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||Neutral Citation Number:  EWCA Civ 1203
||Case No: 2007/0568
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE QUEEN'S BENCH DIVISION BRISTOL DISTRICT REGISTRY
District Judge Daniel
||Royal Courts of Justice
Strand, London, WC2A 2LL
B e f o r e :
SIR ANTHONY CLARKE MR
LORD JUSTICE DYSON
LORD JUSTICE JACOB
|| (1) Gerrard Richard Hoddinott (2) Geoffrey Fred Hoddinott (3) R G Hoddinott Ltd
||- and -
||Persimmon Homes (Wessex) LTD
Mr William Batstone (instructed by Messrs Forrester & Forrester) for the Appellants/Claimants
Mr Gordon Exall (instructed by Davies and Partners Solicitors) for the Respondent/Defendant
Hearing date: Wednesday 31 October 2007
HTML VERSION OF JUDGMENT
Crown Copyright ©
Lord Justice Dyson: this is the judgment of the court.
- The claimants appeal against the decision of District Judge Daniel made on 30 January 2007 whereby he set aside the order of District Judge Rowe made on 13 September 2006 extending the time for service of the claim form to 22 November 2006 and struck out the claim. The claimants appeal with the permission of Lewison J, who referred the appeal to this court because he considered that there was or may be a conflict between some of the relevant authorities. Once again, this court is faced with an appeal as to the application of the CPR provisions relating to service of a claim form.
- The first two claimants are farmers. They are directors of the third claimant. The defendant is a house-builder. The first claimant owns and the third claimant farms land at Lickhill Farm, Calne, Wiltshire ("the land"). A deed of transfer was executed between the first and second claimants and the defendant on 29 March 1999 pursuant to which the defendant was authorised to enter the land in order to construct a sewer and thereafter to reinstate the land. The defendant entered the land for that purpose in about October 1999. It is the claimants' case that the defendant did not reinstate the land properly or make good the damage caused as soon as reasonably practicable thereby causing them to suffer loss and damage.
- On 22 May 2006, the claimants issued a claim form in the High Court. They claimed damages for trespass to and damage to the land and/or for nuisance and/or negligence and/or breach of the terms of the deed of transfer. Particulars of claim were not attached to the claim form.
The course of the litigation
- The claimants were represented by solicitors, Forrester and Forrester. Their case was handled by Matthew Paterson, a partner in the firm. The time for service of the claim form expired on 22 September 2006: CPR 7.5(2). On 13 September, without notice to the defendant Mr Paterson made an application pursuant to CPR 7.6(2) to extend the time for service of the claim form to 22 November 2006. CPR 7.6(4)(b) expressly provides that such an application may be made without notice.
- In the application notice, he gave the following reasons why the claimants were seeking an extension of time:
"There is urgency to justify this matter being dealt with Ex Parte – see paragraph 2 to the witness statement filed herewith and pursuant to CPR 7.6(4)(b).
An extension of time will enable the Claimants' claim to be fully particularised and for any resulting litigation to be conducted more economically and expediently – see paragraph 26 to the witness statement filed herewith.
Full particulars of the claim will promote the chances of the claim being settled without recourse to a trial, for I intend to send a detailed letter of claim to the Defendant as soon as possible and to deal with this matter in a protocol friendly way – see paragraph 28 to the witness statement filed herewith."
- The application was supported by a witness statement by Mr Paterson. At para 2, he said:
"The claim form was issued on 22 May 2006 and so must be served by 22 September 2006 unless the court accedes to the application and makes an order extending time pursuant to CPR rule 7.6(2). As I shall explain, the reason for the application is that the Claimants are not going to be in a position to serve fully particularised particulars of claim by 22 September 2006. If the court decides not to make an order extending time then the Claimants will have no alternative but to serve the claim form, together with such particulars of claim as can be prepared, by the deadline of 22 September 2006. The application is therefore urgent and I respectfully ask for it to be given priority by the court. The application is made without notice, as rule 7.6(4)(b) allows, and I ask for it to be dealt with at a hearing at which I intend to instruct Counsel to attend."
- He then described the nature of the dispute. He stated that as early as 3 July 2002, the claimants had obtained a quotation for the replacement of the topsoil in the sum of £218,295. He referred to the expert's report by Helen Cooper which had been obtained by the defendant in June 2004. Mr Paterson said that his instructions were that the restoration works described in Ms Cooper's report were insufficient to restore the land to the condition it had been in before it had been disturbed by the defendant's works. Accordingly, the claimants had decided to instruct another expert.
- Sheila Royle was instructed on 25 July 2006. At para 21 of his statement, Mr Paterson gave several reasons why she was not instructed earlier. These included the time taken to obtain all the information which it was thought Ms Royle would need. Ms Royle's draft report was received by Mr Paterson on 1 September. At the time of the application to extend the time for service, the report was still in draft form. There was no estimate of the cost of the remedial work that was being proposed by her. Moreover, Mr Paterson said that it had also not been possible to instruct an expert rural surveyor to advise on the effect of the remedial works on the claimants' farming business and the losses that they were likely to suffer.
- Thus it was that Mr Paterson said:
"26. Without an assessment of the cost of the remedial works and the losses that will be caused to the Claimant's business, it will not be possible to produce particulars of claim that will promote settlement of the claim. As the court will have seen, it seems likely that liability will not be disputed and that the only issue will be as to the proper assessment of the Claimants' loss. I decided that serving particulars of claim without the requisite figures would be to risk incurring litigation costs unnecessarily.
27. I also decided that it was not appropriate to seek to agree an extension of time with the Defendant. There has not yet been any contact between my firm and the Defendant or any insurers or solicitors instructed by it and I am not aware of any such professionals having been instructed. I concluded that the chances of reaching agreement so as to secure the Claimants' position by the deadline of 22 September 2006 were remote."
- District Judge Rowe acceded to the application on 13 September and extended the time for service to 22 November. On the following day, Mr Paterson wrote to the defendant notifying it that the claim form had been issued and enclosing a copy of the claim form "for information purposes only". On 20 September, a copy of Ms Royle's finalised report was sent to the defendant.
- On 2 October, the defendant issued an application to set aside the order of 13 September on the grounds that the claimants did not have a good reason to obtain an extension of time for service of the claim form. On 5 October, the parties were notified by the court that the application would be heard on 21 December. On 21 November, the claim form and particulars of claim were served on the defendant.
- On 28 November, the defendant's solicitors filed an acknowledgement of service. The form contains three boxes. They ticked the box "I intend to defend all of this claim". They did not tick the box "I intend to contest jurisdiction".
The relevant CPR provisions
- CPR 7.5 provides:
"(1) After a claim form has been issued, it must be served on the defendant.
(2) The general rule is that a claim form must be served within 4 months after the date of issue."
- CPR 7.6 provides:
"(1) The claimant may apply for an order extending the period within which the claim form may be served.
(2) The general rule is that an application to extend the time for service must be made-
(a) within the period for serving the claim form specified by rule 7.5; or
(b) where an order has been made under this rule, within the period for service specified by that order."
- CPR 11 provides:
"(1) A defendant who wishes to-
(a) dispute the court's jurisdiction to try the claim; or
(b) argue that the court should not exercise its jurisdiction,
may apply to the court for an order declaring that it has no such jurisdiction or should not exercise any jurisdiction which it may have.
(2) A defendant who wishes to make such an application must first file an acknowledgment of service in accordance with Part 10.
(3) A defendant who files an acknowledgment of service does not, by doing so, lose any right that he may have to dispute the court's jurisdiction.
(4) An application under this rule must-
(a) be made within 14 days after filing an acknowledgment of service; and
(b) be supported by evidence.
(5) If the defendant-
(a) files an acknowledgement of service; and
(b) does not make such an application within the period specified in paragraph (4),
he is to be treated as having accepted that the court has jurisdiction to try the claim.
(6) An order containing a declaration that the court has no jurisdiction or will not exercise its jurisdiction may also make further provision including –
(a) setting aside the claim form;
(b) setting aside service of the claim form;
(c) discharging any order made before the claim was commenced or before the claim form was served; and
(d) staying the proceedings."
The judgment of District Judge Daniel
- The district judge started by considering the merits of the application to extend time for service of the claim form. He did not accept Mr Paterson's view that an additional two months for the production of particulars of claim would lead to a settlement. He said that, if the claim form had been served with the new expert's report, the parties would have been likely to agree a stay of the proceedings and deferral of further pleadings until attempts had been made to settle the dispute. At para 5 of his judgment, the district judge said:
"What is clear to me is that the reasons put forward for extending the time for service of the Claim Form in this case are wholly unacceptable. The reasons claimed by Mr Paterson may well be strong reasons for delaying the service of the Particulars of Claim but to my mind they come nowhere near sufficient reasons for extending the time for service of the Claim Form. There is just no reason why the Claim Form could not be served and an application made to extend the time for serving the Particulars of Claim. I just cannot see how the delay in serving the claim form would assist any negotiation in a case that had already been running for 6 years. In any event, there was no contact with the Defendants. I agree entirely with the submissions of Mr Exall in paragraph 6 of his skeleton argument. In particular I agree with him that the case is similar to the case of Glass v Surrendran where the Court of Appeal made it very clear that the awaiting of receipt of the accountant's report was not a reason for delaying service of the Claim Form. It may, said the Court of Appeal, be a reason for extending the time for service of the Particulars of Claim but not of the Claim Form."
- He then considered the limitation issue. It had been submitted on behalf of the claimants that the claim was not yet time-barred by the Limitation Act 1980. As to this, at para 6, the district judge said:
"Mr Batstone, for the Claimant, argues that the issue of limitation period is of considerable importance in deciding whether it is appropriate to serve the Claim Form within the four month period. I agree that it is a consideration, but does not allow the court to escape from its duty to find an acceptable reason for extending the time for service of the Claim Form."
- He then turned to deal with the submission made on behalf of the claimants that, in the light of CPR 11(5) and the terms of the acknowledgment of service, it was not open to the defendant to apply to set aside the order granting an extension of time for service. It was submitted to the district judge (as it has been submitted in this court) that (i) CPR 11 is irrelevant to the issues that arise here; and in any event (ii) the application effectively disputing service was made even before the proceedings were served and it would, therefore, be ridiculous to require the defendant to make an application under CPR 11(1) after filing the acknowledgement of service. The district judge did not rule on the first submission and was content to proceed on the basis that CPR 11 was relevant. He acceded to the second submission.
- Finally, he considered whether the order of District Judge Rowe gave the claimants a false sense of security that service of the claim form during the extended time for service would be good service, and whether that was a fact that should be taken into account in the claimants' favour. As to this, the district judge said that a claimant who makes an application without notice runs the risk that the order may subsequently be set aside. He did not consider that there would be "an unfairness to the claimants simply arising from any reliance on the fact that an order was made."
- The issues that arise on this appeal are (i) whether CPR 11 is engaged at all; if so (ii) whether the district judge was right to hold that the defendant's application to set aside the order extending time for service rendered an application under CPR 11(1) unnecessary; and (iii) whether the district judge's exercise of the discretion conferred by CPR 7.6(1) was wrong.
Is CPR 11 engaged?
- Mr Exall submits that CPR 11 has no relevance in the present context. He says that no issue of "jurisdiction" arises here. He argues that the claimants are in difficulty not because the court does not have jurisdiction to determine the claim, but because they have failed to comply with the rules of court as to service. A defendant who seeks to set aside an order made without notice or to argue that the claim form was served out of time is not challenging the court's jurisdiction, but is merely applying the procedural rules. The court does have jurisdiction to deal with a claim even where the claim form is served out of time. For example, it has jurisdiction retrospectively to extend the time for service under CPR 7.6(3) and to make an order dispensing with service under CPR 6.9. Finally, Mr Exall draws attention to the definition of "jurisdiction" in CPR 2.3: it means "unless the context requires otherwise, England and Wales and any part of the territorial waters of the United Kingdom adjoining England and Wales".
- In our judgment, CPR 11 is engaged in the present context. The definition of "jurisdiction" is not exhaustive. The word "jurisdiction" is used in two different senses in the CPR. One meaning is territorial jurisdiction. This is the sense in which the word is used in the definition in CPR 2.3 and in the provisions which govern service of the claim form out of the jurisdiction: see CPR 6.20 et seq.
- But in CPR 11(1) the word does not denote territorial jurisdiction. Here it is a reference to the court's power or authority to try a claim. There may be a number of reasons why it is said that a court has no jurisdiction to try a claim (CPR 11(1)(a)) or that the court should not exercise its jurisdiction to try a claim (CPR 11(1)(b)). Even if Mr Exall is right in submitting that the court has jurisdiction to try a claim where the claim form has not been served in time, it is undoubtedly open to a defendant to argue that the court should not exercise its jurisdiction to do so in such circumstances. In our judgment, CPR 11(1)(b) is engaged in such a case. It is no answer to say that service of a claim form out of time does not of itself deprive the court of its jurisdiction, and that it is no more than a breach of a rule of procedure, namely CPR 7.5(2). It is the breach of this rule which provides the basis for the argument by the defendant that the court should not exercise its jurisdiction to try the claim.
- We would, therefore, hold that CPR 11 is engaged in the present context. This accords with what was said by Tugendhat J in Mason v First Leisure Corporation Plc  EWHC 1814 (QB) para 11, HH Judge Havelock-Allan QC in The Burns-Anderson Independent Network Plc v Wheeler, (Bristol District Registry Mercantile List, unreported 28 January 2005) para 45 and Uphill v BRB (Residuary) Ltd  EWCA Civ 60,  1 WLR 2070 para 34 (although in this last case, it was common ground that CPR 11 was engaged).
Did the application to set aside the order extending time for service render an application under CPR 11(1) unnecessary?
- Mr Exall seeks to uphold the reasoning of the district judge. The question is whether, in a case where an application to set aside the order extending time for service has already been made, a defendant is to be treated as having accepted that the court should exercise its jurisdiction to try the claim, unless he also makes an application under CPR 11(1) within 14 days after filing an acknowledgment of service. There is force in the observation made by the district judge that "it is not the intention of the Civil Procedure Rules to insist upon a succession of applications to be made seeking the same relief…the issue is the same and the Court should not be burdened with duplicitous or repetitious applications whose purpose is identical".
- We doubt whether the Rule Committee addressed the problem that has arisen in this case. But in our view, the interpretation adopted by the district judge was not open to him. Subject to the point discussed at para 28 below, the language of CPR 11 is clear. Paragraph (1) permits a defendant to apply to the court for an order declaring that the court has no jurisdiction to try the claim or that the jurisdiction should not be exercised. Paragraph (2) provides that a defendant who wishes to make such an application "must first file an acknowledgment of service in accordance with Part 10" (emphasis added). Paragraph (4) provides that an application under CPR 11 must be made "within 14 days after filing an acknowledgement of service" (again, emphasis added). Paragraph (5) provides that if the defendant files an acknowledgement of service and does not make an application within the period specified in paragraph (4), "he is to be treated as having accepted that the court has jurisdiction".
- In our judgment, the meaning of paragraph (5) is clear and unqualified. If the conditions stated in subparagraphs (a) and (b) are satisfied, then the defendant is treated as having accepted that "the court has jurisdiction to try the claim". The conditions include that the defendant does not make an application for an order pursuant to CPR 11(1) within 14 days after filing an acknowledgment of service. An application to set aside an order extending the time for service made before the filing of an acknowledgement of service is not an application under CPR 11(1) nor is it an application made within 14 days after the filing of the acknowledgment of service. The district judge (rightly) did not hold that the application to set aside the order extending time for service was an application under CPR 11(1). Rather, he said that the earlier application to set aside the order rendered it unnecessary to make an application under CPR 11(1). But in our judgment, there is no warrant for holding that, if an application is made before the filing of an acknowledgment of service to set aside an order extending the time for service, this has the effect of disapplying the requirement for an application under CPR 11(1). There is no such express disapplication, nor does one arise by necessary implication.
- In our view, a defendant is fixed with the consequences stated in paragraph (5) if the two stated conditions are satisfied. At first sight, there is an apparent difficulty with the application of this approach to a case (such as the present) where the defendant wishes to argue that the court should not exercise its jurisdiction to try the claim, rather than to dispute the court's jurisdiction to try the claim. The distinction between the two categories of case seems to have been well understood by the draftsman. It is clearly drawn in paragraphs (1) and (6). But paragraph (3) provides that a defendant who files an acknowledgement of service does not, by doing so, lose any right he may have "to dispute the court's jurisdiction"; and paragraph (5) provides that if the two conditions in (a) and (b) are satisfied, the defendant is treated as having accepted that the court "has jurisdiction to try the claim". It may, therefore, be argued (although it was not argued before us) that paragraphs (3) and (5) refer to paragraph (1)(a) but not paragraph (1)(b). We would reject such an argument. CPR 11 must be read as a whole. It is clear that both paragraphs (2) and (4) are referring to applications made under paragraph (1)(a) and (1)(b). Further, paragraph (5) provides that if the defendant does not make "such an application" (ie an application under paragraph (1)(a) or (b)), then the consequences will be as stated. Paragraph (5) cannot mean that, if a defendant does not make an application under paragraph (1)(b), he will be treated as having accepted that the court has jurisdiction to try the claim. It must mean that, if a defendant does not make an application under paragraph (1)(b), he will be treated as having accepted that the court should exercise its jurisdiction to try the claim. In our judgment, the reference to disputing the court's jurisdiction in paragraph (3) and accepting that the court has jurisdiction in paragraph (5) encompasses both limbs of paragraph (1). The reference to the court's jurisdiction is shorthand for both the court's jurisdiction to try the claim and the court's exercise of its jurisdiction to try the claim.
- It follows that, since both of the conditions stated in paragraph (5) were satisfied in this case, the defendant is treated as having accepted that the court should exercise its jurisdiction to try the claim, notwithstanding the late service of the claim form. The effect of paragraph (5) was that he was to be treated as having abandoned its application to set aside the order extending the time for service. This conclusion is reinforced by the fact that in this case the defendant indicated on the acknowledgement of service that it did not intend to contest jurisdiction and did intend to defend the claim.
- For these reasons, we disagree with the decision of the district judge on the second issue and would, therefore, allow the claimants' appeal. There is, however, a second reason why we consider that this appeal should be allowed. That involves a consideration of the third issue.
Was the district judge's exercise of discretion under CPR 7.6(1) wrong?
The claimants' submissions
- Mr Batstone submits that the district judge failed to exercise his discretion properly in a number of respects. First, Mr Paterson's decision not to serve the claim form within 4 months was a carefully considered decision made because he believed that an extension of time would promote the economical and expeditious conduct of the litigation. The district judge failed to draw a distinction between the case of a careful, even if objectively mistaken, decision not to serve in time and a case of mere oversight or sheer incompetence.
- Secondly, Mr Batstone submits that the district judge was wrong to give no weight to the fact that the order made by District Judge Rowe on 13 September gave Mr Paterson a false sense of security that he could safely serve the claim form within the extended period pursuant to the order. In support of the proposition that this was a relevant factor to take into account in exercising the discretion under CPR 7.6(1), Mr Batstone relies on Jones v Wrekin Borough Council (Court of Appeal, unreported 9 July 1999) and Mason v First Leisure Corporation Plc.
- Thirdly, the district judge failed to take proper account of the fact that the claim was not time-barred by the Limitation Act 1980. At para 6 of his judgment, he said that the "issue of limitation period" was a "consideration". He did not state whether he considered that the claim was not yet statute-barred and, if it was not, why he should set aside the order extending time thereby requiring the claimant to issue fresh proceedings.
- Fourthly, the district judge failed to take into account the fact that liability was not seriously in issue and that there was no evidence that the delay in serving the claim form had caused any prejudice to the defendant. In particular, Mr Batstone relies on the fact that on 14 September 2006 (ie before the expiry of the 4 months' period) a copy of the claim form was sent to the defendant for information purposes.
- In short, although the district judge said that the issue of limitation was a "consideration", in substance he decided that there was "no acceptable reason for extending the time of the claim form" (para 7(b)) and that, on an application of the guidance given by this court in Hashtroodi v Hancock  EWCA Civ 652,  1 WLR 3206, repeated by this court in the cases reported with Collier v Williams  EWCA Civ 20,  1 WLR 1945, the absence of such a reason was determinative of the matter.
- In Hashtroodi's case, the court said this:
"19 Whereas, under the previous law, a plaintiff who was unable to show a good reason for not serving in time failed at the threshold, under the CPR a more calibrated approach is to be adopted. Thus, where the court has been unable to serve the claim form or the claimant has taken all reasonable steps to serve the claim form, but has been unable to do so (the CPR r 7.6(3) conditions), the court will have no difficulty in deciding that there is a very good reason for the failure to serve. The weaker the reason, the more likely the court will be to refuse to grant the extension.
20 If the reason why the claimant has not served the claim form within the specified period is that he (or his legal representative) simply overlooked the matter, that will be a strong reason for the court refusing to grant an extension of time for service. One of the important aims of the Woolf reforms was to introduce more discipline into the conduct of civil litigation. One of the ways of achieving this is to insist that time limits be adhered to unless there is good reason for a departure."
- In that case, the reason why the claimant did not serve the claim form within the 4 months' period was that the claims handling company acting for the defendant had not nominated solicitors to accept service on behalf of the defendant. But the claimant's solicitor knew the defendant's address and he could have effected personal service within the 4 months' period. It was held by this court that this was a case where there was no reason for the failure to serve other than the incompetence of the claimant's legal representatives. Although this was not an absolute bar, it was a powerful reason for refusing to grant an extension of time. A number of factors were urged on the court as to why, despite the absence of a reason for the failure to serve within the four months' period, the court should nevertheless exercise its discretion to extend the time for service. At para 36, the court held that these factors were "not sufficient to outweigh the complete absence of any reason which might go some way to excusing the failure to serve in time".
- In Leeson v Marsden, the claimant's solicitor sent a letter to the first defendant in accordance with the clinical negligence protocol. She received no substantive response. The reason she gave for not serving the claim form within the 4 months' period was that she did not consider it to be in the interests of the claimant or cost effective to serve proceedings and particulars of claim until she had received a substantive response from the first defendant as to what issues were still likely to remain between the parties. It can be seen that this reason was substantially the same as that given by Mr Paterson in the present case. This court held (para 129) that this "was no reason at all for not serving the claim form" and that "in not serving the document, the claimant's solicitor made a serious error of judgment". The decision of the judge not to extend time was upheld.
- In Glass v Surrendran, the reason given by the claimant's solicitors for not serving the claim form was that they were awaiting receipt of an accountant's report. In fact, the report was received more than one month before the expiry of the four months period. This court said (para 150) that there was no basis on which a competent litigation solicitor could have justified delaying the service of the claim form beyond the four months' period. The extension of time granted by the district judge was therefore set aside by this court.
- We have referred to these decisions because they illustrate the general principle that, where there is no good reason for the failure to serve the claim form within the four months' period, the court still retains a discretion to grant an extension of time, but is unlikely to do so.
- We would agree with the district judge that there was no good reason for the claimants' failure to serve within the four months' period in this case. The reason given by Mr Paterson was stated in Leeson's case to be "no reason at all" for not serving the claim form. It is true that it is possible to think of more egregious examples of failure to serve. Mr Paterson did not overlook the need to serve within the 4 months' period. He stated in terms in his witness statement that, if the application to extend time was dismissed, he would serve the claim form before the end of the 4 months' period. He took the trouble and incurred the expense on behalf of his client of making an application without notice to extend time. But in our view, he made a serious error of judgment. The reason he gave at para 26 of his witness statement was not a good reason for failing to serve the claim form. The claim form should have been served and then agreement obtained from the defendant that no further steps be taken in the litigation until the claimants were able to produce particulars of claim which would promote a settlement. In the absence of such agreement, the claimants could have sought an order granting an extension of time for service of the particulars of claim.
- We turn to the "false sense of security" point. Relying on recent decisions of this court, the district judge said that this point was irrelevant. But the earlier authorities of Jones v Wrekin and Mason v First Leisure Corporation suggest that it is a point which might appear to have some legitimacy. It is the apparent conflict between these decisions and the recent decisions of this court that led Lewison J to refer the appeal to this court.
- The point seems to have surfaced for the first time in Jones. That was a pre-CPR case, but this court (Lord Woolf MR and Robert Walker LJ) made observations which have application to the CPR. Without notice to the defendant, the claimant applied for and obtained extensions of time for the service of the claim form on three occasions. Each time the reason given in support of the application was that the claimant did not yet have his medical evidence. Lord Woolf, with whom Robert Walker LJ agreed, said that "the failure to get your full medical evidence in order cannot be a justification for not serving proceedings". It was argued nevertheless that the claimant's solicitors acted reasonably: their concern was that the defendants should not be involved in costs which could be totally wasted. Lord Woolf had reservations as to whether that was an "adequate" approach. But he said that there was no previous case in which a similar situation had been considered by the courts. With some hesitation, therefore, he dismissed the appeal. He went on to say, however, that in future the matters relied on by the claimant's solicitors would not be considered to be a proper reason for taking the course that had been taken in that case: "the fact remains, however, that as the authorities then stood, it cannot be said that there was no justification for the solicitors concerned believing that the course which they followed was reasonable and appropriate."
- Robert Walker LJ said:
"It seems to me that each of the three district judges or deputy district judges who separately granted successive extensions on ex parte applications, must have taken the view that the claimants appeared to have a good reason for an extension being granted. The solicitors may, in some degree, have been lulled into a false sense of security. If any of the district judges had indicated that proceedings ought to be served at once, it would have been possible on the first two occasions, although not on the third, for the proceedings to have been served without any further extension of time. Although it is not for judges to give advice to litigants or their solicitors, it appears to me that a word of warning from a district judge would no doubt have led to the solicitors taking a different course.
I, too therefore have been narrowly persuaded that this appeal should be dismissed, but, like my Lord, I would emphasise that it should certainly not be regarded as a precedent for the future."
- Nevertheless, Jones has been cited in subsequent cases. It was cited in Mason case, where Tugendhat J said that it showed that a party who mistakenly obtains an extension of time for service will not necessarily have the service of proceedings set aside if the court does grant an extension for which there were not proper grounds (para 9). Of greater importance, Tugendhat J referred to the false sense of security point made by Robert Walker LJ. He said that the fact that the order made without notice granting an extension of time lulled the claimant into a false sense of security was "a point which suggests that the justice of the case favours the continuance of that order, not its setting aside" (para 25). At para 33, he said that, as in Jones, there was some justification for the claimant's solicitors believing that the course that they had followed was reasonable and appropriate.
- In the Solicitors' Indemnity Fund v Dickins  EWHC 2754 (Ch), the Chancellor, Sir Andrew Morritt referred to Jones and with approval to para 9 of the judgment of Tugendhat J in Mason.
- In our judgment, the time has come to put the "false sense of security" point firmly to rest. We do not understand Robert Walker LJ to have been saying that the fact that a claimant is lulled into a sense of security by an order made without notice granting an extension of time is a factor to be take into account in deciding whether or not to set aside the order. He was merely stating as a fact that the solicitors may have been lulled into a false sense of security and suggesting that a word of warning from the district judge who extended time for service would have led the solicitors to take a different course. This was no doubt a helpful suggestion, but it was no more than that. Further, Robert Walker LJ emphasised that the decision should not be regarded as a precedent. We would add that Lord Woolf said nothing about the false sense of security point.
- It follows that, if (as appears to be the case) Tugendhat J considered that Jones was authority for the proposition that the false sense of security point is a relevant factor to be taken into account by a judge who is deciding whether or not to set aside an order obtained without notice extending the time for service, we respectfully think that he was wrong to do so.
- In our judgment, District Judge Daniel was right to regard the false sense of security point as irrelevant. In Collier v Williams at para 38, this court warned against the dangers of dealing with without notice applications on paper. But the paragraph also contained this passage:
"…An application for an extension of time for service of the claim form is potentially of critical importance, especially where the application is made shortly before the end of the four months period for service and where the cause of action has become time-barred since the date on which the claim form was issued. If the application is allowed and an extension of time is given, the defendant can always apply under CPR r 23.10 for the order to be set aside, in which case the applicant may be worse off than if it had been refused in the first place."
- Thus if a claimant applies for and obtains an extension of time for service of the claim form without giving notice to the defendant, he does so at his peril. He should know that an order obtained in such circumstances may be set aside. He can take no comfort from the fact that the court has made the order. He cannot be heard subsequently to say that it was the court's fault that the order was made. That is not to say that, when such an application is made, the court should not consider it carefully and decide whether, on an application of the guidance given by this court in Hashtroodi and the later cases, the claimant has made out a case for extending time. On the material placed before District Judge Rowe, no such case was made out and she should not have made the order.
- The next question is whether District Judge Daniel dealt with the limitation issue properly. The transfer dated 29 March 1999 was executed as a deed. The claim as pleaded in the particulars of claim includes a claim for damages for breach of the express terms of the deed of transfer. This is the primary way in which the case is put: see paras 58-61 of the particulars of claim. This being "an action upon a specialty", the relevant limitation period is 12 years: see section 8 of the Limitation Act 1980.
- It is clear beyond doubt that the claim for breach of contract is not yet time-barred and will not be time-barred for several years. There is no basis for a contrary argument and the contrary does not seem to have been argued. Where there is doubt as to whether a claim has become time-barred since the date on which the claim form was issued, it is not appropriate to seek to resolve the issue on an application to extend the time for service or an application to set aside an extension of time for service. In such a case, the approach of the court should be to regard the fact that an extension of time might "disturb a defendant who is by now entitled to assume that his rights can no longer be disputed" as a matter of "considerable importance" when deciding whether or not to grant an extension of time for service: see Hashtroodi para 18.
- But where it is clear that an extension of time beyond the 4 months' period will not extend the time to a date when the claim has become time-barred, the considerations are quite different. In such a case, an extension of time does not deprive the defendant of any limitation advantage. Nevertheless, in our view the fact that a claim is clearly not time-barred is a relevant consideration to be taken into account in favour of the claimant when the court decides whether to grant an extension of time. But it is not determinative.
- It is tempting to ask: what is the point in refusing to extend the time for service if the claimant can issue fresh proceedings? But service of the claim form serves three purposes. The first is to notify the defendant that the claimant has embarked on the formal process of litigation and to inform him of the nature of the claim. The second is to enable the defendant to participate in the process and have some say in the way in which the claim is prosecuted: until he has been served, the defendant may know that proceedings are likely to be issued, but he does not know for certain and he can do nothing to move things along. The third is to enable the court to control the litigation process. If extensions of time for serving pleadings or taking other steps are justified, they will be granted by the court. But until the claim form is served, the court has no part to play in the proceedings. A key element of the Woolf reforms was to entrust the court with far more control over proceedings than it had exercised under the previous regime. The rules must be applied so as to give effect to the overriding objective: this includes dealing with a case so as to ensure so far as is practicable that cases are dealt with expeditiously and fairly (CPR 1.1(1)(d)). That is why the court is unlikely to grant an extension of time for service of the claim form under CPR 7.6(2) if no good reason has been shown for the failure to serve within the 4 months' period.
- Thus, there are good reasons why the court should scrutinise with care applications to grant an extension of time for service of the claim form. If an application for an extension of time is made after the end of the 4 months' period, the application must be dismissed unless the 3 conditions specified in CPR 7.6(3) are satisfied. In such a case, the fact that the claim is clearly not yet time-barred is irrelevant. It would be strange if, where an application is made before the end of the 4 months' period, the fact that the claim is clearly not time-barred means that the court must grant the extension of time. In our view, the better view is that, where the application is made before the end of the 4 months' period, the fact that the claim is clearly not yet time-barred is a relevant consideration. The district judge was right on this point.
- It would have been preferable if the district judge had stated whether he accepted that it was clear that the claim was not yet time-barred. But since the contrary does not seem to have been argued, it seems reasonable to conclude that he did consider that the claim was clearly not yet time-barred.
- We turn next to the fact that a copy of the claim form was sent to the defendant on 14 September. The district judge made no reference to this. It was, however, a point relied on by Mr Batstone as one of the reasons why the extension of time caused no prejudice to the defendant. In our view, this was an important factor relevant to the exercise of his discretion which should have been taken into account. It is true that sending a copy of the claim form did not constitute service, but it did bring to the attention of the defendant before the expiry of the 4 months' period the nature of the claims that the claimants were making in the proceedings that they had issued. The failure of the district judge to take this factor into account was a material omission. It enables this court to exercise the discretion afresh.
- There was no good reason for the failure to serve within the 4 months' period. But it is the unusual combination of the fact that (i) the claim is clearly not even now time-barred and (ii) a copy of the claim form was sent to the defendant within the 4 months' period that leads us to the conclusion that the district judge should not have set aside the order. By the time the application came before District Judge Daniel, not only did he know these two facts, but he also knew that the claim form (accompanied by full particulars of claim) had been served on 21 November. In these circumstances, despite the absence of a good reason for not serving within the 4 months' period, we would set aside the order of the district judge. This conclusion is consistent with our earlier statement (para 51) that on the material available to her, District Judge Rowe should not have made the order, since that material did not, of course, include the fact that a copy of the claim form was sent to the defendant on 14 September.
- Nothing that we have said in this judgment should be interpreted as undermining the approach articulated in Hashtroodi and the later cases. In his judgment, the district judge said: "In my experience, there are very few applications [without notice for an extension of time for service of the claim form] being made since the 2006 cases unless there are real difficulties in actual physical service. Even fewer are being granted." But even where there is no good reason for failing to serve within the 4 months' period, the court will exceptionally exercise its discretion to grant an extension where CPR 7.6(2) applies. In our view, the unusual combination of facts in this case justifies the exercise of this discretion.
- We would, therefore, allow this appeal for two reasons. First, by reason of CPR 11(5), the defendant is treated as having accepted that the court should deal with this claim even if the time for service of the claim form should not have been extended. Secondly, the district judge should not have set aside the order granting an extension of time for service of the claim form until 22 November 2006.
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