“INAPPROPRIATE TECHNICAL GAMES”: ANOTHER CASE ABOUT SERVICE OF THE CLAIM FORM: DEFENDANT SNAPPED INTO SHAPE

The judgment of His Honour Judge Hacon in Abbott -v-Econowall Ltd [2016] EWHC 660 (IPEC) contains some important observations about the conduct expected in litigation. Also some important lessons in relation to agreeing extensions of time for service.

“…parties to litigation are plainly not obliged to inform the opposing side of its mistakes – in the sense of steps taken or positions adopted which appear not to be in that other side’s best interest. Each side must look after itself. However this is subject to parties never losing sight of the overriding objective. It seems to me that this requires parties to take reasonable steps to ensure, so far as is reasonably possible, that there is clear common understanding between them as to the identity of the issues in the litigation and also as to related matters, including procedural arrangements. The reason is that any breakdown in such understanding is likely to lead to wasted expense and also to hamper expedition in the progress of the case, often because it gives rise to an application to the court to sort matters out. This in turn requires allocation of the court’s resources which could otherwise be avoided.”

“…where a litigant becomes aware of a real possibility that a genuine misunderstanding has arisen between the parties regarding a significant matter, the litigant should take reasonable steps to clear it up. Dispelling such misunderstandings is likely to ensure that the litigation will be conducted more efficiently and I see no real likelihood of any consequent unfairness to either side.”

KEY POINTS

  • There had been a misunderstanding by the claimant of the date agreed for an extension of service of the claim form.
  • The defendant appeared to be aware of that misunderstanding but did nothing to correct it.
  • This conduct by the defendant made the court more kindly to make an order that service of a copy claim form would be deemed good service of the claim form.
  • CPR 3.9 has no relevance to applications in relation to extend time for service of the claim form.

PRACTICE POINTS

There is a clear lesson here about the need for total certainty when agreeing an extension of time.  All that could sensibly be said about this was said by Jacob LJ in Thomas -v-Home Office [2006] EWCA Civ 1355 where a similar misunderstanding occurred (and the claimant was less fortunate).

“…when agreements (or court orders) about the date by which a thing is to be done are made, it is always better to specify that date precisely rather than by reference to a period such a week or a month. There is always room for misunderstandings or accidentally fixing a weekend or Bank Holiday if time periods are used. Old hands wisely use “On or before the [blank] day of [blank].”

THE CASE

The claimants issued proceedings alleging infringement of a patent.

The claim form was not served until after the expiry of the date for service as extended by agreement. Also the statement of truth on the claim form was not signed.

  • The defendant sought an order disputing the jurisdiction on the grounds that the claim form was not served in time.
  • Alternatively the defendant sought an order striking out the action because the claim was not served in time.

By way of response the claimant served:

  • An order that service of a photocopy of the unsigned claim form just after issue was good service.
  • An order under CPR 3.9 granting relief from sanction.
  • An order retrospectively extending the time for service of the claim form to the date it was sent.

THE AMBIGUITY OF THE EXTENSION GRANTED

The defendants agreed an extension of time for service of the claim form. However there was some ambiguity in the extension.

  • The claimant sought an extension to the 3rd December.
  • The response of the defendant was to agree a month “from now”.
  • The claimant responded stating “Thank you for agreeing to the requested extension of one month”.
THE REASON THE CLAIM FORM WAS SERVED OUT OF TIME
  1. First and most obviously, Mr Turner mis-read the letter from the defendants’ solicitors dated 15 October 2015. Particularly bearing in mind the final substantive paragraph of that letter, I take the view that a reasonable reader taking appropriate care would have understood that the defendants were offering to extend time for service of the claim form to 15 November 2015 and no further. But I accept that in this instance Mr Turner made an honest mistake.
  2. Likewise a reasonable reader of Mr Turner’s response by email at 18:09 on 21 October 2015 would have understood that Mr Turner had wrongly interpreted the offer and had taken it to have been an acceptance of his suggestion to extend time until midnight on 3 December 2015. Mr Taylor says that at the time of receiving Mr Turner’s email (at [27]):
“I did have an element of doubt as to what the Claimant’s position was…but at this stage I assumed that he was effectively agreeing to the one month extension which I had proposed in my letter of 15th October 2015, …”
In the paragraph following this one (quoted above) Mr Taylor states that he discussed the uncertainty of what Mr Turner had agreed to with his clients. Apparently a decision was made to take no steps to clear up any misunderstanding. Even if Mr Taylor’s first reaction was have an element of doubt, by the time he discussed the matter with his clients the possibility (or even probability) that Mr Turner had wrongly interpreted the offered extension of time must have been firmly in the forefront of Mr Taylor’s mind. He discussed what to do about it with his clients. The conclusion reached was to do nothing.
  1. It seems to me that Mr Taylor must have examined the correspondence with some care in order to explain to his clients the reason for the uncertainty of Abbott’s position regarding the extension of time. He must also have thought there was a significant possibility that Mr Turner had misunderstood the defendants’ offer or he would not have raised the matter in the first place. In my view the likelihood is that at the meeting with his clients the decision was taken to do nothing to clarify the understanding between the parties as to when the extension of time for service of the claim form was due to expire, with the anticipated chance that the defendants could profit from Mr Turner’s mistake.
  2. Was there anything wrong in conducting litigation in this way? I think I am obliged to reach a view on this because it has an impact on Abbott’s application. To begin with, parties to litigation are plainly not obliged to inform the opposing side of its mistakes – in the sense of steps taken or positions adopted which appear not to be in that other side’s best interest. Each side must look after itself. However this is subject to parties never losing sight of the overriding objective. It seems to me that this requires parties to take reasonable steps to ensure, so far as is reasonably possible, that there is clear common understanding between them as to the identity of the issues in the litigation and also as to related matters, including procedural arrangements. The reason is that any breakdown in such understanding is likely to lead to wasted expense and also to hamper expedition in the progress of the case, often because it gives rise to an application to the court to sort matters out. This in turn requires allocation of the court’s resources which could otherwise be avoided.
  3. Therefore, in my view, where a litigant becomes aware of a real possibility that a genuine misunderstanding has arisen between the parties regarding a significant matter, the litigant should take reasonable steps to clear it up. Dispelling such misunderstandings is likely to ensure that the litigation will be conducted more efficiently and I see no real likelihood of any consequent unfairness to either side.
  4. Turning to the present facts, in my opinion the defendants’ conduct did not fully comply with the overriding objective. By the time of the conference with their solicitors they and their solicitors believed that there was, at the least, a significant possibility that Abbott thought the parties had agreed to an extension of time to serve the claim form which expired at midnight on 3 December 2015. I take the view that the decision to do nothing was not good enough. The defendants should have informed Abbott that so far as the defendants were concerned the agreement reached was that the extension expired on 15 November 2015, giving brief reasons. Thereafter the defendants would have been free of the suggestion that they were playing inappropriate technical games (see paragraph 45 below).

AN APPLICATION UNDER CPR 3.9

The judge held that CPR 3.9 had no role in application under Part 7.

THE RESULT: SERVICE WAS AUTHORISED RETROSPECTIVELY

  1. I turn to rule 6.15. Both sides’ argument centred around Bethell. However I should first refer to Abela v Baadarani [2013] UKSC 44; [2013] 1 WLR 2043. I believe that there are four principles in the application of rule 6.15 which I can summarise from Abela and which are relevant to this case. They are drawn from the judgment of Lord Clarke of Stone-cum-Ebony, with whom the rest of their Lordships agreed.
  2. The first is that when considering an application under rule 6.15 the court should simply ask itself whether, in all the circumstances of the particular case, there is a good reason to make the order sought. Decisions in previous cases are of limited guidance since they depend on their own facts, see [35].
  3. Secondly, the mere fact that the defendant learned of the existence and content of the claim form cannot, without more, constitute a good reason to make an order under rule 6.15(2). On the other hand, the wording of the rule shows that this is a critical factor. Service has a number of purposes but the most important is to ensure that the contents of the document served, here the claim form, is communicated to the defendant. Service is not about playing technical games, see [36]-[38].
  4. Thirdly, relevant factors include whether service had proved impractical, whether any attempt to pursue it further would lead to unacceptable delay and expense and whether the defendant was unwilling to co-operate by disclosing his address, see [39].
  5. Fourthly, ‘good reason’ within the meaning of CPR 6.15 is something less than the exceptional circumstances required by CPR 6.16, see [33].
  6. As to Bethell I agree with Ms Jones that there are some similarities between that case and this one. To the extent that it was suggested, I do not agree that the requirements of rule 7.6(3) are to be imported into rule 6.15 where the facts concern a failure to serve a claim form in time. The Court of Appeal made no mention of rule 7.6(3) in Bethell. I think this was because the Court believed, without any need to say so, that it had no bearing. The Court by inference held that where the claimant had failed to serve the claim form in time solely because there was a minor departure from a permitted method of service or an ineffective attempt to serve by a permitted method within the time limit, good service can be deemed pursuant to rule 6.15 without the additional burden of the conditions associated with rule 7.6(3), see paragraph 24 in which the Chancellor quoted the judge at first instance and his reference to Kuenyehia v International Hospitals Group Ltd [2006] EWCA Civ 21, apparently with approval.
  7. I will attempt to summarise the reasons given by the Court of Appeal for reaching the conclusion it did – that the claimants had not satisfied CPR 6.15 – and do so as follows:
(1) The defendants were on the facts entitled to rely on the Limitation Act as a bar to further proceedings, an advantage of which they would be deprived if the court were to deem that there had been good service of the claim form.
(2) The defendant had neither waived the requirement for service of the claim form, nor were they estopped from requiring it.
(3) The sanctity of an agreement reached between the parties as to the extension of time for service of the claim form should not be disturbed.
(4) Nothing in the correspondence between the parties justified penalising the defendants. In particular, to the extent that the defendants had “set a trap” for the claimants, the claimants’ solicitor fell into it. The claimants’ mistake (or that of their solicitor) did not justify denying so substantial a lawful consequence to the other. (I take this to be a reference to the limitation point).
In consequence there was neither good reason sufficient to engage CPR 6.15 nor, had there been, sufficient reason to exercise the judicial discretion in favour of the claimants.
  1. None of these reasons apply in the present case. First, no point arises under the Limitation Act. Secondly, waiver and estoppel do not arise. Thirdly, the parties did not agree the date time of expiry of the period for service of the claim form. Mr Turner on Abbott’s behalf suggested an extension until 3 December 2015. Mr Taylor on the defendants’ behalf countered with an offer to extend the time until 15 November 2015. Mr Turner’s email would have conveyed to a reasonable reader that his clients thought that an extension until 3 December 2015 had been agreed. There was no meeting of minds.
  2. As to the fourth reason for the finding in Bethell, there is no ground for believing that the defendants’ conduct fell short of what was to be expected under the overriding objective. The defendants’ solicitors became unsure about what the claimants’ solicitor was saying. But they wrote (in the letter dated 22 October 2010) expressing their uncertainty and stating that they were giving 14 days formal notice of termination of the extended period for service of the claim form (see Bethell at first instance, [2010] EWHC 3664 (Ch), at [32]). The judge at first instance took the view that the letter was drafted in a very careful and calculated way, in particular avoiding any reference to the need for service of the claim form within 14 days. He described this as a “trap” for the claimants’ solicitors (at [32]). Yet the defendants pointed out in very clear terms that the extension agreed earlier would expire in 14 days. It could be said that their failure to go on and spell out in full that the claim form should be served within those 14 days could only in the very broadest sense be characterised as a trap. The important point, though, is that there was no breach of the overriding objective.
  3. By contrast, as I have discussed above, I take the view that in the present case the defendants did not comply with the overriding objective. It follows that granting Abbott’s application under rule 6.15 is more likely to encourage observance of the overriding objective than dismissing it. This is something I should take into account.
  4. To those features of the present case I would add the particularly important matter (see Abela cited above) that the defendants will have learned of the existence and content of the claim form when they received the copy claim form in July 2010.
  5. Taking into account all circumstances of this case I have come to the view that collectively they qualify as a good reason to authorise service retrospectively and I will order that good service is deemed to have been achieved by delivery to the defendants of the copy unsigned claim form on 6 July 2015.

THE OTHER APPLICATIONS

It does not appear that the application to strike out because the claim form was not signed was pursued. Similarly the application in relation to late service of the particulars of claim was not pursued because it was agreed that if there was good service of the particulars of claim then an extension should follow.

The judge did strike out the claim against one defendant on the grounds that there was no case against it and refuse the defendant’s application to refer for arbitration.

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