Sodastream Ltd v Coates & Ors

On a rehearing of a without-notice order extending time for service of a claim form, the principal question is usually whether the claimant had a good reason for failing to serve within the permitted period. A very good reason will ordinarily justify an extension. The absence of a good reason is likely to be decisive against one.

Expiry of the limitation period is especially important because an extension disturbs the defendant’s accrued protection. Waiting for particulars of claim or a sealed extension order will not ordinarily justify delayed service. A defendant’s knowledge of the proceedings is relevant, but a defendant who has created no obstacle need not help the claimant achieve service.

A company in liquidation claimed £12.5 million from five former directors for alleged breach of duty or misfeasance arising from the declaration and payment of a dividend. The claim form was issued shortly before expiry of the applicable limitation period.

The fifth defendant lived in Israel. The claimant obtained five without-notice orders extending time for service and eventually served him during the fifth extension. He applied to set aside the extension orders and the service. The central issue was whether the claimant had shown a good reason for the prolonged failure to serve him within the period originally allowed.

1. The application was granted. The orders of 2 December 2008 and 13 February 2009, which granted the fourth and fifth extensions, were set aside. Service of the claim form on the fifth defendant was consequently set aside or declared ineffective. The action could proceed against the other four defendants alone.

2. An application to set aside a without-notice extension is a rehearing, rather than a review of the original decision. Under rule 7.6(2) of the Civil Procedure Rules 1998, the principal and frequently only question is whether there was a good reason for failing to serve within the permitted period. A very good reason will usually justify an extension. Conversely, the absence of a good reason is likely to be decisive. These principles were derived from Hashtroodi v Hancock [2004] EWCA Civ 652, Collier v Williams [2006] 1 WLR 1945, Carnegie v Drury [2007] EWCA Civ 497 and Hoddinott v Persimmon Homes (Wessex) Ltd [2007] EWCA Civ 1203.

3. The claimant had not shown good reasons for all the extensions, particularly the fourth and fifth. It was unreasonable to defer service until the particulars of claim were finalised. Once it became apparent that solicitors lacked instructions to accept service, the claimant should promptly have engaged an Israeli process server. Instead, the matter drifted for months. The eventual process server located and served the fifth defendant within two weeks.

4. Expiry of the limitation period was a particularly significant factor. Each extension disturbed the fifth defendant’s entitlement to rely upon limitation. His prior receipt of copies of the claim form and particulars was relevant but carried little weight. A potential defendant who has put no obstacle in the claimant’s way has no positive duty to help the claimant locate and serve him.

5. The applications had been handled perfunctorily and contained material inaccuracies or omissions. Applicants seeking without-notice extensions must place all relevant material before the court, including earlier extensions, the service steps taken and the limitation position. Those defects reinforced the conclusion, although they would not alone have caused discharge had good reasons for the extensions otherwise existed.

not stated in the judgment.