Mr Justice Andrew Smith:
Introduction
- The claimant in these proceedings, Associated Electrical Industries Limited ("AEI"), was late in serving its particulars of claim. The defendant, Alstom UK ("Alstom"), applies to strike out the claim, and AEI applies for an extension of time for service of the pleading. Although the applications can be described as simply as that, I heard extended arguments and I need to set out the facts in some detail in order to explain them.
The claim
- AEI was an electrical engineering company, which from 1929 until 1989 operated the British Thomson-Houston mechanical engineering plant in Mill Road, Rugby, Warwickshire. It no longer trades, but, as it is pleaded, its parent, Telent Limited ("telent") keeps it "in existence to meet industrial injury claims". Alstom was previously called GEC Power Systems Limited ("GEC Power"). In 1989 The General Electric Company PLC and Alsthom SA agreed to establish a joint venture, GEC Alsthom NV, and therefore the GEC group was reorganised and businesses were "hived down" in an asset transfer to GEC Power and then shareholdings in GEC Power (and other GEC companies) were transferred to GEC Alsthom NV. By an agreement dated 21 March 1989 AEI agreed to sell to GEC as going concerns certain businesses at the Mill Road plant, including a division known as "Large Machines". GEC also agreed to buy a steam turbine business that AEI had carried on at the plant until 1961 but then moved to Manchester. The steam turbine business was not transferred directly from AEI to GEC Power, but (for reasons that are obscure but irrelevant) under an agreement dated 20 March 1989 it was transferred as a going concern by AEI to its associated company, The English Electric Company Limited ("English Electric"), and then, under an agreement dated 21 March 1989, by English Electric to GEC Power. All three agreements included a term whereby the purchaser (that is to say, the company to whom the assets of the business were transferred) agreed that it would "assume responsibility for the satisfaction of all the Liabilities" and to "indemnify the Vendor against all proceedings, claims and demands in respect thereof". "Liabilities" was defined (subject to some irrelevant exceptions) as "amounts owed by and liabilities (both ascertained and contingent) of the Vendor in connection with any of the Businesses at the Transfer Date …".
- Between 1956 and 1961 a Mr Rodney Oliver was an apprentice mechanical engineer at the Mill Road plant. In 2005 he died of mesothelioma, and his widow and executrix brought a claim against AEI, which in June 2010 was settled by AEI and Alstom, each contributing half of the damages and costs without prejudice to claims that either might have against the other for its contribution. By a letter dated 16 March 2012 AEI, or more precisely telent on its behalf, asserted such a claim on the basis that Mr Oliver had probably worked in the turbine and compressor test facility at Rugby, which was part of the business transferred into the joint venture and so to GEC Power. In a response dated 30 May 2012 Alstom stated that it was "not averse to accepting responsibility for the claim" if better evidence was produced of a link between the steam turbine business and Mr Oliver's exposure to asbestos. It recognised that "finding such information may prove a challenge" since the site had been sold in about 2004. On 15 April 2013 telent wrote again explaining the basis for the claim: it said that it would like to continue discussions, and asked that Alstom agree to a six months' extension of "any time bars or time limits within which telent must commence any proceedings, and confirm that Alstom agrees that it will not argue or plead or rely on any passage of time which may occur between today's date and 12 October 2013 in answer to or defence of any of telent's claims in any proceedings". It reserved its right to bring proceedings without further notice if this was not agreed by 15 May 2013. On 30 May 2013 AEI issued the claim form in these proceedings, in which it claimed an indemnity of £273,392.13 under its 1989 agreement with Alstom, with alternative claims of damages in that amount and a contribution under the Civil Liability (Contribution) Act, 1978. On 30 May 2013 Alstom agreed that the limitation period should not apply to any proceedings brought before 12 October 2013, but, as I would infer, the claim form had been issued before AEI learned this.
The procedural history
- AEI's solicitors, Clyde & Co, served the claim form on Alstom under cover of a letter dated 20 September 2013. Particulars of claim were not contained in or served with the claim form, and therefore, as required by part 58.5 of the Civil Procedure Rules ("CPR"), it stated that particulars of claim would follow if an acknowledgment of service was filed that indicated an intention to defend the claim. Alstom had until 8 October 2013 to file an acknowledgement of service with the court, and on 1 October 2013 it filed one stating that it intended to defend the claim. Therefore particulars of claim had to be served within 28 days, that is to say on or before 29 October 2013: CPR 58.5.
- The CPR provide that "On receipt of an acknowledgment of service, the court must notify the claimant in writing": CPR 10.4. However, by 8 October 2013 Clyde & Co had not been notified of the acknowledgment of service by either the court or Alstom, and they learned about it only because on 8 October 2013 their court clerk made enquiries of the Commercial Court registry. According to the evidence of Mr Andrew Preston, a partner in Clyde & Co, they were given the explanation that the "Commercial Court was very busy". I understand that it is provoking for solicitors that the court service should so explain non-compliance with the CPR when the Court of Appeal has said that they, financial pressures notwithstanding, can seldom do so: Mitchell v News Group Newspaper Limited, [2013] EWCA Civ 1537 at para 41. However, as I shall explain, the court's failing does not affect my decision on these applications.
- Alstom's solicitors are Messrs Pinsent Masons, who on 18 October 2013 wrote to Clyde & Co enclosing a copy of the acknowledgment of service, stating that they understood that no particulars of claim had been served and asking that Clyde & Co "clarify the position". Apparently they thought that the deadline for service of the particulars was governed by CPR 7.4(2) and was 14 days after service of the claim form, but this was an error: CPR 7.4(2) does not apply to Commercial Court proceedings. (The evidence of Ms Nicola Seymour, a solicitor in Pinsent Masons, suggests that they might not have enquired before 18 October 2013 because it was thought that Alstom's communication of 30 May 2013 might somehow have extended "the date for service of the claim" and "the last date for taking the relevant step to effect service of the claim form would have been 12 October 2013 with deemed service on 15 October 2013 and as such [AEI] was obliged to serve the particulars of claim by that date …". I do not follow this reasoning, but nothing, I think, turns on it.)
- Pinsent Masons received no reply and repeated the request for clarification on 25 October 2013. On 29 October 2013 Clyde & Co sent Pinsent Masons an email at 5.20 pm asking for a 14 day extension to finalise and serve particulars of claim. They explained that they had learned of the acknowledgment of service only on 8 October 2013, that they had "therefore" been able to work on the pleading for only three weeks, that some papers on the claim were more than 50 years old and were still being located, and that they had "lost a day" on 28 October 2013 because of the St Jude's storm (which caused widespread travel disruption). Pinsent Masons replied on 30 October 2013 that it was "not for [them]" to agree to an extension of time because the position was governed by CPR 7.4 and time had expired on 8 October 2013, and that they reserved Alstom's position "that failure to serve the Particulars of Claim within the specified time limit means that [the] claim is now out of time". On 13 November 2013 Alstom issued and served its application that the claim be struck out under CPR 3.4(2).
- On 18 November 2013 Clyde & Co sent to Pinsent Masons particulars of claim, which had been verified by a solicitor in Clyde & Co, stating that they did so by way of service. The particulars did not include a claim under the 1978 Act, and Mr Thomas Corby, who represented AEI, confirmed that it was intentionally abandoned (and on 28 January 2014 "out of an abundance of caution" and perhaps unnecessarily AEI served notice of discontinuance of this claim). In their covering letter, Clyde & Co pointed out Pinsent Masons' error about when particulars had been due, referring to the Commercial Court Guide. Pinsent Masons replied on 21 November 2013 that they were aware of the provisions of the Guide, but that it does not affect the requirements of the CPR and Practice Directions. That is so, but it refers to the relevant provision of CPR part 58, as Clyde & Co pointed out in a further communication of 28 November 2013. They also said that Alstom's application served no purpose because (among other reasons) "[AEI] will merely commence new proceedings that will only serve to waste time and costs, and there is not even an advantage to be gained to [Alstom] in terms of causing a time bar to elapse"; and that AEI would apply for a retrospective extension of time for serving the pleading.
- In his evidence in reply to Alstom's application Mr Preston explained (while reserving privilege) that Clyde & Co received a first draft of a pleading from counsel on 16 October 2013 and were taking instructions about it over the next 13 days. It had been difficult to find all the necessary material, including some relevant to events in the early 1960s and the late 1980s. He had thought that AEI had good reason to ask for an extension of time, and, in the interests of saving costs, this would be preferable to applying to the court or serving an incomplete statement of AEI's case; and had expected that a "simple extension of time" would be granted when it was sought on 29 October 2013.
- On 16 December 2013 Clyde & Co advised Pinsent Masons that AEI proposed that its associated company, English Electric, should be joined as a claimant to the proceedings, and invited Alstom to consent to this. They sent in draft an amended claim form and amended particulars of claim pleading alternative claims for English Electric and AEI, which reflected uncertainty about Mr Oliver's work: AEI's claim covered the position if he had worked in a business transferred directly from AEI to GEC Power, and English Electric claimed if he had worked in the steam turbine business, because, it was said, it was liable to indemnify AEI under the agreement of 20 March 1989 and could look to GEC Power under its agreement of 21 March 1989.
- On 18 December 2013 Pinsent Masons replied on the basis that Clyde & Co had "stated that the current claim brought by [AEI] is not sufficient without the addition of another party, [English Electric]", and suggested that AEI discontinue these proceedings and English Electric issue a new claim. They reserved Alstom's position about limitation. AEI issued on 30 January 2014 and served on 31 January 2014 notice of its application under CPR 3.1(2)(a) for an extension of time for serving particulars of claim to 18 November 2013, relying on Mr Preston's evidence of 27 November 2013. In response Alstom served a second witness statement of Ms Seymour dated 3 February 2014, in which she said that "It is clear that [AEI's] claim cannot proceed without adding English Electric to the proceedings; Clyde & Co have acknowledged this is the case in the … correspondence". Apparently Pinsent Masons did not understand that Clyde & Co proposed to make alternative claims.
Alstom's application
- Alstom's application is under CPR 3.4(2), which concerns the court's power to strike out a "statement of case", including a claim form: see CPR 2.3(1). It provides as follows:
"The Court may strike out a statement of case if it appears to the court –
(a) that the statement of case discloses no reasonable grounds for bringing or defending the claim;
(b) that the statement of case is an abuse of the court's process or is otherwise likely to obstruct the just disposal of the proceedings; or
(c) that there has been a failure to comply with a rule, practice direction or court order."
Alstom relied on all three grounds: (i) that the claim form discloses no reasonable grounds for bringing the claim; (ii) that "the failure to serve the particulars of claim in accordance with the CPR or at all is an abuse of process"; and (iii) that AEI had failed to comply with CPR 7.4. It also relied on the fact that AEI had not then applied for "retrospective permission to serve the particulars of claim out of time or sought any other remedial relief".
- AEI disputes that CPR 3.4(2)(a) applies in this case, and I do not consider that it does. Mr Stuart Benzie, who represented Alstom, argued that the claim form is insufficient in itself to disclose reasonable grounds for bringing a claim, and that AEI cannot remedy this by reference to the particulars because they are "a nullity", or should be treated as such for the purposes of this application. He relied on the judgment of the Court of Appeal in Price v Price, [2003] EWCA 888 in which it was said (at para 4) that "in a case of any complexity" when the court considers an application for an extension of time, whether for permission to appeal or for service of particulars of claim, it "should follow the checklist given in [the old version of] CPR 3.9", the "underlying logic" being that "If the court is not willing to extend time, the action will be at an end because the claimant will not be able to proceed any further". Mr Corby, to whose careful submissions I pay tribute, did not accept this, citing CPR 3.10: "Where there has been an error of procedure such as a failure to comply with a rule or practice direction – (a) the error does not invalidate any step taken in the proceedings unless the court so orders; and (b) the court may make an order to remedy the error". The notes in the White Book comment that, "… non-compliance with a rule ... does not nullify the proceedings or any steps taken in the proceedings unless the court so orders".
- This debate did not seem to me helpful in deciding Alstom's application. Surely, the Court of Appeal's reference to the proceedings being "at an end" is simply an observation about the practical position: after all, a jurisprudential analysis would not depend on whether the case is one of "any complexity". Whether or not late particulars of claim are a nullity in any meaningful sense, I do not accept that they should be ignored on applications of this kind or that the claimants can realistically be said to be in a continuing breach of the requirement to serve particulars. However this might be, there is another answer to the application under CPR 3.4(2)(a). This part of the rule is directed to striking out a statement of case which discloses no reasonable cause of action. No complaint has been made or could be made that the claim form does not comply with the requirements of the CPR (see CPR 16.2), or that it discloses AEI's claims insufficiently for a claim form.
- The complaint under CPR 3.4(2)(b) was not developed by Mr Benzie, but in her evidence in support of the application Ms Seymour referred to "an abuse of process as Alstom is unaware of the case it will face at trial". I cannot accept that evidence in view of the exchanges between the parties before proceedings were brought. In any case, I do not see how it could be said that the claim form itself is an abuse of the court's process, or that the claim form itself is likely to obstruct the just disposal of the proceedings. The test for an abuse of process is "exacting": Calyon v Michailaidis, [2009] UKPC 34 at para 37. This case does not come near to satisfying it.
- Alstom's only realistic complaint is under CPR 3.4(2)(c). Its notice put this part of the application on the basis that AEI had not complied with CPR 7.4, which does not apply to these proceedings, but it is not suggested this error is fatal to the application. Mr Benzie submitted initially that AEI is guilty of "so many flagrant breaches of the CPR" that the claim form should be struck out, and he identified three: (i) AEI did not apply for an extension of time before the deadline for service of the particulars; (ii) it was late in serving them; and (iii) it did not apply promptly for a retrospective extension of time. I reject this submission: AEI's only breach of the CPR is that it did not serve particulars within the stipulated time. The CPR does not stipulate that a party must apply for extensions of time or lay down a time limit in which it must do so. But the fact remains that AEI did not comply with CPR 58.5, and is therefore guilty of a breach of the CPR.
- Mr Benzie submitted that AEI's conduct is "a classic example of wilful non-compliance [with the CPR] and inexplicable (and unexplained) delay", and that, adopting the "strict" approach to procedural compliance that the Court of Appeal laid down in Mitchell (cit sup), I should strike out the claim form. He cited paragraphs 40 and 41 of the Mitchell judgment, which state:
"[40] We hope that it may be useful to give some guidance as to how the new approach should be applied in practice. It will usually be appropriate to start by considering the nature of the non-compliance with the relevant rule, practice direction or court order. If this can properly be regarded as trivial, the court will usually grant relief provided that an application is made promptly. The principle "de minimis non curat lex" (the law is not concerned with trivial things) applies here as it applies in most areas of the law. Thus the court will usually grant relief if there has been no more than an insignificant failure to comply with an order: for example, where there has been a failure of form rather than substance; or where the party has narrowly missed the deadline imposed by the order, but has otherwise fully complied with its terms. We acknowledge that even the question of whether a default is insignificant may give rise to dispute and therefore to contested applications. But that possibility cannot be entirely excluded from any regime which does not impose rigid rules from which no departure, however minor, is permitted.
[41] If non-compliance cannot be characterised as trivial, then the burden is on the defaulting party to persuade the court to grant relief. The court will want to consider why the default occurred. If there is a good reason for it, the court will be likely to decide that relief should be granted. For example, if the reason why a document was not filed with the court was that the party or his solicitor suffered from a debilitating illness or was involved in an accident, then, depending on the circumstances, that may constitute a good reason. Later developments in the course of the litigation process are likely to be a good reason if they show that the period for compliance originally imposed was unreasonable, although the period seemed to be reasonable at the time and could not realistically have been the subject of an appeal. But mere overlooking a deadline, whether on account of overwork or otherwise, is unlikely to be a good reason. …".
- In Mitchell the court had imposed a sanction for non-compliance with a practice direction and the Court of Appeal considered an application for relief from the sanction under CPR 3.9, which provides that, "On an application for relief from any sanction imposed for a failure to comply with any rule, practice direction or court order, the court will consider all the circumstances of the case, so as to enable it to deal justly with the application, including the need – (a) for the litigation to be conducted efficiently and at proportionate cost; and (b) to enforce compliance with rules, practice directions and orders". The guidance in paragraphs 40 and 41 is directly concerned with such applications, but Mr Benzie argued that "a retrospective application for an extension is (or is to be treated as) an application for relief from sanction". I accept that the courts have often so regarded them. I have already referred to Price v Price, and another example is Boyle v Commr for Police for the Metropolis, [2013] EWCA Civ 1477, where Longmore LJ endorsed (at para 7) the notes to CPR part 35 in the White Book that a late application to call expert evidence is effectively an application for relief against a sanction of being unable to call such evidence. Mr Benzie also relied on paragraph 49 of the Mitchell judgment where the retrospective application in Raayan al Iraq Co Ltd v Trans Victory Marine Inc, [2013] EWHC 2696 (Comm) for a two days extension for service of particulars of claim was described as "in substance" being for relief from sanctions under CPR 3.9.
- Mr Benzie's submission therefore reflected the guidance in the paragraphs of the Mitchell judgment that I have set out, and he contended that the claim form should be struck out because:
i) Even if AEI's non-compliance was trivial, it did not apply for relief promptly.
ii) AEI's non-compliance was not trivial.
iii) There is no good reason for the non-compliance.
AEI's application for relief
- Mr Corby acknowledged that an application (or at least a retrospective application) for an extension of time to serve particulars of claim is in some ways analogous to an application under CPR 3.9. However, he disputed that therefore the guidance in paragraphs 40 and 41 of Mitchell, in particular the guidance that in cases of "trivial" non-compliance "the court will usually grant relief provided that an application is made promptly" (emphasis added), should be translated inflexibly to retrospective applications for extensions. Where the onus is upon a party in default to apply to the court because there has been an automatic sanction (whether resulting from the CPR, a practice direction or a court order), a prompt application to lift the sanction is obviously necessary because otherwise uncertainty about whether the sanction might be lifted would hamper the efficient progress of the proceedings. The importance of this was re-emphasised by the Court of Appeal in Thevarajah v Riordan, [2014] EWCA Civ 14. But Mr Corby argued that the position is different when, as here, the other party has made an application which will resolve any uncertainty. On 13 November 2013 Alstom had issued and served its application notice, and the parties knew that (assuming Alstom did not agree to an extension under CPR 2.11) the court would decide the consequences of AEI's non-compliance. Mr Corby contended that in these circumstances the timing of AEI's application is inconsequential.
- I see considerable force in Mr Corby's submission in so far as it concerns criticism of AEI's delay after 13 November 2013. Although, in my experience, cross-applications for extensions of time are commonly, even conventionally, made in these circumstances (and generally made more promptly than here), I do not see what practical purpose they serve. The court hears two applications which are (certainly typically if not invariably) two sides of the same coin. If AEI had not made its application at all, I am not convinced that they would have been at fault, and if they were I cannot believe that so sterile a criticism would have affected the fundamental question whether AEI's claim should be struck out because its particulars were late.
- But this does not answer the criticism that AEI did not apply for an extension before the deadline of 29 October 2013 or retrospectively between 29 October 2013 and 13 November 2013. Mr Preston explained this as follows: that Clyde & Co "decided, rather than incur costs and delay in making an application to Court, to press on and serve Particulars of Claim as soon as we could. This claim is of a relatively modest value and we hoped that it could be resolved using the simplest procedure possible. The issues are simple and our clients have no desire to do anything but resolve this matter swiftly and cheaply". Mr Benzie criticised this explanation as displaying an attitude to the CPR that is not compliant with the Woolf reforms, or with the Jackson reforms, or with the approach in Mitchell (which, in fairness to Mr Preston, I note was not decided until 27 November 2013). I recognise Mr Preston's proper concern about aggravating expenditure on claims of this size, but an application for an extension should have been made well before 13 November 2013. The failure to make one does not give the CPR's time limits the respect that is now demanded.
Was AEI's non-compliance "trivial"?
- Mr Corby submitted, adopting the terminology used in Mitchell, that AEI's delay in serving the particulars of claim is to be regarded as "trivial", in that:
i) The pleading was only 20 days date.
ii) The delay did not prejudice Alstom.
iii) The delay did not have any impact on other court users, or the court resources on which other litigants might draw.
iv) There was no breach of an "unless" order or any obligation that attracts an automatic sanction.
v) The non-compliance was not intentional in that no decision was deliberately made to serve the particulars late.
- I shall comment upon these points in reverse order. I accept that AEI and Clyde & Co did not deliberately plan that the particulars of claim should be served after the time stipulated by CPR 58. However, Clyde & Co were surely aware of the deadline, and did not take steps to comply with it. In particular they could easily have asked Pinsent Masons for an extension of time long enough before 29 October 2013 (for example, in reply to the emails of 18 and 25 October 2013) so as to allow them to apply to the court before 29 October 2013 if necessary. The application would have been decided without a hearing and, as Mr Benzie realistically acknowledged, almost certainly have been granted, assuming that it was supported by a sufficient explanation of the need for an extension. However, by the time that Clyde & Co asked Pinsent Masons for an extension late on 29 October 2013, any application would have had to have been made retrospectively. Clyde & Co must have known this, and there is no explanation why the request was made so late. I do not debate whether this amounts to intentional non-compliance with the CPR: on any view it displays indifference to compliance.
- This was indeed not a case in which non-compliance attracted an automatic sanction expressly stated in the CPR. Although the Court of Appeal has referred to "cases where sanctions are implied" (see Sayers v Clarke Walker, [2002] EWCA 645 para 21), the CPR does distinguish cases where a rule specifies the consequences of failure to comply from other cases: see CPR 2.11 and CPR 3.8(3).
- Mr Corby's third point was not disputed. AEI has called upon the court's resources only to issue the claim form, paying the fee to do so. Regrettably the court did not deploy resources to inform it when the acknowledgment of service was received. While resources have been spent on these applications and this hearing, to my mind it would be circular and unfair to AEI to bring this into account unless Alstom's application is otherwise justified.
- With regard to prejudice, Mr Benzie accepted that Alstom has not been at any disadvantaged because the particulars were served after 29 October 2013. He referred to prejudice in that Alstom had agreed not to invoke a time bar on the basis that proceedings would be issued by 12 October 2013. I shall consider the limitation position later, but I do not consider that this point helps Alstom to establish prejudice. After all, if AEI had issued proceedings just before 12 October 2013, the particulars might well have been due long after 18 November 2013.
- The period of non-compliance is, to my mind, realistically to be regarded as 20 days. Mr Benzie argued that it was longer because the purported service on 18 November 2013 did not comply with the rules and is to be regarded as a nullity. I am not persuaded of that, but in any case that theoretical argument does not affect whether the court should disregard the non-compliance on the basis that de minimis non curat lex. However, I cannot accept that, given the approach to non-compliance that decisions of the Court of Appeal require, a default of 20 days in serving particulars of claim is to be categorised as trivial. In Mitchell itself the claimant was five days late with the costs budget but was not considered to have missed the deadline narrowly. In Raayan al Iraq Co Ltd v Trans Victory Marine Inc, [2013] EWHC 2969, I granted an application for a retrospective extension of time when particulars of claim were served two days late, and my decision was criticised in Mitchell (at para 51). Mr Corby submitted that this was only because I said that relief from sanctions would not be refused where injustice would result and did not recognise the regard to be had to the "wide range of interests" affected by non-compliance, but in Thavarajah v Riordan, [2014] EWCA Civ 14 Richards LJ (who was party to the judgment in Mitchell) made it clear (at para 35) that the criticism was directed to my decision. In any case, the application of the de minimis doctrine in these circumstances does not depend only on the length of a failure to meet a deadline but (to use the Court of Appeal's word) its nature. AEI's failure to apply for an extension before 29 October 2013, or even to ask Pinsent Masons for one, reinforces my view that this is not a case where the de minimis doctrine applies.
Was there a good reason for non-compliance?
- Mr Preston explained why the particulars were not served by 29 October 2013 as follows:
i) Seven days were "lost" because the court did not inform Clyde & Co about the acknowledgment of service.
ii) Another day was "lost" because of the St Jude's storm; and
iii) AEI "was considering certain aspects of the claim" with Clyde & Co, and "some of the information and documents are very old: Mr Oliver was employed by [AEI] from 1956 to 1961, the restructuring took place in 1989, Mr Oliver died in 2005 and the personal injury claim in the Middlesbrough District Court took place between 2008 and 2011".
- I accept that investigation of the claim was not straightforward. I appreciate that, when the sums in issue are not large for the businesses involved and there is a realistic hope of settlement, parties are sometimes reluctant to "front-load" costs with detailed investigations before issuing proceedings, but that is not the position here. AEI had apparently carried out investigations after the exchanges of 2012, if not before. Moreover, the particulars of claim do not appear to reflect much by way of further investigations into the key issue identified in correspondence: where in the Rugby works Mr Oliver had worked and apparently been exposed to asbestos dust and fibre. It is pleaded in that regard simply that he served an apprenticeship employed by AEI "at the Rugby works" in Mill Road and that he was so exposed during his work there. The particulars also plead the terms of the 1989 contracts, the proceedings brought by Mrs Oliver and the settlement of them: the 2012 correspondence shows that AEI already had information about those matters. Of course, the solicitor who verified the particulars had to satisfy himself carefully and completely that they were accurate. However, I am not persuaded that there was insufficient time to draft and check the pleading after 8 October 2013, when Clyde & Co learned that an acknowledgment of service had been filed and that it disputed the claims. After all, it runs only to 16 paragraphs over five pages, and, according to Mr Preston, a first draft of it had been received from counsel by 16 October 2013 and Clyde & Co were taking instructions on the draft over the next thirteen days, until 29 October 2013. The St Jude's storm might explain a day's delay, but no more. Even disregarding the period between 1 October 2013 and 8 October 2013 and attributing that to the court's fault, AEI has not persuaded me that there was good reason for not serving the pleading by 29 October 2013.
- But there is another answer to the submission that there was an acceptable explanation for the non-compliance, to which I have already referred. If difficulties in investigating the claim do justify the particulars being late, a timely request for an extension should have been sought from Alstom and if necessary a timely application to the court should have been made.
Limitation
- Mr Corby submitted that on applications of this kind the court must strike a balance between achieving a result that is just and fair between the parties and any adverse impact on others who might (directly or indirectly) be affected by the decision. Before considering this submission and in order to assess what would be just between the parties, it is convenient next to deal with AEI's argument that, if these proceedings are struck out or dismissed, it can bring new proceedings. When they raised this in correspondence, Clyde & Co said that "even if the claim is struck out, our clients will merely commence new proceedings", and I take it that this reflects their instructions. Two questions arise: whether a claim in new proceedings would be time-barred, and whether the prospect of new proceedings is relevant to the applications.
- In his oral submissions Mr Benzie contended that Alstom would have an arguable time-bar defence if new proceedings were brought on the basis of the agreements to indemnify, although he was reluctant to develop it on these applications. I might therefore not properly understand the argument, but I think that it was on these lines: under the March 1989 agreements (whether the relevant agreement be that with AEI or that with English Electric) Alstom had "assumed responsibility for the satisfaction of all the Liabilities", and therefore it was under an obligation to discharge any liability when notified of it; that in view of the date when Alstom was notified of the claim about Mr Oliver, the limitation period expired in 2010; that Alstom agreed by its letter of 30 May 2013 to extend the limitation period provided proceedings were brought by 12 October 2013; and that that agreement does not cover a claim in later proceedings. In response Mr Corby submitted that in the March 1989 agreements Alstom agreed not only to assume responsibility for the satisfaction of liabilities but also to indemnify AEI or, as the case might be, English Electric, against claims; that a claim in respect of breach of contract accrues on breach; and there was no breach of the obligation to indemnify before (at the earliest) Mrs Oliver's claim was settled in 2010.
- I should explain the history of this issue: in her witness statement of 13 November 2013 Ms Seymour stated that in view of the letter of 30 May 2013 "limitation in respect of [AEI's] claim expired on 12 October 2013". In his witness statement of 27 November 2013 Mr Preston explained that the claim form made two claims: a contractual claim for an indemnity, to which a six years' limitation period applies, and a claim under the 1978 Act, governed by a two years' limitation period from the date when the right to contribution accrued. He said that the agreement between the parties about time-limits was directed only to the contribution claim, which has been abandoned, and not to the contractual claim, that "Given that the first payment to Mrs Oliver was made on 14 June 2010, the claim for an indemnity will not be time-barred until 14 June 2016 at the earliest", and that therefore Alstom could not rely on a limitation defence if a new claim form were issued. In her second witness statement, Ms Seymour did not dispute this, nor was it questioned in Mr Benzie's skeleton argument. In a letter dated 18 December 2013 Pinsent Masons invited AEI to discontinue the proceedings, to agree to pay Alstom's costs and to bring new proceedings in the name of English Electric, and they reserved Alstom's "position to advance any limitation defence to it in connection with the subsequent claim", but neither in this letter nor at any time before the hearing did Alstom say that Mr Preston was wrong in understanding that limitation might apply only to a claim under the 1978 Act or gave any indication of how a limitation defence to the contractual claim might arise. I consider that AEI should have been told that this question was controversial: see Robert v Momentum Services Ltd, [2003] EWCA Civ 299, where the Court of Appeal (at para 43) expressed concern that on an application for an extension the defendant prayed in aid the merits of the claim without proper notice to the claimant. As it is, there is no evidence about when Alstom was notified of any claim, and so no evidential basis for Mr Benzie's submission: the date when Alstom was notified of the claim was simply presented to the court on instructions. I add that Mr Benzie initially formulated his argument on the basis that the March agreements "transferred" liabilities to GEC Power, but that seems improbable: liabilities cannot be assigned.
- All that said, the law about when a claim for an indemnity accrues is not straightforward. The position about express indemnities is stated in Halsbury, Laws of England, (5th Ed, 2008) vol 68 at para 967:
"The accrual of the cause of action in the case of a claim on an express indemnity will depend on the construction of the contract. Where the indemnity is an indemnity against a liability, with A being entitled to be indemnified by C in respect of his liability to B, the cause of action will come into existence when A incurs a liability to B. If, however, the indemnity is a general indemnity (an indemnity against the payment and discharge of liabilities), time will not begin to run against A for the purpose of pursuing his indemnity against C until both the fact and the extent of A's liability to B have been established, as the time when the claimant is called upon to pay the principal claim and thereby actually suffers the loss."
However, the law about the application of the Limitation Acts to specific indemnity claims is often difficult: Neill J's authoritative analysis in Telfair Shipping Corp v Intersea Carriers SA, The "Caroline P", [1985] 1 WLR 553 provides (and was intended to provide) only general guidance. I cannot reach a firm conclusion about the position here, although I am left with the impression that Alstom would have difficulty in establishing a time-bar defence to a contractual claim (whether brought by AEI or English Electric or both). Certainly Alstom has not demonstrated that it would have a defence.
- What is the relevance of this to the applications before me? In Birkett v James, [1978] AC 298 the House of Lords decided that, in the absence of contumelious conduct by a claimant, the power to dismiss proceedings should not be exercised before the limitation period had expired, because the claimant could issue a new claim and it would only aggravate delay and costs to dismiss the claim. Mr James' counsel, Mr T H Bingham QC, did not consider it properly arguable that new proceedings would be an abuse of process. As the law then stood, this would be a powerful argument against striking out AEI's claim form. However, in Birkett v James the focus was on how disputes could fairly be resolved between the parties, and now the courts adopt a different approach. Even before the recent changes to CPR, in Securum Finance Ltd v Ashton, [2001] Chadwick LJ said this (at para 34):
"For my part, I think that the time has come for this court to hold that the "change of culture" which has taken place in the last three years—and, in particular, the advent of the Civil Procedure Rules—has led to a position in which it is no longer open to a litigant whose action has been struck out on the grounds of inordinate and inexcusable delay to rely on the principle that a second action commenced within the limitation period will not be struck out save in exceptional cases. The position, now, is that the court must address the application to strike out the second action with the overriding objective of the Civil Procedure Rules in mind—and must consider whether the claimant's wish to have "a second bite at the cherry" outweighs the need to allot its own limited resources to other cases. The courts should now follow the guidance given by this court in the Arbuthnot Latham case [1998] 1 WLR 1426, 1436-1437:
'The question whether a fresh action can be commenced will then be a matter for the discretion of the court when considering any application to strike out that action, and any excuse given for the misconduct of the previous action: …. The position is the same as it is under the first limb of Birkett v James. In exercising its discretion as to whether to strike out the second action, that court should start with the assumption that if a party has had one action struck out for abuse of process some special reason has to be identified to justify a second action being allowed to proceed.'"
(In the Arbuthnot Latham case the claimant had been guilty not only of delay but of contumelious conduct: Wahab v Khan, [2011] EWHC 908 (Ch), para 22.)
- Nevertheless, in this case I cannot properly assume that, if AEI brought a new action, it would be struck out as an abuse. First, the position is complicated by the uncertainly about whether the proper claimant is English Electric or AEI, and Mr Benzie acknowledged that Alstom would find it more difficult to strike out a claim by English Electric than to challenge new proceedings by AEI. Moreover, in the Securum case Chadwick LJ said (at para 31) that "when considering whether to allow the fresh proceedings to continue, the court must address the question whether that is an appropriate use of the court's resources having regard (i) to the fact that the claimant has already had his share of those resources in the first action and (ii) that his claim to a further share must be balanced against the demands of other litigants". As I have said, AEI has not used significant court resources in this action. Further, in Wahab v Khan (loc cit) Briggs J recognised that it is necessary on an application to strike out a second claim as an abuse to examine the circumstances of the particular case, including not only whether a claimant would actually use a disproportionate share of court's resources but justice between the parties and any unfairness to them. Allowing the second action to continue, he considered it relevant (inter alia) that:
i) In the first action Court resources were used in three short interim hearings (which were unlikely to be repeated); and
ii) The first claim had been struck out for "a relatively technical breach of the rules … coupled with a delay of only some seven months".
If this claim is struck out and new proceedings brought, AEI would appear to have stronger arguments than Mr Wahab.
- It is not for me to determine whether or not a second action, if brought, should be struck out as an abuse. But I must acknowledge that, if I grant Alstom's application, there is the real prospect:
i) That it will result in further litigation between the parties which would be less than straightforward, would be costly for the parties, would demand court resources and would be "satellite" in that it would not engage with the question where liability to Mrs Oliver should fall under the 1989 agreements; and
ii) That the result might well be that the substantive dispute between the parties will eventually be determined at more cost and after more delay, the result that the House of Lords in Birkett v James sought to avoid.
- Is it permissible to take this into account in determining these applications? In Ian Wyche v Careforce Group Plc, [2013] EWHC 3282, when granting relief from sanctions for non-compliance with an "unless" order, Paul Walker J expressed concern about substantial amounts of time and money being wasted on preparation for and conduct of satellite litigation. In Mitchell the Court of Appeal criticised his decision (as Richards LJ made clear in Thevarajah v Riordan (cit sup) at para 35), saying:
"We share the judge's desire to discourage satellite litigation, but that is not a good reason for adopting a more relaxed approach to the enforcement of compliance with rules, practice directions and orders. In our view, once it is well understood that the courts will adopt a firm line on enforcement, litigation will be conducted in a more disciplined way and there should be fewer applications under CPR 3.9. In other words, once the new culture becomes accepted, there should be less satellite litigation, not more."
- In the Ian Wyche case the concern was about satellite disputes in the litigation before the Court, and not subsequent litigation that might be brought. On an application under CPR 3.9 the court is required to consider "all the circumstances", and it should, surely, likewise consider all the relevant circumstances on an application under CPR 3.1(2) to extend time or exercise other case management powers. I recognise that the approach adopted by the Court of Appeal discourages judges from giving too much weight to the prospect of unprofitable hearings which do not engage with the underlying dispute. But I do not understand Mitchell to decide that this concern is never a relevant circumstance and must always be entirely disregarded.
The proper balance
- If my decision depended only on what would be just and fair between AEI and Alstom, I would not strike out the claim form and I would grant a retrospective extension of time for service of the particulars. I have referred to most of the relevant considerations, but should mention another matter on which Mr Benzie relied: the tone adopted in correspondence by Clyde & Co when Pinsent Masons did not agree to an extension of time, citing in particular their response of 18 November 2013 to Alstom's application, in which, for example, they described it as "frivolous and embarrassing". The suggestion was that this aggravated AEI's non-compliance. I doubt whether it is often useful on applications of this kind to assess the tone of inter-solicitor correspondence and I do not consider it important here. I would not wish to encourage aggressive correspondence, but I observe that the email was sent when Pinsent Masons misunderstood when the particulars had fallen due, and before the Mitchell judgment.
- Looking at the position simply between the parties, even disregarding limitation and the prospect of continuing satellite litigation, I would consider an order striking out the claim form to be a disproportionate response to AEI's non-compliance, given that the delay in serving the particulars, though not insignificant, was remedied after 20 days and that it did not disadvantage Alstom. This assessment is reinforced by the uncertainties about limitation and whether new proceedings would be struck out. I therefore return to Mr Corby's submission about the balance that the court must strike between the interests of the parties to the litigation and the interests of others who might be affected by my decision.
- I accept Mr Corby's submission that nothing in the judgments of the Court of Appeal in Mitchell or subsequent cases means that the court should disregard justice between the parties altogether. It is not listed in CPR 1.1 as a consideration included in the overriding objective, but in Price v Price (cit sup) at para 45 the decision of the Court of Appeal was expressed in terms of a balance between enforcing the CPR's disciplinary framework and responding proportionately to non-compliance. The question is the weight to be given to justice between the parties on applications under CPR 3.4 and CPR 3.1(2)(a). When a party applies for relief from sanctions, CPR 3.9 requires that the court consider "all the circumstances of the case, so as to enable it to deal justly with the application", but it specifically identifies as relevant circumstances of the case "the need (a) for litigation to be conducted efficiently and at proportionate cost; and (b) to enforce compliance with rules, practice directions and orders". The Court of Appeal said (at para 37 in Mitchell) that, except in cases of trivial non-compliance or where there was good reason for non-compliance, "other considerations should be given less weight than the two considerations that are specifically mentioned". Does this apply to the applications before me?
- Explaining the proper approach to applications under CPR 3.9, the Court of Appeal endorsed (at para 39) what Lord Dyson said extra-judicially in the 18th implementation lecture on the Jackson reforms delivered on 22 March 2013:
"The revisions to the overriding objective and to rule 3.9, and particularly the fact that rule 3.9 now expressly refers back to the revised overriding objective, are intended to make clear that the relationship between justice and procedure has changed. It has changed not by transforming rules and rule compliance into trip wires. Nor has it changed it by turning the rules and rule compliance into the mistress rather than the handmaid of justice. If that were the case then we would have, quite impermissibly, rendered compliance an end in itself and one superior to doing justice in any case. It has changed because doing justice is not something distinct from, and superior to, the overriding objective. Doing justice in each set of proceedings is to ensure that proceedings are dealt with justly and at proportionate cost. Justice in the individual case is now only achievable through the proper application of the CPR consistently with the overriding objective."
The reason that CPR 3.9 is said to refer expressly to the revised overriding objective is, I take it, this: first, the objective of the CPR is now stated in CPR 1.1 to be to enable the court to deal with cases not only justly but "at proportionate cost", an expression echoed in the language of CPR 3.9(1)(a); and secondly the explanation in CPR 1.2 of the overriding objective has been revised to add that it includes "enforcing compliance with rules, practice directions and orders", which is echoed in the revised CPR 3.9. When the court exercises any power given to it by the rules (including the powers under CPR 3.4 and CPR 3.1(2)(a)), it must seek to give effect to the overriding objective. It must therefore (i) seek to deal with the case at proportionate cost (as well as justly), and (ii) recognise that this includes enforcing compliance with rules, practice directions and orders. But this does not mean that, when exercising all powers under the CPR, the court must give more weight to the considerations specifically identified in CPR 3.9 than to other aspects of the overriding objective and other relevant circumstances of the case. As I understand Mitchell, the guidance about the weight to be given to the considerations specifically mentioned in CPR 3.9 is directed to applications under CPR 3.9, and is based on the interpretation and implication of that particular rule. The Court of Appeal said (at para 42) that the proper approach under CPR 3.9 is similar to that which has been adopted to applications to extend the validity of a claim form, but not that it is similar to that to be adopted for all extensions (or all retrospective) extensions of time.
- I therefore consider that it would be taking too far the analogy between CPR 3.9 and retrospective applications of time to conclude that the Court of Appeal meant that in the case of retrospective extensions of time the two considerations specifically mentioned in CPR 3.9 are of greater weight than other considerations involved in dealing with cases justly and at proportionate cost. The Court of Appeal in Sayers v Clarke Walker, [2002] EWCA Civ 645 encouraged consideration of the check-list in the old version of CPR 3.9 on an application for permission to appeal "in a case of any complexity" as preferable to "judges [making] their own check-lists for cases where sanctions are implied but not expressly imposed", the implied sanction being that an application for permission to appeal could not otherwise be made. The guidance was, as I have said, repeated in Price v Price, a case about an application to extend time for service of particulars. But I understand that this is simply guidance about how the court might go about dealing with cases of this kind in accordance with the overriding objective.
- But it does not much help AEI even if I am right that the considerations specifically identified in CPR 3.9 are not to be given more weight than other relevant matters. The court must still seek to give effect to the overriding objective, including the aspects of it emphasised in CPR 3.9. As I see it, the requirement to deal with cases at proportionate cost is not in point here: AEI's non-compliance did not aggravate the costs (and indeed, as Mr Preston explained, Clyde & Co adopted the course that they did with the aim of saving unnecessary costs). Alstom's real argument is the importance of enforcing the requirements of the CPR.
- One reason that dealing with a case in accordance with the overriding objective includes enforcing compliance with rules, practice directions and orders is to enable the courts' resources to be shared fairly between litigants, and to prevent a defaulting party from using them excessively. As I have said, AEI's non-compliance with the CPR did not have a significant impact on resources. However, there is a more general reason that the Court of Appeal has emphasised: it is considered that "once it is well understood that the courts will adopt a firm line on enforcement, litigation will be conducted in a more disciplined way and there should be fewer applications under CPR 3.9. In other words, once the new culture is accepted, there should be less satellite litigation, not more": Mitchell (loc cit) at para 48, and see para 60. I must balance this against my conclusion that as between the parties it is a disproportionate response and unjust to refuse an extension and strike out the claim form. The emphasis that the Court of Appeal has given to enforcement of the CPR in order to encourage procedural discipline drives me to conclude that I should grant Alstom's application and refuse that of AEI.
- This conclusion is, I think, confirmed by what the Court of Appeal has said about the Raayan al Iraq case. As here, the non-compliance in that case did not attract an automatic sanction, and no significant court resources were used because of the breach. As here, the probable result of refusing the extension would have been satellite litigation and the amount in issue was relatively modest in relation to the costs that it would involve. However, Raayan al Iraq Co Ltd was, I think, in a stronger position than AEI: its particulars were only two days late; they were served late, as I concluded, because of an unfortunate oversight on the part of its solicitor despite his careful system for avoiding such errors, not because of indifference to compliance with the CPR; and the application for an extension of time was prompt. Nevertheless, as I said at para 28 above, my decision in Raayan al Iraq was criticised by the Court of Appeal, and not only the observation to which specific reference was made in Mitchell. The result in this case seems to me to follow a fortiori.
Conclusion
- Therefore, despite my conclusion about fairness between the parties and what would be a proportionate response to the non-compliance, I allow Alstom's application and refuse that of AEI.
