Woodward v Phoenix Healthcare Distribution Ltd

The Court of Appeal considered whether the retrospective validation power in CPR r 6.15 should be exercised to cure defective service where an earlier defective attempt meant that any fresh claim would be statute-barred. The Master had validated service on facts where the claimant's solicitors had served the defendant's solicitors without confirming authority to accept service and the claim form expired; the Master treated the defendant's silence as contrary to the duty to further the overriding objective (CPR r 1.3) and as technical game playing. The High Court judge (HHJ Hodge QC) set the Master's order aside, holding there was no duty to warn under CPR r 1.3 and no technical game playing. The Court of Appeal dismissed the appeal, endorsing the High Court judge's reliance on the Supreme Court's decision in Barton v Wright Hassall LLP and emphasising that the exercise under CPR r 6.15 is fact-sensitive and that there is no general duty on a defendant or its solicitors to correct an opponent's mistake where they have not caused it; the risk of depriving a defendant of an accrued limitation defence is an important consideration.

Background and parties:

• The claimants (Woodward and another) sued Phoenix Healthcare Distribution Limited as assignee of two companies in claims for breach of contract and misrepresentation arising from a 2011 contract for purchase of a drug; alleged loss exceeded £5 million.
• The claim accrued on 20 June 2011 and so the limitation period meant the claim risked being time-barred from 20 June 2017. The claim form was issued on 19 June 2017 and required service within four months (by 19 October 2017).

Facts relevant to service:

• The claim form and particulars were sent by the claimants' solicitors (Collyer Bristow) to the defendant's solicitors (Mills & Reeve) by post and by email on 17 October 2017 but Mills & Reeve were not authorised to accept service. The claim form expired unserved at midnight on 19 October 2017; the limitation period also expired.
• Mills & Reeve learned of the defective attempt and did not notify Collyer Bristow before expiry; the claimant then attempted valid service on 20 October 2017 but by then limitation had run.

Procedural posture:

• Master Bowles held there was no written authority to accept service and no estoppel, but nevertheless exercised discretion under CPR r 6.15 to validate the defective service, in part because he considered Mills & Reeve had a duty under CPR r 1.3 to warn the claimants of the defect and had been playing a technical game.
• HHJ Hodge QC allowed an appeal from the Master, set aside the claim form and dismissed the action ([2018] EWHC 2152 (Ch)). This Court of Appeal appeal followed.

Issues framed:

1. Whether a defendant (or its solicitors) has a duty under CPR r 1.3 to warn an opponent of an obvious mistake in service such that the defendant may be estopped from taking procedural points;
2. Whether remaining silent in those circumstances amounts to "technical game playing" justifying validation under CPR r 6.15; and
3. Whether, on the facts, there was "good reason" to validate defective service retrospectively in light of limitation prejudice and the fact-sensitive nature of the r 6.15 discretion.

Court's reasoning:

• The court emphasised that the exercise under CPR r 6.15 is discretionary and highly fact-sensitive and will not be disturbed unless the judge below erred in principle or made a plainly wrong evaluative judgment.
• The Court followed the Supreme Court's analysis in Barton v Wright Hassall LLP, accepting that there is no general duty on a defendant (or its lawyers) to warn a claimant of the claimant's procedural mistake where the defendant did not contribute to it, particularly where doing so may deprive the defendant of an accrued limitation defence. Barton also stressed that the rules on service are conditions on which the court takes cognisance of a claim and that prejudice to a defendant from retrospectively validating service is an important factor.
• The Court held the Master erred in treating Mills & Reeve's silence as a breach of CPR r 1.3 or as technical game playing, and in giving insufficient weight to the prejudice of depriving Phoenix of a limitation defence. The High Court judge's decision to set aside the Master's validation was therefore upheld.

Wider context: The Court reiterated that retrospective validation under CPR r 6.15 is an exception and depends on a fact-sensitive evaluative judgment; the loss of a limitation defence is a significant factor to be weighed in that exercise.

This was an appeal from HHJ Hodge QC's decision setting aside the Master’s order validating defective service. The Court of Appeal dismissed the appeal. It held that the Master erred in principle in imposing a duty under CPR r 1.3 on the defendant or its solicitors to warn the claimant of a mistake they had not caused, and was wrong to characterise silence and proper professional conduct as "technical game playing." The Court followed the Supreme Court's approach in Barton v Wright Hassall LLP and emphasised that the exercise under CPR r 6.15 is highly fact-sensitive and that prejudice to a defendant from loss of an accrued limitation defence is a weighty consideration.

Proceedings before Master Bowles who made an order validating service ([2018] EWHC 334 (Ch)). HHJ Hodge QC allowed an appeal from the Master, set aside the claim form and dismissed the action ([2018] EWHC 2152 (Ch)). The present appeal to the Court of Appeal was dismissed ([2019] EWCA Civ 985).