WHEN IS IT SENSIBLE TO APPLY TO EXTEND TIME FOR SERVICE OF THE CLAIM FORM? NEVER – JUST NEVER: A CASE TO POINT

Yesterday, in a lecture I was giving about issues relating to service of the claim form, I was asked to address the issue of “when is it sensible to apply for an extension of time for service of the claim form.” I have a simple answer to that question – never.  Obtaining extensions leaves a claimant a hostage to fortune. The duty on a claimant making an application is a high one (it is a without notice application and there is a duty of full and frank disclosure). An application to set aside an extension is a rehearing and not a review of the the ex parte application.   The dangers of without notice applications to extend time can be seen fully in the judgment of Mr Justice Constable in Wragg & Ors v Opel Automobile GmbH & Ors [2024] EWHC 1138 (KB).

“In these circumstances, it is for me to determine whether, in a fresh exercise of discretion, I should nevertheless grant the necessary extensions of time. I cannot find myself able to do so. Applying the authorities, there was no good reason for the delays, let alone exceptional circumstances, which justified the granting of extensions of time in circumstances where limitation had expired in relation to at least some part of the claimant cohorts.”

WEBINAR ON SERVICE AND CLAIM FORM ISSUES IN 2024: 19th NOVEMBER 2024

Such is the certainty that claim form issues will continue to cause problems throughout the year I am presenting a webinar on the 19th November reviewing the cases in 2024. Booking details are available here.

This webinar looks at claim form cases in 2024 including:

• Service by the wrong method
• Disputing jurisdiction
• Problems with serving abroad
• Claim failed when the claimant believed claim form would be served by the Court
• When the defendant fails to use the correct rule to dispute jurisdiction
• When can a claim form include multiple parties

THE CASE

The claimants are bringing an action relating to the alleged unlawful defeat devices fitted to motor cars.

THE EXTENSIONS OF TIME

Having issued proceedings the claimants made ex parte applications to extend time.

1. 1. From 10 November 2021 onwards, the Claimants issued ex parte applications seeking: (i) permission to serve the German Defendants in Germany (the ‘Service Out Applications’) and (ii) extensions of time in order to effect service (the ‘Extension Applications’) (the first of which was dated 10 November 2021 (the ’10 November 2021 Application’). Those applications were granted (the ‘Service Out Orders’ and the ‘Extension Orders’). Appendix A to the Appellants’ Skeleton Argument, and appended as Appendix A to this judgment, tabulates for each of the 31 claim forms the date of issue, the original deadline for service out, the date of Service Out Application, the date of Extension Application(s), the date service out was permitted by Order of Senior Master Fontaine, the date that extensions were granted, the total period of extension granted as a result of Extension Orders by Senior Master Fontaine (ranging between 2 months and 3 days and 1 year, 4 months and 20 days), and the dates of service on each of the two German Defendants.

1. 1. There is no dispute that the evidence in support of the first 26 applications failed to mention limitation entirely. In due course, it was found that this breached the duty to give full and frank disclosure, and on the appeal before me, there was no cross-appeal in this respect. Five subsequent applications for Service Out Orders (with two of those also seeking Extension Orders) relied upon evidence which referred to limitation, but the Appellants say that this remained in an incomplete and partial manner which still did not amount to full and frank disclosure to the Court.

1. In early September 2022, the first claim forms were served on the German Defendants in Germany. On 11 October 2022, within the time prescribed by the CPR, the German Defendants made their first applications pursuant to Part 11 to set aside the relevant Service Out and Extension Orders.

THE PART 11 APPLICATIONS BEFORE THE MASTER

The Master did not grant the Part 11 applications, but penalised the claimants heavily in costs.

1. The Part 11 Applications were heard by Senior Master Fontaine, (“the Judge”) who had, as the Respondents rightly point out, enormous experience in ex parte applications, as well as managing group litigation within the King’s Bench Division. Following a hearing on 15 and 16 June 2023, on 23 October 2023, the Judge handed down her Judgment declining, in the exercise of her discretion, to set aside the orders. At the consequential hearing following the handing down of the Judgment, the Judge imposed a sanction in costs in respect of her finding that there was material non-disclosure of limitation defences available to the German Defendants in the ex parte applications. This required the Claimants, who had ultimately been successful in defeating the German Defendants’ Part 11 Applications, nevertheless to pay the German Defendants’ costs of the limitation non-disclosure issue on the indemnity basis, and forego some of the costs which they would otherwise have been likely to have received from the German Defendants in respect of the issues which they were successful in opposing. An interim assessment of £105,000 was ordered to be paid (of costs claimed in excess of £230,000).

THE DEFENDANTS’ APPEAL

The judge reviewed the principles relating to appeals on discretionary issues, and applications to extend time, in detail.  He found that the Master erred and he could exercise his discretion afresh.  He found that the Master erred in finding that there was a “good reason” to extend time.  Exercising his discretion afresh he refused the applications.

1. 1. In the circumstances, I consider that proceeding on the basis that there was ‘a good reason’ for not having commenced and progressed the service out process in relation to the German Defendants at any time between May 2021 and November 2021 was a clear error in principle which led the Judge to exercise her discretion in a manner outside the wide ambit permitted to her. Similarly, concluding that the inevitable complexities of group litigation were, without more, ‘exceptional circumstances’ where the limitation period in respect of some of the claims had expired was also an error. There was no factual evidence before the Judge to permit a finding that particular complexities arose so as to amount to exceptional circumstances.

1. 1. I therefore conclude that the Order arising out of the extension of time application of 10 November 2021 must be set aside.

1. 1. In these circumstances, it is for me to determine whether, in a fresh exercise of discretion, I should nevertheless grant the necessary extensions of time. I cannot find myself able to do so. Applying the authorities, there was no good reason for the delays, let alone exceptional circumstances, which justified the granting of extensions of time in circumstances where limitation had expired in relation to at least some part of the claimant cohorts.

1. 1. I would add that the Judge does not appear to have refocussed, when considering the applications for an extension of time, upon the failure within the applications to give full and frank disclosure of the position relating to limitation. Unlike in the context of the Service Out Applications, the existence of potential limitation defences was highly material to the initial exercise of considering whether, and if so for how long, an extension of time ought to have been granted. The existence of limitation defences changed the very test the Judge had to consider and apply when considering the matter ex parte: it was not enough to show a ‘good reason’: the circumstances were required to be exceptional, in the sense of something out of the ordinary, as considered above. Seen through this lens, the conscious decision not to refer to limitation issues in the evidence supporting the Extension Applications was, in my view, a significantly more serious transgression of the duty of full and frank disclosure. In the exercise of my discretion this factor, of itself, militates much more strongly towards setting aside the order and strongly supports the determination I have otherwise arrived at, namely that the extensions of time sought from 10 November 2021 should not be granted.

The Omnibus Application

1. 1. Submission to the FPS of documents for service commenced on 9 June 2022 and continued, with resubmissions where requests were rejected by the FPS or the German Central Authority, until 30 September 2022. The Claimants made a further ex parte application on 5 October 2022 for a further extension of time until 31 March 2023 for all claim forms – the Omnibus Application. The Judge held that she was unable to conclude that there was a “good reason” given for the 8-9 months delay between the letter from Cleary dated 15 October 2021 and making the first request for service to the FPS in June 2022. The Judge also held (at [76]) that, with regard to the period when applications for extensions were made after the documents for service were lodged with the FPS, it was entirely apparent from the very detailed information provided in Mr Oldnall’s Tenth Witness Statement that there was a good reason for the extensions granted. This element of the judgment is not appealed.

1. 1. The Judge then said that, as she had concluded that no good reasons were provided for some of the period of extensions from 15 October 2021 to June to September 2022, and in the event that she was wrong in relation to her conclusion that there were good reasons for the extensions in respect of the remaining periods of extensions granted, she would consider whether the court’s discretion should be exercised in favour of retaining the orders for extensions.

1. 1. There is no dispute that, as a matter of law, such a discretion existed notwithstanding the absence of any good reason.

1. 1. However, Ms Mulcahy is justified in her criticism that the Judge appears not to have been proceeding on the basis that, in light of the existence of potential limitation defences, ‘exceptional circumstances‘ were required to justify the exercise of discretion. In failing to apply the correct test, I accept the Judge fell into error.

1. 1. I also accept that the Judge made an overarching error in placing what seems to have been considerable weight on her clear, and to some extent entirely justifiable, sympathy for the Claimants on account of the cost and time implications which followed from the German Defendants’ insistence on being served through the FPS process in circumstances where there was no evidence, on her own findings, that this was responsible for the delay. As I have identified above, the fact that a party may be put to particular expense and time because a defendant is insisting, as the rules entitle it to, upon a certain type of service can amount to a good reason for obtaining an extension of time. However, the insistence has to be the cause of the delay which the extension of time is required to alleviate. In circumstances where the Judge was unable to conclude on the evidence that the German Defendants’ insistence on the FPS process was in fact the reason for the delay of (at least) a number of months prior to commencing the FPS process in June 2022, it is not possible to conclude that, nevertheless, that insistence, which lay at the heart of her criticism at [81], amounted to an ‘exceptional reason’ to grant an extension of time.

1. 1. Ms Mulcahy makes the related point that the Judge’s discretion appeared to be influenced by her conclusion that the German Defendants’ insistence on the process of service by the strict rules amounted to a lack of co-operation of which she was critical. Ms Mulcahy submits that that criticism is itself misplaced in circumstances where, as the authorities make clear, a defendant is under no duty to co-operate with the service process. This submission is correct. Subjecting a defendant who insists on its legal rights with regard to service to criticism effectively imposes a duty to co-operate by the back door, which duty the authorities make clear does not exist. Criticism of the insistence by the German Defendants on being served in accordance with the rules should not play a part in the analysis: the effect of insistence on the process can, as I have said, readily amount to a good reason for an extension of time, providing it has actually been the cause of the relevant delay/anticipated delay. If it has not in fact caused the relevant delay/anticipated delay, it should not be a relevant factor in the exercise of discretion.

1. 1. I consider that the Judge was, in addition, wrong to place particular weight on the fact that the Defendants took until 13 August 2021 to respond substantively to the LBA. The LBA was, on the Claimants’ own case, a full and lengthy document. In line with the observations of Haddon-Cave LJ and Sir Timothy Lloyd in Al-Zahra (PVT) Hospital, unless and until proceedings are validly served on the foreign Defendant, that party is under no obligation to respond at all. Moreover, even if taking this amount of time was objectively unjustified (which is far from clear on the evidence), it cannot in fact have hampered (and there was no evidence before the Judge to suggest it did in fact hamper) the Claimants’ ability to take the necessary steps to serve the Claim Form in accordance with the rules.

1. 1. I therefore consider that the Judge’s decision not to set aside Order arising out of the Omnibus Application was in error and must be set aside.

1. 1. In these circumstances, it is for me to determine whether, in a fresh exercise of discretion, I should nevertheless grant the necessary extensions of time. Again, I cannot find myself able to do so. Applying the authorities, there was no good reason for the delays, let alone exceptional circumstances, which justified the granting of extensions of time in circumstances where limitation had expired in relation to at least some material part of the Claimant cohorts.

1. In these circumstances, I allow the appeal in respect of the Extension Applications. In light, however, of the Judge’s conclusion about applications for extensions made after the documents for service were lodged with the FPS, to which I have made reference at paragraph 104 above, and further to submissions made by the Claimants and the German Defendants having seen the draft of this Judgment, I will (subject to any agreement reached between the parties) hear further submissions from the parties in order to consider the precise scope of the Order consequential upon this Judgment as it applies to particular extension of time applications.