Clarifying the interpretation of ‘issued and served’

Clarifying the interpretation of ‘issued and served’

When are proceedings ‘served’ for the purposes of the Civil Procedure Rules 1998? Robert Crossingham of Weightmans LLP considers the legal and the non-legal business meaning of ‘served’.

Original news

T & L Sugars Ltd v Tate & Lyle Industries Ltd [2014] EWHC 1066 (Comm), [2014] All ER (D) 90 (Apr)

The Commercial Court considered preliminary issues which arose in a claim for breach of a contract for the sale of the European sugar business of Tate & Lyle plc. The court held, among other things that the phrase ‘issued and served’ in the contract meant issued and served in accordance with the Civil Procedure Rules 1998, SI 1998/3132 (CPR 1998) and that actual service had been effected by CPR 1998, 7.5 within the 12 month time limit provided by the contract.

What issues did this case raise?

This case considered whether the undefined term ‘served’ within a share and business sale agreement (the agreement) should be given its every day meaning, or be interpreted as importing the specific legal meaning from CPR 1998.

The relevant provisions of the agreement concerned notification of claims and commencement of proceedings. The agreement stated that any claim notified under the agreement would be deemed to be ‘irrevocably withdrawn 12 months after the notice is given…unless at such time legal proceedings in respect of the relevant claim have been commenced by being both issued and served’.

The claimant’s solicitors notified the defendant of a claim on 30 March 2012 and hand delivered a sealed claim form and particulars of claim to the offices of the defendant’s solicitors on 27 March 2013, just within the contractually permitted 12 month period. The claimant thought it had issued and served the claim in time and in compliance with the agreement. The defendant, however, interpreted service within the agreement to mean deemed service under CPR 1998, 6.14, which is two business days following the step required in CPR 1998, 7.5 concerning actual service—in this case, hand delivery. Deemed service, according to the defendant, was Tuesday 2 April 2013, due to the intervening Good Friday and Bank Holiday Monday and therefore just outside the 12 month contractual period.

The claimant’s principal argument was that applying the judgment of Ageas (UK) Limited v Kwik-Fit (GB) Limited [2013] EWHC 3261, [2013] All ER (D) 297 (Oct) which concerned a similar agreement, ‘serving’ should be given a non-legal business meaning and in the context, mean delivered. The claimant argued that if this interpretation was wrong, in any event service was effected when the claim form and particulars of claim were hand delivered pursuant to CPR 1998, 7.5. The claim form and particulars of claim would therefore have been served on 27 March 2013, the date of actual service, and within the 12 month period.

The defendant argued that because the agreement set out different regimes for contractual notification of claims, which required ‘a notice in writing’, and commencement of proceedings, which required a claim to be ‘issued and served’, the parties had clearly intended them to be interpreted differently. In addition, it was argued that service was effected under CPR 1998 on the deemed date of delivery pursuant to CPR 1998, 6.14.

Flaux J considered Ageas and disagreed with the judgment. He concluded that the word ‘issued’ had a distinct legal meaning and therefore reference to ‘issued and served’ in the agreement imported the technical legal meaning from CPR 1998. On the matter of when service was effected, he said: ‘CPR 6.14 is looking at when service will be deemed to have taken place for the purpose of other steps in the proceedings thereafter’, while CPR 1998, 7.5 deals with when service has actually taken place. He concluded that in the absence of reference to deemed service in the agreement, service had been effected according to CPR 1998, 7.5—this being when the claimant’s solicitors hand delivered the documents to the defendant’s solicitors on 27 March 2013.

To what extent is the judgment helpful in clarifying the law in this area?

In light of the existing judgment of Ageas, the judgment in this case has muddied the waters by ostensibly creating two different approaches to interpreting ‘service’ in a commercial agreement.

Green J in Ageas was of the opinion that one should not consider the vantage point for the interpretation of commercial agreements to be that of the reasonable lawyer or ‘business man with a lawyer permanently hovering at his shoulder whispering advice’. As such in the absence of any express provisions to the contrary, the word ‘service’ should have its normal every day meaning. Green J emphasised this point by stating that the draftsman could have added ‘in accordance with the Civil Procedure Rules in force at the relevant time’ or ‘as those terms are applied in Civil Procedure Rules’—to imply a legal meaning.

On the other hand, Flaux J focused on the fact that in the agreement, the word ‘served’ was paired with the word ‘issued’. ‘Issued’, he reasoned, was a legal term denoting a procedural step in litigation, which had no natural meaning in business nomenclature. It followed that the inclusion of this word modified the meaning of ‘served’ to give it its meaning under CPR 1998.

However, despite the above disagreement on the interpretation of ‘service’, both judgments agree that with regard to when service is actually effected, CPR 1998, 7.5 applies. CPR 1998, 6.14 concerning deemed service, can only apply once actual service has taken place. Therefore, the net result is that a claim will be actually served on the day that the required ‘step’ in CPR 1998, 7.5 has taken place.

What practical guidance can lawyers take from this case?

This judgment and that of Ageas present two different interpretations of very similar contractual clauses. For the sake of certainty, lawyers drafting commercial agreements should proceed with caution when seeking to include clauses referencing the issuing and/or serving of claims. It would be prudent for any reference to proceedings being ‘issued’ and ‘served’ to be expressly defined to ensure that both parties are aware of the true time limits applicable should any dispute arise.

If an agreement already exists which uses the terms ‘issue’ and ‘service’ and they are undefined, to err on the side of caution, it should be assumed that CPR 1998 apply. The parties to such an agreement should therefore re-examine the time limits by when a relevant action must be undertaken and attempt to agree retrospectively between them, to clarify and confirm any ambiguities before they become a problem.

Are there still any grey areas lawyers will need to watch out for?

As stated, the judgment in this case alongside Ageas present two different ways of interpreting the same words. As both judgments are High Court decisions, judges dealing with future matters will have the option of applying two different approaches to interpretation, creating uncertainty. It will take a higher court decision to resolve this new tension. In any event, most cases on this point of interpretation will be fact-sensitive so that an unwelcome degree of subjectivity is likely to exist in the resolution of such disputes in the future.

Interviewed by Nicola Laver.

The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.

First published on Lexis®PSL Dispute Resolution on 1 May 2014. Click here for a free one week trial of Lexis®PSL. 

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