The Honourable Mr Justice Flaux:
Introduction and background
- This is the judgment on a trial of preliminary issues in this matter pursuant to the Order of Walker J dated 16 December 2013. The dispute in this litigation concerns a Share and Business Sale Agreement ("the SBSA") dated 30 September 2010 for the sale of the European sugar business of Tate & Lyle Plc to American Sugar Holdings Inc. Under the SBSA the claimant was the Principal Purchaser and the defendant the Principal Seller. The claimant claims that the defendant is in breach of the express and/or implied terms of the SBSA in relation to three distinct parts of the business transferred at Closing: (i) the defendant's Inward Processing Relief balance; (ii) the sugar futures contracts held in the defendant's hedging books at Closing ("the Futures Claim") and (iii) a biomass plant. It is not necessary for the purposes of the trial of the preliminary issues to set out the detail of those claims. The preliminary issues concern whether or not the claims were issued and served in time within the meaning of the SBSA.
- The clauses of the SBSA with which the preliminary issues are primarily concerned are as follows:
"10.1 Time limitation for claims
No Relevant Seller shall be liable under this Agreement in respect of any Warranty Claim … unless a notice of the claim is given by the Principal Purchaser to the Principal Seller specifying the matters set out in Clause 11.2 …
10.1.2 in the case of any other Warranty Claim, within 18 months following Closing;
11 Claims
11.1 Notification of potential Claims
Without prejudice to the obligations of the Principal Purchaser under Clause 11.2, if a Relevant Purchaser or any Group Company becomes aware of any matter or circumstance that may give rise to a claim against any Relevant Seller under this Agreement … the Principal Purchaser shall as soon as reasonably practicable give a notice in writing to the Principal Seller setting out such information as is available to the Relevant Purchaser or Group Company as is reasonably necessary to enable the Principal Seller to assess the merits of the potential claim, to act to preserve evidence and to make such provision as the Principal Seller or the Relevant Sellers may consider necessary.
11.2 Notification of Claims under this Agreement
Notices of claims under this Agreement (excluding the Tax Warranties) or any Local Transfer Document shall be given by the Principal Purchaser to the Principal Seller within the time limits specified in Clause 10.1, specifying in reasonable detail (to the extent available to the Principal Purchaser) the legal and factual basis of the claim and the evidence on which the party relies … and, if reasonably practicable, setting out the Principal Purchaser's estimate of the amount of Losses which are, or are to be, the subject of the claim (including any Losses which are contingent on the occurrence of any future event).
11.3 Commencement of Proceedings
Any claim notified pursuant to Clause 11.2 shall (if it has not been previously satisfied, settled or withdrawn) be deemed to be irrevocably withdrawn 12 months after the notice is given pursuant to Clause 11.2 … unless at such time legal proceedings in respect of the relevant claim have been commenced by being both issued and served."
- Closing, defined as completion of the sale under the SBSA, took place on 30 September 2010. Thereafter the claimant made a number of claims under the SBSA, including the three categories of claims subsequently made in these proceedings, in relation to which the claimant gave a notice in writing under clause 11.2 to the defendant on 30 March 2012, the last day of the 18 month period prescribed by clause 10.1.2 for Warranty Claims. The claimant accepts that the requirement for a notice in writing under clause 11.2 encompasses all claims under the SBSA, not just the particular types of claim specified in clause 10.1, albeit that, for present purposes the time limit in clause 10.1.2 only applies to Warranty Claims. That concession obviates the need to consider Issues 2 and 3 of the preliminary issues.
- On 26 March 2013, the defendant's solicitors, Linklaters, confirmed to the claimant's solicitors, Clifford Chance, that they were instructed to accept service of proceedings. On 27 March 2013, the Claim Form was issued and sealed by the Court at the request of the claimant. Also on 27 March 2013, Clifford Chance delivered the original sealed copy of the Claim Form and Particulars of Claim to Linklaters' offices in London by hand, under cover of a letter which referred to Linklaters' confirmation the previous day that they were instructed to accept service and stated that those documents were enclosed by way of service. 27 March 2013 was the Wednesday before Easter.
- In [4]-[6] of the Defence and Counterclaim served on 24 May 2013, the defendan contended that all the claimant's claims were contractually deemed to be irrevocably withdrawn because they were not issued and served in time within the meaning of clause 11.3 of the SBSA and in [7] that the Futures Claim was not adequately notified under clause 11.2. It is to those contentions that the preliminary issues are directed.
- The two remaining preliminary issues are as follows:
Issue 1
Whether the claimant's claims were "issued and served" within the meaning of Clause 11.3 of the SBSA by 30 March 2013 by the admitted delivery on Wednesday 27 March 2013 of the Claim Form and Particulars of Claim to the defendant's solicitors (who had confirmed on 26 March 2013 that they were instructed to accept service of the same on behalf of the defendant).
Issue 4
What the contractual consequence would be if Clause 11.2 of the SBSA applies to the Futures Claim for the reasons advanced by the defendant in the List of Issues at paragraph 6, and it is determined at trial that the claimant's notice given on 30 March 2012 did not comply with the requirements of Clause 11.2 of the SBSA.
Issue 1
Summary of the defendant's submissions
- Mr John Nicholls QC on behalf of the defendant submits in summary that:
(1) The phrase "issued and served" in the context of the SBSA means issued and served in accordance with the Civil Procedure Rules ("CPR"), given that any proceedings would have to take place in England because clause 16.16.2 contains an exclusive English jurisdiction clause.
(2) The phrase does not mean simply delivered and received in a non-legal sense as the claimant contends. The SBSA set out two distinct regimes: one for contractual notices which had to be delivered and received respectively by the claimant and the defendant and the other for the "service" of legal proceedings, from which the court should conclude that it was not intended that service in the latter regime should be synonymous with delivery and receipt of the claim form.
(3) Whilst the delivery of the claim form and Particulars of Claim took place on 27 March 2013, so that the relevant step under CPR 7.5 ("Delivering to or leaving the document at the relevant place [Linklaters' offices]") was completed at that time, by virtue of CPR 6.14, the proceedings were not served until they were deemed to be served on the second business day after the completion of that relevant step under CPR 7.5. The next day, 28 March 2013 was a business day, but because of the intervention of Easter, 29 March was Good Friday, 30-31 March were the Easter weekend, 1 April was a bank holiday, so that none of those days qualified as a business day by virtue of CPR 6.2(b). Accordingly, the second business day after 27 March 2013 was Tuesday 2 April 2013.
(4) Accordingly, the proceedings were not issued and served within 12 months after the 30 March 2012 notice being given, from which it follows that they are deemed irrevocably withdrawn pursuant to clause 11.3.
(5) Although, in relation to a similar provision in a share purchase agreement, that proceedings should be "commenced by validly issuing and serving legal process" within six months of the making of a claim, Green J decided in Ageas (UK Limited v Kwik-Fit (GB) Limited [2013] EWHC 3261 (QB): (i) that the word "serving" was to be given a non-legal business meaning of delivery and receipt of the claim form and (ii) even if it was a reference to service within the CPR, the relevant provision was CPR 7.5, which had been complied with, not the deemed service provision in CPR 6.14, that decision was either distinguishable because it was dealing with a different provision in a different contract or the reasoning was flawed and I should not follow it.
Summary of the claimant's submissions
- Mr Ian Mill QC on behalf of the claimant submitted in summary as follows:
(1) The word "served" in clause 11.3 of the SBSA should be given its natural commercial meaning of delivery to and receipt by the defendant's duly appointed solicitors on 27 March 2013, not some strained meaning arising from the peculiarity of one part of the CPR. Green J in the Ageas case was considering a materially identical provision and his analysis was correct and should be followed by this court.
(2) Applying the principle enunciated by Lord Neuberger MR in Ener-G Holdings Plc v Hormell [2012] EWCA Civ 1059 at [32], the SBSA would have to contain very clear wording (which it does not) to displace the natural conclusion that service occurred on 27 March 2013, when the claim form was delivered at the address of the defendant's solicitors instructed to accept service and received by them.
(3) It would be completely uncommercial for the parties to have intended that CPR 6.14 should apply so that the claim form would actually have to be served two days before the date specified in clause 11.3 of the SBSA in order to comply with the "deeming" provision in that rule.
(4) Whereas the purpose of contractual notice provisions such as clause 11.2 of the SBSA is to ensure that claims are brought to the attention of the relevant contracting party, which is satisfied when the notice of the claim was received, here on 30 March 2012, the purpose of clause 11.3 of the SBSA is to impose a cut-off on the claimant as to the time by which it must commence proceedings thereafter. It makes sense as a matter of logic or commercial reality that the cut-off point should be measured by reference to an act within the claimant's control, rather than to a deeming provision that does not accord with factual reality.
(5) Even if the claimant is wrong in its primary submission and "served" in clause 11.3 means served in accordance with the CPR, that connotes actual service pursuant to CPR 7.5(1), not deemed service pursuant to CPR 6.14. Under CPR 7.5, service of the claim form took place when the claimant completed the step of delivering the claim form at Linklaters' offices on 27 March 2013. The purpose of the deeming provision in CPR 6.14 is not to determine whether there has in fact been service of the proceedings by a claimant within a material time limit, but to give certainty to the parties (and in particular the defendant) in connection with future steps to be taken in the proceedings. This is also the view of a number of commentators (including the editors of Blackstone's Civil Practice) on the two rules, which were introduced by amendment of the CPR in 2008.
The meaning of "issued and served" in Clause 11.3
- In Ageas (UK) Limited v Kwik-Fit (GB) Limited [2013] EWHC 3261 (QB) Green J was considering a provision in the relevant Sale and Purchase Agreement (Schedule 4(3)) which was in these terms:
"Any claim for breach of Warranties other than the Tax Warranties which is made within the relevant time limit specified above shall, unless previously satisfied, settled or withdrawn, be deemed to be withdrawn and no longer enforceable unless legal proceedings in respect thereof are (i) commenced by validly issuing and serving legal process within six months of the making of such claim and (ii) being pursued with reasonable diligence."
- In rejecting the argument of counsel for the defendant that "serving legal process" meant serving in accordance with English procedural law, Green J said this at [53]-[54]:
"[53] First, the perspective from which the provision must be interpreted is that of the parties, not the reasonable lawyer. Neither party submitted to me that simply because the critical word in dispute - "serving" - concerned an aspect of legal process that the relevant perspective was to be altered to that of a lawyer or even a business man with a lawyer permanently hovering at his shoulder whispering advice. Lord Clarke in the passage cited at [35] above in Rainy Sky v Kookmin Bank referred to the process of construction as involving determining "what the parties meant that the language used" and the "parties" are the parties to the agreement, not third party advisers. This has some significance in the present case because whilst the word "serving" used in Schedule 4(3) and the surrounding phrases ("legal proceedings" etc) refer broadly to legal concepts the draftsmen has neither defined those terms in the SPA nor linked them to any specific procedural rule save to say that English law governs.
[54] This is especially the case with a phrase such as "serving". The expression is one which can bear a number of different and conflicting meanings covering points in time before, on, and after receipt. For instance it can mean dispatch in the sense that a document is "served" from the point in time of its dispatch or sending and therefore prior to its receipt. In such cases the modes of dispatch are frequently spelled out (fax, DX, first class recorded post, etc). The parties by this method in effect agree a risk transfer away from the sender and on to the other party: see the discussion of such clauses in Ener-G Holdings Plc (ibid) at paragraphs [23], [29], [30], [35] per Lord Neuberger MR. Alternatively, the phrase "service" (and its cognates) might be read simply to mean delivery in a form which brings the contents of the document being served to the actual attention of the intended recipient. In such circumstances a document or other instrument will be served only when it is proven that the intended recipient was in actual possession of the document or instrument in issue. This is in my view the normal meaning of the concept of "service". And yet further it is possible that "service" (and cognates) may be treated as having occurred at a point of time after actual receipt by the inclusion in the contract of provisions which define service as having occurred, for example, "x" days or hours following proof of actual receipt. This analysis shows that the phrase "serving" is not a term which necessarily imports a fixed or technical meaning. Its ordinary meaning is delivery upon and receipt by the intended recipient, but that can be modified by contractual provisions. This is not, in my view, one of those cases where the parties have carefully and deliberately chosen a very precise legal term of art which, accordingly to consistent case law, should be accorded its technical meaning and which the parties would accordingly understand as having a precise legal meaning: see the discussion of legal terms of art in Lewison, The Interpretation of Contracts (5th edition, 2011) section 5.08 et seq."
- The learned judge concluded at [55]-[56] that the defendant had received the claim form on 26 January 2012, within the six month time limit in Schedule 4(3) and that, accordingly, a valid claim was served on the defendant on that date. He then went on at [58]-[61] to discuss four additional considerations which supported that conclusion, the purpose of the provision, the absence of clear words importing a contrary intention, certainty and construction of the agreement as a whole. I will consider his reasoning in those paragraphs further below, but for the present focus on his core reasoning as quoted above.
- Mr Nicholls QC submitted that the contract in the present case was not in the same terms as that being considered by Green J in Ageas and that there were material differences between the two contracts which justified my distinguishing that case. He placed particular reliance on clause 1.12 which provided:
"1.12 Legal Terms
References to any England and Wales legal term shall, in respect of any jurisdiction other than England and Wales, be construed as references to the term or concept which most closely corresponds to it in that jurisdiction."
- Mr Nicholls submitted that this clause (not present in Ageas) pointed to proceedings being "served" in clause 11.3 being a legal term. However, in my judgment Mr Mill is right that that submission is a "bootstraps" argument. All the clause is saying is that where the SBSA uses an English legal term, when the position of the parties is being considered in another country, then the intention is that they will find the foreign legal term or concept which most closely corresponds to the English legal term. Clause 1.12 simply does not assist in determining which phrases or clauses in the SBSA amount to English legal terms. Mr Nicholls also relied upon various other provisions in the SBSA which were not present (at least in materially the same terms) in the contract in the Ageas case, but ultimately I was not convinced that any of those really provided any principled basis for distinguishing the Ageas case.
- Nevertheless, in any given case, the court has to construe the particular contract before it, applying the principles of construction to that contract, not some other contract considered by another judge in another case. Given that the decision of Green J is of a court of equal jurisdiction, I am not bound to follow it, although for reasons of judicial comity, I should only decline to do so if I do not agree with the reasoning. For reasons I elaborate below, I do not find Green J's reasoning that service does not mean service in accordance with the CPR compelling and so I have not followed that reasoning. Nevertheless, since, for reasons I will come to in the next sub-section of this judgment, I agree with Green J's reasoning that, if service does mean service in accordance with the CPR, it is CPR 7.5 not CPR 6.14 which prevails, ultimately I have reached the same overall conclusion as he did.
- In my judgment, the word "served" in clause 11.3 means "served" in accordance with the CPR for the following reasons. First, the word is used in the phrase "has issued and served proceedings". Clearly the word "issued" in that phrase must mean issued in accordance with English procedural rules (since the only proceedings permitted by virtue of the exclusive jurisdiction clause were before the English courts) in other words issued and sealed by the court in accordance with CPR 7.2. "Issued" in that context cannot have some ordinary, non-legal meaning, for example the sending of a draft claim form and Particulars of Claim, as sometimes occurs to facilitate settlement before proceedings are formally issued. That would not amount to proceedings being "issued". On the basis that "issued" in this context means issued in accordance with the CPR, it would be very odd if "served" in the same phrase did not also connote served in accordance with the CPR, but had some ordinary non-legal meaning, whatever that entails. So far as I can tell, the significance of the word "issuing" in the provision Green J was considering does not seem to have been discussed in that case.
- Second, following on from that, in its context it seems to me that, when clause 11.3 talks about proceedings (which by necessity means proceedings before the English courts) being "issued and served", the natural meaning of the word "served" in that context is "served in accordance with the procedural rules in force in England at the relevant time". I am afraid that I do not find the contrary reasoning of Green J in Ageas that the parties as reasonable businessmen would have intended "served" to have some ordinary meaning of delivered and received at all compelling. It seems to me that, if the parties had intended to convey that it should be sufficient that the defendant had notice of the proceedings within the twelve month period by receipt of the claim form even though actual service under the CPR had not occurred, they would more naturally have used words such as "the buyer has delivered the claim form" or "the seller has received notice of proceedings" within 12 months in clause 11.3.
- Third, I agree with Mr Nicholls QC that the SBSA envisages two separate regimes, one for the giving and receipt of contractual notices and the other for the issue and service of proceedings. Clause 16.13 of the SBSA, headed "Notices", provides as follows:
"16.13.1 Any notice or other communication in connection with this Agreement (each, a "Notice") shall be:
(i) in writing in English;
(ii) delivered by hand, fax, e-mail, registered post or by courier using an internationally recognised courier company.
16.13.2 A Notice to the Principal Seller, any Relevant Seller or the Sellers' Guarantor shall be sent to such party at the following address, or such other person or address as the Principal Seller may notify to the Principal Purchaser from time to time:
Tate & Lyle Industries Limited
Sugar Quay
Lower Thames Street
London EC3R 6DQ
Fax: +44 (0)20 7977 6551
E-mail: [email protected]
Attention: Robert Gibber
16.13.3 A Notice to the Principal Purchaser, any Relevant Purchaser or the Purchasers' Guarantor shall be sent to such party at the following address, or such other person or address as the Principal Purchaser may notify to the Principal Seller from time to time:
American Sugar Holdings, Inc.
Suite 200
One North Clematis Street
West Palm Beach, Florida 33401
United States
Fax: +1 (561) 651 1247
E-mail: [email protected]
Attention: Armando Tabernilla, Vice President and General Counsel
16.13.4 A Notice shall be effective upon receipt and shall be deemed to have been received:
(i) at the time of delivery, if delivered by hand, registered post or courier;
(ii) at the time of transmission in legible form, if delivered by fax; or
(iii) forty-eight (48) hours after being sent, if sent by e-mail."
- In contrast, Clause 16.17 treats the service of legal process as something different from the giving/receipt of a contractual notice and provides a specific mechanism relating to service of "legal action or proceedings". That clause, under the heading "Appointment of Process Agent", states as follows:
"16.17.1 The Purchasers' Guarantor hereby irrevocably appoints Law Debenture Corporate Services Limited of fifth floor, 100 Wood Street, London EC2V 7EX as its agent to accept service of process in England and Wales in any legal action or proceedings arising out of this Agreement, service upon whom shall be deemed completed whether or not forwarded to or received by the Purchasers' Guarantor.
16.17.2 Each of the Share Purchasers hereby irrevocably appoints the Principal Purchaser as its agent to accept service of process in England and Wales in any legal action or proceedings arising out of this Agreement, service upon whom shall be deemed completed whether or not forwarded to or received by such Share Purchaser.
…
16.17.5 Nothing in this Agreement shall affect the right to serve process in any other manner permitted by law or the right to bring proceedings in any other jurisdiction for the purposes of the enforcement or execution of any judgment or other settlement in any other courts."
- I accept Mr Nicholls QC's submission that these contrasting provisions show that the parties were alive to the service of legal process being something distinct from the giving or receipt of a contractual notice, and intended that the service of legal process should operate by a different set of rules to those applying to ordinary contractual notice. That distinction in turn points strongly to an intention that "served" should not be synonymous with the giving and receipt of notices in some ordinary, non-legal way. Mr Mill QC relied upon the deeming provisions in those clauses, but as I see it, that point goes more to what is meant by service under the CPR, rather than indicating that "issued and served" in clause 11.3 does not mean issued and served in accordance with the CPR, which is the claimant's primary case.
- Mr Mill also pointed to two occasions when the SBSA talks of the service of a notice, in Schedule 3 Clause 7.1 and Schedule 11 Clause 14.1.5, in support of a submission that service and giving and receipt were synonymous. However, those are references to service of notices by third parties outside the contract, in the one case a notice in relation to planning from a local authority and in the other notice from a tax authority. Furthermore, that point does not really assist. This can be tested by assuming for example that for a notice to be served by HMRC, a particular formal procedure had to be followed. It seems to me if that procedure were not followed, then the notice would not have been served within the meaning of the clause.
- Fourth, although I agree with Green J (and Mr Nicholls accepts) that the purpose of a clause such as clause 11.3 is to bring to the attention of the seller the existence of a warranty claim or other claim within a relatively short period of time, here 12 months, so that the seller would know, once the time limit had passed and no proceedings had been issued and served, that it was free from the risk of proceedings, it does not seem to me that reference to that purpose answers the question what step or steps have to be taken to serve proceedings within the meaning of the clause.
- Fifth, contrary to Green J's reasoning, I do not consider that the additional considerations to which he referred at [59]-[61] of his judgment assist the court in determining what "issued and served" means in clause 11.3. His reliance on the absence of clear words importing a contrary intention refers back to the passage at [32] of the judgment of Lord Neuberger MR in the Ener-G case:
"In my view, clear words would normally be required before one could ascribe to the parties an intention that a recipient who actually receives a notice in time should nonetheless be treated as not having received the notice at all. In this case, the point is rather reinforced by the point mentioned in para 23 above, namely that, if a notice is sent by recorded delivery to the prescribed address, it is deemed to have been served, even if it is not actually received. If that is right, it would seem a little curious to ascribe to the parties an intention that a notice sent or delivered in another way was, in the absence of clear words, deemed not to have been served, even though it was clear that, as a matter of fact, it had been received and read by the intended recipient."
- However, that passage was in the context of the service of contractual notices in a contract which provided expressly by clause 13.2 for "service" of such notices. It was not dealing with whether proceedings had been "issued and served" within clause 6.3.3(b) (the equivalent to Schedule 4(3) in Ageas and clause 11.3 in the present case). In fact in Ener-G it was common ground that service of the claim form occurred on a particular date under CPR 6.14 (see [9] of the judgment). Mr Nicholls relied upon that concession by the claimant in that case in his skeleton argument, pointing out that it would have suited the claimant to contend that CPR 7.5 applied. I do not consider that much can be made of that concession, given that the point currently in issue does not seem to have been argued at all.
- So far as certainty is concerned, Green J considered that the conclusion that "serving" bore an ordinary non-legal meaning created greater certainty than resort to what he described as a "legal hornet's nest" under the CPR as to whether 7.5 or 6.14 applied. I have to say that I do not consider myself that the non-legal meaning of service which may lead to disputes about when a claim form was actually received creates any greater certainty than the conclusion that service means service under the CPR. For reasons I will come to, I consider that the provisions of the CPR are clear as to when proceedings have been actually served, which in my judgment is what clause 11.3 is focusing on.
- Finally, whilst I agree with Green J that the contract has to be construed as a whole as part of the "unitary exercise" of construction in accordance with the principles of construction restated by Lord Clarke at [21] in Rainy Sky v Kookmin Bank [2011] UKSC 50; [2011] 1 WLR 2900, in my judgment, that exercise of construction in the present case favours the defendant's construction of clause 11.3. The presence of the exclusive jurisdiction clause makes it quite clear that the proceedings referred to in clause 11.3 must be before the English courts and the clear distinction drawn by the SBSA between the giving and receipt of contractual notices and the service of proceedings, all point to service meaning service under the relevant English procedural law, that is the CPR.
- For all those reasons I consider the phrase "issued and served" in clause 11.3 of the SBSA means issued and served in accordance with the CPR and I turn to consider when service of the claim form is effected under the CPR.
Service under the CPR
- CPR 7.5 is headed "Service of a claim form" and provides as follows:
"Where the claim form is served within the jurisdiction, the claimant must complete the step required by the following table in relation to the particular method of service chosen, before 12.00 midnight on the calendar day four months after the date of issue of the claim form
| Method of service |
Step required |
| First class post, document exchange or other service which provides for delivery on the next business day |
Posting, leaving with, delivering to or collection by the relevant service provider |
| Delivery of the document to or leaving it at the relevant place |
Delivering to or leaving the document at the relevant place |
| Personal service under rule 6.5 |
Completing the relevant step required by rule 6.5(3) |
| Fax |
Completing the transmission of the fax |
| Other electronic method |
Sending the e-mail or other electronic transmission" |
- CPR 6.14 is headed "Deemed service" and provides as follows:
"A claim form served within the United Kingdom in accordance with this Part is deemed to be served on the second business day after completion of the relevant step under rule 7.5(1)."
- Both these provisions were introduced by amendment to the CPR in 2008. CPR 7.5 replaced the previous CPR 7.5 which read, so far as relevant:
"Service of a claim form
7.5(1) After a claim form has been issued, it must be served on the defendant.
(2) The general rule is that a claim form must be served within 4 months after the date of issue."
- The predecessor of CPR 6.14 was CPR 6.7 which provided, except in the case of personal service, for a different deemed day of service depending upon which method of service was employed. The current provision provides for a single deemed day of service of two business days after completion of the relevant step under CPR 7.5. As the note at 6.14.1 in Civil Procedure 2014 ("the White Book") says the former 6.7 was a provision that created some difficulty.
- In my judgment these two rules, CPR 7.5 and 6.14, taken together draw a clear distinction between the date when service is actually effected, which is when the relevant step under 7.5 has been completed and the date two business days later when service is deemed to take place under CPR 6.14. If one asks oneself why that distinction is there, it is not as Mr Nicholls QC suggests because service does not actually occur until the deemed day, but because, whereas CPR 7.5 is looking at when actual service takes place, so that a claimant who takes the requisite step, depending upon which method of service he employs, can be sure that he has served within the four months of validity of the claim form (thereby avoiding, if relevant, any limitation issues), CPR 6.14 is looking at when service will be deemed to have taken place for the purpose of other steps in the proceedings thereafter, beginning with the filing of an acknowledgment of service. In my judgment, that construction of the rules is supported not only by the reasoning of Green J in the Ageas case at [63]-[80], with which on this point I entirely agree, but by the wording of the rules themselves and by the various commentaries on the CPR, not only Blackstone's Civil Practice on which Mr Mill relied, but, on a proper analysis, the notes to the White Book.
- So far as the wording of CPR 7.5(1) is concerned, although Mr Nicholls sought to suggest that the words "the claim form is served within the jurisdiction" should read "the claim form is to be served within the jurisdiction" to mirror CPR 7.5(2) dealing with service out of the jurisdiction, I consider that such rewriting of the provision is not only impermissible but misconceived. CPR 7.5(2) is prospective, simply making the point that to serve out of the jurisdiction the claimant has to follow the procedure in Section IV of Part 6 (i.e. whichever of the rules in CPR 6.30 to 6.47 is applicable to the particular case). In such a case, service will not be effected until the claimant has followed the relevant procedure for service out. In contrast, CPR 7.5(1) is dealing with what constitutes actual service within the jurisdiction, not with the requirement to take additional steps in the future in order to effect valid service, as in the case of service out of the jurisdiction.
- That the completion of the requisite step under CPR 7.5 will constitute actual service is borne out by the Glossary to the CPR which defines "service" as "Steps required by rules of court to bring documents used in court proceedings to a person's attention" which, in the context of CPR 7.5, reflects the completion of the step required. It is also reflected by the notes in the White Book which at 7.5.1 state, inter alia, as follows:
"This rule has been substantially changed with effect from October 1, 2008. The previous rule provided that a claim form had to be served within four months of issue or within six months if service was out of the jurisdiction. The thrust of the new rule is to require the claimant "to complete the step required" before 12 midnight on the calendar day four months after the date of issue of the claim form, rather than to achieve service in that time…It is important to note that compliance with r.7.5 is now determined by asking whether the required step was completed within the four month period not by asking whether the deemed day for service fell within that period (as was the case before October 1, 2008)".
- Mr Nicholls relied upon the words; "rather than to achieve service in that time" in support of his submission that, because of the deeming provision in CPR 6.14, service does not actually occur until the second business day after the completion of the requisite step under CPR 7.5. However, in my judgment that submission is undermined by the passage after that I have quoted, beginning: "It is important to note", which is making precisely the opposite point, that valid service will take place if and when the requisite step is completed within the four month period of validity of the claim form and that, in contrast to the position before 1 October 2008, it is not necessary for the deemed day for service also to fall within the four month period. In other words the problems created by the former rules and dealt with by the Court of Appeal in Godwin v Swindon BC [2002] EWCA Civ 1478; [2002] 1 WLR 997 and Anderton v Clwyd CC (No 2) [2002] EWCA Civ 933; [2002] 1 WLR 3174 that the defendant had to be deemed to be served within the four month period of validity for service to be valid (even if he had in fact received the claim form in that period) have been avoided.
- This construction of the rules is also borne out by the wording of CPR 6.14 itself and by the notes to that rule. The fact that the rule begins "A claim form served within [the jurisdiction]" and then goes on to discuss deemed service demonstrates that the rule is drawing a distinction between actual service and deemed service. The deeming provision only applies when actual service has taken place. The notes at 6.14.3 make precisely the point I have referred to in the previous paragraph (also quoted by Green J at [69] of his judgment):
"It is important to notice that the question whether there has been compliance with a time limit fixed by r.7.5 for service of a claim form within the jurisdiction…is determined, not by inquiring as to whether the deemed day for service fell within the period, or whether personal service was effected within it (as was the case before October 1, 2008), but by asking whether the "step required" was "completed" within the period. Consequently, the problems encountered under the former rule, and dealt with by the Court of Appeal in cases such as Godwin v Swindon BC [2001] EWCA Civ 1478; [2002] 1 WLR 997, CA, and Anderton v Clwyd CC (No. 2) [2002] EWCA Civ 933; [2002] 1 WLR 3174, CA, are avoided."
- The distinction between the day when service was actually effected and the day on which service is deemed to have been effected under CPR 6.14 and the reason for the latter rule are explained in the notes at 6.14.1 in these terms:
"In a given case, the day on which service was actually effected on the defendant may not be the same day as the day on which, by operation of this rule, service was deemed to have been effected. The deemed day is a construction. Such construction is justified by the need to provide certainty. In the interests of certainty, a deemed day is not rebuttable by evidence of actual receipt of the claim form by the defendant on a day before or after the deemed day. [Godwin and Anderton are then cited].
In any given proceedings, it is for various reasons important that there should be no room for doubt as to the day on which (and therefore the date on which) service of originating process is deemed effected. Within the CPR, the time limits for the taking of certain procedural steps are calculated by reference to the day on which service is deemed to have been effected (e.g. r. 10.3 (The period for filing an acknowledgment of service))."
- The same point about the distinction between and the respective purposes of CPR 7.5 and 6.14 is made in Blackstone's Civil Practice at [15.1]:
"The new rules distinguish between steps taken by the claimant to effect service ('the relevant steps') and the deemed date of service. It is the relevant steps under r. 7.5 i.e. the dispatch or delivery of the claim form, not deemed service, which must occur within the four-month period for service of the claim form in the jurisdiction. The effect of this change is to give the claimant full control of meeting the four month deadline. Deemed dates of service are now primarily of use in computing the time for taking the next steps in the litigation."
- The editors return to this point at [15.34], dealing with the combined effect of the two provisions:
"The function of the deemed date of service is to compute with certainty the next steps to be taken in the claim. It is no longer the case that service needs to be deemed to have taken place within the four-month period for service of the claim form in the jurisdiction (r. 7.5). The effect of rr. 7.5 and 6.14 is that, in dispatching or delivering the claim form for service within the period of validity, the claimant does not have to be concerned with how long it takes for the claim form to reach the defendant, or even if it ever does reach the defendant. Also, full use of the periods available means that a claim form may be validly served where deemed service takes effect four months and two business days after issue."
- In other words, by virtue of CPR 7.5 because the "step required" was delivering the claim form to Linklaters' offices, actual service was effected on 27 March 2013. The date of actual service was not extended or suspended until the date of deemed service on 2 April 2013 under CPR 6.14. The combined effect of the two rules is that whilst the defendant was actually served on 27 March 2013, the fourteen days for acknowledgment of service under CPR 58.6 ran from 2 April 2013 and expired on 16 April 2013. The claimant could not have entered judgment in default until after that date, even though actual service had been effected 20 days prior to that date.
- In my judgment this conclusion that it is CPR 7.5 which determines when actual service takes place is unaffected by the common ground in Ener-G that service under CPR 6.14 was effected on a particular date. So far as I can tell, there were no submissions addressed to the Court of Appeal as to the distinction between actual service under CPR 7.5 and deemed service under CPR 6.14 or as to the reasons for that distinction, from which it follows that this court really gets no assistance in determining which provision should, on a proper analysis, prevail as regards the meaning of "served" in clause 11.3 from the common ground in that case. To be fair to Mr Nicholls, he did not seek to argue the contrary.
- Given that the effect of the relevant rules under the CPR is that actual service was effected under CPR 7.5 when the claim form was delivered to Linklaters' offices on 27 March 2013, in my judgment there is absolutely no justification for reading the word "served" in clause 11.3 as referring to "deemed service" under CPR 6.14 rather than actual service under CPR 7.5. As I pointed out to Mr Nicholls in argument, the logical consequence of his submission would be that the claimant would be worse off under clause 11.3 than if he had issued a claim form on the last day of the six year limitation period under the Limitation Act 1980 and then taken the step required, of delivering it to Linklaters' offices, on the last day of the four month period of validity of the claim form.
- Whilst Mr Nicholls did not shrink from still pursuing this submission, the fact that it has such an irrational logical consequence demonstrates the fallacy of it. Furthermore, nothing in the express wording of clause 11.3 supports a construction that the phrase "issued and served" was intended to refer to deemed service under CPR 6.14 rather than actual service under CPR 7.5. As Mr Mill pointed out, the parties were quite capable of writing deeming provisions into the SBSA when appropriate, as in clause 16.17. Furthermore, in a very real sense, the defendant's contention that "served" means "when deemed service takes place under CPR 6.14" is a self-defeating argument since, as I have already held the deeming provision in that rule only applies when actual service has taken place.
- Accordingly, in my judgment, the answer to Issue 1 is that the claimant's claims were "issued and served" within the meaning of clause 11.3 by the delivery of the claim form to Linklaters' offices on 27 March 2013, within the twelve month time limit provided by the clause.
Issue 4
- Since the claimant accepts that clause 11.2 applies to the Futures Claim, the question arises whether the notice of 30 March 2012 was, as the defendant alleges, an inadequate and hence non-compliant notice of the Futures Claim. However, that is not an issue for this trial but for the subsequent trial of issues of fact. Issue 4 asks what the contractual consequence will be if, at that subsequent trial, the court determines that the notice did not comply with the requirements of clause 11.2, because it failed to specify in reasonable detail the factual and legal basis of the claim.
- Mr Nicholls contends that if the notice was non-compliant, as the defendant alleges, then the claimant was not entitled to commence proceedings under clause 11.3 in respect of the Futures Claim, since that entitlement is predicated upon there having been a notice under clause 11.2 served less than 12 months previously, which Mr Nicholls submits must mean a valid, compliant notice. Since Mr Nicholls accepts that the Futures Claim is not a Warranty Claim, he also accepts that it is not caught by the time limit in Clause 10.1 of the SBSA, so that, even on the defendant's case, it would be open to the claimant to serve a fresh, compliant notice in respect of the Futures Claim under clause 11.2 and then issue and serve fresh proceedings in respect of that Claim within the 12 month period thereafter, there being no question of any applicable limitation period under the Limitation Act 1980. In answer to Mr Mill's contention that this outcome is uncommercial, Mr Nicholls submits that it is, however, what the parties have agreed and that, for good reason, proceedings cannot be served on a party under clause 11.3 unless they have had proper notice of the relevant claim in advance.
- Mr Mill's position is that this approach is not only uncommercial but gives rise to an arid dispute. Even if the notice of 30 March 2012 was technically defective because it failed to give sufficient detail of the Futures Claim, that defect has been cured by the service of the Particulars of Claim which does give a full and detailed explanation of the Futures Claim to which the defendant has pleaded in response in the Defence and Counterclaim. Indeed, as Mr Mill points out, the pleadings are now closed.
- In my judgment, this is indeed an arid dispute and the fallacy in the defendant's argument is that, as Mr Nicholls accepts, the purpose of clause 11.3 is to bring to the attention of the defendant the existence of a Warranty Claim or other Claim within the twelve month limit after the original notice. The achievement of that purpose does not require that the notice given on 30 March 2012 be in some way fully compliant in every detail, nor is there anything in the wording of clause 11.3 which requires that the notice be fully compliant before that clause operates.
- Mr Nicholls submitted that, where the parties did not intend that a failure to give notice would affect adversely an entitlement to an indemnity, they expressly said so, as in Schedule 14 clause 2.5.2, dealing with Environmental Indemnity. Although they had not spelt out in Clauses 11.2 and 11.3 what the consequences would be if a notice was not compliant, if they had intended that the claimant should nonetheless be entitled to issue proceedings, they would have said so. I was not impressed by that submission. Schedule 14 clause 2.5.2 is dealing with the consequences of a failure to serve a notice at all. Here the defendant accepts there was a notice relating to the Futures Claim, but alleges that it was deficient because it did not contain sufficient detail. In my judgment, if the intention had been that although a notice under clause 11.2 had been given, if it was deficient in that respect, it should not be a valid notice for the purposes of triggering the twelve month time limit under clause 11.3, one would have expected the parties to spell out such a draconian consequence, which they have not done. Accordingly, the Futures Claim is validly included in the existing proceedings.
- Even if that analysis were wrong, it seems to me that, given that the Particulars of Claim have remedied any defect in the original notice, the claimant should not be required to give a fresh notice under clause 11.2 since, as Lord Denning MR said in Barrett Bros (Taxis) Ltd v Davies [1966] 1 WLR 1334 at 1339F: "the law never compels a person to do that which is useless and unnecessary". That principle was applied by Mustill J (as he then was) in Ferrum GmbH v The Owners of "The Mozart" [1985] 1 Lloyd's Rep 239 at 245-6, in concluding that a requirement in a charterparty to give due notice, could not sensibly be understood as requiring a party to give notice of something of which the other party was already aware. Furthermore, not only does the defendant have full details of the Futures Claim in the Particulars of Claim, but the admitted purpose of clause 11.3 has been achieved: the defendant knows that it is facing the Futures Claim.
- In the circumstances, to require the claimant to serve a fresh notice and then commence fresh proceedings would be useless and unnecessary. Even if I thought that the entirely technical argument of Mr Nicholls were correct as a matter of construction, I would hold that the claimant should not be required either to issue a fresh notice or to commence fresh proceedings in respect of the Futures Claim, but should be entitled to pursue that claim in the current proceedings.
