ON APPEAL FROM Manchester District Registry
His Honour Judge Hodge QC
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE HOOPER
LADY JUSTICE RAFFERTY
| (1)BETHELL CONSTRUCTION LIMITED
(2)BETHELL GROUP PLC
|- and -
|DELOITTE AND TOUCHE
WordWave International Limited
A Merrill Communications Company
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Tel No: 020 7404 1400, Fax No: 020 7404 1424
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THOMAS PLEWMAN (instructed by REYNOLDS PORTER CHAMBERLAIN LLP) for the Respondent
Hearing date : 27 October 2011
Crown Copyright ©
"In view of the lapse of time... our clients have had to issue a protective Claim Form ("the 2007 Claim"), a copy of which (in its present amended form) we enclose (but not by way of service). In principle we would wish to have a proper Pre-action Protocol process, and therefore suggest an agreement with regards to extending time for service of the Claim Form and/or Particulars of Claim."
"We are therefore prepared to agree a 2 week extension of time (to 4pm on 3 July) on condition that you agree extensions of time for service of the claim form and particulars of claim to 2nd August or 14 days after written notice is given by one party to the other (such notice to be given after 2nd August) whichever is the later."
By their email in response the solicitors for Deloittes accepted that condition. Thereafter two mediations took place between the parties but without success.
"As far as the termination of the stay agreed back in March 2007 is concerned, our clients have no objection to your request for more time, a request that would not have been needed had you simply prepared the Particulars of Claim and lifted the stay when you were ready to proceed. We do not propose imposing a particular time limit on you for service of the Claim Form and Particulars of Claim but would simply ask that our clients be given a minimum of 56 days from the service of the Particulars of Claim in which to serve their defence."
On 28th July 2010 the present solicitors for Bethells, having succeeded Halliwells LLP when that firm went out of business, replied:
"With regard to service of the Particulars of Claim, we would be content to convene a case management conference and thereafter set out the timetable for the progression of the claim. With regard to security for costs our clients are satisfied that they can meet any costs orders."
"We now enclose by way of service upon you our client's Particulars of Claim. Previously you indicated that you would prefer a case management conference to be fixed to progress the claim. May we suggest that you serve your defence, say, within the next 21 days and thereafter the case management conference is arranged. Perhaps you would let us have your thoughts on our proposal."
The reply of the solicitors for Deloittes dated 22nd October was as follows:
"Thank you for your letter of 14th October 2010.
It is not clear whether that letter or your without prejudice letter of 7 July were intended to constitute notice of determination of the stay agreement previously concluded between our clients as you did not accept the proposals made in our letter of 16th July 2010.
In the circumstances, we hereby give the requisite 14 days formal notice of determination of the stay but would be agreeable to treating your letter of 14 October as a form of implied notice if you would prefer."
On 3rd November 2010 the individual dealing with the claim of Bethells (who had done so previously with Halliwells) telephoned his counterpart, but she was unavailable. She returned his call the same day but missed him.
"We refer to your letter of 14 October and our letter of 22 October. In your letter of 14 October you did not specifically address the extant agreement to suspend the time for service of the Claim Form and the Particulars of Claim. You purported to attach Particulars of Claim by way of service, but not a Claim Form. As you know, our client had only ever been given the old February 2007 Claim Form expressly "not by way of service" and the suspension agreement specifically extended the time for both.
In our letter we gave the requisite 14 days notice to bring to an end the agreed suspension of the time for service of the Claim Form and Particulars of Claim. That period has now expired but to our surprise, no claim form has been served. The period permitted for service of the 2007 Claim Form has expired.
In the circumstances, our view (and advice) is that the claims are now irreparably time barred under the Limitation Act."
(1) the original claim form had been validly served and/or that Deloittes had waived such service or were estopped from contending otherwise;
(2) an order under CPR Rule 16.5 to the effect that delivery of a copy of the claim form to Deloittes on 9th March 2007 together with the letter from Bethells dated 14th October 2010 deeming the same to constitute due service;
(3) an order under CPR Rule 16.6 dispensing with service of the claim form.
Deloittes sought declarations that the 2007 claim form had not been served in the period of its validity and the resealed version did not disclose a cause of action because the claims were all statute-barred.
(1) Did the letter dated 14th October 2010 from Bethells' solicitors constitute 'constructive' service of the claim form sent to and possessed by Deloittes since 9th March 2007 'not by way of service'?
(2) Was the letter from the solicitors for Deloittes dated 22nd October 2010 effective to determine the extension of time agreed by the emails dated 18th June 2007 so that service in the week commencing 16th November was out of time?
(3) Did Deloittes waive their entitlement to proper service of the claim form and/or were they estopped from insisting on it?
(4) The judge was wrong to have refused to make an order under CPR Rule 6.15 deeming due service of the claim form from its original delivery to Deloittes' solicitors on 9th March 2007 and the letter from Bethells solicitors dated 14th October 2010.
(5) The judge was wrong not to dispense with service of the claim form under CPR Rule 6.16.
(6) Given his conclusions on the foregoing issues the judge had no jurisdiction to order Bethells to pay Deloittes' costs of the claim in addition to their costs of the applications.
Etherton LJ gave permission to appeal on ground 1 on 9th March 2011. On Bethells' renewed application at an oral hearing for permission to appeal on grounds 2 to 6 permission was granted by Rix LJ on 13th May 2011. I will deal with those six grounds in the order in which I have set them out.
Did Deloittes' letter of 22nd October 2010 terminate the agreed extension of time?
"....I was surprised by this development for the following reasons:
- The letter flew in the face of the proposals we had made on 16 July and did not even refer to the material part of that letter.
- The letter did not refer to the extension agreement.
- No claim form was attached (or otherwise served, nor even referred to).
- The attached Particulars of Claim were at odds with the old unserved Claim Form and contained no allegation of negligence in relation to BFS' audit for the year ended 30 September 2000 (indeed, they asserted that the Financial Statements for that year were correct), which had been the primary case that my clients had been defending for more than 5 years.
26. I was unsure what to make of all that. I determined that the best way forward was to deal with the claim formally and properly. The first step was obviously that the extension agreement had to be brought to an end. Accordingly, on 22nd October 2010 we wrote...."
"I acquit RPC of any deliberate intention to mislead. Having said that, and absent any explanation as to how the letter came to be phrased in what seems to me to be the very careful and calculated way in which it was, it does seem to me that considerable attention had been given to the way in which the letter should be expressed: it made no reference to the particulars of claim; it made no reference to the need for service of the claim form in express terms. I have little doubt that RPC were seeking to set a trap for Heatons; but, equally, it seems to me that the fact that a trap was being set is clearly apparent from the face of the letter itself, if any reasonable solicitor looks at it with any degree of care. The overriding feature of it is that it gives the requisite 14 days' formal notice of determination of the stay."
"There was [in the letter of 22nd October] no mention of a need further to serve the Claim Form, and to which I was therefore not alive; and nothing to suggest that the Defendants did not accept the service of the Particulars of Claim as being valid, which I therefore assumed that they did."
Mr Austin was not cross-examined either.
"Equally, it does not seem to me that there can be any estoppel, either of a promissory nature or by way of an estoppel by convention. I acknowledge that the observations, technically and strictly obiter (because he was in a minority on the issue), of Lord Goff of Chieveley in the case of Kenneth Allison Ltd. v AE Limehouse & Co.  2 AC 105 indicate that proceedings can be treated as served pursuant to some form of estoppel by convention. In that case itself, Lord Goff acknowledged that there had been no representation capable of giving rise to a promissory estoppel – and that seems to be the case here – and I cannot see any basis for the assertion that there was anything giving rise to an estoppel by convention. There was simply no reference in the letter of 14th October to service of the claim form not being required, and nothing in the letter of 22nd October 2010 from RPC to suggest that they were proceeding on the footing that the claim form had indeed been served. Indeed, that would be entirely inconsistent with the final paragraph of that letter, "We hereby give the requisite 14 days' formal notice of determination of the stay." I can discern no estoppel by convention."
"In my judgment if they were going to send a reply they owed a duty to send a full reply. Instead they deliberately allowed [the claimants] to continue in their mistaken belief that they had asked for all relevant extensions of time. They encouraged them to make the same mistake…. As a result of the stance deliberately adopted by [the defendants] the claimants did not take the step they feared and their strategy on the face of it worked. In these circumstances it would in my judgment be unconscionable to allow the demise charterers to rely on the time bar."
"(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.
The order Bethells seek is that the possession of the copy of the claim form by Deloittes since 2007 and the sending of the letter dated 14th October by Bethells' solicitors should be treated as an alternative method of service. It was suggested that the facts relied on for the establishment of a waiver or an estopppel, if not sufficient for that purpose, constitute good reason for the purposes of this rule to justify the order sought.
"40. I do not accept those submissions. I do so principally because it seems to me that it would subvert the whole basis of the agreement reached between the parties as to the extension of time for service of the claim form and particulars of claim. It seems to me that it is in the interest of the overriding objective for parties to be able to reach agreement for an extension of time for service of the claim form if this enables them to achieve a resolution of litigation without over-extensive resort to the courts, with a consequent expenditure of legal costs and use of court time. However, for the parties to proceed in this way, it is also important that the court is seen to be upholding the basis upon which they have agreed that they will proceed. Mr Dagnall's approach, it seems to me, would operate to subvert the parties' contractual autonomy, and it would fail to give effect to the important principle of freedom of contract…
41. Adopting the language employed by Lord Justice Neuberger in the case of Kuenyehia and others v International Hospitals Group Ltd.  EWCA Civ 21 at paragraph 36, this was not a case of "a minor departure from a permitted method of service or an ineffective attempt to serve by a permitted method within the time limit". This was not a case of mis-service but one of non-service. The claim form had been delivered in 2007 expressly "not by way of service". The defendants agreed to that; and the parties agreed that either party could determine what was effectively the standstill agreement by giving 14 days' notice for service of the claim form. That is what the defendants' solicitors did by their letter of 22nd October. The Heatons letter of 14th October had said absolutely nothing about service of the claim form. It seems to me that the parties should be held to what they had agreed; and, after all, it was the claimants' solicitors who had originally proposed it back in 2007. For those reasons, to hold that there was good service would be to subvert the express agreement between the parties, and fail to give effect to the important principle of freedom of contract and the contractual autonomy of the parties. It would be a wholly inappropriate exercise of the court's discretion to effectively allow the claimants to rewrite the agreement between the parties. It does not seem to me here that there is any good reason to authorise service contrary to what the parties had agreed."
Counsel for Bethells submits that there are two issues (a) whether there is good reason shown sufficient engage the rule, and if so (b) whether the judicial discretion which then arises should be exercised in favour of making the order Bethells seek. He submits that the judge was wrong on both points.
"(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."
Bethells sought to persuade the judge that he should make an order in this case dispensing with service of the claim form. The judge refused. He said (paragraph 42):
"..this is not a case where the claim form was delivered to the defendants within the period for service by a method of service which the claimants and their solicitors thought was a reasonable method of service. The claim form had been delivered expressly not by way of service, and was never delivered to the defendants again; nor was any statement made that by serving the particulars of claim the claimants were treating the claim form as having, by that act, been served. There was nothing to suggest that the claimants were regarding the not-by-way-of-service condition attached to the previous delivery of the claim form as in any way having been extinguished. Again, it seems to me that it would be an impermissible exercise of the power under the rule to dispense with service of the claim form in those circumstances."
Lord Justice Hooper
Lady Justice Rafferty