Service: Late with no smile

The recent case of Boxwood Leisure Limited v Gleeson Construction Services Limited and M J Gleeson Group Limited, saw the TCC consider Boxwood’s relief from sanctions application following late service of its Claim Form.

This case is a stark reminder of the pitfalls of getting service wrong and the severe consequences that will likely ensue.

Background

On 8 July 2003, Boxwood (the Claimant) and Gleeson (the first Defendant) entered into a contract whereby the first Defendant agreed to carry out the design and construction of 3 indoor leisure centres. MJM (the second Defendant) undertook to guarantee the first Defendant’s performance under the contract. On 24 March 2020, the Claimant commenced proceedings seeking damages against both defendants for breach of contract and/or negligence in respect of the guarantee. The Claimant claimed damages in the sum of £683,212.66.

On 24 March 2020, the Claimant issued an application for directions pursuant to paragraph 12 of the TCC pre-action protocol and/or for an order under CPR7.6, including an extension of the period for service of the Claim Form and Particulars of Claim until 2 April 2021. Despite the first Defendant opposing the application, on 7 April 2020, the Court made an order (the Order) stating that the period of service of the Claim Form and Particulars of Claim was extended to 10 September 2020 and the proceedings were to be stayed until 10 December 2020, to allow time for the parties to comply with the pre-action protocol. The Court reasoned that the Claimant was entitled to an extension of time for service, having regard to the difficulties caused by the COVID-19 crisis. However, the claims were very old and the defendants were entitled to expect the Claimant to identify, as quickly as reasonably practicable, the allegations made so that the defendants understood the case against them. No appeal was made against the application.

On 8 September 2020, a trainee solicitor at Ashfords (solicitors for the Claimant), sent an email to Systech (solicitors for the first Defendant) stating: “We hereby enclose, by way of service upon you, the Claimant’s Particulars of Claim and Response Pack…” Attached were the Particulars of Claim, Acknowledgement of Service forms and the Initial Disclosure List, but not the Claim Form. On 14 September 2020, Ashfords realised that the Claim Form had not been sent and sent a further letter by email serving the Claim Form. On 17 September 2020, Systech sent a reply to Ashfords stating that the purported proceedings were a nullity as the Claim Form has not been served by 10 September 2020, nor had an application to extend the time for compliance under CPR7.6(3) been sought.

On 23 September 2020, the Claimant issued an application seeking an order that:

• Pursuant to CPR 3.9, 1.2, and 3.1(2)(m), the Claimant be granted relief from its failure to comply with the Order dated 7 April 2020.
• Pursuant to CPR 3.10, 1.2, and 3.1(2)(m), the Court should exercise its general power to rectify an error of procedure being the Claimant’s failure to comply with the Order dated 7 April 2020.
• The Order dated 7 April 2020 be varied such that the Claim Form can be regarded as having been properly served.

Ashfords explained their failure to comply with the deadline for service as being due to a trainee initially failing to attach the Claim Form to the intended service email of 8 September 2020. The trainee then went on annual leave and, due to the Covid-19 lockdown, Ashford’s usual diary processes were not followed. This meant that the Claim Form ‘slipped through the net’ as the mistake was only subsequently realised on the trainee’s return to work on 14 September 2020 and the Claim Form was served by email that same day.

The Arguments

The Claimant argued that their failure to serve the Claim Form was a breach of the Order rather than a failure to comply with CPR, therefore the Court had jurisdiction to grant relief from sanctions under CPR 3.9, 1.2, and/or 3.1(2)(m). Alternatively, power to rectify an error of procedure under CPR 3.10, 1.2, and/or 3.1(2)(m). Alternatively, power to vary the order dated 7 April 2020.

The first Defendant argued that CPR 7.6 provides a complete code for extensions of time for service of a Claim Form. The Order dated 7 April 2020 extended time for service of the Claim Form. As the application for a further extension was made after the end of the period specified by CPR 7.5 and after the date set out in the Order made under CPR 7.6, the Court could make such an order only if the claimant had taken all reasonable steps to comply with CPR 7.5 but had been unable to do so. There had been no application for an extension of time under CPR .6(3) because the Claimant recognised that it would be unable to satisfy the conditions required to enable the Court to grant relief. The first Defendant’s position was that the Court does not have any discretion to grant an extension of time for service of the Claim Form or the other relief sought.

The Findings

It was held that the Court does not have power to grant any extension of time for service of the Claim Form under CPR 7.6(3). The Claimant made no application under CPR 7.6 and if such an application were made, the conditions under CPR 7.6(3) would not be met. The Claimant’s solicitors took no steps to serve the Claim Form by 10 September 2020. The Claimant could not establish that it took all reasonable steps to serve the Claim Form within the extended time period ordered by the Court. The Court does not have power to extend the time for service of the Claim Form where the specified conditions have not been met.

The Claimant was not entitled to rely on the Court’s general power under CPR 3.10 to correct a procedural error so as to validate its failure to serve the Claim Form within the prescribed period. Firstly, CPR 3.10 expressly provides that an error of procedure does not invalidate a step taken in the proceedings unless the Court so orders. In this case, the relevant step was not taken at all (service of the Claim Form within the specified period of time). Secondly, it has been doubted in prior cases whether the Court’s discretion would be exercised where there had been a total failure to serve. Thirdly, the first Defendant would suffer prejudice if the Order of 7 April 2020 was retrospectively varied to extend time for service of the Claim Form because they would be deprived of potential limitation defences.

The Claimant was not entitled to rely on the powers under CPR 3.9 to circumvent the specific conditions set out in CPR 7.6(3) for extending the period for service of a Claim Form. Even if the Court had power to grant relief under CPR 3.9, it would not exercise its discretion to extend the time for service of the Claim Form in this case. The Court followed the guidance in Denton v White and found that the breach of the Order was a serious and significant breach.   The difficulties of remote working were not a sufficient excuse and it remains incumbent on the solicitors to ensure the extended dates ordered by the Court are met.  Finally, the Court found that it would not be appropriate to deprive the first Defendant of any accrued limitation defence by extending time for service of the Claim Form.  Therefore, the Claimant’s application was dismissed.

Comment

It was a very bad day in the office (actual or virtual) for the trainee in question.  The strict criteria in Denton v White was applied, and it was held that it would not be just to grant the Claimant relief from sanctions.  Beware of the pitfalls of getting service of a Claim Form wrong and the draconian consequences that follow!