Home Information Cases (1) Sally Woodward (2) Mark Addison v Phoenix Healthcare Distribution Ltd (2018)

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(1) Sally Woodward (2) Mark Addison v Phoenix Healthcare Distribution Ltd (2018)

Summary

A party's entitlement to take advantage of its opponent's mistakes was qualified by its duty under CPR r.1.3 to help the court further the overriding objective. Where a party threatened with litigation failed to draw the proposed claimant's attention to a mistake which resulted in service being defective, that could go towards establishing a good reason for the court to exercise its discretion under CPR r.6.15 to validate the service retrospectively.

Facts

In the context of a proposed claim for damages, the court was required to determine issues arising from the claimants' purported service of the claim form.

Pursuant to CPR r.7.5(1), the claim form had to be served by midnight on 19 October 2017. Following correspondence between the solicitors, the claimants purported to effect service on the defendant's solicitor (Mills & Reeve). It was common ground that Mills & Reeve received the relevant documents by email and post on 17 and 18 October. On 20 October it told the claimants that it was not instructed to accept service. The claimants applied for an order either declaring that the service was good, or retrospectively validating it under CPR r.6.15(1) and r.6.15(2). The defendant cross-applied for a declaration that the court had no jurisdiction to hear the claim because the claim form had not been served within time.

Held

Did the correspondence between the solicitors constitute notification that Mills & Reeve was authorised to accept service? No. Although Mills & Reeve indicated that it had been instructed to deal with the proceedings, and set out the steps it was instructed to take in the event of issue, that did not constitute notification that it was authorised to accept service, Gee 7 Group Ltd v Personal Management Solutions Ltd [2016] EWHC 891 (Ch) applied (see para.25, paras 34-36 of judgment).

Was Mills & Reeve estopped from denying that it was authorised to accept service? No. There could be circumstances in which a party was estopped by its conduct from relying on otherwise defective service, Pacol Ltd v Trade Lines Ltd (The Henrik Sif) [1982] 1 Lloyd's Rep. 456 applied, Bethell Construction Ltd v Deloitte and Touche [2011] EWCA Civ 1321 followed, and Stolt Loyalty, The [1993] 2 Lloyd's Rep. 281 considered. However, such circumstances did not arise in the instant case. The estoppel argument was based on Mills & Reeve's silence in the face of a July 2017 letter indicating that the claimants intended to serve the proceedings on it, and its failure to reveal, before 20 October, that it had no instructions to accept service. For an estoppel to arise, Mills & Reeve must have appreciated or at least suspected that the claimants were acting under a mistake in respect of service, and must have had a duty to speak out. However, the July 2017 letter was not sufficient to fix it with such knowledge. Moreover, although it acquired the requisite knowledge by 17 and 18 October, it had no duty to speak out. While parties were required to respond fully and honestly to matters raised by the other side, the claimants had not asked whether Mills & Reeve had authority to accept service. They had simply proceeded on the unverified basis that it had. If a party to threatened litigation was aware of a mistake by the other side, not of his making and no response from him having been sought, he was not required to bring that party's attention to it, Smith v Probyn Times, March 29, 2000 applied (paras 38-42, 45-46, paras 51-54, 59-68).

Should the defective service be validated retrospectively? Yes. The circumstances did not have to be exceptional before the court would exercise its discretion under r.6.15(1), but there had to be good reason for it to do so. A critical factor, but not one that automatically constituted a good reason, was whether the defendant had learned of the existence and contents of the claim form through the defective service. In the instant case, it had; and that was a factor in favour of validation, Abela v Baadarani [2013] UKSC 44 followed, Societe Generale v Goldas Kuyumculuk Sanayi Ithalat Ihracat AS [2017] EWHC 667 (Comm) applied. However, something more was necessary to establish good reason for validation, and given that validation might deprive the defendant of a possible limitation defence, it had to impact upon limitation. The parties' conduct was relevant; if either was found to be playing technical games, it would count against them, Barton v Wright Hassall LLP [2016] EWCA Civ 177 followed. The key additional matter in the instant case was Mills & Reeve's failure to warn the claimants of their mistake. Although Mills & Reeve had no inter partes duty to warn, a party's entitlement to take advantage of an opponent's mistake was qualified by its CPR r.1.3 duty to the court to help further the overriding objective, OOO Abbott v Econowall UK Ltd [2016] EWHC 660 (IPEC) applied, Higgins v ERC Accountants and Business [2017] EWHC 2190 (Ch) not followed. In the context of CPR r.3.9, it was inappropriate for parties to take advantage of their opponents' mistakes in the hope of obtaining a litigation advantage, and that applied equally to the instant situation, Denton v TH White Ltd [2014] EWCA Civ 906 applied. It was inherent in the approach to r. 6.15(2) that errors in the service of a claim form were not to be treated as irredeemable. Mills & Reeve's failure to warn the claimants of their mistake breached its duty to help give effect to the overriding objective and amounted to the playing of a technical game. There was therefore good reason to validate the claimants' de facto service (paras 69-86, 93-120).

Addendum - The decision in Barton v Wright Hassall LLP [2018] UKSC 12 did not alter the foregoing, Barton (UKSC) considered. The claimants' culpability in failing to establish that Mills & Reeve had authority to accept service was outweighed by the fact that the de facto service fulfilled the objectives of good service, coupled with Mills & Reeve's failure, in breach of its duty to help further the overriding objective, to warn the claimants that their purported service was defective.

Application granted, cross-application refused

Chancery Division
Master Bowles
Judgment date
16 March 2018
References
[2018] EWHC 334 (Ch)