This blog post discusses the court’s approach in determining whether to grant an extension of time to serve a claim form out of the jurisdiction during the COVID-19 pandemic (Qatar Investment and Project Development Holding Co v Phoenix Ancient Art S.A.)
Summary of the decision
In this case, the Court of Appeal was asked to determine whether it was right for an order granting the Claimant an extension of time to serve the claim form out of the jurisdiction to be set aside. The material factual timeline coincided with the COVID-19 pandemic and the related closure of the Foreign Process Section of the High Court (“FPS”). With reference to the rules under CPR 7.6, and analogous caselaw, the Court of Appeal agreed with the two previous decisions in the High Court, and determined that the order granting an extended time period for service out of the jurisdiction should be set aside.
Relevant facts and procedural history
The claimant sought to sue the defendant for damages arising from the claimant’s purchase of fake artwork.
The claim form was issued two days before the expiry of the six-year limitation period, on 22 January 2020. Pursuant to CPR 7.5, the claimant had four months to serve the claim form within the jurisdiction and six months to serve out of the jurisdiction. If service out of the jurisdiction was required, the deadline for service would have been 22 July 2020 unless any extension was granted.
On around 23 June 2020, the claimant’s solicitors discovered that the FPS was closed due to the pandemic. At this stage, solicitors for the claimant did not know that the FPS had in fact been closed since 16 April 2020.
On 26 June 2020, the claimant submitted an ex parte application for an extension of time for service out of the jurisdiction under CPR 7.6(2). The court dealt with this application on 20 July 2020, and the application was accepted. The order confirming this was dated 22 July 2020. The effect of this order was to extend the time for service by four months, with a new deadline of 22 November 2020.
The claimant’s solicitors submitted the application for service out of the jurisdiction to the FPS on 11 August 2020 (by this time the FPS had reopened), and the claim form was served on the defendant’s solicitors in Switzerland on 8 September 2020.
On 15 September 2020, the defendant applied to set aside the order of 22 July 2020. This application was granted by Master Gidden of the High Court, and was also upheld by Judge William Davis on appeal. The effect is that the claimant’s service out of the jurisdiction was out of time, as the true period for service expired on 22 July 2020, six months after the claim form was issued.
The claimant’s final appeal came before the Court of Appeal and is the subject of the remainder of this article.
What was the court’s approach?
In the judgment (from paragraph 11), the court reminded itself of the relevant rules to be applied. Principally, it was concerned with CPR 7.6 and PD 7A.8 which requires the evidence in support of the application to state:
- all the circumstances relied on;
- the date of issue of the claim;
- the expiry date of any rule 7.6 extension, and
- a full explanation as to why the claim has not been served.
The court also reminded itself of the need to “take into account the impact of the Covid-19 pandemic when considering applications for the extension of time for compliance with directions” as offered by PD 51ZA.
Helpful passages from various authorities within the guidance at CPR 7.6, including in Al-Zahra (PVT) Hospital and Others v DDM; Cecil v Bayat and Hashtroodi v Hancock were also cited and applied. The caselaw distilled four key pillars which underpinned the court’s analytical approach (at paragraph 17):
- The court’s decision must accord with the overriding objective.
- The court’s decision is highly influenced by the specific reasons why the claim form could not be served within the permitted time period. Thus, where there is no good reason for the failure to serve the claim form within the time permitted under the rules, the court still retains a discretion to extend time but is unlikely to do so.
- The “calibrated approach” is the most desirable approach. Thus, where a very good reason is shown for the failure to serve within the specified period, an extension will usually be granted; but generally, the weaker the reason, the more likely the court will refuse to grant the extension.
- Importantly, the court analysed the merits of the appeal on the premise that “where an application is made before the expiry of the period permitted under the rules for service, but a limitation defence of the defendant will or may be prejudiced, the claimant should have to show at the very least that he has taken ‘reasonable steps” and “…a claimant’s limitation defence should not be circumvented save in ‘exceptional circumstances”.
The Court of Appeal’s decision and analysis
The claimant’s appeal focused on two particular aspects of the pandemic, which purportedly led to its inability to serve the claim form in time – namely the closure of the FPS and the disruption to the claimant solicitors’ business. Ultimately, the Court of Appeal agreed with the Master and the Judge in the High Court and the appeal was dismissed.
The reasons for the Justices unanimous determination will be of interest and ought to serve as a helpful reminder to those who find themselves in a position where there is a need to apply for an extension of time for any reason. It is apparent that even circumstances as unique, wide reaching and impactful as the pandemic will not automatically ensure the success of such an application. Even the suspension of the FPS during the relevant period for service will not validate a request for an extension of time by default.
The Court of Appeal provided the following analysis in support of its decision:
The claimant argued that the High Court had misdirected itself as to the applicable legal principles and had not given due weight to the fact that the pandemic’s effect on the FPS and the claimant solicitors’ business meant that it was almost inevitable that service would have been delayed beyond the six months and an extension of time was going to be necessary in any event. The court found that this argument demonstrated the wrong approach and did not reflect the proper test. The judgment deals with this at paragraph 36, where the court remarks that:
“…the Court’s task when faced with an application for extension of time under CPR 7.6(2) is to determine the reasons for the application for extension. That is a fact-finding exercise rooted in the evidence provided to the Court. Once the facts are found, the Court evaluates the reasons as good (i.e., are they sufficiently good to justify extension?) or not so good. The Claimants are wrong to suggest that the Court should investigate what the position would or might have been “in any event”. That is a different exercise altogether.”
The corollary seems to be that the claimant and the High Court were addressing fundamentally different questions. This is likely why the claimant solicitors’ evidence (in the court’s view) did not provide enough detail as to the causal link between the pandemic and the disruption to its business, neither did it adequately address why the application was not submitted to the FPS sooner.
The claimant’s solicitors cited the COVID-19 pandemic and the closure of the FPS as being the primary reasons for their inability to serve the claim form in time. However, the court found that in reality and upon further inspection of the evidence, these were not the predominant reasons for why the claimant’s solicitors did not meet the deadline.
The Master of the High Court found that the claimant had issued the claim just before the expiry of the limitation period and it was therefore “incumbent on them to act” (paragraph 29, judgment). Further, the Master determined that it was the claimant’s lack of activity between issue in January 2020 and early May 2020 which was a critical factor and had a significant bearing on the claimant’s inability to carry out service in time. During this time, the claimant had been discussing potential routes to settlement and had hoped (without receiving confirmation) that any service would be within the jurisdiction, thus not requiring the use of the FPS. It was also relevant that the claimant’s solicitors only became aware that the FPS was closed in late June, more than a month after the FPS had closed. That the claimant took no steps to effect service of the claim form for more than three months of the six-month period was, in the view of the High Court, a “failure to grasp the nettle” and a significant factor contributing to their inability to serve the claim form in time. The Court of Appeal endorsed this view.
One can sympathise somewhat with the claimant solicitors’ position here: in the circumstances they may have been optimistic about using the six-month period to negotiate and settle the claim, and optimistic about the prospect of saving time and costs by not engaging the service process until it was deemed necessary. However, the court effectively took the view that such optimism did not warrant a party failing to take significant steps or make appropriate enquiries to at least ‘get the ball rolling’, and in the end, the claimant’s lack of activity on this front significantly weakened the application.
The court’s judgment also demonstrates the importance of providing good reasons as to why service could not have been effected in the circumstances rather than using the benefit of hindsight to state, without proper evidence, that an extension of time would have been necessary “in any event”. The position was helpfully summarised by way of an analogy at paragraph 37.
This hypothetical analogy illustrates the importance of applicants demonstrating that they have taken reasonable steps to effect service within the required time period, and how proactivity on the part of the applicant can bolster their chances of a successful application to extend time for service of a claim form out of the jurisdiction. Put simply, applicants are expected to demonstrate that they made good use of the time available to them, and if they could not do this for reasons outside of their control, those reasons need to be supported by evidence.
The court’s judgment also sheds helpful light on the court’s approach to applications for extensions of time generally where the pandemic (or any well known disruptive and potentially supervening event) is cited as being the cause of the applicant’s need to request a time extension. That a pandemic occurred during the time period in which service of the claim form should have occurred does not automatically mean that the application for a time extension will succeed. There must be a causal link established between the pandemic and the applicant’s inability to comply with the rules, and the court cannot (and should not) simply take judicial notice and make assumptions either way about the effect the pandemic may have on a business or any party (paragraph 40, judgment).
This presented another problem for the applicant in this case because the court had little to no evidence before it that the pandemic had actually disrupted the claimant solicitors’ business and their ability to comply with the rules. In fact, the evidence on this point appeared to be largely unrelated to the pandemic.
Key Takeaways
Those drafting applications for an extension of time to deal with a procedural requirement should bear in mind that at the heart of any “good reason” for such an application will be the causal link between some circumstances outside of the applicant’s control and their inability to act within the required time frame. The court should not be expected to assume that because the relevant procedural time period correlates with a potential supervening event, that the said event actually had any bearing on the applicant’s ability to comply with the rules. An applicant should be thorough with its evidence and demonstrate that it did all it possibly could with the time that it had.
When preparing such applications, we should also bear in mind that the key question is not whether in hindsight it would have been possible for the relevant procedural step to have been carried out within the required time period. The key question is whether the reasons why the applicant was unable to act within the relevant time period are good ones. This is a subtle but important distinction for the purposes of the court’s analysis.
