Cecil and others v Bayat – extension of time for service of claim form  EWCA Civ 135 www.bailii.org/ew/cases/EWCA/Civ/2011/135.html
The Court of Appeal held that the claimants should not have been given an extension of time for the service of their claim form at the end of the limitation period. The fact that they had not yet obtained funding for the claim to proceed to trial (ATE insurance was in place but a CFA not yet concluded) was not a valid reason for an extension of time. They should have served the claim form in the period of its initial validity and issued an application seeking a stay or an extension of time for serving particulars of claim. The judge’s order extending time was reversed.
Giving a strong endorsement to the courts’ ability to deal with problems, the court said that difficulties caused by the financial constraints of the claimants should have been the subject of case management by the court. In response to their argument that the defendants would have sought to scare them off by proliferating costs early in the proceedings, the court would have been astute to prevent the claimants being unduly prejudiced by any such attempt.
An additional issue arose concerning service by an alternative method. Given the court’s decision on the extension of time, this part of the judgment is obiter but of general interest to those serving proceedings abroad. The claimants argued successfully below that because the defendants were international businessmen who had more than one address and travelled extensively, service by electronic means was desirable when contrasted with service under the Hague Convention which would have taken two months.
The Court of Appeal held that while the fact that proceedings served by an alternative method will come to the attention of a defendant more speedily than proceedings served under the Hague Convention is a relevant consideration when deciding whether to make an order under CPR 6.15, it is in general not a sufficient reason for such an order. If it were, service by alternative means would become normal and not exceptional. Orders permitting alternative service may be required in the case of countries with which there are no bilateral treaties for service and where service can take very long periods of up to a year, but this was not the case here.
This doesn’t mean that a claimant cannot bring proceedings to the attention of a defendant by email, fax or other more speedy means than service pursuant to CPR 6.40 and the claimants could have done so here but service is more than that. The judge confused bringing the proceedings to the defendant’s attention with service itself which is an exercise of the power of the court and, in a case involving service out of the jurisdiction, is also an exercise of sovereignty within a foreign state.
The case is a strong reminder from the Court of Appeal that a claimant can very rarely choose to delay serving proceedings, presuming that it will be able to get an extension of time from the court under CPR 7.6(2) because the application is made before the expiration of the validity of the claim form. It may be possible to get an extension from a judge on a without notice application but it is likely to lead to an expensive challenge from the defendant.
Here the claimants were accumulating a war chest to fund some seriously large-scale litigation and hadn’t got their funding completely sorted at the point where they needed to serve the claim form. They had delayed in beginning proceedings in England for two years (there had been some abortive proceedings between the parties in the US) and the limitation period had expired before service. This meant that the defendant’s limitation defence was prejudiced by the extension of time for service.
The court was clear that this should only be allowed in exceptional circumstances. It drew attention to CPR 7.6(3) which differs from CPR 7.6(2) in an important respect. If an application for an extension of time is made after the expiration of the validity of the claim form under CPR 7.6(3), the court has no discretion to exercise in favour of the claimant unless it “has taken all reasonable steps” to serve within the period of its validity but has been unable to do so. The same test should apply to an application under CPR 7.6(2) where the limitation defence of the defendant will be or may be prejudiced. 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.
The Court of Appeal drew a distinction between the facts in this case and those in Hoddinott v Persimmon Homes. In Hoddinott, the Court of Appeal upheld an extension of time under CPR 7.6(2) even though there had been no good reason for the claimant not to serve in time. This was because of the presence of two significant facts: first, the claim was not time-barred and so could be reissued and second, a copy of the claim form had been sent to the defendant within the period. Good reason for an extension of time was found in Imperial Cancer Research Fund v Ove Arup & Partners Ltd where further excavation works and an expert’s report were required before the claimants could know whether they had a claim against the defendant architects and a limitation defence was unlikely to be available. Usually such an excuse will not justify an extension of time for service of the claim form but may well merit an extension of time for service of the particulars of claim.
Lest Cecil should suggest that the odds are stacked against claimants, the reference to Hoddinott is a reminder of the risks facing defendants in these cases. In Hoddinott the Court of Appeal held that jurisdiction in the context of CPR 11.1 is not confined to territorial jurisdiction but includes the court’s jurisdiction to hear the claim in a more general sense. This means that whenever the service is defective in some way, whether because it is out of time under CPR 7.5, incorrect in form or made upon the wrong person, the defendant must tick the “I intend to contest jurisdiction" box in the acknowledgment of service form and issue an application disputing the court’s jurisdiction within 14 days if it is not to be treated as having accepted the court’s jurisdiction to try the claim. Defendants should note that this procedure must be followed where the claimant has obtained an extension of time for service and the defendant wishes to challenge it.