Contrasting first instance decisions on meaning of contractual requirement for "service" of claim

In a recent decision, the High Court has held that a contractual requirement to "serve" a claim within a particular period meant formal service under the CPR: T&L Sugars Limited v Tate & Lyle Industries Limited [2014] EWHC 1066 (Comm). In so doing, the court disagreed with the reasoning in Ageas (UK) Limited v Kwik-Fit (GB) Limited [2013] EWHC 3261 (QB) (see post) where the court took the view that, in the absence of clear words to the contrary, actual delivery of the claim will ordinarily be sufficient to satisfy a contractual requirement for "service", even if the claim has not been formally served under the CPR.

Significantly, however, the court held that the relevant type of service for these purposes was completion of the relevant step under CPR 7.5 (eg. posting the claim form, delivering it to or leaving it at the place for service, completing the fax transmission, etc, depending on the method of service used). It was not necessary for the claim to have been deemed served under CPR 6.14, which does not take place until two business days later. This was in line with the view expressed (obiter) in Ageas.

If this reasoning is followed in other cases, the date of service for the purposes of the contract is likely to be at least as early as the date of actual delivery to the defendant - and might well be earlier, given that CPR 7.5 refers to the date of dispatch rather than delivery. There is however no guarantee that this approach will be adopted in other cases. The contrary was assumed (without argument, it seems) in the Court of Appeal case of Ener-G Holdings Plc v Hormell [2012] EWCA Civ 1059 (i.e. that the claim form was served for the purposes of the contract on the date of deemed service under CPR 6.14)  and, as with all questions of contractual construction, each decision will turn on the particular words used in the particular context.

The practical solution remains for claimants to serve proceedings in good time before expiry of a contractual time bar and, if coming up to the time limit, assume the least favourable interpretation of the relevant service provisions. Ian Gatt QC and Maura McIntosh consider the T&L Sugars decision further below.

	Ian Gatt QC Partner +44 20 7466 2683

Background

The court considered as a preliminary issue whether claims under a Share and Business Sale Agreement ("SBSA") had been served in time within the meaning of clause 11.3. That clause provided that any claim notified under the SBSA would be deemed to be irrevocably withdrawn unless, within 12 months after the notice was given, "legal proceedings in respect of the relevant claim have been commenced by being both issued and served."

The relevant 12 month period expired on 30 March 2013 (the Saturday before Easter). On Wednesday 27 March the sealed claim form and particulars of claim were delivered by hand to the offices of the defendant's solicitors (who were instructed to accept service). The question was whether they had been "served" by 30 March.

The defendant  submitted that "served" under clause 11.3 meant deemed service under clause CPR 6.14, which provides that a claim form is deemed served on the second business day after the claim form is dispatched (by whatever method of service is used). Here the proceedings were not deemed served under CPR 6.14 until Tuesday 2 April, due to the intervention of the Easter bank holidays. Although the defendant accepted that a different conclusion was reached in relation to a similar provision in Ageas, that was either distinguishable because it was dealing with a different provision in a different contract or the reasoning was flawed and should not be followed.

The claimant's position, in contrast, was that:

1. Following the same reasoning adopted in the Ageas case, the word "served" should be given its natural commercial meaning of delivery to and receipt by the defendant (or its duly appointed solicitors), not a technical meaning under the CPR.
2. Alternatively, if "served" in clause 11.3 meant served in accordance with the CPR, that meant actual service under CPR 7.5 (which provides that where the claim form is served within the jurisdiction the claimant has to take the “required step” to dispatch the claim form by the chosen method of service within four months after the claim form is issued) and not deemed service under CPR 6.14.

Decision

The judge (Flaux J) held that the claim form and particulars had been served in time.

In contrast to the decision of Green J in Ageas, Flaux J held that "served" meant served in accordance with the CPR, and not merely delivered to and received by the defendant. Although there was no principled basis to distinguish Ageas, Flaux J declined to follow the reasoning in that case for a number of reasons, including:

• The phrase used was "issued and served proceedings"; "issued" must mean in accordance with the CPR, rather than some ordinary non-legal meaning, so it would be very odd if "served" in the same phrase did not also mean served in accordance with the CPR. Flaux J commented that the significance of the word "issuing" in the provision considered in Ageas did not seem to have been discussed in that case.
• If the parties had intended to convey that it was sufficient that the defendant had notice of the proceedings, even if service under the CPR had not occurred, they would more naturally have used other words, such as "the buyer has delivered the claim form" or "the seller has received notice of the proceedings".
• The SBSA envisaged two separate regimes, one for the giving of contractual notices and the other for the issue and service of proceedings. That pointed strongly to an intention that "served" should not be synonymous with the giving and receipt of notices in some ordinary, non-legal way.

However, in agreement with Green J's obiter comments in Ageas, Flaux J held that the relevant CPR provision was CPR 7.5 and not CPR 6.14. In the judge's view, the rules draw a clear distinction between the date service is actually effected under CPR 7.5 and the date two business days later when service is deemed to take place under CPR 6.14. CPR 7.5 is intended to allow a claimant who takes the required step to be sure he has served within the four-month period of validity of the claim form (thereby avoiding any relevant limitation issues). CPR 6.14 is to determine when service is deemed to have taken place for the purpose of calculating when the next steps in the action must be taken.

Accordingly, the proceedings had been served when they were hand delivered to the defendant's solicitors on 27 March and were therefore in time.

The judge's conclusion on this point was unaffected by the common ground in Ener-G that service under CPR 6.14 had been effected on a particular date. It appeared there were no submissions addressed to the Court of Appeal in that case as to the distinction between service under CPR 7.5 or CPR 6.14 or the reasons for that distinction. The decision was therefore of no assistance in determining which provision should prevail as regards the meaning of "served" in clause 11.3 of the SBSA.