TMT Asia Ltd & Ors v BHP Billiton Marketing AG

Where a claimant seeks an extension of time for service which would effectively extend a limitation period, it must provide a good and sufficiently detailed explanation for both the delay in issuing the claim and the delay in serving it. The explanation required becomes more demanding as the delay increases, particularly where limitation has expired or is about to expire. The court may consider the merits and the relative prejudice to the parties. A claim with no adequate explanation, weak merits and substantial prejudice to the defendant should not be permitted to proceed. Failure to pay the correct issue fee may also mean that proceedings were not validly brought within the limitation period.

The claim arose from long-running disputes between companies controlled by Mr Su and BHP Billiton Marketing AG. Earlier settlement agreements had produced substantial unpaid liabilities and summary judgment had been entered for the defendant. The claimants later issued proceedings shortly before limitation expired, alleging that a separate deed of termination displaced the settlement agreements.

They obtained two ex parte extensions of time for service, from Teare J and Popplewell J, but failed to serve the claim form within the required periods. Service by post was also sent to an incorrect Swiss address. The defendant applied to set aside the extensions and dismiss the proceedings. The issues were whether the claimants had shown good reasons for the delays, whether the merits and prejudice favoured an extension, and whether the correct issue fee had been paid.

1. The application was allowed. The extensions of time for service were set aside, the service of the writ was set aside and the proceedings were dismissed.
2. A party seeking an extension of time for service which would effectively extend limitation must give a good reason for the delay. That obligation covers both the period before issue, especially where the claim was left until limitation was about to expire, and the subsequent delay in serving the issued claim form. The longer the delay, the better the explanation must be, particularly after limitation has expired.
3. The explanations advanced for both applications were inadequate. They did not explain why the claim had been delayed until the end of the limitation period, why no service had occurred during the first six-month extension, or why the second application was made only shortly before the further deadline.
4. The court was entitled to consider the merits and the balance of prejudice. The proposed claim was very weak. The alleged defence based on the deed of termination had not been raised before the earlier summary judgment, despite the opportunity to do so. Applying the principles in Henderson v Henderson (1843) 3 Hare 100 and Johnson v Gore-Wood (No.1) [2002] 2 AC 1, it was unlikely to survive the abuse test. The defendant would suffer greater prejudice if a statute-barred claim proceeded without good reason.
5. The claim form had also been issued without payment of the correct fee. Under Page v Hewetts Solicitors [2012] EWCA Civ 805, payment of the proper fee was a condition of valid issue. Later payment could cure the defect prospectively, but limitation had expired and no corrective payment had been made. This provided an additional ground, although it was unnecessary to the result.