Higgins & Ors v ERC Accountants & Business Advisers Ltd [2017] EWHC 2190 (Ch)

Case No C30MA560[2017] EWHC 2190 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue MANCHESTER DISTRICT REGISTRY, Manchester Civil Justice Centre
1 Bridge Street West
Venue Manchester M60 9 DJDate 18/09/2017
Before
HIS HONOUR JUDGE PELLING QCSITTING AS A JUDGE OF THE HIGH COURT
Between
(1) PATRICK PHILIP JOSEPH HIGGINSClaimants(2) ANGELA SARITA ELSA HIGGINSClaimant(3) CHRISTOPHER McKEATINGClaimant(4) PAUL BRENNANClaimant(5) C&P APOTHECARIES LIMITEDClaimant(6) HIGGINS PHARMACY LIMITEDClaimant(7) PH MECHANICAL SERVICES LIMITEDClaimant(1) ERC ACCOUNTANTS & BUSINESS ADVISERS LIMITEDDefendants(2) GRANITE TAX LIMITEDDefendant
Mr Giles Maynard-Connor (instructed by TLT LLP) for ClaimantMr D.E.W Glover (instructed by Beale & Company) for First DefendantMr James Purchas (instructed by Sedgwick Detert Moran & Arnold LLP) for Second DefendantHearing Hearing dates: 18-19 July 2017
JudgmentHH Judge Pelling QC:IntroductionThe Background
[1]In these proceedings, the claimants seek damages or equitable compensation from the defendants as their former accountants and financial advisors for alleged loss and damage alleged to have been caused by the defendants alleged breaches of contract, negligence and breach of fiduciary and/or statutory duty. The Claim Form was issued on 19 May 2016 (“Claim Form”). The claimants maintain that the Claim Form was validly served on the defendants under cover of a letter dated 20 July 2016 and if and to the extent that an amended Claim Form and or Particulars of Claim have not been validly served then the court should correct these errors and omissions by making various corrective orders pursuant to various powers contained in Parts 3, 6 and 7 of the Civil Procedure Rules. They apply for various orders in order to give effect to those submissions. The second defendant maintains that the Claim Form has not been served and that omission and its effects cannot be corrected other than by the commencement of fresh proceedings in circumstances where it maintains that it would then have the benefit of a limitation defence. Accordingly, it has applied for declaratory and other relief necessary to give effect to that submission. The first defendant has ostensibly sought to remain neutral but in fact has issued an application in similar terms to that issued by the second defendant and invites the court to make the same orders as it makes in relation to the second defendant’s application.[2]The detailed substantive allegations made by the claimant against the defendants do not matter for the purposes of the applications I have to determine but they are set out in the Particulars of Claim dated 17 March 2017 (“Particulars of Claim”). In summary, however, the claim arises out of a tax mitigation scheme allegedly devised by the defendants and implemented by the claimants on their advice (“Scheme Claims”). There is also a claim by C against the first defendant (“D1”) arising out of fraud by an employee of D1 (“the employee fraud claim”). Again, the details of that claim do not matter for present purposes. It is necessary to note only that a different firm of solicitors were appointed by D1 to act on its behalf in relation to the employee fraud claim from that appointed to act on its behalf in respect of the Scheme Claims.

The Applications for Determination

[3]There are three applications that have to be determined being:(a) An application by Cs contained in an Application Notice dated 5 April 2017 by which (as amended by agreement) Cs seek a declaration that the Claim Form and/or Particulars of Claim have been validly served or an order pursuant to CPR r.3.1 and/or r.7.6 and/or 6.15 and/or 6.16 and/or 6.27 extending the time for or dispensing with service of the Claim Form and/or an Amended Claim Form sent to the defendants’ solicitors in March 2017 (“ACF”) and/or the Particulars of Claim and/or an Order pursuant to CPR r.3.1 extending the time, or dispensing with the time, for filing the ACF or relief pursuant to CPR r.3.9 (“Claimants’ Application”);(b) An application by D1 contained in an Application Notice dated 13 April 2017 by which it seeks an order setting aside service of the Claim Form and Particulars of Claim and a declaration that the English court has no jurisdiction to try the claim brought or should not exercise any discretion it might have to try the claim “… to the extent that the same is sought … by … the second defendant …” (“D1 Application”); and(c) An application by the second defendant (“D2”) contained in an Application Notice dated 13 April 2017 by which it seeks and order setting aside service of the Claim Form and Particulars of Claim and a declaration that the English court has no jurisdiction to try the claim brought or should not exercise any discretion it might have to try the claim (“D2 Application”).[4]As mentioned already, D1 maintains both on the face of its Application Notice and in its written submissions that it wishes to remain neutral and had only issued its application because Cs and D2 had issued or threated to issue their respective applications. I have little doubt that D1 wishes thereby to obtain the benefits of any success by D2 but at the same time avoid an adverse costs order if Cs are successful. That is not a permissible way to proceed. In my judgment, it is not open to D1 to remain neutral but at the same time issue an application in the terms referred to above that it requires the court to determine. Either the application must be withdrawn or maintained. In the event, it was maintained. The costs consequences that follow will depend on the outcome of D2’s application.[5]There is an issue between the parties concerning limitation. As mentioned above, the defendants maintain that if the Claim Form in these proceedings has not been validly served then Cs’ claims are all statute barred. Mr Maynard-Connor does not accept that is so for all the claims. He maintains that Cs are entitled to rely on s.14A of the Limitation Act 1980 in relation to the Scheme Claims against each of the defendants and on s.32 of the 1980 Act in relation to the employee fraud claim. These are not issues that I can or should attempt to resolve definitively on these applications. They will only arise if the defendants’ applications succeed and Cs attempt to serve the new Claim Form that Cs have issued without prejudice to the relief sought on their applications. I am satisfied however that if the defendants are correct in their argument that the Claim Form has not been validly served, and that cannot be corrected, then they will have a realistically arguable limitation defence if the new Claim Form is served. The extent to which that is relevant to the applications I have to decide is something I return to later in this judgment.

Facts Relevant to the Applications

[6]The facts relevant for present purposes start with the delivery of pre-action protocol letters on behalf of Cs dated 20 November 2015 to each defendant. It is not necessary that I quote from either. That concerning D1 had been sent to the firm of solicitors with whom Cs’ solicitors had been in contact concerning the employee fraud claim. That firm informed Cs’ solicitors that they were instructed only in relation to that claim and that “… until told otherwise, you should deal with our client directly …”. On 27 January 2016, Beale & Company (“D1’s solicitors”) confirmed that they had been instructed on behalf of D1 in respect of the Scheme Claims and asked Cs’ solicitors to “… please direct all future communications on these matters to us and not contact our client direct going forward”.[7]The pre-action protocol letter sent to D2, was acknowledged by Sedgwick Detert Moran and Arnold LLP (“D2’s solicitors”) by letter dated 16 December 2015 in which Cs’ solicitors were told to “… ensure that all future correspondence is sent to us …”.[8]On 19 May 2016, Cs’ solicitors issued but did not serve the Claim Form. On 20 July 2016, Cs’ solicitors wrote to D1’s solicitors in these terms:
“… As a result of your failure to address the allegations made and the lack of proposals from your client as to resolution of the issues, we have been instructed to issue proceedings. Our clients have instructed counsel to plead proceedings as set out in the attached draft Particulars of Claim which we shall serve upon you within 14 days from the date of this letter namely 3 August 2016. For reasons of limitation, we issued proceedings against your client and [D2] on 19 May 2016, as a protective measure. For the avoidance of any doubt on your clients’ part, we enclose a copy of the issued Claim Form. … … our clients invite you to consider mediation of the dispute and to confirm your intention in writing to this proposal, providing dates of availability before 3 August 2016. … ”
A letter in materially identical terms was sent to D2’s solicitors and also the solicitors acting for D1 in relation to the employee fraud claim. Each was also dated 20 July 2016. The significance of 3 August was of course that it was the prospective date by which Cs’ solicitors had said they would serve the Particulars of Claim.[9]There then followed a series of emails concerning extensions of time. On 4 August 2016, D1’s solicitors wrote to Cs’ solicitors concerning negotiations and mediation and in that context said “… we are willing to agree an extension of time for service of any Claim Form/Particulars to allow these WP discussions/possible mediation.” On the same day D2’s solicitors wrote by email in a similar vein to Cs solicitors saying “… to the extent that it is an issue at this stage, we would also be happy to agree an extension of time for service of the Claim Form.” These emails were acknowledged the following day by an email from Cs’ solicitors in which they said amongst other things that “your confirmation to agree an extension of time for service of the Particulars of Claim is noted”. Notwithstanding the reference to “Particulars of Claim” it would appear that this was an error, or at least that Cs’ solicitors appear to have been aware of the continuing need to serve the Claim Form because on 25 August 2016, Cs’ solicitors wrote to the defendants’ solicitors in the context of an enquiry as to whether they were still willing to participate in a mediation saying “… if your clients are still willing to meet on a WP basis, our client shall make an application to court pursuant to CPR 7.6(2) for an extension of time for service of the Claim Form”. This made complete sense in context because a Claim Form must be served within the jurisdiction by midnight on the calendar day four months after the date of its issue – see CPR r.7.5(1). The Claim Form in these proceedings had been issued on 19 May 2016 and thus had to be served by no later than four months after that date.[10]The 25 August email demonstrates very clearly that to the knowledge of the Cs’ solicitors the Claim Form had not been served and had to be served by 19 September unless time was extended. That this was also the understanding of both defendants’ solicitors is apparent from what they each said in their 4 August letter and email. The habit of Cs’ solicitors using the phrases “Claim Form” and “Particulars of Claim” interchangeably is apparent from the email of 14 September 2016 of the individual concerned with the day to day handling of the matter following the letter of 20 July 2016. It sought the agreement of the defendants’ solicitors to “… the draft Consent Order attached regarding the extension of time for service of the Particulars of Claim …” although, in fact, the Consent Order was concerned exclusively with extending the time for service of the Claim Form since its only operative provision was that the Claim Form “… is to be served by 4:00pm on 19 January 2016…”. I explain why that is relevant later in this judgment. The Consent Order should of course have said 2017 not 2016 but that error does not matter for present purposes. The draft was negotiated between solicitors, a provision was added that had the effect of removing a third defendant from the proceedings by amending the Claim Form and it was then signed off by 15 September 2016. The erroneous reference to 2016 does not appear to have been picked up by any of the solicitors involved in the process until a further version was agreed and signed by no later than 12 October 2016.[11]Aside from the date error in the initially agreed version of the Consent Order, the position is entirely clear – all parties recognised that the Claim Form had not been served, that it would expire on 19 September 2016 unless either served by that date or the time for service of it was extended and for that reason it was agreed between all parties that the time for its service would be extended to 19 January 2017.[12]That this was the understanding of Cs’ solicitors is reflected in the correspondence that followed. There was a Without Prejudice meeting on 1 November 2016 but by 22 November Cs’ and their solicitors were becoming frustrated by the lack of progress. Cs’ solicitors emailed the defendants’ solicitors concerning the difficulties being created by the lack of progress and ended the email with the following:
“In light of the forthcoming deadline of 19 January 2017 for service of the Claim Form and Particulars of Claim, your clients now have a limited opportunity to cooperate as we had previously envisaged.”
As is obvious, this letter recognised that the Claim Form had not been served and now needed to be served by 19 January 2017 unless a further extension was either agreed or obtained by application to the court. What then followed was a further negotiation leading to a further consent order that extended the time for the service of the Claim Form to 19 March 2017. That order was sealed on 24 January 2017.[13]The next stage came in March 2017, when by an email of 15 March 2017, Cs’ solicitors sought confirmation from the defendants’ solicitors that they would accept service by email. D1’s solicitors responded the following day saying they would seek instructions as to whether they could accept service. D2’s solicitors responded in a similar manner. It is common ground that no confirmation was ever provided by either D1’s or D2’s solicitors as to whether they had instructions to accept service.[14]On 17 March 2017, Cs’ solicitors wrote to the defendants’ solicitors in these terms:
“In accordance with the agreement between the parties regarding the extended time for service of the Particulars of Claim, we enclose by way of service a copy of the Claimant’s Particulars of Claim in this matter. …”
Enclosed with the letter was a copy of the Particulars of Claim. The Claim Form was not included. These letters and their enclosures were posted by first class post at about 17:05 on 17 March.[15]By a letter dated 31 March 2017, D2’s solicitors asserted (by reference to the chronology set out above) that “… the Claim Form has not been served on our client and …. is no longer valid. In those circumstances, we shall be filing an Acknowledgement of Service, contesting the Court’s jurisdiction to deal with this claim.” Such an Acknowledgement was filed on 31 March. On 3 April 2017, D1’s solicitors adopted a similar stance to that adopted by D2’s solicitors by filing a similar Acknowledgement. Meanwhile under cover of a letter dated 31 March 2017, Cs’ solicitors wrote to the defendants’ solicitors enclosing “… the signed Claim Form, Particulars of Claim and response pack for your attention”. In fact the Claim Form attached was the ACF being the original Claim Form amended by consent in 2016 so as to remove a third defendant. The applications that I have to determine were then issued.

The Applicable Rules

[16]The rules relevant to the service of Claim Forms are set out in Parts 6 and 7 of the Civil Procedure Rules. By CPR r.6.3:
“6.3 —Methods of service (1) A claim form may (subject to Section IV of this Part and the rules in this Section relating to service out of the jurisdiction on solicitors, European Lawyers and parties) be served by any of the following methods— (a) personal service in accordance with rule 6.5; (b) first class post, document exchange or other service which provides for delivery on the next business day, in accordance with Practice Direction 6A; (c) leaving it at a place specified in rule 6.7, 6.8, 6.9 or 6.10; (d) fax or other means of electronic communication in accordance with Practice Direction 6A; or (e) any method authorised by the court under rule 6.15. (2) A company may be served— (a) by any method permitted under this Part; or (b) by any of the methods of service permitted under the Companies Act 2006.”
The court will serve a Claim Form unless the claimant notifies the court that he wishes to serve it – see CPR r.6.4(1)(b). Claim Forms may be served personally but generally will be served by first class post at an address at which a defendant may be served – see CPR r.6.6(2). This may include a solicitor’s address providing that CPR r.6.7 is complied with. It provides:
“6.7—Service on a solicitor or European Lawyer within the United Kingdom or in any other EEA state (1) Solicitor within the jurisdiction: Subject to rule 6.5(1), where— (a) the defendant has given in writing the business address within the jurisdiction of a solicitor as an address at which the defendant may be served with the claim form; or (b) a solicitor acting for the defendant has notified the claimant in writing that the solicitor is instructed by the defendant to accept service of the claim form on behalf of the defendant at a business address within the jurisdiction, the claim form must be served at the business address of that solicitor.”
In relation to service by electronic means, paragraph 4.1 of Practice Direction 6A – Service Within the United Kingdom, (“PD6A”) provides:
“Service by fax or other electronic means 4.1 Subject to the provisions of rule 6.23(5) and (6), where a document is to be served by fax or other electronic means— (1) the party who is to be served or the solicitor acting for that party must previously have indicated in writing to the party serving— (a) that the party to be served or the solicitor is willing to accept service by fax or other electronic means; and (b) the fax number, e-mail address or other electronic identification to which it must be sent; and (2) the following are to be taken as sufficient written indications for the purposes of paragraph 4.1(1)— (a) a fax number set out on the writing paper of the solicitor acting for the party to be served; (b) an e-mail address set out on the writing paper of the solicitor acting for the party to be served but only where it is stated that the e-mail address may be used for service; or (c) a fax number, e-mail address or electronic identification set out on a statement of case or a response to a claim filed with the court. 4.2 Where a party intends to serve a document by electronic means (other than by fax) that party must first ask the party who is to be served whether there are any limitations to the recipient’s agreement to accept service by such means (for example, the format in which documents are to be sent and the maximum size of attachments that may be received). 4.3 Where a document is served by electronic means, the party serving the document need not in addition send or deliver a hard copy.”
By CPR r.6.15:
“6.15—Service of the claim form by an alternative method or at an alternative place (1) Where it appears to the court that there is a good reason to authorise service by a method or at a place not otherwise permitted by this Part, the court may make an order permitting service by an alternative method or at an alternative place. (2) On an application under this rule, the court may order that steps already taken to bring the claim form to the attention of the defendant by an alternative method or at an alternative place is good service. … ”
Cs place great weight on CPR r.6.15(2) since it was held in Abela v. Baadarani [2013] UKSC 44 [2013] 1 WLR 2043 that it could be used retrospectively (i.e. after expiry of the time for service of the Claim Form either as fixed by CPR r.7.5 or an order of the court extending that time) to accept a party’s actions as constituting good service. That principle is not in dispute but before that rule can provide a solution for a claimant in the position of Cs, it must be shown that there is a “good reason” sufficient to engage the rule – see CPR r.6.15(1) and Abela v. Baadarani [2013] 1 WLR 2043 per Lord Clarke at paragraph 23. The applicable principles are those summarised most recently by Floyd LJ in Barton v. Wright Hassall LLP [2016] EWCA Civ 177 following a comprehensive summary of the decided cases. His summary is in these terms: “I would summarise the effect of these authorities in the following way: i) In deciding whether steps should be validated under the rule the court should simply ask itself whether there is “good reason” to do so: (Abela [35]). ii) A critical factor in deciding whether to validate service under the rule is that the document has come to the attention of the party intended to be served: (Abela [36]). That is the whole purpose of service: (Abela [37], [38]) iii) However it is not by itself sufficient that the document was brought to the attention of the opposite party: something more must be present before there is a “good reason”: (Abela [36]). iv) In deciding whether there is a “good reason”, there will inevitably be a focus on the reason why the claim form cannot or could not be served within the period of its validity, although this is by no means the only area of inquiry: (Abela [48], Kaki [33]). v) The conduct of the claimant and of the defendant is relevant: ( Kaki [33]). It is not necessary, however, for the claimant to show that he has taken all the steps he could have reasonably taken to effect service by the proper method: (Power [39]). vi) The mere fact that one party is a litigant in person cannot on its own amount to a good reason, although it may have some relevance at the margins: (Hysaj [44] - [45]; Nata Lee [53]). vii) If one party or the other is playing technical games, this will count against him: (Abela [38]) viii) An appellate court will only interfere with the judge's evaluation of the various factors in the assessment of whether there is a good reason if he has erred in principle or was wrong in reaching the conclusion which he did: (Abela [23]). the claim form must be served at the business address of that solicitor.” (a) that the party to be served or the solicitor is willing to accept service by fax or other electronic means; and (b) the fax number, e-mail address or other electronic identification to which it must be sent; and (a) a fax number set out on the writing paper of the solicitor acting for the party to be served; (b) an e-mail address set out on the writing paper of the solicitor acting for the party to be served but only where it is stated that the e-mail address may be used for service; or (c) a fax number, e-mail address or electronic identification set out on a statement of case or a response to a claim filed with the court.[17]Cs also rely on CPR r.6.16. It provides “6.16—Power of court to dispense with service of the claim form(1) The court may dispense with service of a claim form in exceptional circumstances.(2) An application for an order to dispense with service may be made at any time and— (a) must be supported by evidence; and (b) may be made without notice” However, as Mr Maynard-Connor acknowledges in paragraph 20 of his written submissions, “a distinction is to be drawn between an application (1) for retrospective dispensing order made by a claimant who has not even attempted to serve a Claim Form in time by one of the methods permitted and (2) for a dispensing order made by a claimant who has in fact already made an ineffective attempt in time to serve a Claim Form by one of the methods permitted. In a Category 1 case a claimant still needs to serve the Claim Form to bring it to the attention of the defendant. An application in such circumstances amounts to an attempt to circumvent the limitations in CPR 7.6(3) which is forbidden. On the other hand in a category 2 case, the claimant in effect seeks to be excused from the need to prove service in accordance with the rules eg where there has been ineffective service because the method of service adopted did not accord with methods stipulated by Part 6”. In any event, the requirement that an applicant demonstrates “exceptional circumstances” means that in practical terms it is unlikely that an application under CPR r.6.16 will succeed if an application under CPR r.6.15 fails for want of a good reason.[18]Aside from CPR r.7.5 referred to above, the other element of Part 7 relevant to this case is CPR r.7.6. This provision is relied on by Cs for their application that if the Claim Form has not been served within its period of validity as extended by the Consent Order, the court should extend its validity to permit valid service. CPR r.7.6 provides:
“7.6—Extension of time for serving a claim form 1 (1) The claimant may apply for an order extending the period for compliance with rule 7.5. (2) The general rule is that an application to extend the time for compliance with rule 7.5 must be made— (a) within the period 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. (3) If the claimant applies for an order to extend the time for compliance after the end of the period specified by rule 7.5 or by an order made under this rule, the court may make such an order only if— (a) the court has failed to serve the claim form; or (b) the claimant has taken all reasonable steps to comply with rule 7.5 but has been unable to do so; and (c) in either case, the claimant has acted promptly in making the application. … ”
The Issues Was the Claim Form served on 20 July 2016?

The Issues

[19]Cs submit that the Claim Form was validly served and in time by provision of a copy of the Claim Form under cover of the letter of 20 July 2016. They submit that the fact that what was supplied was a copy of the Claim Form rather than an original is close to immaterial and that if and to the extent that remains an issue then relief from that failure should be granted under either CPR r.3.1 or CPR r.3.10. Although it is acknowledged that extensions of time were agreed for the service of the Claim Form “… the Claim Form had already been served and … could have no bearing on such service …” The defendants submit that there has been no valid service of the Claim Form at any stage, and that it is now too late because the last extension of time in which to serve the Claim Form has long since expired and no further extension can or should be granted because Cs cannot satisfy the requirements of CPR r.7.6(3)(b) or (c).[20]I reject Cs’ submissions on the issue I am now considering. I do so for the following reasons.[21]The question depends upon the true effect of the letter of 20 July 2016 judged objectively and in its factual context applying the principles that apply to the construction of written agreements – see Asia Pacific (HK) Limited v. Hanjin Shipping Co Ltd and others [2005] EWHC 2443 per Christopher Clarke J as he then was at paragraph 19 and Personal Management Solutions Limited v. Gee 7 Group Limited [2016] EWHC 891 per Arnold J at paragraph 9.[22]That relevant factual context includes but is not limited to the communications passing between the parties’ solicitors down to the date when the letter of 20 July 2016 was sent and received. Although Mr Maynard-Connor relies on the letters from all the firms acting for the defendants asking Cs’ solicitor to communicate with them as being in effect their consent to accept service on behalf of the defendants, in my judgment that is wrong. None of the letters mentioned anything about service either of a Claim Form or otherwise. Each of the letters was sent in response to pre-action protocol letters sent by Cs’ solicitors to the defendants. The pre-action protocol letters did not contain any mention of the service of proceedings. References to communications and to correspondence does not include a Claim Form unless there is something to indicate that it is intended to include a Claim Form – see Personal Management Solutions Limited v. Gee 7 Group Limited (ante) per Arnold J at paragraph 14. There is nothing within any of these letters or the letters they were written in response to that indicates that service of Claim Forms came within the scope of the requests contained in those letters. The reference within the letters sent in response to Cs’ pre-action protocol letters by the defendants’ solicitors was as to communications and correspondence concerning the claim at what was then a pre-action phase. The first mention of proceedings was in the 20 July letter. Although the Claim Form had been issued on 19 May 2016, that fact was not communicated to the defendants’ solicitors other than by the 20 July letter.[23]In addition, Cs had not asked any of the defendants or their respective solicitors either in the pre-action protocol letters or by any subsequent communication down to 20 July whether they were able to serve proceedings on the defendants’ solicitors. That only came much later in the following year. CPR r.6.7 is entirely clear as to what is required if service is to be effected on a solicitor. A solicitor does not generally have implied authority to accept service and if a solicitor accepts service without express authority he or she is in breach of his professional duty to his client – see Personal Management Solutions Limited v. Gee 7 Group Limited (ante) per Arnold J at paragraph 27. As Arnold J pointed out, this is not a technical point. It is an important matter as between clients and solicitors since holding a solicitor to have accepted service on behalf of a client notwithstanding that the solicitor had not said he was authorised to accept service or even been asked whether he was authorised to accept service could expose a solicitor without actual authority to accept service to regulatory action or a claim. That CPR r.6.7 had not been complied with coupled with the general law context being as described by Arnold J shows that service was not something being considered by Cs’ solicitors at any stage down to 20 July 2016.[24]Turning now to the 20 July letters themselves, there is nothing within them that suggests that Cs’ solicitors were attempting to serve the Claim Form under cover of the letter or otherwise. Although a copy of the Claim Form was sent with each of the letters, it was sent for the limited and specific purpose identified in the letters namely “… For reasons of limitation, we issued proceedings against your client … on 19 May 2016, as a protective measure. For the avoidance of any doubt on your clients’ part, we enclose a copy of the issued Claim Form. …” The doubt being avoided was any doubt that the defendants’ or their solicitors might have that a Claim Form had in fact been issued. In those circumstances, it is clear that the copy of the Claim Form was being sent for information purposes only being to eliminate any doubt as to the fact that a Claim Form had been issued and no other. This phraseology within the 20 July letter eliminates any possibility of inferring that Cs’ solicitors were attempting to serve the Claim Form under cover of the letters.[25]Had it been intended to serve the Claim Form then there is no doubt in my mind that Cs’ solicitors would have(a) asked whether the solicitors had instructions to accept service and(b) whether they were prepared to accept service by email if that is what was intended. I have no doubt that they would have taken those steps because (i) the general law and the Rules required it - see CPR r.6.7 and the Practice Direction set out above - and (ii) that is what they did in fact when they decided to serve in the following year.[26]There are two other objective factors relevant to the effect of the letter. First copies of the Claim Form were sent not originals or court sealed copies and secondly no response pack was sent. The rules on their proper construction require service of a court sealed copy, as I explain in more detail below, and a response pack. Those are facts which demonstrate objectively (when taken with the others to which I have referred) that the purpose of sending copies of the Claim Form to the defendants’ solicitors was not to serve it. Had the only point been that what was otherwise regularly served was not a court sealed copy of the Claim Form, I would have been inclined to agree with Cs that the defect should be circumvented by order. However, that is not the point. The failure to serve a court sealed copy of the Claim Form and response pack provides objective evidential support for the conclusion that Cs’ solicitors were not attempting to serve the Claim Form under cover of the 20 July letters.[27]Some reliance is placed on the reference to the future service of Particulars of Claim within 14 days in the 20 July letters. In my judgment, it cannot reasonably be inferred from that reference that Cs’ solicitors were attempting to serve the Claim Form under cover of the letters of 20 July, when all the other considerations I have so far mentioned are borne in mind. The only inference that can safely be drawn from the reference to the Particulars of Claim is either that it was intended to serve proceedings (being the Claim Form and Particulars of Claim) on the date mentioned or more probably that it was intended to serve a copy of the Particulars of Claim in order to further the obvious desire of Cs to resolve the dispute by without prejudice discussion or ADR if at all possible.[28]Some reliance was placed on the fact that no objection was taken by the defendants’ solicitors to the fact that a copy of the Claim Form was sent to them under cover of the 20 July letters. This point is entirely circular. None of them thought or could have any objectively justifiable reason for thinking that the Claim Form was being sent to them by way of service. The copy was sent to them for a single narrow and expressly identified reason. It was not a court sealed copy. There was no response pack. The solicitors had not been asked nor had they confirmed that they could accept service of proceedings. There was thus no reason for them to take any objection to what occurred.[29]Including a copy of the Claim Form with the letter was not in fact good service. CPR r.6.7 had not been complied with so it was not good service to send the Claim Form to the defendants’ solicitors unless they had said they are authorised to accept service – see Brown v. Innovatorone Plc [2009] EWHC 1376 (Comm) per Andrew Smith J at paragraph 26 - and if and to the extent that letters and enclosures were sent by email, Para. 4.1 of PD6A had not been complied with either. It is not good service to send a copy of a Claim Form unless it is a hard copy sealed by the court – see Hills Contractors & Construction limited v. Struth [2014]1 WLR 1 per Ramsey J at paragraphs 45-46. Although Mr Maynard-Connor suggested that I should prefer the approach adopted by HHJ Graham Wood QC in the County Court decision in United Utilities Group Plc v. Hart (Unreported) 24 September 2015, I consider that would be inappropriate. Hills Contractors & Construction is a High Court case and ought to be followed by a judge exercising the same jurisdiction unless that judge is satisfied that it is plainly wrong. I am not so satisfied not least because the conclusion reached by Ramsey J is well founded on previous authority.[30]In summary, therefore, for the reasons set out above, the Claim Form was not served by the letters of 20 July 2016. Cs Reliance on CPR r.6.15 and 6.16 Factual Submissions Relied on by Cs

Cs Reliance on CPR r.6.15 and 6.16

[31]Mr Maynard-Connor accepted in the course of his oral submissions that if he did not succeed in demonstrating that the Claim Form had been validly served, his primary alternative submission was that advanced by reference to CPR r.6.15. This provision is not referred to in Cs’ original Application Notice but was relied on by way of amendment.[32]In support of Cs’ application, Mr Maynard-Connor relied on the following facts and matters as constituting collectively a good reason for making the order sought under CPR r.6.15 or an exceptional reason for the purposes of CPR r.6.16 namely:(a) the Claim Form being issued in time,(b) that the defendants, by their solicitors were provided with copies before expiry of the original date by which it had to be served,(c) that the defendants were aware of the detailed allegations being made from the copy of the Particulars of Claim that was supplied to their solicitors,(d) that the materiality of these points was not displaced by the procedural errors that followed,(e) that the point taken by the defendants concerning the absence of valid service is at best a technical one because the solicitors acting for D1 in relation to the employee fraud claim did give permission to serve the Claim Form by email and in fact D2 authorised their solicitors to accept service although that fact was not in the end communicated by D2’s solicitors to Cs solicitors at the time,(f) no issue was taken concerning service until the end of March 2017,(g) the court can easily correct the service of a copy rather than sealed copy of the Claim Form by making an order remedying the error under CPR r.3.10 and(h) the failures that occurred were the result of error by Cs’ solicitors. In those circumstances, it was submitted that I should conclude that the defendants have known the allegations that they face for years, that the parties have engaged with each other concerning those allegations by participating in without prejudice negotiations for most if not all the same period and that the defendants are seeking to take advantage of a procedural error by Cs’ solicitor that lacks all merit.

Discussion – CPR r.6.15

[33]In a case such as this, the court should ask itself whether in all the circumstances there is a good reason to make the order sought – see Abela v. Baadarani [2013] UKSC 44 [2013] 1 WLR 2043 per Lord Clarke at 35. That being so I accept Mr Maynard-Connor’s overarching submission that the facts and matters that he relies on summarised above should be considered together.[34]That said, the mere fact that the defendant learned of the existence and content of the Claim Form cannot, without more, constitute a good reason – see Abela v. Baadarani (ante) per Lord Clarke at 36 and Floyd LJ’s third principle set out in Barton v. Wright Hassall LLP (ante). The purpose of service is to bring proceedings to the notice of the party served and if that has not been done then any application of the sort I am now considering brought to correct a failure to serve a Claim Form in compliance with the CPR is almost bound to fail - see Abela v. Baadarani (ante) per Lord Clarke at 37-9 and Floyd LJ’s second principle set out in Barton v. Wright Hassall LLP (ante). It follows that it is necessary but not sufficient for Cs to establish that the defendants’ solicitors received a copy of the Claim Form. As Popplewell J put it in Société Générale v. Sanayi and others [2017] EWHC 667 (Comm) at paragraph 49(4) “something more is required”. I am satisfied that the defendants and their solicitors were aware of the existence and terms of the Claim Form from 20 July 2016. That is not in dispute. Applying the principles that I have so far referred to requires that Cs demonstrate a good reason for granting the relief sought having regard to the whole of the remaining circumstances.[35]Analysing the considerations relied on by Cs referred to in paragraph 32 above suggests that the points made break down into three broad categories – one concerned with the timing and detail of the defendants’ knowledge of what was alleged against them, one concerned with an assertion that in effect the defendants were indulging in technical games and/or should have but failed to alert Cs to the fact that the Claim Form required serving and one to the effect that non-service was the result of solicitors’ error.[36]The first of these does not take Cs further than the threshold identified by Lord Clarke, Floyd LJ and Popplewell J referred to above.[37]The third does not assist Cs either. In the circumstances of this case Cs could have served the Claim Form properly well within the time of its validity as extended by the consent orders referred to above by asking the defendants solicitors whether they had authority to accept service and then serving sealed copies of the Claim Form on each of the defendants’ solicitors if they responded positively to the question within reasonable time or otherwise on the defendants themselves either at the addresses identified on the Claim Form or otherwise as provided for in CPR rr, 6.3, 6.6, 6.8 and 6.9.[38]That didn’t happen because of Cs’ solicitors’ error, caused largely by leaving service until very late in the period of extended validity of the Claim Form, then not serving in accordance with the Rules. The evidence of Cs’ solicitor as to how this came about in summary is that she had forgotten about the need to serve the ACF, that she understood that the Claim Form had been served on the defendants when it had been sent to the defendants’ solicitors the previous July and that the defendants solicitors did not remind her of the terms of the consent order – see paragraph 36 of her first statement where she maintains she did not serve the ACF because she knew that the Claim Form “… had already been sent the previous July … and in all honesty I had forgotten about the wording of the consent orders which provided for service of the amended Claim Form”, paragraph 40 of her statement, where Cs’ solicitor accepts that she should not have forgotten and paragraph 41 of her first statement where she says that she was surprised by the need for instructions from the defendants concerning service because she considered that whether a firm of solicitors accepted service “… was solely a matter of policy for the law firm concerned”. This suggests that Cs’ solicitor was not aware of the general principle referred to above or, in consequence, of the real possibility that agreement to accept service by the defendants’ solicitors might not be forthcoming at all and might not be forthcoming by the deadline for service.[39]These explanations do not assist Cs’ cause. Rather the explanation offered emphasises that the failure to serve was I regret to say the result of negligent or incompetent error. Avoiding the error was straight forward – it required Cs’ solicitors to keep a record of what had been served and when and/or to check the file to make sure that all that should have been served had been served or was to be served within time and to check the terms of the two consent orders made in the proceedings. Aside from that, it is entirely unclear why Cs’ solicitor then attempted to serve what she considered had to be served on the defendants’ solicitors when she had asked for but had not received confirmation that service could be on the defendants’ solicitors. Finally, if and to the extent that Cs’ solicitor was not aware of the need for solicitors to obtain instructions from their client before accepting service then Cs’ solicitor ought reasonably to have been aware of these points. As Popplewell J observed in Société Générale v. Sanayi and others (ante) at paragraph 49(5) “… negligence or incompetence on the part of the claimant’s legal advisors is not a good reason; on the contrary, it is a bad reason …” granting relief.[40]The remaining reason that underpins Cs’ application under CPR r.6.15 is that the position in which Cs find themselves is the result of technical game playing which led the defendants’ solicitors not to warn or remind Cs’ solicitors of the need to serve the Claim Form. I am not persuaded that this can change what I have so far considered into a good reason for making the orders sought by Cs.[41]The breaches that occurred in this case are not trivial. Cs’ solicitors failed to take the most basic step required in civil litigation which was to serve the Claim Form on defendants within the jurisdiction of the court in accordance with the straight forward code for service set out in Part 6 of the Civil Procedure Rules. Although it was submitted that in effect the defendants’ solicitors were taking advantage of an obvious error, I do not think that is an appropriate characterisation to adopt. As I have noted already, there is an issue between the parties as to whether some or all of the claim is statute barred. Cs’ solicitors were aware that this was or could become an issue because the reason that they had given for issuing the Claim Form in May 2016 had been to prevent Cs’ claims becoming statute barred. In my view the defendant’s solicitors would be failing in their duty to their clients if they failed to take all steps legitimately available to them to enhance their client’s chances of succeeding in such a defence. I cannot see therefore how it can be credibly asserted that the defendants’ solicitors were under some form of obligation to remind Cs’ solicitors to serve the Claim Form. As HHJ Hacon observed in OOO Abbott v. Econowall UK Limited and others [2016] EWHC 660 (IPEC) at paragraph 40 “… parties to litigation are plainly not obliged to inform the opposing side of its mistakes – in the sense of steps taken or positions adopted which appear not to be in that other side’s best interests. Each side must look after itself”.[42]Cs relied on HHJ Hacon’s qualification to that general proposition set out above as supporting their case on the point I am now considering, I am not able to accept that submission. The exception that HHJ Hacon identified was that set out in paragraph 41 of his judgment in OOO Abbott v. Econowall UK Limited and others (ante) where he said that:
“… where a litigant becomes aware of a reasonable possibility that a genuine misunderstanding has arisen between the parties regarding a significant matter, the litigant should take reasonable steps to clear it up. Dispelling such misunderstandings is likely to ensure that the litigation will be conducted more efficiently and I see no real likelihood of any consequent unfairness to either side.”
Whatever the true scope of any exception to the general principle may be, in my judgment it does not extend to requiring a solicitor acting for one party to inform his or her opponent of an apparent error made by that opponent in the absence of instructions from his or her client to do so, when to do so might be contrary to the substantive interests of that solicitor’s client. That being so, I do not accept that the fact that the defendants’ solicitors did not inform Cs’ solicitors of the apparent error constitutes a good reason to make the order sought by the claimant either when viewed on its own or in combination with all the other relevant considerations.[43]The submission I am now considering assumes that it has been established that the defendants’ solicitors either knew or suspected that Cs’ solicitors had made an error. That could not tenably be argued for any period prior to 17 March 2017, given the terms of the correspondence passing between solicitors concerning service issues and the terms of the consent order. It is true to say that Cs’ solicitor referred to the Particulars of Claim rather than the Claim Form in her email of 15 March 2017 but as I note earlier in this judgment she had used those expressions interchangeably in earlier correspondence. That email was the first in which Cs’ solicitor had asked about service. The responses received were to the effect that instructions were being sought. That response is not consistent with the defendants’ solicitors being aware that a mistake was being made but only of them seeking to comply with the obligations they owed to their clients. Those responses are not capable of supporting an inference that they were aware that a mistake was being or was about to be made by Cs’ solicitor. In order for there to be a factual basis for the issue I am now considering, I would have to infer from the silence that followed the emailed letters of 17 March that all three defendants’ solicitors had decided either independently or otherwise to say nothing until after the time for compliance with the consent orders had passed. I am not prepared to infer that such was the case from silence particularly over so short a period. In any event, as I have said, I do not consider that the defendants’ solicitors were under a duty to correct the errors by Cs’ solicitors assuming they knew or suspected they had been made.[44]In any event the points relied on by Cs as constituting a good reason why the order sought should be made have to be viewed in their context. Those include that there was nothing to prevent Cs’ solicitors serving the defendants personally, aside, possibly, from the delay by Cs’ solicitors in addressing the service issue. The submission by Cs’ that to do so would have been a breach of the solicitors conduct rules is with respect unarguable in the absence of an indication from the defendant’s solicitors that they were authorised to accept service. In that event as the rules indicate service must be on the solicitors concerned. There was nothing in the nature of an apparent error by Cs’ solicitors to the effect that they thought service had been achieved by the letter of 20 July 2016 whereas the defendants’ solicitors thought that it had not been. On the contrary, it is entirely clear that all parties proceeded on the assumption that the Claim Form had not been served by the letters of 20 July. That is apparent from the negotiations that took place leading up to each of the consent orders by which the time for serving the Claim Form was extended.[45]Finally, it is necessary to have regard to the limitation issue. As I have said already, it is not appropriate that I should attempt to resolve on this application and on the evidence that is currently available whether or not the claims made by Cs or any of them are in fact statute barred. However, it is a relevant consideration in considering whether a good reason has been demonstrated that making the order sought by Cs would have the effect of depriving the defendants of an otherwise apparently realistically arguable limitation defence in circumstances where Cs were aware of the potential impact of limitation on their claims and expressly referred to that as being the reason why the Claim Form had been issued. In my judgment, the loss of a potential limitation defence is a material consideration to which weight must be given in arriving at an assessment as to whether a good reason for making the order sought has been demonstrated. In my judgment when taken together with the other factors that I have referred it leads to the conclusion that a good reason for making the order sought has not been made out.[46]For these reasons, I conclude that no good reason has been demonstrated for making the Order sought under CPR r.6.15. In those circumstances and for similar reasons, Cs cannot overcome the more difficult threshold imposed by CPR r.6.16, which requires the applicant to establish the existence of exceptional circumstances before an order can be made.

Application Under CPR r.7.6

[47]In my judgment, the application for an extension of time in which to serve the Claim Form in either its original or amended form must necessarily fail in light of the conclusions that I have so far reached. The application is made after expiry of the time within which the Claim Form had to be served as extended by the consent orders. In order to be able to apply for an extension in such circumstances, Cs must be able to show that they had taken all reasonable steps to serve within that time – see CPR r.7.6(3)(b). They cannot do so because no proper attempt was made to serve the Claim Form at any stage prior to expiry of that time. The Claim Form had not been served under cover of the 20 July letters. It was not served under cover of the 17 March 2017 letters. No steps had been taken to serve the Claim Form or the ACF.

Conclusions

[48]In light of these conclusions, it is neither necessary or appropriate that I should consider further the applications made concerning the Particulars of Claim. As will be apparent from what I have said already, it has not been necessary for me to decide whether the claims have become statute barred. In any event it would have been difficult to do so in the context of the present applications and on the basis of the evidence that is currently available. In those circumstances, I invite submissions as to the form of the order I ought to make in order to give effect to the conclusions set out above. Provisionally, I consider that the only order that it is appropriate to make is one that strikes out the current claim and/or declares that the Claim Form in these proceedings has not been served within its period of validity as extended by the consent orders and dismissing the application under CPR r.7.6. Provisionally, I think that it is inappropriate to declare that the court does not have jurisdiction to try Cs’ claims against the defendants given that another Claim Form has been issued and the limitation issues have not been determined.

Cited in 8 later judgments