The service rules present pitfalls both for solicitors serving claim forms and those acknowledging service. Hallam Estates Ltd v Baker looks at the significance of a limitation defence in these circumstances.

The facts

The claimants were the owners and licensees of The Grand in Folkestone. The defendant was living for a period of time in an apartment in The Grand. On 17 May 2010 she sent an email to six people, one of whom was the editor of the Folkestone Herald, complaining of excessive noise and breaches of planning laws. On 11 May 2011, the claimants issued a claim form alleging libel against the defendant, shortly before the relevant one year limitation period expired.

Service of the claim form

On 18 August 2011, the claimants’ solicitors asked the defendant’s solicitors by fax whether they were instructed to accept service of proceedings. Receiving no response, they wrote again on 25 August 2011 and, having realised that she was no longer living at The Grand, asked for the defendant’s current address and an extension of time for serving the claim form. The defendant’s solicitors said they were taking instructions.

Without notice application for an extension of time

On 30 August 2011, the claimants obtained an order extending time for service until 11 November 2011. On 9 November 2011, Master Kay rejected the defendant’s application to set that extension aside and made an order for alternative service upon the defendant’s solicitors. The claim form was served on 9 November 2011. The defendant appealed.

Reason for the delay

One of the defendant’s grounds of appeal was that, when considering whether the delay in serving the claim form arose through the incompetence or neglect of the claimants, the Master had incorrectly confined his attention to the period in late August 2011, ignoring the period from May to August 2011. The judge held that the Master had erred in doing so. The correct approach, as laid down by the Court of Appeal in Hashtroodi v Hancock, is to look at the whole of the four month period.

Limitation period

Master Kay concluded, the fact that the limitation period had expired was a matter which did not cause particular prejudice to the defendant. This was the wrong approach. The loss of a limitation defence is a matter of considerable importance and "a miss is as good as a mile". The claimants should not have been granted an extension of time which had, or might have had, the effect of depriving the defendant of a limitation defence. This was so even though the period was for one-year only and therefore, as the Master concluded, there may be less prejudice caused by the additional delay.

The decision on appeal

Despite sending three letters to the defendant in 2010 referring to a possible defamation claim, the claimants failed to comply with the Pre-action Protocol for Defamation and provided no evidence as to why they did not pursue the claim earlier. There was no reason for the court to make an order depriving the defendant of a limitation defence and the application to set aside the extension of time for service succeeded.

Comment

Failing to issue and/or serve a claim form in time is one of the most common reasons for negligence claims to be made against litigation solicitors. The correct approach to the jurisdiction to extend time for service of claim forms has been scrutinised by the courts on several occasions in the last few years, and the approach has been generally unforgiving to claimants’ solicitors who take their eye off the ball.

The court has jurisdiction to extend time for service of the claim form, both before and after the expiry of the four months (or six months where it is issued for service out of the jurisdiction). CPR 7.6(2) governs the position where the application notice seeking an extension reaches the court before the period expires. When the period has expired before the application notice reaches the court, CPR 7.6(3) gives the court a limited jurisdiction to extend time only where (a) the claimant has taken all reasonable steps to serve in time, but has been unable to do so and (b) the claimant has acted promptly in applying to extend time.

Hallam Estates Ltd v Baker makes clear the importance of a limitation defence in these circumstances. Last year, in Cecil v Bayat, the Court of Appeal held that the CPR 7.6(3) test should apply to an application under CPR 7.6(2) where a limitation defence will or may be prejudiced by an extension of time. At the very least, even if it has not taken all reasonable steps, the claimant should have to show that it has taken reasonable steps. By failing to comply with the protocol requirements, the claimants in the present case started off on the back foot, and they also failed to provide any satisfactory excuse for their failure to attempt to serve until the last month of the four-month period.

The fact that there are several factors weighing in the claimant’s favour, matters little in such a case. For example, in F G Hawkes (Western) Ltd v Beli Shipping Co Ltd, the claimant had a good arguable claim, the defendant knew both that proceedings had been issued and their nature, and the defendant was not prejudiced by the extension of time (other than by losing a limitation defence). The judge held that the extension of time had been incorrectly given.

Defendants in these circumstances may be able to dispose of the claim in one clean move by applying to set aside the without notice order extending time. There is, however, a deadly pitfall for defendants here. If the defendant fails both to tick the, "I intend to contest jurisdiction" box in the acknowledgment of service form and to issue an application disputing the court’s jurisdiction within 14 days, it will be treated as having accepted the court’s jurisdiction to try the claim and the application will be dismissed (Hoddinott v Persimmon Homes). Solicitors, whether acting for the claimant or the defendant, can easily fall foul of these strict service rules.