DISPUTING SERVICE: USING THE RIGHT PROCEDURE: THE APPLICATION OF CPR 3.10

December 7, 2016 · by · in Service of the claim form, Serving documents, Setting aside judgment, Uncategorized

In Bank of Boroda, GCC Operations -v- Nawayny Marine Shipping FZE [2016] EWHC 3089 (Comm) Ms Sara Cockerill QC (sitting as a Deputy Judge of the High Court) considered issues in relation to disputing service. What is interesting  here is that the judge exercised her discretion under CPR 3.10 in a case where the defendant had (correctly) made an application under CPR Part 11.

KEY POINTS

  • In disputing service the defendants had correctly made an application under CPR Part 11.  Part 11 was the appropriate mechanism.
  • The filing of an acknowledgement of service did not act as a waiver of the defendants’ right to take issue with service.
  • It was, however, appropriate for the court to make an order under CPR 3.10. to rectify matters.

THE CASE

The defendant issued an application to dispute service.  There were a number of defendants, however the claimant only served one original claim form and four original response packs.

THE JUDGMENT (ON THE SERVICE ISSUE)

Defective service
  1. Dealing first with the application based on defective service, the Amended Facility Agreement and the Guarantees both contained service provisions (clauses 37.2 and 24.3 respectively) providing that SH Process Agents Limited in London were appointed as the Defendants’ agents for service in relation to any proceedings before the English Court. The current proceedings were purportedly served on them by a letter dated 29 February 2016 sent by special delivery to SH Process Agents. The letter appended one copy of the Claim Form and four original Response Packs. It is common ground that under CPR 6.3 each Defendant should have been served with a separate original Claim Form and Response pack.
  2. While it was initially contended by Mr Curling of TLT in his witness statement that the proceedings were properly served, it was accepted by the date of the hearing that service was defective. Even if it might have been argued that the service provisions dispensed with the need for a separate copy of the Claim Form for each Defendant, it must be the case that this could only dispense with the need for anything over one copy per claim; and there are at least three claims under separate documents.
  3. Three points were therefore deployed by the Claimants against the defective service point. First it was argued that a challenge to service was not one under CPR Part 11, and therefore the Part 11 challenge was not apt to question service. Secondly it was contended that the Acknowledgment of Service put in by the Defendants’ solicitors operated as a waiver of any argument on service. Thirdly it was contended that if the defect could be challenged in this application, the defect was one which could be cured under CPR 3.10.
  4. On the first two points it seems to me that the Defendants are correct. Although it was suggested for the Claimants that service could and should have been disputed by way of correspondence, that is clearly not practical, given the spectre of default judgments. The means which CPR offers to dispute service is via Part 11. This is reflected in paragraph 5.01 of Briggs, “Civil Jurisdiction and Judgments” (6th ed.) to which both parties referred for their different points:
“If it may be shown that service has not been properly made, it will be open to the defendant to dispute the jurisdiction and to ask the court to declare that it has no jurisdiction; it may be open to the claimant to ask the court to cure or overlook any shortcoming which may be regarded as an irregularity.”
It also reflects both the structure of the CPR and the notes to Part 11 which indicate that any challenge to jurisdiction (including service) should proceed by way of Part 11 challenge. This position was recently confirmed by Popplewell J in IMS SA and others v Capital Oil and Gas [2016] EWHC 1956 (Comm).
  1. That finding, it seems to me, effectively disposes of the Claimants’ second point, waiver. While the Claimants relied on the decision of Mr Stephen Hofmeyr QC (sitting as a Deputy Judge of the High Court) in “The Conti Cartagena” [2014] 2 Lloyd’s Rep 162 as supporting the proposition that an acknowledgment of service can operate as a waiver of service, there is an important distinction between that case and the present. That case was one where the acknowledgment was made before service had ever been effected and there therefore could be no dispute as to the effectiveness of service. Here there was a purported service and the acknowledgment of service filed plainly states that it is an acknowledgment for the purposes of contesting jurisdiction only. In those circumstances the acknowledgment cannot sensibly be read to operate as a waiver of defects in service which fall to be raised by way of the very jurisdictional challenge asserted.
  2. This leaves only CPR 3.10, as Mr Watthey for the Claimants fairly acknowledged that this was not a case where CPR 6.16 could be prayed in aid. In support of the Claimants’ submissions I was referred to the judgment of His Honour Judge Graham Wood QC in United Utilities Group PLC v Hart(Liverpool County Court, unreported, 24 September 2015). That case concerned a question of whether purported defective service of a copy of the sealed version of the claim form can be cured by the court exercising discretion under any part of the CPR and where the defective service was held capable of being cured under CPR 3.10.
  3. This case, as the Defendants correctly pointed out, was not on all fours with the current case. However it includes a very useful summary of the principles and recent authorities in the area, highlighting in particular Lord Brown’s obiter dictum in Philips v Symes (No 3) [2008] 1 WLR 180 at [31] where in the context of a missing English language version of a claim form, he stated:
“It seems to me at least arguable that even without resort to rule 6.9 the court could simply order under paragraph (b) of rule 3.10 that the second and third defendants are to be regarded as properly served, certainly for the purposes of seisin. The “error of procedure” here was, of course, the omission of the English language claim form from the package of documents served: there was in this regard “a failure to comply with the rule” ( rule 7.5 ). But that, says paragraph (a) of rule 3.10 , “does not invalidate any step taken in the proceedings unless the court so orders”.”
  1. Judge Graham Wood QC also highlighted the careful analysis of the significance of that dictum by Popplewell J in Integral Petroleum SA v SCU Finanz AG [2014] EWHC 702 (Comm). Together these cases indicate the following:
i) Lord Brown’s dictum can be taken as an indication of the view of the Judicial Committee that CPR 3.10 is a beneficial provision to be given very wide effect;

ii) This enables it to be used beneficially where a defect has had no prejudicial effect on the other party and prevents the triumph of form over substance;

iii) The key in considering whether a defect can be cured under this provision is to analyse whether there is “an error of procedure” which might otherwise invalidate a step taken in the proceedings. Thus the benefit of CPR 3.10 will be less easy to obtain where there has been no attempt at a procedural step (eg a complete failure of service) or the step taken is not permitted by or within the rules at all.

  1. Is this therefore a case where CPR 3.10 can operate? There is no suggestion that the defect in service has had a prejudicial effect. The Defendants were effectively informed by the defective attempt at service that proceedings had been commenced against them. Nor was it argued that there was any limitation issue. If I were to accede to the Defendants’ application, even though the validity of the Claim Form has now expired there would be nothing preventing the Claimants from issuing another Claim Form and serving it properly. This would, therefore, be a triumph of form over substance.
  2. Further, while the error relates to originating process (which Popplewell J at [37] indicated should attract a more cautious approach) this is a case where a procedural step was taken defectively rather than omitted or performed directly contrary to a rule. So although on one analysis one might say that service on some of the Defendants was omitted in the absence of sufficient Claim Forms, the covering letter makes clear that service was being attempted to be effected against all the Defendants. Effectively some of the procedural boxes were ticked, but others were not. This therefore seems to me to be a case where the power under CPR 3.10 can and should be exercised. Given the fact that no limitation point arises, and the effect of the order will be to validate the steps taken before the Claim Form expired, I do not consider that the expiry of the Claim Form stands in the way of this order being made.
  3. I also note that this result is consistent with the law as it existed before the CPR: in The Goldean Mariner [1990] 2 Lloyd’s Rep. 215 (cited in passing by Popplewell J and also discussed by Lord Brown) four defendants received the wrong writs, while the fifth received no writ, only an acknowledgment of service form. These errors were all treated as capable of cure under RSC rule 2(1). It would be odd if the CPR, with its greater emphasis on substance, should produce a less favourable result to an erring claimant than would have been obtained under the RSC.

RELATED POSTS: SERVICE OF THE CLAIM FORM

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