When the letter of claim is served on the wrong Defendant

Issuing claims against the wrong defendant – A common mistake in disrepair claims.

It is becoming an ever increasing issue in disrepair claims from the new breed of tenant lawyers jumping on the disrepair bandwagon that rarely do they undertake proper due diligence to ascertain (or seemingly ask their clients) who is the landlord. Frequently, Letters of Claim are addressed to an overarching corporate brand and therefore, when court proceedings are issued, they are also brought against the wrong defendant.

It may sound like an obvious point, but claims must always be brought by the correct, identifiable claimant, against a similarly correct and identifiable defendant for them to be valid. For claims based on contract, such as disrepair claims based on a tenancy agreement, only the parties to the contract can generally sue, or be sued, on it. Further, CPR 7.5 requires a claim form to be served “before 12.00 midnight on the calendar day four months after the date of issue of the claim form.” Does not sound like a particularly onerous timescale to achieve, but if the claim is started against the wrong party in the first place, time can slip by.

This point arose in the case of Croke & Anor v National Westminster Bank Plc & Ors [2022] EWHC 1367 (Ch). Whilst not a disrepair case, its principals would equally apply.

Facts of the case

The claim form was served at the end of the four month period. The Particulars of Claim needed to be served within the same period but the defendants did not accept service by email. The Particulars of Claim were sent by post and therefore arrived one day late. The claimants applied for relief from sanctions.

Decision

Deputy Master Marsh refused the claimants’ application for relief from sanctions and it was held that the court had no jurisdiction to hear the claim.

The Law

Social landlords often have complex corporate structures, does it really matter if a claim is issued against a company that is part of that corporate structure but just not the landlord? The answer to that question is ‘yes’. It is already settled in Company Law, by the Salomon v Salomon principles, that a subsidiary company is a completely separate legal entity from the parent company, including separate right of suit.

If the wrong corporate entity is sued, the claimant must apply to amend the claim form and Particulars of Claim and re-serve them within 4 months from the issue of the claim form. That is not as easy as it might sound, especially with court delays in processing applications.

Courts interpret time limits under the Civil Procedure Rules strictly. If an original sealed claim form is not served against the correct defendant within 4 months, the claimant will be unable to proceed with the claim unless they obtain an order retrospectively extending time for service. That will not be easy to obtain especially where a simple search at HM Land Registry or Companies House would have revealed the correct name of the Landlord.

Conclusion

In defending the rising tide of disrepair claims, social landlords should check whether the claim is being brought against the correct defendant, i.e. the company that actually owns the property and receives the rent. Where incorrect parties have been sued, the claim form must be amended and an original sealed claim form served on the correct party. In the time it takes for the Claimant to jump through the necessary administrative hoops it may lead to expiration of the four-month validity of the claim form, so that the case is struck out with all the costs consequences that may flow from that.

As a general point, the courts have affirmed that it is not up to the defendant to warn claimants of any mistake made when issuing proceedings, in Woodward & Anor v Phoenix Healthcare Distribution Ltd [2019] EWCA Civ 985, it was held that so long as defendant had not mislead as to their identity, nor acted in bad faith, such a defendant was not bound to draw attention to the mistake by the claimant in writing to or suing the wrong entity.

How Birketts Can Help?

Birketts have a specialist team of Housing Management lawyers to assist our clients stay ahead. Our expert lawyers can advise on all aspects of housing and asset management from complex ASB claims, Equality Act defences, Building Safety issues, defending disrepair claims/EPA prosecutions, subletting/housing fraud cases, service charge disputes, s.20 consultation issues, applications to vary defective leases, to name but a few of the issues we can assist with. Our experts have decades of experience acting for Registered Providers and Local Authorities and offer a truly ‘one stop shop’ for the issues facing the sector.

If you have any queries regarding the content of this article or wish to discuss any issue regarding the management of your tenants or stock, please contact Clive Adams, Jonathan Hulley or any member of the Social Housing Team, to see how Birketts can help you.