Brightside Group Ltd & Ors v RSM UK Audit LLP & Anor, Court of Appeal - Commercial Court, January 09, 2017, [2017] EWHC 6 (Comm)

Issuing Organization:Commercial Court
Actores:Brightside Group Ltd & Ors v RSM UK Audit LLP & Anor
Resolution Date:January 09, 2017

Case No: CL-2016-000254

Neutral Citation Number: [2017] EWHC 6 (Comm)




Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 9 January 2017

Before :


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Between :

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James Potts QC and Alex Barden (instructed by Rosling King LLP) for the Claimants

Christopher Butcher QC and Josephine Higgs (instructed by Clyde & Co LLP)

for the Defendants

Hearing date: 25 November 2016

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JudgmentMr Justice Andrew Baker :


  1. The Claim Form in these proceedings was issued on 26 April 2016. It was not served immediately or very shortly thereafter. The claims brought by the Claim Form allege audit negligence by the first defendant in respect of the claimants' 2013 statutory accounts and in respect of client asset audits for the 2011, 2012 and 2013 financial periods (`the CASS Audits'), and negligence by the second defendant in due diligence work relating to the purchase in 2011 of E Development Limited and E-Systems Limited, and the latter's computer system known as eSystem, a transaction code-named `Project Pigeon'.

  2. It is at least arguable that a relevant limitation period in respect of the CASS Audits claims expired on 27 April 2016, and that a relevant limitation period in respect of the Project Pigeon claim expired on 2 June 2016.

  3. CPR 7.7 provides as follows:

    (1) Where a claim form has been issued against a defendant, but has not yet been served on him, the defendant may serve a notice on the claimant requiring him to serve the claim form or discontinue the claim within a period specified in the notice.

    (2) The period specified in a notice served under paragraph (1) must be at least 14 days after service of the notice.

    (3) If the claimant fails to comply with the notice, the court may, on the application of the defendant-

    a. dismiss the claim; or

    b. make any other order it thinks just.

  4. Clyde & Co LLP, the defendants' solicitors, by letter dated 27 May 2016 to Rosling King LLP, the claimants' solicitors, gave notice under CPR 7.7 requiring the claimants to serve or discontinue within 14 days. Clyde & Co had previously made Rosling King aware that they were authorised to accept service. They closed their letter by stating that, ``In the event that we are not served with the Claim Form or do not receive confirmation that your clients have discontinued the claim by 10 June 2016, we will apply to the Court for an Order to dismiss the claim''.

  5. Clyde & Co's letter was transmitted successfully by fax and e-mail before 4.30 pm on 27 May 2016, so CPR 6.26 deems that it was served on that day. Its stated requirement - that the claimants serve or discontinue ``within the next 14 days'', i.e. by 10 June 2016 - therefore satisfied CPR 7.7(1)/(2). Failure to serve (or discontinue) on or before 10 June 2016 would therefore entitle the defendants to apply for the dismissal of the claim or such other order as the court might think just under CPR 7.7(3).

  6. The claimants intended to pursue the claim and so did not discontinue. But they did nothing towards serving the Claim Form until the afternoon of 10 June 2016. Clyde & Co's address for service by post or by hand (i.e. by ``Delivering to or leaving the document at the relevant place'') is The St Botolph Building, 138 Houndsditch, London EC3A 7AR. Clyde & Co occupy the 10th-13th floors and their reception desk is on the 13th floor. The main ground floor reception desk inside the building is the landlord's responsibility and is manned by staff employed by or contracted to the landlord.

  7. At about 3.30 pm on 10 June 2016, Kirsty Evans, a trainee solicitor at Rosling King, presented herself at the ground floor reception desk inside The St Botolph Building in the hope of delivering by hand to Clyde & Co. She did not gain access to Clyde & Co upstairs and, in the event, left the service package with Trevor Smalley, a messenger employed by Williams Lea, a company contracted by Clyde & Co to provide it with various office services. Mr Smalley took the package from Miss Evans in the lower ground floor loading bay area of the building, accessed from St Botolph Street. He signed for the package purportedly on behalf of Clyde & Co.

    Application & Decision

  8. On 25 November 2016, I heard and dismissed an application by the defendants made by Application Notice dated 13 July 2016. The application was for the dismissal of the claim under CPR 7.7(3) on the ground that there had been neither service nor discontinuance by 10 June 2016 as called for by Clyde & Co's CPR 7.7 notice, and for a declaration under CPR 11 that the court had no jurisdiction to try the claimants' claim on the ground that if the defendants were correct about CPR 7.7, then service of the claim form had been invalid.

  9. I stated my conclusions on the issues that arose, with full written reasons to follow. This judgment now sets out those reasons. I should record that I did not find it necessary to call on Mr Potts QC for the claimants; but I had detailed written argument from him in a 15-page skeleton argument, and the decisive point is one upon which there appears to be no prior authority; so I have held to the course I indicated of providing my full reasons, by this judgment, and have not adopted Mr Potts QC's suggestion, in correspondence following the hearing, that I do not hand down any fuller judgment after all.

    The Arguments in Summary

  10. The application was put by Mr Butcher QC for the defendants as follows:

    i) The Claim Form was not served on or before 10 June 2016, because (a) if what Miss Evans did on that day amounted to delivering the Claim Form to or leaving it at the relevant place for the purpose of effecting service, the Claim Form was thereby served on 14 June 2016 (see CPR 6.14), alternatively (b) what Miss Evans did on 10 June 2016 did not amount to delivering the Claim Form to or leaving it at the relevant place in any event. CPR 6.14 provides that:

    A claim form served within the United Kingdom in accordance with this Part is deemed to be served on the second business day after completion of the relevant step under rule 7.5(1).

    ii) The purpose of CPR 7.7 was to entitle a defendant, by notice, to shorten the validity of a claim form; in effect, to replace the obligation to satisfy CPR 7.5 with an obligation to comply with the notice. The court's approach to a failure to serve within the time limit set by a valid CPR 7.7 notice should therefore be materially the same as its approach to a failure to comply with CPR 7.5.

    iii) If that be the approach, this was a classic case for dismissal of the claim: for no reason, let alone any good reason, the claimants left it until the last minute; as a result, they served `out of time', and after properly arguable limitation defences had accrued. The court should therefore dismiss the claim, leaving the claimants to start again and take their chances on the limitation defences.

  11. In response, the argument of Mr Potts QC for the claimants was that:

    i) What Miss Evans did on 10 June 2016 amounted to leaving the Claim Form at the relevant place on that date and that was sufficient to comply with the requirement of the CPR 7.7 notice that the Claim Form be served by 10 June 2016, notwithstanding CPR 6.14.


    ii) A CPR 7.7 notice does not supplant CPR 7.5. The purpose of CPR 7.7 is to enable a defendant to get valid proceedings moving more quickly than would be the case if the claimant served only late in the period of validity of the claim form, or (as the case may be) to get rid of proceedings the claimant does not intend to pursue through early discontinuance rather than only through an ultimate failure to comply with CPR 7.5.

    iii) In its discretion, the court should not dismiss the claim.


  12. In my judgment, for the reasons I give below, Mr Butcher QC was correct to submit that if the Claim Form was delivered to or left at the relevant place, for the purpose of CPR 7.5(1), on 10 June 2016, then so far as the CPR are...

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