High Court declines to exercise discretion to extend time for service of expired claim form in context of group action
The High Court, in Lester Viner & others v Volkswagen Group United Kingdom Limited & others, has handed down a judgment rejecting an application for an extension of time for service of an issued, but unserved, claim form encompassed within a group action. Freshfields acted for the defendant.
The decision is of interest in indicating how a court will respond to applications made pursuant to CPR 7.6(2) which seek to extend the time limit within which service of the claim form must take place. In reaching its decision, the Court relied upon the Hashtroodi v Hancock line of cases. The judgment also offers a salutary reminder to solicitors when considering how to deal appropriately with a claim form that has been issued too hastily.
The Court decided two key points:
- Was there good reason for the claimants not to have served the claim form?
- Should the Court nevertheless exercise its discretion to grant an extension of time?
Whether there was good reason for failing to serve the claim form
The Court found that there was no good reason for the claimants having failed to serve their claim form within the claim form's period of validity. In reaching that decision, the Court had regard to the following factors:
- the claim form could have been served on the intended defendant. Indeed, the claimants had served a number of other defendant entities within the same claim form's period of validity; and
- there was a lack of clarity in the evidence advanced to explain why the claim form was not in fact served within the form's period of validity. The Court formed the view that certain reasons offered by the claimants' lawyers were "simply not credible" and "cannot be correct". Further, the Court took the view that aspects of the claimants' lawyers' evidence seeking to explain the failing was "disingenuous" and "inconsistent". Ultimately, however, the Court found that, whatever the reason, there had been "a deliberate decision not to serve the claim form, and there was no good reason not to do so". The Court noted that the proper course of action, which "would have been obvious to a competent litigation practitioner", would have been either to serve the claim form and apply for a stay or, alternatively, apply to the court under CPR 38.6(1) for an order varying the default position that, on discontinuance, a claimant is liable for a defendant's costs. The failure to take either of those actions was characterised by the Court as "incompetent, as it puts at risk the ability to continue the Claimants' claims".
Whether the Court should exercise its discretion to extend time
The Court decided that, in applying the overriding objective, it was appropriate to refuse to use its discretion to grant the extension requested, and restated the position evident in Hoddinott v Persimonn Homes (Wessex) Ltd and Malcolm-Green v And so to Bed Limited to the effect that "exceptional circumstances" must exist for a court to choose to exercise its discretion in favour of granting an extension of time.
The Court set out in detail the factors both for and against exercising its discretion. The factors in favour of the exercise of discretion were stated to be that:
- the claim formed part of a wider group litigation, and could be managed within that litigation without causing interference with the progress of said group litigation;
- other County Court claims against the defendant existed and were likely to be brought into the group litigation;
- the group register remained open and so the claim could be included within the group litigation;
- the defendant knew of the existence of the claim since January 2016 and were, in general terms, aware of the allegations made; and
- limitation was not an issue in relation to tort, and may not be an issue in relation to some or all of the contractual claims.
The factors against the exercise of discretion were that:
- no claim against the defendant appeared in the claimants' generic particulars of claim relating to the group litigation;
- the claimants' lawyers had refused to detail the claim against the defendant in correspondence, despite repeated requests. Grounds for the claim was provided only in the claimants' skeleton argument;
- serious allegations of fraud and dishonesty had been made in the claim, without being identified;
- the claimants' solicitors failed to raise the issue with the Court at any of the various hearings that preceded the making of the group litigation order. In contrast, the defendant's solicitors had raised the issue repeatedly and identified it to the Court; and
- there would be "no material disadvantage to the Claimants, save for costs consequences" if the extension were refused.
Ultimately, the Court concluded that the factors weighing against exercising its discretion were "overwhelming in this case". Of note is the fact that particular weight was placed by the Court on:
- the claimants' failure to bring the claim against the intended defendant to the attention of the Court as part of the related group litigation proceedings as well as the ongoing uncertainty as to whether the claimants' lawyers had raised the issue with the two other law firms on the claimant steering committee;
- the claimants' lawyers failure to properly engage with the defendant's solicitors. Despite the defendant having raised this as an issue before the group litigation order was made, the claimants' lawyers did not reply and the issue was not dealt with at all by them at the March 2018 hearing which ultimately led to the group litigation order being made;
- the claimants' failure to provide any details (in correspondence or at the hearing itself) of the supposed claims against the intended defendant. The Court reached a view that events "strongly suggest[s] that there are no real underlying claims against [the intended defendant]"; and
- the claimants' lawyers acceptance, in correspondence, that they would be willing to discontinue the claim against the intended defendant subject to agreement on costs. The Court formed the view that such an offer "throws doubt on the later assertions that the claims are 'viable'" .
The claimants' lawyers conduct and its impact on costs
The Court also made a number of criticisms in relation to the way in which the claimants' lawyers had handled the matter. Those criticisms included:
- the approach to correspondence with the intended defendant's solicitors with respect to the issue, described by the Court as: "inconsistent, non-engaging and generally unhelpful";
- the unexplained failure to serve the application for an extension of time for some three weeks (in breach of CPR 23.7 requiring that it be "as soon as practicable");
- the decision to contact the Court in private on one occasion whilst seeking to have their application determined without a hearing;
- service of further detailed witness evidence at 6pm the day before the hearing;
- provision to the Court of a bundle only on the morning of the hearing itself; and
- instruction of counsel only the day before the hearing, culminating in the production of a skeleton argument only 45 minutes before the hearing commenced.
The Court considered that its view of such conduct was relevant only insofar as it applied to determining the issue of the costs resulting from the failed application to extend time. It did not impact upon the Court's determination in weighing up whether or not to exercise its discretion to extend time.
The full judgment is available at: https://www.judiciary.uk/wp-content/uploads/2018/07/viner-v-vwuk.pdf