OOO Abbott & Anor v Econowall UK Ltd & Ors

Under CPR 6.15, the court may deem an earlier step good service where, considering all the circumstances, there is good reason to do so. The defendant’s knowledge of the claim form is important, but is not by itself sufficient. A party aware of a genuine misunderstanding about a significant procedural arrangement should take reasonable steps to clarify it, consistently with the overriding objective.

The strict conditions in CPR 7.6(3) cannot be bypassed by seeking relief under CPR 3.9. Apparent inconsistency between an exclusive jurisdiction clause and an arbitration clause must be resolved by construing the agreement as a whole. Here, arbitration was permissive, not mandatory.

The claimants alleged infringement of a patent relating to snap-in inserts and claimed that sales by some defendants fell outside a patent licence. The defendants applied to challenge the court’s jurisdiction because the claim form had been served late and unsigned. They also sought strike-out of the claim against Smithbrewer and a stay in favour of arbitration.

The claimants applied for the copy claim form, delivered shortly after issue, to be deemed good service under CPR 6.15, and sought retrospective permission to serve the particulars of claim. The central issues were whether there was good reason to validate the earlier service, whether the claim against Smithbrewer disclosed reasonable grounds, and whether the licence agreement required arbitration.

1. Service. The copy claim form had been delivered to the defendants on 6 July 2015, and they knew its existence and contents. The defendants’ solicitors also appreciated that the claimants might have misunderstood the proposed extension of time, but chose not to clarify the position. Parties need not generally identify every mistake made by opponents. However, the overriding objective requires reasonable steps to secure a clear common understanding about significant procedural arrangements. The defendants’ failure to clarify the misunderstanding was inconsistent with that objective.
2. Applying Abela v Baadarani [2013] UKSC 44, the question under CPR 6.15 was whether, in all the circumstances, there was good reason to deem the earlier step good service. The circumstances distinguished Bethell Construction Limited v Deloitte and Touche [2011] EWCA Civ 1321. The defendants had suffered no limitation prejudice, there was no concluded agreement on the relevant expiry date, and validating service better promoted the overriding objective. Good service was therefore deemed to have been achieved on 6 July 2015.
3. The court was bound by Kaur v Ctp Coil Limited [2001] C.P. Rep. 34. Where CPR 7.6(3) applies, CPR 3.9 cannot provide an alternative route to relief from the consequences of late service. Had service not been validated under CPR 6.15, the claim would have been struck out. Retrospective permission was granted for service of the particulars of claim by 25 November 2015.
4. The pleaded basis for alleging infringement by Smithbrewer was slender. The defendants’ clear assertion that the only customer of the relevant product was Project Consulting was accepted for present purposes. There were consequently no arguable pleaded grounds for the claim against Smithbrewer, which was struck out.
5. The licence agreement contained both an exclusive English jurisdiction clause and an arbitration clause. Following the whole-contract approach discussed in Ace Capital Ltd v CMS Energy Corp. [2008] EWHC 1843 (Comm), and explaining Sulamérica Cia Nacional de Seguros SA v Enesa Engelharia SA [2012] EWCA Civ 638, the clauses had to be construed in their contractual context. The arbitration clause was permissive. The defendants could not insist on a stay, and the application for a stay was dismissed.