RELIEF FROM SANCTIONS IN THE TCC: LATE SERVICE OF THE PARTICULARS OF CLAIM

The judgment of Mr Justice Edwards-Stuart in North Midland Construction plc -v- Geo Networks Ltd [2015] EWHC 2384 (TCC) provides an object lesson in the dangers of delaying service of the particulars of claim.

THE CASE

The claimant issued two sets of proceedings. The first was known as to “Project Yellow” claim; the second the “Fibrespeed” claim.

  • The particulars of claim in the Project Yellow claim were due be served by the 30th June 2015 after a consent order.
  • The particulars of claim in the Fibrespeed claim were due to be served on the 2nd June 2015.

The claimant failed to serve both particulars of claim on time. The Project Yellow claim was served on the 20th July 2015 (just over two weeks late); the Fibrespeed particulars had not been served by the date of he hearing. The claimant was seeking an extension of time until (at least) the 31st August 2015.

KEY POINTS

  • Relief from sanctions was granted in relation to one claim but refused in the other.
  • The claimant had no good reason for the failures and delay in the Fibrespeed action.
  • It was not appropriate to grant the claimant relief.

THE DENTON PRINCIPLES APPLIED

The application of the relevant principles

8. Both counsel agreed that in approaching these applications I should follow the three stage approach set out by the Court of Appeal in Denton v White [2014] EWCA Civ 906. Although there is no sanction provided either by the rules or – in the case of the Project Yellow claim – the relevant consent order, these applications were made after the time for compliance with the rule or the order had expired and so were made “out of time”. In the circumstances it was common ground that the Claimant’s applications should be treated as applications for relief from sanctions.

THE CLAIMANT’S ARGUMENTS

The claimant’s solicitor stated that he believes that an extension of time had been agreed in relation to both actions. The judge rejected this, regarding the evidence on this point as unsatisfactory. The extension had only been in relation to

APPLYING THE DENTON CRITERIA (1)THE PROJECT YELLOW CLAIM

32. In relation to the cause of delay, what Mr Westlake says in his second witness statement is that the experts’ investigations and reports were “taking longer than anticipated”. In October 2014, the current consultants, Driver Trett, were instructed to conclude the Claimant’s statement of account, and to support it with full documentation. In addition, they were instructed to provide a report on delay and disruption. Mr Westlake says that it was not until June 2015 that they provided preliminary reports on both aspects. He says that they had to review some 70 lever arch files and 28 GB of electronic data. However, it seems that junior counsel had drafted preliminary particulars of claim in December 2014. He referred to various meetings that were arranged during June and July 2015 and that the intention was to file and serve the Particulars of Claim before the end of July 2015. A few paragraphs later this date became 20 July 2015.

33. In fact, the Particulars of Claim were served on 17 July 2015, with a statement of truth signed by Mr Westlake. This is a little surprising since that is also the date on which he signed his first witness statement, in which he referred to the intention to serve the Particulars of Claim by the end of July. I find it curious also that it is said that the revised draft Particulars of Claim prepared by junior counsel on 25 June 2015 ran to 56 pages, whereas the Particulars of Claim served on 17 July 2015 runs to only 36 pages. However, there may be a perfectly good explanation for that.

34. I have to say that I do not find this evidence very convincing. It is not really apparent why it should have required much more than six months to produce the information required for the Particulars of Claim.

35. The delay has not had any very significant consequences, but it has meant that the Defendant will have to consider the pleading in September and October, instead of June and July. There will now be no prospect of a trial in 2015, as the parties had originally anticipated. However, it cannot be overlooked that other factors – such as delays in the related proceedings – might also operate to put back the trial date.

46. I consider that a failure to serve particulars of claim until over two weeks after the expiry of a deadline, particularly when that deadline was about 10 months after the claim form had been issued, should be regarded as a serious and significant breach. I reject the submission to the contrary made by Mr Acton Davis. As I have already indicated, I find the explanation for the delay to be somewhat unconvincing. I consider that it falls short of being a good reason in the context of the rule and the decision in Denton.

47. I therefore turn to consider the application for relief in the light of all the circumstances of the case as I am required to do by CPR 3.9. By contrast to the facts of the Fibrespeed claim, there are some mitigating features. They are these

  1. (i) The period of delay was a little over two weeks, not six week

  2. (ii) Particulars of Claim have now been served

  3. (iii) None of the orders made by consent was an “unless order”, whereas a failure to serve within the four month period carries the consequences that I discuss later in this judgment. The Defendant could have stipulated for an “unless order” but, perhaps generously in all the circumstances, did not do so. It might therefore be said that the Defendant had no legitimate expectation that the sanction for the failure to comply with the final deadline would be to have the claim struck out.

48. But in my view the following factors point the other way:

  1. (i) The Claimant has missed several deadlines, and on at least two occasions did not seek an extension of time until after the deadline had passed.

  1.  

    (ii) The failure to take any steps to seek a further extension of time until the day before the deadline expired, particularly in the light of the history, was cavalier.

49. Taking all the circumstances into account I regard the situation as fairly finely balanced. I have been referred by DLA Piper, very properly, to a very recent decision of the Court of Appeal in Michael Wilson & Partners Ltd v Sinclair & others [2015] EWCA Civ 774. That case involved a very unusual application to reconsider an interlocutory order made by a single Lord Justice refusing relief for a failure to provide security for costs by the date specified in an order. The sanction provided by the order was that if the money was not paid on time, the appeal would be stayed.

50. At paragraph 35 of his judgment Richards LJ said this:

  1.  

    “Bringing together the fact that Rix LJ imposed only a stay, not a strike-out, and what was said in Global Torch Ltd about the giving of every opportunity to comply with an order before resorting to a strike-out, I would not have expected to move straight from a stay to a strike-out in the present case unless there had been a continuing default and a further opportunity, by way of a specific unless order, for MWP to remedy that default. As it was, however, the default had been remedied by the time the formal application for a strike-out was filed and the matter came to be considered by Lewison LJ, so that there was no need for an unless order with the sanction of strike-out for non-compliance. To move straight to a strike-out in those circumstances was a very strong step indeed and, as it seems to me, a step outwith the contemplation of Rix LJ when he ordered a stay in the event of failure to pay the monies within the time specified.”

51. In my judgment, this case falls just on the side of granting relief, particularly since Particulars of Claim have now been served (even if that service may have been prompted by the Defendant’s application). To strike out this action would be a Draconian remedy, for which I consider there is no sufficient justification.

52. I therefore grant relief from sanctions in this case and I grant the necessary extension of time for service of the Particulars of Claim.

APPLYING THE DENTON PRINCIPLES 2: THE FIBRESPEED ACTION

53. In applying the Denton principles, the first question is whether the failure to serve the Particulars of Claim by 2 June 2015 (being 4 months after the date of issue of the claim form) was a serious and significant breach of the rules. By the time the Claimant applied for relief from sanctions, the Particulars of Claim were already more than six weeks out of time and had not been served by the time of the hearing.

54. The rules provide a not ungenerous time of four months in which to serve particulars of claim and in this context I cannot see how a delay of over six weeks can be regarded as either minor or insignificant. I note that Andrew Smith J, in AEI v Alstom UK [2014] EWHC 340 (Comm), had little hesitation in concluding that a delay of 20 days in serving particulars of claim could not be categorised as trivial. Whilst I accept that this was a post Mitchell and pre Denton case, I doubt whether the latter decision would have affected his judgment on that point. Here, of course, the delay was twice as long.

55. In my judgment, this delay cannot be characterised as insignificant or minor, an aspect aggravated by the fact that it could put back the trial date by two or three months (or at least contribute to that happening).

56. I therefore turn to the reason for the delay. So far as claim HT-2015-000036 is concerned, the Claimant’s interim statement claiming £2,278,257 was issued in November 2013. The claim must have been formulated with some care and precision at the time. It is not clear how much work has to be done by Driver Trett: the claim is presented in the Claim Form, in effect, as a claim for a debt following the Defendant’s alleged failure to serve an appropriate withholding notice as required by statute.

57. This characterisation of the claim was made clear in Browne Jacobson’s four page pre-action protocol letter dated 11 February 2015. DLA Piper’s reply of 13 March 2015 ran to 10 pages. Only one paragraph dealt with the accuracy of the Claimant’s account, which it required the Claimant to particularise.

58. In his second witness statement, Mr Westlake describes the volume of relevant documents as being similar to that in HT-2014-000045, but states that Driver Trett produced preliminary reports dated 17 March 2015, 15 April 2015 and 14 May 2015. It is not explained why counsel have not been able to settle Particulars of Claim before now based on these reports. There may of course be a reason for that, but it is not given in Mr Westlake’s second witness statement.

59. In spite of what Mr Westlake has said in his various witness statements, I am quite satisfied that there has been no good reason for the delay, either up to 30 June 2015 or to the date of the application. In so far as the delay has been aggravated by the belief that there was an extension of time until 30 June 2015, I regard the explanation for that belief as thoroughly unsatisfactory.

60. Since I have now concluded that the failure to serve the Particulars of Claim for some six weeks after the expiry of the time for doing so was not only a significant breach of the rules but also one for which no good reason has been shown, I turn to the third stage of the Denton principles.

61. This involves a consideration of all the circumstances of the case including, in particular, (a) the need for litigation to be conducted efficiently and at proportionate cost; and (b) the need to enforce compliance with rules.

62. Whilst there is no specific evidence that the delay in serving the Particulars of Claim has prevented the parties from conducting this litigation efficiently and at proportionate cost, the fact that the delay – albeit possibly in combination with other factors – is likely to put back the date of trial by some 2 to 3 months means that the costs of the litigation are likely to be increased. It is an almost invariable rule that the longer litigation goes on, the more expensive it is. On the other hand, apart from this application for relief from sanctions, the conduct of the Claimant has not used up the resources of the court.

63. But this is a case of fairly serious non-compliance with the rules in circumstances where, if there were real difficulties in preparing the Particulars of Claim by 2 June 2015, there is no reason for not having made an application to the court for an extension of time prior to the expiry of that time limit. Since the Claimant had three preliminary reports – in March, April and May 2015, respectively, it should have been in a position well before the beginning of June 2015 to take a view as to how long it would need to produce the Particulars of Claim.

64. It seems to me that this is a case where factor (b) of CPR 3.9 – the need to enforce compliance with rules, practice directions and orders – is of importance. In this context, I regard the manner in which the Claimant’s solicitors went about seeking to obtain a second consent order is a factor which has to be taken into account. At best it was gross carelessness, at worst it was sharp practice. I am not prepared to go so far as to find the latter, but I am left with serious misgivings about it. It is not an answer to say that this was not an act by the Claimant itself: such failures seldom are. In the context of time limits, as often as not the litigant is let down by his lawyers or experts rather than those for whom he is directly responsible.

65. The fact that the Claimant did not take steps, well before the expiry of the time limit, to ask or apply for the necessary extension of time is itself an indication of a fairly cavalier attitude towards the rules. That the Claimant’s solicitors did not ask their opponents for an extension of time of the perceived deadline of 30 June 2015 until the afternoon of 29 June 2015 speaks for itself. Leaving matters to the last minute in this way is wholly unacceptable. If the other side says no, there may be real difficulties in getting an application put before a judge before the time limit is due to expire.

66. The Claimant asserts that it has no limitation problem, although that submission does not sit very easily with the fact that it did not follow the pre-action protocol before issuing the claim form on 2 February 2015.

67. It may be that the Claimant can bring this claim by way of counterclaim in the third action that has been brought by the Defendant against the Claimant. However, I do not know enough about that claim to form a view about this.

68. As the courts have repeatedly made clear, to strike out a claim is a very Draconian sanction. It is not the automatic sanction for failure to serve the particulars of claim, unless that is done in breach of an “unless order”. The sanction for failure to serve particulars of claim within the time specified in the rules is that there can be no valid service thereafter without the leave of the court. It is as if the action becomes stayed. However, the practical consequence may not be very different to that of striking 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, thus making the second action amenable to being struck out.

69. Taking into account all the circumstances that I have mentioned, I am clearly of the view that in this case relief from sanctions should not be granted. However, I do not consider that this is a case where refusal of relief should prevent the Claimant from starting a fresh claim in respect of the same cause of action if the claim were to be struck out. However, the effect of refusing relief and striking out the claim will mean that the Claimant may be adversely affected if there is a limitation problem. The Claimant asserts that there is not, in which case – if that is correct – no useful purpose would be served by striking out the claim.

70. However, the Defendant considers that the Claimant may have a limitation problem, a position that the Claimant’s hasty issue of proceedings without following the pre-action protocol tends to support. If that is the position, then I consider that the Defendant is entitled to ask the court to strike out the claim. I do not consider that it is appropriate on these applications to go into the merits of any limitation defence. If the Claimant is right about the limitation position, then the only prejudice that it will suffer will be that of having to pay the costs thrown away as a result of having the claim struck out. Whether or not the Claimant may have a remedy against its solicitors is not a matter that I consider I should take into account.

71. I consider that the way to deal justly with this application is to refuse relief and to accede to the Defendant’s application to strike out this claim. Accordingly, that is the course that I propose to take.”

RELATED POSTS

There are numerous posts in relation to relief from sanctions on this blog. Here are links to some of those relating to the Particulars of Claim:

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