Sodastream v Coates
| Jurisdiction | England & Wales |
| Judge | Mr Justice Blackburne |
| Judgment Date | 31 July 2009 |
| Neutral Citation | [2009] EWHC 1936 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC09C00866 |
| Date | 31 July 2009 |
[2009] EWHC 1936 (Ch)
Mr Justice Blackburne
Case No: HC09C00866
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Rachel Sleeman (instructed by Clarke Willmott) for the Claimant
Orlando Gledhill (instructed by Brabners Chaffe Street LLP) for the Fifth Defendant
Hearing dates: 9 and 10 July 2009
This is an application by the fifth defendant, Mr Dan Firer, to set aside five orders, each made without notice, extending the time for service of the claim form and, if that relief is granted (at any rate if that relief is granted in respect of the latest of the time extensions), to set aside the service of the claim form on him. The claim form was served on him at an address in Israel on 15 February 2009 which was during the currency of a period of extension granted by the fifth of the five orders.
The claim form was issued on 1 November 2007. It was issued out of the Queen's Bench Division. On 6 February 2009 the claim was transferred to this Division. The claimant is a company in liquidation. It went into insolvent liquidation on 8 February 2006. Mr James Duckworth was appointed liquidator with effect from 12 January 2007. The defendants are former directors of the claimant. The claim arises out of the declaration of a dividend of £12.5 million resolved on by the directors on 6 November 2001 and (according to the particulars of claim) recorded in the minutes of the claimant's annual general meeting that same day. It is alleged that the dividend was paid out by 31 December 2001 in that the claimant's audited accounts for that calendar year record the payment by the year end. The claimant, acting by Mr Duckworth, claims that the declaration and payment of the dividend constituted a breach of the duty which each defendant owed to it, alternatively a misfeasance on the part of each of them. It sues to recover the £12.5 million from them, together with interest.
Given the date of the dividend's declaration on 6 November 2001 and its payment then or shortly thereafter, it was evident that the six year limitation period relevant to the claim to recover it was likely to be on or shortly after 6 November 2007. The claim form, as I have mentioned, was issued on 1 November 2007, a matter of days before the sixth anniversary of the declaration.
Of the five defendants, the first and third reside in this country and were served on 25 February 2008, just before the expiry of the four months within which, by rule 7.5(1), they were to be served without the need for an extension of time under rule 7.6. But the second, fourth and fifth defendants reside in Israel and although by rule 7.5(2) the time for service on them out of the jurisdiction was six months of the date of issue of the claim form the claimant, more particularly Mr Duckworth its liquidator together with the solicitors acting for him in the claim, Messrs Clarke Willmott, considered it advisable to apply not only for permission to serve out on those defendants in Israel (as was required in any event) but also for an extension of time to 1 July 2008 within which to do so.
This led to the making of the first of the five orders extending time for the service of the claim form. The fifth defendant now seeks to have it set aside so far as it relates to him. The first extension of time was applied for on or about 4 February 2008 and therefore well within the six months available for service on the three defendants outside the jurisdiction (assuming that permission to serve out was also obtained). The application was supported by a witness statement dated 4 February 2008 made by Ms Lisa Saxby, a solicitor and employee with Clarke Willmott and the person who, at that time, had day to day conduct of the proceedings.
The application was dealt with, as the claimant had requested, without a hearing and necessarily without notice to the three intended defendants. It came before Master Foster who on 7 February gave permission for service of the claim form on them and extended the period for so doing so to 1 July 2008.
In Collier v Williams [2006] EWCA Civ [2006] 1WLR 1945 at [38], the Court of Appeal said this of applications to extend time for the service of a claim form:
“…On receipt of a without notice application with a request for the matter to be disposed of on paper, the court should consider whether it is appropriate to dispose of the matter without a hearing. In our view, there is a danger in dealing with important applications on paper. An application for an extension of time for service of the claim form is potentially of critical importance, especially where the application is made shortly before the end of the four months period for service and where the cause of action has become time-barred since the date on which the claim form was issued. If the application is allowed and an extension of time is given, the defendant can always apply under CPR r 23.10 for the order to be set aside, in which case the applicant may be worse off than if it had been refused in the first place. It is highly desirable that on the without notice application, full consideration (with proper testing of the argument) is given to the issue of whether the relief sought should be granted. Equally, if an application is made late in the day and refused on paper when proper argument would have made it proper to grant, a great deal of heartache can be saved. We think that applications of this kind, where time limits are running out, should normally be dealt with by an urgent hearing. We accept, however, that owing to time constraints, pressure of business and the like, it will sometimes not be possible to deal with such an application other than on paper. Even in such cases, however, consideration should be given to dealing with the application by telephone.”
It is a noteworthy feature of all five applications to extend time for the service of the claim form in this case that this cautionary advice was ignored: not one of the applications was dealt with by hearing; all were dealt with on paper. All were made after the cause of action had become time-barred. As will appear, one of them was made on the very last day of the extended period for service. With the possible exception of the first of them, the evidence in support—in each case it was a witness statement by Ms Saxby—was in the briefest of terms. It was evidently thought unnecessary to exhibit to those brief statements any correspondence or other background material. Although I have no reason to think that there was the slightest intention to mislead the court, none of the applications after the first of them drew attention to the fact that the application had been preceded by another or others. By the time of the second and subsequent applications it would have been apparent from a reference in each witness statement to the fact that the claim form had been issued on 1 November 2007 that there must have been at least one earlier extension of time. But that was left to the reader to divine.
Miss Rachel Sleeman who appeared for the claimant submitted, correctly, that it was not mandatory to have a hearing. She submitted that the advice of the Court of Appeal was directed as much to the court as to the applicant for the extension of time. The point was also made that although none of the later applications referred to any earlier application, it would have been evident from the file that there were earlier applications and what the evidence was that had supported those earlier applications.
In my view, the onus is on the applicant for the extension to ensure that the correct practice is followed. It is not for the busy Master before whom the application comes to search the file to see if there have been any and if so how many earlier extensions and what the evidence was upon which those earlier applications were based. The onus, in my view, is on the applicant to ensure on each application that all relevant material is drawn to the court's attention. The strong impression I have from the manner in which these applications were approached is that the matter was regarded as something of a formality and that it was expected that the extension would be granted almost as a matter of course. I cannot think that if Ms Saxby or those supervising had had in mind the advice of the Court of Appeal in Collier v Williams the matter would have been approached in the way that it was.
Having obtained the extension of time pursuant to the first application, nothing was done to initiate any steps to effect service on the Israeli-based intended defendants until almost five weeks had passed. It appears that there was a delay in obtaining sealed copies of the order. It is not clear why it was considered necessary to await obtaining a sealed copy of the order. It was not needed to effect service on the Israeli defendants. As soon as the order was forthcoming, which was on 13 March 2008, Ms Saxby forwarded a request for service of the claim form and the particulars of claim (which by then had been prepared) and the order of 7 February to the Foreign Process Section (“FPS”) in the Royal Courts of Justice, requesting service on the Israeli-based defendants. This is a well recognised means of effecting service on persons who are outside the jurisdiction. Ms Saxby had earlier been given to understand that it would take the FPS up to five days to process the request and that there could thereafter be a delay of anywhere up to four months for actual service to be effected. In her witness statement of 4 February Ms Saxby referred to a delay of “up to five...
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