NV Procter & Gamble International & Ors v Gartner KG & Ors

The first defendant, Gartner KG (“Gartner”), an Austrian company, applies to set aside two orders extending time for service of the claim form upon them, namely an order of Mr. Justice Tomlinson made on 1 October 2004, which extended the time until 30 January 2005, and an order of Mr. Justice Moore-Bick made on 20 December 2004, extending time to 31 May 2005. These proceedings were issued on 30 April 2004, and time to serve them in Austria would have expired, but for the orders, on 29 October 2004. The orders were made in the usual way, that is to say on paper and without notice to Gartner. This is a rehearing of the application to extend time, and I must consider the decisions to grant extensions afresh.

The claimants (to whom I refer collectively as “P&G”) bring their claim as the cargo interests in a shipment of “Pampers” baby products carried from Spain to Manchester, England in January 2003. It is alleged that goods were lost overboard the MV “Sybille”. The claim is for some €300,000, although the evidence is that much of that sum relates to voluntary donations given by P&G to charitable organisations involved in clean-up operations rather than the value of the goods. There are five defendants named on the claim form. Gartner sold transport services to the first and second claimants. The second defendant, who has not been served with these proceedings and against whom the claim is not pursued, was the sub-contractor providing transport in Spain to Santander. The third or fourth defendants were the sub-contractors providing transport from Santander to Manchester. The fifth defendants were the owners of the “Sybille”. On the face of it, this is an unremarkable and not particularly large cargo claim.

In a letter dated 1 February 2003 Gartner’s immediate reaction to learning of the loss was that they had “contributed to P&G’s increasing turnover, unfortunately not in a positive way”. There was some debate before me as to whether this amounted to an admission on the part of Gartner. Whether or not it should so be characterised, it might well understandably have given grounds to hope that the claim would be settled and not lead to litigation.

P&G appointed recovery agents called Reclaim Consulting Services Limited (“Reclaim”) to pursue the claim. In a letter to Reclaim dated 20 August 2003 Gartner confirmed that the loss occurred when the goods were in the custody of their sub-contractor, but stated that they could not “confirm any liability, because we have to face an ‘act of God’”. After further letters from Reclaim, on 13 October 2003 Gartner stated that, “the whole case is under investigation by the marine authorities. Also an marine claims bureau is investigating this case… so at the moment we cannot accept any liability”. After a further ten letters from Reclaim, on 12 January 2004 Gartner again said that they were “still collecting the facts which is not easy to do as you know very well”, and that “if we have new facts we will promptly report to you”. They repeated that they could not accept liability “at this stage”.

By a request dated 9 January 2004 Reclaim had written to Gartner, stating that while the claim against them was not subject to a one-year time bar, a claim against the sub-contractors might be, and “in order to avoid any difficulties or problems at a later stage” requested a time extension from Gartner and their sub-contractors. On 26 January 2004, an extension until 30 April 2004 was given. On 14 April 2004 Reclaim sought a further extension. Gartner, for their part, were willing to grant one until 30 July 2004, but because the fifth defendants’ insurers refused to extend time, Reclaim properly decided to issue these proceedings.

Reclaim did not immediately go about serving the proceedings on Gartner. As far as the evidence before me goes, the last that they had heard was that Gartner were still collecting the facts about the claim. On 7 June 2004 Reclaim wrote to Gartner’s German lawyers in Hamburg explaining that legal proceedings had been brought “in order to protect time” and inviting “a sensible settlement proposal” in order to minimise costs.

On 15 June 2004 P&G’s solicitors, Messrs Bentleys Stokes and Lowless (“BSL”), who had first been instructed on 22 April 2004, wrote to Reclaim saying that they assumed that Reclaim had been continuing negotiations but reminding them “that there are time limits for service of the claim forms issued and that, if the matter has not been settled by then, they must be served or an extension sought from the court”. By a letter dated 2 August 2004 Reclaim told BSL that they had been instructed to hand the matter over to the solicitors. On 4 August 2004 Messrs Waltons and Morse (“W&M”) wrote to Reclaim that they had been appointed by Gartner and asking whether proceedings had been issued and asking for a copy of any proceedings by way of information only “at this stage”. (In fact, Reclaim had already informed Gartner’s German lawyers that proceedings had been issued.)

During August 2004 BSL obtained from Reclaim further information about the claim. On 24 August 2004 BSL advised Reclaim that the deadline for service within the jurisdiction was 30 August 2004 and that the third defendant, a UK company, should be served by then, since the court was unlikely to grant an extension “as there has been no practical impediment to us serving the claim form since it was issued”. They also advised that they should come on the record as far as Gartner and W&M were concerned.

On 26 August 2004 BSL asked W&M to confirm that they had instructions to accept service of the claim form, suggesting that it would be preferable to avoid unnecessary costs of serving Gartner out of the jurisdiction. They asked for a reply by close of business the following day. On 2 September 2004 W&M replied that they would take instructions and give an answer “by the early part of next week”. On 6 September, BSL wrote that if W&M could not confirm that they had instructions to accept service, they would have to incur the costs of service out of the jurisdiction. They asked to know “as a matter or urgency” that W&M were instructed to accept service. Thereafter they heard nothing from W&M until they telephoned them on 21 September 2004. W&M then told them that they did not have instructions to accept service, but they promised to chase Gartner. On 23 September 2004 W&M told BSL that they did not have instructions to accept service.

The evidence from Mr. Christopher Chatfield, a partner of W&M, is that when they were telephoned by BSL on 2 September 2004 W&M sought Gartner’s instructions about accepting service. He explained that Gartner “wished to investigate the merits of the claim in Austria” and that “those investigations took a little time to complete”. He said that because of the letter of 6 September 2004 he had assumed that BSL would take steps to serve the claim form out of the jurisdiction. He made no reference to the indication in his fax of 2 September 2004 that he had envisaged that he would be able to revert to BSL with an answer “by the early part of next week”, and did not explain further why he did not do so.

On 28 September 2004 P&G applied for an extension of time to serve the proceedings upon Gartner in Austria. In a witness statement in support of the application Mr. Paul Crane, a solicitor with BSL, stated that he was informed that the normal period for service of a claim form in Austria was 3 months. The third, fourth and fifth defendants had been informed of the application and did not oppose it. It was granted.

On 22 September 2004 Mr. Crane had telephoned the foreign process section of the court office and was told that in order for the proceedings to be served in Austria it was necessary to provide an amended claim form, the response pack, and certified German translations of them. BSL went about obtaining the necessary translations on 2 November 2004. The first translations mistakenly included some notes and amended versions had to be obtained. These were submitted to the foreign process section on 23 November 2004. Because the order of Mr. Justice Tomlinson was not included, the documents were returned by the court service by letter dated 3 December 2004. Mr. Crane spoke to the foreign process section, and they told him that the average time for service in Austria was 2-3 months. He therefore thought that P&G would not be able to serve Gartner by 30 January 2005, and, having informed the third, fourth and fifth defendants, he applied on 16 December for a further extension of time for service of the claim form on Gartner to 30 May 2005. This was granted on 20 December 2004. The order needed to be translated and proper translations were eventually received on 7 January 2005. On the same day they were sent to the Foreign Process Section for service and they were served in less than four weeks on 31 January 2005.

The argument was conducted before me by Mr. Stewart Buckingham, who represented Gartner, and by Mr. Yash Kulkarni, who represented P&G. I am grateful to both counsel for their succinct and clear submissions, and the attractive presentation of them.

Mr. Buckingham argued that P&G have given no good reason for not serving the claim form within the proper time limits. He acknowledged that under the CPR, unlike the previous law, it is not necessary as a matter of the rules for a claimant to show a good reason for failing to serve within the time limits, but he submitted, and I accept, that the reason that an extension is sought remains an important consideration as to whether the court should exercise its discretion to grant it. He drew my attention to paragraphs 19 and 20 of the judgment of Lord Justice Dyson in Hashtroodi v Hancock [2004] EWCA Civ. 652, describing the “more calibrated approach” adopted under the CPR than under the previous rules:

“If there is a very good reason for the failure to serve the claim form within the specified period, then an extension of time will usually be granted. Thus, where the court has been unable to serve the claim form or the claimant has taken all reasonable steps to serve the claim form, but has been unable to do so… the court will have no difficulty in deciding that there is a very good reason for the failure to serve. The weaker the reason, the more likely the court will be to refuse to grant the extension. If the reason why the claimant has not served the claim form within the specified period is that he, or his legal representative, simply overlooked the matter, that will be a strong reason for the court refusing to grant an extension of time for service. One of the important aims of the Woolf reforms was to introduce more discipline into the conduct of civil litigation. One of the ways of achieving this is to insist that time limits be adhered to unless there is good reason for a departure…”

Mr Buckingham argued that P&G have not given a proper explanation for requiring these two extensions of time. He pointed that out the Practice Direction to part 7 of the CPR requires (at paragraph 8.2) that the evidence in support of an application for an extension of time should state “a full explanation as to why the claim has not been served”. In particular he identifies three periods when there was unnecessary and unexplained (or insufficiently explained) delay on P&G’s part: a period of some four months after the proceedings were issued until the end of August 2004; a period after the order of Mr Justice Tomlinson before documents were submitted to the Foreign Process Section; and a further period of about a month because the order was not included in the documents that were submitted.

It seems to me that there is force in these submissions, but a number of points may be made in response to them:

The point is also properly made on behalf of P&G that Gartner were always well aware that the claim was being pursued. (Indeed, on 19 November 2004 W&M enquired whether P&G intended to discontinue the proceedings and BSW replied the same day that they would not be doing so and that the extension of time for service had been obtained.) Gartner had given no indication that they wished to have the dispute resolved speedily: on the contrary their position was that their investigations were taking some time. They had granted an extension of time to 30 April 2004 for proceedings to be issued, and had indicated a willingness to grant a further extension.

I would also observe that no explanation has been provided as to why Gartner wished to have the proceedings served in Austria although W&M were instructed in the matter. Of course, Gartner were entitled to take this stance, but it does reinforce the picture that they were not concerned to progress the resolution of the dispute.

I come to the evidence presented by P&G upon the applications to Mr Justice Tomlinson and Mr Justice Moore-Bick, and P&G’s explanation as to why an extension of time was required. I agree with Mr Buckingham that P&G did not comply with the requirements of the Practice Direction. Most remarkably, the evidence in support of the first application did not explain what had happened between the end of April 2004 and 26 August 2004. It should have done so. Moreover, although there is no reason to think that Mr Crane’s evidence is misleading in any way, and a day-by-day account of exchanges is not called for by the Practice Direction or expected by the Court, nevertheless P&G still have not given a properly detailed explanation as to what they were doing in the period after the proceedings were issued.

The evidence in support of the second application was also thin. However, Mr Crane has now given further explanation about what was happening in the period leading up to the application to Mr Justice Moore-Bick, and it does not seem to me that his original evidence omitted anything of real significance in respect of it.

Finally, at one point in his submissions Mr Buckingham suggested that the evidence put forward in support of P&G’s applications did not provide a proper explanation as to the position with regard to any potential time-bar defences. I do not accept that criticism of P&G: because of the extension that had been granted, on no view was a time-bar defence available to Gartner.

Mr. Kulkarni submits that whatever criticisms might be made of P&G, it would be disproportionate to refuse to extend the time for service and to deprive them of their claim in these proceedings against Gartner, particularly bearing in mind Gartner’s initial response to learning of the loss. Against this argument, I weigh the fact that, on the face of it, P&G could pursue a claim in bailment against the fifth defendant. Moreover it is not clear whether or not Gartner would have a reply of time-bar if new proceedings were brought against them. However, the question remains whether it would be proportionate to deprive P&G of their claim against Gartner in these proceedings, and in weighing this I accept Mr Kulkarni’s submission that there is nothing to indicate that the delay in serving these proceedings has prejudiced Gartner’s defence of them.

I must exercise my discretion in light of the overall objective to deal with cases justly, and to that end to deal with them expeditiously. Nevertheless, it does seem to me that in the circumstances of this case, it would be a disproportionate response to the criticisms that can properly be made of the claimants to set aside the extensions of time that were granted. I therefore refuse Gartner’s application.