UK Highways A55 Ltd v Hyder Consulting (UK) Ltd illustrates the risks for a claimant when it has not served particulars of claim and the proceedings are stayed to enable the parties to complete the protocol process.
In October 2009 the claimants sent their letter of claim to both defendants in accordance with the Pre-Action Protocol for Construction and Engineering Disputes. The claim arose from a design, build, finance and operate (DBFO) contract for a road in North Wales, the A55. The first defendant provided design services and the second defendant, now in voluntary liquidation, was its parent company and guaranteed its performance. In March 2010 each defendant indicated in its letter of response that, for different reasons, it was not yet able to respond fully to the claim.
The claimants served the claim form on 6 May 2010. CPR 7.4 requires particulars of claim to be served “within 14 days after service of the claim form”. On 10 May 2010 the claimants invited the defendants to agree to a stay in order to allow the protocol process to run its course. On 17 May 2010 a consent order was made staying the proceedings. The stay was to be lifted on the application of any party and, in any event, within three months.
During the months that followed, three further stays were made by consent order, the fourth stay expiring on 23 June 2011. The parties continued to discuss the claim and the possibility of a mediation. The particulars of claim were not served.
On 28 August 2012 the first defendant said that it would apply to strike out the claim if it was not discontinued. Both defendants subsequently applied to strike out the claim and the claimants applied for an extension of time for service of the particulars of claim. The following important points of principle arose:
- What is the effect of a stay upon the time limit for serving particulars?
- Can there be a de facto stay of proceedings?
- When will a defendant be held to have acquiesced in the delay or to have waived its right to object to late service of particulars?
Effect of a stay
The effect of a stay is to suspend the proceedings until the stay is lifted or expires, whereupon they resume automatically from where they left off. The effect is therefore simply to shunt back any outstanding time limits by an amount of time equivalent to the length of the stay. In this case, the successive stays were not continuous but the parties treated them as though they were. This confused the issue of when the particulars were due.
De facto stays
There is no such thing as a de facto stay. The parties cannot impose a stay by express agreement in the absence of an order of the court. There is no question therefore of a stay being imposed by implication where, as here, one party suggests a further stay, but on receiving no response, takes no steps to follow it up. Remember also that the parties can extend the time limit for complying with a rule without a court order but only by written agreement (CPR 2.11 and Thomas v Home Office).
Acquiescence and waiver
Between June 2011 and March 2012 the parties were still discussing the claim and exchanging information. No one suggested that the claimants should serve their particulars of claim, still less criticised them for not doing so. The claimants were entitled to take the view that the defendants were acquiescing in this situation. The judge did not go so far as to find that the defendants had waived their right to object to the failure to serve the particulars but he concluded that it would be unjust if they could turn round and strike out the claim in circumstances where the claimants were genuinely seeking to reach a compromise.
Relief from sanctions
Since the defendants were entitled to complain about the delay between April and September 2012, the court had to decide whether the claimants were entitled to an extension of time for service of the particulars of claim. The judge reviewed the factors relevant to an application for relief from sanctions under CPR 3.9. He concluded that, while the delay had deprived the court of the opportunity of managing the case properly, the court would probably have agreed to another stay had it been asked. The defendants were commercial parties quite capable of applying for a case management conference at any time if they thought any activity of the claimants was prejudicing their position.
Wishing to grant the extension of time but also noting that the delay could prejudice the defendants, the judge concluded that this risk could be minimised by imposing conditions on the granting of the extension of time. He disallowed those parts of the particulars which would raise supervision issues, confining the claim to one based on allegations of negligent design which could be resolved primarily by expert evidence.
This is a common scenario and one which offers lessons to both sides. Stays are technical creatures and require the court’s authorisation; extensions of time for the service of particulars of claim require the parties’ written agreement. Claimants risk losing their claim in its entirety, or in part of the claim as occurred in this case, if they get this wrong.
The risk for claimants in these circumstances will increase after April 2013 when CPR 3.9 is amended to make relief from sanctions harder to obtain. The new rule was revealed last year by Jackson LJ in Fred Perry (Holdings) Ltd v Brands Plaza Trading Ltd. He referred to concern that relief against sanctions is being granted too readily and that the culture of delay and non-compliance is damaging the civil justice system.
Defendants, on the other hand, can benefit from this development but only if they play with a straight bat. Although there is no general duty owed by one party to litigation to correct the mistakes of the other, there are circumstances in which deliberately allowing the other party to continue in a mistaken belief will be unconscionable. The present case shows that the court may look unfavourably on a defendant which sits back in apparent acquiescence to delay and, without warning, turns round and makes an application to strike out the claim.
Having said that, it is possible to take advantage of a claimant’s error about service and extensions of time without behaving unconscionably - Bethell Construction Ltd v Deloitte and Touche is a good example of how it can be done. Where claimants or their solicitors are the authors of their own misfortune, the court is unlikely to help them out.