A party wall award is deemed to have been effectively served from the date of receipt not posting

Freetown Ltd v Assethold Ltd [2012] EWCA Civ 1657

On 14 December 2012, the Court of Appeal held that the serving of a party wall award under section 15(1) of the Party Wall Act etc. 1996 (‘the Act’) was effective from the date of receipt (or deemed receipt), and not the date on which it was posted, regardless of whether it was sent by registered or recorded post. Accordingly, the date of receipt, or deemed receipt, should be used to calculate the 14-day time limit for filing an appeal against a party wall award.

Freetown Limited and Assethold Limited were, respectively, the freeholder and long term lessee of immediately adjacent properties. Freetown had served notice of its intention to carry out development works at its property, which Assethold objected to.  Each party appointed a surveyor who then jointly selected a third surveyor under section 10(1) of the Act.

The third surveyor made a party wall award and posted it to the parties either on Friday 22 July or Saturday 23 July 2011. Freetown received the award on Monday 25 July 2011 and lodged an appeal against it on 8 August 2011. Under the Act the time for lodging an appeal against an award is 14 days, there being no provision for an extension of time (under the Act or otherwise).

If time began to run from when the award was posted then the 14 days for appealing would have expired on either Thursday 4 August or Friday 5 August 2011. If, however, time began to run from the day it was received by Freetown, the time would have expired on Sunday 7 August 2011, when the court office was closed.  The time limit would thus have been extended to the next working day, 8 August 2011, (following the reasoning in Mucelli v The Government of Albania [2009] UKHL 2). On this basis, Freetown would have lodged its appeal in time.

The appeal against the award was initially dismissed by a county court judge as being out of time.  Freetown appealed to the High Court, where Slade J upheld the decision of the lower court. In reaching her decision, Slade J relied on the reasoning in C A Webber (Transport) Ltd. v Railtrack plc [2004] 1 WLR 320 (CA).

In Webber, the Court of Appeal considered whether a notice had been effectively served by registered post under section 23 of the Landlord and Tenant Act 1927 (‘LTA 1927’).  The question before the Court was whether section 7 of the Interpretation Act 1978, regarding service by post, was applicable in determining effective service under the LTA 1927. Section 7 is applicable to any statutory provision concerning post, unless there is an express or implied contrary intention in the particular provision in question.

Section 7 of the Interpretation Act, headed ‘References to service by post’, provides that where a letter has been properly addressed and posted, service is deemed to have been effective at the time the letter would have been delivered in the ordinary course of posting. The Court in Webber held that section 7 was excluded from the interpretation of section 23 by finding a ‘contrary intention’ in the section.

In the present appeal, the Court of Appeal held that the lower courts had erred by drawing a collation between section 23 of the LTA 1927 and section 15(1) of the Act.  Rix LJ, giving the principal judgment, was struck by how the section 23, LTA 1927 jurisprudence had proceeded with little reference to section 7 of the Interpretation Act. In such circumstances, he considered it inappropriate to extend the reasoning applicable to section 23 of the LTA 1927 into a different statute, with different wording, by reference to which it could not be said that section 7 was excluded on the basis that a “contrary intention” appeared.

Instead, the Court held that section 7 of the Interpretation Act did apply as there appeared no contrary intention in the Act to suggest otherwise. The wording of section 15(1) of the Act pointed prima facie to receipt being effective service, with the Act requiring an award to be served on a person or addressed to them specifically if posted.  Rix LJ stated that any other conclusion would be a highly improbable interpretation of section 15(1).  To hold otherwise would have been unreasonable in Rix LJ’s view, given that:

1.       It would be in disconformity with the common law, the other provisions of s. 15(1) of the Act, and with the explicit intent of section 7 of the Interpretation Act to be of application “unless the contrary intention” appeared.

2.       Section 7’s “helpful” code concerning posting would be lost.

3.       An award could be deemed served even if it had not been received, or received in time, which was essentially unfair to the prospective appellant.

4.       The short time for lodging an appeal of 14 days could seriously be eroded if time were to commence from the date of posting rather than receipt.

In the circumstances, the Court held it was unnecessary to rule on the appellant’s further submission relating to section 3 of the Human Rights Act 1998.

The appeal was therefore allowed.

Read the judgment here.

Lawrence Power acted for Freetown Limited in the county court and High Court proceedings where he advanced arguments that were subsequently successful on appeal.

High Court decides delay and failure to continue proceedings having obtained a freezing order does not amount to an abuse of process

TAG Capital Ventures Ltd v Potter [2012] EWHC 3323 (Ch)

 

On 23 November 2012, the High Court decided that a four-month delay in proceedings and a decision by the Official Receiver (OR) not to continue with proceedings against a company director, four days before the deadline for filing the pre-trial questionnaire, did not amount to an abuse of process which would have sanctioned the striking out of proceedings.

On the 25 July 2011, Mr and Mrs Workman (‘the Workmans’) made a petition to the Court for TAG Capital Venture Limited (‘the Company’) to be wound up. Provisional liquidators (PLs) were appointed and soon thereafter they submitted a without notice application to the Court for a freezing order to be made against Mr Potter- the Director and “leading light” of the Company. The basis of their claim was that Mr Potter had breached his statutory and/or fiduciary duties to the Company and requested a remedial constructive trust and/or equitable compensation in respect of money paid by the Workmans to the Company. On the return date of the without notice application, the orders were continued by the Court.

Mr Potter opposed the PLs’ claim and the freezing order, submitting that the Workmans were not creditors and therefore lacked legal standing to present the petition. If this contention was correct, there could be no winding up on the basis of the petition, and the action brought by the PLs against Mr Potter would have fallen away.

The PLs were subsequently replaced by the OR as the liquidator of the Company. The following history of the management of the proceedings by the OR became the subject of the abuse of process claim:

1.       After an apparent stall in the pursuance of the claim, solicitors for Mr Potter wrote to the OR requesting it to respond by indicating whether it intended to continue with the claim and warned that their client would be seeking the costs of the freezing order on an indemnity basis. Albeit not parties to these proceedings, but with an apparent interest in its outcome, the Workmans were not sent a copy of this correspondence.

2.       The OR conducted the usual interviews with Mr Potter, who seemed to have gathered an impression that the action would not be pursued. The Court did not review evidence supporting this belief, and although accepted it as fact, did not attach any weight to it.

3.       Mr Potter’s solicitors sent another letter a day before the pre-trial questionnaire was due to be filed, requesting that the OR confirm whether it was continuing with the proceedings. The OR responded the following day, stating there was insufficient evidence to continue; to which Mr Potter’s solicitors responded by requesting that the OR apply for a discontinuance within fourteen days or they would submit an application that the proceedings be struck out as an abuse of process. No response was forthcoming from the or within the 14-day deadline, and as a result, Mr Potter issued the application for strike out.

4.       During the hearing the Court became aware of the administrative difficulties the OR faced due to financial and personnel shortages. This delayed the OR’s investigations which ultimately lead to the decision not to continue to pursue proceedings and explained, in part, the delay in responding to Mr Potter’s solicitors’ ultimatum.

Thereafter, an insolvency practitioner was appointed as the liquidator was appointed replacing the OR.

Mr Potter’s submissions that the proceedings ought to be struck out centred on the fact that the OR had given notice of its intention not to continue with the proceedings for want of supporting evidence; and that it did so as a representative of the Company. As a consequence, the newly appointed liquidator was bound by this decision. Any intention by the new liquidator to continue with the proceedings, in addition to the delay of the investigations of the OR, accordingly amounted to an abuse of process on the grounds that the liquidator would be continuing the action when the Company had already shown an intention not to proceed. This, it was submitted, warranted the Court striking out the proceedings.

Warren J, who dismissed the application, found that there was no evidence that the OR had categorically decided to discontinue the claim against Mr Potter. Accordingly, neither the OR’s nor the new liquidator’s actions amounted to abuses of process.

The judge further held that if he was wrong in his assessment, and there was indeed an abuse of process, it was insufficient to tip the scales to warrant the striking out of proceedings; for it would have been disproportionate. The reasoning for his decision was that:

1.       Although it was under the old regime of the RSC that a delay may have been sufficient to question whether there was an abuse of process for want of prosecution (Groit v Doctor [1997] 1 WLR 640); the law still applied under the new CPR. This was established in Habib Bank Ltd. v. Jaffer (decided on 29 March 2000, briefly reported in The Times on 5 April 2000). It was held that a “wholesale disregard of the rules” was required, which was not found to have happened in the present case.

2.       Nevertheless, although Groit is still considered good law (Jeffery v. Flanders [2005] EWHC 1697 (Ch)) it was not applicable in this case. Some factor must be demonstrated to establish an abuse of process of which a long delay may suffice however the delay of four months did not tip the scale in this instance.

3.       In reaching his decision, Warren J considered all the relevant circumstances of the case, which included the manner in which Mr Potter (and his representatives) had conducted the case. He accepted that Mr Potter was entitled to take whatever proper steps he thought appropriate in order to defeat the claim against him. However, he found it highly relevant that he had failed to keep the Workmans informed when they had such a vested interest in the outcome of the proceedings.

Conclusively, Warren J held that in the light of the above, it was not appropriate to visit the proceedings with a sanction of strike out.

Read the judgment here

Virgin Atlantic waives privilege to Part 36 offer by referring to a term of the offer

Virgin Atlantic Airways Ltd. v Zodiac Seats UK Ltd and others [2012] EWHC 3318 (Pat)

On 27^th July 2012, the High Court handed down judgment in this action: [2012] EWHC 2153 (Pat) (“the main judgment”).

On the 8^th November 2012, the Court heard argument in relation to the form of the order to be made in relation to the main judgment and issues relating to costs. Virgin Atlantic Limited (Virgin) had revealed in its skeleton argument, that it had made a Part 36 offer to Zodiac Seats UK Limited, (‘Zodiac’, formerly Contour Aerospace Limited) in relating to another set of proceedings. The Court held that by referring to what it considered a main term of the offer, Virgin had waived its without prejudice privilege and therefore could not prevent the Court being presented with the remaining terms.  

Virgin had argued that whilst it did not take issue with the Court being aware of the offer, its terms were still protected and should not be revealed to the Court pursuant to the parties’ without prejudice privilege. Virgin further argued, that in previous case law, where there had been a split trial to decide liability and the assessment of damages separately, (e.g. HSS Hire Services Group plc v BMB Builders Merchants Ltd [2005] EWCA Civ 626), it was acceptable to disclose the fact that such an offer had been made, pursuant to CPR 36.19(3). This did not mean, however, that the terms of the offer were disclosable. It was submitted that the reasoning in HSS Services Group should be expanded to be applied in cases, such as the present one, where there were related actions or disputes. 

Zodiac submitted the following arguments in response, (a) when the Court is dealing with costs is it is permitted under CPR 36.13(1) to be presented with the terms of the offer; (b) by referring to the term of the offer, Virgin had waived privilege; and (c) if strict rules regarding privilege were enforced where a Part 36 offer was made in relation to a different action, it would became too easy for a party to prevent the court from dealing with costs at the conclusion of an action.

In hearing these arguments, the Court decided that it should be presented with the terms of the Part 36 offer at the present stage. In giving reasons for his judgment, Floyd J stated, that:

1.       Firstly, there exists a very strong presumption that the court should be able to deal with all outstanding issues including costs at the end of a trial. The court must be satisfied that a strong reason exists if it is to a take a different course;

2.       Secondly, the court cannot be satisfied that it should not deal with costs at the end of the trial merely because of the possibility of the existence of a relevant offer. This is distinguishable from cases involving split trials- where, if an offer exists, there is an “inherent plausibility” that it will be inclusive of quantum and therefore relevant to costs; there is no such inherent plausibility in the case of an offer about a separate cause of action.

3.       Thirdly, a rigid that a court is prohibited from knowing the terms of an offer could be open to abuse.

4.       Fourthly, although caution should be taken before deciding that a party is obliged to waive their privilege, in the present case, Virgin could have presented the existence of the Part 36 offer to Court at a later stage or not at all. Instead, in this instance, Virgin divulged the existence of the offer in order to ask the court to delay dealing with costs until a later date. In deciding whether to allow the delay, it was right that the Court saw the terms of the offer to see whether it was justified.

Read the judgment here