Bethell Construction Ltd & Anor v Deloitte and Touche

A claimant cannot unilaterally serve a claim form by a method which the procedural rules do not authorise. Silence generally creates no estoppel, although a duty to speak may arise where silence would make an express statement misleading.

Relief under rule 6.15 requires both a good reason for alternative service and a favourable exercise of discretion. The threshold is lower than the exceptional circumstances required to dispense with service under rule 6.16. A claimant’s mistake does not ordinarily justify depriving a defendant of an accrued limitation defence, particularly where alternative service would contradict an agreed extension arrangement.

Issuing a claim form creates proceedings for costs purposes. The court may therefore award the defendant its costs even though the claim form was never validly served.

The claimants alleged that their former auditors had negligently advised them and audited company accounts. They issued a protective claim form in February 2007 but sent the defendant a copy expressly otherwise than by way of service. The parties agreed successive extensions, culminating in an arrangement under which time for serving the claim form and particulars would expire 14 days after written notice.

In October 2010 the claimants purported to serve particulars of claim without serving the claim form. The defendant then gave 14 days’ notice terminating the extension. The claimants failed to serve within that period, after which the defendant asserted a limitation defence.

HH Judge Hodge QC dismissed the claimants’ application for relief, declared that the court lacked jurisdiction to hear the claim, and awarded the defendant its costs. The appeal concerned constructive service, termination of the extension, waiver and estoppel, alternative or dispensed service, and jurisdiction to award the costs of unserved proceedings.

1. The appeal was dismissed unanimously. A claimant cannot unilaterally select a method of serving a claim form which Civil Procedure Rules 1998 Part 6 does not authorise. Subject to rules 6.15 and 6.16, the prescribed methods must be followed. The October 2010 letter serving only the particulars could not retrospectively convert the copy supplied in 2007 expressly otherwise than by way of service into a served claim form.

2. The defendant’s October 2010 letter validly terminated the agreed extension. Although it described the arrangement as a stay, its objective meaning was clear. No other agreement could have been intended, and the notice unmistakably referred to the arrangement extending time for service.

3. Silence does not generally create an estoppel, but a duty to speak may arise where silence would render an express statement misleading. If the defendant’s solicitor chose to reply to correspondence revealing the claimant’s mistake, the reply had to be sufficiently full. Applying The Stolt Loyalty [1993] 2 Ll.L.R. 281, the reply satisfied that requirement. Read as a whole, it gave the contractual notice which triggered time for serving both the claim form and particulars. It neither represented that the claim form had been served nor waived proper service.

4. Rule 6.15 imposes cumulative requirements: there must be a good reason to authorise alternative service, followed by a favourable exercise of discretion. This threshold is lower than the exceptional circumstances required by rule 6.16. Neither requirement was met. Retrospective alternative service would undermine the parties’ extension agreement and deprive the defendant of an accrued limitation defence merely because the claimant’s solicitor had made a mistake.

5. No exceptional circumstances justified dispensing with service under rule 6.16. The claim form had originally been delivered expressly otherwise than by way of service, and the claimant never subsequently communicated that it was treating the form as served.

6. Issuing the claim form created proceedings for the purposes of section 51 of the Senior Courts Act 1981. The court’s costs jurisdiction, regulated by Parts 43 and 44, was not excluded merely because the claim form had not been served. The judge was entitled to award the successful defendant its costs of the action, and no ground existed for appellate interference.

1. Court of Appeal (Civil Division): The appeal was dismissed unanimously. The orders concerning jurisdiction and costs were upheld.

2. High Court, Chancery Division: HH Judge Hodge QC, sitting as a deputy judge in the Manchester District Registry, dismissed the claimants’ application, declared that the court had no jurisdiction to hear the claim, and ordered the claimants to pay the defendant’s application costs and its costs of the claim incurred after 19 September 2007.