Excotek Ltd v City Air Express Ltd ((in Liquidation))
| Jurisdiction | England & Wales |
| Judge | Mr Justice Henshaw |
| Judgment Date | 30 September 2021 |
| Neutral Citation | [2021] EWHC 2615 (Comm) |
| Docket Number | Case No: CL 2019 000566 |
| Court | Queen's Bench Division (Commercial Court) |
[2021] EWHC 2615 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Rolls Building, Fetter Lane,
London, EC4A 1NL
THE HONOURABLE Mr Justice Henshaw
Case No: CL 2019 000566
Tom Bird (instructed by Hill Dickinson LLP) for the Claimant
Peter Stevenson (instructed by DAC Beachcroft LLP) for the Second Defendant
The First Defendant did not appear and was not represented
Hearing date: 2 July 2021
Draft circulated: 27 August 2021
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
| (A) INTRODUCTION | 2 |
| (B) FACTUAL AND PROCEDURAL BACKGROUND | 2 |
| (C) PRINCIPLES | 7 |
| (D) APPLICATION TO THE PRESENT CASE | 13 |
| (1) Denton stage 1: seriousness and significance of breach | 13 |
| (2) Denton stage 2: reason for breach | 17 |
| (3) Denton stage 3: circumstances as a whole | 18 |
| (E) EXCOTEK'S ALTERNATIVE APPLICATION FOR A STAY | 22 |
| (F) STRIKE OUT | 22 |
| (G) CONCLUSION | 23 |
(A) INTRODUCTION
The Claimant (“ Excotek”) applies for an extension of time from 6 February 2020 to 26 March 2021 for the service of Particulars of Claim on the Second Defendant (“ Chaucer”), alternatively for a stay. The application is in substance for relief from sanctions following an omission to take steps to draft, and seek the court's approval for, a consent order reflecting a stay of proceedings which had been agreed in principle between the parties. Chaucer cross-applies to strike out Excotek's claim.
For the reasons set out below, I have come to the conclusion that the extension of time which Excotek seeks should be granted, and that the cross-application should be dismissed.
(B) FACTUAL AND PROCEDURAL BACKGROUND
These proceedings arise from the theft of goods belonging to Excotek from the First Defendant (“ CAE”)'s warehouse in Manchester on 15 October 2016.
Excotek is a supplier of computer hardware. On 7 October 2016 it concluded a storage contract with CAE for the storage of some of Excotek's goods. CAE transported the goods to the warehouse on 8 October. They were stolen about a week later.
Excotek alleges that CAE was liable as bailee for the loss of the goods. In outline, Excotek says CAE failed to take reasonable care of them: when the goods were stolen, the CCTV cameras covering the location of the theft were not operating and the alarm system was not activated. The total value of Excotek's claim is about £770,000 plus interest. CAE has been dissolved, and the claim is brought against Chaucer as CAE's liability insurer under the Third Parties (Rights against Insurers) Act 2010 (“ the 2010 Act”).
There is a dispute about the terms on which the goods were stored and whether a contractual time bar applies. Chaucer contends that CAE provided custodian services pursuant to an agreement incorporating CAE's standard terms and conditions. Excotek contends that the standard terms were not incorporated. If Chaucer is correct, then the contract between Excotek and CAE included a contractual time bar providing:
“30(B). Notwithstanding the provisions of Sub-Paragraph (A) above the Company [the First Defendant] shall in any event be discharged of all liability whatsoever arising in respect of any service provided for the Customer [Excotek]…unless suit be brought and written notice thereof given to the Company within nine months from the date of the event or occurrence alleged to give rise to a cause of action …”
If incorporated, this provision required any claim against CAE to be brought, and written notice of it given, by 15 July 2017.
Following the theft, correspondence between Excotek and CAE was conducted through their respective insurers and their lawyers. Excotek was represented by Mr John Clarke, Senior Claims Analyst at DXC Technology, and Hill Dickinson LLP. CAE was represented by Christine Midwood, Claims Director at Lonham Group Ltd, and DAC Beachcroft LLP.
Between June 2017 and July 2019, Excotek sought a series of extensions of time for the commencement of proceedings.
On 20 June 2017 Mr Clarke noted that things were “ all a bit quiet my side of things” and sought an extension of time “ while enquiries/cogitations progress”.
On 21 September 2017 Mr Clarke asked for more time “ while I chase up our insured re answers to a few questions”.
On 14 December 2017 Hill Dickinson sought a further extension up to 14 April 2018 without giving a reason for the request.
On 20 March 2018 Hill Dickinson requested a further extension to 14 July 2018, stating that Excotek was not yet in a position to revert substantively on the claim.
On 22 June 2018 CAE passed a resolution for its voluntary winding up. It entered into liquidation on 22 June 2018 and was subsequently dissolved on 19 November 2020.
On 3 July 2018 Hill Dickinson requested a further extension to 14 October 2018 in order to “ keep costs to a minimum” while “ we are continuing our enquiries in this matter”. That request was granted, although DAC Beachcroft noted its dissatisfaction with the continued delays:
“…It is not understood why your enquiries still continue, our client's position having been set out as long ago as November of last year. The position appears to us to be quite straight forward, and clearly our client cannot go on granting time extensions indefinitely. With that in mind please confirm when your clients / you anticipate concluding their / your enquiries.”
On 21 September 2018 Hill Dickinson said “ we are close to finalising enquiries in this matter and will be writing to you on the substantive points over the next couple of weeks”, but requested a further extension to 14 November 2018, which Chaucer granted.
On 5 November 2018 Hill Dickinson indicated that “ having finalised enquiries, we are making recommendations to our client and will be writing to you on the substantial issues over the next 7–10 days”, but nonetheless sought a further extension to 14 December 2018.
On 28 November 2018 Hill Dickinson sought a further extension to 14 January 2019 “ with a view to minimising legal costs”.
In January, March and April, May, June and July 2019 Hill Dickinson sought further extensions without giving reasons. All of these were granted.
On 12 September 2019, two days before expiry of the last extension, Excotek issued a claim form naming CAE (then in liquidation) and Chaucer Syndicates Limited as defendants. Before service, Excotek amended the claim form to substitute Chaucer for Chaucer Syndicates Limited. The brief details of claim summarised the claims against both defendants, identifying Chaucer Syndicates Limited as CAE's liability insurers. In fact, Chaucer Syndicates Limited is not an insurer but the managing agent of the underwriter subscribing to Lloyd's Syndicate 1084, viz. Chaucer. It is not clear why Excotek failed to check this point before issuing proceedings. In a letter dated 26 September 2019 DAC Beachcroft highlighted Excotek's error, invited it to amend the claim form to identify Chaucer as the proper defendant, and indicated that the claim would be defended by attaching a draft acknowledgment of service.
After various chasers from Chaucer, Excotek served the amended claim form on Chaucer, via DAC Beachcroft, on 6 January 2020, which was six days before the claim form was due to expire. The amended claim form indicated that particulars of claim would follow if an acknowledgment of service were filed indicating an intention to defend the claim.
On 9 January 2020 Chaucer filed an acknowledgment of service indicating an intention to defend the claim. Particulars of Claim as against Chaucer were therefore due by 6 February 2020.
CAE did not file an acknowledgment of service and one of its liquidators, Alex Coffey, informed Hill Dickinson that CAE did not intend to do so. Mr Coffey also said that the liquidators intended shortly to dissolve CAE. Excotek submits that the dissolution of CAE was a potentially significant development because (a) the claim could not proceed against a dissolved company, and (b) section 9(3) of the 2010 Act provides that the rights transferred thereunder are not subject to a condition requiring the insured (CAE) to provide information or assistance to the insurer (Chaucer) if that condition cannot be fulfilled because the insured is a body corporate “ that has been dissolved”.
On 3 February 2020 Hill Dickinson emailed DAC Beachcroft seeking Chaucer's agreement to a stay of the action, terminable on 28 days' notice by either party, said to be for the purpose of holding settlement discussions. The email attached draft Particulars of Claim. These were 4 pages long and could reasonably be described as a slightly longer version of the brief particulars set out in the claim form. Hill Dickinson's email stated “if your clients are amendable to the stay, then we can explore with you how best to get the mediation into place, alternatively a wp meeting with clients if preferred”.
On 4 February, DAC Beachcroft responded:
“We have now sought our client's instructions, who are in agreement to the stay of proceedings proposed by your client, the same being terminable by either party on 28 days' notice.
We trust you will make the necessary arrangements and look forward to receiving a draft Order for our client's consent.”
An order was required because, although parties are permitted to agree extensions of time “ for a person to do any act” ( CPR 2.11), Practice Direction 58 § 7 states that in Commercial Court proceedings any such agreement must be notified to the...
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