NON-SERVICE OF THE CLAIM FORM: MORE CLAIMANTS DICING WITH PROCEDURAL DEATH (AND LOSING): JUDGE REFUSES TO PUSH THE ENVELOPE

I am grateful to David Turner QC for sending me a copy of the judgment in  HHJ Klein (sitting as a High Court judge) in Capital Alternatives Sales and Marketing Ltd v Nabas & Ors [2018] EWHC 3345 (Comm). This is a case that is very difficult to summarise. Essentially it is about errors by the claimants in relation to service of the claim form and  their ingenious, but ultimately unsuccessful attempts to rectify the situation. It is another case that emphasises the importance of finding out where to serve at the earliest opportunity. I have simplified the issues here.   The central point remains clear: knowing where to serve the claim form (and getting this right) is as important as knowing the relevant limitation period.  Here the claimants left everything to the last minute, matters went awry, this led to the action against one of the defendants failing.

“I do not believe that good service is effected, under section 1140 or CPR rr.6.3, 6.7-6.10, on their proper construction, by a claim form being left at a permitted place for service not by a claimant or someone on its behalf but by a third party including another defendant who is itself being served, perhaps entirely fortuitously (as might be the case in the present proceedings)”

THE CASE

The claimants brought an action against a number of defendants.  The claim form was issued in February 2018, it should have been served by the 20th June 2018.

On the 19th June 2018 the claimants served  claim forms at a business address, these were forwarded to other addresses due to an internal mail procedure .   The envelopes containing the claim forms were addressed to other defendants.   No envelope was addressed to the first defendant (this was  mistake, the claimant meant to send a claim form to the first defendant but failed to do so).   On the 4th July 2018 the first defendant filed an acknowledgement of service stating that she intended to dispute jurisdiction.   She duly made an application to dispute jurisdiction. The  claimants thereafter made a number of applications in an attempt to remedy the situation if the court found that the claimant had not been properly served.

THE CLAIMANT’S APPLICATIONS

The claimants’ applications were manifold.

a) a declaration that the First Defendant was validly served with the claim form and the Particulars of Claim at Unit 44, City Business Centre, St Olav’s Court, Lower Road, Canada Water, London, SE16 2XB (“Unit 44”) (which is the registered office of the Second Defendant and which, the First Defendant accepts, is a “registered address” of the First Defendant for the purpose of s.1140 of the Companies Act 2006 (“section 1140”));
b) pursuant to CPR r.6.15(2), an order giving retrospective permission for the Claimants to serve the claim form and Particulars of Claim on the First Defendant by leaving them at an alternative place or address for service, being the offices of Cubism Ltd. (the Third Defendant) at 1 Plough Place, London, EC4A 1DE (“Plough Place”) (which the First Defendant accepts is her postal address for business purposes but which is not a registered address of the First Defendant for the purpose of section 1140) and/or at the offices of the Second Defendant at Unit 44;
c) pursuant to CPR r.6.16, an order that service of the claim form and Particulars of Claim on the First Defendant be dispensed with;
d) pursuant to CPR r.7.6(2) and/or CPR r.3.1(2)(a), an order extending the time for service of the claim form and Particulars of Claim on the First Defendant to 14 days after the date of the order on the application, together with an order that such service may be effected by service on the First Defendant’s solicitors;
e) pursuant to CPR r.3.9 and/or CPR r.3.10, an order for relief from any sanction imposed by CPR rr.6.9, 7.5(1) and 7.6(2) and/or to remedy any error caused by the failure to follow those provisions;

THE JUDGE’S FINDINGS: THE CLAIMANTS LOST ON EVERY POINT

The judge rejected the argument that leaving service packs at an address was sufficient service.  The service packs were never addressed to the claimant. The test to be applied was an objective test. Applying that test the first defendant was not served.

THE FIRST DEFENDANT’S APPLICATION TO DISPUTE JURISDICTION DID NOT LEAD TO THE CONCLUSION THAT GOOD SERVICE HAD TAKEN PLACE

The judge also rejected the argument that by acknowledging service the first defendant accepted that one of the service packs was for her.

    1. Further, I cannot conclude, from the filing of the acknowledgement of service in this case, that the First Defendant appreciated that one of the Service Packs was left for her, because:
i) The acknowledgment of service did not indicate any intention other than that she intended to contest jurisdiction which, in this case, is a tolerably clear indication that she took the view that there had not been good service on her;
ii) I accept, as Mr Turner contended, that it is equally probable that the filing of the acknowledgment of service in this case was a protective measure taken to prevent judgment in default of acknowledgment of service being entered by the Claimants believing that there had been good service on the First Defendant.
  1. I have considered whether the fact and contents of the June correspondence and/or the existence of three Service Packs and their ultimate location affects the objective assessment which I have already made, as admissible background evidence. For the same reason as I have been unable to conclude, from these additional facts, that the First Defendant appreciated that one of the Service Packs was left for her, I have concluded that these additional facts do not alter the objective assessment which I have already made.

THE CLAIMANTS’ UNSUCCESSFUL APPLICATION UNDER CPR 6.15

The judge also rejected the claimants’ application for an order that the steps already taken constitute good service.  There is a detailed consideration of the test of “good reason. The judge also rejected the claimants’ “windfall” argument.

    1. If the First Defendant will obtain a windfall, as Mr Moraes suggests, that will not be as a result of anything that the First Defendant has done. Rather, it will be as a result of what the Claimants and the Solicitors have not done; namely:
i) not to engage with the First Defendant until almost the very last moment;
ii) not to attempt to serve the claim form well within the period of its validity;
iii) not to take the apparently simple step of serving the claim form on the First Defendant by leaving a Service Pack addressed to her and/or a claim form with the Address Box containing her details at Unit 44 (or, indeed, at Plough Place) on 19 June or beforehand.

The judge also rejected an argument that a copy claim form, expressly stated “not for service” could amount to good service.

  1. I have also considered whether there is sufficient reason to treat, as good service on the First Defendant, the provision to her of a copy of the claim form under cover of the 7 June letter. If, as I have concluded, the events of 19 June ought not to be treated as good service on the First Defendant, then, in my view, the sending of the claim form to the First Defendant, under cover of the 7 June letter, expressly not for service, ought not to be treated as good service on her.

THE CLAIMANTS’ UNSUCCESSFUL APPLICATION UNDER CPR 16.6

CPR 16.6 allows the court, in exceptional circumstances, to dispense with service of the claim form.   Again there is a detailed review of the authorities by the judge.  The claimants’ arguments were rejected.

    1. For the same reasons that I have concluded that there are insufficient grounds for making an order under CPR r.6.15 in this case, and having carried out the same balancing exercise, I have concluded that there are insufficient circumstances for making an order under CPR r.6.16; in particular, because:
i) there is a real possibility that the Claimants left it until at least late within the limitation period to issue the claim form;
ii) there is no evidence that they took any steps to attempt to serve the claim form on the First Defendant until towards the end of the period of its validity;
iii) 19 June was at the very end of the period of the claim form’s validity;
iv) as I have already concluded, there was no attempt, on 19 June, to leave the claim form, for the First Defendant, at a permitted place for service even though, seemingly, this could have been done easily;
v) the Claimants did not apparently attempt to take steps they were encouraged to take or ought to have taken under the Professional Negligence Pre-action Protocol before 7 June 2018;
vi) there is no evidence that they took any steps, during the period of the claim form’s validity, to consider or investigate the practicality of serving the claim form on the First Defendant otherwise than by leaving it at a particular location;
vii) there is no evidence that they took any steps, easy as they were in relation to section 1140, during the period of the claim form’s validity, to investigate where might be a permitted place for service on the First Defendant;
viii) this conduct has to be set against the likelihood that the Claimants had contemplated a professional negligence claim for some years before the claim form was issued;
ix) if I make an order dispensing with service of the claim form on the First Defendant, she may lose the benefit of an accrued limitation defence.

THE CLAIMANTS’ UNSUCCESSFUL APPLICATION UNDER CPR 3.9 AND 3.10

The judge rejected the argument that the claimants could make an application under CPR 3.10
    1. I also agree with Mr Turner that, in this case, the Claimants cannot avoid the limitations imposed by CPR rr.6.15, 6.16 by making an application under CPR r.3.10. As Dyson LJ explained, in analogous circumstances, in Steele v. Mooney [2005] 1 WLR 2819, at [15]:
“In Vinos v. Marks & Spencer this court had to consider the relationship between rule 3.10 and rule 7.6(3). The claimant issued his claim form about one week before the expiry of the limitation period, but due to an oversight, his solicitors did not serve it until nine days after the expiry of the four month period specified by rule 7.5(2). He applied for an extension of time for serving the claim form. He accepted that he could not satisfy the conditions of rule 7.6(3)(a) or (b), but contended that the court could grant the extension under rule 3.10 on the grounds that a failure to serve the claim form within the prescribed period was an error of procedure which could be corrected under the general power conferred by that rule. This court held that rule 3.10 cannot be invoked to obtain an extension of time for service of a claim form after the end of the period specified by rule 7.5(2) in circumstances where an extension of time is prohibited by rule 7.6(3). May LJ said in terms, at para.20:

“The general words of rule 3.10 cannot extend to enable the court to do what rule 7.6(3) specifically forbids, nor to extend time when the specific provision of the rules which enables extensions of time specifically does not extend to making this extension of time. What Mr Vinos in substance needs is an extension of time – calling it correcting an error does not change its substance.””

    1. Mr Turner also argued that, where the issue before the court relates to the service of a claim form, a claimant cannot have recourse to CPR r.3.9.[6]This is a point I do not need to decide but I do note that, in Barton, Lord Sumption said, at [8]:
“The Civil Procedure Rules contain a number of provisions empowering the court to waive compliance with procedural conditions or the ordinary consequences of non-compliance. The most significant is to be found in CPR r.3.9, which confers a power to relieve a litigant from any “sanctions” imposed for failure to comply with a rule, practice direction or court order. These powers are conferred in wholly general terms, although there is a substantial body of case law on the manner in which they should be exercised: see, in particular, Denton v. TH White Ltd. (De Laval Ltd., Part 20 defendant) (Practice Note) [2014] 1 WLR 3926 (CA), especially at para.40 (Lord Dyson MR and Vos LJ), Global Torch Ltd. v. Apex Global Management Ltd. (No 2) [2014] 1 WLR 4495, SC(E). The short point to be made about them is that there is a disciplinary factor in the decision whether to impose or relieve from sanctions for non-compliance with rules or orders of the court, which has become increasingly significant in recent years with the growing pressure of business in the courts. CPR r 6.15 is rather different. It is directed specifically to the rules governing service of a claim form. They give rise to special considerations which do not necessarily apply to other formal documents or to other rules or orders of the court. The main difference is that the disciplinary factor is less important. The rules governing service of a claim form do not impose duties, in the sense in which, say, the rules governing the time for the service of evidence, impose a duty. They are simply conditions on which the court will take cognisance of the matter at all. Although the court may dispense with service altogether or make interlocutory orders before it has happened if necessary, as a general rule service of originating process is the act by which the defendant is subjected to the court’s jurisdiction.”

THE RESULT

The claimants’ applications were dismissed. The case could not continue against the First Defendant.