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Brightside Group Ltd & Ors v RSM UK Audit LLP & Anor

[2017] EWHC 6 (Comm)

Case No: CL-2016-000254
Neutral Citation Number: [2017] EWHC 6 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 9 January 2017

Before :

MR JUSTICE ANDREW BAKER

Between :

(1) BRIGHTSIDE GROUP LIMITED

(formerly Brightside Group plc)

(2) BRIGHTSIDE INSURANCE SERVICES LIMITED

(formerly Commercial Vehicle Direct Insurance Services Limited)

(3) PANACEA FINANCE LIMITED

Claimants

- and -

(1) RSM UK AUDIT LLP

(formerly Baker Tilly UK Audit LLP)

(2) RSM CORPORATE FINANCE LLP

(formerly Baker Tilly Corporate Finance LLP)

Defendants

James Potts QC and Alex Barden (instructed by Rosling King LLP) for the Claimants

Christopher Butcher QC and Josephine Higgs (instructed by Clyde & Co LLP)

for the Defendants

Hearing date: 25 November 2016

Judgment

Mr Justice Andrew Baker :

Introduction

1.

The Claim Form in these proceedings was issued on 26 April 2016. It was not served immediately or very shortly thereafter. The claims brought by the Claim Form allege audit negligence by the first defendant in respect of the claimants’ 2013 statutory accounts and in respect of client asset audits for the 2011, 2012 and 2013 financial periods (‘the CASS Audits’), and negligence by the second defendant in due diligence work relating to the purchase in 2011 of E Development Limited and E-Systems Limited, and the latter’s computer system known as eSystem, a transaction code-named ‘Project Pigeon’.

2.

It is at least arguable that a relevant limitation period in respect of the CASS Audits claims expired on 27 April 2016, and that a relevant limitation period in respect of the Project Pigeon claim expired on 2 June 2016.

3.

CPR 7.7 provides as follows:

(1)

Where a claim form has been issued against a defendant, but has not yet been served on him, the defendant may serve a notice on the claimant requiring him to serve the claim form or discontinue the claim within a period specified in the notice.

(2)

The period specified in a notice served under paragraph (1) must be at least 14 days after service of the notice.

(3)

If the claimant fails to comply with the notice, the court may, on the application of the defendant–

a.

dismiss the claim; or

b.

make any other order it thinks just.

4.

Clyde & Co LLP, the defendants’ solicitors, by letter dated 27 May 2016 to Rosling King LLP, the claimants’ solicitors, gave notice under CPR 7.7 requiring the claimants to serve or discontinue within 14 days. Clyde & Co had previously made Rosling King aware that they were authorised to accept service. They closed their letter by stating that, “In the event that we are not served with the Claim Form or do not receive confirmation that your clients have discontinued the claim by 10 June 2016, we will apply to the Court for an Order to dismiss the claim”.

5.

Clyde & Co’s letter was transmitted successfully by fax and e-mail before 4.30 pm on 27 May 2016, so CPR 6.26 deems that it was served on that day. Its stated requirement – that the claimants serve or discontinue “within the next 14 days”, i.e. by 10 June 2016 – therefore satisfied CPR 7.7(1)/(2). Failure to serve (or discontinue) on or before 10 June 2016 would therefore entitle the defendants to apply for the dismissal of the claim or such other order as the court might think just under CPR 7.7(3).

6.

The claimants intended to pursue the claim and so did not discontinue. But they did nothing towards serving the Claim Form until the afternoon of 10 June 2016. Clyde & Co’s address for service by post or by hand (i.e. by “Delivering to or leaving the document at the relevant place”) is The St Botolph Building, 138 Houndsditch, London EC3A 7AR. Clyde & Co occupy the 10th-13th floors and their reception desk is on the 13th floor. The main ground floor reception desk inside the building is the landlord’s responsibility and is manned by staff employed by or contracted to the landlord.

7.

At about 3.30 pm on 10 June 2016, Kirsty Evans, a trainee solicitor at Rosling King, presented herself at the ground floor reception desk inside The St Botolph Building in the hope of delivering by hand to Clyde & Co. She did not gain access to Clyde & Co upstairs and, in the event, left the service package with Trevor Smalley, a messenger employed by Williams Lea, a company contracted by Clyde & Co to provide it with various office services. Mr Smalley took the package from Miss Evans in the lower ground floor loading bay area of the building, accessed from St Botolph Street. He signed for the package purportedly on behalf of Clyde & Co.

Application & Decision

8.

On 25 November 2016, I heard and dismissed an application by the defendants made by Application Notice dated 13 July 2016. The application was for the dismissal of the claim under CPR 7.7(3) on the ground that there had been neither service nor discontinuance by 10 June 2016 as called for by Clyde & Co’s CPR 7.7 notice, and for a declaration under CPR 11 that the court had no jurisdiction to try the claimants’ claim on the ground that if the defendants were correct about CPR 7.7, then service of the claim form had been invalid.

9.

I stated my conclusions on the issues that arose, with full written reasons to follow. This judgment now sets out those reasons. I should record that I did not find it necessary to call on Mr Potts QC for the claimants; but I had detailed written argument from him in a 15-page skeleton argument, and the decisive point is one upon which there appears to be no prior authority; so I have held to the course I indicated of providing my full reasons, by this judgment, and have not adopted Mr Potts QC’s suggestion, in correspondence following the hearing, that I do not hand down any fuller judgment after all.

The Arguments in Summary

10.

The application was put by Mr Butcher QC for the defendants as follows:

i)

The Claim Form was not served on or before 10 June 2016, because (a) if what Miss Evans did on that day amounted to delivering the Claim Form to or leaving it at the relevant place for the purpose of effecting service, the Claim Form was thereby served on 14 June 2016 (see CPR 6.14), alternatively (b) what Miss Evans did on 10 June 2016 did not amount to delivering the Claim Form to or leaving it at the relevant place in any event. CPR 6.14 provides that:

A claim form served within the United Kingdom in accordance with this Part is deemed to be served on the second business day after completion of the relevant step under rule 7.5(1).

ii)

The purpose of CPR 7.7 was to entitle a defendant, by notice, to shorten the validity of a claim form; in effect, to replace the obligation to satisfy CPR 7.5 with an obligation to comply with the notice. The court’s approach to a failure to serve within the time limit set by a valid CPR 7.7 notice should therefore be materially the same as its approach to a failure to comply with CPR 7.5.

iii)

If that be the approach, this was a classic case for dismissal of the claim: for no reason, let alone any good reason, the claimants left it until the last minute; as a result, they served ‘out of time’, and after properly arguable limitation defences had accrued. The court should therefore dismiss the claim, leaving the claimants to start again and take their chances on the limitation defences.

11.

In response, the argument of Mr Potts QC for the claimants was that:

i)

What Miss Evans did on 10 June 2016 amounted to leaving the Claim Form at the relevant place on that date and that was sufficient to comply with the requirement of the CPR 7.7 notice that the Claim Form be served by 10 June 2016, notwithstanding CPR 6.14.

Alternatively:

ii)

A CPR 7.7 notice does not supplant CPR 7.5. The purpose of CPR 7.7 is to enable a defendant to get valid proceedings moving more quickly than would be the case if the claimant served only late in the period of validity of the claim form, or (as the case may be) to get rid of proceedings the claimant does not intend to pursue through early discontinuance rather than only through an ultimate failure to comply with CPR 7.5.

iii)

In its discretion, the court should not dismiss the claim.

Discussion

12.

In my judgment, for the reasons I give below, Mr Butcher QC was correct to submit that if the Claim Form was delivered to or left at the relevant place, for the purpose of CPR 7.5(1), on 10 June 2016, then so far as the CPR are concerned, the date on which service occurred as a result was 14 June 2016 by operation of CPR 6.14. So I shall not lengthen this judgment by dealing in detail with the evidence as to what precisely Miss Evans did and how it came about, in particular, that she handed the service package to Mr Smalley in the loading bay area. On that evidence, Miss Evans did what she was directed to do, so as to effect a delivery to Clyde & Co, by the landlord’s main reception and security personnel, having told them in terms that she “had to serve the envelope and enclosures on Clyde & Co today”. In my judgment, that did suffice to comply with CPR 7.5(1). In other words, the Claim Form was indeed delivered to or left at the relevant place (Clyde & Co’s address for service) on 10 June 2016.

13.

In accordance with its plain terms, notice duly given under CPR 7.7 will be a notice requiring that within the period specified the claimant either (a) serve the claim form or (b) discontinue the claim. Where, as here, the claimant has served, the question whether there has been a failure to comply with the notice is the question whether the claimant served within the period specified by the notice. In other words, when did service take place? That is squarely and specifically the question addressed and answered by CPR 6.14, for claim forms served within the jurisdiction (in fact, CPR 6.14 also applies to claim forms served outside the jurisdiction but within the United Kingdom). The answer given by CPR 6.14 to the question of when service took place is not the date on which the claimant took the step referred to in CPR 7.5(1) relevant to the method of service employed. The answer is the second business day after completion of that step, because for the purpose of the CPR that is deemed by CPR 6.14 to be the date on which service took place.

14.

In Godwin v Swindon Borough Council [2002] 1 WLR 997 and Anderton v Clwyd County Council (No.2) [2002] 1 WLR 3174, it was decided that the deemed date of service of a claim form provided by the CPR is a fixed date. It is not merely a presumption, rebuttable by proof by a claimant that the claim form was actually received by a relevant individual(s) on some earlier date, following steps taken by it to deliver it to them or bring it to their attention, or proof by a defendant that the claim form was only in fact received on some later date. When those cases were decided, the deemed date of service was set by CPR 6.7 and was different for different methods of service (as it is now, under CPR 6.26, for documents other than claim forms served within the United Kingdom), whereas now CPR 6.14 provides a common deemed date of service for claim forms served within the United Kingdom, whatever the method of service; but that does not in my view affect the decision in the cases as to the nature of the deemed date. CPR 6.14, in other words, fixes the date upon which service takes place, for the purpose of the CPR, for claim forms served within the United Kingdom.

15.

CPR 7.5 creates and defines the important notion that a claim form has a limited lifespan, a temporal validity, following its issue. That notion is created and defined by imposing upon the claimant an obligation in relation to service, to be complied with within a defined period after issue. The claim form only validly founds the court’s jurisdiction to try the claimant’s claim on its merits if that obligation is complied with (or if, exceptionally, any non-compliance is waived by the court in the exercise of its discretion to extend time or cure any other irregularity in relation to service). When Godwin and Anderton were decided, CPR 7.5 required that within four months after issue of the claim form, or within six months if service was outside the jurisdiction, the claim form had to be “served on the defendant”. Therefore, given the nature of a deemed date of service under the CPR, that date had to fall within the stated period, and Godwin and Anderton so decided; it was not sufficient to show that within the period of validity of the claim form the claimant had done what he needed to do to effect service. I agree with Mr Butcher QC that it is inconceivable a different decision would have been reached as to what was required to comply with CPR 7.7, which existed in the same terms as now when Godwin and Anderton were decided, and was not amended in 2008. For both CPR 7.5 (as it stood then) and CPR 7.7, there was room to argue, I think, that compliance should be tested by when the claimant had done what he was required to do to effect service, rather than by the deemed date of service resulting under CPR 6.14, since in both cases the focus was upon the claimant effecting service rather than upon the defendant responding to it. But the Court of Appeal decided against that argument and that binds me.

16.

CPR 7.5 was amended in 2008, so as to reverse the end result of Godwin and Anderton for claim forms served within the jurisdiction. The claim form must still “be served” within six months in the case of service out of the jurisdiction (CPR 7.5(2)). For a claim form served within the jurisdiction, however, the requirement is now not that the claim form be served within four months, it is that the step taken by the claimant so as to effect service be completed within four months. More precisely, CPR 7.5(1) requires that the ‘step required’ to be taken by the claimant, as there set out in a table, e.g. posting by first class post in the case of postal service, be completed “by 12.00 midnight on the calendar day four months after the date of issue”. CPR 6.14 was introduced by the same amendment, standardising the ‘deemed date’ of service for claim forms served within the United Kingdom at two business days after that ‘step required’ is completed. The table of ‘steps required’ was put in CPR 7.5(1) and a cross-reference to that was put in CPR 6.14; it could equally have been done the other way round; and in my view nothing turns on which drafting technique was adopted.

17.

It is to be noted that: there have always been two different questions, (i) what must the claimant do to effect service, and (ii) when do the CPR say that service, in consequence, takes place; the distinction between the two was not introduced by the amendment to CPR 7.5; moreover, that amendment did not touch question (ii); rather, it re-defined the temporal validity of a claim form for service within the jurisdiction so that it referred to question (i) rather than to question (ii). (I also note, for completeness, that the distinction between the two questions is reflected in CPR 6.15, which contains the court’s power to permit service by an alternative method or at an alternative place. Any order for alternative service is required by CPR 6.15(3) to specify, separately, (a) the method of service (answering question (i)), and (b) “the date on which the claim form is deemed served” (answering question (ii)).)

18.

Thus, the result in the Godwin and Anderton cases, that CPR 7.5 had not been complied with because the date of service achieved by the claimant (as deemed, i.e. fixed, by the CPR) was not within four months from the issue of the claim form, was reversed by the 2008 amendment to CPR 7.5, but only for claim forms served within the jurisdiction and not by changing the meaning or nature of a deemed date of service under the CPR. As the CPR now stand: for a claim form served within the jurisdiction, CPR 7.5(1) requires that the step there specified, for the method of service used by the claimant, as a result of the taking of which service will be effected two business days later (see CPR 6.14), must be taken within four months of the claim form being issued; for a claim form served outside the jurisdiction, CPR 7.5(2) requires that the claim form be served, i.e. (see Godwin and Anderton) that the date of service be, within six months of issue. (If service is in Scotland or Northern Ireland, that date of service will be the date fixed by CPR 6.14; if it is overseas, so far as I can see – this was not explored in argument – there are no ‘deemed date’ rules in the CPR, so that when service occurs, if disputed, will fall to be determined on the facts of each case.)

19.

To my mind, therefore, the terms of CPR 7.5 as they now stand do not provide any reason for saying that the question of when, according to the CPR, a claim form is served, which will determine whether there has been compliance with a CPR 7.7 notice, is not governed by CPR 6.14 (if the claim form is served in the United Kingdom). Prior to the 2008 amendment of CPR 7.5, that which had to occur within four months (or six months as the case may be), to comply with CPR 7.5, was the same as that which had to occur within the period specified by a CPR 7.7 notice, to comply with that notice. But that was not because the content of CPR 7.7 was defined by or by reference to CPR 7.5; it was because the content of both Rules was defined by reference to when service occurs. That is still true for claim forms served outside the jurisdiction. For claim forms served within the jurisdiction, CPR 7.7 still has reference to when service occurs, but CPR 7.5 does not; the unsurprising consequence, for that case, is that what must happen by the deadline stated by the Rule, to comply with CPR 7.5, is not now the same as what must happen by the deadline set by the notice, for there to be compliance with a CPR 7.7 notice.

20.

I do not agree with the claimants that the purpose and effect of CPR 6.14 is to fix the date on which service is taken to have occurred, for the sole purpose of fixing, and thus assessing compliance with, subsequent deadlines defined by reference to when service took place. That is an important consequential effect. In most cases where the claim form has been served within the jurisdiction, it may be the only effect of CPR 6.14 that will matter, because the validity of that service is not defined by reference to CPR 6.14. But the purpose and effect of the CPR deemed date of service always was, and remains, to fix the date on which service of a document is taken to have occurred for the purpose of assessing compliance with any deadline for achieving that service. That CPR 7.5 no longer imposes such a deadline, in the case of claim forms served within the jurisdiction, has not changed that. Put more shortly, CPR 6.14 fixes the date on which service of a claim form occurs, for all, not only for some, CPR purposes.

21.

Mr Potts QC submitted that I should reach a different conclusion, namely that for a claim form served within the jurisdiction, compliance with a CPR 7.7 notice is to be tested by reference to whether by the deadline specified in the notice the applicable CPR 7.5(1) step has been completed. He cited Ageas (UK) Ltd v Kwik-Fit (GB) Ltd [2013] EWHC 3261 (QB), T&L Sugars Ltd v Tate & Lyle Industries [2014] EWHC 1066 (Comm), Heron Bros Ltd v Central Bedfordshire Council [2015] EWHC 604 (TCC), decisions respectively of Green J., Flaux J. (as he was then) and Edwards-Stuart J., and a decision of Master Matthews, DB UK Bank Ltd v Sinclair Solutions Ltd, Transcript 17 December 2015.

22.

Ageas (UK) Ltd (Green J.) and T&L Sugars (Flaux J.) each concerned the proper interpretation of a contractual time bar provision in a share purchase agreement providing that claims made by written notice within a set time limit (failing which they could not be made at all) would be deemed withdrawn. The requirement, to avoid the deemed withdrawal, was that legal proceedings be, in the case of Ageas (UK) Ltd, “commenced by validly issuing and serving legal process” within six months or, in the case of T&L Sugars, “commenced by being both issued and served” within twelve months. In both cases, it was held that legal proceedings had been served, within the meaning of the contractual term in question, when they were successfully delivered to the defendant’s solicitors (by fax and e-mail in Ageas (UK) Ltd, by hand in T&L Sugars). Since that occurred within the contractual time limit, the contract was satisfied and the claim was not deemed withdrawn, although for CPR purposes the date of service set by CPR 6.14 was after the contractual deadline had expired. Neither is a decision on the meaning and effect of CPR 7.7, but Mr Potts QC relied on the reasoning.

23.

As I have said above, CPR 6.14 creates a fixed rule as to when, for the purpose of the CPR, service of a claim form occurs; a fixed rule that operates independently of any enquiry into when the claim form was in fact received by or otherwise brought to the attention of the defendant; and a fixed rule that applies to all claim forms served anywhere within the United Kingdom, not just to those served within the jurisdiction. In Ageas (UK) Ltd, Green J. recognised at [55] that any dispute as to whether legal proceedings had been “validly” served for the purpose of the contractual provision before him would have to be determined by reference to the CPR. However, he rejected the submission that the question of when service had occurred, for the purpose of assessing compliance with the contractual deadline, was to be determined by reference to the CPR. CPR 6.14 was therefore irrelevant, although he saw its existence, and what he saw as tension between it and CPR 7.5(1), as support for his primary conclusion on the meaning of the contract. That conclusion (see [54]-[56]) was that legal proceedings were served, within the meaning of the contract he was considering, when they were delivered to and received by their intended recipient.

24.

Green J. went on to say, obiter, that if he had construed the contract as providing that when service occurred was to be determined by reference to the CPR, he would have said it occurred upon completion of the applicable step referred to in CPR 7.5(1) and not upon the date of service under the fixed rule of CPR 6.14. That conclusion would have produced the same result on the facts before Green J., but that would not always be so. If service were by post, the CPR 7.5(1) step would be posting, but the date of delivery and receipt by the intended recipient would be (normally) one or two business days later. Green J.’s alternative, obiter, conclusion can be explained on the basis that: under the CPR, there may be a difference between (a) the date on which the claimant takes the step required of him, so as to effect service by the method of service used in the particular case, and (b) the date on which service is taken to have been effected, for the purpose of the CPR; properly construed, if the contract had in mind the CPR at all, it had in mind (a) rather than (if different) (b). That is not how Green J. reasoned, but in a number of respects I do not agree with his reasoning. In summary:

i)

I do not agree that CPR 7.5(1) “creates a different regime [to that of CPR 6.14] and treats service as having occurred upon the happening of a “step required”” (per Green J. at [67]); or that (at [77]) there are under the CPR “two forms of “service” [that] serve different purposes”; or that (at [79]) there are “two concepts of service” within the CPR.

ii)

CPR 7.5(1) now defines the temporal validity of a claim form, for service within the jurisdiction, by the obligation imposed on the claimant to complete the ‘step required’ within four months from issue. It therefore defines what must be done within four months by a claimant who serves within the jurisdiction for the resulting service of his claim form to be valid. It does not provide or imply that service of a claim form served within the jurisdiction occurs upon completion of that step. CPR 6.14 still fixes when, for the purpose of the CPR, service occurs for a claim form served within the jurisdiction, as it does for a claim form served out of the jurisdiction but within the United Kingdom.

iii)

Green J. (at [70]) seems possibly to have misunderstood that the new CPR 7.5(1) reverses the ultimate result in Godwin and Anderton in all cases, not only in cases where the claim form is served within the jurisdiction.

iv)

CPR 7.4 and the reference to ‘service’ in the CPR Glossary, referred to at [71]-[72], could support, it seems to me, the explanation I have suggested for Green J.’s obiter conclusion. But they do not affect the meaning or effect of a CPR deemed date of service (they were present, in identical terms, before the 2008 amendment to CPR 7.5, and indeed the glossary was relied on as part of the losing argument in Godwin).

v)

I disagree with the view (at [73]-[76]) that “the purpose” (if Green J. meant by that the sole purpose) of CPR 6.14 is to set a date from which to identify consequent steps in the litigation. CPR 6.14 continues to fix the date of service of the claim form, if served within the United Kingdom, for (all) the purposes of the CPR. If any other provision of the CPR operates by reference to the date of service, or requires the question to be asked when service occurred, and the claim form was served within the United Kingdom, CPR 6.14 applies. The new CPR 7.5(1) means, but means only, that that question no longer determines the validity of service of a claim form served within the jurisdiction, since that is instead now determined by when the ‘step required’ was completed (as a result of which, from the point of view of the CPR, service will have been effected two business days later, but that is not relevant to compliance with CPR 7.5(1)).

25.

In T&L Sugars, Flaux J. disagreed with Green J.’s ratio (see per Flaux J. at [14]-[26]), concluding that upon the proper construction of the contract he was considering, when legal proceedings were commenced “by being both issued and served” was to be determined by reference to the CPR. The question posed by the contract, he decided, was when proceedings had been “issued and served in accordance with the CPR”. As I mentioned above, the claim form had been delivered within the jurisdiction, by hand, to the defendant’s solicitors. For the reasons given at [27]-[43], Flaux J. concluded that the claim form had been “served in accordance with the CPR”, to use his phrase, on the date of hand delivery, that being the date when the ‘step required’ under CPR 7.5(1) had been completed. As with Green J.’s obiter conclusion, to my mind this decision of Flaux J.’s is to be explained on the basis that upon the proper construction of the contract before him, and bearing in mind the two different questions addressed by the CPR (see paragraph 17 above), the contractual time bar operated by reference to the date when the claimant did that which was required of it by the CPR, so as to effect service, and not by the date when service occurred, according to the CPR. Flaux J.’s reasoning seems, rather, to have been that (i) the contract asks when, according to the CPR, the claim form was served, and (ii) the CPR say it was served on the date of the CPR 7.5(1) ‘step required’, but I respectfully regard that as erroneous. CPR 6.14 exists to answer the question when, according to the CPR, a claim form was served if served within the United Kingdom.

26.

Flaux J. reasoned by reference to a distinction which he articulated at [31] in language echoing a White Book note quoted at [36], namely a distinction between “the date when service is actually effected, which is when the relevant step under 7.5 has been completed and the date two business days later when service is deemed to take place under CPR 6.14”. Flaux J. also said at [31] that he agreed with Green J.’s reasoning in Ageas (UK) Ltd at [63]-[80] which I have criticised above. For my part, I think it incorrect and unhelpful, in an analysis of the meaning and effect of these provisions of the CPR, to speak about when service “actually occurs” as distinct from when the CPR say it occurs. As I have sought to explain above, the distinction drawn by the Rules is, as it was before the 2008 amendments, a distinction between (i) what the claimant must do to effect service and (ii) when the CPR say that service results. As the present case shows, it will be a source for confusion and dispute in relation to the operation of the CPR if there is to be room for argument as to when they say that service has taken place, despite the clear terms of CPR 6.14 (or, as the case may be, CPR 6.26). Parties should be able to know that if a provision of the CPR requires it to be asked when service occurred (as does CPR 7.7 for the present case), and CPR 6.14 (or, it may be, CPR 6.26) gives a “deemed date of service”, then that answers the question.

27.

In Heron Bros Ltd, Edwards-Stuart J. considered regulation 47F of the Public Contract Regulations 2006 in relation to a procurement challenge by the claimant concerning the award of a contract by the defendant Council for the construction of a leisure centre. Regulation 47F(1) provided that “Where proceedings are started, the economic operator must serve the claim form on the contracting authority within 7 days after the date of issue”; regulation 47F(5) provided that “In this regulation, ‘serve’ means serve in accordance with rules of court, and for the purposes of this regulation a claim form is deemed to be served on the day on which it is deemed by rules of court to be served”. On 31 October 2014, the claimant’s agent sent to the court by letter its draft claim form and Particulars of Claim supported by a signed Statement of Truth, to be sealed and issued. On 3 November 2014, the agent sent the defendant by e-mail a copy of its letter to the court and the enclosures. Also on that date the court issued and sealed the claim form.

28.

Edwards-Stuart J. decided that the service by e-mail of the claim form in draft was sufficient to satisfy the requirement to “serve the claim form” within regulation 47F(1), because the failure to serve the sealed claim form as issued was to be regarded as a procedural irregularity capable of cure, and on the facts the court would cure it. On that basis the time limit in regulation 47F(1) was met even if that required a CPR 6.14 date of service within seven days of issue, as regulation 47F(5) taken at face value indeed required. He also concluded, obiter, that regulation 47F(5) should not be taken at face value but should be construed as requiring the completion by the claimant within the seven day period of the step required to effect service. In doing so, he referred to Flaux J. in T&L Sugars as having considered the “apparent inconsistency” between CPR 7.5(1) and CPR 6.14. As I have endeavoured to explain, there is no such inconsistency. I do not regard Edwards-Stuart J.’s bold obiter construction of regulation 47F(5), founded on a principle of effectiveness, as bearing upon the proper construction of CPR 7.7. (That principle of effectiveness was that a procedural rule should not be read in such a way that it might not be complied with even by a claimant taking all possible steps to do so.)

29.

Finally, in DB UK Bank Ltd, Deputy Master Cousins had made an order in agreed terms by which the claimant was granted, explicitly under CPR 7.6, “an extension of time for service of the claim form … of two months to 7 September 2015”. CPR 7.6 contains the court’s power to extend “the period for compliance with rule 7.5”. Master Matthews decided, unsurprisingly, that Deputy Master Cousins’ order had therefore extended the period for compliance with CPR 7.5 to 7 September 2015, which was a Monday. Therefore, since the ‘step required’ by CPR 7.5(1) had been completed on the Friday before (4 September 2015), service was valid though the date of service under CPR 6.14 was 8 September 2015.

30.

At [24], Master Matthews said, in effect, that if the question had been when, according to the CPR, the claim form had been served, he would still have said 4 September, as the date on which the ‘step required’ was taken; at [25] he quoted T&L Sugars, per Flaux J. at [31], as support for that view. For the reasons I have given above, I think that is an incorrect analysis of the CPR; and that Flaux J.’s distinction between claim forms being ‘actually served’ and ‘deemed served’ is an unhelpful, complicating gloss.

31.

I therefore find that the cases cited by Mr Potts QC, none of which is a decision on CPR 7.7 in any event, do not cause me to change my analysis or conclusions to this point. To recap: Clyde & Co’s CPR 7.7 notice required the Claim Form to be served by 10 June 2016; that required the date of service set by CPR 6.14 to be 10 June 2016 latest; the ‘step required’ for the purpose of CPR 7.5(1) was completed on that date; the date of service set by CPR 6.14, therefore, was 14 June 2016.

32.

There was, therefore, a failure to comply with the CPR 7.7 notice, so that by CPR 7.7(3) I was entitled, on the defendants’ application, to dismiss the claim or make such other order as I thought just.

33.

I agreed with Mr Butcher QC that if the claimants were to be treated similarly to claimants who had failed to comply with CPR 7.5, then they would have been in real difficulty. For the reasons he gave, which I summarised at paragraph 10.iii) above, if the case had been one of non-compliance with CPR 7.5, I would have set service aside and not granted any retrospective extension of time; so if the claimants were to be treated in the same way, it would have been right to dismiss their claim as suggested by the defendants.

34.

However, I did not agree with the premise of that argument (paragraph 10.ii) above). CPR 7.7 neither says, nor in my judgment does it imply, that the temporal validity of a claim form is truncated by service of a notice. It is not necessary to hold that it has that consequence to give CPR 7.7 a clear and useful purpose, as submitted by Mr Potts QC (paragraph 11.ii) above). The function of CPR 7.7, as it seems to me, is to enable defendants to flush out early whether a claim that has been issued against them is going to be pursued and to get early sight of it, if it is. That does not involve or require putting the temporal validity of the claim form, that is to say the length of time within which the claimants’ invocation of the court’s jurisdiction will be valid, into defendants’ hands (through service of a CPR 7.7 notice). I do not read the express reference to dismissal of the claim in CPR 7.7(3) as indicating a presumption as to the result of non-compliance with a CPR 7.7 notice. In my judgment, it is there merely to make clear that non-compliance is to carry with it a power to dismiss in an appropriate case (and not only lesser, procedural, sanctions). An example would be where the defendant, on his application under CPR 7.7(3), persuades the court by evidence that the claimant has no real intention of pursuing the claim. The court could then, and would expect to, put the claim out of its misery by an order for dismissal even though ex hypothesi the claimant had not done so himself by discontinuing.

35.

In the light of Hoddinott v Persimmon Homes (Wessex) Ltd [2007] EWCA Civ 1203, [2008] 1 WLR 806, the defendants indicated in their acknowledgment of service an intention to contest jurisdiction and made their application under CPR 11 as well as CPR 7.7. In my judgment, that was unnecessary. The jurisdiction of the court to entertain the claimants’ claims on their merits was validly invoked by the service of the Claim Form, because CPR 7.5(1) was complied with by what happened on 10 June 2016, less than half way through the four-month period allowed thereby. No possible ground for applying under CPR 11 arose.

36.

To my mind, this was plainly not a case for dismissal under CPR 7.7(3) if I am right as to its purposes. My ruling in the defendants’ favour as to the meaning and effect of CPR 6.14 means that service did not occur by the deadline set by the CPR 7.7 notice. However, on the evidence: the claimants’ solicitors in good faith thought that completing the CPR 7.5(1) ‘step required’ on 10 June 2016 would comply with the notice; the Claim Form in fact duly came to the attention of fee earners at Clyde & Co with carriage of this matter for the defendants on the morning of 13 June 2016, the next working day; the purposes of CPR 7.7, as I have construed it, were as well satisfied, in truth, as if the date of service had been 10 June 2016. For example, that would have been the case if the Claim Form had been posted to Clyde & Co by first class post on 8 June 2016, in which case it would probably have arrived the next day, but quite possibly only on 10 June, or perhaps later still if the claimants were unlucky. The defendants received, as their CPR 7.7 notice demanded, early confirmation, less than half way through the period of validity of the Claim Form, that these claims are to be pursued; and had sight of such detail of the claim as they are entitled to at this stage. The failure to comply strictly with the deadline set by the CPR 7.7 notice meant at most only that the defendants received that confirmation, and those details, one or two working days later than they might otherwise have done. That has not caused and will not cause them any prejudice or difficulty whatever. Indeed, to be fair to the defendants, Mr Butcher QC was clear that the application for dismissal was really only pursued on the basis that the claimants’ position was to be assimilated to that of claimants who had failed to comply with CPR 7.5; but I decided that was not the correct approach.

37.

For the reasons set out above, (a) I concluded that the claimants had failed to comply with the CPR 7.7 notice served by the defendants, but (b) I rejected the application for a dismissal of the claim, and instead (c) I set a timetable for service of a Defence and Reply (if any).

Brightside Group Ltd & Ors v RSM UK Audit LLP & Anor

[2017] EWHC 6 (Comm)

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