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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Bayat Telephone Systems Internaitonal Inc & Ors v Lord Michael Cecil & Ors [2011] EWCA Civ 135 (18 February 2011) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2011/135.html Cite as: [2011] EWCA Civ 135, [2011] 1 WLR 3086, [2011] CP Rep 25, [2011] WLR (D) 51

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IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
COMMERCIAL COURT
MR JUSTICE HAMBLEN
[2010] EWHC 641 (Comm)

		Royal Courts of Justice Strand, London, WC2A 2LL
		18/02/2011

Lord Justice Stanley Burnton :

Introduction

1. This is the Defendant Appellants' appeal against orders made by Hamblen J on 29 March 2010:

(a) dismissing their application to set aside the order made by Field J dated 19 September 2008 extending the Claimant Respondents' time to serve their claim form on the Appellants;

(b) dismissing their application to set aside the order made by Tomlinson J dated 18 March 2009 granting the Respondents an extension of time to serve their claim form on the Defendants; and

(c) dismissing their application to set aside the order dated 8 April 2009 made by Steel J in so far as it gave the Respondents, pursuant to CPR 6.15, permission to serve the Appellants by alternative means.

2. Hamblen J's judgment also addressed applications made by the Appellants to set aside the order made for their service out of the jurisdiction. The order he made dismissing those applications is not the subject of appeal.
3. I have been able to take my account of the background to these applications from Hamblen J's careful judgment, for which I express my appreciation. It will, I think, be clearer if I refer to the Appellants as the Defendants and to the Respondents as the Claimants.

The claim

4. The Claimants allege that by an oral agreement made on 19 September 1998 in London the First and Second Defendants ("Bayat" and "TSI Inc.") promised the First and Second Claimants ("Cecil" and "Bentham") a 45 per cent interest in the shares in TSI Inc., and/or in any other corporate vehicle used to carry out a project to set up a telecommunications network in Afghanistan ("the Afghan Project"). This promise was allegedly made in return for Cecil and Bentham taking responsibility for the business, technical and development aspects of the Afghan Project. It is alleged that the initial agreement was that the Fourth Defendant ("Warner") was to have 11.25 per cent of the promised 45 per cent, subsequently amended to 49 per cent, of which Warner was to have 9 per cent. Later, by further alleged oral agreements between (among others) Bayat, TSI Inc. and the Third and Fourth Claimants ("Grinling" and "Lehmkuhl"), it was agreed that Lehmkuhl and Grinling should, in consideration of their respective services, have respectively 5 per cent and 1 per cent of the equity out of the 49 per cent minority interest. It is alleged that there were agreed adjustments to these promised shareholdings, the details of which are irrelevant to the issues on this appeal.
5. None of the Claimants has received any shareholding in TSI Inc. or in any other corporate vehicle for the Afghan Project, despite allegedly providing the services which they had agreed to provide. In consequence, the Claimants claim damages for breach of contract, remedies for breach of constructive trust, alternatively a quantum meruit for their services. They also claim damages for fraudulent misrepresentation and damages for conspiracy.
6. The claim is very substantial indeed. In their Particulars of Claim, the Claimants allege that their loss in connection with the shares alone was in the region of US$400 million, plus interest and costs.
7. As I read the Particulars of Claim, the earliest cause of action pleaded accrued in June 1999, when the fraudulent misrepresentations alleged in paragraphs 119 to 124 and paragraphs 125 to 128 were made and relied upon. The dates of the alleged breaches of contract, in so far as they are alleged to be a failure to allot or to transfer shares, are unclear, but in or about November 2002 Bayat commenced the proceedings in New York to which I refer below, denying that Cecil and Bentham had any interest in TSI Inc.. Breach of fiduciary duty is alleged to have occurred from about January 2002.
8. The judge did not make any clear finding as to when the various causes of action alleged by the Claimants accrued, but this appeal has been argued on the basis that the extension of time for service of the claim form ordered by Field J on 19 September 2008 arguably took that time beyond the expiry of the 6 year limitation period, and that the order made by Tomlinson J on 18 March 2009 took it arguably beyond the period of 6 years and 6 months from its expiry. This basis would seem, if anything, to be favourable to the Claimants. In fact, the Defendants say that limitation would have come into play by October or November 2008, and perhaps earlier, and that relevant limitation periods expired at the end of November 2008.

The procedural history

9. On 21 November 2002, TSI Inc. and the Third Defendant, ("AWCC") commenced proceedings in the court of the Southern District New York ("SDNY") against Cecil, Bentham and NetMobile S.A., a company managed by Cecil and Bentham, claiming damages for conspiracy to defraud, breach of fiduciary duty and conversion of their property. Cecil, Bentham and NetMobile counterclaimed, and added Bayat as a counterclaim defendant, alleging that the defendants to their counterclaim had refused to recognise Bentham and Cecil's interests in the entity holding the licence for and operating the Afghan Project. In their Reply, the claimants in that action contended that Bentham and Cecil had no interest in TSI Inc or the Afghan Project.
10. On 30 November 2004, without hearing any evidence, the SDNY dismissed the claim and counterclaim, and ordered that the file, and nearly all documents relating to the action, be sealed.
11. Cecil and Bentham (but not the claimants in the action, TSI Inc and AWCC) appealed against the decision dismissing the proceedings (including the counterclaim) to the Second Circuit Appeal Court, which in January 2006 affirmed the lower court's decision. In addition, in January 2008 that Court made a Protective Order. Cecil and Bentham then sought to appeal to the Supreme Court, which in January 2007 declined to hear the appeal. The information and documents relating to these appeals are also sealed. No reasons for these decisions were given by the US courts.
12. According to the Claimants, at the end of April 2006, i.e., after the decision of the Second Circuit Appeal Court but before the decision of the US Supreme Court, they decided to bring these proceedings in England.
13. The claim form in these proceedings was issued on 19 May 2008. It was marked "Not for service out of the jurisdiction". On 10 September 2008, the Claimants applied for an extension of time for the service of their claim form of 6 months, to 20 March 2009. Permission to serve out had not yet been obtained and was not sought. The application was supported by the witness statement of Adam Greaves, a partner in the Claimants' then solicitors Steptoe & Johnson. He said that it was thought that the limitation period for the claims would expire some time after (sic) 29 November 2008. He referred to the US proceedings, and to the fact that Cecil and Bentham had committed substantial funds to them. He stated:

11. In April 2006, Lord Cecil and Mr Bentham sought to commence proceedings in England against Mr Bayat and the various companies and individuals. However, having exhausted their funds in the SDNY proceedings, it was necessary for them first to obtain third party funding for their claim.

12. Over the course of the next 2 years, Lord Cecil and Mr Bentham approached various potential funders including: Barclays Bank; Coutts Bank; Allianz; IMF (an Australian listed company involved in litigation funding); Insolvency Management, Consillium Capital, Arlington Group, Justice Capital, Trafalgar and Elliott (investment funds involved in litigation funding); and, various wealthy individuals with histories of funding litigation.

13. Unfortunately, negotiations with each of these potential funders were unsuccessful for reasons including, but not limited to: the scale of the claim (and the consequent cost implications); the cross-border nature of the claim; and, the fact that any subsequent enforcement of a judgment or award in the Claimants' favour would need to take place across various jurisdictions.

14. On or about 25 April 2008 I met Therium Capital (a newly established company specialising in litigation funding and whose principals include solicitors and barristers experienced in large scale litigation) who subsequently expressed interest in funding the Claimants' claim subject to securing funding themselves. Subsequently, on or about 11 August 2008 Therium provided a draft funding agreement for consideration.

15. On or about 3 September 2008, the Claimants received confirmation that Therium had secured an offer for their own funding from Och Ziff Capital Management and that the Claimants' claim would be the first put forward for approval of funding. However, on 9 September 2008, the claimants were informed that Och Ziff Capital management had declined the Claimants' application for funding.

16. Whilst Therium is in the process of pursuing backing from an alternative capacity provider, Credit Suisse, it is not, at present, able to confirm whether its negotiations are likely to be successful. Consequently, the Claimants are themselves pursuing alternative means of funding through a contact known to the Fourth Claimant ("Mr Lehmkuhl"). Once funding has been obtained, it will then be necessary to finalise the relevant litigation funding agreement, finalise ATE insurance (for which a firm proposal has been received from Brit Insurance), put in place conditional fee agreements with the Claimants' legal advisers (both solicitors and counsel) and agree a deed of priority.

17. Unfortunately, all this is after the deadline for service of the Claim Form on 20 September 2008, being 4 months after the issue under CPR 7.5(3).

18. Therefore, because of the funding issue, service of the Claim Form has not been effected on any of the Defendants and the Claimants therefore make this application for an extension of time of the service of the Claim form, to 4 pm on 20 March 2009, under CPR 7.6(1).

19. A substantial amount of work has already been undertaken on the Claimants' case. As the First, Second and Third Defendants are outside of the jurisdiction, an application to allow service outside of the jurisdiction and/or an application for alternate service will then have to be made. The preparations for service outside of the jurisdiction on the various Defendants will be complicated and it will take time to complete this process. Given the fact that the Christmas holidays also fall at the end of December, it is likely that the Claimants will not be in a position to serve the Claim Form outside the jurisdiction on the various Defendants before February and it could be as late as March 2009, although the Claimants will endeavour to do so before then.

14. As mentioned above, on 19 September 2008 Field J made the order sought by the Claimants. This is the first of the orders that the Defendants say Hamblen J should have set aside.
15. On 27 February 2009, the Claimants issued their first application for permission to serve the claim form out of the jurisdiction. It was heard by Tomlinson J on 13 March 2009. It appears from the transcript of the hearing that the Particulars of Claim were before him, although they were not signed by the Claimants until 5 and 6 April 2009. There was no American legal evidence before him to the effect that the USA was not an available forum for the claim. The application was dismissed by Tomlinson J on 18 March 2009, without prejudice to any further application, on the ground that it had not been shown that England was the appropriate forum for the trial of the claim. The judge also granted an extension of the validity for service of the claim form until 30 April 2009, while presciently remarking that the Claimants were at risk that the Defendants would in due course apply to set it aside. This order is the second order the Defendants say that Hamblen J should have set aside.
16. On 7 April 2009, the Claimants again applied for permission to serve the claim form out of the jurisdiction. It was granted by David Steel J on the following day. In addition, on this occasion the Claimants applied for permission to serve by alternative means. This too was granted by David Steel J. His order is the third order which, in this appeal, the Defendants contend should have been set aside by Hamblen J.
17. On 16 April 2009 an After Event Insurance policy was issued.
18. The claim form was despatched for service on 17 April 2009; on the same day, the Claimants' solicitors issued a press release announcing their claim. The earliest deemed date of service on any of the Defendants is 21 April 2009. The Defendants filed their acknowledgments of service on 13 May 2009, stating they would contest the jurisdiction, and on 4 June 2009 they issued their applications to set aside the orders now at issue, as well as the order giving permission to serve out of the jurisdiction.
19. On 10 July 2009, the Defendants issued an application for security for costs. It was determined by a consent order dated 16 September 2009 by which the Claimants undertook, until the determination of the Defendants' jurisdiction challenge, not to dispose of specified assets.
20. The Defendants' applications were heard by Hamblen J in March 2010. The applications to set aside the orders now in issue were dismissed. He gave the Defendants permission to appeal against his refusal to set aside the orders of Field and David Steel JJ. Before us, the Defendants sought permission to appeal against the order of Tomlinson J also. The Claimants did not object to the necessary amendment to the Defendants' notice of appeal, and we granted the required permission and heard the appeal concerning all three orders now in question.

Hamblen J's judgment

21. The greater part of Hamblen J's judgment (paragraphs 14 to 156) is concerned with the Defendants' application to set aside the order for service of the claim form out of the jurisdiction.
22. In paragraphs 157 to 166 of his judgment, Hamblen J set out CPR 7.6(2) and (3), the rules applicable to extensions of time, and referred to a number of pertinent authorities, namely Hashtroodi v Hancock [2004] 1 WLR 3206, Collier v Williams [2006] 1 WLR 1945, and Hoddinott v Persimmon Homes [2008] 1 WLR 806, Imperial Cancer Research UK v Ove Arup and Partners Limited [2009] EWHC 1453 (TCC). The judge referred to limitation in paragraphs 166 and 167:

166. As to the relevance of limitation, whether the claim has become statute barred since the issue of the claim form is a matter of importance. Where an extension of time is sought in circumstances where the claim has, or may have, become time-barred since the date on which the claim form was issued, or will become time-barred in the extended period, the court should have regard to the fact that an extension of time might disturb a defendant who is entitled to assume that his rights can no longer be disputed as a matter of importance when deciding whether to grant an extension of time for service: see Hashtroodi para. 18 and Hoddinott para. 52. See also Sodastream v Coates [2009] EWHC 1936 (Ch) "…it was certainly prejudicial to the fifth defendant who, as a result of the further extension, found the limitation period for the claim against him extended by a further three months" (para. 38). This consideration is the more important if the extension is beyond four (or six) months after the expiry of the limitation period when such an assumption can be safely made.

167. The Claimants also submitted that in the exercise of its discretion the court should have regard to the balance of hardship. In this regard reliance was placed upon case law under RSC Ord 6 r 8 (under which it was necessary to show "good reason" for an extension) and Lord Brandon's judgment in Waddon v Whitecroft-Scovill Ltd [1988] 1 All ER 996 at p1003 in which he stated that whilst balance of hardship could not in itself be a good reason, "where there were matters which could, potentially at least, constitute good reason for extension, balance of hardship might be a relevant consideration". Although reliance upon RSC caselaw is generally discouraged (see in the present context Hashtroodi at para. 16), I accept that, if a potentially good reason for an extension has been shown, balance of hardship may be relevant to the exercise of the court's discretion to extend time.

23. He referred to the parties' submissions on the facts of this case in paragraphs 177 and 178, and set out his conclusions:

179. Whilst I accept that lack of funding will often not be a good reason for an extension of time, in the unusual circumstances of the present case I am satisfied that good reason has been made out. In particular:

(1) The immediate reason that … Cecil and Bentham were so strapped for funds was that significant amounts had been spent by them in the US proceedings but, through no fault of theirs and without any determination on the merits, those proceedings had very unusually been dismissed on the Court's own motion.

(2) Following the failure of their attempted appeal to the Supreme Court, Cecil and Bentham resolved that proceedings would have to be brought here and made extensive efforts to obtain funding.

(3) It was apparent that the costs of litigation here would be very extensive. The ATE insurance eventually obtained was for £6 million in total, including provision of £2.6 million for adverse costs. For reasons that will be addressed in more detail below, I accept that it was not viable for the Claimants to bring proceedings here without a CFA and ATE insurance.

(4) Although the Claimants could have funded the service of the claim form and then sought a stay there is little doubt that that would have been opposed and that they would in any event have been faced with the present application. A heavy and expensive hearing would have been inevitable, as borne out by the Defendants' costs estimate of £500,000 for this hearing.

(5) Although the claim form was eventually served before the CFA had been obtained, ATE insurance had been procured which meant that there was now a good prospect of securing a CFA and doing so soon, as was borne out by events.

180. In the unusual circumstances of the present case I therefore accept that the Claimants acted "sensibly and responsibly" in not serving the claim form. In cases such as Steele v Mooney it was not sensible to serve the claim until it had been established that the claimant had a viable claim. In that case expert evidence was required for the claim to be viable. In the present case funding was required for the claim to be viable. That could clearly not justify a prolonged extension of time but in this case a short extension was being sought in circumstances where extensive efforts had been made to obtain funding and there was a real prospect of it being obtained shortly, as events proved. Further, the obtaining of ATE insurance before serving the claim was in the Defendants' own interests since it would provide them with costs protection in respect of the heavy applications which would inevitably follow service.

181. I also consider that the balance of hardship strongly favours the granting of an extension. If the extension is set aside the Claimants will have lost the opportunity to pursue a very sizeable claim which they are now in a position to fund and which they have been seeking to pursue since 2002. Through no fault of their own the US proceedings came to an end without resolution. This is not a case where the Defendants are suddenly faced with a claim for the first time at or after the end of the limitation period. The Defendants have been facing and dealing with this claim since 2002 and extensive documentary and witness evidence has already been procured in relation to it. In such circumstances, a short further delay in prosecution of the claim would cause little prejudice. Nor is this a case, given its history, in which the Defendants could safely assume that the claim was no longer being pursued. It will have been apparent from Cecil and Bentham's conduct of and attempts to revive the US proceedings that this was a claim that they were very serious about pursuing. In any event, on the Claimants' case on limitation the extension did not in any event take the claim outside the period of 6 years and 6 months after which, in an ordinary case, such an assumption might safely be made. Although the Defendants contended for a slightly earlier date, even on their case the extension is only just outside the extended period.

182. For all these reasons, I am satisfied that there was good reason for the grant of the extensions of time and that this is an appropriate case for an extension.

24. The judge also rejected the Defendants' contention, based primarily on Mr Greaves' statement that they had "exhausted their funds in the SDNY proceedings", that there had been material non-disclosure. He said:

186. I also do not accept that the statement that Cecil and Bentham had "exhausted" their funds would be reasonably understood as meaning that they had no funds; not even sufficient funds to issue a claim form. The statement was made in the context of evidence relating to their attempts to obtain litigation funding for the prosecution of the claim. What was being said was that in view of the monies spent in the US proceedings they were not in a position to fund proceedings here and could not pursue their claim without external funding. That was and remains true. The assets disclosed do not reveal an ability to fund this expensive litigation without significant external support.

187. I therefore do not accept that there was a material non-disclosure or misrepresentation or, if there was, that it was deliberate or that … in any event it would be appropriate to set aside the orders made.

25. I should like to think that the judge did not intend to state (as he did) that it would not be appropriate to set aside the orders made if there had been deliberate non-disclosure or misrepresentation, and I shall proceed on that basis.
26. In relation to the order permitting service by alternative means, the judge said:

199. The evidence is that the individual Defendants in this case are international businessmen who travel extensively, have a transient lifestyle and homes in different countries. As such, service through official channels would not necessarily have meant that the proceedings would come to their attention promptly. I accept that the more efficient means of doing so was service by electronic means. In the case of the corporate Defendants the evidence was that service in the US and Afghanistan would involve delay. In relation to all Defendants, given the limitation issues, it was important that service was effected as soon as possible. I do not consider that there was any ulterior motive behind the request for service by alternative means. Concerns about a possible anti-suit injunction was (sic) a reason why the Defendants were not told of the proceedings in advance. It was not the reason why service by alternative means was being sought. That was justifiably motivated by a desire to ensure that proceedings were brought to the Defendants' attention as efficiently and expeditiously as possible. In my judgment in the present case service by alternative means was likely to be the most effective and efficient means of bringing the proceedings to the attention of the Defendants and there was a need, in the interests of the Defendants themselves, for that to be done as expeditiously as possible. In all the circumstances I am satisfied that there was good reason for service by alternative means.

The parties' contentions in summary

(a) The order made by Field J extending the validity of the claim form

27. The Defendants contend:

(a) The order of Field J was obtained as a result of material non-disclosure or misrepresentation by the Claimants as to their ability to fund their claim.

(b) The only ground put forward by the Claimants for the extension was their inability to fund the litigation to the end. This was not an admissible ground. Alternatively, the judge erred in the exercise of his discretion by giving this consideration undue weight, and in failing properly to consider and to take into account the effect of the order on their limitation defence.

(c) The judge should have required the Claimants promptly to apply for permission to serve the claim form out of the jurisdiction and to serve the claim form, and if they were financially unable at that point to pursue the litigation they could and should have made an application for a stay of proceedings for an appropriate period in which they could seek to make the necessary funding arrangements.

28. The Claimants contend:

(a) There had been no material misrepresentation or non-disclosure, and certainly not such as to justify setting aside the order.

(b) Although in general difficulty in funding litigation is not a good reason to extend the validity of a claim form, in the particular and unusual circumstances of this case, in which time and the Claimants' resources had been used up in the US proceedings, it was a good reason.

(c) The suggestion that there could have been a relatively inexpensive application for a stay after service of the claim form was impractical. The Defendants had demonstrated that they could and would seek to outspend the Claimants, and exhaust their ability to pursue their claims. Any such application would have been met by the applications in fact made by the Defendants, at a time when the Claimants would not have had the funding available properly to contest them.

(d) This was not a case in which the Claimants or their solicitors had acted imprudently or negligently. They had not waited until the last minute before issuing proceedings. The authorities which demonstrated a strict approach to extensions of time were concerned with such cases, rather than cases in which the Claimants had acted sensibly, even if not perfectly, as the Claimants had in this case.

(e) The judge had duly exercised his discretion; he had taken into account the effect of the extension of time on the Defendants' limitation defence; and it had not been shown that he had erred so as to exceed the wide bounds of his discretion.

(b) The order of Tomlinson J further extending the validity of the claim form

29. The parties' contentions are in substance the same as those relating to the order made by Field J, save that there is no allegation of material non-disclosure or misrepresentation.

(c) The order of David Steel J permitting service by alternative means

30. The Defendants submit that the only ground relied upon by the Claimants for this order, namely that service would be speedier by alternative means, was not an admissible ground. Service should have been effected under the Hague Convention. Such service would have required a further and extraordinary extension of the validity of the claim form, which should not have been granted. It follows that the judge should have set the order aside.
31. The Claimants submit that the use of alternative means of service was permitted under the CPR, and the judge had duly exercised his discretion in refusing to set the order aside.

Discussion

(1) The extensions of time to serve the claim form

(a) Non-disclosure

32. It is convenient to address this ground asserted by the Defendants first, since if it is established it may justify reversing the judge's order irrespective of the merits of the application to extend time.
33. The evidence of the Claimants' assets relied upon by the Defendants is, for present purposes, to be found in the helpful Schedule prepared for this appeal, with columns containing the parties' comments.
34. Like the judge, I do not read the second sentence of paragraph 11 of Mr Greaves' first witness statement as stating that Cecil and Bentham had exhausted their assets, rather than their funds, in the US proceedings. The fact that Cecil had relatively valuable furniture and other chattels is not inconsistent with the statement. Nor do I read it as implying that Cecil had made himself destitute as a result of the US proceedings. I therefore do not find that the fact that he had a share portfolio worth about £365,000 at the date of the application (an agreed figure) necessarily inconsistent with the witness statement, read as a whole, in which the context of the statement is the need to obtain third-party funding. Much the same applies to Bentham's assets.
35. I would, therefore, acquit the Claimants of deliberate misrepresentation.
36. However, I do not think that Mr Greaves' first witness statement was a full and frank exposition of the Claimants' means. In the first place, it entirely ignored the means of Grinling and Lehmkuhl. Lemkuhl is a person of some substance. He is the owner of a property in Switzerland the equity in which is worth some £2.5 million. He could not borrow against it without his wife's agreement, but some borrowing should have been possible. He owns a chalet in Verbier the equity in which is worth some £236,000; it is let, but again it could provide security for a loan. More importantly, Lehmkuhl Holdings is his personal holding company with a value of approximately US$1.25 million. While tax and other difficulties to which he refers in his witness statement would prevent its being used to obtain the full value of the underlying shares, it could be the source of significant funding. Given that Lehmkuhl's claim is said to be worth some $40 million, it would have been reasonable to expect him to put his hand in his pocket.
37. In my view, however, these failures of disclosure are linked to a fundamental issue relating to the Claimants' application to Field J, namely whether at that stage of the litigation they required funding for the whole of the proceedings, to trial. It seems to me that their approach, which was that they required to have such funding in place, not only affected their estimate of their funding needs, but also affected their disclosure of their means. In the context of a proposal simply to serve the proceedings and immediately to issue an application for directions, including a stay pending the obtaining of the necessary financial support, it would have been misleading to state that the Claimants' funds had been exhausted. But that was not the context. The decision to arrange funding for the entirety of the proceedings before serving the claim form was determinative of the Claimants' decision as to the appropriate steps to take in the proceedings at that stage and their funding requirements at that stage. In effect, the judge held that the Claimants' approach was permissible in the circumstances.
38. I add that, as I think Mr Strauss QC accepted, the Claimants' evidence as to their funding is unsatisfactory. In paragraph 16 of Mr Greaves' first witness statement, set out above, he refers to three requirements: funding, ATE insurance and CFAs. What was the nature, amount or purpose of the first item was not stated, and has not been since.
39. I turn to consider the decisions to extend time for service of the claim form.

(b) The extensions of time for service of the claim form: substance

40. For present purposes, I shall proceed on the basis that the claim form was valid for 6 months from the date of issue, i.e., with the extra 2 months normally allowed for service out of the jurisdiction.
41. As Mr Strauss rightly emphasised, the Defendants' appeal is against the judge's exercise of his discretion conferred by the CPR. It follows that in order to succeed they must show that he erred in law or in principle, or that his decisions were outside the generous width of his discretion.
42. In my judgment, it was not for the Claimants unilaterally to decide to postpone service of their claim form. They should have served it in the period of its initial validity, and, if they were not in a financial position to proceed immediately with the claim, they should have issued an application seeking a stay, or an extension of the time for procedural steps to be taken. I do not accept that this would necessarily have involved great legal costs. The nature of their application would have been apparent. It would have been for the court to ensure that those costs were kept within acceptable limits, and if necessary an order limiting the Claimants' cost exposure in respect of that application could have been sought under CPR r 44.18. The court would, in my view, have been astute to prevent the Claimants being unduly prejudiced by any attempt by the Defendants to seek to proliferate costs at that very early stage.
43. In other words, any forensic difficulties caused by the financial constraints of the Claimants should have been the subject of case management by the Court. I would respectfully endorse what was said in the judgment of this Court in Hoddinott v Persimmon Homes (Wessex) Ltd [2007] EWCA Civ 1203 [2008] 1 WLR 806:

54. It is tempting to ask: what is the point in refusing to extend the time for service if the claimant can issue fresh proceedings? But service of the claim form serves three purposes. The first is to notify the defendant that the claimant has embarked on the formal process of litigation and to inform him of the nature of the claim. The second is to enable the defendant to participate in the process and have some say in the way in which the claim is prosecuted: until he has been served, the defendant may know that proceedings are likely to be issued, but he does not know for certain and he can do nothing to move things along. The third is to enable the court to control the litigation process. If extensions of time for serving pleadings or taking other steps are justified, they will be granted by the court. But until the claim form is served, the court has no part to play in the proceedings. A key element of the Woolf reforms was to entrust the court with far more control over proceedings than it had exercised under the previous regime. The rules must be applied so as to give effect to the overriding objective: this includes dealing with a case so as to ensure so far as is practicable that cases are dealt with expeditiously and fairly (CPR 1.1(2)(d)). That is why the court is unlikely to grant an extension of time for service of the claim form under CPR 7.6(2) if no good reason has been shown for the failure to serve within the 4 months' period.

44. Mr Strauss relied on the fact that the authorities to which we have been referred in which an extension of time was refused or set aside on appeal were cases in which the solicitor acting for the claimant had been negligent. Hashtroodi v Hancock was such a case. In general, an extension of time is not justified where its need is due to the negligence of those acting for the claimant. But it does not follow that an extension is necessarily to be granted in a limitation case where those acting for the claimant have acted competently.
45. There is some similarity between the present case and that of Glass v Surrendran, one of the four appeals before the Court in Collier v Williams [2006] EWCA Civ 20 [2006] 1 WLR 1945. In Glass v Surrendran, the only reason put forward for not serving the claim form was that the claimant was waiting for an accountant's report. That would have been a reason for an extension of time to serve the particulars of claim, but not for delaying service of the claim form: see at paragraph 148 of the judgment of the Court, given by Dyson LJ, as he then was, who was the author of many of the leading judgments in this area:

148. … As Mr Walker said, the apparent justification advanced on behalf of the claimant, namely that his solicitors were awaiting receipt of the accountant's report, is not a reason for delaying service of the claim form. In the first place, if that point could justify any extension of time, it would be an extension for the service of the particulars of claim, not the service of the claim form. The judge appears to have accepted that, but it does not seem to us that this can simply be explained away, as the judge sought to do it, by describing the claimant as having made "the wrong form of application". The essential point is not that the claimant made the wrong form of application, but that the reason which may justify an extension of time for service of the particulars of claim does not justify an extension of time for the service of the claim form.

See too the judgment of Christopher Clarke J in City & General (Holborn) Ltd v Structure Tone Ltd and Ainscough Crane Hire [2009] EWHC 2139 (TCC) at paragraphs 36 and 37, in which he similarly considered that the desirability of postponing production of the particulars of claim did not justify an extension of time to serve the claim form, in a case in which limitation was in issue.

46. Reliance was placed on the decision of this Court in Steele v Mooney [2005] EWCA Civ 96 [2005] 2 All ER 256. That was a case in which the claimant did not know whether she had a good cause of action against any of the defendants because she had not obtained an expert's report, and the expert's report had been delayed by the failure of one of the defendants to provide copies of his clinical notes. None of the defendants had objected to the extensions of time sought by the claimant, and the error in referring to service of the particulars of claim rather than the claim form in the application for an extension was obvious and had been realised by the defendants. It was a very different case from the present, where the Claimants have considered that they have meritorious claims against the Defendants for some years.
47. It follows that I do not agree that, as the judge accepted in paragraph 179 of his judgment, "it was not viable for the Claimants to bring proceedings here without a CFA and ATE insurance". I would accept that it was not viable without a CFA and ATE insurance for the Claimants to take the proceedings to trial; I do not accept that they could not have commenced and served their proceedings without them. I similarly disagree with what the judge said in paragraph 179(4) of his judgment. The issues as to service out of the jurisdiction, which occupied most of the judgment and doubtless generated most of the costs to which he referred, would not have been addressed on an application for a stay or for extensions of time. There is an analogy with the jurisdiction of the court to order security for costs. Security is often ordered on a staged basis, precisely because it is unnecessary for provision to be made for the costs of the entire proceedings at early stages.
48. CPR r 7.6(3) differs from CPR r 7.6(2) in an important respect. If an application for an extension of time is made after the expiration of the validity of the claim form, the court has no discretion to exercise in favour of the claimant unless, in a case in which the claimant was to serve it, he "has taken all reasonable steps" to serve within the period of its validity but has been unable to do so. It would to my mind be curious if any different test may be applied to an application for an extension of time made within the period of the validity of the claim form in a case in which the limitation defence of the defendant will be or may be prejudiced. At the very least, even if he has not taken all reasonable steps, the claimant should have to show that he has taken reasonable steps. I refer to what Rix LJ recently said in his judgment in Aktas v Adepta [2010] EWCA Civ 1170 with which the other members of the Court agreed:

91. The reason why failure to serve in time has always been dealt with strictly (even if CPR 7.6(3) represents a still further tightening of the rules where a retrospective request for an extension is made out of time) is in my judgment bound up with the fact that in England, unlike (all or most) civil law jurisdictions, proceedings are commenced when issued and not when served. However, it is not until service that a defendant has been given proper notice of the proceedings in question. Therefore, the additional time between issue and service is, in a way, an extension of the limitation period. A claimant can issue proceedings on the last day of the limitation period and can still, whatever risks he takes in doing so, enjoy a further four month period until service, and his proceedings will still be in time. In such a system, it is important therefore that the courts strictly regulate the period granted for service. If it were otherwise, the statutory limitation period could be made elastic at the whim or sloppiness of the claimant or his solicitors. For the same reason, the argument that if late service were not permitted, the claimant would lose his claim, because it would become time barred, becomes a barren excuse. But even where the claimant is well within the limitation period despite his delay in serving, there is a clear public interest in the rules and the courts curtailing the efficacy of a claim form which, because it has not been served, is not very different from an unposted letter. Therefore, the strictness with which the time for service is supervised has entirely valid public interest underpinnings which are quite separate from the doctrine of abuse of process. It is sufficient for the rules to provide for service within a specified time and for the courts to require claimants to adhere strictly to that time limit or else timeously provide a good reason for some dispensation. …

49. The general rule is that the good reason that must be shown for the exercise of the discretion under CPR r 7.6(2) must be a difficulty in effecting service. In Hoddinott, the Court accepted what had been said by the district judge whose decision was under appeal:

59. Nothing that we have said in this judgment should be interpreted as undermining the approach articulated in Hashtroodi and the later cases. In his judgment, the district judge said:

"In my experience, there are very few applications [without notice for an extension of time for service of the claim form] being made since the 2006 cases unless there are real difficulties in actual physical service. Even fewer are being granted."

But even where there is no good reason for failing to serve within the 4 months' period, the court will exceptionally exercise its discretion to grant an extension where CPR 7.6(2) applies. In our view, the unusual combination of facts in this case justifies the exercise of this discretion.

50. Hoddinott is authority for the proposition that the court may grant an extension of time under CPR r 7.6(2) even where there is no good reason for failing to serve in the period of validity of the claim form. However, it was a case in which there was no question of a limitation defence being prejudiced by the extension: as remarked in paragraph 54 of the judgment, the claimant could have issued a new claim form. It was also a case in which the defendant had been made aware of the proceedings, since it had been sent a copy of the claim form. It required those two facts to justify the extension granted by the Court of Appeal. Neither was applicable in the present case.
51. Limitation defences are, in the context of the present claims (which do not include claims for death or personal injury), blind to the resources of the claimant. If, by reason of his lack of resources, a claimant is unable or unwilling to bring proceedings within the applicable limitation period, his claim becomes statute barred. Mr Strauss accepted that in general lack of funds is not a good reason for an extension of time (the effect of which is to extend the limitation period), but he submitted that the present case is exceptional. I accept that the facts are unusual, and in particular the fact that the Claimants' resources were spent on the US proceedings. But, as I have said, they would have been able to finance the service of proceedings and the making of an application to stay. Moreover, the fact that the US proceedings were abortive was, as the judge found, brought about by neither the Claimants nor the Defendants. It cannot be said, therefore, that the Defendants caused or contributed to any inability to serve the claim form resulting from the US proceedings.
52. Furthermore, in my judgment the judge did not address appropriately the consequences of his order on limitation. In Hoddinott Dyson LJ, giving the judgment of the Court, said:

52. It is clear beyond doubt that the claim for breach of contract is not yet time-barred and will not be time-barred for several years. There is no basis for a contrary argument and the contrary does not seem to have been argued. Where there is doubt as to whether a claim has become time-barred since the date on which the claim form was issued, it is not appropriate to seek to resolve the issue on an application to extend the time for service or an application to set aside an extension of time for service. In such a case, the approach of the court should be to regard the fact that an extension of time might "disturb a defendant who is by now entitled to assume that his rights can no longer be disputed" as a matter of "considerable importance" when deciding whether or not to grant an extension of time for service: see Hashtroodi para 18.

53. This approach was followed in City & General (Holborn) Ltd v Royal and Sun Alliance Plc [2010] EWCA Civ 911. Longmore LJ said, in a judgment with which the other members of the Court agreed:

7. … It is well-settled that when debatable issues of limitation arise, it is inappropriate to attempt to decide them on an interlocutory application for an extension of time for service of a claim form. If the claimants' argument that the claims are not time-barred is correct, they can always begin a fresh action in which, if a time-bar is asserted, it can be adjudicated upon. It is enough for a defendant to show that he might be deprived of a defence of limitation if time for service of a claim form is extended; if he can show that, an extension should not be granted or, if granted without notice, such extension should be set aside, see Hashtroodi v Hancock [2004] 1 WLR 3206 (paragraph 18) and Hoddinott v Persimmon Homes (Wessex) Ltd [2008] 1 WLR 806 (paragraph 52).

54. In paragraph 181 of his judgment, when considering the balance of hardship, the judge referred to the Claimants' loss of their claim, but did not refer to the Defendants' loss of their limitation defence, other than to say that the extension in question was "only just outside the extended period". But in the law of limitation, a miss is as good as a mile. Furthermore, the primary question in a case where limitation is engaged is not whether the Defendants could or could not assume that the claim was no longer being pursued (to which the judge did refer). The primary question is whether, if an extension of time is granted, the defendant will or may be deprived of a limitation defence.
55. It is of course relevant that the effect of a refusal to extend time for service of the claim form will deprive the claimant of what may be a good claim. But the stronger the claim, the more important is the defendant's limitation defence, which should not be circumvented by an extension of time for serving a claim form save in exceptional circumstances.
56. It follows that neither of the extensions of time granted respectively by Field J and Tomlinson J should have been granted. There was no good reason for them. For the reasons I have set out above, I have reluctantly concluded that the judge erred in dismissing the Defendants' application, and that this Court should reverse his decision.

(c) Service by an alternative method

57. On the basis of my conclusion on the extensions of the validity of the claim form, it is unnecessary to address this issue. However, having heard full argument, I propose to address it.
58. The Claimants had not served any of the Defendants by 8 April 2009, when David Steel J made his order permitting service by alternative methods. At that date they had only three weeks remaining of the validity of their claim form, as extended by Field and Tomlinson JJ. They could not have served under the Hague Convention within that time. Hence they required either a further extension, of some two months, or an order for service by an alternative, and speedier, method.
59. The grounds for this order put forward by the Claimants, in Mr Greaves' third witness statement, were that service under the Hague Convention would be likely to take around 2 months and that the personal Defendants were international business men who had more than one address and who travelled extensively. Bayat had homes in Florida, New Jersey and Kabul and an office in New York, and the Claimants could not be certain that he would be properly served, or that the proceedings would come quickly to his attention, if documents were simply sent to a single address. The Claimants proposed to serve him by post and courier to his Florida and New Jersey homes and to his New York office, and by email. They proposed to effect substituted service on TSI Inc. by post and courier to its business address in New Jersey and by email. AWCC is a company incorporated in Afghanistan, and it was proposed to serve it by means permitted by Afghanistan law, by registered post and by courier to its registered address in Kabul, and by email to its Managing Director. Mr Greaves said that Warner had homes in England, the Bahamas, Tobago and the USA. The Claimants proposed to serve him, in addition by postal service on his London home, by post and courier to his home address in New York and to his office address in the Bahamas, and by email.
60. David Steel J's order dated 8 April gave the Claimants permission pursuant to CPR r 6.15 to serve each of the Defendants out of the jurisdiction by the methods sought by the Claimants. In the case of Warner, this was in addition to service by post and courier at his home address in London. Afghanistan is not a party to the Hague Convention or to a bilateral civil procedure convention with the United Kingdom. AWCC, a company incorporated in Afghanistan, could be served as permitted by CPR r 6.40 by any method permitted by the law of Afghanistan, and David Steel J's order permitted service in accordance with what the Claimants had stated that law to be, i.e. by registered post and courier to its registered business address, but the order also permitted service by email addressed to its Managing Director pursuant to CPR r 6.15. It was implicit in the Claimants' application and in the order that the methods of service permitted pursuant to CPR r 6.15 were not methods permitted by the law of the country in which service was to be effected: if they had been so, no order under CPR r 6.15 would have been required.
61. The judge's reasons for his decision on this issue are to be found in paragraph 199 of his judgment, which I have set out above. In it, he referred to service as a means of bringing proceedings to the attention of the Defendants. However, service is more than that. It is an exercise of the power of the Court. In a case involving service out of the jurisdiction, it is an exercise of sovereignty within a foreign state. It requires the defendant, if he is to dispute the claim, to file an acknowledgment of service and to participate in litigation in what for him is a foreign state.
62. Thus, in Cookney v Anderson (1863) 1 De G J & S 365 (1863) 46 ER 146 Lord Westbury, the Lord Chancellor said, at 380-381:

The right of administering justice is the attribute of sovereignty, and all persons within the dominions of a sovereign are within his allegiance and under his protection. If, therefore, one sovereign causes process to be served in the territory of another, and summons a foreign subject to his Court of Justice, it is in fact an invasion of sovereignty, and would be unjustifiable, unless done with consent …

63. Similarly, in George Monro Limited v. American Cyanamid and Chemical Corporation [1944] 1 KB 432, 437 Scott LJ said, in a judgment with which Goddard and du Parcq LJ agreed:

Service out of the jurisdiction at the instance of our courts is necessarily prima facie an interference with the exclusive jurisdiction of the sovereignty of the foreign country where service is to be effected.

In Afro Continental Nigeria v Meridian Shipping Co SA (The Vrontados) [1982] 2 Lloyd's Rep 241, Lord Denning MR said, at 245:

As I have always understood it, service of a writ out of the jurisdiction is an exercise of sovereignty within the country in which service is effected.

64. More recently, in Molins Plc. v. G.D. S.p.A. [2000] 1 WLR 1741, Aldous LJ, giving the only substantive judgment of the Court of Appeal, said at paragraph 40:

… under both English and Continental legal systems service out of the jurisdiction is regarded as an interference with sovereignty

65. In modern times, outside the context of the EU, the most important source of the consent of States to service of foreign process within their territory is to be found in the Hague Convention (in relation to the State parties to it) and in bilateral conventions on this matter. Because service out of the jurisdiction without the consent of the State in which service is to be effected is an interference with the sovereignty of that state, service on a party to the Hague Convention by an alternative method under CPR 6.15 should be regarded as exceptional, to be permitted in special circumstances only.
66. It follows, in my judgment, that while the fact that proceedings served by an alternative method will come to the attention of a defendant more speedily than proceedings served under the Hague Convention is a relevant consideration when deciding whether to make an order under CPR r 6.15, it is in general not a sufficient reason for an order for service by an alternative method.
67. Quite apart from authority, I would consider that in general the desire of a claimant to avoid the delay inherent in service by the methods permitted by CPR r 6.40, or that delay, cannot of itself justify an order for service by alternative means. Nor can reliance on the Overriding Objective. If they could, particularly in commercial cases, service in accordance with CPR r 6.40 would be optional; indeed, service by alternative means would become normal. In fact this view is supported by authority: see the judgment of the Court in Knauf UK GmbH v British Gypsum Ltd [2001] EWCA Civ 1570 [2002] 1 WLR 907 at paragraph 47:

It was argued by Peters before the judge that the Hague Convention and the Bilateral Convention were a "mandatory and exhaustive code of the proper means of service on German domiciled defendants", which therefore excluded alternative service in England. The judge did not accept that submission, pointing out that those Conventions were simply not concerned with service within the English jurisdiction. Peters did not repeat that submission on its appeal. Nevertheless, it follows in our judgment that to use rule 6.8 as a means for turning the flank of those Conventions, when it is common ground that they do not permit service by a direct and speedy method such as post, is to subvert the Conventions which govern the service rule as between claimants in England and defendants in Germany. It may be necessary to make exceptional orders for service by an alternative method where there is "good reason": but a consideration of what is common ground as to the primary method for service of English process in Germany suggests that a mere desire for speed is unlikely to amount to good reason, for else, since claimants nearly always desire speed, the alternative method would become the primary way.

68. Service by alternative means may be justified by facts specific to the defendant, as where there are grounds for believing that he has or will seek to avoid personal service where that is the only method permitted by the foreign law, or by facts relating to the proceedings, as where an injunction has been obtained without notice, or where an urgent application on notice for injunctive relief is required to be made after the issue of proceedings. In the present case, the only reason for urgency in serving the Defendants arose from the Claimants' delay in seeking and obtaining their permission to serve out of the jurisdiction: a delay resulting in part from their decision not to proceed with their claim until they had obtained funding for the entire proceedings. Furthermore, their application for permission to serve out was not particularly complicated.
69. This does not mean that a claimant cannot bring proceedings to the attention of a defendant by email, fax or other more speedy means than service pursuant to CPR r 6.40. The Claimants could have done so in the present case. But, as I have indicated, service is more than this. In my view, the judge confused this possibility with service itself.
70. It follows that in my judgment there was no good reason for an order granting permission to serve the Defendants by alternative methods.

Conclusion

71. For the reasons I have set out above I would allow the Defendants' appeal and set aside the orders extending the validity of the claim form.

Lord Justice Wilson:

72. I have read the judgments of Lord Justice Stanley Burnton and of Lord Justice Rix in draft. I agree with both judgments.

Lord Justice Rix:

73. I am grateful to Lord Justice Stanley Burnton for setting out the material in this case. I agree with him, and add some observations of my own as we are disagreeing with the careful judgment of Hamblen J.

Extension of time for service

74. The essential chronology can be expressed as follows. The cause of action upon which the claimants are suing came into existence by at latest end November 2002 (as for present purposes has been common ground). In that same month, the claimants were sued in New York's southern district court by interests representing the defendants. The claimants date their cause of action from the time when they were served with those proceedings. The claimants counterclaimed. After two years of litigation in New York, in November 2004 the district court of its own motion dismissed both claim and counterclaim and ordered the court file and most of the documents to be sealed. The claimants appealed unsuccessfully, but their appeal was dismissed in January 2006.
75. Although it was common ground that late November 2008 was the latest time for the expiry of limitation, the defendants argue that time in fact expired earlier. The claimants' pleadings suggest that a cause of action in fraudulent representation accrued in June 1999 (giving an expiry date in June 2005), breach of fiduciary duty is alleged to have occurred in about January 2002 (giving an expiry date of January 2008), but the alleged breach of contract for failing to allot shares is left uncertain. The litigation commenced in New York in November 2002 denying the claimants' alleged rights suggest that it may have been clear before then that no shares would be allotted. The fact that the claimants issued their claim form in May 2008, particularly against the background of their unwillingness to get involved in the expense of litigation without funding in place, suggests that some potentially important milestone was then approaching.
76. What is important for present purposes is a cause of action which might expire in between the issue of the claim form and the expiry of time for service under it: for if the claim form has not been served and time for service therefore needs to be extended, the decision whether to extend or not will involve a decision whether the claimant is forced to issue anew, which may leave him exposed to a limitation defence, or else will be permitted in effect to extend time for getting his litigation underway albeit under the protection of a claim form originally issued within time. I spoke of this in Aktas v. Adepta at [91] in a passage cited by Stanley Burnton LJ at [48] above. I would particularly stress the following in that passage:

"In such a system, it is important therefore that the courts strictly regulate the period granted for service. If it were otherwise, the statutory limitation period could be made elastic at the whim or sloppiness of the claimant or his solicitors. For the same reason, the argument that if late service were not permitted, the claimant would lose his claim, because it would become time barred, becomes a barren excuse."

77. In my respectful opinion, therefore, the question of an extension for service in the context of the expiry of a limitation period goes beyond a point referred to in the authorities to the effect that after a limitation period plus four months for service a defendant who has not been served can be entitled to assume that he will not be bothered by litigation. The point is referred to in a passage in Professor Zuckerman's Civil Procedure, 2^nd ed, 2008, at 4.145:

"If an extension is sought beyond four months after the expiry of the limitation period, the claimant is effectively asking the court to disturb a defendant who is by now entitled to assume that his rights can no longer be disputed."

That is so, and that thought was referred to with approval first in Hashtroodi at [18], and again in Hoddinott at [52] (see at [52] above).

78. However, the matter goes further than that, because, whatever the expectations of a defendant who bears any relevant limitation period in mind, the fact is that an extension of time for service does effectively extend the period (primarily a matter of limitation) during which a claimant can do nothing to bring his litigation formally to the notice of his defendant. That larger point was the subject matter of another observation of Professor Zuckerman (at para 4.134):

"The need for placing a time limit on service of the claim form is dictated by the need for finality in litigation and by the very existence of limitation periods. The period allowed for service seeks to ensure that the uncertainty of litigation is not unreasonably extended. True, unlike the limitation period, which the court has no power to extend, except within narrowly defined statutory exceptions, the court has always had a power to extend the time for service of originating process. This discretionary power reflects the recognition that some latitude must exist to deal with situations where it has proved difficult to carry out service within the time limits established by the rules. However, as Lord Browne-Wilkinson stated in Dagnell v J.L Freedman & Co (a firm) [[1993] 1 WLR 388 (HL)], the starting point of any consideration of extension of the period for service must be that a defendant has a right to be sued, if at all, by means of a writ (now a claim form) issued within the limitation period and served within the period of its initial validity."

79. Lord Browne-Wilkinson there had the agreement of the House as a whole. He spoke of the defendant's right based upon the limitation period as a "fundamental right". I will revert to the facts of Dagnell below, for they are in my judgment instructive.
80. To continue with the essential chronology: in April 2006 (pending an unsuccessful attempt to obtain an appeal in the US Supreme Court) the claimants resolved to commence these proceedings in England. That was more than 2½ years before the expiry of the limitation period. However, the claim form was not issued before 19 May 2008, and when it was, it was issued "not for service out of the jurisdiction". As such that claim form had a life of four months, unless extended, although that period could automatically be extended to six months if service out was necessary.
81. The delay of over two years between the decision to claim in England and the issue of the English proceedings has been explained in the claimants' own evidence as due to the unwillingness of the claimants to commence proceedings unless they were entirely insulated against the cost consequences of such proceedings. Mr Strauss QC, who has appeared on behalf of the claimants, has confirmed to the court that their evidence is properly to be understood as giving rise to that inference. This deliberate decision on their part has necessitated, in their judgment, the accumulation of an effective war chest of many millions of pounds of litigation funding designed to cover the whole process. Figures which have been confirmed to us by Mr Strauss are made up of CFAs to cover both solicitors and counsel and an ATE policy against liability for both the claimants' and the defendants' costs. The details of these arrangements were obscure at the hearing, but their essential outline and the huge sums involved were vouchsafed to us by Mr Strauss (and after the hearing the ATE insurance policy was sent to us). The total funding is £6.06 million. There is protection against defendant costs ("adverse costs") in the sum of £2.6 million, and in addition the claimants' own lawyers are themselves indemnified in respect of their costs up to £1.75 million, and it is only above that sum that they are prepared to take the risk of non-recovery from the claimants. In addition there is further cover for the claimants' disbursements in the sum of £1,710,606. The premium is not revealed. It is plain therefore that such funding is vital to the claimants' litigating strategy, but beyond that I would also draw the inference that the importance of such vast sums is to demonstrate to the defendants that the claimants have the resources to see the matter through. This is in the light of their experience in the New York proceedings that their opponents there were themselves big spenders (although that was possibly in part a reflection of US contingency fee relationships). At any rate, it was the claimants rather than their opponents who sought to appeal the US courts' decisions.
82. Details of the claimants' attempts, starting in April 2006, to arrange such funding are contained in their evidence. In particular, in September 2008, when the claimants applied for the first time to extend time for service, they relied on the witness statement of their solicitor Mr Greaves, whose evidence was that they had been unwilling to serve their claim form on the defendants until they had funding in place ("Therefore, because of the funding issue, service of the Claim Form has not been effected on any of the Defendants and the Claimants therefore make this application for an extension of time…", at para 18 of Mr Greaves' statement).
83. In this connection, we are not told what had prompted the issue of proceedings in May 2008. We are told, however, that the plan was not to proceed to make an application for service out of the jurisdiction ("and/or an application for alternate service") until funding was in place, viz "possibly as late as March 2009". Even so, "A substantial amount of work has already been undertaken".
84. On 19 September 2008 Field J extended time for service for six months until 20 March 2009. That time went well beyond the expiry of the limitation period.
85. A first application for permission to serve out was made on 27 February 2009, but dismissed by Tomlinson J on 18 March 2009, who extended time for service until 30 April 2009. On 7 April 2009, the claimants applied again for permission to serve out, and to do so by alternative means. On 8 April 2009 David Steel J granted these applications. If service had had to be effected under the Hague Convention (for which a standard two months would need to be allowed) or by other normal means (e.g. in Afghanistan), service could not have been achieved within such time (unless possibly in Afghanistan, against the third defendant). As it was, service was easily achieved under the alternative arrangements permitted. Even so, the claimants were not prepared to authorise service until after the ATE insurance policy was issued on 16 April 2009. The claim form was then despatched for service on 17 April 2009, and a press release announcing the claim was made the same day. Service was effected or deemed to be effected on 21 April 2009. Service was ultimately proceeded with before the CFAs had been obtained (but, as the judge found, the securing of the ATE insurance meant that there was a good prospect of obtaining the former).
86. In this way, albeit by means of ex parte applications at which the defendants were not represented, service was effected about eleven months after issue of the claim form, and nearly five months after the expiry of the limitation period. The two extensions of time for service, those in September 2008 and March 2009, extended time for service even though in the first case the time so extended went beyond the expiry of that limitation period, and in the second case the extension had been made at a time when limitation had already expired. However, service was effected within six months of the expiry of limitation, at which time a foreign defendant may feel more or less safe from suit (subject to extension of time for service).
87. Mr Strauss accepted that funding difficulties would not normally justify such extensions of service, but he submitted that this was what he described as a unique case. He submitted that English jurisprudence regarding the strictness with which extension of time for service is guarded was irrelevant, since those cases were entirely or principally concerned with negligence in missing the due date for service, which was not in issue here; and he relied on Steele v. Mooney as an example (if alone in the reports) of a deliberate decision to delay service which was approved by this court as sensible and responsible. The judge was right to find support in that case for the position adopted by the claimants here. It was a decision in his discretion which could not be faulted.
88. In my judgment, however, the jurisprudence regarding CPR 7.6 is entirely relevant even though it is mostly concerned with negligence in missing the time for service. What that jurisprudence emphasises as a general rule is that, although exceptionally, for instance where a claim is still well within its limitation period, the defendant has received (even if not by formal service) a copy of the claim form within the four-month period for service, and the defendant could have therefore suffered no prejudice by reason of the extension of time (as in Hoddinott v. Persimmon Homes (Wessex Ltd)), the court will extend time even in the absence of a good reason, nevertheless in the great majority of cases an extension will only be granted where a good reason has been supplied. As Dyson LJ said at the end of the important passage from Hoddinott, cited by Stanley Burnton LJ at [43] above –

"That is why the court is unlikely to grant an extension of time for service of the claim form under CPR 7.6(2) if no good reason has been shown for the failure to serve within the 4 months' period."

89. Although the context of many of the leading cases is that of solicitor negligence and personal injury, the principles developed in them are to my mind of general application. Hashtroodi in fact was not a case of negligence but of a deliberate decision not to serve. What was there said was that a negligent failure to serve was not a good reason, but a bad reason for seeking an extension of time. The deliberate decision not to serve was because the solicitor was hoping to persuade the defendant's insurers to appoint solicitors: it was a "particularly egregious" failure (at [36]). That was why this court refused an extension (despite the superficially attractive submissions recorded at [35]).
90. More generally, however, if consideration is given to the run of authority concerning CPR 7.6, which starts with Vinos v. Marks & Spencer plc [2001] 3 All ER 784 (CA) and continues with cases such as Godwin v. Swindon Borough Council [2001] EWCA 1478, [2002] 1 WLR 997, Anderton v. Clwyd County Council (No 2) [2002] EWCA Civ 933, [2002] 1 WLR 3174, Wilkey v. British Broadcasting Corpn [2002] EWCA Civ 1561, [2003] 1 WLR 1, Hashtroodi, Collier v. Williams, Hoddinott, City & General, and Aktas v. Adepta, it is clear that the strictness with which the jurisdiction to extend time is viewed is of general application. It may be that the negligence of solicitors is described as a bad reason for extending time, but what is emphasised is that, save in exceptional cases such as Hoddinott, what is required is a good reason. If there is a very good reason, an extension will usually be granted; the weaker the reason, the more likely the court will be to refuse to grant the extension: see Hashtroodi at [19], where Dyson LJ described this as a calibrated approach. However, the general regime is a strict one, and that will be particularly the case where limitation is involved. As Mummery LJ said in Anderton in a judgment of the court which included Lord Phillips of Worth Matravers MR and Hale LJ, at 3184E:

"Now that the disputed interpretations of the Civil Procedure Rules have been resolved by Godwin's case and by this judgment, there will be very few (if any) acceptable excuses for future failures to observe the rules for service of a claim form. The courts will be entitled to adopt a strict approach, even though the consequences appear to be harsh in individual cases."

91. In these circumstances, can the claimants' reason for wanting successive extensions of time be described as a good reason? Since a limitation period expired in November 2008, during the period of the first extension (from September 2008 to March 2009), an especially good reason would, in my judgment, on Dyson LJ's calibrated approach, be required. The reports are not replete with examples, at any rate where the claimant has not established a real problem in carrying out service. The sole example relied on by the claimants is Steele v. Mooney [2005] 2 All ER 256.
92. However, in that case there was no issue as to the exercise of discretion. The sole issue was as to whether the case should be regarded as a CPR 7.6(3) case or a CPR 7.6(2) case with the assistance of CPR 3.10. The application to extend time to serve had in form been made out of time, but in practice had been made in time. What had gone wrong was that the application had by mistake referred to "particulars of claim and supporting documentation", without explicit reference to the claim form itself, whereas previous communications between claimant and defendants, requesting their consent to an extension of time by means of a consent order, had referred to "particulars of claim and supporting documentation, including the claim form". One defendant simply signed that consent order, another said it was willing to do so but pointed out that an extension of time for service of a claim form could not be dealt with by consent, and a third defendant did not respond. In the end the formal application had been made with its inadequate wording. It was only after the service period had passed that the mistake was picked up and rectified, but by then the claimant faced opposition because of the limited terms of CPR 7.6(3). Nevertheless, the claimant sought to get herself out of CPR 7.6(3) and back within the broader discretion of CPR 7.6(2) by invoking CPR 3.10 which permits a judge to "remedy the error" where there has been an "error of procedure such as a failure to comply with a rule". Deputy District Judge Smith acceded to that application on the ground that the defective application had been a mistake which had not misled any of the parties, and that but for the formal error the application would not have been opposed and thus would in all probability have been granted by the court. On first appeal, Judge Rudd overturned that decision on the ground that CPR 3.10's "error of procedure" could not cover such a case and therefore he was without jurisdiction to remedy the mistake. If, however, he had found here an "error of procedure", he would have agreed with the deputy judge's disposition. On second appeal, the sole issue was the width of CPR 3.10. There was no attack on the discretion exercised by both courts below (at [35]).
93. Therefore the essential exercise of discretion had really been unopposed. The critical facts are explained in [33], and were that the claimant could not know whether she had a viable claim without an export's report which could not be completed without disclosure of clinical notes which the first defendant (the only defendant ultimately served) had not provided although "proper requests" had been made for them. Therefore this was, au fond, a standard case where timely service had been delayed by matters outside her control. As Dyson LJ said –

"The claimant had good reason for not serving the claim form…The claimant's solicitors behaved sensibly and responsibly in not serving proceedings when they did not know whether the claimant had a claim which had real prospects of success against any, and if so which, of the three defendants. They could not responsibly proceed against any of the defendants without the report of an expert…The report was delayed because the first defendant himself had not responded to proper requests for his clinical notes. The situation was quite different from that which often arises where the claimant seeks an extension of time for service of the claim form because he or she wants further time to prepare a schedule of loss. In the present case, the outstanding information went to the very heart of the claimant's case."

94. In my judgment, Steele v. Mooney, properly understood, is not a rare and exceptional case where a claimant was permitted to extend time for service because of a deliberate decision to keep her defendant in the dark as to her claim pending delayed service, but resolves itself into a standard case where a claimant has experienced difficulty in serving and needs the court's assistance. The defendant knew of the impending claim and had himself caused or materially contributed to the delay and the need for an extension of time in which to serve, and did not even dispute the ultimate issue of discretion. Professor Zuckerman's Civil Procedure does not treat Steele v. Mooney as illustrating any wider principle (at para 4.150).
95. For these reasons I consider that the judge erred in principle in attaching importance to Steele v. Mooney at the beginning of [180] of his judgment, where he said:

"In the unusual circumstances of the present case I therefore accept that the Claimants have acted "sensibly and responsibly" in not serving the claim form. In cases such as Steele v. Mooney it was not sensible to serve the claim until it had been established that the claimant had a viable claim. In that case expert evidence was required for the claim to be viable. In the present case funding was required for the claim to be viable."

96. But funding was not required for the claim to be viable. I assume that the claim was viable in the sense in which Dyson LJ had used that term, ie legally coherent and sustainable. It was also viable in the financial sense in which the judge used that term, ie the claimants had the means (as on the evidence they plainly did) to commence the litigation. It was simply that the claimants were unwilling to expose themselves to a lengthy litigious campaign without being entirely insulated against the incidence of costs.
97. So the question remains: is there any support for the claimants' submission that funding difficulties – or rather a desire that funding be in place for the whole of the litigation so as to eliminate or minimise any risk to the claimants – can be a good reason for the deliberate decision to delay service of a claim, thereby necessitating an extension from the court of time within which to serve? In my judgment, there is nothing in the jurisprudence to support that submission, even in the absence of a problem with limitation, and the position is still more difficult in its presence. In the absence of authority, I look at the proposition as a matter of principle. I would subscribe to the cautionary view of never saying never. It is possible that an impecunious claimant who has acted timeously to obtain legal aid, and is delayed for an answer for reasons which are not within his or her control, and only needs a short extension to enable aid and thus representation to be secured, might come within CPR 7.6(2). But that is not this case.
98. This is commercial litigation on a grand scale. The claimants may not have large liquid funds, but they are well able to get this litigation on its feet. One claimant alone has a share portfolio running into several hundred thousand pounds. Between them they have assets upon which they could raise a certain amount of borrowed money. However, they are not willing, save possibly to an entirely limited seeding extent, to risk their own capital. That may be wise, but it speaks volumes about the speculative nature of the litigation. I do not say that the claim is not well founded as a claim – the judge has said that it is, and that is not in dispute. However, the claimants were still not willing to go to even first base without complete cover for the whole of the litigation. That is no doubt tactically shrewd, but it is not in my judgment within the spirit of the rule, properly and therefore strictly applied. Moreover, even though contingency fees are not at present allowed, and I have no doubt that the funding in place is within the present rules, it is still clear from what we have been told about the funding that both the lawyers concerned and the ATE insurance funders are entering upon the litigation as partners in a business speculation. The lawyers are guaranteed their fees up to £1.75 million and are only at risk beyond that figure. The ATE insurers must be charging a substantial premium, which they will receive from the defendants if the claim is successful but which they will otherwise lose. Does the entirely laudable aim of access to justice mean that, after years which the claimants have had available for putting this package together, years of negotiations with funders about which the claimants have vouchsafed only the outlines, the court should in effect side-step limitation by granting two extensions to enable the deal to be put together? I would answer a firm no. If the court answered otherwise in this case, I do not understand where the court would draw the line in other cases. It cannot be that only the very biggest and most complex litigation should get this exceptional treatment. That would stand access to justice on its head.
99. In this context it seems to me that Dagnell v. J L Freedman & Co [1993] 1 WLR 388 (HL), which Professor Zuckerman cites at para 4.134 of Civil Procedure (see at [78] above) is instructive. The plaintiffs there were trustees of a will, suing the solicitors who had prepared it in negligence. The plaintiffs issued their writ some 7 months before the limitation date for their claim, but they did not then serve it. They were advised first to make an application to the court (a Beddoe application, see In re Beddoe [1893] 1 Ch 547 (CA)) to safeguard their position as to costs. They issued their application a few weeks before the expiry of the limitation period and some months later obtained an ex parte extension of the validity of the writ, subsequently further extended, in order to cover actual service, which was finally effected some 9 months after limitation expired. In those days a writ was valid for an initial 12 months. The defendant solicitors challenged those extensions and were initially unsuccessful (Hoffmann J) and then succeeded by a majority in this court. The House of Lords upheld the court of appeal. Lord Templeman, Lord Goff of Chieveley, Lord Oliver of Aylmerton and Lord Mustill agreed with the speech of Lord Browne-Wilkinson.
100. Lord Browne-Wilkinson said that "[t]he starting-point is that a defendant has a right to be sued, if at all, by means of a writ issued within the statutory period of limitation and served within the period of its initial validity" (at 393C). He then set out the then current principles upon which an extension of time for service could be granted, which were that a good reason had to be shown and only thereafter could the "balance of hardship" be considered. He said that "it is normally impossible to show such good reason without first showing good reason for the failure to serve the writ during the period of its validity. It has throughout been common ground in the present case that the crucial question is whether the plaintiffs have shown good reason" (at 393H). It seems to me that these principles are essentially transferable to the CPR regime (and I bear in mind that under that regime, exceptionally, no good reason need be shown at all, but no one suggests that that exception applies to the present case). What was most in issue in that case was the so-called Battersby doctrine whereby normally it was not a good reason to hold up service pending collateral litigation. In Battersby v. Anglo-American Oil Co Ltd [1945] KB 23 at 32 Lord Goddard, giving the judgment of this court, said:

"ordinarily it is not a good reason that the plaintiff desires to hold up the proceedings while some other case is tried or to await some future development".

101. Hoffmann J at first instance considered that this doctrine did not apply, at any rate not with its full rigour, to a Beddoe application, because the trustees were acting gratuitously "and are entitled to be protected against the risk" of finding themselves liable in costs despite having acted in good faith (at 394H). Therefore, prima facie, the desire for Beddoe protection was a good reason, unless it was reasonable to take some other course of action, such as service pending the outcome of the Beddoe application, or the agreement of a stand-still with the defendants following service, or an emergency Beddoe application to cover at least service. However, Hoffmann J found each of these alternatives to be impracticable on the facts. Lord Browne-Wilkinson rejected a submission that Hoffmann J's exercise of his discretion was unassailable because the court of appeal had stopped short of saying that a Beddoe application could never be a good reason for delaying service. What the judge had done was to reverse the ordinary principle. Ordinarily, collateral litigation was not a good reason for delay, whereas Hoffmann J had started from the position that a Beddoe application was prima facie a good reason, and in doing so he had erred in principle. It follows that this is another case where the solution, as a matter of principle, and not merely discretion, was that the claimant should have served, and then sought to agree or secure a stay pending some awaited outcome.
102. Lord Browne-Wilkinson said (at 396D):

"In my judgment, there is no ground for treating a Beddoe application differently. The fundamental consideration is that a defendant has a right to be served with proceedings (if at all) within the statutory period of limitation plus the period for the validity of the writ. The convenience of the plaintiffs seeking to have other collateral proceedings determined first is not ordinarily good reason for impinging on this right of the defendant. The trustee plaintiffs, like other plaintiffs, may wish to secure their position as to costs before starting proceedings but this does not ordinarily justify denying defendants their normal right to be sued in time."

103. It seems to me that this decision applies with a fortiori force to the current case. There was no collateral litigation here, but there was a similar attempt to secure the claimants' position in costs before committing themselves to the incurring of costs or of liability in costs. The difference is that whereas a Beddoe application is entirely transparent and dependent on the objective view of the court, the claimants' negotiations for their funding are neither. Moreover the Beddoe doctrine applies to more than collateral litigation, it applies in principle to any "future development". Indeed, the reference to collateral litigation ("some other case") in Battersby was by the way: there was no issue or reliance there on collateral litigation, it was just an example given by Lord Goddard, and "any future development" was therefore clearly intended to be of wide application. Indeed, Battersby is not about collateral litigation at all, but first and foremost about the inappropriateness of extending a writ so as to validate a time-barred claim. As Lord Goddard said (at 28):

"That the widest discretion is given to the court under that rule none will deny, but there is a line of authority, unbroken till the recent decision in Holman's case [[1944] KB 591], that the court will not exercise that discretion in favour of renewal, nor allow an amendment of pleadings to be made, if the effect of so doing be to deprive a defendant of the benefit of a limitation which has already accrued."

104. Lord Goddard considered that jurisprudence and concluded Holman's case was per incuriam and ought to be disregarded (at 32). He also said (ibid):

"It is for the court and not for one of the litigants to decide whether there should be a stay, and it is not right that people should be left in ignorance that proceedings have been taken against them if they are here to be served."

105. Mr Strauss nevertheless submitted that this case is "unique", and that the principal reason was the time lost in the abortive New York proceedings. That he said had deprived the claimants of their full six year limitation period; but it had also brought the claimants' claims to the attention of the defendants at an earlier time. He also relied to some extent on the expenditure of funds in the US, particularly for the claimants' appeals, which unlike the first instance litigation were not covered by contingency fees. In a submission which was developed in a supplemental post-hearing skeleton, he referred to additional documents to support his plea that it had been the complexities of the case, and in particular the mysterious closure of the New York litigation by the court itself, that had prejudiced the obtaining of funding in what was described as a funding market in its infancy. There was evidence from Mr James Delaney, the claimants' funding broker, that "[s]ome of the hedge funds are demanding excessive, even "loan shark" returns on their investment", for instance up to 50% of the outcome. The claimants had therefore deserved "one last chance".
106. However, the time taken up in the New York proceedings was not lost because of the fault of the defendants. The proceedings were closed down by the court of its own motion, without fault on either side. Moreover, although the reason why those proceedings proved abortive may be highly unusual, the abortive failure of foreign litigation (usually for jurisdictional reasons) is by no means unusual, and the commercial court is entirely familiar with litigation which spans several jurisdictions. The fact is that the New York proceedings came to an end in the district court as long ago as November 2004. Only the claimants sought to appeal the court's decision. As at November 2004 the claimants had four years to prepare for litigation in England. They started their preparations in April 2006. They had already pleaded their case in New York. This is entirely unlike other cases, where it might be that a claimant truly has only a short time to prepare for litigation before a limitation deadline, such as the one year Hague Rules limitation, or in circumstances where a claimant only discovers it has a cause of action not long before the expiry of time. In the present case, the claimants had six years to bring their claim. They may have found the idea of litigating in the USA with its contingent fee opportunities attractive, albeit in the end the court there blocked that avenue. They turned their attention to England, but without any notice to the defendants. They appear to have had the question of limitation in mind, but they wished to extend the time for service beyond the expiry of the limitation period. Their first extension (from Field J) took them beyond the expiry of limitation in late November 2008 and granted them until 20 March 2009. Their second extension (Tomlinson J) was in respect of a claim whose limitation period had otherwise already expired.
107. In their circumstances and in light of their ambitions, if the claimants were only prepared to litigate if they had funding in place for the whole litigation, then they ought to have served promptly and asked for a stay pending finalisation of their funding arrangements. I am not saying that such a stay ought necessarily to have been granted, but it would have been a much more reasonable request to have made. The defendants would have been party to such a request, which is how it should be, and the court would therefore have been better informed: see Dyson LJ in Hoddinott cited at [43] above, which can be seen to have been anticipated by Lord Goddard's brief remarks in Battersby. See also the cases cited by Stanley Burnton LJ at [45] above. It may be nevertheless that the commercial court would have been persuaded by the defendants that there should be no stay until first the question of jurisdiction had been sorted out. The claimants submit that if they had been dragged into a fight on jurisdiction before their funding was in place, their position would have been unsupportable, for the cost of even such a hearing would have been very large – as has proved to be the case, for the hearing before the judge took place over five days and costs of £500,000 have been mentioned. However, that would properly have been a matter for argument. It seems to me that the claimants' potential funders might have been entirely amenable to such a situation: after all, if the claim had not survived the service out challenge, everyone would have known where they stood at an early stage, before millions had been spent; and if the claim had withstood that challenge, with the court applying the well-known test in Canada Trust v. Stolzenberg (No 2) [1998] 1 WLR 547 (CA), [2002] 1 AC 1, then that would have been a considerable encouragement to any potential funders. (I make these observations as a matter of principle and what I regard as common sense, but they are not unsupported by reading that, by a special endorsement to the claimants' ATE policy agreed on 17 August 2009, that is to say after service had been effected, it was agreed that if the claim were stayed as a result of the defendants' successful challenge to the English court's jurisdiction, cover would have been reduced to adverse costs of £400,000 only. I assume, but I do not know, that in those circumstances, the claimants' legal representatives might have operated on a true contingency fee basis.)
108. Finally on the question of an extension of time for service, but of prime importance, there is the way in which the judge considered the limitation aspect of the case. In [166] the judge directed himself correctly, as it seems to me, about the need to take limitation into account. However, in considering whether good reason had been shown, at [179], he failed to take limitation into account at all. He concluded that good reason had been shown, without reminding himself about the limitation position or explaining how the claimants' submission of "good reason" surmounted that difficulty. He only brought limitation into account at [181], when he considered the "balance of hardship", which he argued strongly favoured the granting of an extension. In that paragraph, he first mentioned limitation as something in the claimants' favour ("the Claimants will have lost the opportunity to pursue a very sizeable claim"). For the reasons which I sought to explain in Aktas v. Adepta at [91] (which, however, was only decided after the judge gave judgment), the loss of a claimant's claim by reason of limitation is likely to be a barren excuse, unless, as I would accept, he has been prevented from serving in time or some other good reason which takes account of limitation has been shown. The judge next entirely discounted the loss of the limitation defence which the defendants achieve in such a case in the absence of an extension of time: first on the ground that "a short further delay in prosecution of the claim would cause little prejudice", and secondly on the ground that the defendants could not assume that they were protected by limitation until 6 years and 6 months after the origin of the cause of action. However, that in essence begs the question, for it assumes that an extension of time would not deprive the defendants of a limitation defence, and considers prejudice and the feelings of the defendants on that basis. In my respectful judgment, the judge has got these matters the wrong way round. As Stanley Burnton LJ says (at [54]), the primary question is whether, if an extension of time is granted, the defendant will or may be deprived of a limitation defence. That is plainly shown by Battersby and Dagnell always to have been the attitude of the courts, on the highest authority. It is therefore for the claimant to show that his "good reason" directly impacts on the limitation aspect of the problem, as for instance where he can show that he has been delayed in service for reasons for which he does not bear responsibility, or that he could not have known about the claim until close to the end of the limitation period. If he cannot do that, he is unlikely to show a good or sufficiently good reason in a limitation case.
109. In this connection, it is not simply a matter of the "balance of hardship". Although I used that expression in Aktas v. Adepta at [71], it was for the purpose of distinguishing such an approach (which could arise where, as under section 33 of the Limitation Act 1980, statute itself gives to the court a discretion to disapply limitation) from the jurisprudence under CPR 7.6. It is also different where a good reason has been shown for extending time for service beyond the Rubicon of a time bar. It appears that "balance of hardship" was used in the days of the RSC regime to describe the exercise of discretion if a claimant had first shown a good reason; but that if good reason had not been shown, the question of the balance of hardship did not arise (Dagnell at 393E/H, citing Lord Brandon in Baly v. Barrett [1988] NI 369, the fruit of three decisions of the House of Lords). In my judgment, it follows from the logic of the CPR decisions themselves that that remains the position. That means that in a limitation case, a claimant must show a (provisionally) good reason for an extension of time which properly takes on board the significance of limitation. If he does not do so, his reason cannot be described as a good reason. It is only if a good reason can be shown that the balance of hardship could arise.
110. I nevertheless have considerable sympathy for the judge in the position in which he found himself. The argument before him was concerned primarily with the question of service out and jurisdiction. More than three quarters of his judgment was taken up with that subject, which he dealt with first. There was a suggestion that he could take a short-cut by dealing solely with the question of extension of time for service, but the judge understandably wanted to hear everything together, especially as he was faced with a submission on the part of the claimant's that, on the question of non-disclosure, the points were intertwined. Nevertheless in making his decision, logically the question of an extension of time ought to come first. Particularly in a situation where, in the absence of an extension, a claimant is time barred, the purpose of limitation is to avoid argument about the merits of a claim. Nevertheless, the judge was involved in those merits as part of the jurisdictional argument on service out, because of the Canada Trust test about a claimant having the better of the argument.
111. For these reasons, which, if perchance they add to those of Stanley Burnton LJ, are not intended to differ from them, I agree that the judge has erred as a matter of principle in upholding the extensions of time given in turn by Field J and Tomlinson J.

Alternative service

112. I turn to the separate question of David Steel J's order for alternative service. I agree with what Stanley Burnton LJ says about that, although it is not decisive in the light of the previous point about the invalidity of the extensions of time for service.
113. 40. It may be that orders permitting alternative service are not unusual in the case of countries with which there are no bilateral treaties for service and where service can take very long periods, of up to a year (cf Marconi v. PT Communications International Ltd [2004] EWHC 129 (Comm), [2004] 1 Lloyd's Rep 594 (David Steel J) at [44]-[45]). In the present case, that did not apply to any of the defendants, and I would prefer to leave such cases out of account. The rule, CPR 6.15(1), expressly requires "good reason", and it may be that some flexibility should be shown in dealing with such cases, especially where litigation could be prejudiced by such lengthy periods. However, in Knauf this court observed that mere desire for speed was unlikely to amount to good reason. As it is, the second defendant was a US company, the first and fourth defendants could be served in the USA, all in accordance with the Hague Convention, and the third defendant, a company incorporated in Afghanistan could, it seems, be served under Aghanistan law and therefore pursuant to CPR 6.40 by registered post and courier to its registered business address. Therefore the claimants did not require more than about two months for service. In such a case, I agree that some special circumstance is needed to amount to good reason: after all, any case of service out earns the claimant an additional two months for service (the difference between the standard initial period of four months in a case of service within the jurisdiction and six months in the case of a claim form for service outside the jurisdiction).
114. It is plain, however, that the problem of permission to serve out had been left until late in the day, even after two previous extensions, and the claimants were unwilling to take the risk of being refused the length of extension required to ensure service by the normal means. The excuse used, that of ensuring that the defendants were served wherever they happened to be, did not need the sidestepping of the Hague Convention, for the reasons explained by Stanley Burnton LJ.
115. Finally in this context, the possible lacuna highlighted in para 6.15.7 of The White Book 2010 may be noted.