FIRST CLAIM FORM CASE OF THE YEAR: SERVICE WITHOUT A SEAL IS NOT GOOD SERVICE BUT CPR 3.10 SAVED THE CLAIMANT

It took until the 31st January for the first claim form of the case of the year to come up (a bit later than normal, still there’s 11 months left). This time it was good news for the claimant.  In Dory Acquisitions Designated Activity Company v Frangos [2020] EWHC 240 (Comm)  The court allowed an application that an unsealed claim form that had been served be deemed to be validly served.  Service of an unsealed claim form is never good practice. However Mr Justice Bryan held that on the facts of the current case it was appropriate for the court to exercise its discretion under CPR 3.10.

“CPR rule 3.10 is a beneficial provision to be given a very wide effect. It can be used beneficially where a defect has no prejudicial effect to the other party and to prevent the triumph of style over substance”

THE CASE

The claimant brought proceedings under a guarantee.  Proceedings were issued and served on the defendant’s solicitor. However a sealed copy was not served.

  1. The claim form that is referred to does not, under the heading “Claim number and issue date”, have a claim number or issue date completed. Nor does it bear a seal. But it is signed with a statement of truth. Equally, the Particulars of Claim do not have a claim number attached to them, but accompanying those documents was a document entitled “E-filing submission confirmation”, which, amongst other matters, states: “Court: Commercial Court (QBD). Filing type: filing claim form part 7.”
  2. From this it would be apparent from that that a claim form had been CE-filed and issued that day. I should say the time. The date is 14 November and the time 04.19 pm. So in other words, shortly before the letter with accompanying claim form was handed to the Guarantor’s solicitors.
  3. I interpose at this point that Waterson Hicks, being solicitors and no doubt familiar with CE filing in the Commercial Court, could at that point, had they wished to do so, have logged on to the CE file system, and had confirmed by using “Dory” as a search term, that indeed a claim form had been issued. And if they had looked at that they would also have been able to see that it was in identical terms to that which had been served, and they would also have been able to identify the claim reference number.
  4. As they are not present today, it is not known whether that in fact was what they did. But it is a reasonable inference. I am satisfied that that is what a solicitor would do in the position of Waterson Hicks.

THE DEFENDANT (BELATEDLY) TAKES THE POINT

The defendant took the point (belatedly) that the claim form was not sealed.
    1. There is then reference to [30] of Mr Feldman’s witness statement dated 11 December, in which it was asserted that proceedings were served by the delivery of papers to Waterson Hicks’s offices on 14 November. It is said:
“With respect, that assertion is plainly wrong. On 14 November someone from your firm made a ‘by hand’ delivery of papers to our office just after 16.30 pm. The papers then delivered to our office had not been issued by the court. The claim form did not bear any court seal. It did not bear any court action number. For the purpose of service ‘claim form’ means the form issued by the court and bearing the court seal and action number. We refer you to the notes at CPR 6.2.3 and CPR 6.2.2 of the White Book and the case mentioned therein of Hills Contractors & Construction Limited v Struth [2013] EWHC 1693 (TCC).
These defects…in service were not minor technicalities.
Similarly, the particulars of claim did not bear any action number (see CPR Practice Direction 7A at 7APD.4. In fact, you have never sent us a claim form bearing a court seal or action number, and we became aware of the above-mentioned action number by chance as you included it in the headings of your letter dated 2 December and subsequent documents.”
    1. It was then asserted:
“Once it is appreciated that the steps taken on 14 November and subsequently were not good service, it is apparent that the time for filing acknowledgement of service has not yet started to run and the time for a challenge to jurisdiction has not expired. It follows it is not appropriate for the court to give permission for a summary judgment application. The application should be dismissed. The rationale behind CPR 24.4 is that a defendant should not be required to respond on the merits to a summary judgment application until any challenge to jurisdiction has been determined or the time for bringing a challenge to jurisdiction has passed without any challenge having been brought (see, for example, Trafigura Beheer BV v Renbrandt [2017] EWHC 3100 (Comm) and the other cases mentioned in that judgment).”
    1. The letter ended by saying:
“The documents that you have delivered to our office [refer to] a variety of other matters and we do not propose to address them at this time. You should anticipate that if proceedings are served Mr Frangos will challenge jurisdiction and will then set out the grounds upon which jurisdiction is challenged.”
  1. Just stopping there for a moment, it will be seen that the first time, therefore, that any point is taken about the validity of service of the claim form is on 21 January 2020, some two months since the claim form was served.

THE JUDGE’S CONSIDERATION OF THE LAW IN RELATION TO DEFECTIVE SERVICE

The judgment has a detailed review of the principles relating to defective service.
    1. I first deal with Dory Acquisitions’ Application pursuant to CPR 3.10. CPR 3.10 provides, as follows:
“3.10:
“Where there has been an error of procedure such as a failure to comply with a rule or practice direction –

(a) the error does not invalidate any step taken in the proceedings unless the court so orders; and

(b) the court may make an order to remedy the error.”

    1. CPR Part 6 Part II sets out the rules on the service of claim forms. In order for service to be valid, an original claim form sealed by the court must be served (White Book commentary 6.2.3 relying upon Hills Contractors & Construction Limited v Struth [2013] EWHC 1693 (TCC).
    2. It is clear (and accepted) that the attempted service on 14 November 2019 was not valid service in that the claim form served was unsealed and lacked a claim number. This was so notwithstanding the fact that it must have been apparent to the Guarantor’s solicitors that the claim form had been issued, as was clear from the “E-filing submission confirmation” which was provided at the same time and which recorded the “filing-claim form part 7” together with payment of the appropriate court fee.
    3. It would have taken a matter of minutes if not seconds for the Guarantor’s solicitor to access the CE file and locate the very same claim form (sealed) and the associated claim reference number.
    4. As quoted above, CPR 3.10 applies where there has been a qualifying “error of procedure” which includes a “failure to comply” with a rule or practice direction. It provides that where such an error occurs that procedural step will be treated as valid unless the court makes an order setting it aside, see CPR rule 3.10(a). Further, the court may make an order remedying the error, see CPR 3.10(b).
    5. Guidance on the scope of this provision is to be found in Phillips v Nussberger (reported sub nom Phillips and Another v Symes and Others (No 3) [2008] 1 WLR 180).
    6. This guidance was subsequently referred to by the High Court in, inter alia, Integral Petroleum SA v SCU Finanz AG [2014] EWHC 702 (Comm) and Bank of Baroda and Others v Nawany Marine Shipping FZE and others [2016] EWHC 309 (Comm).
    7. The guidance of the House of Lords in Phillips v Nussberger and subsequent cases can be summarised as follows:
(1) The guidance in Phillips v Nussberger is authoritative obiter dicta.
(2) CPR rule 3.10 is a beneficial provision to be given a very wide effect. It can be used beneficially where a defect has no prejudicial effect to the other party and to prevent the triumph of style over substance. (See Bank of Baroda at [17].) CPR rule 3.10 can apply even where the defect constitutes a failure to serve sufficient claim forms on defendants or a failure to deliver the correct claim form to the correct defendants or even where a defendant received no claim form at all, only an acknowledgement of service form in the context of service of claim forms on multiple defendants (see the Goldean Mariner [1990] 2 Lloyd’s Reports 215 discussed in Phillips v Nussberger, Integral Petroleum and the Bank of Baroda). This interpretation of CPR rule 3.10 applies to originating processes as much as it does to other procedural steps (see Bank of Baroda at [19]).
(3) In view of this broad guidance, the most important question in determining whether CPR 3.10 applies is whether there has been an error of procedure which might otherwise invalidate a procedural step. This would be more difficult where there has been, for example, a complete failure of service (Bank of Baroda at [17]).
(4) Another important factor to consider is whether the defendant has suffered any prejudice as a result of the procedural error. The court has in the past used its powers under CPR rule 3.10 to remedy service of an unsealed claim form without a claim number where the service of that claim did not deprive the defendant of any knowledge of the fact that the proceedings had been or were about to be started or the nature of the claim against it (see Heron Bros Limited v Central Bedfordshire Council [2015] EWHC 604 (TCC), at [16] and below).
(5) Whether the defect was the fault of the defendant is considered, but it is a subsidiary factor.

THE EXERCISE OF THE DISCRETION IN THE CURRENT CASE

The judge then applied those principles to the current case and found it was appropriate to make an order under CPR 3.10.

    1. I will now consider each of these points in turn before applying them to the facts of this case.
(1) Status of the guidance in Phillips v Nussberger.
    1. In Phillips v Nussberger, the service which had taken place in the English proceedings was personal service on Ms. Nussberger by the Swiss authorities of a package including the Particulars of Claim in English and German, a copy of the claim form in German but not the claim form in English because it had been removed from the package of documents by the Swiss authorities. Some documents were also not served on another defendant because of an error at the Swiss Post Office.
    2. The House of Lords determined that service should be dispensed with under CPR Rule 6.9. Lord Brown, with whom the other members of the Judicial Committee agreed, found that it was “at least arguable” that the court could make an order under 3.10(b) in these circumstances for the reasons set out by Lord Brown at [29]-[34] to which I have had regard.
    3. In Integral Petroleum v SCU Finanz AG, an error of procedure with respect to the service of Particulars of Claim was remedied pursuant to CPR rule 3.10, with the effect that the defendant was barred from challenging a default judgment against him pursuant to CPR Rule 13.2, because as a consequence the time for the defendant to file its defence had expired by the time the default judgment had been entered (See Popplewell J’s judgment at [42]).
    4. Popplewell J was rightly of the view that the dicta in Phillips v Nussberger were authoritative guidance despite the fact that the remarks on rule 3.10 fell outside the ratio of the decision (see in particular [22] and [24]).
(2) Broad application of rule 3.10 including to originating process.
    1. Popplewell J at [28] to [30] made the following observations on the wide application of rule 3.10 in Phillips v Nussberger:
“28. Fifthly, Lord Brown approved two aspects of the decision of the Court of Appeal in The Goldean Mariner [1990] 2 Lloyd’s Rep 215:
(a) He approved the unanimous view of the Court of Appeal in that case that RSC order 2 Rule 1 was a beneficial provision to be given wide effect, and further observed that in this respect it was not materially different from CPR 3.10. It is clear from [32] that CPR 3.10 is to be given wide effect so as to be used beneficially to cure defects.
(b) He approved the majority decision in The Goldean Mariner that the rule was engaged even where all that had been served was an acknowledgement of service and there had been no service of the writ. This suggests a very wide ambit to the rule, which is capable of curing a defect which consists of non-service of the very document by which originating process is initiated.
29. Sixthly, Lord Brown’s observations at [31] that CPR 3.10 was engaged were addressed to the position not only of Mrs Nussberger, on whom there had been service by a permitted method of a package of documents which included the German translation of the claim form and particulars of claim in both languages, but also to the position of Nefer, the third defendant, on whom there had been no service at all. In this he went further than the majority in The Goldean Mariner, where there had at least been some service, of the acknowledgment of service form if not the writ. I have some difficulty in treating an “error of procedure” in CPR 3.10 as encompassing circumstances where there is no purported service of any document of any kind, particularly where CPR 3.10(a) automatically validates subsequent steps in the proceedings if CPR 3.10 is engaged. I would be inclined for my part to treat the remedy in such case as lying, if at all, with the discretionary power to dispense with service under CPR 6.9. Nevertheless, the reference by Lord Brown in [31] to CPR 3.10(b) applying to the third defendant, Nefer, is indicative of the view of the Judicial Committee that CPR 3.10 is a beneficial provision to be given very wide effect indeed.”
    1. Popplewell J found that there was a “significant distinction” between service of originating process and subsequent procedural steps and indicated that a narrower approach was justified where CPR 3.10 was to be applied to the service of such process because that is what establishes in personam jurisdiction over the defendant. However, he also accepted that, according to Phillips v Nussberger, even for service of originating processes, CPR rule 3.10 is to be given a wide effect (see [37]).
    2. Bank of Baroda and Others v Nawany Marine Shipping FZE and Others [2016] EWHC 3089 (Comm) concerned the service of claims in relation to a loan agreement and a guarantee agreement. There was purported service of three separate claims. The claims were purportedly served on the defendant’s process agents by a letter which appended one copy of the Claim Form and four original response packs. In fact, they should have served a separate copy of the claim form for each defendant in circumstances where there were at least three claims under separate documents.
    3. It was found that CPR rule 3.10 did operate to cure the defect. Sara Cockerill QC, sitting as a Deputy High Court Judge (as she then was), summarised the position at [15] to [17], stating, amongst other matters, as follows:
“15. This leaves only CPR 3.10 […] 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.
16. […] [it] includes a very useful summary of the principles and recent authorities in the area, highlighting in particular Lord Brown’s obiter dictum in Phillips v Symes (No 3) [2008] 1 WLR 180 at [31] …”
“17. 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)…”

(3) Has there been an error of procedure?
    1. The third of the principles set out by Sara Cockerill QC at [17] is as follows:
“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 (e.g. a complete failure of service) or the step taken is not permitted by or within the rules at all.”
    1. This was considered in relation to the facts of that case at [19]:
“19. 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.”
    1. At [20] of her judgment she also continued as follows:
“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.”
    1. I would only add at this point that I agree with the sentiments expressed by the learned judge in that case, which I consider are also apposite to the facts of this case, as I shall come on to address.
(4) A question of whether the error had a “prejudicial effect”.
    1. The learned judge in that case considered further whether CPR 3.10 could operate in the case before her. An important consideration was whether the defect in service had a prejudicial effect, taking into account whether the defendants were effectively informed that proceedings had been commenced:
“18. 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.
    1. Lord Brown in Phillips v Nussberger also noted that the documents served on the defendant in that case included the German translation of the claim form and the Particulars of Claim which set out the details of the appellant’s case, so:
“29. […] (iii) the second and third defendants accordingly suffered no prejudice from the omission of the English language claim form from the package of documents served but rather used the omission as the opportunity to seek to achieve first seisin in Switzerland.”
    1. Furthermore, the court has previously used its powers under rule 3.10 of the CPR to remedy service of an unsealed claim from without a claim number where the error had no prejudicial effect. In Heron Bros Limited v Central Bedfordshire Council [2015] EWHC 604 (TCC), Edwards-Stuart J at [33] to [34] found that such service was an irregularity that could be cured (in the context of service within seven days of issue under regulation 47F(1) of the Public Contracts Regulations 2006), particularly where the irregularity did not deprive the defendant “of any knowledge of the nature of the claim against it or of the fact that proceedings had been or were about to be started ” (at [60]) (emphasis added).
(5) Fault of the applicant.
    1. As one of the considerations, the court has on occasions considered whether the failure to properly effect the procedural step was the fault of the applicant or beyond their control. In Heron Bros at [59], the judge noted that the failure to serve the claim form in time had “two effective causes”: the failure of the court office to return the documents promptly and the failures of the claimant’s legal consultants. Those consultants took no steps to find out what happened to those documents (despite them being retained by the court) or go to the court in person.

THE EXERCISE OF THE DISCRETION IN THE CURRENT CASE

(6) Application of the applicable principles to the facts of this case.
  1. I am satisfied that this is an appropriate case for the application of CPR 3.10 so as to remedy the defects in service, and for five reasons:
  2. First, the attempted service of the claim form was an error made in taking a procedural step. There was service of a defective claim form: this constituted an attempt at a procedural step, not a complete failure of service (see Bank of Baroda at [17(iii)]). Further, service of a claim form which was unsealed and without a claim number is an irregularity that can be cured (see Heron Bros at [33]).
  3. Secondly, the Guarantor and Waterson Hicks have long been aware that Dory Acquisitions intended to start proceedings against him. In fact, both parties continued to litigate as if the proceedings had been validly issued, and this remained the position until over two months later on 21 January 2020. 
    1. In this regard:
(1) The Guarantor received a letter before action from Dory Acquisitions on 29 October 2019 setting out Dory Acquisitions’ intention to issue proceedings.
(2) The Guarantor was aware that the claim form had been issued by the court:

(a) the Guarantor, through Waterson Hicks, received a copy of the electronic filing submission confirmation from the courts CE filing system delivered by hand in its offices on 14 November 2019. The reason that the claim form was not sealed was that it had been electronically filed at court and the court had not yet provided a sealed version to Dory Acquisitions.

(b) further, Dory Acquisitions’ letter of 2 December 2019 to Waterson Hicks set out the claim number, which demonstrated clearly if the Guarantor and Waterson Hicks were not already aware of the fact, that the claim had been issued by the court. As I have already noted, the means were readily at hand at any point for Waterson Hicks to check that the claim form had indeed been issued and issued in identical terms, and to have ascertained the claim reference number.

(3) Waterson Hicks engaged in correspondence with the solicitors of Dory Acquisitions regarding the proceedings, including discussion of the disclosure of documents.
(4) On 10 December 2019 Waterson Hicks sent a letter to Dory Acquisitions which asked Dory Acquisitions to “withdraw its claims on terms that it will pay [the Guarantor’s] reasonable costs” (emphasis added). This comment is predicated on the basis that there was an extant claim – i.e. on the basis that the claim form had been validly served.
    1. Thirdly, the Guarantor has long been aware of the contents of the claim form and the allegations made against it:
(1) The letter before action dated 29 October 2019 set out details of the claims that Dory Acquisitions intended to bring against the Guarantor. Those claims were also repeated in correspondence.
(2) Waterson Hicks was delivered a copy of the unsealed claim form and Particulars of Claim, a Response Pack and an initial disclosure list of documents to its offices on 14 November 2019.
    1. Fourthly, the Guarantor did not suffer any prejudice as a result of the error of procedure:
(1) For the reasons set out above, the Guarantor (through his solicitors) was aware of the fact that Dory Acquisitions had issued proceedings and the nature of the allegations and causes of action against it.
(2) The only prejudice that the Guarantor appears to allege is that they would be unable to acknowledge service within 14 days of receiving the claim form, i.e. by 28 November 2019, on the basis that a claim number is required to file an acknowledgement of service (and Dory Acquisitions first provided this claim number after the deadline for acknowledgement of service had passed). However, this is a bad point in my view. The Guarantor had been served with the Response Pack. Waterson Hicks would have been well aware of the need to acknowledge service and would have been able to obtain the reference from the court CE filing system, within if not a matter of seconds certainly within a matter of minutes, by searching for either of the parties’ names or they could of course have simply requested the claim number from Dory Acquisitions’ solicitors. They did not take either action, instead allowing time for the acknowledgement of service to elapse. This cannot, in my view, have been other than a conscious decision.
(3) The manner in which the Guarantor has conducted its response to the Application also shows that it has not suffered any prejudice as a result of the defective service:

(a) the Guarantor initially took no point on service and indeed corresponded as if the claim had been validly served, and only took the point two months later and only about a week before Dory Acquisitions’ application was due to be heard.

(b) whilst the Guarantor subsequently stated in correspondence that service had not been validly effected, he took no step to acknowledge service. Once he knew the claim reference number, he did not contest the jurisdiction and he did not put in any evidence either in furtherance of a jurisdictional challenge nor in opposition to the Application for summary judgment.

(c) yet further, even when put on notice of the application to be made under CPR 3.10 the Guarantor neither put in evidence in opposition nor any skeleton argument nor attended today.

(4) In such circumstances I am satisfied that the Guarantor suffered no prejudice as a result of the claim form with which he was served not being sealed nor in not being provided with the claim reference number.
  1. Finally, while it could be said that Dory Acquisitions was at fault in providing an unsealed claim form with no claim number, the Guarantor was, I am satisfied, perfectly well aware that he was being served with proceedings. The accompanying Response Pack contained what he needed to respond and Waterson Hicks could have verified within short order that proceedings had been issued in such terms and could, as I have identified, have obtained the claim number. I have little doubt that this is in fact what they in all probability would have done at that time when no point was taken on service. That was then followed, as I have identified, by a period of some two months, during which time the Guarantor in correspondence conducted himself throughout through his solicitors as if the claim was proceeding.
  2. The suggestion that there has been no valid service in such circumstances is technical in the extreme and applying the applicable principles as identified in the authorities I have referred to I am satisfied that this is a case within CPR 3.10 where there has been an error of procedure in failing to serve a sealed copy of the claim form which does not invalidate the step of service and it is appropriate that the service that was effected is to be treated as valid service under CPR 3.10(b).
  3. Accordingly, the Guarantor has failed to acknowledge service or contest jurisdiction in time and has also failed to serve a defence within time. I would only add that it has also failed to do any of these things even after it was aware of the claimant’s stance that time to do so had expired. I am again satisfied that this was tactical. If the Guarantor actually had any ground to contest jurisdiction (despite the terms of the Guarantee in which he submitted to the jurisdiction of the court) he could, of course, have still sought to challenge jurisdiction. See the principles identified by Gloster J (as she then was), in Antec International Limited v Bio Safety USA [2006] EWHC 47 (Comm)).
  4. The Guarantor did not do so. Equally, had the Guarantor had any defence to the claim, notwithstanding the terms of the Guarantee, he could, and I am satisfied would, have put in evidence in opposition and appeared today to resist the Application, no doubt making clear that in making any submissions on the merits he was not submitting to the jurisdiction of the court. If, in truth, he had any jurisdictional basis of challenge, or any genuine defence to the claim, he would have done so.