England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM Exeter Combined Court Centre
His Honour Judge Gore Q.C
C00BT804

		Royal Courts of Justice Strand, London, WC2A 2LL
		16/10/2018

Lord Justice Coulson :

1. The Issue

1. The issue that arises on this appeal is whether a stay of proceedings imposed by the court applies to the service of the claim form, as well as to any other procedural step that would otherwise have been required to be taken during the period of the stay. By an order dated 16 August 2017, Judge Gore QC declared that, notwithstanding the stay, the claim form should have been – but was not - served within 4 months after issue, as prescribed by the CPR. This matters, because it is common ground that any fresh claim would (subject to section 33 of the Limitation Act 1980) now be statute-barred.
2. In Kirby & Kirby v Davis Wood; Pringle v Oliver Charges [2014] EWHC 4051 (Ch) a similar issue was raised but, on the facts of the case, Morgan J did not need to decide it. He said at [39] that it was a difficult question on which there was no authority. For the reasons set out below, I do not consider that the issue as it arises in this case is particularly complex.

2. The Factual Background

3. The appellant was employed by the respondent. On 30 September 2013 he suffered an accident at work. Thereafter, he intimated a claim under the Pre-Action Protocol for Low Value Personal Injury (Employer's Liability and Public Liability) Claims ("the Protocol"). The respondent admitted liability. However, settlement did not prove possible during the primary limitation period, and the respondent indicated that it had a counterclaim for monies allegedly due under the appellant's contract of employment.
4. Where parties are unable to agree the quantum of a claim under the Protocol, a claim can be issued under CPR Part 8. As a result of limitation concerns, the appellant issued proceedings on 24 June 2016. In the absence of up-to-date medical evidence, the claim form issued on that date also sought a stay of proceedings.
5. The stay was granted by Order dated 7 July 2016 for three months, thereby expiring on 7 October 2016. On 5 October 2016, at the appellant's request, the court further extended the stay until 30 November 2016. It is common ground that the stay expired on that date.
6. On 17 January 2017, the court ordered the respondent to file a defence by 17 February 2017. A defence and counterclaim was served on 14 February 2017, although it was said to be 'without prejudice' to the respondent's argument that a claim form should have been, but had not been, served within the 4 month period set out in CPR r.7.5(1). This issue was raised again at a CMC on 2 March 2017. The claim form was served on 6 March 2017.
7. The respondent applied for a declaration that the claim form had not been served in time, arguing that the stay imposed by the court did not affect the appellant's obligation to serve the claim form within 4 months of its issue. On 19 April 2017 Deputy District Judge Davy concluded that the stay operated in such a way as to apply to every step otherwise required by the CPR, including the obligation to serve the claim form. On this basis, she determined that the claim form had been served in time. On 11 August 2017, on the hearing of the respondent's appeal, Judge Gore QC reached the opposite conclusion. It is that judgment which is now the subject of this appeal.

3. The Framework of the CPR and the Authorities

3.1 The Protocol and Part 8

8. Where a claim is properly brought under the Protocol and the parties have agreed liability but are unable to agree the amount of damages at the end of Stage 2, the CPR provides that the remaining quantum-only proceedings will be issued under Part 8. This is known as the Stage 3 procedure, and it is governed by Practice Direction 8B. Paragraph 1.1 of PD 8B provides:

"1.1 This Practice Direction sets out the procedure ('the Stage 3 Procedure') for a claim where –

(1) the parties –

(a) have followed the Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents ('the RTA Protocol') or the Pre-Action Protocol for Low Value Personal Injury (Employers' Liability and Public Liability) Claims ("the EL/PL Protocol"); but

(b) are unable to agree the amount of damages payable at the end of Stage 2 of the relevant Protocol;

(2)

(a) the claimant is a child;

(b) a settlement has been agreed by the parties at the end of Stage 2 of the relevant Protocol; and

(c) the approval of the court is required in relation to the settlement in accordance with rule 21.10(2); or

(3) compliance with the relevant Protocol is not possible before the expiry of a limitation period and proceedings are started in accordance with paragraph 16 of this Practice Direction."

9. As noted there, the detailed provisions where there is a potential issue with limitation are set out in paragraph 16 of PD 8B. It is necessary to set out those provisions in full:

"Limitation

16.1 Where compliance with the relevant Protocol is not possible before the expiry of a limitation period the claimant may start proceedings in accordance with paragraph 16.2.

16.2 The claimant must –

(1) start proceedings under this Practice Direction; and

(2) state on the claim form that –

(a) the claim is for damages; and

(b) a stay of proceedings is sought in order to comply with the relevant Protocol.

16.3 The claimant must send to the defendant the claim form together with the order imposing the stay.

…

16.5 Where –

(1) a stay is granted by the court;

(2) the parties have complied with the relevant Protocol; and

(3) the claimant wishes to start the Stage 3 Procedure,

the claimant must make an application to the court to lift the stay and request directions."

3.2 Stays Generally

10. The Glossary to the CPR provides that "a stay imposes a halt on proceedings, apart from taking any steps allowed by the Rules or the terms of the stay. Proceedings can be continued if the stay is lifted". This definition is further expanded at paragraph 3.1.8 of the 2018 White Book in these terms:

"The making of a stay imposes a halt, not only upon proceedings, but also upon the expiration of any time limit in those proceedings which have not expired when the stay was imposed."

11. In UK Highways A55 Limited v Hyder Consulting (UK) Limited [2013] BLR 95, the particulars of claim were not served during the prescribed 14 day period following the service of the claim form. However, during that period the parties had agreed a stay of proceedings. When the stay expired, the defendant said that the proceedings had come to an end because no particulars of claim had been served in accordance with the CPR. Edwards-Stuart J disagreed, ruling that the claimant had the balance of the 14 days following the expiry of the stay in which to serve the particulars of claim. He said of this outcome at [48]:

"It seems to me that this submission avoids the impossibility problem raised by Mr White and has the sensible result that the proceedings can resume where they left off without any party having to go to the trouble and expense of making an application to the Court in order to enable that to happen. There is nothing in the rules which provides that, once stayed, no further step need be taken in the proceedings unless there has been an order of the court, even if the stay has been lifted automatically (because it expired on a particular date or the happening of a particular event)."

3.3 Service Generally

12. CPR 7.5(1) provides for different methods of service but requires such service to be completed "before 12 midnight on the calendar day four months after the date of issue of the claim form".
13. CPR 7.6 deals with extensions of time for serving a claim form. It provides as follows:

"7.6 (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…"

14. There are a number of authorities dealing with these rules, including Vinos v Marks and Spencer PLC [2001] EWCA Civ 1415, [2001] 3 All ER 784 (CA); and, more recently, Barton v Wright Hassall LLP [2018] UKSC 12, [2018] 1 WLR 1119. In the latter case, a claimant acting in person purported to serve a claim form and particulars of claim by email in circumstances where prior permission for such form of service had not been given. The claim form expired unserved and the claim became statute-barred. When dealing with CPR r.6.15 (service of a claim form by an alternative method) and the court's exercise of its discretion under that rule, Lord Sumption JSC said:

"…CPR rule 6.15 is rather different. It is directed specifically to the rules governing service of a claim form. They give rise to special considerations which do not necessarily apply to other formal documents or to other rules or orders of the court. The main difference is that the disciplinary factor is less important. The rules governing service of a claim form do not impose duties, in the sense in which, say, the rules governing the time for the service of evidence, impose a duty. They are simply conditions on which the court will take cognisance of the matter at all. Although the court may dispense with service altogether or make interlocutory orders before it has happened if necessary, as a general rule service of originating process is the act by which the defendant is subjected to the court's jurisdiction."

4. The Judgment of Judge Gore QC

15. The critical paragraphs of the judgment of Judge Gore QC appear to be the following:

i) At [10] he said that there was force in the submission that paragraph 16 of PD 8B (paragraph 9 above) meant that the stay did not operate to exclude the appellant from the underlying obligation to serve the claim form within 4 months of issue;

ii) At [14] – [16] he distinguished UK Highways on the basis that the case was dealing with the service of the particulars of claim, rather than the service of the claim form. He therefore did not follow it;

iii) At [17], he said:

"In my judgment there is something procedurally and fundamentally different between CPR 7.4 and CPR 7.5 and that is this. While it is right that proceedings have been commenced by the issue of claim form, they do not really have a legal life unless or until they are in fact served on the party or parties named as defendant. That is because the proceedings can remain unserved and then lapse, as a result of which, the defendant attracts no liabilities within the proceedings, including no liability to costs. The position is different in relation to the service of particulars of claim, because, although there is a rule based requirement for particulars of claim to be served, the non-service of particulars of claim does not have the effect of invalidating the proceedings that otherwise may have been validly and effectively issued and which, by definition, will also have been served.";

iv) At [19] he made the critical finding that

"the stay…does not operate to stay the time within which the claimant must serve the proceedings. If he does not serve the proceedings within that time, they lapse and there are no proceedings.";

v) At [22] he found that the appellant should have applied to lift the stay for the purpose of effecting service of the claim form, or alternatively should have proceeded to serve the claim form before applying for the stay, and then the appellant would have been fully protected "both as to limitation and procedurally".

16. As a consequence of this reasoning, Judge Gore QC declared that the proceedings were not served within the 4 month period prescribed by CPR r.7.5(2). If he were right about that, these proceedings would be irrecoverable, because the appellant would now be unable to satisfy the criteria in CPR r.7.6(3) for an extension of time for service of the claim form. Furthermore, any new claim would be met by the limitation defence which the stay had been expressly designed to avoid.
17. Permission to appeal against the judge's order was granted by Hamblen LJ on 29 January 2018.

5. Analysis

18. As the various citations at paragraphs 10 and 11 above make plain, a stay operates to 'halt' or 'freeze' the proceedings. In general terms, no steps in the action, by either side, are required or permitted during the period of the stay. When the stay is lifted, or the stay expires, the position as between the parties should be the same as it was at the moment that the stay was imposed. The parties (and the court) pick up where they left off at the time of the imposition of the stay.
19. In the present case, the stay expired on 30 November 2016, when it was not renewed. The stay (or more properly the original stay and its extension) had been in operation since 7 July 2017, which was 13 days after the proceedings had been issued. Thus, on an application of the usual principles relating to a stay, the appellant had 4 months (less 13 days) from 30 November 2016 in which to serve the claim form, which meant that, to be in time, service had to be effected on or before 17 March 2017. On this basis, since the claim form was served on 6 March 2017, the claim form was served in time.
20. That conventional analysis would be wrong only if there was a reason to treat the service of the claim form as different to any other procedural step, such as the service of, say, the particulars of claim. That was indeed Mr Arentsen's basic submission: he said that the service of the claim form "stands alone", and so was required in any event, regardless of the stay imposed by the court. At the close of his oral submissions, he summarised his case by contending that, until the proceedings were served, "there was nothing to stay".
21. For a variety of reasons, I do not accept those submissions: I consider them to be contrary to the CPR, and also to lead to consequences which the rules cannot conceivably have intended.
22. First, the rules do not say that the service of the claim form stands outside – and is therefore unaffected by – a stay of proceedings. Paragraph 16 of PD 8B is expressly premised on the basis that a party in the position of this appellant must start proceedings (by issuing the claim form), and at the same time, seek a stay of those proceedings. There is no mention of any requirement to serve the claim form in those circumstances. On the contrary, paragraph 16.2 of PD 8B requires the sending of the claim form to the defendant, rather than its service. If Mr Arentsen were correct, there would be no reasons for the rule to require "sending" rather than "service"; because the stay would bite when service was effected. More generally, paragraph 16 would have to be completely reworded if Mr Arentsen was right and the claim form had to be served before any stay could be imposed or come into effect.
23. Secondly, in the context of a stay of proceedings, I can see nothing in the rules to justify distinguishing between the service of the claim form on the one hand and any other procedural step, such as the service of the particulars of claim, on the other. There is no basis for saying, as the judge did, that Edwards-Stuart J's explanation in UK Highways as to the effect of a stay was not equally applicable to the service of a claim form. The CPR does not make any such distinction. The explanation in UK Highways is therefore equally applicable to the present case.
24. I do not consider that r.7.5 is relevant to the issue on this appeal. The appellant did not seek to extend time for service of the claim form under that rule, and if I am right about the effect of the stay, he had no need to do so. The authorities referred to at paragraph 15 above are therefore nothing to the point. To the extent that it is suggested that the provisions of r.7.5 meant that a stay could not have the effect contended for by the appellant, because only an application under r.7.5 could give the appellant the relief sought, I reject it: there is nothing about r.7.5 which prevents a court-imposed stay from affecting the time limit for the service of the claim form in the usual way. Any other conclusion would be contrary to the plain words of paragraph 16 of PD 8B.
25. Moreover, I do not accept Mr Arentsen's submission that the passage from the judgment of Lord Sumption in Barton, referred to at paragraph 15 above, somehow elevates the service of the claim form into a step in the proceedings which has to be taken regardless of any stay, or which dictates when the stay comes into force. Lord Sumption was not addressing the question of a stay at all, but was instead dealing with the entirely separate question of the importance of formality in bringing the fact of the claim to the attention of the defendant.
26. Thirdly, I consider that my interpretation of the CPR can be sense-tested in this way. Any other interpretation would make the stay effective for some things (such as service of the particulars of claim), but not for others (such as service of the claim form). That would introduce an unnecessary level of complexity into what should be a straightforward situation. Indeed, as the judge himself noted at [22], such an interpretation would require the appellant to seek a stay, then to apply to lift the stay in order to serve the claim form (and then presumably to apply to re-impose the stay). Such a procedure would be unnecessarily cumbersome, and contrary to the intention that the rules in this area should be straightforward.
27. On a related topic, I should add that, whilst the judge was right to say that, if a claim form is eventually not served at all then it is as if the proceedings had never happened, he was wrong to say that the proceedings "do not really have a legal life" until the service of the claim form. The issue of the claim form creates a lis, regardless of its subsequent service. Moreover, the judge's acceptance, even if he was right, of the need for the appellant to apply to lift the stay in order to serve the claim form, was itself an acknowledgement that the proceedings do "have a legal life" prior to the service of the claim form.
28. Finally, it is right to note that, in the present case, there has been an element of opportunism on the part of the respondent which I would be reluctant to reward. The absence of a served claim form did not in fact make any difference to the progress of this case. Liability was always admitted. The court ordered a defence by the 17^th of February and the defendant filed and served a defence and counterclaim in accordance with that order. The absence of the claim form did not have any effect on the proper progress of these proceedings. On the other hand, if Mr Arentsen were right, then, having conceded liability, the respondent would not be liable to the appellant for any damages.
29. In a similar vein, although Mr Arentsen sought in his oral submissions to rely on the fact that the appellant had not sent the claim form in accordance with paragraph 16.2 of PD 8B, that was not a point taken before the judge, and therefore not a point that can now arise on this appeal. In any event, it could not bear upon the issue of whether, as a matter of construction of the rules, a stay applies to the service of the claim form.
30. For all those reasons, therefore, I would allow the appeal against the decision of Judge Gore QC. Subject to submissions on the form of the order, I would reinstate the decision of Deputy District Judge Davy dismissing the respondent's application dated 17 March 2017 for the claim to be struck out for non-service of the claim form; and declare the claim form to have been served in time. The claim form was served within 4 months of its issue, once proper allowance is made for the full period of the stay imposed by the court.
31. Lord Justice Haddon-Cave :
32. For the reasons given by my Lord, Coulson LJ, I agree that the appeal be allowed, and the disposal he indicates.

Lord Justice Hickinbottom :

33. I too agree.