A Sage Warning on the Consequences of Defective Service
The Court of Appeal have recently ruled in Woodward & Anor v Phoenix Healthcare Distribution Ltd that the Defendant’s solicitors were under no duty to flag a mistake to the Claimant’s solicitors. Although this case appears at first blush to concern a fairly narrow point, it could well have wider implications.
The causes of action were breach of contract and misrepresentation, alleged to have been in excess of £5 million. They arose out of a contract dated 20 June 2011 and the cause of action accrued at the date of the contract. As such, primary limitation expired on 20 June 2017.
The claim form was issued on 19 June 2017 and pursuant to CPR r 7.5(1) should therefore have been served no later than 12.00 midnight on the calendar day four months after that date, being 12.00 on 19 October 2017.
The issued pleadings were sent to the Defendant’s solicitors by email and post on 17 October 2017. However, crucially, at no point had the Defendant’s solicitors indicated that they were instructed to accept service of proceedings. The solicitor with conduct took the view that service was ineffective. He took instructions from his client and, unsurprisingly, was instructed by his client not to inform the Claimant’s solicitors of their mistake. The claim form expired at 12.00 on 19 October 2017.
On 20 October 2017, the Defendant’s solicitors notified the Claimant’s solicitors that service had been defective. They further indicated their intention on behalf of the Defendant to apply for a declaration that as a result of expiry of the claim form the Court had no jurisdiction to hear the claim.
The Claimant’s solicitors in turn made an Application seeking an Order that the Court should validate the purported service on the Defendant by granting an extension of time.
At first instance the Master agreed that there had not been good service, however he considered that a “good reason” to validate effective service was the conduct of the Defendant’s solicitors in failing to further the overriding objective by warning the Claimant’s solicitors that service was defective, so that good service could be effected. He considered this conduct to be the deliberate playing of a technical game.
The Master’s view was that a litigant’s obligation under CPR r 1.3 to give effect to the overriding objective was such that they be precluded from taking advantage of an opponent’s mistakes.
The Court of Appeal disagreed that there was any such duty to warn the Claimant’s solicitors on a plain reading of CRP r 1.3. Even if there had been time to warn the Claimant’s solicitors, there was no duty upon the Defendant’s solicitors to do so. They were obliged to obtain their client’s instructions, and those instructions did not encompass notifying the Claimant’s solicitors of their error.
The Court of Appeal took the view that there had been no deliberate obstruction of service on the part of the Defendant and that the Claimant’s solicitors had “courted disaster” by waiting until the very end of the limitation period to attempt to effect service of the claim form.
Any suggestion of “technical game playing” was rejected and the Court of Appeal found in the Defendant’s favour. The Order retrospectively validating service of the claim form was overturned, and the £5 million claim was indeed statute barred. A bad day for the Claimant’s solicitors’ professional indemnity insurers, no doubt.