SERVICE WITHOUT A SMILE: CLAIMANTS COME TO GRIEF IN THE COURT OF APPEAL: SENDING AN UNSEALED CLAIM FORM IS NOT GOOD SERVICE, THE CLAIMANTS COULD NOT RELY ON CPR 3.10

The first (but probably not the last) case on service of the claim form arrives in January, with the Court of Appeal decision in  Ideal Shopping Direct Ltd & Ors v Mastercard Incorporated & Ors [2022] EWCA Civ 14.  It is another case where claimants come to grief as a result of waiting until the last moment to serve the claim form and then not serving in accordance to the rules.

… where a claimant leaves the filing of claim forms until the last day for service, as Lord Sumption said in Barton, it courts disaster and has a limited claim on the indulgence of the Court.”

 

AVOIDING PROCEDURAL PITFALLS: WEBINAR 20th JANUARY 2022

On the 20th January 2022 I am presenting a webinar on Avoiding Procedural Pitfall in Personal Injury Litigation.  This covers matters relating to service of the claim form.  Booking details are available here.

THE CASE

The claimants brought proceedings against the defendant alleging breaches of competition law.

The claimants’ solicitor sent copies of the issued claim forms to the defendant for information. An agreement was made that there be an extension of time for service.

SERVICE OF UNSEALED CLAIM FORMS

The claimant “served” copies of amended claim forms at a time when the amended claim forms had not been sealed by the court.  The original (sealed) claim forms were not served (although they were available).

    1. On 17 July 2020, after the appellants’ solicitors had sent the amended claim forms and the Particulars of Claim to the Court electronically for filing, they did not immediately send the unsealed documents to the respondents’ solicitors. Ms Hollway said that they wanted to allow time for the sealed amended claim forms to be available for service but when, at about 15.00, they had not been issued, the decision was taken to serve the unsealed amended claim forms and accompanying documents. This was done by email to the respective respondents’ solicitors between then and about 16.32 that day.
    1. Ms Hollway gave evidence as to her state of mind that day about what was needed to serve the amended claim forms. She said that she believed the amended claim form had to have been filed electronically before it was served but it did not occur to her or any member of her team that it was necessary to have sealed amended claim forms in order to effect valid service. If it had occurred to her that her method would not be good service, she would either have contacted the court to ask for sealing of the amended claim forms to be expedited or, if this was not possible, she would have served the original unamended claim forms which were sealed.
  1. The sealed amended claim forms were served on 24 July 2020 (in the case of Mastercard) and 29 July 2020 in the case of Visa. On 5 August 2020, Visa made an application for orders that the appellants had not served the claim forms by 17 July 2020 and were now out of time to do so and accordingly the Court had no jurisdiction to hear those claims. On 10 August 2020, Mastercard applied for essentially the same relief. On 14 August 2020, the appellants made applications for declarations that they had validly effected service of the amended claim forms on 17 July 2020, alternatively for relief under CPR Parts 6.15, 6.16, or 3.10 to produce the result that there was no need to take further steps towards service.

THE JUDGMENT AT FIRST INSTANCE

The judgment at first instance was looked at in detail in an earlier post.  

The judge found that valid service had not taken place  because only copies of the amended claim forms had been served, he refused to grant relief under rules 6.15, 6.16 or 3.10.

 

THE CLAIMANTS’ UNSUCCESSFUL APPEAL

The claimants’ appeal was not successful.

 

ELECTRONIC ISSUE DID NOT LEAD TO ANY LACUNA IN THE RULES

The Court of Appeal rejected an argument that the Electronic Working Pilot let to a lacuna in the rules.
    1. Before considering the two grounds of appeal in turn, I will address the overarching submission by Ms Smith QC that there is a lacuna in the Electronic Working Pilot because of the time lag between filing of a claim form and its acceptance and sealing. This is said to lead to injustice and uncertainty and the Court is, in effect, asked to alleviate that injustice and uncertainty both in its approach to the construction of PD51O and to the scope of rule 3.10.
    1. I am not convinced that there is a lacuna in the Pilot which requires the intervention of this Court. Whilst it is correct that there is a gap or delay between electronic filing of a claim form and its Acceptance and sealing, which to an extent has been exacerbated by the pandemic, so that Acceptance may not take place on the same day as filing, this is something that is known to solicitors who use the Business and Property Courts in the Rolls Building, as Ms Hollway accepts. There are at least five things the appellants and their solicitors could and should have done which would have avoided the problem which they encountered.
    1. First and foremost, they should have filed the amended claim forms earlier than the last day of the period for service as extended. They had had a month to assimilate the Supreme Court judgment in Sainsbury’s and make whatever amendments to the claim forms were appropriate, which was ample time to file the amended claim forms by, at the latest, earlier in the week of 13 July 2020, in which case they would have been accepted and sealed in good time for service to be effected before the expiry of the deadline. Although much was made by Ms Smith QC of the supposed unpredictability with CE File as to how soon a claim form would be accepted after it was filed, as Birss LJ pointed out during the course of argument, this did not help the appellants’ case. It simply demonstrated that the appellants should have given themselves sufficient time to deal with the matter before the expiry of the deadline for service given that unpredictability.
    1. In fact, one of the amended claim forms was accepted and sealed on 17 July 2020 (and could have been served before midnight but for the appellants’ solicitors’ mistaken belief that service of unsealed claim forms was good service) and all but one of the other amended claim forms were accepted and sealed on Monday 20 July 2020, the next working day after they were filed. Thus, it is clear that had they all been filed on, say, Tuesday 14 July 2020, they would in all probability have been accepted and sealed the next day, Wednesday 15 July 2020 or, at the latest, on Thursday 16 July 2020. Leaving the filing until the last day, itself a Friday, was asking for trouble. Furthermore, as Mr Hoskins QC rightly said, the position was no different under the old system pre-CE File. If the claimant’s solicitors left issue until the last moment, there was always a risk that their outdoor clerk or trainee solicitor turned up at the court office too late for the claim form to be issued and sealed that day. The self-induced problem of late filing is not unique to CE File.
    1. Ms Smith QC sought to counter this point by suggesting in reply that there might be a good reason for not filing and serving a claim form until the end of the period for service, but the obvious problem with that argument is that it is unsupported by the evidence in this case. It was not suggested by Ms Hollway that the appellants and their solicitors had left filing the amended claim forms until the last day for some good reason. Ms Smith QC also suggested that a solicitor might not be able for practical reasons to give an explanation as to why filing was left till the last minute, for example that there were difficulties in obtaining instructions or that without prejudice discussions were in progress. However, as I pointed out in argument, neither of those would have been a good reason for leaving filing until the last minute.
    1. Second, if for whatever reason, the first course was not possible, the appellants’ solicitors could have sought a further extension of time for service of the amended claim forms from the respondents’ solicitors. Visa’s solicitors have indicated that they would have agreed and it is possible that, if the appellants’ solicitors could have shown a good reason for a further extension, Mastercard would also have agreed.
    1. Third, if agreement to an extension was not forthcoming, the appellants’ solicitors could have engaged in the simple expedient of serving the original claim forms on 17 July 2020, then serving the amended claim forms when they had been sealed. This would have complied with rule 7.5 and avoided the respondents obtaining any limitation defence. It is striking that Ms Hollway accepts in her first witness statement that this is one of the things they would have done had they appreciated that service of the unsealed amended claim forms was not good service.
    1. Fourth, when the amended claim forms were filed electronically, the appellants’ solicitors could have asked the court staff to expedite acceptance of these 16 amended claim forms, so as to ensure they were sealed and ready for service before the expiry of the deadline. Again, Ms Hollway accepts in her first witness statement that her firm would have done this if they had appreciated that service of the unsealed amended claim forms was not good service.
    1. Fifth, if all else failed, the appellants’ solicitors could have issued an application for an extension of time under rule 7.6(2) before the expiry of the deadline for service under rule 7.5 as extended by agreement, indicating in their supporting evidence under rule 7.6(4) any concern that delays within the CE File system might jeopardise service before the expiry of the deadline. In all probability, the court would have granted a short extension of, say, a week.
    1. The problem which the appellants faced was not caused by any lacuna in the Electronic Working Pilot, but by their failure to take one or other of those courses and by their solicitors’ mistaken belief that service of an unsealed amended claim form would be good service.
    1. In relation to the first ground of appeal, I agree with the respondents that the starting point under the CPR, in a case where Electronic Working does not operate, is that the general rule is that the claim form must be sealed before it can be validly served. Reading rules 2.6(1) and 7.5 together, the claim form that is issued and served must by definition be a sealed one. This is not only the court practice as accurately stated by the notes at 6.2.3 and 6.3.2 of the White Book, but is reflected in the case law. The general rule that what is served must be an original sealed claim form is made absolutely clear from the passage in [57] of the judgment of this Court in McManus v Sharif, one of the cases reported with Cranfield v Bridgegrove which I cited at [100] above. Although that case was decided under the previous version of the CPR, the same general rule applies under the current version of the CPR, as is clear from the decision of Ramsey J in Hills which was correctly decided.
    1. It is no answer for Ms Smith QC to say that the only defect identified in Hills was that a photocopy of the claim form was served rather than the original. Morgan J was correct in the present case in saying that, if service of a photocopy of a sealed claim form is not good service, it is absolutely obvious that service of an unsealed claim form is not sufficient.
    1. Any suggestion that it made any difference that what were to be served were amended claim forms is misconceived. There is nothing in rule 17.1 which removes the requirements in earlier rules such as Parts 6 and 7 in relation to the commencement of proceedings. I agree with Mr Hoskins QC that, were it otherwise, the claimant could avoid the requirement to serve a sealed claim form simply by amending an original claim form without permission under rule 17.1 and then serving the amended unsealed claim form, which, as he said, would make a nonsense of the scheme of the Rules.
    1. The question then is whether the general rule that a claim form must be sealed before it can be validly served is in some way abrogated in the case of Electronic Working under PD51O. The answer is clearly no. Paragraph 1.2(1) makes clear that the Pilot operates within the CPR and subject to the applicable procedural rules unless there is an exclusion or revision within the practice direction. Since the present claims are Part 7 claims, this means that the provisions as regards service of such claims apply, including the general rule that claim forms have to be sealed before service.
    1. I agree with Mr Hoskins QC that any abrogation from the general rule would need to be expressly stated in PD51O, which it is not. Far from there being any exclusion or revision as regards the requirement of sealing, the practice direction confirms that requirement. Paragraph 7 is headed “Electronic sealing” and 7.1 makes it clear that a claim form is not sealed until it has been accepted by the court. It follows that with one exception on 17 July 2020 there was no sealed amended claim form in existence which could be served. To the extent that Fraser J in Citysprint suggests the contrary, that must be in error. In any event, as Mr Hoskins QC correctly submitted, there is nothing in that case to suggest that service of an unsealed claim form would be good service.
    1. Paragraph 8.1 also confirms the general rule providing: “The Court will electronically return the sealed and issued claim form…to the party’s Electronic Working online account and notify the party that it is ready for service.” Contrary to Ms Smith QC’s submission, this provision is not simply some permissive notification provision. Paragraph 8 is headed: “Service” and is clearly predicated upon the claim form not being ready for service until it has been accepted and sealed by the court, which is completely inconsistent with the claimant being entitled to serve an unsealed claim form, which by definition is not ready for service. Far from paragraph 5.4 of the practice direction dealing with issue and filing providing any assistance to the appellants’ argument, (6) of that paragraph, which provides that if a claim form fails Acceptance, it is deemed not to have been issued, is completely inconsistent with a claimant being entitled to serve an unsealed claim form before the court has determined whether it is accepted or not.
    1. Nor is there any basis for giving these clear provisions some other, distorted meaning because of some lacuna in the practice direction. I have already held that, in my judgment, there is no such lacuna, but even if there were, it could only be addressed by a change in the Rules at the behest of the Civil Procedure Rules Committee, not by distortion of clear language by this Court.
    1. Accordingly, in my judgment, Morgan J was right to conclude as he did at [58] of his judgment that the unsealed documents served by the appellants on 17 July 2020 were not “claim forms” within the Rules and that no claim form was served on the respondents within the period for service as extended by agreement. It follows that the first ground of appeal should be dismissed.

 

COULD THE CLAIMANTS BE SAVED BY CPR 3.10?

The Court of Appeal held that CPR 3.10 could not be employed in this specific context and, in any event, it would not be appropriate to exercise the discretion to grant relief.
    1. The second ground of appeal concerns the scope of rule 3.10 and whether it is available in principle in this case. It is important to analyse correctly what is the error of procedure which the appellants are asking the Court to remedy. They are in substance asking the Court to treat the service of unsealed amended claim forms as good service and to dispense with the requirement for any further service. Those are matters to which rules 6.15 and 6.16 are applicable and yet the appellants’ applications under those provisions were refused. It is also important to note that none of the appellants’ applications included an application for an extension of time under rule 7.6(3) for service of the sealed amended claim forms. Yet, in seeking to remedy the defect in service, the appellants are, in a very real sense, seeking to achieve the same result as would a successful application under rule 7.6(3).
    1. It follows that the appellants are asking the Court to do the very thing which Vinos and the line of authority which follows it does not permit. The general provision in rule 3.10 cannot be used to override a specific provision, here rule 6.15 or rule 6.16. The appellants could not satisfy the “good reason” or “exceptional circumstances” criteria under those two rules and they are not permitted to use rule 3.10 to bypass the requirements of those specific provisions. Likewise, since the appellants could not have satisfied condition (b) of rule 7.6(3), as they could not have shown that they had taken all reasonable steps to comply with rule 7.5 or that they had been unable to do so, they cannot be permitted to use rule 3.10 to bypass the requirements of rule 7.6(3).
    1. This is clear from the judgments in Vinos of May LJ at [20] and Peter Gibson LJ at [27] and from the judgment of Simon Brown LJ in Elmes at [13]. It is also clear that the Court of Appeal in Steele v Mooney approved that principle established by Vinos (see [24] of the judgment) but was able to grant relief because, unlike in the present case, the error which was sought to be remedied was not a failure to serve originating process in accordance with the Rules, but an error in the form of the consent orders made by the Court (see [27]-[28] of the judgment).
    1. Whilst it is correct that Steele v Mooney draws a distinction at [27] between making an application which contains an error and not making an application at all, it seems to me that this is not saying that in the former case rule 3.10 will be available even if the remedying of the error will involve bypassing a specific rule about service. It is simply making the point that, because the claimant there had sought extensions of time, but the order made contained an error, the remedying of that error did not circumvent the prohibition in rule 7.6(3), the point made in [28] of the judgment:
“In our judgment, the error made in the present case falls into the first of these two categories. The applications for an extension of time were clearly intended to be applications for an extension of time for service of the claim form, but by mistake they referred to the wrong, albeit closely related, document ie the particulars of claim. Our reference to what was intended is not to Ms Watkins’ subjective state of mind. It is to what she must be taken to have intended on an objective assessment of the terms in which the applications were expressed and all the surrounding circumstances. If the error were a failure to make an application for an extension of time at all within the period specified by rule 7.5(2), then an application to remedy that error would in substance be an application for an extension of time after the expiry of the specified period, and would fail for the reasons stated in Vinos: it would in substance be an application for an extension of time for service of the claim form after the expiry of the time for service in circumstances where such an extension of time would be prohibited by rule 7.6(3). But for the reasons that we have given, the application of 18 February 2004 was not in substance an application for an extension of time for service of the claim form. It was in substance an application to correct the applications for an extension of time which were made within the time specified for service by rule 7.5(2) and which by mistake did not refer to the claim form. To remedy the error contained in the applications (and resultant orders) does not circumvent the prohibition in rule 7.6(3).”
    1. The judge in Bank of Baroda sought to draw a distinction between “where a procedural step was taken defectively rather than omitted or performed directly contrary to a rule” at [19] of her judgment and Ms Smith QC seeks to draw the same distinction, contending that where a procedural step has been taken albeit defectively, rule 3.10 is available to remedy the defect. However, I do not consider that this is a valid distinction. Bank of Baroda needs to be approached with some caution, since it did not consider the Vinos line of cases (albeit it can be said that the judge referred at [15] to [17] to the judgment of HHJ Graham Wood QC in United Utilities which did refer at [34] and [38] to Vinos and Elmes respectively). Furthermore, in my judgment, if the remedying of a procedural step taken defectively would involve bypassing a specific provision such as rules 7.6(3) or 6.15, it would still fall foul of the principle established by Vinos. Elmes, where the Vinos principle was applied, was on analysis a case where a procedural step was taken but was taken defectively: i.e. service of the claim form in time but on the defendant’s insurers rather than the defendant.
    1. Thus in the present case it is no answer for Ms Smith QC to rely upon the distinction she seeks to draw and to categorise this as a case where the appellants did take a procedural step (purported service of the amended claim forms) but did so defectively (serving unsealed amended claim forms). The remedying of that error under rule 3.10 would still involve bypassing rules 6.15 or 6.16 or 7.6(3) and is thus not permissible. The provisions on service of originating process in rules such as 6.15, 6.16 and 7.6 form part of what Peter Gibson LJ described in Vinos at [27] as a “specific sub-code” dealing with service and cannot be overridden or bypassed by the general power in rule 3.10.
    1. None of this analysis is affected by the obiter dictum of Lord Brown in Phillips. As I have already held, there is no question of what he said having somehow overruled the Vinos line of cases and this Court is obliged to follow that line of cases which, in any event, I consider to have been correctly decided. However wide and beneficial a scope rule 3.10 is to be given in other circumstances than the present, it cannot be used to remedy a defect in service which is incapable of being remedied by the more specific rules applicable, here rules 6.15, 6.16 and 7.6(3), since to permit it to do so would involve bypassing those specific rules, contrary to the principle enunciated in Vinos.
    1. I consider that there is much force in what Foxton J said in Serbian Orthodox Church v Kesar at [51] that if rule 3.10 applies to service errors, rule 3.10(a) would appear automatically to validate service unless the court ordered otherwise, which, as he said, is a surprising proposition. To permit it to be used in that way would not only contravene the principle enunciated in Vinos but would also be contrary to what was said about the significance of service of originating process by the majority of the Supreme Court in Barton v Wright Hassall LLP in particular at [16] of the judgment of Lord Sumption JSC:
“…it cannot be enough that Mr Barton’s mode of service successfully brought the claim form to the attention of Berrymans. As Lord Clarke pointed out in Abela v Baadarani, this is likely to be a necessary condition for an order under CPR rule 6.15, but it is not a sufficient one. Although the purpose of service is to bring the contents of the claim form to the attention of the defendant, the manner in which this is done is also important. Rules of court must identify some formal step which can be treated as making him aware of it. This is because a bright line rule is necessary in order to determine the exact point from which time runs for the taking of further steps or the entry of judgment in default of them. Service of the claim form within its period of validity may have significant implications for the operation of any relevant limitation period, as they do in this case. Time stops running for limitation purposes when the claim form is issued. The period of validity of the claim form is therefore equivalent to an extension of the limitation period before the proceedings can effectively begin. It is important that there should be a finite limit on that extension. An order under CPR rule 6.15 necessarily has the effect of further extending it. For these reasons it has never been enough that the defendant should be aware of the contents of an originating document such as a claim form. Otherwise any unauthorised mode of service would be acceptable, notwithstanding that it fulfilled none of the other purposes of serving originating process.”
    1. None of the first instance decisions cited to this Court are binding on us, but to the extent that the issue which has arisen in this case has arisen in those other cases I would prefer the reasoning of Nicklin J in Piepenbrock (as followed by Morgan J in the present case, O’Farrell J in Boxwood and Foxton J in Serbian Orthodox Church v Kesar) to that in any of the earlier cases or in the judgment of Fraser J in Citysprint. Whilst those earlier cases and Citysprint may be correct on their own particular facts, they should not be followed in relation to the scope of rule 3.10.
    1. Since I have concluded that rule 3.10 is not available in principle to cure the defect in service in the present case, it is not strictly necessary to consider whether, if it were available in principle, the Court should grant a remedy as a matter of discretion. However, since this issue was fully argued on both sides, I will deal with it, albeit shortly.
    1. For a number of reasons, I do not consider that this would be an appropriate case in which to grant the remedy which the appellants seek. First, where a claimant leaves the filing of claim forms until the last day for service, as Lord Sumption said in Barton, it courts disaster and has a limited claim on the indulgence of the Court. This is all the more so where the failure to serve sealed amended claim forms was due to a mistake on the part of the appellants’ solicitors, as in this case. As I have already held in dismissing the suggestion that there is some lacuna in the Electronic Working Pilot, there are a number of steps the appellants’ solicitors could have taken to avoid the problem which occurred. Since they failed to take any of those steps, the Court should be reluctant to grant them the indulgence of an Order under rule 3.10 remedying the defect in service.
    1. Second, whilst there is force in the appellants’ point that the respondents were fully aware of the claims being made against them and had a 30 page particulars of claim on 17 July 2020, so that the error in procedure here caused them no prejudice, as O’Farrell J said in Boxwood at [51], knowledge of the claims by the defendant is a necessary but not sufficient factor for the Court to consider when exercising its discretion as to whether to grant relief.
    1. Third, whilst there is also force in Ms Smith QC’s point that, unless relief is granted under rule 3.10, the appellants will suffer the prejudice of some of their claims becoming time-barred, that prejudice is outweighed by the prejudice to the respondents of being deprived of limitation defences. Whilst that is not a decisive factor, it is as O’Farrell J said a powerful argument against the granting of relief under rule 3.10.
    1. Accordingly, even if relief under rule 3.10 were available in principle, which I have held it was not, I would not exercise the discretion to grant relief in favour of the appellants. In my judgment, the second ground of appeal should be dismissed.