The Khan Partnership LLP v Infinity Distribution Ltd

Applications to extend time for serving a claim form under CPR 7.6(2) involve a broad discretion, but it must be exercised consistently with the overriding objective and the strict approach established by authority.

Where an extension may deprive a defendant of a limitation defence, that prejudice is a matter of considerable importance. A claimant ordinarily needs a good reason for failing to serve within four months. Exceptional circumstances may nevertheless justify an extension where the defendant’s own procedural breach directly affects the limitation position, particularly where the defendant already knows the substance of the claim. A partial extension is permissible where the claims affected by limitation are discrete and severable.

Infinity Distribution Ltd, acting through its administrators, brought claims against its former solicitors, The Khan Partnership LLP, concerning success fees and a further fee taken from money recovered from HMRC.

The claim form was issued within the relevant period but was not served within four months because Infinity pursued pre-action correspondence. The Chief Master extended time for service and later refused to set aside that extension, although he excluded the success fee claims because he considered that limitation affected only those claims.

The Khan Partnership appealed. The central issues were whether the extension potentially prejudiced limitation rights, whether the defendant’s late service of its application to set aside constituted an exceptional circumstance, and whether the extension could properly be retained for a discrete part of the claim.

1. The appeal was dismissed. The Chief Master’s order was upheld, although the reasoning differed in part.
2. Under CPR 7.6(2), an application made before expiry of the four-month period is governed by a broad discretion. The discretion must be exercised consistently with the overriding objective and established principles. The claimant’s reason for failing to serve remains an important consideration.
3. The authorities, including Hoddinott v Persimmon Homes (Wessex) Ltd [2007] EWCA Civ 1203, establish that a claimant will generally require a good reason for failing to serve within time. Seeking to continue pre-action correspondence, once it is clear that no substantive response will be received within the period, is ordinarily a serious error of judgment rather than a good reason.
4. Where limitation is engaged, the primary question is whether an extension will or may deprive the defendant of a limitation defence. The court need not finally determine a disputed limitation issue on an application of this kind. The potential prejudice to the interest fee claim was material because its six-year limitation period expired on 24 December 2014.
5. Although the original extension might not have been justified merely because draft particulars had been supplied, the later circumstances were exceptional. The defendant issued its application to set aside on the last permitted day but deliberately or inadvertently failed to serve it until 23 December, immediately before expiry of the relevant limitation period. That deprived the claimant of a realistic opportunity to issue a protective claim form. The defendant had already received full draft particulars and therefore knew the nature of the claim.
6. The court could retain the extension for the interest fee claim while excluding the distinct success fee claims. A partial extension was permissible where the claims were discrete and the limitation issues did not overlap.

1. High Court (Chancery Division): appeal from the Chief Master’s order of 23 February 2015. The order was upheld and the application to set aside was dismissed.
2. Chief Master Marsh: on 7 November 2014, extended time for service of the claim form; on 23 February 2015, refused to set aside the extension but excluded the success fee claims.