Maybe, according to the UK’s Business and Property Court. In an interim judgment, the Court held that parties to a litigation may be under a duty to correct their opponent’s mistakes or misunderstandings if doing so furthers the overriding objective. This is an unorthodox view, but as discussed below, there are good reasons behind it.
Background
Woodward and Addison v Phoenix Healthcare Distribution Ltd [2018] EWHC 334 (Ch) was a claim for breach of contract and misrepresentation worth over £5 million, brought by the assignees of two companies.
The contract was made on 20 June 2011 for the purchase of a drug (atorvastatin). The Claimants alleged that Phoenix had sold them the product as a generic drug, in breach of an existing patent to Pfizer. Once the Claimants had discovered the patent, Phoenix refused to accept the return of the drug and would not refund the contract price (around £450,000), putting the Claimant’s companies into severe financial difficulty and leading to their group of companies going into administration and losing value and profits.
Service of the claim form
As the breach and/or misrepresentation had occurred at the time the contract was entered into, the claim was due to be time barred on 20 June 2017. The Claimants issued the Claim Form on the eve of limitation (19 June 2017) and the usual rule (CPR 7.5(1)) required them to serve the Claim Form on the Defendant within 4 months of that date, using one of the methods set out in CPR 6.3.
Where problems arise in the method or place of service, the Court has the power in exceptional circumstances to dispense with the requirement of service (CPR 6.15 and 6.16).
In this case, after several years of correspondence between the parties’ lawyers seeking to resolve the dispute, the Claimant’s solicitors (Collyer Bristow) sent the Defendant’s solicitors (Mills & Reeve) the Claim Form and related documents by first class post and email on 17 October 2017 (ie. shortly before the expiry of the 4-month deadline for service). Mills & Reeve had received both the email and the posted documents.
On 20 October 2017, Mills & Reeve emailed Collyer Bristow to explain that service of the Claim Form on them was defective as the Claimants had served the wrong person according to the rules. Mills & Reeve had never been instructed to accept service and the Defendant had not confirmed in writing that Mills & Reeve was authorised to accept service. The claim was therefore time barred as of midnight on 18 October 2017.
More correspondence followed and Collyer Bristow applied to the Court for an order that the steps it had taken constituted good service and that in the circumstances the usual requirements should be dispensed with or that time for compliance should be extended. Mills & Reeve applied for an application to set aside the Claim Form and an order that the Court had no jurisdiction to hear the claim.
The High Court’s findings
The Court reached 3 main conclusions.
Firstly, there was nothing in the pre-action correspondence that amounted to Mills & Reeve accepting service on them. Responding to allegations and threatened proceedings does not amount to an instruction to accept service (§§ 35 to 36).
Secondly, Mills & Reeve’s silence when told that Collyer Bristow were instructed to serve the claim form on them did not prevent them from relying on defective service. Collyer Bristow had not specifically asked Mills & Reeve to confirm whether they were instructed to accept service. There was no duty on Mills & Reeve to point out that Collyer Bristow were mistaken in their belief that Mills & Reeve were instructed to accept service (§§ 59 to 61 and 68).
General guidance on this point appears at § 63:
…honesty and responsibility plainly require that, if matters are raised which fall to be dealt with, they should be dealt with fully and fairly. I do not think, however, that, as between potential parties to contested litigation, it is incumbent upon a party, aware of a mistake on the other side, not of his making and not requiring a response, to, nonetheless, raise the matter, by way of response. It does not seem to me that, as between parties to litigation, honesty and responsibility so requires.
Thirdly, parties have a duty under the overriding objective to cooperate and avoid unnecessary satellite litigation. Lawyers should not take advantage of the mistakes of their opponents where to do so amounts to playing ‘technical games’ (§ 99), even if they are acting in their client’s interests (§ 107).
As Mills & Reeve were made aware of the Claim Form and its contents which were served on them to commence proceedings, the underlying purpose of the rules on service was satisfied. Courts should adopt a relatively flexible approach to discourage parties from game playing with service (as with other aspects of the CPR).
For those interested in how this judgment relates with the UK Supreme Court case of Barton v Wright Hassall LLP [2018] UKSC 12, which may be read as suggesting (at § 22) that there is no duty to advise mistaken opponents, the High Court produced an addendum to its judgment explaining why Barton did not affect its conclusions. However, given the existence of conflicting authority on this important point, Master Bowles granted permission to appeal to the Court of Appeal.
The outcome
The Court ordered that the Claimants had taken sufficient steps to bring the Claim Form to the attention of the Defendant within the 4-month window and that this amounted to valid service. Service was retrospectively validated under CPR r.6.15 and the claim had been brought in time.
Practical tips
- Avoid playing technical games in civil litigation. There are circumstances where taking unfair advantage of opponent’s mistakes and doing nothing to correct misunderstandings will breach the duty to assist the Court. The correct balance must be struck in every case between serving the interests of a client and upholding the overriding objective (see §§ 109 to 110);
- Do not leave service to the last minute if you can avoid it. This is common-sense and although sometimes delay is unavoidable (such as with late instructions) it comes with the obvious danger that any defects cannot be corrected in time;
- Assuming that a solicitor has implied authority to accept service is a very high-risk strategy. Avoid the potential pitfalls: ask up-front whether or not they are instructed to accept service. That way, there is a duty on your opponent to respond. If they then deliberately fail to confirm and you must serve due to a limitation deadline, they may be guilty of unfair game playing;
- In addition to following the rules on the method and place of service, use read receipts when emailing important documents such as the claim form to your opponent. That makes it harder for you opponent to argue that the document in question did not come to their attention by email.
- Some solicitors will find themselves caught between their duty to the Court (which may require them to point out their opponent’s error) and their duty to act on the instructions of their client (who is unlikely to want them to assist an opponent). As yet, there is no easy answer to resolving such a conflict. In light of Woodward, Courts will expect the right balance to be struck on the facts of each case.
An earlier version of this article appeared in Lexis Nexis’ New Law Journal [£]. Download a free pdf of the article here.
