SERVICE OF THE CLAIM FORM: DEFENDANT’S LAST KNOWN ADDRESS: CLAIMANT’S “REASON TO BELIEVE”: A FEW POINTS TO WATCH

In Wards Solicitors v Hendawi [2018] EWHC 1907 (Ch) HHJ Paul Matthews (sitting as a judge of the High Court) considered the issue of whether a claimant had “reason to believe” that a defendant did not live at the address for service.  The case concerns a previous version of the rules. However the judge also made observations about whether the claimant had “reason to believe” the defendant was not at the address.

THE CASE

The claimant had entered default judgment in 2007.  In 2018 the defendant made an application to set aside that judgment. One issue was whether the defendant had been validly served.  The rules relating to “last known address” were very different in 2007.

THE JUDGMENT ON CORRECT ADDRESS FOR SERVICE
    1. According to the Notice of Issue (N205A), sent to the claimant, and received by it on 13 December 2006, the claim form in this matter was served by the court by first class post on the defendant at the address considered by the claimant to be the last known residence of the defendant, namely 46 The Deans, Portishead, North Somerset. It was sent out on 12 December 2006, so if it was properly served it was deemed to be served on 14 December 2006 (in accordance with the then CPR r 6.7 (1)). However, the defendant was at that date no longer resident at that address, and so the claim form was returned in its envelope undelivered to the court. The notice issued by the court of the return of that document to it is dated 2 January 2007. It too was sent to the claimant.
    2. But on the same day, 2 January 2007, the claimant made its request for judgment in default of acknowledgement of service. This request was made in the space provided in the bottom half of the notice of issue of the claim. In response to that request, a default judgment was issued by the court on 8 January 2007, and a copy was sent to the defendant himself at the same address as the claim form. On 16 January 2007, however, the court sent to the claimant a further notice of returned documents saying that the judgment envelope had been returned marked “gone away”. It appears that, thereafter, some enquiries were made by the claimant in relation to tracing the whereabouts of the defendant and enforcing the judgment which had been obtained, but it is a curious feature of this case that nothing further substantive in the matter occurred until 2017, some ten years later.
    3. On 4 August 2017 the claimant issued a statutory demand under the Insolvency Act 1986 against the defendant. It is to be noted that this statutory demand was addressed to the defendant at the same address as 10 years previously, namely, 46 The Deans. That demand was not satisfied, and on 24 October 2017 a petition for the defendant’s bankruptcy was presented. Paragraph 10 of that petition claimed interest on the original judgment debt for 6 years, namely £17,232.55. On 12 December 2017 District Judge Rowe made an order for substituted service of the petition by email. On 30 January 2018 she made a further order adjourning the petition to the first available date after 15 February 2018. On 31 January 2018, the court issued a notice of hearing to the parties, informing them that the hearing would be held on 3 April 2018. However, and as I have already said, on 27 March 2018, the defendant issued the present application notice to set aside the judgment. Accordingly, when the matter came before District Judge Rowe on 3 April 2018, she ordered that the application to set aside be listed before me and that the bankruptcy petition should be listed for further hearing at least 28 days afterwards. In fact that has now been listed for 13 August 2018.
Service of the claim on the defendant
    1. There is an issue about service of the claim form on the defendant. According to the witness statement of Charlotte Gage, for the claimant,
“14. … Office Copy Register Entries were obtained for the defendant’s residential address at 46 The Deans, Portishead BS20 6EQ which showed that the register had not been updated since 31 October 2005 and showed a Mr Veale as the registered proprietor. The claim was issued on 5 December 2006 and served on the defendant at his last known residential address. The defendant had not advised that he had left the property and therefore the claimant had no reason to believe the defendant no longer resided at the property…
15. The Office Copy Register Entries provided by the Defendant in his previous statement indicate that the current Registered Proprietors purchased the property on 10 August 2006 but the entries relating to this transfer were not entered on the Register until 15 December 2006, after the Claim was issued.”
  1. The evidence of Ms Gage is limited. Since it was the court which served the claim form (by post), her evidence does not refer to the method of service nor to the sending out a response pack. The physical court file from 2006-07 is no longer available, and all that the court now has are limited computer records. I must assume that the court staff enclosed the relevant response pack. What is clear from the computer record is that a judgment in default in Form N30 was indeed issued subsequently, on 8 January 2007. Paragraph 4.1 (1) of the Practice Direction to Part 12 of the CPR requires that the court must be satisfied that the particulars of claim have been served on a defendant before a default judgment can be issued. It is part of the ‘checklist’ procedure which court staff follow when a request for default judgment is received. But since the court serves the claim form, there would be no need for a certificate of service. The fact and date of service would be noted on the file.
  2. However, there is a further issue to be considered. Service on the defendant was to be effected by post. At that date the then CPR rule 6.5 (4), (6) permitted (as CPR rule 6.9 (2) now permits) service on an individual being sued as such by post at his “usual or last known residence”. The current sub rule (r 6.9(2)) is made subject to sub-rules (3)-(6) of rule 6.9. Sub rule (3) provides that, where a claimant has “reason to believe” that the last known residence is an address at which the defendant no longer resides, he must take reasonable steps to ascertain the defendant’s current residence. At the hearing I heard argument on whether the claimant in this case had such “reason to believe”. In order to answer this question, it would be necessary to consider the events that took place nearly one year earlier, shortly after the mistaken payment and the partial repayment, and which I have already set out (see [8]-[9] above). But of course the version of the rule that needed to be considered was that in force in 2006. I was supplied at the hearing with a copy of the original 1998 version of rule 6.5. Since the hearing I have checked for the exact form of the rule in force in 2006. It is not materially different from the 1998 version, though very different from the version currently in force, introduced largely in 2008. The version in force in 2006 does not contain any equivalent to the current r 6.9(3)-(6). There is therefore no need to consider whether the claimant had such “reason to believe”.
  3. If it had been necessary to decide the question, I would have held as follows. The position in February 2006 was that the claimant was told by the defendant by email on 6 February 2006 that the defendant did not receive the letter of 16 January 2006. The claimant knew that the letter had not been returned undelivered. The defendant could have explained, but did not, that the reason he did not receive it was that he had moved away. In my judgment, this would not amount to “reason to believe” on the part of the claimant that the last known residence is an address at which the defendant no longer resides. What had happened was potentially explicable on that basis, but was also explicable on the simpler basis that the letter of 16 January had been mis-delivered by the post office. At best, it amounted to a matter which might be further investigated. Unfortunately, the claimant did not do so.

THE CURRENT RULE

The current CPR 6.9 (3)

(3) Where a claimant has reason to believe that the address of the defendant referred to in entries 1, 2 or 3 in the table in paragraph (2) is an address at which the defendant no longer resides or carries on business, the claimant must take reasonable steps to ascertain the address of the defendant’s current residence or place of business (‘current address’).

THE RULES GOES ON

(4) Where, having taken the reasonable steps required by paragraph (3), the claimant –
(a) ascertains the defendant’s current address, the claim form must be served at that address; or
(b) is unable to ascertain the defendant’s current address, the claimant must consider whether there is –
(i) an alternative place where; or
(ii) an alternative method by which,
service may be effected.
(5) If, under paragraph (4)(b), there is such a place where or a method by which service may be effected, the claimant must make an application under rule 6.15.
(6) Where paragraph (3) applies, the claimant may serve on the defendant’s usual or last known address in accordance with the table in paragraph (2) where the claimant –
(a) cannot ascertain the defendant’s current residence or place of business; and

(b) cannot ascertain an alternative place or an alternative method under paragraph (4)(b).”

THE ISSUES THAT ARISE

There are a number of issues here:

  •  When does a claimant have “reason to believe” that the defendant no longer resides or carry on business at that address. Is this an objective or subjective test?
  • What are the “reasonable steps” that a claimant has to take?

IN ESSENCE: JUST BE VERY CAREFUL

  •  If the claimant has any suspicion at all that the defendant does not remain at the “last known address” it would be prudent to check this prior to issue.
  • A prudent claimant should assume that lapse of time, or a failure to respond to correspondence, gives rise to a risk that the defendant has moved.

IF YOU FIND THE DEFENDANT AND/OR ANOTHER ADDRESS

Make an application under CPR 6.15 (which allows service of the claim form by an alternative method or at an alternative place).

IF YOU CANNOT FIND THE DEFENDANT

Then you can serve at the last known address. However a claimant remains vulnerable if they cannot show that they have taken “reasonable steps” to find the defendant or an alternative address for service.  The notes in the White Book describe this requirement (or perhaps the drafting) as “ugly” and note that the provisions could be harsh, emphasising the importance of taking the steps outlined in (4) and (5).

IT CANNOT BE THE “LAST KNOWN ADDRESS” IF THE DEFENDANT HAS NEVER LIVED THERE

In Marshall and Rankine -v- Maggs [2006] EWCA Civ 20

the Court of Appeal held that:

  1. The phrase “last known residence” could not be extended to an address at which the individual to be served has never resided.
  2. When considering an address at which the individual to be served did actually live at some time the court is not concerned with “belief” but with knowledge:

The draftsman of the rules deliberately chose the word “known”. In our view, knowledge, in this context refers to the serving party’s actual knowledge or what might be called his constructive knowledge, i.e. knowledge which he could have acquired exercising reasonable diligence.”

THE SITUATION PRIOR TO THE RULE CHANGE

The rule change was introduced to essentially, codify, the comments made in Smith –v- Hughes and the MIB the tranche of cases considered by the Court of Appeal and reported as Cranfield -v- Bridgegrove [2003] EWCA Civ 656.   The old rules allowed a claimant to serve on the “last known residence”, with none of the requirements to take reasonable steps that now exist in (4),(5) and (6) set out above.

In the Smith case:-

  • The effective defendant was the Motor Insurers Bureau. Mr Smith was an uninsured driver.
  • Prior to service of the Claim Form the claimant’s solicitors had been told by the MIB that Mr Smith had moved and they could not find a forwarding address. The MIB sent a copy of their enquiry agent’s report to the claimant’s solicitor.
  • The claimant served on the address at which Mr Smith last lived (where it was known that the defendant did not in fact now live).
  • The MIB, some time into the action, applied to set aside service.
  • The claimant argued that this was Mr Smith’s  “last known residence”
  • The judge at first instance held that the claim form had not been properly served on Mr. Smith.  However this decision was overturned by the Court of Appeal.

The Court of Appeal held that service at an address at which the claimant knew the defendant no longer lived could be service at the last known residence.  The significant factor here was that it was evidence from the MIB that demonstrated the last known address.  The Court observed

“If the MIB had disputed the claimant’s claim that this was Mr Hughes’ last known residence, then difficult questions might have arisen. In particular, is the rule concerned with the claimant’s actual knowledge, or is it directed at the knowledge which, exercising reasonable diligence, he or she could acquire? We incline to the latter view, but, as we have said, the point does not arise on this appeal.

(I represented the claimant in that appeal and there was some interesting – at times philosophical – discussion about whether a place could be the “last known residence” if a claimant knew that the defendant did not, in fact, actually live there.)

 HOW WOULD SMITH BE DECIDED UNDER THE NEW RULES?

Smith was interesting because it was the (effective defendant) the MIB that employed the enquiry agent that could not Mr Smith.  The new rules put the burden on the claimant to take reasonable steps. Could the MIB now argue that failing to employ another enquiry agent was not a “reasonable step”? Even after its own investigations had failed to find an alternative address?