IF YOU ARE APPLYING FOR RELIEF FROM SANCTIONS “OWN YOUR MISTAKES”: YOU HAVE TO SERVE THE PARTICULARS OF CLAIM WITHIN FOUR MONTHS: CLAIMANT IN ERROR, BUT RELIEF FROM SANCTIONS GRANTED

The judgment in  Holterman v Electrium Sales Ltd & Anor [2020] EWHC 3915 (TCC) shows a “classic” error in relation to service of proceedings. The claimant served the claim form at the end of the relevant period, and the particulars of claim 13 days later. Unfortunately for the claimant the particulars were served 13 days late.  Particulars of claim have to be served within the period of time for serving the claim form.   The judgment also makes some important observations in relation to the need for a party applying for relief from sanctions to be candid in setting out the reason why a mistake was made.

Generally speaking, where there is a clear and obvious error of the type that occurred here, the court is likely to expect an early full and frank admission of that error. Such an admission (whilst not determinative and perhaps not central to the outcome of the application) will provide comfort that the person who made the mistake is likely not to repeat it and to have learned from the experience. A single-minded drive to defend the indefensible and avoid any suggestion of error (when the error is clear) is in my judgment, unhelpful.”

THE CASE

The court was considering a number of applications by the defendant in relation to a claim following a fire. One of the applications related to late service of the Particulars of Claim. The claimant had served proceedings at the end of the period for service.  When proceedings are served well within the period for service then a claimant has an additional 14 days after service of the claim form to serve the particulars of claim.  However the rules require that the particulars be served within the period of service.  The claimant had, therefore, served 13 days late and required relief from sanctions.

THE JUDGMENT ON THIS ISSUE

Late service of the Particulars of Claim and the application for relief from sanctions
    1. I remind myself that the only aspect of the claim which now survives against the first Defendant is the negligence claim. That claim is not subject to a limitation argument at this stage.
    1. The outcome of this application will depend on a consideration of the three-stage test set out in Denton v TH White Limited [2014] 1 WLR 3926. The well-known guidance is summarised at paragraph 24 of the judgment:
A judge should address an application for relief from sanctions in three stages. 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 (a) for litigation to be conducted efficiently and at proportionate cost; and (b) to enforce compliance with rules, practice directions and orders.”
    1. The application is supported by the evidence of Mr Ho-Shing Mak, the Claimant’s solicitor (who qualified to practise in October 2018). Dealing with stages 1 and 2, the Claimant maintains that the delay was neither serious nor significant and that there was a good reason for default namely that the solicitor (see paragraph 44.1):
“held a genuine belief that serving the Particulars of Claim by 3 June 2020 was in compliance with the CPR as a result of the issuing of the Amended Claim Form. I sought at all times to comply with the rules and believed that I was doing so.”
    1. The basis of Mr Mak’s belief that the Particulars of Claim were served on time is explained at paragraphs 18, 19 and 28 of his evidence:
18. On 25 September 2019 I was notified by the court that [the filing of the amended Claim Form] had been accepted. I therefore downloaded a copy of the sealed document and after looking at it I concluded that the now amended Claim Form (the “Amended Claim Form”) had been “issued” on 24 September 2019. I based this on two factors: First, the Original Claim Form and the Amended Claim Form were dated by the court in the same way with the same seal, except that the Original Claim Form seal had a date of 21 June 2019 and the Amended Claim Form had a seal with the date of 24 September 2019. Secondly, as detailed above (at paragraph 10) I knew that CPR 7.2(2) said that “a claim form is issued on the date entered on the form by the court.” Therefore, as with the Original Claim Form, I followed the date the court had entered onto the Amended Claim Form via the seal and concluded that the Amended Claim Form had been issued on 24 September 2019.
19. Having reached this conclusion, my subsequent decision making was predicated on an assumption that I had two issued claim forms; the Original Claim Form issued on 21 June 2019 and the Amended Claim Form issued on 24 September 2019. I concluded that each constituted an issued Claim Form for the purposes of the CPR.”
…..
28. On 1 May 2020 the extended stay expired and as the period for the stay, over 2 concurrent periods, had been 1 October 2019 to 1 May 2020, I calculated that we had until 21 May 2020 to serve the Original Claim Form and 24 August 2020 to serve the Amended Claim Form. However, I was conservative and did not want to risk being out of time by a day. I therefore told the client and counsel that we would be working towards a deadline of 20 May 2020 for service of both Claim Forms and 3 June 2020 for service of the Particulars of Claim.”

    1. Particulars were, as planned, served on 3 June 2020 (it is now accepted that service was 13 days late). On 4 June the first Defendant acknowledged receipt and asked the Claimant to confirm that service by email would be accepted. That was confirmed on the same day. On 9 June 2020 the first Defendant wrote a detailed letter to the Claimant pointing out that the Particulars had been served late. Its first paragraph said this:
“We write regarding the timing of the service of the Particulars of Claim. For the reasons explained below, we consider that they have been served out of time. This letter includes requests for further information to enable us to consider this issue further. In particular, we would grateful to know whether you intend to apply retrospectively for an extension of time pursuant to CPR rule 3.1(2)(a).”

    1. The response came on 12 June 2020. The Claimant (through Mr Mak) asserted that the Particulars had been served on time but “to ensure that there is no procedural uncertainty” noted that there would be an application for relief from sanction.
    1. Dealing with the three-stage test, the Claimant, in the letter of 12 June 2020:
i)                   asserted that it was “plain that a 13-day delay in providing the [Particulars of Claim] is neither serious nor significant
ii)                 the reasons for default was that the Claimant’s solicitor held a “genuine and reasonable belief that serving the [Particulars of Claim] by 3 June 2020 was in compliance with the CPR as a result of the issue of the Amended Claim Form”
iii)               the Claimant invited the first Defendant to conclude that in all the circumstances of the case (which I will return to) relief should be granted.
    1. The letter concluded with these words:
“In the event that our client is forced to make the application contemplated our client will represent your conduct as opportunistic, and ask for a costs order against your client on an indemnity basis and with other terms in keeping with the warning in Denton”

    1. Before dealing with the three stages of the Denton test, I return to the evidence in support. Dealing with stage 3 of the test, Mr Mak invites me to take account of the following factors (which I summarise):
i)                   The first Defendant’s solicitors (and the Claimant’s then counsel) knew what the Claimant’s plan was but raised no objection and the Claimant’s solicitor held an honest and reasonable belief that his view of the rules was correct.
ii)                 On 20 May 2019 he spoke to counsel (because his supervisor was on annual leave). The conversation “reinforced [his] belief that I should serve the Claim Forms that day but that I had until 3 June to serve the Particulars of Claim”
iii)               Court resources are being wasted by the need to make the application and “the First Defendant, by refusing to consent to this application has demonstrated opportunistic behaviour, attempting to take advantage of a minor instance of procedural uncertainty so as to extinguish an otherwise valid claim.”
iv)               The Defendants are not prejudiced by the delay; each has been involved in detailed discussion about merits, there has been a joint consideration of the consumer unit and detailed correspondence. The claim has been pursued diligently and has merit.
v)                  If relief is granted, the Defendants will not be prejudiced.
vi)               If relief is refused Claimant will be significantly prejudiced and there is likely to be satellite litigation.
Stage 1

    1. It is in my view plain and obvious that the default was serious and significant. A delay of 13 days is, in context, a significant delay. Mr Moody QC conceded that point. In my view he was plainly right to do so.
Stage 2
    1.  Mr Mak’s genuine belief that in acting as he did he was complying with the CPR in my judgment falls far short of a good reason for the default. Mr Moody QC accepted that the authorities supported that view. Mr Mak’s view of the rules was wrong, and in my judgment plainly so. The view he held was also clearly unreasonable. A solicitor, no matter how experienced or inexperienced, must be taken to know the Civil Procedure Rules.
Stage 3
    1. In my judgment, attempts to share or pass the blame to others who failed to point out the obvious mistake (as Mr Mak seeks to do) does nothing to assist the Claimant. The first Defendant’s failure to raise an immediate objection when told that the Particulars of Claim would follow and the short reference in evidence to Mr Mak’s conversation with counsel on 20 May 2020 carry no weight. The first Defendant’s solicitors were under no duty to point out the Claimant’s mistake (assuming they were aware of it) and would, in any event have needed the first Defendant’s instruction to do so (see Lord Sumption in Barton v Wright Hassall [2018] 1 WLR 1119 at para.22). The fact that others may also have made the same mistake would be relevant if the issue was whether Mr Mak was solely responsible for the default, but is not relevant in any broader sense.
    1. Generally speaking, where there is a clear and obvious error of the type that occurred here, the court is likely to expect an early full and frank admission of that error. Such an admission (whilst not determinative and perhaps not central to the outcome of the application) will provide comfort that the person who made the mistake is likely not to repeat it and to have learned from the experience. A single-minded drive to defend the indefensible and avoid any suggestion of error (when the error is clear) is in my judgment, unhelpful.
    1. I do not accept that the first Defendant has been opportunistic in its approach to this application. It seems to me that the first Defendant has behaved properly at all times, giving the Claimant an opportunity to explain its position and to issue an application for an extension of time and drawing the problem (which might well otherwise have gone unnoticed) to the Claimant’s attention.
    1. I accept that the delay in serving the Particulars of Claim caused no particular prejudice to the first Defendant and, importantly, I accept that the parties had engaged with each other meaningfully before issue so that issues between them were known and understood.
    1. The first Defendant was aware of the broad nature of the potential claim by September 2018 and by July 2019 the parties had explored the claim fully. The detailed letter of claim was sent on 23 July 2019. It included reference to the negligence claim.
    1. In dealing with the third stage of the Denton test, I bear in mind that the only part of the claim that is left against the first Defendant is the negligence claim. That claim is not subject to any limitation argument. If relief is granted the claim in negligence will carry on. If relief is refused, the Claimant will be able to issue a fresh claim. Whether relief is refused or allowed therefore the first Defendant will still need to deal with a claim.
Conclusion
    1. I have come to the view, despite the clear and obvious failings in the way the claim has been handled to date and the absence of a good reason for the serious default, that relief should be granted.
    1. I am satisfied that the overall justice of the case requires it. In particular the fact that the only surviving part of the claim could be the subject of a new claim and that the delay caused no prejudice are important factors. Refusing relief would in my judgment mark a return to an overly mechanistic, pre-Denton approach to CPR 3.9.
  1. I am grateful to both Leading Counsel for their helpful and focussed submissions.