.4 (whether this is because the claimant misunderstood the effect of r.7.4(2) or for some other reason), an application may be made to the court for an extension of time. An application for an extension may be made either before or after the expiry of the relevant time limit. For commentary on such applications, see para.7.6.8 below. The application must be determined by adopting the relief from sanctions framework under Pt 3.9. See Price v Price  3 All E.R. 911”
and the similar statement in note 7.6.8 that:
“A party who has served the claim form in accordance with r.7.5, but who has failed to comply with the time limits for the separate service of particulars of claim imposed by r.7.4, may apply to the court for an extension of time for service of the particulars. A court considering whether, on such an application, it should exercise its general discretionary power, recited in r.3.1(2)(a)), to extend time for compliance with any rule (in this case r.7.4) should adopt the r.3.9 (Relief from sanctions) framework (Price v Price  EWCA Civ 888;  3 All E.R. 911, CA).”
38. In Price, the Court of Appeal said:
“ … this court had made it clear in Sayers v Clarke Walker (a firm)  EWCA 645;  3 All ER 490 that in a case of any complexity, when a court was considering an application for an extension of time made after the time prescribed for the taking of a step in proceedings had expired, the court should follow the checklist given in CPR 3.9. Although the present case is concerned with an extension of time for serving particulars of claim, and not with an extension of time for appealing, the underlying logic is the same. If the court is not willing to extend time, the action will be at an end because the claimant will not be able to proceed with it any further.” (§ 4)
On that basis, Excotek needs to obtain an extension of time.
THE BASIS UPON WHICH THE COURT WOULD EXERCISE ITS DISCRETION
39. In Integral Petroleum v SCU-Finanz  EWHC 702 (Comm), Popplewell J concluded that an error of procedure in serving the Particulars of Claim by e-mail was a failure to comply with a rule or practice direction that fell within CPR 3.10. Accordingly, under CPR 3.10(a) such service was to be treated as valid, so as to commence time running for the service of the defence (§ 34). Popplewell J noted at § 37 that “CPR 3.10 is particularly apposite for treating as valid a step whose whole function is to bring a document to the attention of the opposing party where such function has been fulfilled. It prevents a triumph of form over substance”. At § 39 he said “to treat [email] service as outside the scope of CPR 3.10 so as to entitle a defendant to set aside judgment under Rule 13.2 as of right would confer an unjustified benefit on a defendant who could rely upon a technical defect which has had no practical effect, and caused no prejudice, so as to deprive the claimant of a judgment to which, on the present hypothesis, he is entitled”. Popplewell J went on to state:
“These reasons apply with even greater force to the applicability of CPR 3.10 to the other deficiency relied on in relation to service of the Particulars of Claim, namely that it was 5 days out of time” (§ 40)
40. Price was not referred to in Integral Petroleum. Conversely, Excotek points out that Price did not consider the effect of CPR rule 3.10. In the light of the conclusions I reach later in this judgment, I do not find it necessary to seek to resolve this matter. I proceed on the basis that late service of Particulars of Claim requires an application to be made by the claimant, to be determined applying the principles relevant to relief from sanctions. I note that it was common ground before Popplewell J in the later case Viridor Waste Management v Veolia Environmental Services  EWHC 2321 (Comm) that that was the correct approach (see § 17).
41. Excotek seeks the extension pursuant to CPR 3.1(2)(a), under which the court’s discretion is on the face of it unfettered. However, it is well established that an application made after the time for compliance has expired is sufficiently analogous to an application for relief from sanctions as to engage the principles in Denton v TH White Ltd  EWCA Civ 906: see, e.g., White Book notes 3.1.2 and 3.9.15, and R (Hysaj) v Secretary of State for the Home Department  EWCA Civ 1633.
42. Under those principles, the court should take a three-stage approach:
“The first stage is to identify and assess the seriousness and significance of the “failure to comply with any rule, practice direction or court order” which engages rule 3.9(1). If the breach is neither serious nor significant, the court is unlikely to need to spend much time on the second and third stages.
The second stage is to consider why the default occurred.
The third stage is to evaluate “all the circumstances of the case, so as to enable [the court] to deal justly with the application including [factors (a) and (b)]”….”
(Denton § 24, paragraph breaks interpolated)