Service of the Claim Form - cladding claim dismissed
Portsmouth City Council v Prater Limited [05.10.18]
In the first post-Grenfell cladding case to be issued and determined in the UK, this case concerns the application of a limitation period contained within a collateral warranty. It sends a clear message of the importance of dealing with the fundamental contractual and legal issues at hand, and not to allow the often overly-technical and academic debates to distract from key procedural obligations that a court will impose when determining a claim.
4 May 2014
A collateral warranty was given by the defendant in favour of the claimant in respect of the design, manufacture, and installation of cladding on a high-rise residential tower owned by the claimant. Executed by deed, it provided that it would cease to have effect twelve years from the date of practical completion (save for any proceedings already commenced), which took place on 21 October 2005 meaning expiry of the deed and effective contractual limitation period, would be 20 October 2017.
At pre-action stage, the claimant sought to extend the time period of the collateral warranty. The defendant instead offered to enter into a Standstill Agreement in respect of the existing claims but the claimant rejected that offer on the basis that it might in some way limit its potential claims.
16 October 2017
The claimant issued a Claim Form three days before the limitation period expired.
15 December 2017
In accordance with the Civil Procedure Rules the claimant had four months to serve the Claim Form. The claimant made an application (without notice) for an extension of time to serve the Claim Form, asserting it had issued proceedings protectively but did not have all of its expert evidence available when preparing its Particulars of Claim.
22 December 2017
An order for an extension was granted by the court on paper (the Order). Neither the Order nor the application were served on the Defendant as required by CPR 23.9.
25 April 2018
The claimant served the Claim Form, Particulars of Claim, and the Order on the defendant after expiry of the contractual limitation period and the four month post-issue period for service. Therefore, ‘but for’ the Order granting the extension, the claimant would have been time-barred.
The defendant subsequently made a successful application to overturn the Order, which was heard by Waksman J in the Technology and Construction Court on 5 October 2018 (full transcript here). Stressing that the law in this area is well established, Waksman J referred to Lincolnshire County Council v Mouchel Business Services Ltd & Anor , Hoddinott v Persimmon Homes (Wessex Limited)  and Hashtroodi v Hancock  (see pages 3 and 4 of the transcript), when highlighting the risks for claimants applying for an extension without notice.
Why the Order was overturned
The claimant first became aware of problems with the cladding in October 2009 and had reports produced by various consultants between 2009 and 2016 (two of which were supplied to the defendant with its notice of claim in December 2016). Waksman J noted that there is no procedural requirement for claimants to serve substantial expert evidence with its Particulars of Claim (and thus should not have prevented service of the Claim Form).
In failing to have its expert evidence available earlier, the claimant was considered by the court to be the author of its own misfortune. In any event, at the date of the application, the claimant had an expert report and there was no suggestion that further test results (on which the application relied) were necessary for the claimant to establish whether there was a viable claim against the defendant or produce Particulars of Claim.
It is arguable that the Particulars of Claim would not have been as full as the claimant would have liked and amendments might have been required later, but the court held that this could not possibly justify an extension of time in which to serve the Claim Form.
The judge considered the claimant had failed to act with urgency and, therefore, overturned the extension for service, noting the following circumstances:
- The cost of obtaining expert evidence was approximately £16,000 (on a £6 million claim)
- The claimant was on notice of the need for expert evidence from at least 2016
- Limitation expired in 2017.
This meant that the Claim Form had expired and the end of the limitation period prevented the issue of new proceedings. Waksman J reiterated that “the limitation periods are there to be observed”.
Parties must seriously consider the risk of making without notice applications to extend the period for service of the Claim Form. Where (as in this case) it is subsequently determined that the extension was unjustified and should be set aside, a claimant’s claim will be left out of time.
Following earlier case law, an extension will only be granted where strong justification can be shown and only in “exceptional circumstances”. The priority consideration of the courts is the potential deprivation of a limitation defence as opposed to the loss of the claim on the claimant’s side (the remedy being against the instructed solicitors, if any).
As a result, care should be taken promptly to issue and serve the Claim Form in order to protect the limitation position and, if appropriate, subsequently to seek an extension for service of the Particulars of Claim. These issues are of particular importance, especially so in future cladding cases, where claims are made under collateral warranties.
Solicitors for Prater Limited: Christopher Butler (Partner) and Craig Holland of Kennedys Law LLP
Counsel for Prater Limited: Paul Cowan of 4 New Square
Co-authors of article: Christopher Butler, Craig Holland and Nikki Baynes, Kennedys Law LLP and Paul Cowan of 4 New Square