F G Hawkes (Western) Ltd v Beli Shipping Co Ltd

There is before the Court an application on the part of Beli Shipping Co. Limited (“the Defendant”) seeking an order (1) under CPR r.11 (1), declaring that the Court does not have or will not exercise its jurisdiction over the Defendant; alternatively (2) under CPR r.23(10), setting aside the order of Burton J of the 10^th October, 2008 (“the Burton order”); alternatively (3) under CPR r. 3.4(2), striking out the claim.

In a nutshell, the Defendant challenges the Burton order, made on the ex parte application of FG Hawkes (Western) Limited (“the Claimant”), to extend time for service of the Claim Form. Although that application for the extension of time was made within the 6 month period during which the Claim Form was valid, the basis of the Defendant’s application is that (1) the Claimant had taken no steps to try to discover the Defendant’s address for service until 3 weeks before the Claim Form expired; and (2) that there was no good reason why the Claimant had allowed more than 5 months to slip by in total inactivity. Additionally, the Defendant complains that in its application to extend time, the Claimant had been less than full and frank in its disclosure to the Court. For its part, the Claimant contends that the correct course was to extend time for service of the Claim Form and that the relief sought by the Defendant would be disproportionate; further, the Claimant denies that it was less than full and frank in its application to extend time.

The underlying dispute can be shortly summarised. Pursuant to a straight- consigned bill of lading (“the bill of lading”), the Claimant was the consignee of a parcel of plywood (“the cargo”), shipped on the Defendant’s vessel, the MV Katarina (“the vessel”), at Lianyungang, China, in December 2006, for carriage to and discharge at Swansea. On the 22^nd February 2007, the vessel completed discharge of the cargo at Swansea. It is not in dispute that during discharge the cargo was found to be damaged by mould; there are suggestions too, of water damage. At first blush, the possible causes for damage of this nature would be inherent vice or some breach of contract or duty on the part of the Defendant as carrier. It is again not in dispute that the terms of the bill of lading provide for the familiar Hague Rules (or equivalent) one year time limit for the bringing of proceedings in respect of loss or damage to the cargo. Without more, therefore, time for the Claimant to bring proceedings against the Defendant under the bill of lading in respect of loss or damage to the cargo, would have expired on the 22^nd February, 2008.

On the 29^th January, 2008 (so, more than 11 months after completion of discharge), the Claimant’s solicitors (“Morgan Cole”) informed the Defendant’s P&I Club (“the North of England”) of a potential claim against the Defendant in respect of damage to the cargo and sought an extension of time. Morgan Cole further indicated that a claim against the Claimant’s cargo insurers (“cargo insurers”) was under consideration. Curiously enough in the light of subsequent events – though not a matter relied on at the hearing by either party – the Morgan Cole letter said this of the owners of the vessel:

In the event, the North of England granted the Claimant two time extensions; the first up to the 10^th March, 2008 and the second up to and including the 10^th April, 2008.

On the 3^rd April, 2008, Morgan Cole and the North of England agreed to submit the dispute to the jurisdiction of this Court, to be determined in accordance with English law.

On the 10^th April, 2008, thus the very last day for doing so, the Claim Form was issued. Two features of the Claim Form attracted comment at the hearing; I will return to these matters later but it is convenient to note them now:

First, the address of the Defendant was given as, in the event, care of the vessel’s Croatian managers, at an address in Croatia;

Secondly, the Claim Form contained this certification from Morgan Cole:

As the Claim Form was to be served out of the jurisdiction, the Claimant had a period of 6 months within which to serve it: CPR r.7(5)(2). That period accordingly expired on the 10^th October, 2008.

It is fair to note that on the 2^nd June, 2008, Morgan Cole confirmed to the North of England that proceedings had been issued. That apart, the evidence suggests that between the 10^th April, 2008 and the 19^th September, 2008 (to which I shall come in a moment), the Claimant had done nothing at all either (1) to ascertain the Defendant’s address; or (2) to serve the Claim Form. Mr. Manship of Morgan Cole, who had the conduct of this matter on behalf of the Claimant, offered this by way of explanation; between April and September 2008, the Claimant’s efforts had been “directed primarily” to pursuing its claim against cargo insurers.

On the 19^th September, 2008 – so, 21 days before the end of the period for service of the Claim Form – Morgan Cole did contact the North of England. In that e-mail, Mr. Manship said that he had not been able to obtain an address for service for the Defendant. He asked if the North of England could confirm that address or whether the Claim Form could be served on the Defendant’s Croatian managers (in Croatia). He remarked that he had raised similar queries on the 9^th April (the day before the issue of the Claim Form) and asked for an urgent response.

On the 30^th September, 2008, Mr. Brian McGregor of the North of England responded to Mr. Manship in the following terms:

On the 2^nd October, 2008 (so, 8 days before the Claim Form expired), Mr. Manship wrote to the managers of the vessel in Croatia, seeking essentially the same information as that sought from the North of England. The managers did not reply.

On the 3^rd October, 2008, with 7 days remaining before the Claim Form expired, the Claimant applied to the Court, ex parte, for an order that the period within which the Claim Form could be served be extended to the 10^th February, 2009. No separate witness statement was served in support of this application. Instead, the Claimant’s evidence was contained in Part C of the application notice itself, with a Statement of Truth signed by Mr. Manship. That evidence was as follows:

The Claimant’s “primary claim” lay against its cargo insurers. However, the policy contained a provision requiring the Claimant to ensure that all its rights against carriers and others were properly preserved and exercised. The Claimant was about to commence proceedings against cargo insurers. Following service of the Claim Form and Particulars of Claim on the Defendant, the Claimant would be making an application to stay these proceedings pending the outcome of the claim against insurers.

The Claimant then spoke “in addition” of having had “some difficulty” in identifying upon whom the Claim Form should be served and the address for service. The matter was put this way:

As already noted, the Burton order was made on the 10^th October, 2008, extending time for service of the Claim Form and the Particulars of Claim to the 10^th February, 2009.

On the 12^th November, 2008, the Claimant applied to the Court for permission to serve the Claim Form and Particulars of Claim on the Defendant “at its registered office, namely Trust House, 112 Bonadie Street, Kingstown, St Vincent.” The basis of the application was the agreement (already referred to) as to English governing law and jurisdiction. On the 14^th November, 2008, Flaux J granted permission.

On the 21^st January, 2009, the Claim Form was served on the Defendant. On the 13^th February, 2009, the Defendant acknowledged service, stating that it intended to challenge the jurisdiction. As already noted, on the 10^th March, 2009, the Defendant issued the application notice presently before the Court.

For the Defendant, Mr. Kenny’s submissions were to the following effect.

The Claimant’s failure to serve the Claim Form within the permitted 6 month period was, bluntly put, attributable to its solicitors’ neglect; the Claimant had left it until the end of the period before starting to make inquiries as to the Defendant’s address for service. On the authorities, such neglect did not constitute a reason, still less a good reason, for extending time.

No criticism could be made of the North of England’s conduct in September, 2008 (or, so far as it matters, that of the vessel’s managers in October, 2008). But, regardless of any involvement of the North of England and the vessel’s managers, by the 19^th September, 2008 – when the Claimant’s solicitors commenced making inquiries as to the Defendant’s address – it was very likely too late. See, in this regard, the time it actually took the Claimant before it effected service following the grant of permission (to serve out) by the Court.

If the Claimant had fully and frankly disclosed the facts when it applied ex parte to the Court for an extension of time, the Court would or should not have granted the extension. In its application for an extension of time, the Claimant had alluded to the difficulties it faced but had not frankly explained the history and the dates in question; in particular, it had not disclosed that it had done nothing for more than 5 of the 6 available months.

Finally, the Defendant relied on two alleged defects in the Claim Form. First, that the Claimant had “attached a false CJJA certificate” when the basis for jurisdiction was not the Civil Jurisdiction and Judgments Act 1982 (“the CJJA”) but the Judgments Regulation, Council Regulation (EC) 44/2001 (“the Regulation”). Secondly, that the Claimant had “deliberately inserted an address that it knew was not” the Defendant’s address but was instead that of its managers.

For the Claimant, Mr. Kulkarni’s submissions proceeded as follows.

Prima facie, the Claimant had at least a good arguable claim.

The Defendant had known from the 2^nd June, 2008 onwards (see above) that the Claimant had issued proceedings and it knew of their nature.

The Defendant had not sustained any prejudice by reason of the extension of time for service of the Claim Form and did not assert that it had.

This was not a case where in the period of validity of the Claim Form the Claimant had done nothing at all; during that period, the Claimant had concentrated on its primary target, namely, cargo insurers.

As to the inquiries launched on the 19^th September, 2008, that was “not quite the 11^th hour”. In any event, not least given the jurisdiction agreement, it was not unreasonable for Morgan Cole to assume that the North of England might cooperate. Mr. Kulkarni did, however, very fairly accept that as of the 19^th September, 2008, the timescale for serving the Claim Form on or before the 10^th October would have been “tight in any event”.

Overall, it was appropriate for Burton J to have extended time for service of the Claim Form and for me to do likewise. The remedies sought by the Defendant were disproportionate. My discretion should be informed by cases on strike-out; there were alternative sanctions as to costs and interests to consider, in preference to the relief for which the Defendant contended.

The Claimant had not been less than full and frank in its application considered by Burton J, albeit that Mr. Kulkarni accepted that the evidence had been compressed and it would have been preferable to say more.

As to the CJJA endorsement on the Claim Form, this was correct. Furthermore, in a telephone conversation between Mr. Manship and a member of the Court staff, it had been confirmed that the endorsement was correct; I shall have something to say as to that particular submission later. Still further and in any event, the Claimant had gained no advantage from the CJJA endorsement; even if it was in error, the Claim Form, was always going to be served out of the jurisdiction and so would always have been valid for 6 months.

The alleged incorrect address on the Claim Form was a non-point; at all events, the Claim Form had ultimately been served on the Defendant at its correct address in St. Vincent.

It is common ground that this application involves a rehearing of the matter, rather than a review of the decision involved in the making of the Burton order.

As already noted, CPR r.7.5(2) provides that where the Claim Form is to be served out of the jurisdiction, it must be served within 6 months of the date of issue.

CPR r.7.6 is central to this dispute. Insofar as material, it provides as follows:

Mr. Kenny placed at the forefront of his argument the following Court of Appeal authorities: Hashtroodi v Hancock[2004] EWCA Civ 652; [2004] 1 WLR 3206; Collier v Williams [2006] EWCA Civ 20; [2006] 1 WLR 1945; Hoddinott v Persimmon Homes (Wessex) Ltd[2007] EWCA Civ 1203; [2008] 1 WLR 806. All of these authorities are, to my mind, directly in point, in that they relate to extending time for service of a claim form under the CPR. Admittedly, they do not concern service out of the jurisdiction but, for present purposes, that does not appear to be a relevant distinction. From those authorities, the propositions which follow may be derived.

First, there is a striking contrast between CPR rules 7.6(2) and 7.6(3). R. 7.6(2) governs applications for extensions of time made within the period of validity of the claim form; r.7.6(3) deals with applications for extensions of time made after the expiry of that period. Under r. 7(6)(3), the Court is only empowered to grant an extension of time if the conditions stated in paragraphs (a) or (b) and (c) are satisfied – and cannot do so otherwise. There is no equivalent threshold condition applicable to the grant of relief under r. 7.6(2) and indeed no fixed “bar” as such, so that the Court has power to grant an extension of time even if it is not satisfied that the claimant has taken all reasonable steps to serve and has acted promptly. Nor is there to be incorporated into CPR r. 7.6(2), the previous threshold condition of “good reason”, found in RSC 0.6, r.8, or any other implied condition. There is, moreover, no check-list of relevant factors, comparable to that found in CPR r. 3.9(1) in relation to relief from sanctions.

Secondly, in the absence of any such threshold condition or check-list, the Court’s power under r. 7.6(2) must be exercised in accordance with the overriding objective (CPR, rr. 1.1 and 1.2). What this entails is an inquiry as to why the claim form has not been served within the relevant period. Once this inquiry has been answered, the court follows a more calibrated approach than hitherto; the better the reason for not having served in time, the more likely it is that an extension will be granted; conversely, the weaker the reason for not having done so, the more likely it is that an extension will be refused. So although there are no absolute bars or threshold conditions governing applications under r.7(6)(2), the fate of the application is very likely to hinge on the strength of the reason giving rise to the need for an extension. In Hashtroodi v Hancock (supra), Dyson LJ explained the Court’s approach as follows:

Thirdly, where there is no reason for the failure to serve the claim form within time other than incompetence, neglect or oversight on the part of the Claimant or his legal representative, this, though not an absolute bar, will be a strong or powerful reason for refusing to grant an extension of time. In Hashtroodi v Hancock, Dyson LJ said this:

Fourthly, the fact that a claimant is awaiting some other development in the case, may well not amount to a good reason justifying an extension of time for service of the claim form: Collier v Williams (supra), esp. at [129] and [148]. It would seem to follow, perhaps even a fortiori, that giving priority to another claim may well likewise not amount to a good reason for the grant of relief under CPR r.7.6(2).

Fifthly, it is incumbent on a claimant to take reasonable steps to ascertain a defendant’s address for service. A defendant’s solicitors and (doubtless) insurers, are not, at least as a matter of law, under an obligation to a claimant to reveal the address for service. See: Collier v Williams (supra), at [99] and [102].

Pausing here, the guidance and statements of principle from these decisions are, with respect, of the most powerful persuasive authority, regardless of the precise extent to which they are strictly binding. These authorities are of course not to be slavishly applied; nor are they to be treated as statutes. But the strictness of the approach favoured by these Court of Appeal decisions is apparent from their application of the relevant principles to the facts in the individual cases – with the exception of Hoddinott v Persimmon Homes (Wessex) Ltd (supra) where, amongst an unusual combination of facts, the claim would not have been time-barred even had an extension of time been refused: see, at [58].

Against this background and while it is always necessary to have regard to the overriding objective, the flexible nature of the CPR and the availability of graduated proportionate sanctions thereunder, I do not think that the authorities on strike-out to which Mr. Kulkarni referred, take the matter materially further. For the sake of good order, those were Biguzzi v Rank Leisure Plc[1999] 1 WLR 1926 and Asiansky Television Plc v Bayer Roisin [2001] EWCA Civ 1792. Likewise, with respect, I do not think that assistance is to be gained from the decision on significantly different facts in NV Procter & Gamble International v Gartner KG [2005] EWHC 960, upon which Mr. Kulkarni additionally sought to place reliance.

I now seek to apply the guidance given by the appellate decisions discussed above to the facts. I take as my starting point the question posed in these authorities: why did the Claimant not serve the Claim Form within the specified period? Unhappily, the evidence admits of only one answer to this question. For over 5 months of the 6 month period, Mr. Manship who had the conduct of the matter was focussing on the claim against cargo insurers and neglected or lost sight of the need to get on with serving the Claim Form in these proceedings. Indeed, nothing at all was done in these proceedings for those 5 plus months. On the authorities, that is not an absolute bar to extending time for service but it is a strong or powerful reason for refusing to do so. That the focus at the time was on a different claim does not, as it seems to me, mitigate this conclusion.

As already noted, Mr. Kulkarni submitted that the commencement of inquiries on the 19^th September, 2008 (expiry date minus 21 days) was “not quite” leaving matters until the 11^th hour. Plainly, he is right this far: it could have been still worse. But to my mind, when the Claim Form had itself been issued on the very last day of an agreed extension period, to then leave inquiries as to service until 21 days before the period for service expired was leaving it very late indeed. It is noteworthy that even after the Claimant was in possession of the correct address for service and permission to serve out had been granted, it took over 2 months to effect service. No doubt for this reason and as already recounted, Mr. Kulkarni accepted that (regardless of any involvement of the North of England or the vessel’s managers), as of the 19^th September, 2008, the timescale for serving the Claim Form on or before the 10^th October would have been “tight in any event”.

What then of the North of England’s response on the 30^th September to the Morgan Cole inquiry of the 19^th September? In the light of the jurisdiction agreement entered into in April - it must be assumed to the mutual benefit of the Claimant and the North of England - it was perhaps not unreasonable for Mr. Manship to hope that he might elicit a helpful response from the North of England. With jurisdiction already agreed, he could be forgiven for hoping that a cooperative and commercial rather than a strict approach might be taken to the question of service. Indeed, it must be likely that had time not been rapidly running out, the North of England’s stance as to service might have been different – or, at least, it is to be hoped that it would have been. But what Mr. Manship was not entitled to do was to expect or assume that there would be such cooperation; put another way, the risk of the North of England’s non-cooperation was one which rested on the Claimant and its legal representatives. On any view, what the Claimant could not do was to rely on the North of England to pull its chestnuts out of the fire. Even if, to some, the reply written by Mr. Brian McGregor of the North of England and the time taken to dispatch it, might have an unappealing flavour, it cannot be said that it involved the breach of a legal duty; notably, Mr. Kulkarni was careful not to advance any criticism in this regard, or any suggestion of reliance. It follows that I am unable to conclude that the North of England’s involvement in late September serves to mitigate the Claimant’s failure to get on with serving the Claim Form within the specified period. The same conclusion follows as to the silence of the vessel’s managers, in response to Mr. Manship’s communication of the 2^nd October, 2008.

On the other side of the line, the following matters may be said to weigh in the Claimant’s favour:

I am prepared to assume that the Claimant had as against the Defendant at least a good arguable claim.

I accept that the Defendant knew that proceedings had been issued and knew of their nature.

I further accept that the Defendant would not be prejudiced by a short extension of time covering the service of these proceedings.

This case involves an application to extend time made before the expiry of the specified period under CPR r.7(6)(2) rather than after the expiry of that period under r.7(6)(3).

What of these matters?

The absence of a good arguable claim would itself be a reason for not extending time; but the (assumed) existence of such a claim cannot, or, at least, does not, weigh heavily in the scale. Any different conclusion would indeed prove too much.

That the Defendant knew that proceedings had been issued and the nature of those proceedings is a point in the Claimant’s favour, at least insofar as its position would have been worse if the very existence of such proceedings had been unknown to the Defendant. But the Defendant was entitled to wait and see whether the Claimant was in reality going to proceed with the claim and, if so, entitled to insist that the Claimant complied with the relevant time limit/s. So I do not think that too much should be made of this consideration.

The absence of prejudice to the Defendant is a factor in the Claimant’s favour; again its position would be significantly worse if the position was otherwise. But the mere absence of prejudice to the Defendant is by itself insufficient to tip the scales in the Claimant’s favour.

Upon analysis, the authorities tell decisively against the conclusion that the mere fact that an application to extend time is brought within the period of the validity of a claim form points towards the likely success of the application. Instead, the fact that this application falls under r.7(6)(2) rather than r.7(6)(3) means that the application is not bound to fail, as, effectively, it would be under r. 7(6)(3). That the application was brought within the period of validity of the Claim Form means that a discretionary exercise of the present nature must be undertaken; but it does not by itself assist in determining the outcome of this discretionary exercise. The strictness of the Court of Appeal’s approach to applications for extension of time brought within the period of validity of the claim form is a striking feature of the authorities in question.

Self evidently, none of these matters go to the question of why the Claim Form was not served in time.

In my judgment, these matters, whether considered individually or cumulatively, do not come close to outweighing the powerful reason for not extending time so emphasised in the authorities – neglect or oversight in getting on with service until too late and for reasons solely attributable to the Claimant or its legal representatives.

There is too, this further consideration, going to the missing piece of the factual jigsaw – the Defendant’s address for service. As far back as the 29^th January, 2008, Morgan Cole understood that the Defendant was a St. Vincent company. All that remained was to discover its precise address. As has been made clear by Mr. Stembridge (the Defendant’s solicitor) in undisputed evidence contained in his 2^nd witness statement, that was not a task giving rise to any or undue difficulty. Through the use of registers of shipping, or the Lloyds Maritime Intelligence Unit or a local lawyer or agent, there is no reason to suppose that the full registered address for the Defendant could not have been relatively simply ascertained. What was however required was timely attention to this matter.

Overall therefore - with a measure of regret because time bar points are inherently unattractive but with no real hesitation - I do not think that the Burton order is sustainable. In the exercise of my discretion, I am unable to agree to an extension of time for service of the proceedings. I should make it plain that in reaching this conclusion I have not lost sight of the option of alternative sanctions; in all the circumstances, however, I take the view that a refusal to extend time is appropriate rather than disproportionate.

It follows that the Defendant’s application is entitled to succeed – as it seems to me, it matters not by which particular route, though that is something to be discussed with counsel when judgment is handed down.

Having reached my conclusion for the reasons already given, I shall deal only very briefly with the other matters canvassed in argument.

Was the Claimant’s application to extend time insufficiently full and frank? This is a matter of no little practical importance. Applications to extend time are dealt with by Judges of this Court, ex parte, on paper and under considerable time pressure. Applications on the basis of compressed evidence which conceal more than they reveal – even unintentionally – are to be strongly discouraged. Self evidently, an applicant who sails close to the wind takes the risk that any extension granted ex parte on such a footing might be set aside on that ground alone at the inter partes stage.

Here, Mr. Kulkarni accepted that it would have been preferable for more to have been said. He was right to do so. To my mind, the evidence presented by the Claimant to Burton J was close to the borderline. Given, however, that it is unnecessary for me to reach a final conclusion as to whether this criticism of the Claimant’s application should itself constitute a ground for setting aside the Burton order, I do not propose to do so.

The CJJA endorsement of the Claim Form: I shall assume (without in any way deciding) that Mr. Kenny was right to submit that this endorsement was incorrect and that the Regulation should instead have been relied upon. I wish to say nothing to encourage casual drafting of the legal basis relied upon for the initiation of proceedings destined for service out of the jurisdiction; that said, I was wholly unable to accept Mr. Kenny’s submission that this point, in context, was a factor of any assistance in this case, even as a makeweight. As has been seen, Mr. Kenny had other much better points.

I do, however, wish to say something as to the references, in the Claimant’s materials, to the Court staff having approved the endorsement. To my mind, with respect, such references were wholly inappropriate. No doubt the member of staff concerned sought, characteristically, to be helpful. But it is no part of the Court staff’s function to advise on the correctness of an endorsement on a claim form. It is incumbent on the party in question, not the Court staff, to get its tackle in order. In the event, nothing has turned on anything which might have been said by a member of the Court staff but I have remarked upon this point with a view to discouraging any enthusiasm for such references in other cases in the future.

The use of the managers’ address on the Claim Form: Mr. Kulkarni, rightly in my judgment, characterised this matter as a “non-point”. In fairness to the Claimant, the wording on the Claim Form made it clear in terms that the address was a “c/o” address. The Claimant’s difficulties as to the Defendant’s correct address for service lay, as already discussed, elsewhere. By the time the Claim Form did come to be served, the Defendant’s correct address for service had been established and was utilised in seeking permission to serve out of the jurisdiction.

I shall be grateful to counsel for assistance in drawing up the order and as to any questions of costs.