SERVICE OF A COMPANY UNDER THE COMPANIES ACT: MURPHY -V- STAPLES RE-VISITED

March 23, 2018 · by · in Service of the claim form, Serving documents

I am likely to be returning to the judgment of Master Bowles in Woodward & Anor v Phoenix Healthcare Distribution Ltd [2018] EWHC 334 (Ch) several times on this blog. If the decision is appealed and upheld it is likely to be a seminal judgment in civil procedure.  However here I am looking at one passage in relation to service of the claim form on a company, in paricular the decision in Murphy -v- Staples UK Limited.

THE JUDGMENT

The Master was considering methods of service on a limited company.

  1. Relevantly to this case, where the defendant is a company, service could have been effected, pursuant to the provisions of section 1139 of the Companies Act 2006 and CPR 6.9, at either the registered office of the company, or at its principal office, or at any other place of business of the company within the jurisdiction having a real connection with the Claim. The exception to the foregoing is that, if Phoenix had given in writing to the Claimants the business address of its solicitor as an address at which it might be served, or, if Mills & Reeve LLP (Mills & Reeve), the solicitor acting for Phoenix, had notified the Claimants that it was instructed to accept service on behalf of Phoenix, then, pursuant to CPR 6.7(1), service would have had to be effected upon Mills & Reeve.

SERVICE ON  A LIMITED COMPANY CAN ALWAYS TAKE PLACE AT ITS REGISTERED OFFICE

This passage gives the impression that once a solicitor’s address has been nominated then service must take place on the solicitor.  However this appears to  ignore the effect of the Court of Appeal judgment in Murphy -v- Staples UK Limited, one of the decisions reported under the general heading of  Cranfield & Anor v Bridgegrove Ltd [2003] EWCA Civ 656.  This was one of five cases where, in 2003, the Court of Appeal attempted to iron out some of the issues relating to service of the claim form.    Murphy indicates that it is open to a claimant to serve a company at its registered office under the Companies Act.

The white book (6.7.1 of the 2017 edition) indicate that Murphy is still good law and that a claimant can bypass the civil procedure rules and serve at the registered office under the Companies Act rather than under the CPR. It also indicates that the same principles apply to LLPs.

A WORD OF WARNING

I have seen one case where the claimant issued and did a company search to obtain the registered office. Four months later, when proceedings were served, the company had changed its registered office. It now had no connection with that address at all. The claim form was not properly served. Given that the claim form had sat around for four months in the solicitor’s office and no-one had re-checked prior to service, it was not possible to extricate the claimant from this situation.

THE ISSUE IN MURPHY

The route to the Court of Appeal was an interesting one.  Prior to issue the defendant’s solicitors indicated they would accept service.  However the claimant served the original documents on the defendant’s registered office, copies were sent to the defendant’s solicitor.

  • A District Judge then ordered that service be set aside.
  • The Circuit Judge,on appeal, held that service had not taken place properly.  However he held that it was an “exceptional” case and made an order dispensing with service under CPR 6.9.
  • The defendant then appealed to the Court of Appeal.  The Court of Appeal listed the appeal to deal with the issue of whether this was an exceptional case.

BUT THEN WALLER J ASKS A QUESTION

I was in the court when this appeal  was being heard (I was involved in the last appeal being heard and the Court of Appeal had directed we all advocates be present throughout in case anything was relevant to that appeal).

Just before the defendant’s advocate started Waller J asked, looking at the white book,

“It says here you can serve under the Companies Act or under the Civil Procedure Rules – how do you serve under the Companies Act?”

After some consideration the defendant’s Q.C. states “by serving on the registered office”

Waller J “Well hasn’t the claimant served under the Companies Act”

Reply from Q.C. (who was now thinking on his feet) “No because you have to nominate whether you are serving under the Companies Act or Civil Procedure Rules”.

By now the other judges had got interested:

“Do you mean you go to the post box and say “Post Box I nominate the Civil Procedure Rules”?

By now the defendant was on the back foot (“Bowled out by ball not in play” is how he described in the robing room afterwards).

Meanwhile the claimant’s counsel, seeing a bandwagon rolling by, promptly jumped on it and adopted Waller J’s suggestion.

THE JUDGMENT

The Court of Appeal (delivering one judgment)

    1. Permission to appeal to this court was given on the question whether in a pre-Anderton case, the category of “exceptional” cases where service may be dispensed with retrospectively under CPR 6.9 is restricted to cases where there has been an unsuccessful attempt to serve at the address for service.
    2. But we need first to deal with the point raised by Waller LJ during the course of argument that the sending of the claim form by first class post to the defendant’s registered office on 15 March constituted good service pursuant to section 725(1) of the 1985 Act, such that there was no need to invoke CPR 6.9 at all. Mr Tozzi QC adopted this as part of his submissions. Mr Purchas protested that it had been conceded below that there had not been service on the defendant in accordance with CPR 6.5, and the suggestion that service had been effected under section 725(1) had not been raised, and that it was too late for the point to be taken now. But we decided that it would be unsatisfactory to determine this appeal on a false basis. Any prejudice caused to the defendant by the fact that the point was taken so late could be met by an appropriate order for costs, and giving the defendant time to submit further submissions in writing on the new point. Since the end of the hearing we have received written submissions from both parties on the point.
    3. Mr Tozzi submits as follows. Section 725(1) of the 1985 Act provides:
“A document may be served on a company by leaving it at, or sending it by post to, the company’s registered office”.
    1. Section 7 of the Interpretation Act 1978 Act provides:
“Where an Act authorises or requires any document to be served by post … then, unless the contrary intention appears, the service is deemed to be effected by properly addressing, pre-paying and posting a letter containing the document and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post.”
    1. CPR 6.2(1) provides that the rules in Part 6 apply to the service of documents “except where (a) any other enactment, a rule in another Part, or a practice direction makes a different provision”. CPR 6.2(1) provides the methods by which service may be effected, viz by personal service in accordance with CPR 6.4, by first class post, by leaving the document at a place specified in CPR 6.5, through a document exchange, or by fax or other electronic communication. CPR 6.2(2) provides:
“(2) A company may be served by any method permitted under this Part as an alternative to the methods of service set out in –
(a) section 725 of the Companies Act 1985 (service by leaving a document at or posting it to an authorised place);
(b) section 695 of that Act (service on overseas companies); and
(c) section 694A of that Act (service of documents on companies incorporated outside the UK and Gibraltar and having a branch in Great Britain).
    1. CPR 6.4 contains the following provisions relating to personal service:
“(1) A document to be served may be served personally, except as provided in paragraph (2).
(2) Where a solicitor –
(a) is authorised to accept service on behalf of a party; and
(b) has notified the party serving the document in writing that he is so authorised,
a document must be served on the solicitor, unless personal service is required by an enactment, rule, practice direction or court order.
(3) A document is served personally on an individual by leaving it with that individual.
(4) A document is served personally on a company or other corporation by leaving it with a person holding a senior position within the company or corporation.”
    1. CPR 6.5 deals with the address for service. CPR 6.5(2) requires a party to give an address for service within the jurisdiction. CPR 6.5(4) provides that “any document to be served (a) by first class post…..must be sent or transmitted to, or left at, the address given by the party to be served”. CPR 6.5(6) provides that where “(a) no solicitor is acting for the party to be served; and (b) the party has not given an address for service, the document must be sent or transmitted to, or left at, the place shown in the following table”. The table shows the place for service according to the nature of the party to be served. It includes as the place for service of a company registered in England and Wales either the “principal office of the company” or “any place of business of the company within the jurisdiction which has a real connection with the claim”.
    2. In this case, service was effected using the statutory procedure. Mr Tozzi submits that the fact that service by post pursuant to the 1985 Act overlaps with service by first class post under CPR 6.2(1)(b) is immaterial. Service by first class post is a permitted method of service. Accordingly, service on the company at its registered office was good service. The case of Nanglegan can be distinguished, since the defendant in that case was not a company. Alternatively it was wrongly decided.
    3. The submissions on behalf of the defendant may be summarised as follows. A defendant company may be served under section 725(1) of the 1985 Act, under the CPR or in such other way as may be agreed between the parties: see Kenneth Allison Ltd v AE Limehouse Ltd [1992] 2 AC 105, per Lord Bridge at p 116H-117A, with whom Lords Lowry, Templeman and Jauncey agreed. Lord Bridge said:
“I do not see any difficulty in holding that the kind of ad hoc agreement in question is legally effective. If one party, knowing that another wishes to serve process upon him, requests or authorises the other to do so in a particular way which is outside the Rules and the other does so, then, unless the Rules themselves prohibit consensual service, the party so served cannot be heard to say that the service was not valid. Thus, I have no doubt that, if the circumstances of the present case had come before the court in 1898, the validity of the service would have been affirmed. The crucial question is whether subsequent changes in the Rules of the Supreme Court have introduced just such a prohibition of consensual service outside the Rules as was unsuccessfully contended for in Montgomery, Jones & Co v Liebenthal & Co [1898] 1 QB 487.”
  1. This presupposes that CPR 6.2(2) and section 725(1) provide alternative, and not concurrent, methods of service. Where a choice or election is made as to the method of service to be employed, then both parties are bound by it. Once the CPR is engaged by an effective election, the parties know when the court timetable will start to run, because the claimant will have served a certificate of service specifying the deemed date of service. In this way, certainty is achieved. On the facts of the present case, the claimant by his solicitors elected to proceed by way of service on the defendant’s solicitors under the CPR, rather than under section 725(1). At no time prior did the claimant seek to resile from the election. The defendant also relies on Nanglegan.
  2. Our conclusion on this issue is as follows. A claimant may serve the claim form on a defendant company either by leaving it at, or by sending it by post to, the company’s registered office, or by serving it in accordance with one of the methods permitted by the CPR. They are true alternatives. That is made clear by CPR 6.2(2). There are differences between the two methods. For example, service under section 725(1) may be by second class post. CPR 6(1) provides for service by first class post. Service under section 725(1) is deemed to have been effected at the time at which the letter would be delivered “in the ordinary course of post” (section 7 of the Interpretation Act) unless the contrary is proved. CPR 6.7 provides that, where service is by first class post, the document is irrebuttably deemed to have been served on the second day after it was posted. Another difference is that service under section 725(1) must be by leaving the document at, or posting it to, the registered office. CPR 6.2(1) provides for five permitted methods of service.
  3. If a defendant has not given an address for service, a claimant may choose whether to follow the section 725(1) or the CPR route for service. In Nanglegan, it was held that, where a defendant elects to give his address for service, and nominates his solicitor to accept service, CPR 6.5(4) requires personal service to be effected upon the nominated solicitor, and not on the defendant. As Thorpe LJ put it (p 1047F) “there will be many cases in which a defendant does not want service either at his residence or at his place of business”. But in that case, the court was not concerned with the interplay between section 725(1) and the CPR, which expressly recognise alternative methods.
  4. We accept that it is possible for the parties to make a binding contract whereby the claimant agrees to serve the claim form by the CPR route rather than under section 725(1) or vice versa. But we do not consider that the effect of the letters dated 28 May, 2 and 9 June 1999 was to deny to the claimant the option of serving under section 725(1) of the 1985 Act. In our judgment, the true effect of these letters was not a binding promise by the claimant to serve on the solicitors under CPR 6.4(2). Rather, it was that the parties agreed that, if the claimant decided to effect personal service under CPR 6.4, then they would serve on the defendant’s solicitors rather than on the company under CPR 6.4(4). Allison v Limehouse is authority for the proposition that an ad hoc agreement for service not permitted by the rules is legally effective. We do not consider that it assists in the resolution of the issue which arises here.
  5. Our conclusion, therefore, is that the service on the company’s registered office by first class post on 15 March 2002 was good service.”
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