England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		07/11/2014

Mr Justice Globe :

Introduction

1. The appellant appeals against an order of Master Leslie dated 4^th June 2014 refusing to grant a request for an extension of time to serve particulars of claim. Various grounds of appeal were originally relied upon. By leave of the single judge on 9^th September 2014, the sole ground relied on is ground 3. Although there are a number of particulars within the ground, in summary it is contended that Master Leslie erred in the exercise of his discretion to refuse to grant the appellant relief from sanction; the relief being an extension of time for serving particulars of claim out of time pursuant to CPR 7.4(3).

Chronology

2. The nature of the appellant's claim relates to money paid by the Legal Aid Board as interim payments on account under two legal aid certificates issued to clients of the second defendant, a firm of solicitors, the assets and business of which were acquired by the first defendants on 31^st October 1997. The second defendant no longer exists. The third defendant has died. The fourth defendant, fifth defendant and sixth defendant are solicitors and former partners of the first defendant. The payments on account totalled £160,035.28 and were paid between 7^th April 1994 and 30^th March 1998.
3. Between 30^th March 1998 and 2008, the first defendant made no application for a detailed assessment of the sums due under the two legal aid certificates. It is the appellant's case and it does not appear to be disputed that, in default of an application by a solicitor for a detailed assessment, the Legal Aid Board, or the Legal Services Commission as its successor, was entitled to assess the work done under the certificates with such an assessment resulting in a "nil assessment".
4. In January 2006, the Legal Services Commission wrote to the defendants in relation to no assessment having been applied for.
5. During 2007, there was correspondence between the Legal Services Commission and the defendants about the issue.
6. On 15 January 2008, the Legal Services Commission carried out its own assessment and assessed the sums due under the two certificates as £0. It is the appellant's case, although it is not necessarily admitted by the defendants, that the statutory limitation period thereby commenced on 15 January 2008.
7. Between April 2008 and August 2008, there was further correspondence between the Legal Services Commission and solicitors acting for the defendants who were raising the issue of any claim under the Civil Legal Aid (General) Regulations 1989 being statute barred.
8. After that activity in the early part of 2008, nothing significant occurred between August 2008 and August 2013.
9. On 22 August 2013, solicitors acting for the Legal Aid Agency, who by then had taken over the Legal Service Commission's responsibility for legal aid, sent a letter before action to the sixth defendant threatening proceedings if the sum claimed was not paid by 5 September 2013. The claim was and is £160,035 plus interest subject to a set off in relation to another legal aid certificate issued to a client of the first defendants in the sum of £4,576. The net sum claimed is therefore £155,458 plus interest paid by way of interim payments under the two legal aid certificates already referred to. The letter before action stated that various enclosures were included with the letter.
10. On 30 August 2013, the fourth defendant replied on the first defendants' headed paper stating that the enclosures supposed to be included with the letter before action had not been included with it and asking to see them.
11. On 4 September 2013, the sixth defendant wrote on the first defendants' headed paper repeating the request for the enclosures and stating that the letter before action was the first that had been heard about the matter for five years, at which time the defendants had been waiting for replies to the points raised in a letter from the defendants' solicitors. The sixth defendant explained that, in the intervening period, there had been very significant events that impacted on the ability to provide a speedy response. There had been a death, two retirements and the dissolution of the first defendants. A request was made for no proceedings to be issued, following the deadline of 5 September 2013, while efforts were made to recover files from archives, after which a substantive response should be able to be made.
12. It was over two months later, by a letter dated 17 December 2013, that the appellant's solicitors purported to send the enclosures that should have been included with the letter before action. In the letter, the appellant's solicitors raised the issue of limitation generally and a potential limitation date in January 2014 if negotiations failed and proceedings had to be commenced. A proposal was made for there to be a standstill agreement and a draft agreement was sent for consideration.
13. On 19 December 2013, the fourth defendant replied stating that the enclosures had not been sent with the letter of 17 December 2013 and pointing out that it had been four months since the letter before action that they had been waiting for the enclosures and, given the imminence of the seasonal break, a reasoned answer could not be given until the New Year. The fourth defendant also asked what day in January was thought to be relevant for limitation.
14. On 2 January 2014, the appellant's solicitors sent the enclosures under cover of a letter stating that, if no substantive response was received to the letter of 17 December together with a fully executed copy of the standstill agreement, then they would have no choice but to issue a claim on or before 13 January 2014.
15. On 7 January 2014, the defendants' solicitors wrote to say the defendants were in principle agreeable to entering into such an agreement and requested a "Word" copy in order to make some amendments to the draft previously sent to the defendants.
16. There then followed email correspondence, particularly on 9 January 2014, between Mr Simpson (for the defendants' solicitors) and Ellen Yeates (for the appellant's solicitors) in relation to various amendments to the draft agreement.
17. On 13 January 2014, the appellant's solicitors issued a claim form for £155,458 against all six defendants. The defendants were not notified that the claim form had been issued and were unaware that the appellant had commenced proceedings.
18. The claim form was issued prior to the appellant's solicitors receiving the executed standstill agreement that the defendants' solicitors sent to them on the same day, 13 January 2014. The standstill agreement potentially extended the limitation period for 12 months until 13 January 2015, although it contained provision for the earlier determination of the suspension of time. Under the agreement, there was no need to issue or serve a claim form. However, one of the grounds upon which time would start to run again was "the service of proceedings".
19. Between 22 January 2014 and 25 February 2014, there was correspondence about disclosure. The documents were ones that the defendants' solicitors were claiming should have been included with the letter before action. They were provided by letter of 25 February 2014.
20. On 7 March 2014, the defendants' solicitors wrote to say they expected to be able to respond to the letter before action by 28 March 2014 and requested the appellant's solicitors to postpone the issue of proceedings until 28 March 2014.
21. On 10 March 2014, the appellant's solicitors emailed the defendants' solicitors saying the claim form had already been issued and agreeing to delay any further steps until 28 March 2014.
22. On the same day, 10 March 2014, the defendants' solicitors replied expressing surprise about the issue of the claim form given that the executed standstill agreement had been returned at 10.13 on 13 January. A request was made for an informal copy of the claim form.
23. On 12 March 2014, the appellant's solicitors explained that they had had someone going down to the High Court to issue the claim first thing on 13 January. No chances had been able to be taken and the claim was issued at 10.28.
24. On 27 March 2014, the appellant's solicitors agreed to a request of the same date to extend time for the defendants' response to the letter before action and not to take any further action in the proceedings until Friday 11 April 2014.
25. On Monday 14 April 2014, Mr Duncan (for the appellant's solicitors) enquired about the response that had not been forthcoming. Mr Simpson stated that counsel's advice was expected that week and the advice would determine the defendants' response. Mr Simpson made specific reference to his understanding that the appellant's cut off time for service of the claim was 13 May 2014. A further extension of time was given until 28 April 2014.
26. On 1 May 2014, Mr Duncan emailed Mr Simpson thanking him for a voicemail message he had left for him on 28 April 2014 wherein Mr Simpson had said he now had counsel's opinion and suggested agreeing an extension of time to serve the claim form. Mr Duncan suggested Friday 30 May 2014.
27. On 9 May 2014, Mr Duncan emailed Mr Simpson asking whether the date of 30 May 2014 was agreed. He received an out of office reply to state that Mr Simpson was away between 6 May and 19 May and indicating who should be contacted if assistance was required. Mr Duncan emailed another addressee at the defendants' solicitors with the same query.
28. Later on 9 May 2014, Mr Weeks, another partner at the defendants' solicitors, replied stating he was getting up to speed and would revert as quickly as he could.
29. On 12 May 2014, Mr Duncan and Mr Weeks spoke on the phone. The contents of the call are referred to in an email from Mr Duncan on 13 May 2014. The email referred to the defendants' solicitors being in the process of seeking instructions to agree to an extension of time for service of the claim form until 30 May 2014. Mr Duncan explained that, in order to avoid uncertainty, the claim form had gone out on 12 May using next day delivery service. Mr Duncan suggested a stay until 30 May 2014 before time started to run for service of the particulars of claim.
30. On 13 May 2014, Mr Weeks noted the claim form was being served.
31. On 19 May 2014, Mr Duncan emailed Mr Simpson asking if an extension of time could be agreed for service of the particulars of claim. He sent a reminder on 21 May 2014.
32. On the same day, 21 May 2014, Mr Simpson replied stating that the appellant was out of time for service of the particulars of claim, inviting the appellant to discontinue the claim and indicating that any application for an extension of time for service of the particulars of claim would be opposed.
33. On 23 May 2014, the appellant's solicitors issued an application to extend time for service of the particulars of claim.
34. On 30 May 2014, Mr Simpson made his statement in opposition to the application.
35. On the same day, 30 May 2014, the appellant sent draft particulars of claim to the defendants. That was 18 days after the claim form had been served on 12 May 2014.
36. On 4 June 2014, at a contested hearing, Master Leslie refused the appellant's application to extend time for service of the particulars of claim.
37. On 9 September 2014, the single judge granted leave to appeal on ground 3 of the notice of appeal.
38. On 24 September 2014, after receiving the respondent's notice of objection dated 22 September, wherein the point was made that no attempt had been made to serve the defendants with the particulars of claim, the appellant's solicitors emailed the defendants' solicitors asking if they would now accept service of the particulars of claim. The response was that the defendants' solicitors were authorised to accept service, but it was not accepted that any such purported service would be valid service.
39. On 26 September 2014, the appellant's solicitors purported to serve the particulars of claim on the defendants' solicitors.

Summary of key dates

40. The full circumstances of the chronology are important. However, there are some key dates

• On 13 January 2014, the claim form was issued.

• On 12 May 2014, the claim form was served.

• On 23 May 2014, an application to extend time for service of the particulars of claim was made.

• On 30 May 2014, draft particulars of claim were sent to the defendants.

• On 4 June 2014, the application to extend time was refused.

• On 9September 2014, leave was granted to appeal the refusal.

• On 26 September 2014, the appellant's solicitors purported to serve the particulars of claim on the defendants' solicitors.

The Rules

41. CPR 7.4 governs the service of particulars of claim. CPR 7.4(2) states:

"Particulars of claim must be served on the defendant no later than the latest time for serving a claim form."

42. CPR 7.5 sets out the latest time for serving a claim form which is:

"…..before 12 midnight on the calendar day 4 months after the date of issue of the claim form."

43. CPR 7.6 provides for extensions of time for serving a claim form. There are time constraints and CPR 7.6(3) sets out limited circumstances where time may be extended beyond the period of four months prescribed in CPR 7.5. In the context of the case, the latest time for serving the claim form was 13 May 2014. Any service of the particulars of claim after 13 May 2014 required leave of the court, unless the parties had previously reached agreement to extend time for such service or an order of the court had been made before 13 May 2014 under CPR 7.6, neither of which occurred here.
44. An application to extend time for service of the particulars of claim made after the deadline of four months is to be considered with regard to the principles under the provisions for relief from sanctions set out in CPR 3.9.
45. CPR 3.9 states

"(1) On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need-

a) for litigation to be conducted efficiently and at proportionate cost; and

to enforce compliance with rules, practice directions and orders."

Decision of Master Leslie dated 4 June 2014

46. In rejecting the application for relief from sanction, Master Leslie stated that he had considered various authorities, particularly the case of Mitchell v MGN [2013] EWCA Civ 1537.
47. He noted the history and the fact that the particulars of claim, even in draft form, did not come into existence until the week commencing 26 May 2014.
48. In paragraph 22 of his judgment, he referred to the provisions in CPR 3.9 being "paramount". There was a requirement for "litigation to be conducted efficiently", which meant " getting on with it, which means getting on with it particularly if you are at the end of, or beyond the end of, the limitation period". "Compliance with rules" was also important.
49. In paragraph 23 of his judgment, he said as follows:

"I accept that I have to look at all the circumstances of the case. No good reason has been advanced for the delay, which it goes without saying I find not to be trivial; indeed, very, very much the opposite, very serious. Even two weeks after this length of time shows certainly either a lack of understanding of the position or some rather 'lese-majeste' attitude, which is to be deprecated."

The cases of Mitchell –v- MGN and Denton -v- White

50. At the time Master Leslie considered the matter, he was relying solely on the Mitchell guidance. The joint judgment of the Master of the Rolls and Vos LJ in the case of Denton -v- White [2014] EWCA Civ 906 had not yet been handed down. The issue arises as to whether Denton has changed anything of significance in relation to how CPR 3.9 should be considered and has any real effect on the approach taken by Master Leslie.
51. The following matters of importance arise from the judgment in Denton.
52. First, in paragraph 3, the court stated that, in some courts, the judgment in Mitchell may have been misunderstood and was being misapplied. The guidance therefore needed to be clarified and amplified in certain respects.
53. Secondly, in paragraph 24, the clarification and amplification was given as follows:

"24. We consider that the guidance given in paragraphs 40 and 41 of Mitchell remains substantially sound. However, in view of the way in which it has been interpreted, we propose to restate the approach that should be applied in a little more detail. A judge should address an application for relief from sanctions in three stages. The first stage is to identify and assess the seriousness and significance of the "failure to comply with any rule, practice direction or court order" which engages rule 3.9. If the breach is neither serious nor significant, the court is unlikely to need to spend much time on the second and third stages. The second stage is to consider why the default occurred. The third stage is to evaluate "all the circumstances of the case, so as to enable [the court] to deal justly with the application including [factors (a) and (b)]"

54. Thirdly, in relation to the first stage, the expression "serious and significant" was preferred to the word "trivial", which had been used in paragraph 40 of Mitchell, albeit that the court in Mitchell had also used the word "minor" in paragraph 59 and "insignificant" in paragraph 40.
55. Fourthly, the second stage reflected what had been stated in Mitchell in paragraph 41.
56. Fifthly, in relation to the third stage, in paragraph 36 of Mitchell factors (a) and (b) in CPR 3.9 had been stated to be of "paramount" importance and, in paragraph 37, it had been stated that the other circumstances should be given "less weight" than factors (a) and (b). In Denton, the court reasserted that factors (a) and (b) were of "particular importance" and should be given "particular weight" at the third stage when all the circumstances are considered. At paragraph 36 of Denton, the court drew attention to the necessity always to have regard to "the circumstances of the case", with the relevant factors varying from case to case.
57. It is against this background that the submissions of the parties need to be considered.

The Appellant's submissions

58. Mr Grundy, for the appellant, makes various submissions that can be summarised as follows. He submits that Master Leslie erred in applying a test of "triviality" rather than "serious or significant"; erred in finding the default was not trivial; erred in failing to accept there was a reasonable explanation for the default; and erred in failing to consider all the relevant circumstances of the case.
59. Mr Grundy particularly relies upon the following matters. The defendants had been alerted to the proceedings in 2006, in 2007-2008 and in 2013. There was a standstill agreement suspending time from running until 13 January 2015. By 25 February 2014, the defendants had received all the disclosure they needed. They were given time to consider with counsel the letter before action of 22 August 2103. After the service of the letter before action, the parties had been proceeding on the basis of agreeing extensions of time. The defendants had informally received the claim form on 12 March 2014. On 28 April 2014, Mr Simpson had proposed an extension of time for service of the claim form, which in turn would have extended time for service of the particulars of claim. That extension was only not agreed because Mr Simpson was away and did not respond to Mr Duncan's emails of 1 May and 9 May. That meant that the appellant had to serve the claim form at the last minute on 13 May 2014 and by then had not prepared the particulars of claim. The draft particulars of claim that were eventually sent were seventeen days late.
60. In addressing the particular issues under CPR 3.9, Mr Grundy submits that, in relation to factor (a), the failure has had no impact on the efficient conduct of this litigation. It arose from a desire to save costs in the context of an atmosphere of agreeing extensions and the standstill agreement. In relation to factor (b), the failure to serve the particulars of claim in time is a breach of the rules, but there had been a belief that the defendants were going to agree to an extension of time for service of the claim form. In relation to the overall circumstances, the only reference to them appears in paragraph 23 of the judgment and Master Leslie did not indicate what circumstances he took into account. The full circumstances were not given adequate consideration. If they had been, then regard should have been had to the full history of the matter, the fact that the failure has had no impact on other court users, did not cause any other hearings to be vacated or require the relisting of any trial. Regard should also have been had to the impact of a refusal to grant relief, namely, that the appellant cannot bring a claim of which the defendants were well aware and in respect of which they had already taken counsel's advice.

The Respondents' submissions

61. Mr Stacey, for the respondents, submits that Master Leslie applied the guidance in Mitchell. His decision was plainly correct and, at its lowest, was well within the scope of his discretion. It does not require fresh consideration under Denton. The appellant must establish the decision was wrong under Mitchell. However, even if the decision is to be considered under the Denton guidance, the result would be the same.
62. Mr Stacey relies on the following matters.
63. The breach was serious because the appellant missed the deadline of 13 May 2014. The claim had been issued at the last moment with the appellant's solicitors appreciating the significance of missing the January deadline. They should have been equally vigilant about the deadline in May. Service of the particulars of claim had still not been complied with by the hearing date of 4 June 2014 and purported service only took place on 26 September 2014 after the failure had been raised in the respondents' notice. Although it did not affect any pre-existing court timetable, the delay in service prevented the commencement of the pleadings process.
64. There was no good reason for the failure. The appellant knew or ought to have known of the deadline in the absence of any agreement or court order to extend time.
65. Although in the judgment factors (a) and (b) were referred to as "paramount considerations", in the context of the case, any differences between Mitchell and Denton do not affect the outcome. In giving "particular weight" to factors (a) and (b), both still point away from giving relief.
66. The circumstances of the case were considered. In paragraph 23 of the judgment, Master Leslie specifically referred to "all the circumstances of the case". There is no rule that a judgment has to list everything that makes up such circumstances and a summary of the history of the proceedings had been set out earlier in the judgment. In any event, the following matters are apparent and relevant from the full facts. The claim is not clear-cut with there being limitation, fair trial and liability issues. The claim is almost unbelievably stale. The work was allegedly done 16-20 years ago. After discussions about it between 2006 and 2008, there was then an unexplained delay of five years when nothing happened. The defendants are now prejudiced in defending the claim so long after the event. There was no good reason for not informing the defendants that a claim form had been issued on 13 January 2014 and not being candid in communications in relation to any difficulties in relation to the particulars of claim. When proceedings were eventually commenced, they were incorrectly commenced against the second defendant who no longer exists and the third defendant who has died. Finally, the mere fact that a party has sensibly and proportionately agreed to extensions of time under a standstill agreement does not justify the other party failing to comply with the court rules. Once the claim was issued, the particulars of claim had to be served within the four-month period. All of these considerations point away from relief being granted under both Mitchell and Denton.

The procedure on appeals

67. By CPR.52.11(3)(a), the appeal court will allow an appeal where the decision of the lower court was "wrong". It is for the appellant to show it was wrong.
68. In accordance with the judgment of Lord Fraser in G –v- G [1985] 1 WLR 647 @ 652

"The appellate court should only interfere when they consider that the judge of first instance ……. has exceeded the generous ambit within which a reasonable disagreement is possible."

69. In accordance with the judgment of Lord Woolf in Phonographic Performance Limited –v- AEI Rediffusion [1999] 1 WLR 1507 @ 1523

"Before a court can interfere, it must be shown that the judge has either erred in principle in his approach or has left out of account or has taken into account some feature that he should or should not have considered or that his decision was wholly wrong because the court is forced to the conclusion that he has not balanced the various factors in the scale."

Discussion

70. Denton has clarified and amplified Mitchell in certain respects so as to avoid any misunderstanding and misapplication of the guidance given in Mitchell. The guidance has not been overruled. It has been strengthened. Attention has been drawn to the importance of a careful examination of the text in CPR 3.9 itself.
71. Master Leslie has considerable knowledge and experience of CPR 3.9 and had a full grasp of the Mitchell principles. Even without the benefit of the judgment in Denton, it is apparent that the Master conducted the three-stage test approach recommended in Denton. The breach was found "not to be trivial"; it was "very, very much the opposite, very serious". No good reason was found for it. Factors (a) and (b) were stated to be "paramount", but only in the context of "the overall circumstances of the case". It is apparent from Master Leslie's judgment that he did not apply factors (a) and (b) to the exclusion of all else. In that he did not, the difference between the nuanced approach in Denton of regarding factors (a) and (b) as being "of particular importance" rather than "of paramount importance" is not significant against the full background of the case.
72. Notwithstanding the detailed written submissions of Mr Grundy, as expanded upon in the course of oral submissions, there is considerable force in the counter submissions made on behalf of the defendants by Mr Stacey. This is not a re-hearing. I am not here to make an independent first instance decision. I am obliged to consider the appeal in accordance with the appeal principles I have summarised. In my judgment, the decision of the Master was one that he was entitled to reach. It was within the generous ambit within which a reasonable disagreement is possible. I am unable to find it was wholly wrong. It was a considered decision applying the Mitchell guidance correctly. It stands up to scrutiny even when studied alongside the later, amplified Denton guidance. The appeal must be dismissed.
73. Having received written submissions from the parties about what costs orders should be made, it is common ground that costs follow the event of dismissal of the appeal. The appellant must pay the defendants' costs. I will hear further submissions about the details of such an order if necessary.