Practical Law

Even before the tougher approach to compliance with rules and practice directions recently adopted by the courts, limitation was the area of the law most likely to cause practitioners sleepless nights. The recent TCC decision in Lincolnshire County Council v Mouchel Business Services has re-enforced the courts’ lack of sympathy for claimants who fail to progress their claim expeditiously, and leave themselves vulnerable to ending up with no remedy at all as a result.

Lincolnshire County Council v Mouchel Business Services

The background facts were somewhat convoluted but, in summary, the Council wished to bring a claim against its former architect (Mouchel) and contractors (RG Carter Building Services Ltd) in relation to allegedly defective damp proofing at a school extension completed in March 2002.

Correspondence between the parties began in late 2009 and continued (without reaching any resolution) for several years. In August 2012, the Council referred the matter to its Legal Services Department. The Department instructed expert consulting engineers who investigated the matter. They concluded in February 2013 that the design of the extension had been “fundamentally flawed”.

The agreement between Mouchel and the Council was executed as a deed, meaning that the Council had 12 years from the date of breach to bring proceedings.

Limitation looms

Conscious of the potential for a limitation problem to arise, the Council issued proceedings on 19 July 2013. By that time it had not (as it was required to) complied with the Pre-Action Protocol for Construction and Engineering Disputes (Protocol). Although the TCC Guide indicated that the appropriate thing to do in such situations was apply to the court (with notice to the defendant) for directions for the progress of the claim (which would be likely to involve a stay to accommodate the Protocol process), it applied without notice for an extension of time for the service of the claim form and particulars of claim. The extension sought (and granted) was to January 2014 on the express basis that this was to allow the Protocol to be complied with.

The Council’s delay

Having obtained its extension, the Council did not adopt a proactive approach to the claim.

In late October (seemingly prompted by a letter from Mouchel), a joint inspection of the site took place, and the Council received a further expert report. Thereafter it instructed that letters of claim be drafted against both defendants, which were finally sent on 3 December 2013. As the Protocol permitted 28 days for a response, and then required a meeting between the parties, this was clearly cutting it very fine as to whether everything could be achieved by 18 January 2014.

Mouchel provided its response relatively quickly, on 24 December 2013 and offered to attend a meeting during the week commencing 13 January 2014.

However, the previous day the Council had applied – again, without notice – for a further extension of time for service of the claim form and particulars of claim to 18 April 2014. It cited the limited time available for a meeting, and a subsequent mediation, should that be considered appropriate.

That application was granted (ex parte) and Mouchel, when it learned of it, applied for the order to be set aside.

The legal principles

The court has a discretion as to whether it will extend time for service of a claim form (which automatically also extends time for service of the particulars of claim). Perhaps unsurprisingly, the Court of Appeal has emphasised that the weaker the reason provided for the claimant’s failure to serve proceedings within the usual period, the less likely it is to be granted an extension (Hashtroodi v Hancock).

In considering the present facts, Stuart-Smith J cited a line of authority that the courts will take an even firmer line where limitation on the underlying action has expired after the date for service that the claimant is applying to extend to. In such a situation, the Court of Appeal concluded that it would be a matter of “considerable importance” if an extension might “disturb a defendant who is by now entitled to assume that his rights can no longer be disputed” (Hoddinott and others v Persimmon Homes (Wessex) Ltd).

The court also:

• Identified that there are sound principles of legal certainty underpinning limitation periods, and these should not lightly be undermined by allowing claimants to effectively extend limitation through successive applications to extend time for service.
• Noted the Court of Appeal’s decision in Mitchell v News Group Newspapers, emphasising the tougher line now adopted by the courts towards failures to comply with rules and time limits generally.

The decision

The court subjected the Council’s use of the time afforded by the original extension  of time to close scrutiny. It was critical of the failure to take steps between July and September 2013, holding that the excuse offered (essentially, lack of resources in the Legal Services Department) was “no good reason at all”. A view repeatedly expressed in the post-Mitchell cases. The court held that a failure to arrange a joint inspection before late October displayed a lack of urgency, and there was no evidence that experts or counsel (who drafted the letters of claim) had been notified of extreme urgency in completing their tasks.

The court rejected the submission that there was a tension between the courts’ reluctance to extend time for service and the TCC Guide’s emphasis on the importance of compliance with the Protocol. The Council should have adopted the course recommended in the TCC Guide and applied for directions on notice, rather than applying without notice for an extension of time. Accordingly, it set aside the second extension and struck out the claim as it had not been served in time.

Conclusion

Although it may be tempting to view this case as a further post-Mitchell example of the courts’ tough approach to compliance with the rules, extensions of time to serve claim forms are always subjected to close scrutiny. It is likely that the same result would have been reached on these facts before the Jackson reforms. It illustrates once again, the heavy price a litigant can pay for delay in progressing its claim at any stage.