23 October 2009

Professional Negligence briefing: Late service of claim forms — a risky practice


Christopher Coffin

Partner | UK

The service of claim forms is, time and again, a cause of professional embarrassment as the courts insist on timely and correct service on defendants. For a number of years, the courts have been making very clear to lawyers that the test for obtaining an extension of time for service of a claim form after time has expired is a very onerous one.  If you need more time, the message was, apply in advance, not after time expires.  Two recent cases have now emphasised that there also are serious risks involved in obtaining extensions before time for service expires.

In the first case, Sodastream (in liquidation) v Coates & ors [2009] EWHC 1936, the applicant, the fifth (and seemingly overlooked) defendant, applied to set aside five orders each extending time for service of the claim form.  The claim form had been served on him in Israel 15 months after it was issued, the claimant having made five applications, all without notice and dealt with on paper, to extend time for service out of the jurisdiction.  The limitation period on the claim had by then expired.

The judge, Mr Justice Blackburne had to consider whether the claimant had had ‘good reasons’ for obtaining each of the extensions up until the time when service was effected. Some extensions he held to be valid, specifically those to cover the time required by the Foreign Process Section of the court to attempt service in Israel. This attempt at service failed because the address given by the claimant for the fifth defendant was incorrect.  However, the claimant was unable to show good reason for all the extensions, in particular the fourth and fifth, which appeared to cover time during which the claimant had made very little effort to find the correct address and to effect service once the official channel had failed.  The judge also criticised the earliest periods of delay saying it had not been reasonable to await finalisation of the particulars of the claim before serving the claim form.

The judge was also critical of the approach taken by the claimant’s solicitor who appeared to treat the applications as mere formalities; ignoring recommendations from the Court of Appeal that applications to extend where limitation was close to expiring should be properly argued not dealt with on paper; failing to mention in supporting evidence the numerous previous applications; and simply re-using the same witness statement time and again – each time labelling it as the first witness statement. 

Blackburne J’s judgment sets out some useful propositions from a number of recent cases on the discretion to extend time, including:

  1. An application to set aside an order extending time obtained on a without notice application is a rehearing of the matter, not a review of the decision to extend time.
  2. Whether the limitation period applicable to the claim has expired was an important factor as an extension of time for service extends the period of limitation, disturbing the entitlement of the potential defendant to be free of the possibility of any claim.
  3. The fact that the claimant has delayed serving the claim form until the particulars of claim were ready is not likely to provide a good reason for the failure to serve.
  4. The fact that the person to be served has been supplied with a copy of the claim form or is otherwise aware of the claimant’s wish to take proceedings against him is a factor to be considered, but will not necessarily absolve the claimant from making attempts to serve properly.
  5. Provided he has done nothing to put obstacles in the claimant’s way, a potential defendant is under no obligation to give any positive assistance to the claimant to serve the claim form.

The importance of the effect on the defendant’s potential limitation defence was also a factor in a second case, City & General (Holborn) Ltd v Structure Tone Ltd & ors [2009] EWHC 2139 (TCC).

Here, the claimant had applied for an extension of time to serve and delayed serving its claim forms on proposed defendants on the grounds that there were arbitral proceedings on foot in a related dispute.  The claimant stated that, until there was a decision in the arbitration, it would be unable to establish the proper extent of any loss or damage arising out of the claims.

The court did not agree with this approach and, on the application of the defendants, set aside the orders extending time for service, saying the extension had not been appropriate in the circumstances.  The arbitral decision was relevant only to a small part of the claim and, even if all claims were dependent on the outcome of the arbitration, the claimant would still be entitled to claim a declaration of its right to be indemnified.

Moreover, the claim forms had been issued days before the expiration of the limitation period, and without complying with the relevant pre-action protocol.  Extending the time for service consequently deprived the defendants of a limitation defence, and it was held this was of particular significance in this case where there had no been no letter before action or any other intimation of suit.

This case also contains interesting comments on practicalities of applying and of the relevance of conversations with court administrative staff.  The TCC case administration unit had told the claimant’s solicitors that an order would be granted extending time to cover the time taken for the judge to deliberate upon the application.  The solicitors claimed they had relied on this assurance when not serving the claim form.  However, Christopher Clarke J held that no pre-indication of the judge’s decision should have been given, the solicitors should have realised this, nor should it have been relied upon.

The lesson, once again, is that it is critical for solicitors to serve a claim form on time.  Where this is not possible, other case management tools should be considered. In City & General, it was suggested that a better approach may have been to serve the claim form and then apply for a stay pending the arbitral outcome.  If an extension of time is absolutely necessary, solicitors must treat any application very carefully and not approach it, as the solicitors in Sodastream were felt to be doing, in ‘a perfunctory manner’. 

 

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