REUTERS | John Kolesidis

The curious case of CPR 7.7

With the advent of online legal resources and, in particular, the online availability of legal textbooks such as Chitty on Contracts, many lawyers do away with purchasing hard copy practitioner’s texts. I always think that is a bit of a shame. I am surely not the only one who has been scrabbling around Chambers the night before a hearing for the most recent update to Keating on Construction Contracts, which a fellow barrister has taken from your room without leaving a note. There is nothing quite like that kind of unnecessary pressure to focus the mind.

One of my annual conundrums is whether to buy both volumes of the White Book; or just one volume; or not to buy at all, and instead rely on the online version. This year I opted for using the online edition, but I ended up having to buy the book anyway on the way to court, with only one month to go before the 2014 version came out. Now in possession of a gleaming but redundant tome, I figured I might as well get my money’s worth and delve into some of the more obscure provisions of the CPR, something that is less easily done online, perhaps because computer screens do not accidentally fall open on a particular page.

CPR 7.7

One of these obscure provisions is CPR 7.7, which deals with a defendant’s application for service of the claim form:

“(1) Where a claim form has been issued against a defendant, but has not yet been served on him, the defendant may serve a notice on the claimant requiring him to serve the claim form or discontinue the claim within a period specified in the notice.

(2) The period specified in a notice served under paragraph (1) must be at least 14 days after service of the notice.

(3) If the claimant fails to comply with the notice, the court may, on the application of the defendant –

(a) dismiss the claim; or

(b) make any other order it thinks just.”

It is a pretty curious provision. There is little direct authority on it, as the provision is a relic from the old RSC, where parties had 12 months to serve the claim form, so applications could be made to compel the claimant to get on with the litigation and progress it expeditiously. However, now that the time limit is shorter, the utility of the provision is perhaps open to doubt. Indeed, the White Book’s commentary concludes that:

“the usefulness of the provision can be questioned and its practical application is expected to be rare.”

Nevertheless, it has survived the Wolff reforms, and is still part of the CPR. I suggest that contrary to the White Book commentators, it might have a potentially useful purpose, namely to put pressure on a claimant who has issued a claim form simply to stop limitation running, or as a statement of intent, but who is not yet in a position to serve particulars.

Activation of CPR 7.7 will of course depend on the defendant knowing that proceedings have been issued, but in the context of, for example, a mediation, where issue is threatened, it might provide a useful counter-threat to make that claimant think again, or at least spend some money in putting its house in order, lest a defendant’s CPR 7.7(1) notice is served.

What about costs?

Once in play, CPR 7.7 raises an interesting question in relation to costs in circumstances where a claim has been issued, but not served. The general rule is that recoverable costs run from the date of issuing proceedings (see Clydesdale Bank plc v Kinleigh Folkard & Hayward). The defendant’s argument might go something like this:

  • The claim has been issued, so technically the proceedings have started.
  • It has incurred costs from the date of issue.
  • The claimant has failed to serve its claim within the period specified in the defendant’s CPR 7.7(1) notice.
  • Therefore, the defendant is entitled to costs in the litigation when it applies for an order to dismiss the claim under CPR 7.7(3).

Potentially, that defendant might also say it has participated in the pre-action protocol under the threat of litigation; thus any order dismissing that claim should include a costs order for pre action costs, which are ordinarily recoverable if they are incidental to the proceedings (see McGlinn v Waltham Contractors Ltd). Technically, there may well be a discretion for the court to make such an order, although in the absence of any guidance at all in the CPR, it may well require some ingenuity. Whether or not an order should be made will always depend on the facts.

However, in my view it would take a fairly extreme set of facts for a court to award costs against a claimant in such circumstances. Arguably the costs are not incidental to proceedings, because those proceedings never really properly got off the ground. There is some support for this in Citation plc v Ellis Whittam Ltd, where the court held that the proceedings should not have even been started (it struck them out), but still refused to award to the victorious party the costs that were incurred before service of the claim.

The logic appears to have been that the defendant would not have got any costs if the claimant had not started the claim, so simply because the claimant started the claim should not make pre-action costs recoverable. Further, it would be odd if a legitimate claim that was dismissed under CPR 7.7(3) simply because the claimant didn’t want to serve it, resulted in a punishment in costs, particularly in circumstances where a misconceived claim in Citation escaped such payment.

That said, this year’s case of Clydesdale Bank v Kinleigh Folkard & Hayward suggests that the court will, in appropriate circumstances, order costs incurred after issue if the claim form is not served in the relevant statutory period. Those seeking costs under CPR 7.7(3) will certainly find that case helpful in demanding payment of costs under CPR 7.7(1): the only real difference is that activating CPR 7.7(1) has the effect of curtailing the full statutory standstill period.

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