FIRST SERVICE CASE OF THE YEAR: SERVING PROCEEDINGS IS NOT ALWAYS A WALK ON THE BEACH

In Alli-Balogun & On The Beach Ltd & Ors [2021] EWHC 83 (QB) Mr Justice Bourne considered an issue relating to mis-service of proceedings.  He held that service on a foreign  company on another company, in the same group, with offices in the UK was not effective service.  However he exercised his discretion under CPR 6.15 to order that such service was retrospectively approved.

“(1) Where it appears to the court that there is a good reason to authorise service by a method or at a place not otherwise permitted by this Part, the court may make an order permitting service by an alternative method or at an alternative place.

(2) On an application under this rule, the court may order that steps already taken to bring the claim form to the attention of the defendant by an alternative method or at an alternative place is good service…”

THE CASE

The action relates to serious injuries suffered by the claimant (a child) while on holiday in Spain.  The first defendant in the action issued an additional claim against Meeting Point, a company registered in Dubai.

SERVICE ON MEETING POINT

The additional claim was served at an address in London at the premises of Youtravel, a company registered in England.

THE APPLICATION TO SET SERVICE ASIDE

Meeting point applied to set service aside on the grounds that service on Youtravel was not good service.   Youtravel was not a subsidiary of Meeting Point. The were distinct corporate entities within the same corporate group.

THE FIRST DEFENDANT’S CROSS-APPLICATIONS IN RELATION TO SERVICE

The first defendant made a number of cross-applications in relation to service.

1. 1. claim form (either retrospectively, effectively validating what has already occurred, or prospectively) under CPR 6.12, which provides:

“(1) The court may, on application, permit a claim form relating to a contract to be served on the defendant’s agent where –

(a) the defendant is out of the jurisdiction;

(b) the contract to which the claim relates was entered into within the jurisdiction with or through the defendant’s agent; and

(c) at the time of the application either the agent’s authority has not been terminated or the agent is still in business relations with the defendant.

…

(5) This rule does not exclude the court’s power under rule 6.15 (service by an alternative method or at an alternative place).”

1. 1. In the further alternative, OTB seeks permission (retrospective or prospective) pursuant to CPR 6.15, which provides:

“(1) Where it appears to the court that there is a good reason to authorise service by a method or at a place not otherwise permitted by this Part, the court may make an order permitting service by an alternative method or at an alternative place.

(2) On an application under this rule, the court may order that steps already taken to bring the claim form to the attention of the defendant by an alternative method or at an alternative place is good service…”

1. 1. As a further alternative, OTB seeks permission to serve Meeting Point out of the jurisdiction pursuant to CPR 6.36, which provides:

“In any proceedings to which rule 6.32 or 6.33 does not apply, the claimant may serve a claim form out of the jurisdiction with the permission of the court if any of the grounds set out in paragraph 3.1 of Practice Direction 6B apply.”

THE JUDGE’S FINDINGS ON SERVICE: SERVICE HAD NOT BEEN EFFECTED

The judge found that the corporate arrangement of the additional party meant that service at the offices of an agent in London was not good service.

1. Nevertheless, my conclusion is that the activities of Youtravel are activities of an agent, carrying on the business of working as an agent. Properly analysed, they are not the activities of Meeting Point.

2. The FTI Group was legally entitled to arrange its affairs as it did in 2014. It could, and did, cause a company to be incorporated in Dubai and transfer what had been Youtravel’s business to the new company. The new company could, and did, outsource services to an agent in London, namely Youtravel. The two corporate entities genuinely, and lawfully, had and have separate identities.

3. That legal reality is reflected in the fact that the two companies have separate finances and different employees, and in the fact that the premises at 55 Strand are occupied and paid for by Youtravel, not Meeting Point. Mr Allen’s evidence does not change that conclusion. It seems to me that in the commercial activities which Mr Allen describes, Mr Carpenter was working for the agent Youtravel whilst Mr Kundi was transacting Meeting Point’s business.

4. Meeting Point’s application is therefore well founded. Service of the claim has not been effected under CPR 6.3(1)(c) and 6(9).

THE CROSS-APPLICATIONS: THE JUDGE MADE AN ORDER UNDER CPR 16.5

The judge considered the first defendant’s cross-applications.  Although proceedings had not been validly served an order was made giving retrospective permission to serve at the office address in London, effectively retrospectively ratifying service.

1. 1. I therefore return to CPR 6.15. Should there be an order permitting service (retrospectively or prospectively) “at an alternative place” i.e. 55 Strand? If so, then it is necessary to make orders permitting both service out of the jurisdiction and service at the alternative place: Marashen Ltd v Kenvett Ltd (Ivanchenko, third party) [2017] EWHC 1706 (Ch); [2018] 1 WLR 288 per David Foxton QC (as he then was) at [17].

   2. The test under CPR 6.15 is whether there is “good reason” to make the order. It is not a test of exceptionality, by contrast with CPR 6.16. See Abela v Baadarani [2013] UKSC 44, [2013] 1 WLR 2043 per Lord Clarke at [33].

   3. The Supreme Court in Abela also decided (per Lord Clarke at [36]):

“The mere fact that the defendant learned of the existence and content of the claim form cannot, without more, constitute a good reason to make an order under rule 6.15(2). On the other hand, the wording of the rule shows that it is a critical factor. As the editors of the 2013 edition of the White Book note (vol 1, para 6.15.5), rule 6.15(2) was designed to remedy what were thought to be defects as matters stood before 1 October 2008. The Court of Appeal had held in Elmes v Hygrade Food Products plc [2001] EWCA Civ 121 that the court had no jurisdiction to order retrospectively that an erroneous method of service already adopted should be allowed to stand as service by an alternative method permitted by the court. The editors of the White Book add that the particular significance of rule 6.15(2) is that it may enable a claimant to escape the serious consequences that would normally ensue where there has been mis-service and, not only has the period for service of the claim form fixed by CPR 7.5 run, but also the relevant limitation period has expired.”

In this case that “critical factor” is present. In addition, there is the question of delay. The incident giving rise to the claims occurred in 2015. The underlying claim has made little progress in the last year. The additional claim was issued nearly 13 months ago and is becalmed while the service issue is resolved. Meanwhile, I have not been told of any prejudice which would be caused to Meeting Point by making an order under CPR 6.15. CPR 6.15(4) requires such an order to specify the period in which the other party is to respond.

1. Mr Stevens QC is right to note that, so far as one can discern from the available evidence, it is possible to serve proceedings in Dubai via diplomatic channels and this may take a few months. This is therefore a more borderline case than Abela, where service overseas by diplomatic channels had proved impractical.

2. Nevertheless, it seems to me that on balance, there is “good reason” to permit service on Meeting Point at the offices of its agent Youtravel.com Ltd at 55 Strand, and to validate the steps already taken to effect that service under CPR 6.15(2). As the Supreme Court explained in Abela, the most important purpose of service is to ensure that the contents of the claim form are brought to a defendant’s attention, and that has happened. Making the order will avoid significant delay and expense in the additional claim. It may also assist in avoiding further delay in the resolution of the underlying claim by the child. In my judgment, further litigation on the subject of whether the additional claim has been served is not in the interests of justice.

3. In arriving at that decision, I have had regard to the fact that OTB’s original reliance on CPR 6.9 was misplaced. Mr Stevens QC further submits that OTB has been guilty of significant delay in seeking to regularise the position. However, as Ms Prager points out, OTB sought an extension of time for service of proceedings in its cross-application on 24 February 2020, well within the lifetime of the Part 20 claim form. In my judgment, any delay by OTB is less important than the need to progress the litigation now.

THE JUDGE WOULD NOT HAVE MADE AN ORDER UNDER CPR 6.16

The judge held that he would not have made an under under CPR 6.16 because there were no “exceptional circumstances”.

1. It is therefore not necessary to decide whether to dispense with service altogether under CPR 6.16. If it had been necessary to make that decision, I would have held that there are not sufficient “exceptional circumstances” to justify making the order, there being at least one avenue by which service could still be effected even if it had not already been effected.