Are service of a claim form tactics a thing of the past?
Lester Viner & Others v Volkswagen Group Ltd & Others [30.07.18]
On a regular basis solicitors are instructed to issue court proceedings in order to protect an impending time bar. This request is often followed up with a request to “hold off” from serving the claim form in order to provide further time to attempt to resolve the dispute.
However, the Court Procedure Rules (CPR) are not well situated for such purposes. Indeed, issuing such protective proceedings and then sitting in the claim form is a dangerous practice as recent authority confirms.
The position under the CPR
Once a claim form has been issued, Rule 6 of the CPR states that a claimant must serve the claim form upon the defendant within four months, if serving within the jurisdiction, and six months if serving outside of the jurisdiction.
So, all being well, the claim form is issued and the claim form is served well within the deadline. However, there are often delays and problems with service which can mean that service takes some weeks to complete.
In the marine and transport sector, tight time bars often mean that the parties run out of time when negotiating a resolution. They therefore ask solicitors to issue proceedings to protect the time bar and to demonstrate their serious intentions in terms of pursing the claim. Meanwhile, knowing that they have either four months or six months in which to serve the claim form, they use that period to attempt to negotiate.
Lester Viner & Others v Volkswagen Group Ltd & Others [30.07.2018]
However, in the recent case of Lester Viner v Volkswagen Group this tactic of waiting for further instructions to serve the claim form has been described by Senior Master Barbara Fontaine as “a serious misjudgement”.
The claimants issued their claim form against the first defendant, VUK, in January 2016. VUK agreed a number of extensions for service of the claim form with the court extending the deadline to April 2018.
The claimants made a deliberate decision not to serve before the April 2018 deadline.
Subsequently, the claimants made an application to the court to use its discretion to extend the time for service of the claim form under CPR Rule 7.6(2). Under Rule 7.6(2) an extension of time may be granted if “…the claimant has taken all reasonable steps…” to serve the claim form but has been unable to do so.
From the facts as presented, it was quite clear that the claimants had not taken any steps, never mind “reasonable” steps, to serve the claim form.
Ultimately, the court found that no reasonable steps had been taken and the claimants had no good reason not to have served the claim form within the time allowed; it was for purely tactical reasons that the claim form was not served.
Accordingly, the claimants’ application was declined.
So what now?
The court commented that a “competent litigation practitioner” should, instead, have,
- Served the claim form and, subsequently, applied for a stay of proceedings; or
- Applied under CPR Rule 38.6(1) for an alternative order than the default position.
It has been common practice to issue a claim form to interrupt time and to take the decision not to serve for four months (if within the jurisdiction).
However, following on from this recent decision, parties will need to seriously consider whether they are justified in delaying serving the claim form. Practitioners will also need to consider their own duties to advise clients that delaying serving for the purposes of continuing settlement discussions is unlikely to be a sufficient reason under CPR Rule 7. As such, the purpose of the protective claim form in protecting the time bar position may be completely lost.