Higgins & Others v ERC Accountants & Business Advisers Ltd [2017] EWHC 2190 (Ch)

The facts

The claimants brought an action against the defendants alleging negligence and other breaches in relation to a tax mitigation scheme.

The claimants’ solicitors issued proceedings on 19 May 2016. On 20 July 2016, the claimants’ solicitors wrote to the first defendant advising them of the position. Draft particulars of claim were attached to the letter and the first defendant was notified that this would be served on them within 14 days from the date of the letter. Also, a copy of the issued claim form was attached and the first defendant was invited to consider mediation.

A letter in materially identical terms was sent to the second defendant’s solicitors and to the solicitors acting for the first defendant in relation to the employee fraud claim. All of the letters were dated 20 July, which meant that service of the particulars of claim was due, in accordance with the letters, by 3 August 2016.

The parties agreed an extension of time for service of the proceedings until 19 March 2017 but it was not until 15 March 2017 that the claimant’s solicitors emailed the defendants’ solicitors asking whether they would accept service by email. The first defendant’s solicitors and the second defendant’s solicitors advised that they would take instructions but did not get back to the claimant on this point.

At approximately 5:05 pm on 17 March 2017, the claimant sent the particulars of claim by first class post to the solicitors for the first and second defendants. The claim form was not included and both defendants submitted that service had been invalid and that the claimant was out of time.

On 31 March 2017, the claimant’s solicitors wrote to both the first and second defendant’s solicitors enclosing the signed claim form, particulars of claim and response pack.

The claimant argued that service of the copy claim form in July 2016 constituted good service but if this was not the case, then the court should exercise its discretion to extend time or to dispense with service.

Decision

The High Court held that there was nothing in the letters dated 20 July 2016 to suggest that the claimant’s solicitors were attempting to serve the claim form. Instead, the claimant’s solicitors had been writing to the solicitors for the first and second defendants for information purposes and to eliminate any doubt that the claim form had not been served.

The High Court concluded that if the claimant’s solicitors had intended to serve the claim form under cover of the letters dated 20 July 2016 then they would have asked whether the solicitors had instructions to accept service and whether they were prepared to accept service by email. Also, the High Court noted that copies of the claim form were sent and not the originals or court sealed copies. Further, it was noted that no response pack was sent and the rules on proper construction require service of a sealed claim form and a response pack.

It was held that the claimant’s breaches were not trivial and the defendants were not under any form of obligation to remind the claimant’s solicitors to serve the claim form within the relevant period. The High Court stated that a solicitor acting for one party is not required “… to inform his or her opponent of an apparent error made by that opponent in the absence of instructions from his or her client to do so, when to do so might be contrary to the substantive interests of that solicitor’s client.

Also, the High Court did not agree that there was any good reason to permit the claimant’s application because the mere fact that the defendants learned of the existence and content of the claim form did not make it right to grant the claimant relief. Also, the claimant’s solicitors could have served the claim form properly within the time of its validity but this did not happen because of a “…negligent or incompetent error.

The claimant’s application was unsuccessful and the High Court noted that there was no jurisdiction to try the claims against the defendants because the claim form had been issued but not served within the period of validity.

What this means for you

This case highlights that the original sealed copy of the claim form should be served on the opponent and not a copy of the claim form. Here, the claimant’s solicitors sent a copy of the claim form to the first and second defendants’ solicitors who had not stated that they had authority to accept service. It is therefore not surprising that the High Court concluded that this did not constitute good service.

In this case, there was no good reason to extend the time for service because the claimant’s solicitors had ample opportunity to validly serve the claim form but failed to do so. Also, this case serves as a reminder that legal representatives are not obliged to point out their opponents mistakes as to do so could be contrary to the interests of the client.

It is crucial that the rules in respect of service are followed and that proceedings are served within the period of validity. Claimants should be challenged in the event that service of proceedings appears invalid. As a starting point, it is essential to check that the claim has been served on the correct person or business, at the correct address, within the limitation period, within the required period for service and/or within any agreed extension period. Also, it is important to check that the original sealed claim form has been served and if served by email or other electronic means; that the defendant or their representative has agreed to accept service by this method.