“THE PROVISION OF THE CPR FOR SERVICE… SHOULD BE FAMILIAR TO EVERY SOLICITOR WHO CONDUCTS LITIGATION… THE MULTIPLE ERRORS MADE IN PURPORTING TO SERVE THE DEFENDANT COULD HAVE BEEN AVOIDED WITH A LITTLE DILIGENCE”

June 15, 2021 · by · in Assessment of Costs, Civil Procedure, Costs, Service of the claim form, Serving documents

Although issues of service are a regular feature on this blog I cannot recall many cases about mis-service of Notice of Commencement of a Bill of Costs. There have been several recently.   The claimant failed to serve properly in Gregor Fisken Ltd v Carl [2021] EWHC B9 (Costs). Costs Judge Leonard held that service had not taken place properly and dismissed the claimant’s attempt to rectify the position retrospectively.  The judge observed “The provisions of the CPR for service upon a solicitor, for service by email and for service to the right postal address should be familiar to every solicitor who conducts litigation, and as I have said the multiple errors made in purporting to serve the Defendant could have been avoided with a little diligence.”

“….the Claimant attempted to serve upon the wrong person, by the wrong method, simultaneously serving by post to the wrong address. All of these errors could have been avoided with a little diligence.”

THE CASE

The claimant served a bill of costs. This was served on the defendant at an address for service given by the defendant’s former solicitors as being that of new defendant’s new legal representatives, however those solicitors remained on the record. It was also served at a property owned by the defendant (an address that did not qualify as his address for service).  No response was received and the claimant obtained a default costs certificate.   The defendant applied to set the default costs certificate aside, the claimant made an application that the court retrospectively validate service.  The defendant also applied for a general stay of the costs proceedings until after judgment had been given in an appeal that had been heard in relation to the action.

WAS THIS A VALID DEFAULT COSTS CERTIFICATE?

The defendant had three grounds for arguing that notice of commencement had not been properly served.
    1. Mr Shepherd for the Defendant says that the Claimant made three errors in purporting to serve the notice of commencement of detailed assessment proceedings. The first was in attempting service upon the Defendant himself, when the right course of action was to serve upon Davis Woolfe, who were still on the record as his solicitors. Both Davis Woolfe and Rosenblatt had overlooked CPR 42.2, and that as a matter of general law the handing down of a judgment does not end the authority of the solicitors for a defendant (Lady de la Pole v. Dick (1885) 29 Ch. D. 351). The Claimant now accepts that attempting service other than on Davis Woolfe was an error.
    1. The second error was that, in attempting to serve the Notice of Commencement upon the Defendant personally by email, the Claimant did not in any event comply with either of the mandatory requirements of Practice Direction 6A. The Defendant had never, as required by paragraph 4.1 of the Practice Direction, indicated that he was willing to accept service by email; the most that can be said is that Davis Woolfe volunteered his email address for the purposes of correspondence. Nor did the Claimant make the enquiries required by paragraph 4.2.
  1. The third error was to post hard copies of the Notice of Commencement and supporting documents to an address which was not a valid address for service.
THE JUDGMENT: THIS WAS NOT A VALID CERTIFICATE AND THE COURT SHOULD NOT RECTIFY THE SITUATION IN THE CLAIMANT’S FAVOUR

The judge found in favour of the defendant on both issues.

    1. Whilst I was in the course of preparing this judgment, Mr Justice Foxton handed down judgment in Serbian Orthodox Church – Serbian Patriarchy v Kesar & Co [2021] EWHC 1205 (QB). That case has issues in common with this one, and I will be referring to it in my conclusions, but the parties have requested that I complete this judgment without further submissions.
    1. In Serbian Orthodox Church Foxton J allowed an appeal from an order of the Senior Costs Judge setting aside a Default Costs Certificate for the sum of £222,256.85. The Senior Costs Judge had set aside the certificate on the basis that, although the parties in that case had agreed to accept service by email, the notice of commencement of detailed assessment proceedings had been sent to an out-of-date email address and so had not been validly served on the paying party, a solicitor.
    1. The solicitor had arranged for all emails sent to the old email address to be forwarded automatically and instantaneously to the current one, and he simply did not open the email serving the notice of commencement. Even so, Foxton J agreed with the Senior Costs Judge’s conclusion that service had not been effected in compliance with CPR 6.20(1)(d) and practice Direction 6A. He was however persuaded (on a submission that had not been put to the Senior Costs Judge) that it was appropriate retrospectively to validate service of the notice of commencement under CPR 6.27.
    1. In concluding that that service by email to the wrong email address could not be effective service, Foxton J undertook a thorough analysis of the provisions of the CPR for service by various methods, which it is not necessary to repeat here. More pertinent, for present purposes, are the following conclusions.
    1. Foxton J found that CPR 3.10, as a provision of general application, must yield to the more specific provisions of the CPR as to service. Accordingly the receiving party could only validate the service of the notice of commencement if it could persuade the court to make an order under CPR 6.27.
    1. In coming to that conclusion, he referred to a number of authorities. Those supporting the proposition that CPR 3.10 could remedy defective service included Integral and extended to Bank of Baroda v Nawany Marine Shipping FZE [2016] EWHC 3089 (Comm) and Dory Acquisitions Designated Activity Company v Ionnais [2020] EWHC 240 (Comm).
    1. Those that did not included the judgments of O’Farrell J in Boxwood Leisure Ltd v Gleeson Construction Services Ltd [2021] EWHC 947 (TCC) and of Nicklen J in Piepenbrock v Associated Newspapers Limited [2020] EWHC 1708 (QB). Nicklen J found that CPR 3.10 could not be used to validate service of originating process purportedly effected by email, when there had been no agreement to accept service by that method.
    1. At paragraph 82(iii) of his judgment in Piepenbrock Nicklen J had said:
“if CPR 3.10 is given an interpretation that permits the Court, retrospectively, to validate service not in accordance with the CPR on the basis that there has been a ‘failure to comply with a rule’, then that would make CPR 6.15(2) redundant. That would be a surprising result as the terms of CPR 6.15(2) are of specific operation whereas CPR 3.10 is of general application…”
    1. Foxton J also referred to the judgment of Morgan J in Ideal Shopping Direct Limited v Visa Europe Ltd [2020] EWHC 3399 (Ch) (“Rule 3.10 is to be regarded as a general provision which does not prevail over the specific rules as to the time for, and manner of service, of a claim form”).
    1. Morgan J had found the reasoning in Piepenbrock to be more persuasive than that of the authorities which appeared to support a contrary finding. So did Foxton J. At paragraphs 51 and 52 of his judgment he set out his conclusions:
“I must confess to having some difficulty with the suggestion that CPR 3.10 could be relied upon to validate a defect in service where, for example, service had been effected by email without permission to serve at that email address, in any case in which relief could not have been obtained under CPR 6.15. A particular difficulty with CPR 3.10 is that, if it is applicable to service errors, CPR 3.10(a) would appear automatically to validate service unless the Court ordered otherwise. That, with respect, is a surprising proposition, and an approach which requires the party seeking to validate service to seek and obtain an order from the court seems inherently more appropriate.
Further, the reasoning which commended itself to Nicklen J and Morgan J – that CPR 3.10 as a provision of general application must yield to the more specific provisions on service in, for example, CPR 6.15, 6.27 and CPR 7.6(3) – also commends itself to me, for conventional legal reasons and because it has strong support from the majority of the Supreme Court in Barton, when addressing a similar argument as the interrelationship of CPR 3.9 and CPR 6.15. In these circumstances, I have concluded that if the Appellant is to validate the service of the notice of commencement, it must persuade the court to make an order under CPR 6.27.”
    1. As to whether a notice of commencement of detailed assessment proceedings is, in effect, originating process, he said (at paragraph 56):
“… I accept that the detailed assessment of costs is a distinct phase of the proceedings, with a distinct process for commencement. However, I do not accept that this is equivalent to the commencement of originating process. By the time costs are assessed, in personam jurisdiction over the defendant has long been established, and the defendant has been fully engaged in the proceedings. The commencement of “detailed assessment proceedings” is the next step in the proceedings, which a defendant against whom an adverse costs order has been made should be expecting…”
    1. Foxton J’s conclusion that there was good reason, as required by CPR 6.27, to order that the steps taken by the receiving party to serve notice of commencement constituted good service, was founded on these facts.
    1. The notice of commencement and supporting documents had been sent to an email address which the solicitor had used, and which was set up not to notify senders that the email was no longer in use or to direct them to a different email address, but automatically to forward the documents to the right address. They were received through the agreed mechanism for service. Short of opening the email (which he did not do) it would not in fact have been possible for the solicitor to know whether the notice of commencement had reached the correct email box because it had been sent there directly or forwarded automatically.
    1. The requisite documents not only reached the party to be served, but did so by service to an email address which was set up to receive electronic service of documents such as the notice of commencement, and which ought to have been monitored to that end. By reason of its arrival at that email address, the document reached the solicitor by a means from which, had the email been opened, it would have been obvious this was an attempt at formal service.
    1. The only prejudice to the solicitor in validating service was that there had been a default assessment of his costs liability, unless he was able to show “good reason” (by reference to CPR 47.12) for setting the Default Costs Certificate aside.
Conclusions
    1. Before summarising my conclusions I should mention that I am surprised to be told that MRN was given to understand by someone at the SCCO that a consent order would be needed to set aside the Default Costs Certificate. I have referred above to Practice Direction 47, paragraph 11.1, which provides that a court officer, meaning a member of court staff, may set aside a default costs certificate at the request of the receiving party.
    1. In my view, the Default Costs Certificate should have been set aside when the SCCO received MRN’s letter, and for the reasons I shall give, my view is that it would have been better if that had happened.
Whether the Claimant’s Notice of Commencement was Validly Served
    1. I have no doubt that all three of Mr Shepherd’s criticisms of the Claimant’s attempts at service are justified. In the circumstances all that the Claimant had to do, to effect service of the Notice of Commencement, was to send it and the appropriate supporting documents by DX or ordinary first class post to Davis Woolfe. Instead the Claimant attempted to serve upon the wrong person, by the wrong method, simultaneously serving by post to the wrong address. All of these errors could have been avoided with a little diligence.
    1. The proposition that on 25 August 2020 Davis Woolfe, on the Defendant’s behalf, authorised service upon the Defendant by email in accordance with CPR 6.23(6) and paragraph 4.1 of Practice Direction 6A seems to me plainly to be wrong. The email was copied to the Defendant, but does not purport to have been authorised by him. Assuming that it was authorised, it does no more than provide an address for correspondence which, unsurprisingly, he subsequently accepted. It does not mention service (and evidently Rosenblatt did not ask either Davis Woolfe or the Defendant about service, whether by email or any other method). Even if it had mentioned service, it could not have dispensed with the mandatory requirements of CPR 6.23 and CPR 42.2.
Whether the Notice of Commencement Should be Treated as Originating Process
    1. Before Foxton J helpfully disposed of the question, I had already concluded that it cannot be right to treat a notice of commencement of detailed assessment proceedings as originating process. Commencing detailed assessment proceedings invokes the jurisdiction of what CPR 47 refers to as “the appropriate office”, meaning the court which will deal with all aspects of the assessment proceedings (in this case, the SCCO). It does so however as a continuation of the existing proceedings, not as a new set of proceedings. If such were not the case, then Rosenblatt would have been right to take the view that for the purposes of the detailed assessment proceedings, Davis Woolfe was not on the court record for the Defendant.
Whether Service Can be Validated by CPR 3.10
    1. Before I read the judgment of Foxton J in Serbian Orthodox Church, I had already concluded that it cannot be right to apply CPR 3.10 so as to validate service upon the wrong person by the wrong electronic method and physically at the wrong address. These defects in service are not minor or technical. Nor can they be said with certainty to have had no practical effect, given the possibility that service upon solicitors might have prompted a timelier response. Even solicitors who had declared themselves no longer to be acting might well have felt duty bound to offer the Defendant some guidance on the consequences of ignoring a Notice of Commencement.
    1. I had in mind also that Popplewell J, at paragraph 36 of his judgment in Integral, accepted that purported “service” by a method which is not permitted by the rules at all could fall outside CPR 3.10 (and that ultimately he found that the balance of justice required in fact that the default judgment, in Integral, should be set aside). It seems to me that this is an example of a case where service has been attempted by a method not permitted by the rules: that is to say, upon the Defendant directly rather than upon his solicitors.
    1. In the event, I have been greatly assisted by the thorough analysis and the findings of Foxton J in Serbian Orthodox Church. His conclusions are binding on me, and to the extent that they might be perceived as inconsistent with previous High Court decisions his analysis seems to me to be the most recent and complete. CPR 3.10 cannot validate service of the Claimant’s Notice of Commencement. If it could, it would in my view be wrong, on the facts of this case, to apply it in that way.
The Effect of CPR 47.12(1)
    1. I am not entirely convinced by Mr Innes’ comparison between CPR 47.12(1) and the mandatory provisions of CPR 13 for setting aside a default judgment. The wording of CPR 13 is materially different from that of CPR 47.12(1), which is wider: the court will set aside a Default Costs Certificate where the receiving party was not entitled to it, whatever the reason for that may be.
    1. The question of whether CPR 3.10 be applied so as to defeat the mandatory provisions of CPR47.12(1) has, given the conclusions I have reached, fallen away. As for whether CPR47.12(1) operates so as to prevent an order being made under CPR 6.27, for reasons I shall give, I do not need to decide that and I do not think that I should. Instead I will offer my conclusions on the assumption that it does not.
    1. This leaves the question of whether there is good reason to make an order retrospectively authorising service under CPR 6.27. In my view, on balance, there is not. These are my reasons.
Whether the Claimant’s Notice of Commencement Came to the Defendant’s Attention
    1. On the evidence I have seen, it must be right to conclude that it the Notice of Commencement and supporting documents sent to the Defendant by email, to a correspondence address given to the Claimant by his former solicitors and used by him in subsequent correspondence, came to his attention. The Notice of Commencement so received would have incorporated a warning about the time available to file Points of Dispute.
    1. It would follow that this essential prerequisite to making an order retrospectively validating service can be taken to exist, but it is common ground that in itself it is not sufficient. I have to consider all the circumstances of this case and apply the other Barton criteria.
Whether the Claimant took Reasonable Steps to Effect Service
    1. It seems to me to be evident that the Claimant has not taken reasonable steps to effect service in accordance with the rules. The provisions of the CPR for service upon a solicitor, for service by email and for service to the right postal address should be familiar to every solicitor who conducts litigation, and as I have said the multiple errors made in purporting to serve the Defendant could have been avoided with a little diligence.
    1. Solicitors are officers of the court. They are expected to understand and to comply with the Civil Procedure Rules. Mr Shepherd makes a good point when he says that an order under CPR 6.27, retrospectively authorising service on the facts of this case, would offer an indication that even for a solicitor, compliance with the rules is optional.
Prejudice to the Defendant
    1. In Serbian Orthodox Church the error in sending served documents to an old email address was of no material effect: the solicitor who was to meet the costs received it at the correct address and simply failed to open it, just as he would have done if it had been sent directly. Under the circumstances it is unsurprising that Foxton J concluded that he would not be unfairly prejudiced, on the making of an order under CPR 6.27, by then having to show good reason to set aside his opponent’s Default Costs Certificate.
    1. This case seems to me to be very different. To rectify multiple, basic and avoidable procedural errors made by solicitors, so as to deprive the (then unrepresented) Defendant of the opportunity to dispute the Claimant’s bill of costs, does not strike me as being in accordance with the overriding objective or with the proper administration of justice.
    1. The Claimant’s bill of costs exceeds £500,000. It is more than twice the size of the bill of costs in Serbian Orthodox Church. It is not untypical, even where some (or all) of the costs have been ordered on the indemnity basis, for bills of that size to be reduced by in the region of 20%, which in this case would be about £100,000. Whilst I do not wish to attach undue weight to evidence upon which I have heard no submissions, a copy of the Claimant’s bill included in the hearing bundle seems to indicate that the Claimant’s costs exceeded budget by a substantial amount.
    1. In any event, there is good reason to suppose that applying CPR 36.27 so as to ensure that the Claimant escapes the consequences of its procedural failures, but the Defendant does not escape the consequences of his, would result in a significant windfall to the Claimant.
    1. I have mentioned that the Claimant’s application for retrospective validation of service was framed, in the alternative, as an application for relief from sanction. That was (rightly in my view) not pursued in submissions. I do not think that the provisions of CPR 3.9 apply. It is nonetheless useful, for the purposes of illustration, to observe that if they did apply the Claimant would have little prospect of establishing that the failures to observe the provisions of the CPR on service were not serious; that there was good reason for them; or that it would be just, in all the circumstances, to allow the Claimant to escape the consequences.
    1. For the reasons I have given my conclusion is that the application under CPR 6.27 must be refused and the Default Costs Certificate set aside.
YA II PN Ltd v Frontera Resources Corporation
    1. I have said that it is not necessary to make a finding on whether CPR47.12(1) operates so as to prevent an order being made under CPR 6.27. In fact it might engender some delay. That is because I have read the judgment of Mr Justice Butcher in YA II PN Ltd v Frontera Resources Corporation [2021] EWHC 1380 (Comm), handed down on 26 May 2021.
    1. Butcher J, on making an order under CPR 6.15 retrospectively validating service of a claim form, came (by reference to Dubai Financial Group LLC v National Private Air Transport Co (National Air Services) Ltd [2016] EWCA Civ 71) to the conclusion that a judgment, entered when acknowledgement of service was not filed, must nonetheless be set aside and time allowed for acknowledgement.
    1. Both judgments can be distinguished from this case in particular because they address provisions of CPR 6.15 specific to service of a claim form, but it does seem to me that Dubai Financial Group LLC offers some foundation for the conclusion that any order under CPR 6.27 retrospectively validating service of a Notice of Commencement must, if unfairness is to be avoided, also set aside any Default Costs Certificate and give time for Points of Dispute to be served.
    1. This line of argument was evidently not raised in Serbian Orthodox Church and might well furnish an answer to Mr Shepherd’s point about the effect of CPR 47.12(1). I could not, however, come to any firm conclusion on that without inviting further submissions. As I have said, it is not necessary for me to do so, and the parties have already made it clear that they would prefer to receive my judgment rather than make further submissions.
Extensions of Time and Stay
    1. Given the conclusions I have reached the Defendant does not need an extension of time for service of Points of Dispute, which has not begun to run. As for the applications for a general extension of time and a stay of the detailed assessment pending appeal, the Defendant’s appeal has now been heard. Only judgment is awaited.
    1. Nonetheless it seems to me that the applications for a general extension or a stay pending the outcome of the appeal should be refused. A stay was refused by HHJ Pearce and to my mind an application should have been made to the Court of Appeal on 25 August 2020, whereupon it would have been considered and decided in November 2020, along with the application for permission to appeal. The Defendant left it too late to apply. Unless the parties now agree that there should be a stay pending the outcome of the appeal, and subject to any submissions I might hear, I will on handing down this judgment (or at a further hearing, if necessary) make an order setting a timetable within which a reasonable period will be provided for the preparation and service of Points of Dispute.
Summary of Conclusions
    1. CPR 3.10 does not operate to validate service that does not comply with the rules. Nor would it be right, in all the circumstances, to make an order under CPR 6.27 retrospectively validating service upon the wrong person by the wrong means. The Claimant’s application for retrospective validation is refused.
    1. The Claimant was not entitled to the Default Costs Certificate, which must be set aside under CPR 47.12(1).
  1. The applications for a general extension on time to serve Points of Dispute, and for a stay of the detailed assessment, are refused. The next step will be to set a timetable which will include an appropriate period for service of Points of Dispute.
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