Sodastream Ltd v Coates & Ors [2009] EWHC 1936 (Ch)

[2009] EWHC 1936 (Ch)Case No HC09C00866
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 31 July 2009
Before
MR JUSTICE BLACKBURNE
Between
SODASTREAM LIMITED (In liquidation)Claimant(By James RICHARD DUCKWORTHClaimantliquidator of SODASTREAM LIMITED)Claimant(1) PAUL CHRISTOPHER COATESDefendants(2) PETER GORDON WISEBURGHDefendant(3) JULIA ANN HAMPSHIREDefendant(4) MOSHE BAR HAIMDefendant(5) DAN FIRERDefendant
Rachel Sleeman (instructed by Clarke Willmott) for ClaimantOrlando Gledhill (instructed by Brabners Chaffe Street LLP) for Fifth DefendantHearing Hearing dates: 9 and 10 July 2009
Judgment
[1]This is an application by the fifth defendant, Mr Dan Firer, to set aside five orders, each made without notice, extending the time for service of the claim form and, if that relief is granted (at any rate if that relief is granted in respect of the latest of the time extensions), to set aside the service of the claim form on him. The claim form was served on him at an address in Israel on 15 February 2009 which was during the currency of a period of extension granted by the fifth of the five orders.[2]The claim form was issued on 1 November 2007. It was issued out of the Queen’s Bench Division. On 6 February 2009 the claim was transferred to this Division. The claimant is a company in liquidation. It went into insolvent liquidation on 8 February 2006. Mr James Duckworth was appointed liquidator with effect from 12 January 2007. The defendants are former directors of the claimant. The claim arises out of the declaration of a dividend of £12.5 million resolved on by the directors on 6 November 2001 and (according to the particulars of claim) recorded in the minutes of the claimant’s annual general meeting that same day. It is alleged that the dividend was paid out by 31 December 2001 in that the claimant’s audited accounts for that calendar year record the payment by the year end. The claimant, acting by Mr Duckworth, claims that the declaration and payment of the dividend constituted a breach of the duty which each defendant owed to it, alternatively a misfeasance on the part of each of them. It sues to recover the £12.5 million from them, together with interest.[3]Given the date of the dividend’s declaration on 6 November 2001 and its payment then or shortly thereafter, it was evident that the six year limitation period relevant to the claim to recover it was likely to be on or shortly after 6 November 2007. The claim form, as I have mentioned, was issued on 1 November 2007, a matter of days before the sixth anniversary of the declaration.[4]Of the five defendants, the first and third reside in this country and were served on 25 February 2008, just before the expiry of the four months within which, by rule 7.5(1), they were to be served without the need for an extension of time under rule 7.6. But the second, fourth and fifth defendants reside in Israel and although by rule 7.5(2) the time for service on them out of the jurisdiction was six months of the date of issue of the claim form the claimant, more particularly Mr Duckworth its liquidator together with the solicitors acting for him in the claim, Messrs Clarke Willmott, considered it advisable to apply not only for permission to serve out on those defendants in Israel (as was required in any event) but also for an extension of time to 1 July 2008 within which to do so.[5]This led to the making of the first of the five orders extending time for the service of the claim form. The fifth defendant now seeks to have it set aside so far as it relates to him. The first extension of time was applied for on or about 4 February 2008 and therefore well within the six months available for service on the three defendants outside the jurisdiction (assuming that permission to serve out was also obtained). The application was supported by a witness statement dated 4 February 2008 made by Ms Lisa Saxby, a solicitor and employee with Clarke Willmott and the person who, at that time, had day to day conduct of the proceedings.[6]The application was dealt with, as the claimant had requested, without a hearing and necessarily without notice to the three intended defendants. It came before Master Foster who on 7 February gave permission for service of the claim form on them and extended the period for so doing so to 1 July 2008.[7]In Collier v Williams [2006] EWCA Civ [2006] 1WLR 1945 at [38], the Court of Appeal said this of applications to extend time for the service of a claim form:
“…On receipt of a without notice application with a request for the matter to be disposed of on paper, the court should consider whether it is appropriate to dispose of the matter without a hearing. In our view, there is a danger in dealing with important applications on paper. 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. It is highly desirable that on the without notice application, full consideration (with proper testing of the argument) is given to the issue of whether the relief sought should be granted. Equally, if an application is made late in the day and refused on paper when proper argument would have made it proper to grant, a great deal of heartache can be saved. We think that applications of this kind, where time limits are running out, should normally be dealt with by an urgent hearing. We accept, however, that owing to time constraints, pressure of business and the like, it will sometimes not be possible to deal with such an application other than on paper. Even in such cases, however, consideration should be given to dealing with the application by telephone.”
It is a noteworthy feature of all five applications to extend time for the service of the claim form in this case that this cautionary advice was ignored: not one of the applications was dealt with by hearing; all were dealt with on paper. All were made after the cause of action had become time-barred. As will appear, one of them was made on the very last day of the extended period for service. With the possible exception of the first of them, the evidence in support - in each case it was a witness statement by Ms Saxby - was in the briefest of terms. It was evidently thought unnecessary to exhibit to those brief statements any correspondence or other background material. Although I have no reason to think that there was the slightest intention to mislead the court, none of the applications after the first of them drew attention to the fact that the application had been preceded by another or others. By the time of the second and subsequent applications it would have been apparent from a reference in each witness statement to the fact that the claim form had been issued on 1 November 2007 that there must have been at least one earlier extension of time. But that was left to the reader to divine.[8]Miss Rachel Sleeman who appeared for the claimant submitted, correctly, that it was not mandatory to have a hearing. She submitted that the advice of the Court of Appeal was directed as much to the court as to the applicant for the extension of time. The point was also made that although none of the later applications referred to any earlier application, it would have been evident from the file that there were earlier applications and what the evidence was that had supported those earlier applications.[9]In my view, the onus is on the applicant for the extension to ensure that the correct practice is followed. It is not for the busy Master before whom the application comes to search the file to see if there have been any and if so how many earlier extensions and what the evidence was upon which those earlier applications were based. The onus, in my view, is on the applicant to ensure on each application that all relevant material is drawn to the court’s attention. The strong impression I have from the manner in which these applications were approached is that the matter was regarded as something of a formality and that it was expected that the extension would be granted almost as a matter of course. I cannot think that if Ms Saxby or those supervising had had in mind the advice of the Court of Appeal in Collier v Williams the matter would have been approached in the way that it was.[10]Having obtained the extension of time pursuant to the first application, nothing was done to initiate any steps to effect service on the Israeli-based intended defendants until almost five weeks had passed. It appears that there was a delay in obtaining sealed copies of the order. It is not clear why it was considered necessary to await obtaining a sealed copy of the order. It was not needed to effect service on the Israeli defendants. As soon as the order was forthcoming, which was on 13 March 2008, Ms Saxby forwarded a request for service of the claim form and the particulars of claim (which by then had been prepared) and the order of 7 February to the Foreign Process Section (“FPS”) in the Royal Courts of Justice, requesting service on the Israeli-based defendants. This is a well recognised means of effecting service on persons who are outside the jurisdiction. Ms Saxby had earlier been given to understand that it would take the FPS up to five days to process the request and that there could thereafter be a delay of anywhere up to four months for actual service to be effected. In her witness statement of 4 February Ms Saxby referred to a delay of “up to five months”. Mr Orlando Gledhill, who appeared for the fifth defendant, was critical of this. As I do not think that she would have secured any lesser period of extension if she had referred to four months for service I do not consider that anything turns on this discrepancy between what she had been given to understand and what she put in her witness statement.[11]What is less easy to understand is why Clarke Willmott waited until an extension of time had been obtained before even getting around to initiating the process of serving the Israeli-based defendants. It appears that this was to await finalisation of the particulars of claim which, it appears, were not approved until 22 February 2008. The requirement under the rules is to serve the claim form within the period allowed. The justification for an extension of time must, in my view, relate to why it is that the claim form has not been served within the generous period allowed by the rules. Awaiting the finalised particulars of claim (or a sealed or any order extending time) is not a good reason for delaying service of the claim form, convenient though it may be to serve both at the same time. (See also Collier v Williams at [148].)[12]An issue that was debated before me was whether the application for the second extension of time was made by 4 pm on 1 July 2008, the day on which the first extension of time expired. The evidence in support of the application, a witness statement by Ms Saxby, is dated 1 July. It was sent under cover of a letter, also dated 1 July. The letter is headed “urgent” and marked “By Fax and DX”. It was common ground that the critical question is the date when and time by which the application was received by the court, rather than the date when, having been received by the court, the application is stamped. It was also common ground that the application must be received by 4 pm if it is to be treated as received on that day. The date by which the application is received is important as regards the exercise of the court’s power to extend time under rule 7.6. If the application is made after the time for service has expired (whether that time is the original or an extended period for service) the exercise of the court’s power to extend time is conferred by rule 7.6(3) rather than by rule 7.6(2). Rule 7.6(3) is subject to preconditions and relief cannot be granted if the preconditions have not been satisfied. See Collier v Williams. Rule 7.6(2), by contrast, has no preconditions and relief may be granted under that rule even if the court is not satisfied that the claimant has taken all reasonable steps to serve and has acted promptly (these being the relevant preconditions under rule 7.6(3)).[13]Unfortunately, Ms Saxby has been on a career break since 9 April of this year and has been uncontactable since that date to explain just when she sent the application from her office in Southampton to the Royal Courts of Justice for the second extension and, not least, why she left it to the last day. Mr Gledhill submitted that the burden was on the claimant to persuade the court, if this was its contention, that the application reached the court by 4 pm on 1 July. He submitted that, on the evidence, it had failed to discharge that burden. Mr Matthew Barker, the partner in Clarke Willmott who has overall charge of the litigation by his firm on the claimant’s behalf and has made two witness statements on this application, was of the view, based on the terms of Ms Saxby’s accompanying letter, that the application was indeed made on 1 July and, what is more, that it was received by the court before 4 pm that day.[14]I am persuaded on a balance of probabilities that the application did reach the court by 4 pm on 1 July. Uniquely among the five applications, the letter accompanying the second application was marked “By Fax and DX”. It seems fairly clear that Ms Saxby was alerted, albeit very belatedly, to the need to get the application before the court that day. I find that she faxed it to the court. There would have been little point in sending it after 4 pm. I therefore find that it was received by the court by 4 pm that day and that, accordingly, the court’s power to extend time was that conferred by rule 7.6(2).[15]Ms Saxby’s evidence in support of the second application was exceedingly brief. It made no reference to the earlier application. It omitted any reference to the fact, set out in the evidence which supported the earlier application, that the statutory time limit applicable to the claim had expired. Its first six paragraphs (the witness statement was only eight paragraphs in length) had all the hallmarks of a “cut and paste job” (as Mr Gledhill described it) based on the equivalent paragraphs in the witness statement which supported the first extension. The only paragraphs which were material to the further application were paragraphs 7 and 8:
“7. Three of the five Defendants reside in Israel. Two of the above Defendants have been served, however The Foreign Process Office within the Royal Courts of Justice have been unable to serve the Fifth Defendant, Mr Dan Firer of 21 Robinson, Petach Tikva, Israel 8. Permission is therefore sought to extend the deadline for service of the Claim Form upon the Fifth Defendant until 1 September 2008. It is understood that the Fifth Defendant is in contact with the solicitors instructed by the remaining four Defendants and therefore it is anticipated that service can take place very shortly potentially through solicitor [sic] instructed by the other Defendants.”
[16]Thus, the statement in paragraph 8 suggested that service was expected to be via the solicitors acting for the other defendants. In fact the solicitors in question, Taylor Vinters, had informed Clarke Willmott in a letter dated 17 June that, although they had instructions from the other two Israeli-based defendants, they had not heard from the fifth defendant although they were attempting to make contact with him “and anticipate that we will be able to confirm whether or not we are instructed on his behalf shortly”. On the available correspondence there was therefore no basis for the statement that the fifth defendant was actually in contact with Taylor Vinters and no basis for the expectation that service on him could take place “very shortly” through the solicitors instructed by the other defendants. As Mr Gledhill put it, this was a wishful overstatement of the position.[17]It would surely have been far better if Ms Saxby had exhibited the correspondence and explained exactly what steps were being taken and with what expectation to effect service so that the court could assess for itself whether any further extension of time was justified and if so for how long. In my judgment, this was a misleading statement although I have no reason to think that it was intentionally so. It resulted in the grant of a further extension, this time to 31 August 2008.[18]On 20 August or thereabouts, but well before the expiry of the second extension of time, Ms Saxby applied for a third extension. The first six paragraphs of her witness statement in support were identical to the first six paragraphs of her previous witness statement. So also was the seventh paragraph except for the addition of a sentence to the effect that the FPS had recently returned the documents confirming that service of them had not been executed. This was a reference to the fact that the previous day Clarke Willmott had received from the FPS a notification from the Directorate of Courts in Jerusalem that service on the fifth defendant had not been executed because he had “moved to an unknown address”. In fact, as Clarke Willmott were later to discover, the fifth defendant had not moved address at all: he had lived at the same address at least since 2002. It was just that the claimant and Clarke Willmott had the wrong address for him.[19]Paragraph 8 of Ms Saxby’s witness statement was also almost identical to the corresponding paragraph in her previous witness statement. The only difference was that the application was for an extension of time to 1 December 2008 and that it was “to enable the Claimant to investigate and attempt to undertake alternative means of service of the documents upon the Fifth Defendant”. Like the second application, this application, which came before a Deputy Master, did not refer to the earlier applications or the grounds upon which they had been made. It explained nothing of the steps taken to serve the claim form beyond the fact that the FPS was involved, not least, how the claimant came to have an address for the fifth defendant which turned out to be incorrect. It failed to exhibit any correspondence. It was perfunctory in the extreme.[20]Although the witness statement did not refer to this, there had been a change of solicitors acting for the defendants. The defendants’ present solicitors, Brabners Chaffe Street LLP (“BCS”), had been instructed at the end of July. In his witness statement Mr Barker made the point that the letter which Clarke Willmott had received from BCS enclosing a notice of change of solicitor to BCS did not make clear that they did not have instructions to accept service on behalf of the fifth defendant and that this was despite a request from Clarke Willmott for confirmation “whether you are in contact with the fifth defendant and whether you are instructed to accept service of the claim form on his behalf”. It is quite true that BCS did not in terms respond to that letter indicating whether they did or did not have instructions. On the other hand their subsequent correspondence referred simply to the first to fourth defendants. It gave no indication that they were acting for the fifth defendant and no indication, contrary to the impression conveyed by paragraph 8 of Ms Saxby’s witness statement, that there were grounds for hoping that service on the fifth defendant could take place shortly through them.[21]In fact, although this only emerged in answer to a question I put to Mr Gledhill during the course of the hearing, the fifth defendant instructed BCS in late July 2008. But, as Mr Gledhill submitted and as the correspondence passing between Clarke Willmott and BCS confirmed, BCS did not at any stage make any statement on the fifth defendant’s behalf, let alone suggest, that the firm had or would shortly have instructions to accept service on the fifth defendant’s behalf. Ms Saxby appears to have grounded her hope that service on the fifth defendant would shortly take place on her understanding that BCS were in contact with the fifth defendant (as in fact they were) from which she jumped to the conclusion that BCS would thereby obtain instructions to accept service on his behalf. In short, she was relying on the fifth defendant’s co-operation to enable service to be effected. Since, as she knew, the limitation period had expired, this was optimistic to say the least. She was taking no steps at all in the meantime to effect service should this hope prove unfounded.[22]The further application for an extension of time was successful. The Deputy Master granted the extension sought, this time to 1 December. Whereas each of the first two extensions had been for two months, this one was for three months. It had the effect of extending the limitation period for the bringing of the claimant’s action against the fifth defendant by seven months, over and above the six months (less a few days) conferred (in effect) by rule 7.5(2). At the time that the application was made the claimant and its advisers had no idea where the fifth defendant resided except that it was in Israel (the only address they had was, according to the information of the Directorate of Courts in Jerusalem, incorrect) and, subject to one possible point, were taking no steps to find out where he might be and had put in hand no arrangements to have him served once his correct address had been established.[23]That one point is a remark in a letter from Ms Saxby to the QB Masters’ Support Unit. The letter, dated 22 August 2008, was sent the same day as the letter enclosing the third application. It was in response to an earlier letter from the Court (although that earlier letter was not in evidence before me) which had evidently instructed Clarke Willmott to “serve a photocopy of the Application Notice upon the relevant parties”. Ms Saxby’s letter stated that “We have forwarded this to the foreign process servers who are in the process of arrange [sic] to serve the fifth defendant. However, they have reverted to us confirming that they require a sealed Order…”. This letter was a complete mystery. Neither Miss Sleeman nor those from Clarke Willmott who were instructing her could assist with its contents. I have the very strong suspicion that the letter was written in reference to the earlier attempt to effect service via the FPS which, however, had got nowhere on account of the incorrect address for the fifth defendant. The oddity is why Ms Saxby should have written this letter when she had been made aware three days earlier that service by the FPS had not been possible. There was certainly nothing to indicate that Ms Saxby, or anyone else from Clarke Willmott, had by then taken any steps to identify another process server in Israel (or anywhere else for that matter) to effect service or even to initiate any process with a view to establishing where the fifth defendant was to be found. As will appear, those steps were only started several months later. At that stage, and for many weeks to come, Clarke Willmott’s hopes appear to have been pinned on co-operation from the fifth defendant via BCS.[24]This brings me to the fourth application for an extension of time. This was dated 19 November 2008. I am satisfied that the application reached the court well before the expiry of the then extended period for service, namely 1 December 2008.[25]The first seven paragraphs of Ms Saxby’s witness statement in support were word for word the same as the corresponding paragraphs in her witness statement in support of the third extension. The statement in paragraph 7 that “the Foreign Process Section has recently returned the documents confirming that the service of documents has not been executed” (emphasis added) was misleading. The documents in question had been returned on or about 19 August. In the context of an application for an extension of time where, at the very least, the applicant must expect to be able to show that he is pursuing the matter of service with all due diligence it is hardly correct to describe a critical event which occurred three months earlier as having occurred “recently”. Miss Sleeman accepted that the use of the expression was “unfortunate”. Master Foster who dealt with this further application would only have known that the FPS had returned the documents three months earlier if he had read the file and seen what it was that had been placed before the Deputy Master three months earlier. And why should he?[26]Paragraphs 8 and 9 of Ms Saxby’s witness statement were in the following terms:
“8. We have been in contact with the solicitor acting on behalf of the First, Second, Third and Fourth Defendant. We understand that the solicitors are in contact with the Fifth Defendant and it was anticipated that it would be agreed that they would be instructed to accept service on behalf of the Fifth Defendant, however they have now confirmed that they are not instructed to do so. 9. It will now be necessary to instruct a process server in Israel to attempt to serve the Fifth Defendant. In the meantime it has also been agreed that the claim will be stayed in order to attempt a settlement of this matter.”
[27]The second sentence of paragraph 8 is unhappily worded. Nothing that BCS said to Clarke Willmott justified Ms Saxby’s expectation that BCS would be instructed by the fifth defendant to accept service on his behalf. On the contrary, by mid-October, which was over a month before this further application was submitted and Ms Saxby had made her witness statement in support, BCS had indicated in clear terms that they had no instructions to accept service on the fifth defendant’s behalf. The fact, as it appears to be, that Ms Saxby was questioning in subsequent correspondence whether BCS’s lack of instructions was founded on a mistaken belief on their part that the time for service had already expired and that she then went on to ask whether, in the light of the fact that, by reason of the third extension, the time for service had not yet expired, BCS could indicate whether they were in a position to accept service but they failed to respond, does not, in my view, excuse the way the matter was explained by Ms Saxby. To describe BCS’s clear statement, a month earlier, that they were not instructed to accept service as confirmation which Clarke Willmott had “now” received is, likewise, unfortunate.[28]The fact is that, over the previous four months, Ms Saxby had been hoping that service on the fifth defendant could be effected entirely through co-operation from the fifth defendant himself. But she had absolutely no grounds for supposing that this co-operation would be forthcoming and, for reasons I have already mentioned (based on limitation), good grounds for supposing that it would not. Nothing said by BCS justified her hope.[29]The first sentence of paragraph 9 supports the view that up to 19 November at least, no steps had in fact been taken to instruct a process server in Israel to effect service on the fifth defendant. The fact, adverted to in the second sentence, that a stay of the claim to attempt a settlement had been agreed between the claimant and the other defendants is, in my view, irrelevant to the need to effect service on the fifth defendant and provides no excuse for the dilatory way in which the matter was apparently being pursued.[30]In the tenth and last paragraph of her witness statement Ms Saxby sought a further two months extension to 1 February 2009. She stated “Given the stay agreed by the parties it is submitted that none of the parties will be prejudiced by the further extension”. That might have been true of the other defendants but it was most certainly not true as regards the fifth defendant. Every extra period of extension operated to extend the limitation period for the bringing of the claim against him. That was manifestly prejudicial to him.[31]The application succeeded and an order was made on 2 December extending the period to 1 February 2009.[32]Despite having this further (and fourth) extension for service of the claim form, service was not effected prior to the expiry on 1 February of this further period. Indeed, it is far from clear that any steps were taken towards achieving service during this further extension until near the end of the two months. This led to the fifth application and, in due course, to the fifth extension.[33]As on previous occasions the application was supported by a witness statement of Ms Saxby. As on previous occasions the matter was dealt with on paper and without therefore a hearing. As on previous occasions Ms Saxby’s witness statement failed to set out just what earlier extensions had been granted, the reasons for them and, except in the briefest terms, why it was that previous extensions had proved insufficient.[34]The first seven paragraphs of her witness statement followed word for word the first seven paragraphs of her previous witness statement. By 26 January 2009, the date of the new witness statement, the assertion in paragraph 7 that “the Foreign Process Section has recently returned the documents confirming that the service of documents has not been executed” (emphasis again added) was even more out of date and inaccurate than it had been in the previous witness statement: the return of documents had, by then, occurred five months earlier. Ms Saxby added a further sentence to paragraph 7 stating that:
“No explanation has been given as to why service was not effected by the Foreign Process Section.”
That was simply untrue: the Directorate of Courts of Jerusalem had indicated in a document which had been supplied by the Royal Courts of Justice to Clarke Willmott on or about 19 August that the “recipient” (ie the fifth defendant) had “moved to an unknown address”.[35]What was conspicuously absent from Ms Saxby’s fifth witness statement (as with all of the others it is designated a “first” witness statement) as it had been in the witness statement in support of the application for the fourth extension, was what steps Clarke Willmott (or others on their behalf) were taking to ascertain the fifth defendant’s current address. Instead, what Ms Saxby stated, in paragraphs 8 to 11 of the witness statement, was that:
“8. We have been in contact with the solicitor acting on behalf of the First, Second, Third and Fourth Defendant. The solicitors have been/are in contact with the Fifth Defendant and previously indicated that they were instructed by the Fifth Defendant and that they would be making an application to the court on his behalf. However they have informed us that they are not instructed to accept service on behalf of the Fifth Defendant. 9. It has therefore been necessary for the Claimant to attempt to instruct a process server in Israel to attempt to serve the Fifth Defendant. Some delay has been caused due to difficulty obtaining a suitable agent, such an agent has now been instructed and we hope that service can be [e]ffected fairly swiftly. 10. A case management conference has been listed for 9 February 2009 and the directions sought will include disclosure followed by the filing of a reply by the Claimant to the defence. 11. Permission is sought to extend the deadline for service of the Claim Form upon the Fifth Defendant until 1 May 2009 to enable the Claimant to attempt to undertake alternative means of service of the documents upon the Fifth Defendant in Israel. Given the directions sought, it is submitted that none of the parties will be prejudiced by the further extension.”
[36]The second sentence of paragraph 8 was not correct. A letter dated 17 October 2008 from BCS on which, it appears, that sentence is based, stated in terms (in repetition of an earlier letter) that:
“We confirm that we are not instructed to accept service on behalf of the Fifth Defendant.”
Then, after stating, incorrectly because Clarke Willmott had not thought it necessary to inform BCS of the third extension, that the extended time for service had expired, the writer of the letter, a Mr Lancefield of BCS (and the person within BCS having care and conduct of the matter), stated that:
“We are presently considering an Application to have the proceedings against the Fifth Defendant dismissed with costs.”
Since the fifth defendant had not been served and BCS had no instructions to accept service on his behalf and believed that the time for service had in any event expired, that last sentence could only sensibly have referred to an application by the other defendants. But even if Ms Saxby misunderstood it to mean that the fifth defendant would somehow be applying to have the unserved claim against him dismissed, a further three months had passed since that letter was sent before Ms Saxby made her statement in paragraph 8.[37]The reference in paragraph 8 to the necessity to attempt to instruct a process server in Israel to attempt to serve the fifth defendant and to “some delay” having been encountered owing to the difficulty in obtaining a suitable agent, failed to point out that by an e-mail dated 17 October to Mr Lancefield Ms Saxby had stated that Clarke Willmott “are in the process of attempting to serve the fifth defendant personally”. But neither in her fourth witness statement (made on 19 November) nor in her fifth witness statement (made on 26 January) did Ms Saxby indicate what if any steps to achieve that end she had taken. The statement in paragraph 9 that an agent had “now” been instructed and that Clarke Willmott “hoped that service can be [e]ffected fairly swiftly” is likewise shrouded in some mystery. This is because, apparently, there is nothing in Ms Saxby’s file, neither a letter nor any kind of note however brief, to indicate when she first approached, or attempted to approach, a process server in Israel prior to the only relevant letter that does exist, namely one dated 2 February 2009 to a firm called EMT Israel Investigation based in Tel-Aviv. A later letter from Clarke Willmott to BCS dated 5 May 2009 suggested, as might be expected, that before the letter of 2 February was sent to EMT Israel Investigation there had to be agreement on timescales and terms of payment. If this was so none of these matters was reflected in any contemporary correspondence or internal memoranda. Nor was Mr Barker able to shed any light on quite what steps prior to 2 February Ms Saxby had been taking with a view to finding a process server. Ms Saxby’s continuing absence since 9 April 2009 has meant that she cannot be contacted. That said, it is to be noted that Clarke Willmott had an opportunity to obtain full instructions from her before she departed because the present application, dated 19 March, and a detailed supporting witness statement of Mr Lancefield with exhibits were sent to Ms Saxby under cover of a letter dated 25 March 2009 to which Ms Saxby herself replied on 6 April.[38]Paragraph 11 of Ms Saxby’s witness statement repeated the same assertion that the further extension would not cause any prejudice. The other defendants may not have been prejudiced but it was certainly prejudicial to the fifth defendant who, as a result of the further extension, found the limitation period for the claim against him extended by a further three months.[39]In her submissions to me, Miss Sleeman referred to the fact that the order made on the fourth application, extending time to 1 February 2009, was only stamped on 16 January 2009. The suggestion, apparently, was that the sealed order was needed for supply to the process server in Israel and that in view of the delay in getting it back a further extension - the fifth - was needed because, by the time the stamped order was received, only two weeks remained of the fourth extension. But as Mr Gledhill submitted, if following its making on 2 December Clarke Willmott had wanted a sealed copy as a matter of any urgency, it could have been asked for and would assuredly have been provided without delay. Indeed, sealing such a simple pre-prepared two-sentence order (which merely extends the time to 1 February and makes costs in the case) would have been readily forthcoming in a matter of hours if not minutes. But, in any event, it was not necessary to serve that order in order to achieve service of the claim form. The requirement of the rules is merely to serve the claim form. If challenged, subsequent to service, to demonstrate that the service had been within the period allowed for it, the order could have been produced to show that the necessary extension of time had been secured. There was therefore nothing in this further point.[40]The fifth application which, I accept, was lodged with the court before 1 February (it appears to have been sent by DX on Thursday 29 January and would likely have reached the court on Friday 30 January) led to the grant of the fifth extension, this time for three months to 1 May 2009.[41]As matters turned out, such a lengthy extension was not necessary. Instructed by the letter from Clarke Willmott dated 2 February 2009, EMT Israel Investigation were able to find and serve the fifth defendant in less than two weeks, by 15 February 2009. It appears that he had been resident at least since 2002 at the address where he was located. There is no evidence that he had sought in any way to conceal his address or his presence there, or put forward a false address. The very strong likelihood is that if Clarke Willmott had attempted at the outset to find a local process server, and had done so with the diligence that they showed in late January/early February 2009 service could have been effected in little more than the two weeks that it eventually took. In that event, no extension of time would have been needed, let alone the five extensions totalling twelve months that were in fact obtained.[42]Before coming to counsels’ submissions there is one further matter which I should mention. This is a suggestion in Mr Barker’s evidence that BCS were aware that the claimant and those advising him (including Clarke Willmott) had the wrong address for the fifth defendant but failed to volunteer what his correct address was. In a second witness statement Mr Lancefield of BCS made three points in response to that. The first was that he was unaware that the claimant had the wrong address until he reviewed his files in response to Mr Barker’s second witness statement of 29 April 2009 and had no reason to check that the fifth defendant’s address was correct until the point was raised in Mr Barker’s second witness statement. That is not a matter which I can resolve on an application of this kind. Second, Clarke Willmott did not even ask BCS what the fifth defendant’s address was until they asked in a letter dated 4 February 2009. The matter was then raised again in a telephone conversation the next day between Ms Saxby and Mr Lancefield. Third, and in any event, BCS did not have the fifth defendant’s authority to disclose his address when Ms Saxby raised the matter with him in their 5 February conversation. As matters turned out her request was overtaken by the success of the Israeli process server in locating and serving the fifth defendant a few days later.[43]It was also suggested that the fifth defendant knew that the claimant was seeking to serve him at the wrong address and that he failed to disclose his correct address. The only evidence to support this is the presence on the face of the claim form itself of the fifth defendant’s incorrect address. It turns on the fact, which is not disputed, that on or about 29 July 2008 BCS supplied the fifth defendant with a copy of the claim form, particulars of claim and various exhibits for the purpose (as it is put in a letter dated 27 April 2009 from BCS to Clarke Willmott) “of obtaining factual input into the Defence of the First to Fourth Defendants…”. Even if the fifth defendant did notice the incorrect address (it does not appear in the particulars of claim) I do not see that his failure to disclose his correct address - presumably to the claimant or to the claimant’s solicitors - is something that is to be held against him. I will refer later to this when I consider the question whether to any extent a defendant who has not been served with proceedings is under any duty to assist a claimant to find and serve him.

Counsels’ submissions

[44]Mr Gledhill submitted that, these being without notice applications, the orders made on them should be set aside by reason of misstatements and non-disclosures in the evidence of Ms Saxby. At all events, he submitted, this should be the consequence as regards the orders made on the fourth and fifth applications. This is because the evidence breached the duty of full and frank disclosure implicit in any without notice application. The defects in Ms Saxby’s evidence meant that the court was given a one-sided and inaccurate view of the merits of granting any and if so what extensions and what points might fairly be made on the fifth defendant’s behalf. He submitted that if the conclusion reached was that the duty had been broken it was not necessary for the court to enquire further into the matter: the orders should simply be set aside.[45]He went on to submit that, even if there had been no breach of the duty or none which would attract the sanction of a discharge of the orders made on the occasions in question, the orders made on the fourth and fifth occasions should be set aside - it was not necessary to consider the point in relation to the earlier applications - because the evidence did not disclose grounds for any extension, let alone the extensions granted. Even assuming that, having on 19 August heard that service by the FPS was not going to take place so that the third application (submitted shortly afterwards) might have been justified, Clarke Willmott were not justified, having secured that further (third) extension, in doing nothing thereafter to ascertain the fifth defendant’s whereabouts with a view to effecting service on him and, instead, hoping that the fifth defendant would instruct solicitors to accept service on his behalf. On any view BCS, acting for the other defendants, had made clear by 15 October 2008 at the latest that they had no instructions to accept service on behalf of the fifth defendant. Yet it was only towards the end of the fourth extension, at the very earliest, that steps were taken to instruct a local process server with a view to locating and serving the fifth defendant. Once this was done (in very early February), service was effected within days. This went to show, Mr Gledhill suggested, how quickly and easily service could have been effected if only Clarke Willmott had set about the matter at an earlier stage.[46]Miss Sleeman submitted that, even if (which she did not accept) there had been material misstatements and non-disclosure in the evidence of Ms Saxby, such failings were unintended and should not automatically justify the draconian steps of setting aside the orders and thereby invalidating the service effected on the fifth defendant. It was necessary, she submitted, to look at the matter more broadly and take into account the overriding objective, in particular the need to deal justly with a case and do so in ways which are proportionate. It was proportionate, she said, to grant the various extensions having regard to all of the circumstances of the matter. This, she said, was emphatically not a case where a claimant has waited to the last minute to initiate its process against the defendant; Mr Duckworth, the claimant’s liquidator, had only been appointed in January 2007 which was less than a year before the expiry of the relevant limitation period. He had to undertake a complex investigation. The claim form was issued (on 1 November 2007) while his investigations were still in progress. It was proportionate and just in the interests of saving expense to wait until the particulars of claim had been finalised before serving the claim form on the five defendants. Given the likely time for service in Israel that the FPS would need (over four months), it was sensible and prudent to launch the first application for an extension when it was realised that further time would probably be needed to enable this to be achieved: the application was made well in advance of the 1 May 2008 expiry of the six months allowed by CPR 7.5(2) for service out of the jurisdiction.[47]The second application, admittedly left to the last day of the two months extension provided by the first order but nevertheless lodged by close of business that day, was made because the FPS had not yet come back with the result of its attempts to serve the fifth defendant. It was, submitted Miss Sleeman, sensible and proportionate to grant further time to await the outcome of these efforts before taking steps to locate and instruct someone else to find and serve the fifth defendant. The fact that Ms Saxby was aware by June 2008 that the other two Israeli-based defendants had been served did not imply - and there is no evidence to suggest - that Ms Saxby was aware of any particular difficulties experienced by the FPS in serving the fifth defendant. The four months needed by FPS had not yet expired. There could have been all sorts of reasons why the FPS had not served him.[48]The third extension was necessary because Clarke Willmott were informed that the FPS had been unable to serve the fifth defendant. It was launched within three days of that information reaching them. By then the second extension had no more that twelve days to run. Thereafter, for several months, there was uncertainty, she submitted, over whether BCS would accept service on the fifth defendant’s behalf. The inter-solicitor correspondence continued until not much of the third extension was left, so necessitating the fourth extension. In the meantime, Clarke Willmott were looking to instruct an agent in Israel to trace and serve the fifth defendant. Rightly or wrongly, there was a delay in obtaining a sealed copy of the order granting the fourth extension. When it became clear that the fourth extension would expire before the process server in Israel could locate and served the fifth defendant, a fifth application was necessary, leading to the fifth extension. Service was effected very shortly after the fifth extension was granted.[49]Miss Sleeman went on to submit that a most important factor in the exercise of the court’s discretion to extend time is that by late July 2008, if not earlier, the fifth defendant was aware of the claim which the claimant was bringing: BCS had by then been retained by him and had supplied him with a copy of the claim form and particulars of claim. She submitted that a defendant with full knowledge of the case and having the benefit of legal advice should not be allowed to avoid his potential liability for the claim because the claimant experiences difficulty in locating and serving him out of the jurisdiction. This would not be dealing with the case justly. Moreover, she submitted, the fifth defendant had not identified any prejudice caused to him by the late service. It was unlikely that his defence would differ from that of the other defendants, disclosure had only just taken place, all five defendants had instructed the same solicitors and no trial date had yet been fixed. There was no reason why the claim against him could not be heard at the same time as the claim against the other defendants. Indeed, she submitted, if the fifth defendant was not a defendant to the claim, the other defendants might consider seeking an indemnity or contribution from him in the event that the claim against them should succeed. Were this to happen, the result would be increased costs and a need for more of the court’s resources to be diverted to the matter.

The legal position

[50]The discretion to extend time under rule 7.6(2) is at large: the rule does not lay down any explicit guidance as to how the discretion is to be exercised. As might be expected, however, the correct approach has been the subject of judicial decision, notably Hashtroodi v Hancock [2004] EWCA Civ 652; [2004] 1WLR 3206, Collier v Williams, Carnegie v Drury [2007] EWCA Civ 497 and Hoddinott & ors v Persimmon Homes (Wessex) Ltd [2007] EWCA Civ 1203; [2008] 1WLR 806, from which I derive the following propositions.(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) The principal and frequently the only question is to determine whether there was a good reason for the claimant’s failure to serve the claim form within the period allowed by the rules.(3) If there was a very good reason for the failure to serve within the specified period, an extension of time will usually be granted, for example where the court has been unable to serve the claim form or the claimant has taken all reasonable steps to serve but has been unable to do so.(4) Conversely, the absence of any good reason for the failure to serve is likely to be a decisive factor against the grant of an extension of time.(5) The weaker the reason for failure to serve, the more likely the court will be to refuse to grant the extension.(6) Whether the limitation period applicable to the claim has expired is of importance to the exercise of the discretion since an extension has the effect of extending the period of limitation and disturbing the entitlement of the potential defendant to be free of the possibility of any claim.(7) 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.(8) 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.(9) 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, so that the fact that the potential defendant has simply sat back and awaited developments (if any) is an entirely neutral factor in the exercise of the discretion.

Decision

[51]The truly remarkable fact in this case is that the claimant needed no less than five extensions over and above the initial (and generous) six months afforded by rule 7.5(2) within which to effect service of the claim form on the fifth defendant. Altogether, extensions totalling twelve months were obtained although, as it happens, service was achieved shortly into the period of the fifth extension.[52]The question I ask myself is whether the claimant has shown good reasons for obtaining extensions of the length needed to enable the claim form to be served on the date when actual service was effected.[53]I accept that this is not one of those cases where the claimant, desirous of making a claim, has stood idly by until the last minute (in limitation terms) before issuing the claim form. I accept that the liquidator was active in conducting the investigations he felt that he needed before a decision could be made whether to make a claim. It was nevertheless incumbent upon the claimant, acting by the liquidator, having issued the claim form to proceed without undue delay to ascertain the whereabouts of the five potential defendants and serve them with the claim form. It was incumbent upon it to do so because, as the liquidator and those advising him understood only too well, the limitation period expired a matter of days after the claim form was issued. In particular, it was not reasonable to await finalisation of the particulars of claim in February before taking steps to serve. This resulted in the loss of three months or so in the case of the English-based defendants and even longer in the case of the three Israeli-based defendants and, given the time that the FPS were likely to take to effect service on the latter, made inevitable the need for an extension of time.[54]Having belatedly taken steps to use the FPS to effect service on the Israeli-based defendants, it was reasonable for the claimant to await the outcome of those attempts before taking steps to effect service, by then on the fifth defendant alone, by some other means.[55]Aware by July 2008 that BCS were in touch with the fifth defendant, it was reasonable for Clarke Willmott by letter dated 31 July 2008 to enquire whether BCS had instructions to accept service on the fifth defendant’s behalf (and this notwithstanding that BCS’s predecessor, Taylor Vinters, had stated, by their letter of 17 June 2008, that they had no instructions from the fifth defendant) but, not having heard in response that BCS did have such instructions, it was incumbent upon them to take steps without undue delay to locate and instruct an Israeli-based process server with a view to finding and serving the fifth defendant. This Clarke Willmott failed for many months to do. I have seen no good reason why they did not. Instead, they persisted in the attempt to establish whether BCS had instructions to accept service. By mid-October, BCS had made plain that they had no such instructions. Ms Saxby’s belief that BCS might have laboured under a misconception as to whether by then there was an unexpired extension of the period for service and that their response was influenced by their belief that there was no such extension, does not provide a good reason for not taking immediate steps to locate and instruct an Israeli-based (or some other) process server to find and serve the fifth defendant. Clarke Willmott appears to have allowed the matter to drift until, it would seem, early 2009 (there being no evidence to suggest that it was any earlier) before taking steps to identify and instruct an Israeli-based process server. The fact that there was delay in receiving stamped copies of the court orders extending time provides no good reason for delaying matters.[56]I conclude therefore that no good reasons have been shown to justify all of the extensions obtained, in particular the fourth and fifth extensions.[57]Are there any factors which should persuade me to leave the orders in place notwithstanding the absence of good reason for the failure to serve before February 2009? I am not persuaded that there are. A most significant factor in this regard is the expiry of the limitation period. The importance of this is something which Ms Saxby’s witness statements appear to ignore and which Miss Sleeman’s skeleton argument appears to underrate. It is no answer to say that the other defendants might seek to join the fifth defendant with a view to recovering an indemnity or contribution from him in the event that they should be held liable to the claimant. The fact is that they may not. The fifth defendant is entitled to take his chance on that. To deprive him of his limitation defence by extending time is not to any material degree outweighed by the possibility that the other defendants may seek to join him at a later stage.[58]In reaching my decision I have borne in mind, but attach no great weight to the fact, that the fifth defendant was supplied in late July 2008 with a copy of the claim form and particulars of claim.

Result

[59]The application succeeds. I shall set aside the orders extending time made on 2 December 2008 and 13 February 2009. It is not necessary to set aside the earlier orders. It follows that I shall set aside (or declare to be ineffective) the service of the claim form on the fifth defendant. The consequence is that the action will proceed against the other four defendants alone.[60]I add the following footnote. The fact that Ms Saxby’s witness statements in support of the various applications to extend time contained the misstatements to which I have drawn attention and may be criticised for failing to point out, for example, the number of earlier extensions there had been, or exactly what steps were being taken (if any) to identify and instruct an process server to find and serve the fifth defendant, or to highlight the fact that the limitation period had long since passed, would not have led me to set aside the orders made if I had been otherwise persuaded that good reasons existed for the extensions granted. Instead, they reinforced my impression that this whole process was approached in a perfunctory manner and without proper regard for the need to effect service as a matter of urgency and not to rely on obtaining extensions of time.

Cited in 16 later judgments

and 7 more of the most senior