Marine & Transit - September 2009

Waking the dead - time to serve your claim form!

FG Hawkes (Western) Ltd v Beli Shipping Co Ltd – Commercial Court (Gross J) – [2009] EWHC 1740 (Comm)

Once limitation has been protected by issue of proceedings, there can be an assumption that the service of those proceedings can be affected leisurely and the court will grant time extensions for service if required “on the nod.” However, this Commercial Court decision provides a wake up call that parties are expected to take prompt steps to serve proceedings.

In this case an order extending time for service of a claim form was set aside where there had been neglect or oversight by the claimants and/or their legal representatives in getting on with service until too late in the day.

The claim involved a consignment of plywood shipped from China to Swansea.  During discharge, the cargo was found to be damaged by mould due to water ingress. The terms of the bill of lading contained a one year time limit for bringing proceedings in respect of loss or damage to cargo.  The shippers, however, waited until 11 months after discovery of the damage before alerting the ship owners’ P & I Club to a potential claim.  In doing so, they sought an extension of time, which was granted.  Two further extensions of time were also given.  The claim form was eventually issued on the last day of the final time extension. 

The Civil Procedure Rules (“CPR”) provide that once a claim form has been issued, it must be served by midnight on the calendar day four months after the date of issue. This period is extended to six months if the claim form is to be served out of the jurisdiction (CPR 7.5).

As the claim form in this case was for service out of the jurisdiction, the claimant shippers had six months from the date of issue within which to serve it.  However, they failed to take any steps to do so until three weeks before the end of the six month period, when they asked the owners’ P&I club to confirm the owners’ address for service.  Not obliged to provide such information, the club declined.  A week before the period for service expired, the claimants therefore obtained an ex parte order for a further time extension. 

The claim form was then served on the owners at their registered office in St Vincent.  In response, the owners applied to have the order extending time for service set aside.

CPR 7.6 provides that a claimant may apply for an order extending the period for service.  However, the general rule is that such an application must be made within the period allowed for service (CPR 7.6(2)).  If a claimant applies to extend the time for service after the period allowed for service has expired, the court may make such an order only if: (a) the court has failed to serve the claim form; or (b) the claimant has taken all reasonable steps to serve the claim form within the time allowed but has been unable to do so; and (c) the claimant has acted promptly in making the application. 

In this case, the claimants had made their application before expiry of the period allowed for service.  In theory, the test ought therefore to have been less stringent.  However, following a recent line of authorities such as Hashtroodi v Hancock [2004] EWCA Civ 652 , Collier v Williams [2006] EWCA Civ 20 and Hoddinott v Persimmon Homes (Wessex) Ltd [2007] EWCA Civ 1203, the court took a more rigorous stance.  In doing so, it referred to the dicta of Lord Dyson LJ in Collier v Williams (above):

“When deciding whether to grant an extension of time under CPR Rule 7.6(2), the court is required to consider how good a reason there was for the failure to serve in time… the stronger the reason, the more likely the court will be to extend time; the weaker the reason, the less likely.” 

This is a more subtle exercise than that required under CPR Rule 7.6(3), which provides that unless all reasonable steps have been taken the court cannot extend time.  However, it is apparent that a time extension will not be granted or upheld without good reason.

Here the claimants relied on the fact that their solicitors had done nothing for five months while they were focussing on the claim against cargo insurers.  They also argued they had a good arguable case and that because the owners had known proceedings had been issued and their nature, they would not be prejudiced by a short extension of time.

Although the court acknowledged these were all good points in the claimants’ favour, these reasons did not outweigh the claimants’ neglect or oversight in getting on with service until too late – discovering the defendants’ address was not a task giving rise to any undue difficulty, all that was required was timely attention to that matter.  It was also the court’s view that whilst the solicitors might hope for a helpful response from the P & I club or ship’s managers, they were not entitled to expect or assume they would co-operate.

The court therefore allowed the application holding that there was no reason for the failure to serve the claim form within the time allowed other than incompetence, neglect or oversight on the part of the claimants or their legal representatives. 

Ultimately, the lesson here is that a claimant who sails close to the wind allowing time limits to drift takes the risk that any time extension granted ex parte might be set aside at the inter partes stage.

Emma Rice, Solicitor
Weightmans LLP