Solicitors' Duties: Now including the duty to point out the other side’s mistakes?

The court granted an application under CPR 6.15 for retrospective service of a claim form that had been served late. The court found that the defendant solicitor should have drawn the claimant’s attention to errors in timeous attempts to serve. The decision was later reversed by the High Court and the reversal approved by the Court of Appeal.

The High Court has granted an application that defective service of a Claim Form be retrospectively validated under CPR 6.15 in circumstances where proceedings were initially served on the Defendant’s solicitor, in time, but without explicit confirmation that the Defendant’s solicitor was authorised to accept service. The Court held that the Defendant's behaviour amounted to “playing technical games” and was contrary to its duty to further the 'overriding objective', of enabling the court to deal with cases justly and at proportionate cost (CPR 1.1).

In doing so, the High Court rejected the Defendant's application for an order that the Court had no continuing jurisdiction to hear the claim due to the expiry of the Claim Form.

Background

The Claimants, Sally Woodward and Mark Addison, brought proceedings against the Defendant, Phoenix Healthcare Distribution Limited (“Phoenix”), in breach of contract and misrepresentation for a claim said to exceed £5 million.

The contract giving rise to the causes of action was entered into on 20 June 2011. The Claimants had initially issued letters before action in 2014 and 2016 but these were rebutted by Mills & Reeve, acting for the Defendant. The Claimants then instructed Collyer Bristow to move matters forward, and a third letter before action was issued on 19 June 2017 and proceedings were issued on the same date to protect against the 6 year limitation deadline. Under CPR 7.5(1), the Claimants had until midnight of 19 October 2017 to serve the Claim Form.

Collyer Bristow served the Claim Form on Mills & Reeve by letter sent by first class post on 17 October 2017. It also emailed a copy of the Claim Form to Mills & Reeve at 10:37am the same day. Mills & Reeve did not acknowledge receipt until 20 October 2017, by which time it was able to state, correctly, that since it had never confirmed it was instructed to accept service of the Claim Form, the Claim Form had not been served correctly, and the period for service had now expired. In response, Collyer Bristow sought to serve the Claim Form on Phoenix by all methods available, none of them being effected before 11am on 20 October 2017, thereby being late by at least 11 hours. Following a brief series of correspondence between the parties, it could not be agreed that service was effected or could be dispensed with, and so the matter was referred to the High Court.

The Application

The Claimants put forward a number of arguments.

They failed to show that Mills & Reeve had explicitly or implicitly agreed to accept service of the Claim Form in its various exchanges with Collyer Bristow. The fact that Mills & Reeve notified Collyer Bristow that it was instructed and the fact that it chose to inform them of the steps that it was instructed to take, should proceedings be issued, did not constitute a written notification that it was instructed to accept service (Personal Management Solutions v Gee 7 Group [2016] EWHC 891 (Ch)).

The Claimants further sought to argue that the Defendant was estopped from relying on the argument that the Claim Form had not been served correctly, due to the alleged inaction, or silence on the part of Mills & Reeve following receipt of correspondence in July 2017 of the Claimants' intention to issue proceedings and in the near 48 hours following receipt of the email in October 2017 purporting to serve proceedings.

Master Bowles referred to a number of cases, in particular, the judgment of Oliver J in Taylor Fashions Ltd v Liverpool Victoria Trustees Co. Ltd [1982] 1 QB 133, and found that an estoppel could only arise, in circumstances where a party had been inactive, when they had also owed a duty to speak up about the error. This was not held to be the case here.

The Claimants did, however, succeed in arguing that the Court should apply its discretion under CPR 6.15(1). Where there is a good reason to authorise service by a method not otherwise permitted, the court may make an order permitting it. Further, under CPR 6.15(2), the court may make good service where a claimant has already taken steps to bring the claim form to the attention of the defendant by an alternative method or place. Citing Abela v Baadarani [2013] UKSC 44, the "good reason" needed was fact dependent; the fact that a defendant has been made aware of a claim form and its contents (which is the 'whole purpose' of serving, not the playing of "technical games") within the usual time limit "is a, if not 'the' critical factor".

The result of sending the Claim Form to Mills & Reeve achieved the 'purpose' of serving within the time limit, notwithstanding the defective nature of the purported service: "that 'critical' factor operates in favour of validation and is a serious step towards the conclusion that good reason exists to validate the purported service."

Master Bowles found that as well as this, an additional “good reason” was required to validate service. Whilst finding that a solicitor cannot be "stigmatised as taking unfair advantage if he fails to draw attention to the relevant mistake", the Master found that Mills & Reeve had a duty to further the overriding objective, part of which is a duty to avoid unnecessary, expensive and time consuming satellite litigation. The consequence of this was expressed in Denton v T H White [2014] EWCA Civ 906 as being "wholly inappropriate for litigants or their lawyers to take advantage of mistakes made by opposing parties in the hope that relief from sanctions will be denied and that they will obtain a windfall strike out or other litigation advantage." The 'windfall' for the Defendant here would be the strike out, or dismissal, of the Claimants' claim.  The Court held that the purpose of service had been achieved and Mills & Reeve, in remaining silent until the deadline had expired, even if only for 48 hours, amounted to the "playing of a technical game" and the solicitor in question "misjudged the correct balance to be drawn between his duty to his client and his duty under the rules to give effect to the overriding objective". The Master did not consider that the fact that the necessity for validation arose out the mistaken conduct of Collyer Bristow "detracts significantly" from the good reason he considered had been made out.

Comment

Before final judgment was handed down in this case, the Supreme Court delivered judgment in Barton v Wright Hassall [2018] UKSC 12. In his majority judgment in Barton, Lord Sumption had observed that solicitors did not owe any duty to their counterparts to point out errors. In an addendum to his judgment, Master Bowles, however, distinguished this case on the basis that in Barton the Supreme Court had not found a good reason to validate service over and above the fact that de facto service had been effected (Mr Barton being a litigant in person was not a good reason). Further, the Supreme Court had also found expressly that the solicitors had not played 'technical games'. Despite acknowledging that the Supreme Court had held that the solicitors in Barton were not, even had they had the time to do so, under any duty to advise the Claimant of his mistake as to service, the Master noted that the Supreme Court had not been asked to determine the impact and effect of the duty to further the overriding objective as giving rise to a duty to the court to warn an opposing party of its mistakes. However, given the conflicting authority on the point and the weight the Master attached to Mills & Reeves' conduct, permission to appeal was given.

Walking the line between situations where failure to respond to a mistake constitutes a legitimate reaction to an error in one case, but amounts to a 'technical game' in another, will therefore continue to be difficult for solicitors going forward and any comfort solicitors may have derived from Barton has been tempered somewhat.

It should also be noted that the Barton decision had divided the five Supreme Court Justices 3 to 2, suggesting that there could be some way to go before the courts are clear on how the duty of parties to comply with the procedural rules flexes with the duty to cooperate with other parties and minimise the cost of enforcing the rules.

Authors: Clive Brett and Owen Rees