WHEN DEFENDANTS MAKE AN APPLICATION IN RELATION TO SERVICE: WHAT METHOD MUST THEY USE? IS PART 11 MANDATORY?

We are taking a second look at the judgment of Lord Justice Nugee in Hand Held Products, Inc & Anor v Zebra Technologies Europe Ltd & Anor [2022] EWHC 640 (Ch). This time in relation to that part of the judgment that dealt with the claimant’s argument that the second defendant could not argue points in relation to service of the claim form as it had submitted to the jurisdiction.

“It is not obvious to me that Hoddinott stands as authority for the wider proposition that if the claimant claims to have served the defendant and the defendant denies that there has been any effective service, the defendant must still use Part 11 to challenge the effectiveness of the service. It is possible that that follows, but I do not think it necessarily follows.”

WEBINAR ON SERVICE OF THE CLAIM FORM

This case is one of several recent cases being looked at in a webinar on the 11th April 2022 “Serving the Claim Properly – The Dire Problems if you Don’t, and the lessons to be learnt from Good Law.”  Booking details are available here.

This webinar looks at:

•    The rules relating to service of the claim form
•    Where and why claimants go wrong
•    What steps can be taken to remedy matters

THE CASE

The claimant failed in its submissions that it had served proceedings properly on the second defendant.  The second defendant made an application under CPR 7.7(1).  The claimant argued that the second defendant’s application in itself represented acceptance of the jurisdiction. Further the second defendant had failed to use Part 11 and had accepted jurisdiction.  The judge rejected the claimant’s arguments on both issues.

THE JUDGMENT ON THESE ISSUES

Submission to the jurisdiction

1. 1. The first further argument is that by serving a notice under CPR r 7.7(1) ZTC has irrevocably submitted to the jurisdiction.

1. 1. CPR r 7.7 provides as follows:

“7.7— Application by defendant for service of claim form

(1)  Where a claim form has been issued against a defendant, but has not yet been served on him, the defendant may serve a notice on the claimant requiring him to serve the claim form or discontinue the claim within a period specified in the notice.

(2)  The period specified in a notice served under paragraph (1) must be at least 14 days after service of the notice.

(3)  If the claimant fails to comply with the notice, the court may, on the application of the defendant—

(a)  dismiss the claim; or

(b)  make any other order it thinks just.”

1. 1. In Deutsche Bank AG London Branch v Petromena ASA [2015] EWCA Civ 226 (“Petromena”) at [32]-[33], Floyd LJ identified two circumstances in which a defendant will be held to have submitted to the jurisdiction. One is what he called “statutory submission”, namely where the relevant rules of court so provide (as CPR r 11(5) does). That has no application here as CPR r 7.7 contains no such provision. The other is what Floyd LJ referred to as “common law waiver”.

1. 1. The test for such a waiver has been variously expressed. In re Dulles’ Settlement (No 2) [1951] Ch 842 Evershed MR said (at 847) that a man cannot fight the issue on the merits, or take any step unequivocably referable to the issue on the merits, and at the same time preserve the right to say that the court has no jurisdiction. Denning LJ (at 850) agreed that if he fights the case on the merits he must be taken to have submitted to the jurisdiction but not when he only appears with the sole object of protesting against the jurisdiction, saying that he did not see “how anyone can fairly say that a man has voluntarily submitted to the jurisdiction of a court, when he has all the time been vigorously protesting that it has no jurisdiction.” In Astro Exito Navegacion SA v Hsu [1984] 1 Ll Rep 266 Robert Goff LJ (at 270 col 2) said that a person makes a voluntary submission to the jurisdiction if he takes a step in proceedings which in all the circumstances amounts to a recognition of the Court’s jurisdiction in respect of the claim. In Sage v Double A Hydraulics [1992] Times Law Reports 175 Farquharson LJ said that a useful test was whether a disinterested bystander with knowledge of the case would have regarded the acts of the defendant, or his solicitors, as inconsistent with the making and maintaining of his challenge. In Spargos Mining NL v Atlantic Capital Corporation (Times, 11 December 1995), Colman J said that there would be an effective waiver or submission to the jurisdiction only where the step relied upon as a waiver or submission “cannot be explained except on the assumption that the party in question accepts that the court should be given jurisdiction. If the step relied upon, although consistent with the acceptance of the jurisdiction, is a step which can be explained because it was also necessary or useful for some purposes other than acceptance of the jurisdiction, there will, on the authorities, be no submission.” In Rubin v Eurofinance SA [2012] UKSC 46 at [159] Lord Collins of Mapesbury identified the test as being whether the relevant party had “taken some step which is only necessary or only useful if” an objection to jurisdiction “has been actually waived, or if the objection has never been entertained at all.” In Petromena at [32] Floyd LJ referred to common law waiver as “the doing of an act inconsistent with maintaining a challenge to the jurisdiction. Such a waiver must clearly convey to the claimant and the court that the defendant is unequivocally renouncing his right to challenge the jurisdiction.”

1. 1. I do not think it necessary in the present case to explore if there are any subtle differences between these various expressions of the test. On the facts of the present case it seems to me that there can be only one answer, which is that Quinn Emanuel’s letter of 17 December 2021 containing ZTC’s notice under CPR r 7.7(1) (paragraph 11 above) did not amount to a common law waiver or voluntary submission to the jurisdiction. Not only did the letter contain a statement that nothing in it was or should be construed as a submission, but the form of the notice contained in the letter itself indicated that although ZTC was calling on the claimant to serve or discontinue, such service would have to be out of the jurisdiction pursuant to a successful application for permission to serve out. That does not seem to me to be a step that is, or would appear to a disinterested bystander to be, “inconsistent with the making and maintaining of [ZTC’s] challenge”; I would go further and say that it is in fact inconsistent with a waiver, as in that case there would be no need to require the Claimants to go to the trouble of seeking permission to serve out. Nor is it a step that was only necessary or useful if the objection had been waived; nor did it convey that ZTC was unequivocally renouncing its right to challenge the jurisdiction. On the contrary ZTC has continued at every opportunity vigorously to protest that it is not submitting to the jurisdiction. In my judgment ZTC did not, by serving a notice under CPR r 7.7(1), submit to the jurisdiction. I need not consider what the position would have been if ZTC had simply served a notice under CPR r 7.7(1) without at the same time making it clear that ZTC’s position was that it needed to be served, if at all, out of the jurisdiction with permission to do so; I can see that the position then might have been different, but those are not the facts.

1. 1. Mr St Ville raised a number of arguments to the contrary. First he said that the historical antecedent of the provision in CPR r 7.7 was the practice of entering an appearance gratis (see the note in Civil Procedure (The White Book) 2021 at §7.7.1), and he suggested that entering an appearance would have amounted to a recognition of the jurisdiction of the Court. In 1979 entering an appearance was replaced under the RSC by the procedure of acknowledging service, and in Abu Dhabi Helicopters v Aeradio plc [1986] 1 WLR 312 the Court of Appeal held that there was no such thing as an acknowledgment of service gratis. That then led to the introduction into the RSC of RSC Ord 12 r 8A, in similar (but not identical) terms to the current CPR r 7.7. Mr St Ville pointed out that under RSC Ord 12 r 8A(3) a defendant who applied to have the action dismissed had to support the application with an affidavit stating that he intended to contest the proceedings. That would no doubt support an argument that a defendant who gave notice under that rule might have been regarded as taking a step indicating an intention to contest the case on the merits and as thereby effecting a waiver or submission; but the CPR are a new procedural code and nothing equivalent to those words appears in CPR r 7.7. And I do not think it necessary to consider whether Mr St Ville is right that the entry of an appearance gratis, a procedure that has long disappeared, would have amounted to a submission to the jurisdiction.

1. 1. Second, Mr St Ville said that by using the CPR r 7.7 procedure ZTC was invoking the positive use by the Court of its powers to dismiss the claim, thereby requiring the Claimants to issue a second claim form. That might, he said, deprive the Claimants of the benefit of the limitation period applicable to the first claim form, and might also provide a platform for a possible (although he would say flawed) allegation that the second claim form would be an abuse. I accept that serving a notice under CPR r 7.7(1) is a precursor to bringing an application under CPR r 7.7(3) to have the claim form dismissed; and that by bringing such an application, ZTC is seeking to invoke the power of the Court to dismiss the action. But the ground for dismissal would be that the Claimant has failed to serve ZTC; and I do not see that seeking to have the Court dismiss the action for non-service is inconsistent with ZTC’s position that it has not submitted to the jurisdiction and that if the Claimants are to serve ZTC they have to apply for and obtain leave to serve it out of the jurisdiction. The very foundation of the application under CPR r 7.7(3) is that ZTC has not been served at all, either in or out of the jurisdiction.

1. 1. Third, in his written argument, although not I think orally, Mr St Ville referred to the judgment of Morritt C in Global Multimedia International Ltd v ARA Media Services Ltd [2006] EWHC 3612 (Ch) at [31] where he said:

“A defendant who intends to challenge the jurisdiction of the court does not … threaten to strike-out the claim if the claimant refuses to discontinue it.”

But that was a case where the ground of threatened strike-out was that the defendant had been discharged from any potential liabilities, or in other words that it had an unanswerable defence on the merits (see at [18]). Taking such a step would be “unequivocally referable to the issue on the merits” (to use the language of Evershed MR in Re Dulles’ Settlement) and it is not difficult to see why Morritt C thought that a threat to take that step was inconsistent with maintaining a challenge to the jurisdiction. I do not see that it has any relevance to the present case.

1. 1. For the reasons I have given I reject the submission that ZTC has submitted to the jurisdiction.

Requirement to use CPR Part 11

1. 1. Mr St Ville’s final point on the application is that whenever a defendant wishes to dispute the Court’s jurisdiction on the grounds that there has been non-service or defective service, it can only do so under CPR Part 11.

1. 1. Part 11 of the CPR only contains one rule. It provides as follows:

“11— Procedure for disputing the court’s jurisdiction

(1)  A defendant who wishes to—

(a)  dispute the court’s jurisdiction to try the claim; or

(b)  argue that the court should not exercise its jurisdiction,

may apply to the court for an order declaring that it has no such jurisdiction or should not exercise any jurisdiction which it may have.

(2)  A defendant who wishes to make such an application must first file an acknowledgment of service in accordance with Part 10.

(3)  A defendant who files an acknowledgment of service does not, by doing so, lose any right that he may have to dispute the court’s jurisdiction.

(4)  An application under this rule must—

(a)  be made within 14 days after filing an acknowledgment of service; and

(b)  be supported by evidence.

(5)  If the defendant—

(a)  files an acknowledgment of service; and

(b)  does not make such an application within the period specified in paragraph (4),

he is to be treated as having accepted that the court has jurisdiction to try the claim.

(6)  An order containing a declaration that the court has no jurisdiction or will not exercise its jurisdiction may also make further provision including—

(a)  setting aside the claim form;

(b)  setting aside service of the claim form;

(c)  discharging any order made before the claim was commenced or before the claim form was served; and

(d)  staying (GL) the proceedings.

(7)  If on an application under this rule the court does not make a declaration—

(a)  the acknowledgment of service shall cease to have effect;

(b)  the defendant may file a further acknowledgment of service within 14 days or such other period as the court may direct; and

(c)  the court shall give directions as to the filing and service of the defence in a claim under Part 7 or the filing of evidence in a claim under Part 8 in the event that a further acknowledgment of service is filed.

(8)  If the defendant files a further acknowledgment of service in accordance with paragraph (7)(b) he shall be treated as having accepted that the court has jurisdiction to try the claim.

(9)  If a defendant makes an application under this rule, he must file and serve his written evidence in support with the application notice, but he need not before the hearing of the application file—

(a)  in a Part 7 claim, a defence; or

(b)  in a Part 8 claim, any other written evidence.”

1. 1. Mr St Ville’s submission obtains support from a note in The White Book at §11.1.3 which includes the statement that “Any challenge to jurisdiction (including those based on non-service or defective service) should proceed by way of the Pt 11 procedure”.

1. 1. The foundation of the argument, however, is the decision of the Court of Appeal in Hoddinott v Persimmon Homes (Wessex) Ltd [2007] EWCA Civ 1203 (“Hoddinott”). It is helpful to consider that case in a little detail. There was no foreign element to the claim at all: the claimants were farmers in Wiltshire and were claiming damages for the alleged failure by the defendant, presumably an English company (there is no suggestion otherwise), to reinstate their land after laying a sewer. The relevant chronology was as follows: 

(1) The claim form was issued on 22 May 2006. (All dates hereafter are 2006 unless otherwise specified). The time for service of the claim form therefore expired 4 months after issue on 22 September.

(2) On 13 September the claimants applied without notice for an order extending the time for service. That was granted by DJ Rowe on the same day, and time was extended to 22 November.

(3) On 14 September the claimants sent a copy of the claim form to the defendant but for information only, not by way of service.

(4) On 2 October the defendant issued an application to set aside the without notice order extending time for service on the basis that there was no good ground for it.

(5) On 21 November the claim form was served on the defendant.

(6) On 28 November the defendant’s solicitors filed an acknowledgment of service. The relevant form has 3 boxes, which are respectively (i) “I intend to defend all of this claim”; (ii) “I intend to defend part of this claim”; and (iii) “I intend to contest jurisdiction”. The defendant’s solicitors ticked box (i) indicating that the defendant intended to defend all of the claim. They did not tick box (iii) indicating that the defendant intended to contest jurisdiction.

1. 1. On these facts on 30 January 2007 DJ Daniel set aside the extension of time and struck out the claim. The Court of Appeal however allowed the claimants’ appeal.

1. 1. The reasoning of Dyson LJ, giving the judgment of the Court, is as follows. First it was argued that Part 11 was not engaged at all as CPR r 11 only applies where the defendant wishes to dispute the Court’s jurisdiction or argue that the Court should not exercise its jurisdiction, and the failure to serve proceedings in time did not raise an issue of the Court’s “jurisdiction” at all. Dyson LJ rejected that (at [23]): in CPR r 11(1) “jurisdiction” does not denote territorial jurisdiction but the Court’s power or authority to try a claim. Service of a claim form out of time might not deprive the Court of jurisdiction (ie in the sense of power to hear the claim) but it formed the basis of the defendant’s argument that the Court should not exercise its jurisdiction. So CPR r 11(1)(b) was engaged.

1. 1. Second, it followed that the defendant in that case, despite having already, before acknowledging service, issued its application to set aside the order extending time for service, had to comply with the procedure in Part 11. CPR r 11(5) is clear and unqualified: if the conditions in sub-paragraphs (a) and (b) are satisfied, then the defendant is treated as having accepted that the Court has jurisdiction (at [27]). Since they were satisfied in the present case (as the defendant had (a) filed an acknowledgment of service and (b) not made an application under CPR r 11(1) within 14 days thereafter), the defendant was to be treated as having accepted that the Court had jurisdiction to try the claim. That was to be interpreted as meaning that the defendant had accepted that the Court should exercise its jurisdiction to try the claim (at [28]).

1. 1. Mr St Ville said that Hoddinott was authority for the proposition that any challenge to the ability of the Court to try the claim, including a challenge based on the fact that service had not been effective, must be made by way of Part 11. He referred me to Caine v Advertiser and Times Ltd [2019] EWHC 39 (QB) (“Caine”) at [30] per Dingemans J where he said that Hoddinott was “clear authority … that an application that the court should not exercise its jurisdiction to try a claim must be made by CPR Part 11.”

1. 1. Caine was another case where the claim form had been served on the defendant, albeit service was both late and defective (in not including a response pack), and the defendant had acknowledged service: see at [7]-[8]. The decision of Dingemans J was that in those circumstances the defendant had to use an application under CPR r 11(4) if it wished to set aside service of the claim form on the grounds of late service, rather than using an application under CPR r 3.4(2)(c) to strike out the claim form for failure to comply with the rules. I agree that that follows from the decision in Hoddinott, which is in my judgment authority for the proposition that if a defendant has been served and has acknowledged service, then the defendant must use an application under CPR r 11(4) to set aside the service (either on the ground, as in Hoddinott, that a without notice order extending time for service should be set aside, or on the ground, as in Caine, that service was out of time).

1. 1. It is not obvious to me that Hoddinott stands as authority for the wider proposition that if the claimant claims to have served the defendant and the defendant denies that there has been any effective service, the defendant must still use Part 11 to challenge the effectiveness of the service. It is possible that that follows, but I do not think it necessarily follows. For example suppose a claimant serves not at the defendant’s address but at his neighbour’s. The defendant may be passed the claim form by his neighbour and may therefore be in a position to invoke Part 11 (although it is to be noted that before applying under CPR r 11(4) a defendant must by CPR r 11(2) first file an acknowledgment of service and it seems a bit odd for a defendant to acknowledge service when his contention is that there has been no service at all). But the neighbour may never tell the defendant, and the first the defendant may know of the proceedings is an attempt by the claimant to enforce a default judgment. Must the defendant then use Part 11 to challenge the default judgment? I do not regard that as obvious. The reasoning of Dyson LJ in Hoddinott is that where a defendant has acknowledged service and has not brought an application under CPR r 11(4) within 14 days thereafter, the consequences in CPR r 11(5) follow. But that does not necessarily apply where a defendant has not acknowledged service. The logic of Dyson LJ’s judgment does not compel the conclusion that a defendant who has not acknowledged service can only raise the issue whether service has been effected at all by using Part 11.

1. 1. But I do not propose to resolve the general question as I do not consider that I need to. The particular question before me is whether it is open to the defendant to challenge the validity of purported service by making an application under CPR r 7.7(3). Whatever the general position may be in the case of a defendant who wishes to raise the issue of the validity of service, in my judgment it must be open to a defendant who claims not to have been served at all to use CPR r 7.7(3). The structure of the rules does not make sense otherwise.

1. 1. Take a simple case, not involving a foreign defendant. The defendant is aware that a claim form has been issued. The defendant has not been served. Under CPR r 7.7(1) he gives the claimant, as he is entitled to, notice requiring the claimant either to serve the claim form or discontinue the claim within 14 days. At the end of 14 days the claimant has neither discontinued nor, as far as the defendant is aware, has served the claim form. The defendant therefore applies under CPR r 7.7(3) to have the claim dismissed. The claimant responds by saying that he has served the claim form within 14 days. That raises an issue as to whether what the claimant has done amounts to effective service or not. That may be a very simple issue – did the claimant post the claim form to the defendant’s address at No 10 or to his neighbour’s at No 11? It may be a more complex issue such as whether the address at which an individual is served is his usual residence, or his last known residence (see CPR r 6.9(2) case 1); or whether the address at which an LLP is served is its principal place of business (case 4); or, as in this case, whether the address at which a company is served is a place of business of the company (case 6 or 7).

1. 1. But whatever the issue is, it seems to me that it must be open to the Court to resolve it on the hearing of the application under CPR r 7.7(3). The whole question under that rule is whether the claimant has “fail[ed] to comply with the notice”, as that is what gives the Court discretion to dismiss the claim. So if there is a dispute whether the claimant has or has not served the defendant within the relevant period, the Court must resolve it. To my mind it follows that the Court must have power to resolve it on that application. It would be absurd if the only way that the defendant in such a case could have the issue determined were by filing an acknowledgment of service and then issuing another application, this time under CPR r 11(4), raising the very same issue. That cannot sensibly be what those responsible for drafting the rules envisaged.

1. 1. And if this is right, I do not think that the ability of the defendant to ask the Court, on an application under CPR r 7.7(3), to determine whether there has been valid and effective service can depend on whether the defendant knows before issuing the application that the claimant is asserting that he has been served, or knows nothing about the claimant’s purported service (which may for example be at an address that he left years before). Either the Court has power to resolve the issue on such an application or it does not. That cannot turn on whether the defendant is, or ought to be, aware of the purported service. He must still in my judgment be able to argue that there has been no service in fact and hence that the claimant has failed to comply with the CPR r 7.7(1) notice.

1. For these reasons I reject the submission that ZTC here had to use the Part 11 procedure to challenge the service at Bourne End. In my judgment it was appropriate for it to raise the issue by bringing its application under CPR r 7.7(3).