ASHLEY -v- TESCO STORES: FULL TRANSCRIPT NOW AVAILABLE: CLAIMANT HAS SIX MONTHS TO SERVE ON A SCOTTISH COMPANY
The case of Ashley -v- Tesco Stores  EWCA Civ 1423 has been looked at earlier in this blog. The full transcript is now available.
THE JUDGMENT OF LADY JUSTICE ARDEN
- This appeal from the order of Patterson J dated 15 April 2014 raises an important point of practice, and it is this: is the applicable time limit for service out of the jurisdiction on a Scottish company where it has been served pursuant to section 1139 of the Companies Act 2006 four months or six months? Subsections (1) and (4) of that Act provide:
“(1) A document may be served on a company registered under this Act by leaving it at, or sending it by post to, the company’s registered office.
(4) Where a company registered in Scotland or Northern Ireland carries on business in England and Wales, the process of any court in England and Wales may be served on the company by leaving it at, or sending it by post to, the company’s principal place of business in England and Wales, addressed to the manager or other head officer in England and Wales of the company. Where process is served on a company under this subsection, the person issuing out the process must send a copy of it by post to the company’s registered office.”
- In this case we are concerned particularly with subsection (1) because the respondent (“Santon”), for whom Mr William Norris QC appears, is a company registered under the Companies Acts but having its registered office in Scotland; in fact it has it in Edinburgh. We are not concerned with subsection (4) which introduces a further permissive method, so we are focusing on subsection (1).
- In Cranfield v Bridgegrove Ltd  1 WLR 2441 this court had to consider whether the predecessor of section 1139 of the Companies Act 2006 (which was section 725 of the Companies Act 1985) could be used in preference to modes of service laid down in the Civil Procedure Rules (“CPR”). This court has held that section 1139 (as it now is) was a true alternative method of service to those modes of service permitted by the CPR. The claimant could decide which to use. That much is common ground. However, Cranfield did not decide the question which is now before us, which is: how long is the period within which the claimant has to effect service if it utilises section 1139(1)? So in the present case the question is not whether the claimants could use section 1139 but whether, if they did so, this counted as service out of the jurisdiction entitling the claimants to six months in which to serve their claim form. This mattered because they failed to effect service within four months, which is the period allowed for service within the jurisdiction. However, this does not matter if the service on the company’s registered office in Scotland is in fact service out of the jurisdiction which meets the requirements of CPR 7.5.
- I now turn to CPR 7.5:
“(1) Where the claim form is served within the jurisdiction, the claimant must complete the step required by the following table in relation to the particular method of service chosen, before 12.00 midnight on the calendar day four months after the date of issue of the claim form.
(2) Where the claim form is to be served out of the jurisdiction, the claim form must be served in accordance with Section IV of Part 6 within 6 months of the date of issue.”
- The learned judge set out the facts and also the proceedings before the Master from whom she was hearing an appeal in some detail. It is not necessary for me to repeat the facts or details of those proceedings because we are not concerned, as I see it, with the details of the facts but with the interpretation and application of the Civil Procedure Rules and section 1139. The particular type of proceedings or the particular type of claim does not seem to me to matter. All that matters is that the respondent (whom I am calling “Santon”) was a Scottish-registered company with its registered office in Edinburgh. What we have is simply an exercise of interpretation of the CPR and the merits or demerits of the conduct of the parties in this case do not in my judgment matter.
- Mr Robert Sterling for the appellants, who are the claimants in these proceedings, submits very simply that the claim form was served “in accordance with section IV of Part 6” within six months of the date of issue. Section IV of Part 6 begins at Rule 6.30 but the first place to go to is Rule 6.40. That is on page 322 of the White Book. Rule 6.40 provides at sub-rules (1) and (2):
“(1) This rule contains general provisions about the method of service of a claim form or other document on a party out of the jurisdiction.
Where service is to be effected on a party in Scotland or Northern Ireland
(2) Where a party serves a claim form or other document on a party in Scotland or Northern Ireland, it must be served by a method permitted by Section II (and references to ‘jurisdiction’ in that Section are modified accordingly) …”
- I need not read the remaining words of sub-rule (2) because it is common ground that they do not apply in this case. Subparagraph (3) of Rule 6.40 deals with where service is to be served on a party out of the United Kingdom. That is not relevant because service was not sought to be made out of the United Kingdom.
- So the next step in the argument presented by Mr Sterling is to go to section II of Part 6. That begins at Rule 6.3 at page 212 of the White Book, and we can go straight to Rule 6.3(2). This provides (and this is very important):
“(2) A company may be served –
(a) by any method permitted under this Part; or
(b) by any of the methods of service permitted under the Companies Act 2006.”
- Mr Norris QC on the other hand rejects Mr Sterling’s argument. He seeks to uphold the judge’s reasoning. The judge held that to achieve service within section II the claimants had to use CPR 6.9. CPR 6.9 is headed “Service of the claim form where the defendant does not give an address at which the defendant may be served”, and the sub-rule 1 provides that this Rule applies in certain circumstances, and then the material part is subsection (2), “Subject to paragraphs (3) to (6), the claim form must be served on the defendant at the place shown in the following table”. The argument runs thus: that far from the method of service permitted by section 1139 being a method permitted by section II, it is necessary to find a specific rule within section II and to use that as the method of service in order to get within Rule 6.40. So in the case where 6.9 is available. it would be necessary to serve under that Rule and, it is said, 6.9(2) is available because the table which it sets out contains seven items, and the seventh item would be applicable in this case. That reads:
“7. Any other company or corporation”
And in that instance the second column of the table shows that the place of service would be:
“Any place within the jurisdiction where the corporation carries on its activities; or any place of business of the company within the jurisdiction.”
- So the judge reached the conclusion that the service under section 1139 had to be achieved within four months because in order for the service to be in accordance with Part 2 the claimants had first to find whether any of the routes permitted in section II was available.
- Mr Norris points to section 6.9 which I have just read. He also refers to section 6.7, because in this case Keoghs, solicitors instructed to act on behalf of the respondent, Santon, gave notice that they were authorised to accept service on the very last day of the four-month period. Thus section 6.7(1) on Mr Norris’s submission applies. This reads:
“(1) Solicitor within the jurisdiction: Subject to rule 6.5(1), where –
(a) the defendant has given in writing the business address within the jurisdiction of a solicitor as an address at which the defendant may be served with the claim form; or
(b) a solicitor acting for the defendant has notified the claimant in writing that the solicitor is instructed by the defendant to accept service of the claim form on behalf of the defendant at a business address within the jurisdiction,
the claim form must be served at the business address of that solicitor.”
- So those are the two applicable provisions of section II of Part 2, and Mr Norris’s argument is that, since they are specified within section II, the claimants had to use those methods and they could not resort to section 1139 unless they had exhausted those methods. If they could use the registered office address under section 1139 they had to do it within the four-month period.
- The point is, as I see it, a very short one, and I now move to my conclusions in which I will mention at some greater length some of the arguments that have been put to us. In my view, with great respect, the judge was wrong in the conclusion reached. In this instance the period for service is the six-month period provided for by CPR 7.5(2) because as I read section 1139 it gives unqualified permission to use the method of service set out in that section. I further consider that the method of service authorised by statute is a method of service permitted by section II of Part 6. Here I go to Rule 6.40 which, when dealing with service on a party in Scotland and Northern Ireland, states that where a party serves a claim form it must be served “by a method permitted by Section II” and it then has material words in parenthesis that references to “jurisdiction” in section II are modified accordingly.
- That sends one back to section II and to Rule 6.3 in the White Book. Section 6.3 is headed “SERVICE OF THE CLAIM FORM IN THE JURISDICTION OR IN SPECIFIED CIRCUMSTANCES WITHIN THE EEA”, and we know from the words in parenthesis that the word “jurisdiction” has to be treated as modified because we are dealing with a case of service within another part of the United Kingdom. When we go to section 6.3, as the parties accept, the material provision is sub-rule (2), and this says that a company may be served in one of two ways, either by a method permitted under this Part or, secondly, by any of the methods of service permitted under the Companies Act 2006. As I see it, a method of service permitted under the Companies Act 2006 is incorporated into Part 6 and becomes a rule permitted by section II.
- In support of that conclusion I draw some weight (not much weight, but some weight) from the fact that Rule 6.1 provides that the whole of the Part applies to the service of documents except where another part or any other enactment or practice direction makes different provision, and self-evidently section 1139 of the Companies Act 2006 is not making a different provision because the provision it has made has been incorporated into Part 6. The mere fact that a method of service is authorised by the Companies Act 2006 does not mean that it cannot also be a method of service for the purposes of section II. Section II can, as it seems to me it has done, adopt the Companies Act method of service and it would logically do so to create a procedural code on service.
- The way that the argument has been developed is by focusing on 6.3(2) but I would start by emphasising the point that 6.40(2) does contain two important signals: first, the words “permitted by Section II”, in that the word permitted does not say “specified in section II” but “permitted by Section II”, which are words that the drafter might well have used where the method is incorporated by reference; and second, as I have pointed out, the words that are in brackets make it clear that service in another constituent part of the United Kingdom is not true service out of the jurisdiction.
- The argument which Mr Norris has pressed on us is that Rule 6.3(2) does not deal with the address for service that is governed by Part II. So he submits that, if a method is specified in Part II, that must be used in preference to the service under the Companies Act. Thus, he says, since on his submission (and it has been accepted for the purposes of this appeal) there was a place of business in England and Wales, there should have been service on that place of business first because of item 7 in the box in Rule 6.9(2); alternatively upon the solicitors, Keoghs, upon their giving notice that they were authorised to accept service.
- It seems to me with respect that this argument takes away and detracts from the provision in the statute, namely section 1139, and that it introduces a qualification into the statute which simply is not there. As Mr Sterling put it, it would be odd if primary legislation had been subsumed by the CPR 6.9 without any reference to it in the Companies Act 2006, which after all has been enacted since the CPR were first introduced. As I see it, the respondent’s argument has to be that the words in 6.3(2)(a) “by any method permitted under this Part” is exhaustive of the meaning of the words “by a method permitted by Section II” in Rule 6.40(2). Quite obviously the words are different. In any event, as Kitchin LJ pointed out in the valuable exchanges we had with Mr Norris in argument, there is a logical difficulty. For the argument to be good, the respondent has to accept that the words “permitted by Section II” in Rule 6.40(2) do include section 1139 where there is only a registered office in Scotland at which service can take place and it is only there that the company can be served. That would be the case if there has never been a place of business in England and if no solicitor has come forward to say that he has authority to accept service. There is simply no mandate in CPR 6 which allows this qualified use of service on the registered office in Scotland pursuant to section 1139.
- It all boils down, then, to the meaning of Rule 6.40 and those words “permitted by Section II” and to the fact that the respondents say it has the same meaning as the different words used in CPR 6.3(2)(a). I would reject that argument. Moreover it has most unfortunate implications. If the respondents are correct then the claimants, if they used the six-month period in error, have to apply for an extension. Any extension is discretionary. It involves the claimant throwing themselves on the mercy of the court. It also uses the valuable resources of the court for dealing with the situation. It also means if the respondents are correct (and this was a point made by Gloster LJ, a very important practical point) that the claimants would have to make substantial enquiries or maybe substantial enquiries in England and Wales as to whether there was a place of business at which the respondent could be served. It could, as my Lady colourfully put it, be simply a pop-up shop.
- All in all, the result of the interpretation for which the respondent contends with great persuasive force is considerably less convenient. It could be very costly and, as Mr Sterling pointed out, it could lead to satellite litigation and uncertainty. This is contrary to the objectives of the CPR and the matters which the CPR were introduced to prevent. Moreover, as Mr Sterling pointed out in his reply, when the court is interpreting any Rule in the CPR, it must seek to give effect to the overriding objective of the CPR (see CPR 1.2). So for those additional reasons I would also reject the respondents’ contention.
- I mention for completeness CPR 6.6(1). Reference was briefly made to this. This appears in section II. It provides as follows, “The claim form must be served within the jurisdiction except where rule 6.7(2), 6.7(3) or 6.11 applies”. It then adds, “or as provided by Section IV of this Part”. So that sends us back to the other provisions which I have already considered and rejected, and so on balance that Rule likewise does not assist.
- So for these reasons, notwithstanding the excellent argument that we have had, I would hold that this appeal succeeds and that the period for service was six months as provided in CPR 7.5(2).