Stephen Gerlis on why going to sleep for four months may be catastrophic, and why doing a favour may turn into an expensive business


Here is a timely object lesson in the dangers of getting it wrong. The case of Hastroodi v Hancock [2004] EWCA Civ 652; [2004] All ER (D) 368 must be viewed against the basis on which the claimant's solicitors originally sought an extension of time in which to serve the claim form.



Professionally speaking it doesn't look very promising!

Rule 7.5(2) of the Civil Procedure Rules 1998 (CPR) provides that a claim form must normally be served within four months of the date of issue. An application can be made under rule 7.6(1) to extend the time for service but there is a vital difference between whether that application to extend time is made before or after the time for service has expired. If made before, there are no prescribed matters on which the court must be satisfied before extending, although this does not mean that the application will be granted as of right. If the application is made after the time for service has expired, the court cannot grant an extension. Unless, that is, it is satisfied either that the court was unable to serve the claim form, or the claimant had taken all reasonable steps to try to serve but had failed and that, in either case, the application to extend was made promptly (CPR rule 7.6(3)).


Therefore, it is all the more surprising that Hastroodi concerned the rather easier situation of an application made before expiry. Giving judgment, Lord Justice Dyson rejected the pre-CPR approach of a 'good reason' for non-service. But he nevertheless concluded that some reason for non-service must be given, which is then viewed in the light of the overriding objective in CPR rule 1.2(b) - that of dealing with cases 'justly'. Ironically, Lord Justice Dyson went on to hold that 'if there is a very good reason for failure to serve within the specified period, the extension of time will usually be granted'.



As the failure to serve was merely down to the incompetence of the claimant's solicitor ('I overlooked it'), there was no ground to grant the extension. The solicitor had vacillated over service of the proceedings, having difficulty deciding whether it should be effected on the insurers or their solicitors, without once giving thought to the possibility of serving it on the defendant.


It should be noted that the court effectively sunk the claim by refusing an extension, notwithstanding submissions by the claimant's counsel that his client's claim was substantial and that greater prejudice would be caused to his client than to the defendant by the refusal.


The Court of Appeal also took the opportunity to remind practitioners of the dangers of the common practice of waiting until just before the limitation period expires before issuing and attempting to serve proceedings. This is particularly the case in personal injury cases where the normal limitation period is three years from the date the cause of action accrued.


As a parting shot, Lord Justice Dyson said the court could see no defence to a claim for negligence against the claimant's solicitors.



When friends pay



Where a non-party funds an action, the court has the discretion to order that party to pay the costs if the action fails.



The most famous example of this was Neil Hamilton's failed action for libel against Mohamed Al Fayed (see Hamilton v Al Fayed [2002] EWCA Civ 665, [2002] 2 All ER 64). In that action, the court held that the claimant's backers should not be liable to pay the defendant's costs as they had acted out of charitable motives.



Three recent cases illustrate that the court may not always be so generous. In Gulf Azov Shipping Co Ltd v Idisi (Costs) [2004] EWCA Civ 292, [2004] All ER (D) 284 (Mar), the judge at first instance ordered a Nigerian lawyer, who had funded the defendant's failed defence to an action for the unlawful detention of the claimant's vessel, to pay the costs. However, on this occasion, the Court of Appeal was kinder, stating that the lawyer could not be criticised for using his own funds to assist the defendant, especially as the defendant's assets had been subject to a freezing order. The lawyer had ensured that the defendant's case did not go by default and, additionally, there was no evidence that the lawyer had any personal interest in the outcome of the case.



A personal interest in a case seems to be the yardstick by which a funder may find himself having to put his hand in his pocket. In Dymocks Franchise Systems (NSW) PTY Ltd v Todd & Ors [2004] UKPC 39, the funder had financed failed appeals to the Court of Appeal and Privy Council on behalf of an insolvent company but had also controlled the proceedings and had a financial benefit in them. The funder had to pick up the tab.



The funder in Bournemouth & Boscombe Athletic Football Club Ltd v Lloyds TSB Bank plc [2004] EWCA Civ 935, [2004] All ER (D) 323 (Jun), according to Lord Justice Parker, was 'an individual who made a practice of seeking to represent otherwise unrepresented individuals'. In this odd role, he became a director of the claimant football club and sought to bring a series of unrealistic proceedings against the club's bank and receivers following default on loans made. The actions were struck out and an appeal was also unsuccessful.



The funder's behaviour in promoting hopeless actions was sufficient for the court to decide that, at the very least, he should be made liable for the costs of the unsuccessful appeal, the club already having had costs orders made against it as a result of the striking-out orders.


The court also gave a warning to those unqualified persons who seek to represent litigants-in-person either directly or by means of being a 'McKenzie friend', as the funder in the Bournemouth case tried to do. They may find that friendship to be somewhat strained - especially when it turns out to be expensive on presentation of the bill.



District Judge Stephen Gerlis sits at Barnet County Court