IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
COMMERCIAL
Royal Courts of Justice
Rolls Building
7 Rolls Buildings
Fetter Lane
London EC24 1NL
Before:
THE HONOURABLE MR JUSTICE ANDREW SMITH
Between:
RAAYAN AL IRAQ CO. LTD et al | Claimant |
-and - | |
TRANS VICTORY MARINE INC. et al | Defendant |
MR. ENNET GOLDRICK for the Claimant
MR. MARK JONES for the Defendant
Hearing date: Friday, 23rd August 2013
JUDGMENT
MR JUSTICE SMITH:
This is an application by the claimant for an extension of two days for the service of their particulars of claim. They were due on 23rd July 2013. In fact, they were served on 25th July 2013. The purpose of their application is to regularise the position.
The action is about a cargo claim that is brought after consignments of cargo such as cartons of fruit juice apparently went overboard in the course of a voyage off the MAG Victory in December 2013[sic] the voyage being from the UAE to Iraq. Some cargo was lost and other parts of the cargo were recovered but damaged. Apparently, the claim is for something in the order of 850,000 US dollars.
The defendants’ evidence goes somewhat further by way of a description of the incident and gives more details but I need not go into that except to acknowledge that the defendants say that the problems that the vessel encountered are not straight forward and as it is put:
“A number of phases and a number of different potential causative factors...will require careful analysis and Hague Rules regime” if the case comes to trial.
Two defendants are named in the proceedings. The bills of lading give the name of MAG Shipping Company Inc. as the carrier. The first defendant is not the carrier named in the bills of lading but is the owner of the vessel at the relevant time. The owners are not said to have issued bills of lading and the claim against them is pleaded in tort or bailment and it is also alleged that the vessel was unseaworthy at the start of the voyage.
The position of the second defendants, MAG Shipping Company LLC, is not clear. It might be that they are mistaken as the name carriers on the bills of lading. Mr Iain Butterworth of Myton Law, who are on the record for the defendants, says in his witness statement that the company named in the bills no longer exists and that it “was closed down a couple of years ago.” However, that might be, the particulars of claim do not assert a claim against the second defendants named on the claim form and apparently the claimants have no security for a claim against them. It seems possible that the claim against the second defendants will not, in the end, be pursued but I cannot say whether that is so or not and it is certainly not for me to decide that today.
What are the merits of the claim otherwise? Mr Stuart Armstrong, a partner in Hill Dickinson of the claimant’s solicitors, says in a witness statement that he believes that the claimants’ claims are good. Mr Butterworth in a witness statement expresses disagreement and disputes that the vessel was unseaworthy and that the claimants were negligent and he indicates how the defendants might defend the claim referring, inter alia, to bad weather and to a Himalaya clause in the bills of lading and to other provisions in the bills including a time bar provision that:
“The carrier shall be discharged of all liability whatsoever in respect of suit unless suit is brought in the proper form and written notice, thereof, received by the carrier...within 12 months in respect of port to port shipment after the delivery of the goods or the date when the goods should have been delivered.”
He also says that the defendants are entitled to the protection of a one year time bar under the Hague-Visby Rules. I shall refer in this judgment to the Hague Rules for the sake of simplicity.
The claims, to my mind, are properly arguable and equally the points made by Mr Butterworth are apparently arguable. On an application of this kind I cannot begin to form any more specific view of the merits about the underlying issues in this case. It is not sufficiently clear for that. I proceed on the basis that there is a genuine dispute in which both sides have respectable arguments.
As I have said, there is an issue about whether the first defendants were protected by a one year time limit under the Hague Rules or other contractual provision but there were agreed extensions of any time limit until 13th March 2013. Mr Butterworth sets out the details. On 18th February 2011 an extension was granted until 19th June 2011. Thereafter there were a series of extensions for three month periods, the last being given on 6th December 2012 and expiring, as I have said, on 18th March 2013. Before the time limit expired, these proceedings were issued on 21st February 2013 by Messrs Hill Dickinson on behalf of the eleven claimants, all of whom claim an interest in the cargo. No particulars of claim were served. CPR 58.5 provides that if particulars of claim are not contained in or served with the claim form the claimant must serve them within 28 days of the filing of an acknowledgment of service indicating an intention to defend.
Before the proceedings were issued, there were discussions between the cargo underwriters and the club representing the vessel which resolved many cargo claims arising from this incident but there remained live the claims the subject of these proceedings. Mr Armstrong observed that this is not a case in which the claimants or their representatives have been inactive in the period between when the causes of action arose and the issue of the claim form and Mr Butterworth acknowledges that. However, Mr Butterworth also points out that before the claim forms were issued :
A formal claim was presented only in a letter of 18th July 2010.
UK solicitors became involved only in the last year or so before proceedings were issued.
There were some without prejudice discussions on two occasions in December 2010 and September 2011.
Mr Butterworth did not dispute Mr Armstrong’s evidence that many claims have been settled. He also said that the claimants had not sought to explain their title to sue but does not suggest that the defendants have ever pressed them to do so. Presumably the insurers on both sides recognise that they were dealing with subrogated claims and the identity of the insured on the different bills of lading was not of immediate commercial importance. However, Mr Butterworth states in his evidence:
“That the claimants did not, before issuing the proceedings, write a letter before action and that this was a breach of the commercial court guide and pre-action protocol. In this context he says that the presentation in the particulars of claim of a claim in bailment and tort came as a surprise the discussions having been ‘premised’ on a Hague Rules analysis.”
I do not propose to say much about that because, as I understand it, the negotiations were without prejudice. However, a claim in tort and bailment is not inconsistent with the parties’ rights and obligations being governed by a Hague Rules regime. In any case, Mr Butterworth’s complaint does not, to my mind, fairly reflect the commercial court guide. The commercial court guide at B3.2 observes that:
“Subject to complying with the Practice Direction and any applicable approved protocol, the parties to proceedings in the Commercial Court are not required, or generally expected, to engage in elaborate or expensive pre-action procedures, and restraint is encouraged.”
Mr Butterworth does not explain what purpose would have been served by such a letter. The claims had, no doubt, been discussed by experienced adjusters and the issues ventilated. The protocols are not designed to impose on the parties the expense of (inaudible) procedural hoops and no complaint was made about the absence of a letter before action before particulars of claim were late and the claimants put in the position where they had to make this application. It is said that any issues about title to sue or about the proper defendants might have been clarified but that is speculation. In my experience it is quite often the case that issues about title to sue are not resolved in cases of this kind by the time that proceedings have been brought and are generally resolved, consensually, in the course of proceedings. The point about not sending a letter before action appears to me opportunistic and not a matter that should weigh heavily on the exercise of my discretion.
After the claim form was issued Hill Dickinson asked Myton whether they had authority to accept service doing so on 9th May 2012 and were eventually told by Myton that they did not. However, on 12th May 2013 they had confirmed that they had been authorised and on 17th June 2013 they agreed to accept electronic service. An acknowledgment of service was served late on 24th June 2013 and is to be treated under the Rules as served on the 25th June 2013 and it indicated an intention to dispute the claim. Accordingly, under CPR 58, particulars of claim were due on 23rd July 2013 but as I have said, they were served two days late. When they were served nothing was said about them being two days late and Hill Dickinson and, in particular, Mr Armstrong, are criticised in that regard. I do not find that criticism compelling. It was put in terms of impropriety and I reject that criticism. It is a pity that if an allegation of impropriety was to be made, proper notice of it was not given to Hill Dickinson and it was referred to only in the skeleton action before this hearing. I suspect that Hill Dickinson thought the delay was such that the defendants would be entirely unconcerned and there is no proper basis for any implied assertion that they thought Mr Butterworth would overlook it. Even if they did think that, I hesitate to criticise them for it. It was for Mr Butterworth to take the point should he and his clients see fit to do so.
On 29th July 2013 Mr Butterworth sent an e-mail to Mr Armstrong saying that he did not have his file immediately available but asking whether the pleading was not out of time. Hill Dickinson replied immediately acknowledging that it was and inviting the defendants to grant the necessary extension. On 2nd August 2012 Mr Butterworth said he would take instructions. Hill Dickinson chased for a reply on 8th and 14th August. On 14th August Mr Butterworth promised a response that day but there was no such response. It was only on 16th August 2013 that the defendants said that they were not prepared to extend time. That same day Hill Dickinson wrote to the court asking for an extension of two days to regularise the position. They set out the history, to my mind fairly, and explained the delay and they proffered an appropriate apology. They said they could not see how the delay had caused prejudice. They anticipated, understandably, that the court would deal with the application on paper. This, indeed, is how we deal with many applications for extension of time whether the application is made before or after default.
On Monday 19th August 2013 Myton referred it to the commercial court. They objected to the application being dealt with on paper. They submitted that the procedural timetable should “follow normal CPR Part 23 lines” and a hearing should follow “in due course.” They gave no reason for this. They did not suggest that anything in HD’s letter was untruthful or misleading although they pointed out that the letter of 16th August 2013 was not supported by a verification of truth. They did not say why they needed 14 days to prepare evidence. When I considered the application on Monday this week in light of this correspondence, although I could not understand the need for an oral hearing, I thought that in the end the quickest and cheapest way of dealing with the matter was to have an oral hearing today. I directed that the claimant should serve any evidence by noon on Tuesday and they did so and gave the defendants until noon on Thursday to reply.
Mr Armstrong gave this evidence as to why the particulars of claim were served two days late. He said it was his intention that particulars of claim should be served within the initial 28 day period allowed for doing so; that is to say, by 23rd July. He noted that date in his diary system as being the deadline. The draft of the particulars of claim and accompanying schedule was completed to his satisfaction on 18th July. He did not anticipate delay in receiving approval through W K Webster & Company (UK), the agents, through whom he received instructions for the subrogated cargo claims to the particulars of claim. He had in mind the deadline of 23rd July but did not anticipate the need to apply for additional time. He had a conversation with a representative of W K Webster on 18th July and he anticipated that, whilst he would not have authority to proceed until after the Muslim weekend, the authority was likely to be ready on 22nd July. He did not hear further from Websters after the weekend and he failed to make further enquiries himself. He also failed to ask the solicitors or the court, if necessary, for additional time. He says he does not know why he failed to pick up his diary entry but suggests that having assumed the necessary authority would, in all likelihood, be provided as a matter of routine, the authority being to serve the draft particulars. The case entirely slipped his mind. On 24th July he realised the deadline had passed. He chased Websters for instructions adding that if Websters did not have instructions they would need to seek an extension of time and, if necessary, apply to the court. The witness statement goes on to repeat the apology which had been made in the letter of 16th August. If an application for an extension of say 7 days had been made shortly before 23rd July 2013, in my judgment, undoubtedly, an extension would have been granted on paper with little expense and no real delay to the proceedings. In essence, the claimants say that it would be unjust and disproportionate that the failure to apply for the extension until 16th August 2013 should result in an extension being refused and, effectively, the claim being struck out or dismissed. If new proceedings had to be started the effect would be that the defendants would rely upon a time bar defence which I must accept, for present purposes, would have some prospect of succeeding and the chance of a time bar defence succeeding in new proceedings would be significantly greater than in the present proceedings.
The defendants resist the application for that very reason. In the skeleton argument of Mr Mark Jones who represents the defendants they say this:
“The application should be dismissed, the claim struck out and the defendants awarded their costs of the action. The claimants would then be free to try to commence a fresh action. After all, if there is no applicable contractual time limit then the normal six year limitation period would likely apply. Such a limitation period would only expire in late 2015. They should, however, be under no illusion that any such action would be met with a time bar defence.”
Later he says this in conclusion:
“The claimants have exposed themselves to a powerful contractual time bar. The court should not deprive the defendants of their substantive rights by granting the claimants the procedural indulgence bearing in mind the overriding objective. There is a cost and time effective solution that preserves the defendants’ substantive rights or, at the very least, to the defendants’ ability to run a case based on well arguable substantive rights while avoiding the time spent on the action to date going to waste. The defendants can then use costs orders as a sanction if it thinks it appropriate to do so.”
In substance, the suggestion was that the present proceedings should be struck out and the defendants left to commence a new action, no doubt using the same procedure because of the claim in that new action.
The application is for relief from sanctions and is governed by CPR 3.9 which has been revised with effect from 1st April this year and now provides as follows:
“On an application for relief from any sanction imposed for a failure to comply with any rules, 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
(b) to enforce compliance with rules, practice directions and orders.”
It goes on to say that an application for relief must be supported by evidence.
The list of considerations that were itemised in the old version of the Rules has gone but, no doubt, all are potentially relevant for the exercise of the power under the new version of the Rules. The defendants say that the change in the Rules reflects an intention that the court should not show the same indulgence to non-compliance with the Rules and orders under them as apparently had been the previous practice or had developed, although this is not immediately apparent from the more succinct version of CPR 3.9 that has been introduced; the indentified considerations always having been relevant to the exercise of the power under CPR 3.9. I accept that this was the intention. Mr Jones cites in support of this what was said in the Court of Appeal in Fred Perry v Brands Plaza Trading [2012] EWCA Civ 224 Lord Justice Lewison cited with approval a paragraph of Sir Rupert Jackson’s report which said:
“...courts at all levels have become too tolerant of delays and noncompliance with orders. In doing so, they have lost sight of the damage which the culture of delay and non-compliance is inflicting on the civil justice system. The balance, therefore, needs to be redressed.”
Sir Rupert Jackson, on the same case, expressed similar sentiments. He drew attention to the then prospective amendments to Rule 3.9. He says that there was a concern that relief against sanctions was being granted too readily and:
“a culture of delay and non-compliance is injurious to the civil justice system and to litigants generally.”
He said that it was anticipated that the revised Rule would come into force on 1st April 2013 and after that date:
“Litigants who substantially disregard court orders or the requirements of the CPR will receive significantly less indulgence than hitherto.”
Similar sentiments are reflected in the judgment of Mr Justice Edwards-Stuart in Venulum Property Investments Ltd v Space Architecture Ltd. I observe, however, that that was a case which turned on particular and unusual facts. The application concerned the claim against only two of the defendants, the ninth and tenth defendants, and the court was able to conclude that the claimants were seeking to advance a claim for bad faith that was pleaded in particularly vague terms and commented that that was a course that did not merit indulgence. The Judge also felt able to conclude that the claim against those defendants was weak, a comparable conclusion to which I am unable to make in the present case. Nor do I accept that the change in the Rule or a change in the attitude or approach of the courts to applications of this kind means that relief from sanctions will be refused even where injustice would result. Indeed, Sir Rupert Jackson specifically said in his report that he had considered and rejected the suggestion that non-compliance with deadlines would no longer be tolerated except in exceptional circumstances. He concluded that he did not advocate what he called such an “extreme course...or any approach of that nature.”
I am unable to accept that it is no longer the case that the position is as was observed by Lord Justice Brooke in Price v Price [2003] EWCA Civ 888 Paragraph 45 that while it is important that the court maintain a disciplinary framework, including compliance with the CPR, that does not mean that there should be “a disproportionate response” or that defendants should be given an “unjustified windfall” where the dictates of justice and the overriding objective indicate the contrary. Despite the change in the Rules, Mr Jones presented his argument on the basis of the considerations identified in the old version of the Rules. Somewhat reluctantly, since I suspect the change recognises the old version of CPR 3.9 could sometimes result in an unduly formulaic approach to granting relief from sanctions, I shall deal with the thrust of his submissions accordingly:
The position with regard to the administration of justice: The justice as between the parties is not affected by the delay in the service of the particulars or in the failure to apply for an extension of time before rather than after 23rd July 2013, nor does the timing of the application or the failure to serve particulars have impacted upon any other court users or the court’s resources, save for the need to deal with this application.
Was the application for relief made promptly? It was. The only delay was because the defendants did not respond promptly to Hill Dickinson’s reasonable enquiry as to whether they were taking any point about the delay. They have provided no explanation for not replying more promptly but what matters is that the claimants certainly cannot be criticised.
Was the failure to comply intentional? It was not and it was not suggested that it was.
Is there a good explanation for the failure? The explanation is presented by Mr Armstrong. It was a slip on his part. It is regrettable but by no means egregious.
The extent to which the party in default has complied with other Rules, Practice Directions, court orders or any other relevant pre-action protocol? I consider there has been no relevant breach. I have referred to Mr Jones’ observation about there being no pre-action letter. It was said in his submissions that the failure to set out the case in a proper pre-action letter is, one suspects, a symptom of the claimants’ wider failure to keep on top of the timetable. I do not so suspect. I rather suspect that those dealing daily with cargo claims which are handled generally by experienced insurers on both sides and so many of which are sensibly settled, would be horrified by the thought of unnecessary additional expense of the kind which the defendants now suggest. Had the defendants really thought a letter of this kind would be useful, I cannot think why they did not ask for it when they knew that proceedings were issued but not served.
It is also said that there was collusion and there was:
“Collusion on the part of all those on the claimant’s side of the fence when it came to knowingly purporting to serve out of time and knowing and deciding not to seek an extension of time despite being fully aware and discussing the fact that the deadline had passed. They tried to get away with it, but got caught.”
I have already commented and reject upon and rejected the connotation of impropriety. It does seem to me unfortunate that the matter was put in that way. It is also said that if the claimants’ position is aggravated because of the need to start fresh proceedings the claimants would be in a position to consider a claim against Hill Dickinson or Websters or both. I find unappealing the thought of the cost of litigation from this incident being extended by secondary litigation involved in apportioning the blame for two days’ delay between the claimant’s two different advisors and an evaluation of the strength of the time bar point on a hypothetical than an actual basis. The next consideration under the old version of the Rules was whether the failure to comply was caused by the party or his legal representative? I have said sufficient about that. The next consideration is whether a trial date or likely trial date would be affected manifestly? That does not arise.
The final consideration is the effect of the failure to comply had on the parties and the failure which granting relief would have on each party. Mr Jones takes those together. He submits that leaving aside the time bar point the first defendants have powerful arguments and as for the time bar point he makes submissions along the lines that I have indicated. He says that time bar is strict. There is no flexibility; that a miss is a good as a mile if a suit is not commenced in time, the claim is extinguished and that is that. So far the point cannot be controversial. It is further said it was incumbent on the claimants and, indeed, take every care to protect their suit as losing it would expose them to the extinguishing effect of a powerful contractual time bar. Again, as far as the observation goes it cannot be disputed. It is said that they failed to do that. Instead they courted disaster by leaving things to the last minute and adopting the CPR 58 procedure to delay preparation and service of the particulars of claim and that they should live with the consequences. The time bar point, both under the Hague Rules and under any contractual time bar, turns upon the time when suit is brought. Suit was brought before the expiry of the extended March deadline. The fact that the claimants now need to seek an extension of time in order to pursue the particulars of claim does not gainsay that. Mr Jones sought to argue the contrary on the basis of an observation by Lord Justice Brooke in Price v Price which considered the position under CPR 7.4(1)(b) with regard to service of particulars of claim, a provision comparable for present purposes with CPR58. Lord Justice Brookes said at paragraph 4:
“Although the present case is concerned with an extension of time for serving particulars of claim, and not with an extension of time for appealing, the underlying logic is the same [as in another case he cited]. If the court is not willing to extend time the action will be at an end because the claimant will not be able to proceed with it any further.”
That does not, to my mind, suggest that in some sense suit has not been brought. It merely means an extension of time is required in order for the claimants to take advantage of the suit that was brought before the deadline. There is no question of the court (in the words of Mr Jones): “Stripping the defendants of a contractual time bar.” This seems to me the clearest case of granting the claimants’ extension. This is not because the court is unconcerned to ensure that Rules and orders are observed because it is unrealistic to think that no litigation solicitor (inaudible) or that justice always requires that indulgence should be refused. In this case a solicitor erred. The error should have been inconsequential. The overriding objective demands that relief be granted and I grant it. It is ironic that, but for changes to the Rules and the Sir Rupert Jackson report designed to save costs, this matter, I have no doubt, would have been dealt with without a hearing and with minimum expense. As it is, costs of something over £21,000 have been incurred by the defendant including about £10,000 by way of counsel’s fees. I understand that, mercifully, the claimant’s costs have been much more moderate. The defendants’ attempts to exploit the error in the way that they have are, to my mind, regrettable. I consider that an oral hearing was unnecessary. Nothing was argued that could not have been presented in a reasonably short letter to the court. Certainly there was no need for the extended timetable and delay to the litigation that the defendants had sought. I very much hope that changes designed to reduce costs will not have the effect of detracting from the sensible cooperation between solicitors which have, for years, characterised litigation in this court and, I dare say in other courts, otherwise the fault of those solicitors who have delayed and caused unnecessary expense in litigation through delay would find manifestation in aggravating the costs on a more routine litigation. Most cargo claims are dealt with on the basis of sensible and proper cooperation between the cargo interest insurers and (inaudible) clubs. If the points of the kind taken by the defendants result from a change in the Rules, far from the changes at reducing costs and delays in litigation of this kind the changes will, regrettably, aggravate them. I grant the application.
(End of Judgment)
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