ANOTHER FAILED SERVICE CASE: AGREEMENT TO ACCEPT SERVICE BY EMAIL DID NOT EXTEND TO DOCUMENTS ALREADY SENT

We have another case falling foul of the provisions in relation to service. In Allen v Mittal [2022] EWHC 762 (Ch) Deputy Insolvency and Companies Court Judge Agnello QC rejected an applicant’s arguments that an application had been served properly.  A statement that proceedings would be accepted by email did not extend to documents already served.  The respondent had not waived his right to argue issues of service. The judge rejected the applicant’s argument that service should be retrospectively validated.

“The evidence which is before me is that set out in the emails. In my judgment, the email on 11 June 2021 at 19.14 dealt with service via email on a prospective basis. It used clear and unambiguous language. It stated that, ‘we will accept service by email and there is no need to deliver a hard copy to our new offices’. I am unable to accept that this can be interpreted as accepting as valid service of the suspension application and the documents sent by email earlier that day. That is not what the email says. In my judgment, the words used in the email are clear and unambiguous. It dealt with prospective service.”

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THE CASE

The applicant Trustee in bankruptcy was applying for an order to suspend discharge of the respondent’s bankruptcy. Such applications have to be served in accordance with CPR Part 6. The issue before the Court was whether the application had been validly served.

“SERVICE” OF THE APPLICATION (OR NOT)

The judge sent out the chronology.

1. 1. The relevant facts as to what occurred are as follows. These are not disputed although the parties assert that what occurred is open to different interpretation. On 10 June 2021, the suspension application was issued by the Trustee. On 11 June 2021, the following exchanges took place:-

(1) At [15:18], Mishcon sent an email to Collyer containing a link to files

stored on a Mimecast platform. The covering email stated:

“Please see the attached correspondence, a hard copy of which has

been sent today via same day courier.”

(2) At [18:53] Mishcon sent a further email to Collyer saying that no one

had been at Collyer’s offices to accept delivery of the application. They proceeded to ask whether Collyer were prepared to accept service via email:

“We should be grateful if you would confirm you are content to accept

service of our letter and Application via email. In any event, we have arranged

for the hard copy to be re-delivered to your offices on Monday

morning.”

(3) At [19:14] Collyer replied as follows:

“We have moved offices to….I thought that had been brought to your

firm’s attention.

In any event, we will accept service by email and there is no need to

deliver a hard copy to our new offices. (I am still working remotely.)”

Mishcon replied [19:19] saying “Thank you, I shall be sure to update our

records”.

(4) After the last email reply from Mishcon, there was no attempt to send the documents via email.

SERVICE HAD NOT TAKEN PLACE

The judge rejected the argument that this chain of emails meant that the respondent had accepted service.

1. 1. Mr Beswetherick accepted that, at the time of the email of 11 June 2021 at 15.18, there had been no prior request for service to be effected by electronic means. He also accepted that the email itself (or indeed the covering letter attached) did not request for service to be by electronic means. As Mr Gibbons submitted, the intention at that stage was to effect service personally via courier. Mr Beswetherick submits that the correct interpretation of the email dated 11 June 2021 at 19.14 is that the documents sent via email at 15.18 were accepted as proper service by Collyer and there was no need to resend those documents by way of service.

1. 1. I have considered carefully the exchange of emails and I find that I am unable to accept Mr Beswetherick’s submission relating to the construction and interpretation of the emails. The evidence which is before me is that set out in the emails. In my judgment, the email on 11 June 2021 at 19.14 dealt with service via email on a prospective basis. It used clear and unambiguous language. It stated that, ‘we will accept service by email and there is no need to deliver a hard copy to our new offices’. I am unable to accept that this can be interpreted as accepting as valid service of the suspension application and the documents sent by email earlier that day. That is not what the email says. In my judgment, the words used in the email are clear and unambiguous. It dealt with prospective service.

1. Mr Beswetherick also sought to persuade me on the basis that clearly the parties intended to and did agree that the email transmission of the documents earlier that same day would constitute good service, then service was properly effected. The difficulty with this argument is that the words used in the exchange of emails is contrary to this proposed construction. I will deal later in this judgment with the related argument that, by reason of the conduct of Mr Mittal and/or his legal representatives, they have accepted the service as being valid and effectively have waived an entitlement to challenge service. However, in my judgment, service was not effected in accordance with the rules on 11 June 2021.

REJECTION OF THE APPLICANT’S SUBMISSIONS THAT THERE HAD BEEN WAIVER

The judge considered, and rejected, the applicant’s submission that the respondent had waived the issue in relation to service.

“In my judgment, the above demonstrates the difficulty in the Trustee seeking to rely on waiver. It is clear that knowledge is essential. There is no evidence in the case before me of knowledge of the right to elect and waive the service point. The reliance for the purposes of waiver by the Trustee relates to a failure by Mr Mittal and his legal representatives to notify that they would take the issue that service had not been effected in accordance with the relevant rules. However there is no evidence that Mr Mittal knew and made the election. Reliance upon the statement in the skeleton is to my mind much more ambiguous than the evidence before the Judge in the Edray Limited case. As I have already set out, the application came on urgently. The Judge adjourned it whilst preserving all the points which had been raised as well as any others which could have been raised. In my judgment, the level of knowledge required for an effective waiver is not established on the evidence in the case before me. There is no evidence to establish that either Mr Mittal or his solicitors or Counsel were aware of the service point and that there was an election to treat the ‘service’ of the suspension application as good or bad service. There is no evidence therefore to support any knowledge of an election being made on the basis of the statement in the skeleton. Incidentally, the Judge also rejected in Edray there being evidence sufficient to establish the waiver. Mr Beswetherick’s submission relating to there being a waiver on the evidence accordingly fails.”

ESTOPPEL BY CONVENTION POINT ARGUMENT DID NOT SUCCEED

The judge also rejected the argument that there was estoppel by convention.

58.In my judgment, despite Mr Beswetherick’s submissions, there is no estoppel by convention arising in this case. This is because on the evidence, there is no common assumption. A failure by Mr Mittal and his legal representatives to notice the service issue, cannot in my judgement create such a common assumption. As is clear in Barton, there is no duty to raise issues relating to service. That leaves, for the purposes of establishing the required common assumption, the statement set out in the skeleton which stated that service was effected on 14 June 2021. In my judgment, that is far from being a common assumption that service had been effected in accordance with the rules and no point would be taken. Firstly, it is hard to see how there could have been any such common assumption when the terms of paragraph 4 of the order made by ICC Judge Prentis expressly reserved the entitlement of Mr Mittal to raise objections, ‘on any grounds’ including those not before the Court. Secondly, as far as the Trustee was concerned, service had been effected on 11 June 2021 and not 14 June 2021. Furthermore, as submitted by Mr Gibbons, there is no evidence at all before me that the statement made in a skeleton filed for an urgent hearing can be considered as being such a type of assumption. It is, in my judgment, extremely far away from a statement made in a letter sent to the other party alongside a statement of truth lodged and filed at court. Those are the facts in Edray v Caning. Each case will turn on its facts, but as I have set out above, the facts in this case simply do not support a common assumption. Mr Beswetherick relied upon paragraph 41 as being support for his submission that had the matter been raised, it was likely that an application would have been made before the expiry of the bankruptcy. However, on the facts as I have set out above, in my judgment, neither waiver or the common assumption necessary for an estoppel have been established. Accordingly there is no need for me to assess this issue relating to what the Trustee would have done had he ascertained the issue of service.

THE APPLICANT’S APPLICATION FOR POST SERVICE VALIDATION

The applicant’s application for retrospective validation was also refused.

1. 1. I have already set out above some of Mr Gibbons’s submissions relating to this application. Mr Beswetherick impresses upon me the merits of the suspension application as well as the seriousness of the conduct of Mr Mittal. Mr Beswetherick also submitted that there is no need to establish exceptional circumstances because of his submission that this does not fall to be considered as a limitation defence type case. As I have set out above, I do not accept this to be the case. I accept Mr Gibbons’s submission that a post validation service application would need to show exceptional circumstances as explained by Lord Justice Newey in Bell v Ide.

1. On the facts of this case, no such good reason, or exceptional circumstances are apparent. There really is no reason as to why service could not have been carried out in accordance with the rules. The failure to serve in accordance with the rules is not something which can be blamed upon Mr Mittal or his legal representatives. I have already rejected both the waiver and the estoppel arguments on the basis of the evidence before me.

CONSIDERATION OF THE RELEVANT PRINCIPLES

Mr Gibbons referred me to the judgement of Mr Justice Popplewell in Societe General v Goldas Kuyumculuk Sanayi and others [2017]EWHC 667 ( Comm). In summarising the principles applicable to an application to validate the service which had been carried out or dispensing with service pursuant to Rule 6.16 ( CPR), the Judge stated as follows:-

’49. …(8) Limitation:

(a) Where relief under Rule 6.15 would, or might, deprive the defendant of an

accrued limitation defence, the test remains whether there is a good reason

to grant relief: Abela.

(b) However save in exceptional circumstances the good reason must impact

on the expiry of the limitation period, for instance where the claimant can

show that he is not culpable for the delay leading to it or was unaware of

the claim until close to its expiry: Cecil at [108] and see Godwin at [50].

(c) It is not ordinarily a good reason if the claimant is simply desirous of

holding up proceedings while litigation is pursued elsewhere or to await

some future development; the convenience for a claimant of having

collateral proceedings determined first is not a good reason for impinging

on the right of a defendant to be served within the limitation period plus

the period of validity of the writ: Battersby per Lord Goddard at p.32;

Dagnell per Lord Browne-Wilkinson at p. 393C. Cecil at [99]-[106].

(d) Absent some good reason for the delay which has led to expiry of the

limitation period, it is only in exceptional cases that relief should be

granted under Rule 6.15 or 6.16; there is a distinction between cases in

which there has been no attempt at service and those in which defective

service has brought the claim form to the defendant’s attention (Anderton

at [56]-[58], Abela [36]), with relief being less readily granted in the

former case, but even in the latter case exceptional circumstances are

required: Kuenyehia at [26]

(e) Absent some good reason for the delay which has led to expiry of the

limitation period, it is never a good reason that the claimant will be

deprived of the opportunity to pursue its claim if relief is not granted; that

is a barren factor which is outweighed by the deprivation of the

defendant’s accrued limitation defence if relief is granted; that is so

however meritorious the claim: the stronger the claim, the greater the

weight to be attached to not depriving the defendant of his limitation

defence: Cecil at [55], Aktas at [91].’

1. 1. In my judgment, this useful summary makes it clear that the focus of the investigation and the factors that the Court considers relates to the reason why service was not effected correctly and whether there is any explanation for the delay. The evidence of the Trustee relies upon the lack of funding for making the suspension application and that funding was only finalised in late May 2021. There lacks any real explanation as to why the steps to obtain the necessary funding to make the suspension application were made so late in the day. I agree with Mr Gibbons that steps could have been taken in December 2020 when the Trustee sought and obtained funding from Moorgate in relation to other applications. The Trustee’s evidence does not deal with why he left it so late to seek the funding for the suspension application. His evidence states that he asked the OR if the OR was intending to issue an application for the suspension of Mr Mittal’s discharge. That was on 29 March 2021. It was only after the OR replied in the negative that discussions started with the funders. No good reason is provided as to why the Trustee delayed in seeking the funding from the creditor as late as end of March 2021/April 2021 or any reason as to why this issue was not raised in December 2020. I should add that the issue of the challenge to the IVA does not really assist the Trustee in this respect. A CMC had been listed for half a day on 25 June 2021. The Trustee was therefore well aware that the IVA challenge would not take place prior to the expiry of the discharge period. Whilst the Trustee asserts in his statement he sought to take a measured approach in circumstances where there was an IVA and outstanding requests from him for delivery up of items in the hands of Mr Mittal, in my judgment, these issues do not provide any real explanation as to why the Trustee delayed in seeking funding and making the suspension application. In my judgment, there is on the basis of the evidence, no good reason for the delay in bringing the application. Mr Beswetherick relies strongly upon the strength of the case for suspension and the unchallenged evidence of Mr Mittal’s failure to cooperate. This argument is not one which the court takes into account. That is apparent, in my judgment from what is set out at (e) in the passage I have set out from Societe Generale. I adopt and agree with that statement of the factors. In my judgment, the argument that the Trustee will be deprived of a strong case for a suspension on the merits is met by the fact that the Mr Mittal would have an even stronger limitation defence. In my judgment, the application for post validation of service fails.

THE RESULT

1. 1. In conclusion, I accept ground 1 and determine that the suspension application was not served in accordance with the rules. I have rejected on the evidence Mr Beswetherick’s submissions that there was an agreement between the parties that the service was valid as well as rejecting any waiver or estoppel. I have also considered the very late application made seeking a post validation service order. I have refused to make such an order on the grounds set out above. Accordingly, the Trustee’s application is dismissed. As to ground 2, which is an alternative to ground 1, I have dealt with it very much in summary form for the reasons set out above. I shall hear the parties on any outstanding issues and/or costs.