Lincolnshire County Council v Mouchel Business Services Ltd & Anr

[2014] EWHC 352 (TCC)

Mouchel designed a school for LCC. The contract was executed as a deed in April 2000. Practical completion was achieved in March 2002, though in 2003 rising damp was noticed. Certain steps were taken, however on 19 July 2013, LCC issued but did not serve a claim form. Under CPR 7.5, this must be served within four calendar months. LCC also issued a without notice application to extend time for service of the claim form. This was granted until 18 January 2014. LCC made a second without notice application on 23 December 2013. Again, time was extended until 18 April 2014. Mouchel applied to set aside the order. If successful, the claim would be struck out and it would be too late, for limitation reasons, for LCC to re-issue the claim.

In accordance with Part 6 of the TCC Pre-Action Protocol, where it is not possible to follow the requirements of the Protocol because of limitation concerns, a claimant may issue a claim form without complying with the Protocol but then must at the same time apply to the court on notice for directions as to the timetable and form of procedure to be adopted. The TCC will then consider whether to order a stay of the whole or part of the proceedings pending compliance with this Protocol. The first order from the TCC had envisaged that the proceedings had to be served by 18 January 2014 and that the Protocol was to be complied with by then.

Mr Justice Stuart-Smith noted that it was not “entirely” within LCC’s hands whether the Protocol would be complied with, since it applied to Mouchel as well. Further, and the Judge said “more importantly”, having set the timetable itself, it was imperative that LCC should act promptly if it was to be in a position to serve the proceedings having complied with the Protocol on or before 18 January 2014

What happened was that LCC did not issue its letter of claim until 3 December 2013, four and a half months into the period allowed by the first TCC order. The evidence before the court was that for the first six weeks of that period, the reason for this was the need to provide detailed instructions to a new expert together with both annual leave of the relevant fee earner and the need to cover for others when on their own leave.

Mouchel then inspected the site on 2 September 2013 without experts. There was further correspondence and a joint inspection was arranged for 24 October 2013. It was arranged to take place during half term. However, the Judge noted that there was no reason on the evidence why a joint inspection could not have taken place before term started in early September 2013. LCC’s new expert prepared a report after the site visit and this was provided to Mouchel on 8 November 2013. LCC sent out letters of claim on 3 December 2013.

On 19 December 2013, LCC asked Mouchel if they considered there was sufficient time to comply with the Protocol (i.e. letter of response and a meeting) before 18 January 2014. Mouchel’s solicitors replied the next day saying that there was and that they would be available to attend a meeting in the week commencing 13 January 2014. However, on 23 December 2013 LCC made a second without notice application to extend time for service of the claim form. That application noted that the second defendants had said they would not be in a position to attend the meeting before 18 January 2014 and in the circumstances, the existing stay did not allow time for the parties to attempt a resolution of the matter by way of mediation should that be considered a way forward.

The Judge said that while an application for an extension of time for serving the claim form may be made without notice pursuant to CPR 7.6, a party issuing proceedings to which Part 6 of the TCC Pre-Action Protocol applies (because his claim may become time barred) is obliged to apply to the court on notice for directions as to the form of procedure to be adopted. An application on notice enables the court to review the position in the light of any relevant submissions made by all the parties. Further, if the order is made without notice, there is the risk that one of those parties will apply to set the order aside as happened here. The requirement for the initial order for directions to be made on notice thus removes the risk of further costly and time-consuming satellite litigation.

The Judge then noted the “new and more robust approach to case management” adopted by the courts. He also referred to precedent that neither the fact that the provisions of the Pre-Action Protocol had not yet been complied with nor the prospect that serving proceedings might lead to an increase in costs because of that non-compliance were good reasons for failing to serve the claim form. Mr Justice Stuart-Smith therefore concluded that:

“To my mind, the established principles, the amendments to the CPR that I have identified, and the terms of the Protocol all point in one direction: parties who issue late are obliged to act promptly and effectively and, in the absence of sound reasons (which will seldom if ever include a continuing failure to comply with pre-action protocol requirements) the proceedings should be served within four months or in accordance with any direction from the Court. A claimant who does not do so and (where the Protocol for Construction & Engineering Disputes applies) who does not obtain directions on notice does so at extreme peril.”

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