MORE ABOUT SERVICE OF THE CLAIM FORM: GOOD REASONS, DELAY AND A FAILURE TO PAY THE PROPER COURT FEES

April 15, 2016 · by · in Applications, Civil evidence, Limitation, Service of the claim form, Uncategorized

In TMT Asia LImited -v- BHP Billiton Marketing AG [2016] EWHC 287 (Ch) Mr Justice Burton considered several issues relating to late service of the claim form and failure to pay the correct court fee.

KEY POINTS

  • The defendant’s application to set aside service was granted when the claimant had been granted two extensions of time for service.
  • A “good reason” was required to make an order to extend time.  No such good reason had been demonstrated.
  • In any event the claimant had not paid the correct court fee.
  • It was possible that a retrospective application and payment of the correct fee could correct the situation. However the limitation period had now expired and this could not be remedied retrospectively.

THE CASE

The claimant issued proceedings on the day before expiry of the limitation period.  The solicitors who were instructed came off record.

New solicitors obtained an extension of time. These second solicitors later came off the record.  However a further extension of time was obtained and proceedings served on the defendants.

The defendant disputed the jurisdiction.

THE JUDGMENT
  1. It is common ground as to what the authorities are which I have to consider. I have been supplied an agreed bundle containing the most relevant of them, put together by BMAG. The most significant ones to which both sides have referred are Hashtroodi v Hancock [2004] 1 WLR 3206, Euro-Asian Oil SA v Abilo (UK) Ltd [2013] EWHC 485, Lincolnshire County Council v Mouchell [2014] EWHC 352, Mitchell v Newsgroup Newspapers Ltd [2014] 1 WLR 795, which is more general in relation to compliance with time limits, and The Katarina [2010] 1 Lloyd’s Rep 499.
  2. To summarise, the obligation on a party seeking effectively to extend the limitation period by having an extension of time for service of a writ, and on this occasion an extension was sought twice, is to give a good reason for the delay, and that good reason would apply both to why the claim was left to be made until the limitation period had expired, or in this case had nearly expired, and in particular where the limitation period would otherwise by then have expired, and to the delay or otherwise in relation to an extension of time for a writ, once that writ was issued within the limitation period but had not been served.
  3. The explanation that is given must be the better the more delay there is, and in particular where the limitation period either was about to expire, as it was in the case of the original writ, or had already expired, in relation to the two Orders obtained from Teare J and Popplewell J.
  4. Mr Cooper QC has asserted that there was failure to be full and frank in relation to the two applications before Teare J and Popplewell J, because there was no adequate explanation of the central feature of this case, namely that the delay actually was constituted by long periods of time in which the Claimants were seeking to avoid execution of an unappealed judgment of Gloster J, during which period there had been no reliance on the alleged Termination Agreement defence, except that it was raised in the execution proceedings in Singapore and the Marshall Islands, and in both cases regarded as an irrelevance, because if and insofar as arguable at all, it was too late to argue the matter, which had not been raised in the English Courts before Gloster J.
  5. I am not persuaded that that of itself amounts to a failure to be full and frank, but it does seem to me to be the reverse side of the coin of the duty of the Claimants to give a good reason. There was no explanation made as to why they had waited to the end of the limitation period, and the explanation that was given in relation to the first application to Teare J was, as I have indicated in my summary of it, very inadequate. Of course, as it happens, Mr Hughes’ witness statement was put before the learned Judge, and that no doubt would have raised an eyebrow on the part of the Judge. But nevertheless, the explanations which were put forward were at least sufficient so far as Teare J was concerned to make the Order he did, always subject to its being challenged or set aside thereafter on an inter partes basis; which is no doubt what he had in mind when he saw that there was a limitation point which was flagged up. But on any analysis, particularly at the inter partes stage, the explanation was non-existent and there was no good reason, particularly in the absence of any explanation, even to the extent of “This defence has only occurred to us, on legal advice or otherwise, very recently and we only took the point in execution proceedings and we have now thought it ought to be given a run.”
  6. Whether saying that would have prevented Teare J making the Order does not matter. The fact is there was no explanation of the period prior to June 2014 and the explanation given in relation to the period when, on any basis, Mr Hughes was warning them to get their tackle together, was not a good explanation, certainly not good where the limitation period had by then expired.
  7. But if that was an inappropriate Order, Popplewell J’s Order was an even more inappropriate one, in the sense that this was now the second application for an extension, and there was still no explanation about the earlier periods, but no explanation whatever about the period between December 2014 and May 2015. I have effectively criticised the witness statement of Mr Su in the course of my recital of it, and I do not propose to repeat what I have said.
  8. I have considered that this is a case in which no adequate, certainly no good explanation was given, either for the first Order or in particular for the second Order. Insofar as the merits arise, since the authorities do indicate that one is entitled to consider the merits, either on the original ex parteapplication or on the inter partes reconsideration, I am not persuaded that there is any merit in the case. I have not, of course, considered the strength of the actual defence that the Termination Agreement in some way replaced the Settlement Agreements, but what is utterly clear is that it did not occur to anyone on the Claimants’ side, and no explanation has been given as to how it did occur to them, until very late on in the execution procedures and, above all, of why it was not run, either at the 13th or even 14th hour before Gloster J when she gave judgment. On the principles ofHenderson v Henderson (1843) 3 Hare 100, and Johnson v Gore-Wood (No.1) [2002] 2 AC 1, I see no likelihood that this will survive, never mind res judicata, the abuse test. I am not however concluding the absence of merits; I am simply indicating that if merits come to be considered, if there were a balancing to be done, merits would come firmly down on the side of the Defendants.
  9. So although there is prejudice to the Claimants in not being able to pursue what, in my judgment, was in any event a very weak case, there would be much greater prejudice to the Defendants, if this case, which is statute-barred and for which no good reason has been given for the extension of any writ and thereby the loss of any limitation defence, were permitted to be brought. It is sometimes a factor if defendants did not know of the existence of a potential claim and, as Mr Gersch has pointed out on 21 May 2015 in the letter to which I referred, there was some very unparticularised indication given to the Defendants of such a claim, which might take it out of the ordinary run of an entirely ignorant defendant. That could in some cases be a factor, but in my judgment, it is not a factor here. What is important however is that the Defendants knew that there was no defence, could be no defence, when they got judgment, and then sought to enforce it at great length. It is now only belatedly, even if one takes it as at 21 May 2015, suggested that there is some arguable basis of challenge. But there is not. It is statute-barred.
  10. There is a further basis on which this writ could have been struck out, namely that the proper fee was not paid. The position is that the only fee that was paid by the Claimants’ solicitors, when the writ was issued just within the limitation period, was a fee of £480, which would be relevant to the declaratory relief that was sought. However because there was the damages claim in addition, and of course a very substantial damages claim of more than $200 million (albeit not specifically quantified in the writ), there should have been paid an additional £1,920 fee, making a total of £2,400. No such fee was paid.
  11. It is, of course, a tough situation to be told that because a fee was not paid in full, or the right fee was not paid, the writ was not issued. That is, however, the consequence of a decision of the Court of Appeal in Page v Hewetts Solicitors [2012] EWCA Civ 805, and the subsequent first instance decision based upon that Court of Appeal judgment, by Hildyard J, [2013] EWHC 2845, this was itself a limitation case, and the issue was whether the action had been brought within the limitation period, and it was held not to have been brought within the limitation period because the relevant fee had not been paid which was a condition for a good issue of a writ.
  12. It is plain that the conclusion of the Court would be that that error could be corrected by the subsequent payment of the correct fee, which would thereby render, but not retrospectively, the issue a good issue. But in that case, and in this one, that was no longer possible because the limitation period had expired. In any event, there has been no attempt to make retrospective payment of the additional fee in this case.
  13. Plainly, this would not be needed as the determinative factor in this case because I have already decided very firmly that the service of the writ should be set aside and the proceedings dismissed on the other grounds. Whether it would have been possible to argue that the declaratory part of the writ should survive even if the damages claim was struck out for want of a fee, I need not decide, although it is plain that these proceedings would have been completely toothless if they had been limited to a declaratory claim. It seems to me most unlikely that that would have been the sensible outcome. But it is not one that I need to consider because, for all the reasons I have given, this application must be allowed.

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