The Dispute
On 8 July 2003 Boxwood Leisure Limited ("Boxwood") and the First Defendant, Gleeson Construction Services Limited ("GCSL"), entered into a contract executed as a deed whereby GCSL agreed to carry out the design and construction of three leisure centres at Erith, Crook Log and Sidcup (the "Contract"). The Second Defendant, MJ Gleeson, guaranteed GCSL's performance under the Contract by a deed dated 8 July 2003. The works under the Contract were completed in or around March 2008.
On 24 March 2020 Boxwood commenced protective proceedings against both Defendants (collectively "Gleeson") alleging that the design and/or construction of the leisure centre at Sidcup was defective resulting in water ingress, deterioration of the external fabric of the building and inadequate fire protection measures. Boxwood sought damages of circa £683,000 in respect of the estimated costs of the remedial works to the leisure centre.
Following issue of proceedings, Boxwood made an application to the Court seeking directions pursuant to the Pre-Action Protocol for Construction and Engineering Disputes (the "Protocol") due to the limitation issues raised by the claim. The application included a request for an extension of the period for service of the Claim Form and Particulars of Claim (under the Civil Procedure Rules service of the Claim Form has to be effected within four months of issue).
Considering Boxwood's application and the opposing submissions from Gleeson, the Court made an order on 7 April 2020 providing for the period of service of the Claim Form and Particulars of Claim to be extended to 10 September 2020 and for the proceedings then to be stayed from 13 September 2020 to 10 December 2020 to facilitate the parties' compliance with the Protocol (the "Order").
Service of Proceedings
On 8 September 2020 Boxwood's solicitors sent a letter by email to Gleeson's solicitors which enclosed, by way of service, the Claimant's Particulars of Claim, Response Pack and Initial Disclosure List. The Claim Form was not enclosed.
On realising that the Claim Form had not been enclosed with the letter sent by email on 8 September 2020, Boxwood's solicitors sent a second letter by email to Gleeson's solicitors on 14 September 2020 enclosing the Claim Form together with copies of the Particulars of Claim, Response Pack and Initial Disclosure List.
Boxwood's Application
Boxwood's solicitors realised service of the Claim Form was late and, on 23 September 2020 Boxwood issued an application at Court seeking an order that Boxwood be granted relief from its failure to comply with the Order and its failure to serve its Claim Form by 10 September 2020, such that the Claim Form served on 14 September 2020 be regarded as having been properly served in time.
Boxwood submitted that the failure to serve the Claim Form by 10 September 2020 amounted to a breach of the Order but that the Court could still grant relief from sanctions. Alternatively, Boxwood argued that the Court had the power to rectify an error of procedure and the power to vary the Order dated 7 April 2020 so that the Claim Form served on 14 September 2020 could be regarded as properly served. In support of its position, Boxwood asserted that the failure to serve the Claim Form by 10 September 2020 was not a serious or significant failure to comply with the Order, rather the oversight was wholly accidental resulting from the challenge of overseeing the work of more junior practitioners whilst working away from the office during the pandemic and noted that the failure had been rectified in a matter of days with no prejudice being caused to Gleeson.
In its submissions, Gleeson argued that the Civil Procedure Rules provided a complete code for extensions of time for service of a Claim Form and that the Order had extended time for service of the Claim Form to 10 September 2020 in accordance with the Rules. Any application for a further extension of time for service of the Claim Form could only be made in circumstances where Boxwood evidenced that it had taken all reasonable steps to comply with the time for service but had been unable to do so and that it had acted promptly in making the application. Gleeson argued that beyond this the Court did not have discretion to grant an extension of time for service of the Claim Form or the other relief sought by Boxwood.
The Judgment
Boxwood's application for relief was dismissed. Mrs Justice O'Farrell DBE held that the Court did not have the power to grant an extension of the time for service of the Claim Form because Boxwood had not made such an application and, if it had, Boxwood would not meet the requisite conditions namely that it had taken all reasonable steps to comply with date for service but had been unable to do so.
Mrs Justice O'Farrell concluded that Boxwood could not rely on the Court's general power to correct a procedural error because this power could not circumvent the specific conditions set out in the Civil Procedure Rules for extending the period for service of a Claim Form. As the conditions for granting an extension of time for the service of the Claim Form had not been satisfied, the Court did not have the power to vary the Order thereby retrospectively extending time for the service of the Claim Form.
The Court could also not use its power to correct a defective step in the proceedings because, in Boxwood's case, the relevant step in the proceedings being the service of the Claim Form within the specified time period, had not been taken. Furthermore, the existing authorities cast doubt on whether the Court's discretion could be exercised where there was a total failure to serve originating process.
Justice O'Farrell held that Gleeson would also suffer prejudice if the Order of 7 April 2020 was varied retrospectively to extend time for service of the claim because it would be deprived of potential limitation defences that had accrued since March 2020.
With regards to the application for relief from sanctions Justice O'Farrell applied the three stage test in Denton v TH White Ltd [2014] 1 WLR 3926 considering (i) the seriousness and significance of the failure, (ii) the reason for the default, and (iii) all the circumstances of the case, so as to enable to the Court to deal justly with the application. She concluded that Boxwood's breach was serious and significant and had not been corrected for a matter of days. Whilst the reason for the breach was a genuine mistake made by the Claimant's solicitors as a result of the difficulties supervising more junior practitioners working away from the office during the pandemic, having previously applied for an extension of time, Justice O'Farrell held that it was incumbent on the solicitors to ensure that the extended dates ordered by the Court were met. Lastly, in the circumstances, it would not be appropriate to deprive Gleeson of any limitation defences by extending time for service of the Claim Form.
Comment
The judgment identifies the key principles below that should be considered when dealing with applications for relief relating to service of proceedings:
- The Court has a wide, general power to correct an error in procedure so that such error does not invalidate any step taken in the proceedings. The power has been exercised in cases where there was a relevant, defective step that could be corrected. There is doubt as to whether the Court's power can be used in circumstances where no relevant procedural step has been taken.
- The Court has a wide, general power to grant relief from any sanction imposed for a failure to comply with any rule, practice direction or court order.
- A claimant is not entitled to rely on the wide, general powers to circumvent the specific conditions set out in the Civil Procedure Rules for extending the period for service of a claim form.
In addition to summarising the key principles to be considered when applying for relief in connection with service of proceedings, the decision highlights that, whilst the pandemic has created challenges and resulted in different working practices that could allow mistakes to slip through the net, this will not mitigate the strict application of the Civil Procedure Rules and its implications for practitioners and their clients.
