COURT REFUSES TO MAKE AN ORDER FOR SUBSTITUTED SERVICE ON DEFENDANT’S SOLICITOR: THE DANGERS OF LEAVING SERVICE ISSUES TO THE LAST MINUTE

Another aspect of the judgment of Mr Justice Nicklin in SMO v Tiktok Inc & Ors [2022] EWHC 489 (QB) relates to the claimant’s application to serve the claim form by alternative method. This case illustrates how difficult this order is to obtain.  The judge held that the claimant’s difficulties were self-inflicted, by leaving issues relating to service to the 11th hour.

 

“… this case is remarkably prosaic. The Claimant has simply failed properly to attend to service of the Claim Form until, as they then understood matters, about a week before the time for doing so was due to expire. In that respect, the Claimant is no different from the host of other litigants who have failed properly to prioritise service of a Claim Form and who have unwisely left matters to the last minute.”

 

THE CASE

The claimant, a minor, is bringing a claim for breach of personal data by users of TikTok. The claimant’s litigation friend is the (now former) Children’s Commissioner for England.  It is said to be a representative claim.  One of the defendants was based in China. It would take a considerable time – about a year –  to achieve valid service in China.  The claimant sought an order that the defendant could be served at the address of their solicitors, based in the UK (who had not stated that they would accept service).

THE JUDGMENT ON ALTERNATIVE SERVICE: THE JUDGE’S REVIEW OF THE LAW

The judge reviewed the rules and the legal principles involved.

    1. In respect of service of the Claim Form on a foreign domiciled defendant, CPR 6.40 provides, so far as is material:
“(3) Where a party wishes to serve a claim form or other document on a party out of the United Kingdom, it may be served-

(a) by any method provided for by … rule 6.42 (service through foreign governments, judicial authorities and British consular authorities); or

(b) by any method permitted by a Civil Procedure Convention or Treaty; or

(c) by any other method permitted by the law of the country in which it is to be served.

(4) Nothing in paragraph (3) or in any court order authorises or requires any person to do anything which is contrary to the law of the country where the claim form or other document is to be served.”
    1. CPR 6.15 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.
(3) An application for an order under this rule –

(a) must be supported by evidence; and

(b) may be made without notice.

(4) An order under this rule must specify –

(a) the method or place of service;

(b) the date on which the claim form is deemed served; and

(c) the period for –

(i) filing an acknowledgment of service;

(ii) filing an admission; or

(iii) filing a defence.”

    1. It is common ground that, if the Court has granted permission to serve a Claim Form on a defendant outside the jurisdiction, then CPR 6.37(5)(b)(i) gives the Court jurisdiction to permit service of the Claim Form on that defendant by alternative means: see e.g. Marashen Ltd -v- Kenvett Ltd [2018] 1 WLR 288 [17]-[18].
    1. The Order that Claimant seeks, pursuant to this rule, is:
“The Claimant has permission to effect service of the Claim Form and Particulars of Claim on the First, Fourth, Fifth and Sixth Defendants by personal delivery to Hogan Lovells International LLP, at Atlantic House, Holborn Viaduct, LONDON EC1A 2FG, or by email to [email address given], marked for the attention of Ivan Shiu”
The draft Order is defective, in that it fails to comply with CPR 6.15(4)(b), but if an order for alternative service is granted that could be remedied. The Application Notice also states that the application for alternative service of the Claim Form on the Service Out Defendants is made under CPR 6.15 and 6.27. The latter rule, which governs alternative service of documents other than the Claim Form is not appropriate.
    1. Although the Application Notice seeks an order for alternative service on all Service Out Defendants, at the hearing the Claimant limited the application to the Fifth Defendant. That is because the Claimant’s advisors believe that they could effect service on the other Service Out Defendants without an alternative service order.
    1. The applicable principles when considering an application for alternative service of the Claim Form on a defendant domiciled in the People’s Republic of China were recently summarised in Godo Kaisha IP Bridge 1 -v- Huawei Technologies Co Ltd [2021] FSR 33 [12]:
i) Where the court gives permission to serve a Claim Form out of the jurisdiction, it also has power, by reason of CPR 6.37(5)(b)(i) and 6.15(1), to make an order permitting service by an alternative method or at an alternative address: Celgard LLC -v- Shenzhen Senior Technology Material Co Ltd [2020] FSR 37 [115] and GHS Global Hospitality Ltd -v- Beale [2021] EWHC 488 (Ch) [10].
ii) Such an order can only be made if the court is satisfied that there is “a good reason”. If there is a good reason, the most important aspect of the jurisdiction is to ensure that the defendant is adequately informed of the contents of the Claim Form and the nature of the claim: Celgard LLC [116]).
iii) Where a defendant is resident in a country that is party to a convention as regards service, then service in accordance with that convention is “the prime way of service” in that country: Deutsche Bank AG -v- Sebastian Holdings Inc [2014] EWHC 112 (Comm) [27]). Further, where a country has (like China) stated its objection under Article 10 of the Hague Convention to service otherwise than through the authority that it has designated to deal with service under the Convention, an order for alternative service will only be made in “exceptional circumstances” (sometimes referred to as “special circumstances“): Société Générale -v- Goldas Kuyumculuk Sanayi Ithalat Ihracat AS [2017] EWHC 667 [49(9)(b)] and, on appeal [2019] 1 WLR 346 [31]–[35]; Marashen [57]; and M -v- N [2021] EWHC 360 (Comm) [8(iv)].
iv) In determining whether exceptional circumstances exist, each case will turn on its own particular facts and involves balancing the various factors: GHS [12].
v) Mere delay or additional expense arising from having to serve in accordance with the Hague Convention do not, without more, constitute exceptional circumstancesSociété Générale [2017] EWHC 667 (Comm) [49(9)(a)] and [2018] EWCA Civ 1093 [31]–[35]. However, delay might suffice when coupled with another factor or factors such as, for example, some form of litigation prejudice or where it is of such exceptional length as to be incompatible with the due administration of justice: Marashen [57]; and Celgard [119].
vi) Some examples of the sort of factors which might help establish the existence of exceptional circumstances are set out in M -v- N [9]-[10]. They include, for example, the need for urgent interim injunctive relief or for relief under the Arbitration Act 1996 .
    1. Mr Ciumei QC referred me to several first instance decisions in which these principles have been applied:
i) In JSC BTA Bank -v- Ablyazov [2011] EWHC 2988 (Comm), Teare J considered that a delay of between 9 months and 2 years in service of the Claim Form was a factor to be taken into account when considering the litigation prejudice of delay.
ii) In Bill Kenwright Ltd -v- Flash Entertainment FZ LLC [2016] EWHC 1951 (QB), Haddon-Cave J considered that a delay of 8 months was “inordinate delay” in the context of that case ([48]) and that the application for an order for alternative service was not driven by a “mere desire for speed” ([54]).
iii) In Nokia Technologies -v- Oneplus Technology (Shenzen) Co. Ltd [2022] EWHC 293 (Pat), Marcus Smith J made an order permitting alternative service of the Claim Form on the relevant defendants. However, in that case the claimant was found to have “tried very hard to effect regular service pursuant to the Convention” ([29]) and that the relevant defendants were already “informally enmeshed in [the] litigation” and it was “not a case of a true stranger being dragged kicking and screaming across the threshold of these courts” ([33]). The relevant defendants had already received copies of the pleadings in the action and that the proposed method of alternative was highly likely to bring the proceedings to their attention ([34]).
    1. In Cecil -v- Bayat, Stanley Burnton LJ suggested that one of the reasons why, in a Hague Convention case, exceptional or special circumstances were required before an alternative service order could be made was the interference that such an order represented with the sovereignty of the relevant state ([65]). In Abela -v- Baadarani [2013] 1 WLR 2043, Lord Sumption doubted whether such an analysis was helpful [53]:
“The characterisation of the service of process abroad as an assertion of sovereignty may have been superficially plausible under the old form of writ (“We command you …”). But it is, and probably always was, in reality no more than notice of the commencement of proceedings which was necessary to enable the defendant to decide whether and if so how to respond in his own interest. It should no longer be necessary to resort to the kind of muscular presumptions against service out which are implicit in adjectives like “exorbitant”. The decision is generally a pragmatic one in the interests of the efficient conduct of litigation in an appropriate forum.”
    1. In Société Générale, Popplewell J nevertheless held that issues of comity were still of importance, where a Hague Convention state had permitted service of originating process only by certain means [49(9)(b)]:
“It remains relevant whether the method of service which the Court is being asked to sanction under CPR 6.15 is one which is not permitted by the terms of the Hague Convention or the bilateral treaty in question. For example, where the country in which service is to be effected has stated its objections under Article 10 of the Hague Convention to service otherwise than through its designated authority, as part of the reciprocal arrangements for mutual assistance on service with this country, comity requires the English Court to take account of and give weight to those objections… In such cases relief should only be granted under Rule 6.15 in exceptional circumstances. I would regard the statement of Stanley Burnton LJ in Cecil at [65] to that effect, with which Wilson and Rix LJJ agreed, as remaining good law; it accords with the earlier judgment of the Court in [Knauf UK GmbH v British Gypsum Ltd [2002] 1 WLR 907] at [58]-[59]; Lord Clarke at paragraphs [33] and [45] of Abela was careful to except such cases from his analysis of when only a good reason was required, and to express no view on them (at [34]); and although Stanley Burnton LJ’s reasoning that service abroad is an exercise of sovereignty cannot survive what was said by Lord Sumption (with unanimous support) at [53] of Abela, there is nothing in that analysis which undermines the rationale that as a matter of comity the English Court should not lightly treat service by a method to which the foreign country has objected under mutual assistance treaty arrangements as sufficient. That is not to say, however, that there can never be a good reason for ordering service by an alternative method in a Hague Convention case: [Bank St Petersburg OJSC -v- Arkhangelsky [2014] 1 WLR 4360] at [26].”
This statement was approved by the Court of Appeal in Société Générale: [32]-[33]. In Abela, Lord Clarke specifically noted that the appeal did not concern a case in which the Hague Convention applied and so the alternative service order “did not run the risk of subverting the provision of any such convention or treaty“: [34].

APPLICATION OF THOSE PROVISIONS TO THE CURRENT CASE

The judge held that, applying those principles, it was not appropriate, to make an order allowing service on the solicitors in the current case.

Submissions
    1. Mr Ciumei QC submitted that there was a good reason to authorise service of the Claim Form by the alternative method proposed by the Claimant.
i) First, Hogan Lovells have been instructed to act for all the Defendants and have corresponded with the Claimant’s solicitors regarding the claim and, indeed, agreed the stay with them. This represents the reality of the situation that all the Defendants are part of the same essential group that operates the TikTok platform.
ii) Second, because of this, the Service Out Defendants are fully aware of the claim that is being brought against them and are likely to have full knowledge of the contents of the Claim Form and the Particulars of Claim that has already been served on the Second Defendant.
iii) Third, the First, Fourth and Fifth Defendants are involved in the Dutch proceedings, in which the First and Fourth Defendants had both appeared.
iv) Fourth, it can take a year (or more) to serve the Fifth Defendant in the People’s Republic of China under the Hague Convention. The Second and Third Defendants have both been served with the proceedings. The First, Fourth and Sixth Defendants “can be served in short order” once permission to serve out has been granted and there is (or shortly will be) a pending application by the Second Defendant for summary judgment on the claim. Delay in serving the Fifth Defendant threatens to disrupt the litigation, which disruption has been held in several authorities to justify an order for alternative service in Hague Convention cases.
    1. In respect of the application in respect of the Fifth Defendant, I asked Mr Ciumei QC to identify the exceptional or special circumstances that justified the Court making an order for alternative service in the terms sought. He submitted that the four matters I have identified in the paragraph above are individually and collectively to be regarded as exceptional circumstances. He laid greatest emphasis on the potential disruption to the litigation caused by a year’s delay in effecting service on the Fifth Defendant.
    1. It was recognised at the hearing that, if I refused the application for alternative service and the application for an extension of time within which to serve the Claim Form, the current claim against the Fifth Defendant could not be pursued. However, as the limitation period has not expired, it would be open to the Claimant to issue a fresh claim against the Fifth Defendant. I asked Mr Ciumei whether he submitted that the Claimant would be substantially prejudiced if that were the result. He identified the following. First, the additional costs of a fresh claim, second the fact that there would then be two claims, with the possibility of the claims having to be joined or consolidated subsequently. Finally, that the Fifth Defendant’s alleged breaches were ongoing. Mr Ciumei QC did not identify any prejudice as a result of the change of law that took place – at the end of the Brexit transition period – on 1 January 2021. Mr Ciumei responded that the Claimant did rely on this as an “element” of prejudice, but he contended that the change of law did not necessarily prevent a claim because the Claimant could rely upon the EU GDPR rather than the UK version.
Decision
    1. I am not persuaded that the Claimant has demonstrated a good reason for authorising service of the Claim Form on the Fifth Defendant by the alternative means of service upon Hogan Lovells. In reality, the Claimant needs to serve the Claim Form by this means because, in the very limited time that remains, it is the only way that the Claim Form could practically be served on the Fifth Defendant before the time allowed under CPR 7.5 expires. There are no exceptional or special circumstances. On the contrary, this case is remarkably prosaic. The Claimant has simply failed properly to attend to service of the Claim Form until, as they then understood matters, about a week before the time for doing so was due to expire. In that respect, the Claimant is no different from the host of other litigants who have failed properly to prioritise service of a Claim Form and who have unwisely left matters to the last minute.
    1. I have set out the chronology of the action above. The Defendants’ solicitors had been consistent throughout: the Service Out Defendants were not going to authorise or accept service of the proceedings. As such, it was plain from the point at which the Claim Form was issued, on 30 December 2020, that the Claimant would have to obtain permission to serve the Claim Form on the Service Out Defendants. The Claim Form was issued on 30 December 2020, not because there was any limitation issue, but for the tactical reasons I have identified.
    1. I can accept that, if it were the only consideration, it would have been better for the future management and conduct of the claim if the Fifth Defendant could have been served at a point reasonably proximate to the other Defendants. But this is not a factor which, on its own, can be described as exceptional or special. It is not unusual for a claim to be brought against several defendants, some of whom are foreign-domiciled and, in respect of whom, service of the Claim Form may take longer. Ms Proops QC suggested that staggered litigation against both domestic and international defendants is not uncommon. On its own, delay caused by the requirement to serve a Claim Form on a defendant in compliance with the Hague Convention cannot justify bypassing its requirements by the simple expedient of an alternative service order. A litigant must recognise this, factor in the potential delay and prosecute his litigation accordingly. Fundamentally, in my judgment this is just a delay case with no other factors marking it out in any way as special or exceptional. There is neither a good reason for authorising alternative service nor exceptional or special circumstances justifying such an order in respect of the Fifth Defendant.
    1. I recognise that the effect of my decisions will be that it will be practically impossible for the Claimant now to effect service of the Claim Form in this action on the Fifth Defendant. This will inevitably cause some prejudice to the Defendant, but in my judgment this is not so serious as to require the Court to take a different course. This is not a limitation case. There may be some cost implications, but this litigation is being funded on a commercial basis and, ultimately if costs have been wasted or further costs must be incurred, the responsibility for that lies with the Claimant’s side. If the Claimant still wants to pursue a claim against the Fifth Defendant, then she has the option of issuing a fresh claim. Although Mr Ciumei appeared not to regard this as representing any significant prejudice, the Claimant will lose whatever litigation advantage there was, as against the Fifth Defendant, of starting the Claim before the changes in the law that took effect on 1 January 2021. Whatever its weight, that is a factor which counts in the Fifth Defendant’s favour. If the Claimant wanted the benefits of a more advantageous legal terrain by issuing the Claim Form on 30 December 2020, it was incumbent on her to make sure she served that Claim Form as required by the rules.
  1. As a matter of practical reality, the effect of having to issue a separate Claim Form against the Fifth Defendant may well not be as dramatic as the Claimant was suggesting. The next stage is this litigation is going to be the hearing of the summary judgment application brought by the Second Defendant. If that is successful, as it is an attack on the viability of the whole claim on a representative basis, following Lloyd -v- Google, that will effectively bring an end to the claim against all Defendants. Judged neutrally, there must be a high likelihood of an appeal, whatever the decision on the summary judgment application. The time taken for any appeal to be resolved will mean that, in all probability, and if the Claimant takes the necessary steps promptly, there would be no reason why a second claim against the Fifth Defendant could not be brought into rough alignment with the existing claim.