The Court of Appeal recently handed down its decision in the case of Woodward & another v Phoenix Healthcare Distribution Ltd  EWCA Civ 985. This is the latest in a string of cases in which a party has sought an order to validate service retrospectively under CPR r 6.15 and which looks at the circumstances in which it is appropriate for a solicitor to stay silent in the event that an opponent makes a mistake.
The Court of Appeal confirmed that there is no duty to warn an opponent of a mistake of their own making but, as each case turns on its facts, suggested that there would or may be a duty to speak out where a party's own conduct has contributed to an opponent's misunderstanding on a significant matter. In doing so, the Court affirmed the decision of HHJ Hodge QC, sitting as a High Court Judge, that the Master at first instance had erred when concluding that service ought be retrospectively validated under CPR r 6.15, affirming the majority view of the Supreme Court in Barton v Wright Hassall  UKSC 12. The judgment also serves to underline the risk, once again, of a party choosing to issue and serve proceedings at the very end of the limitation period.
The Appellants, Sally Woodward and Mark Addison, sought to bring proceedings against the Respondent, Phoenix Healthcare Distribution Limited, alleging causes of action in breach of contract and in misrepresentation. The claim was alleged to be worth around £5m and arose out of a contract dated 20 June 2011 in which Phoenix entered into an agreement with a third party for the purchase of a drug. It was alleged that the drug was still under patent and that Phoenix negligently or fraudulently misrepresented when negotiating that the drug was no longer under patent and was available for sale. It was also alleged that Phoenix was in breach of contract in selling the drug when, in fact, it had no right to do so.
The causes of action accrued from the date of the contract and therefore the claim was potentially time barred from 20 June 2017. The claim form was issued on 19 June 2017 and the Respondent's solicitors were notified of this. On 27 July 2017, the Appellants' solicitors wrote to the Respondent's solicitors stating that they had "not yet served this claim on you in order that the parties can sensibly proceed on a pre-action basis such that good faith efforts are made to reach appropriate settlement". At no point did the Appellants' solicitors ask for confirmation that the Respondent's solicitors were authorised to accept service. On 30 August 2017, the Respondent's solicitors provided a substantive response to the letter of claim and, in doing so, made no comment on Appellants' solicitors previous statement regarding intended service of the claim "on you" despite the fact that the they were not authorised to accept service.
Pursuant to CPR r 7.5(1) the claim form ought to have been served on the Respondent's by no later than four months from the date of issue, being 19 October 2017. The claim form was sent by the Appellants' solicitors to the Respondent's solicitors (rather than the Respondents) by post and email on 17 October 2017. The claim form sent by email was received on the same day (and a read receipt confirming that the email had been opened was automatically sent by the Respondents the same day) and the claim form sent by post was received on 18 October 2017.
Given the Respondent's solicitors were not authorised to accept service, the purported service was, in fact, ineffective. Having satisfied themselves of this fact, the Respondent's solicitors determined that they were not obliged to notify the Appellant's solicitors and took instructions from their clients not to notify them of their mistake.
The claim form subsequently expired at midnight on 19 October 2017 and the following day the Respondent's solicitors wrote to the Appellants' solicitors stating that service had been ineffective, given that 1) they were not authorised to accept service, and 2) the claim form had not alternatively been served on the Respondent directly. The Respondent's solicitors contended that the claim form had expired and the claim had therefore become time barred. The Appellants' solicitors then attempted to serve the claim form on the Respondent by post, courier and email at its registered address. The documentation was delivered to the Respondent on 20 October 2017.
The Appellants then sought a declaration that their purported service on the Respondents had been good service or, alternatively, that service should be dispensed with or the time for service dispensed with.
The Appellants succeeded at first instance and a declaration was made by the Master pursuant to CPR 6.15 that there was good reason to validate service and therefore that the order for retrospective service should be granted. The Respondent successfully appealed to the High Court with the Judge finding that the Master had erred in principle and arrived at a conclusion which was "plainly wrong" in deciding to retrospectively validate the claim form under CPR r 6.15. The High Court therefore determined it was entitled to set aside the Master's order for retrospective service.
The Appellants appealed to the Court of Appeal on three grounds: (i) that the Judge in the High Court was wrong to hold that the Master at first instance had erred in finding the Respondents' conduct in not notifying the Appellants' of their mistake was contrary to CPR r 1.3; (ii) the Master had erred in finding that such conduct was "technical game playing"; and (iii) the facts of the case did not give rise to a "good reason" to permit alternative service.
Conclusions of the Court of Appeal
The Court of Appeal dismissed the appeal, with Asplin LJ giving the judgment, finding that the Master had erred at first instance and the High Court was entitled to set aside the Master's judgment, such that the order for retrospective service was set aside and the claim was time barred. The Court of Appeal also noted that this case was all but indistinguishable from the Supreme Court decision in Barton v Wright Hassall  UKSC 12 albeit noting that the evaluative exercise to be undertaken when exercising discretion under CPR r 6.15 is "highly fact-sensitive".
The judgment noted that the Supreme Court in Barton v Wright Hassall made it clear that an appeal court should only interfere in the exercise of discretion enabled by CPR r 6.15 where the lower court had erred in principle or reached a conclusion that was plainly wrong. The Court of Appeal held that the Master had erred in principle for three reasons: (i) there is no positive duty, pursuant to CPR 1.3, to advise an opposing party of its own error (though each case turns on its facts); (ii) a Defendant's solicitor who identifies that service is potentially invalid and advises their client as such is not playing "technical games"; and (iii) there was no "good reason" to permit alternative service.
(i) the effect of CPR 1.3 – no duty to advise an opposing party of its own error
The Court of Appeal found that the Judge was right to interfere with respect to the Master's finding that the Respondent had failed to comply with the overriding objective under CPR r 1.3. Whilst the Court of Appeal agreed that it was correct to say that the majority view in Barton v Wright Hassall did not address the impact of CPR r 1.3 as regards the duty to warn opponents of a mistake, the Supreme Court did find in Barton that there was no positive duty to advise an opposing party of its own error (though recognising each case turns on its facts). The Master's reasoning that there had been a breach of CPR 1.3 occasioned by the failure of the Respondent's solicitors to warn the Appellant's solicitors was contrary to this finding. Given this, the Court of Appeal found that there was "no scope" for arguing that the Master had not erred in finding the Respondents' conduct contrary to CPR r 1.3; there was no duty on the Respondent's solicitors to warn the Appellant's solicitors of a mistake of their own making.
(ii) No "technical game playing"
The Court of Appeal found that the Judge in the High Court had rightly dismissed the Master's finding of supposed "technical game-playing" by the Respondent's solicitors. The judgment noted that a Defendant's solicitor who identifies that service is potentially invalid, researches the position, advises his or her client and takes the point that service is invalid is not playing "technical games". The judgment contrasted this with the situation where the Defendant is deliberately obstructing service rather than merely staying silent as in the present case. The Court of Appeal therefore distinguished Abela v Baadarani  UKSC 44, where the Defendant, based out of the jurisdiction, had refused to disclose an address at which service could be affected.
(iii) No good reason to permit alternative service
The Court of Appeal found that the Judge in the High Court was correct in finding that there was no "good reason" to permit alternative service. A Claimant who waits until the very end of the limitation period to issue a claim form, and until the very end of the four-month period thereafter to attempt to serve it, "courts disaster" and "can have only a very limited claim on the court's indulgence in an application under CPR rule 6.15(2)".
The question of the appropriate course of action in the event that the claimant makes a mistake when serving the claim form and time is ticking down has been considered in a number of cases, many of which were cited in the present case. This judgment serves to underline the risk of a party choosing to issue and serve proceedings at the very end of the limitation period.
The judgment explicitly does not consider what the position would be had the claimants sought specific confirmation on the validity of service. This leaves open the question of whether firms should consider routinely including wording that requests confirmation on service. However, doing so would be no substitute to ensuring that service is effected in good time and by the correct method.
Whilst this case dealt with the interpretation of provisions of the CPR, it is an important reminder of the importance of understanding the applicable rules of service and the applicable limitation period. As well the CPR, parties should consider if there are any contractual provisions on service or limitation which apply, and which would take precedence over the CPR. As with the CPR, such contractual provisions may treat service of the claim form differently from service of other documents, such as a contractual notice.
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