THIS MAY (OR MAY NOT) BE THE FINAL CLAIM FORM CASE OF 2023: CLAIMANT MAKES FUNDAMENTAL MISTAKE AS TO SERVICE, DEFENDANTS FAIL TO NOTICE IN TIME: THERE IS MUCH TO LEARN HERE…

December 5, 2023 · by · in Applications, Relief from sanctions, Service of the claim form

There are lessons for both claimants and defendant litigators in the judgment of Master Teverson (sitting in retirement) in Simon Bain Building Services Ltd v Cardone & Anor [2023] EWHC 2916 (Ch).  Firstly we see another error by the claimant in failing to notice that solicitors had stated that they would accept service.  The obligation to serve on those solicitors had not ended when the defendant instructed new solicitors, but there had been no correspondence stating that service should take place elsewhere. Secondly the defendants failed to take the point about service promptly.  An application under CPR Part 11 was raised many weeks after an application to set aside the default judgment on the merits. The defendants were taken to have accepted the jurisdiction.

 

“In my view there was a fundamental inconsistency between the Default Judgment Application on the one hand and any intention to contest jurisdiction on the other. Applying to set aside the default judgments under CPR r.13.3 required the Defendants to show they had a real prospect of defending the claim. It involved taking a step in relation to the merits. The authorities indicate that there may be circumstances where steps taken to prevent a default judgment being entered are consistent with an intention to contest jurisdiction: see Winkler v Shamoon [2016] EWHC 217 (Ch) at [48] but in my view, in the present case, the substance of the Default Judgment Application was inconsistent with an intention to contest jurisdiction.”

 

WEBINAR ON SERVICE OF THE CLAIM FORM: 5th FEBRUARY 2024

This case will be one of the many cases looked at in detail in a webinar on the 5th February 2024 on “Service of the Claim Form Cases: the Past 14 months. Booking details are available here.

 

THE CASE

The claimant issued proceedings against the defendants claiming moneys due.  In 2020 the defendants then solicitors, Russell-Cooke wrote stating that they were instructed to accept service.  The defendants then instructed new solicitors who corresponded with the claimant’s solicitor, however nothing was said about service.  The claimant issued proceedings and served the defendant at the defendants’ property.

The defendants acknowledged service indicating an intention to dispute jurisdiction.  However the 14 days for issuing an application under CPR Part 11 passed on the 6th March 2023.   The defendant applied to set aside the default judgment on the 21st March 2023, that application said, expressly, to be made under CPR Part 13.

THE APPLICATION

The defendant’s initial application was under CPR Part 13. It concentrated upon the merits and said nothing about issues relating to service of proceedings.
    1. By application notice dated 21 March 2023 the Defendants applied pursuant to CPR Part 13 to set aside the default judgments entered on 16 March 2023 against them.
    1. The application notice in box 3 in answer to the question “What order are you asking the court to make and why?” stated:-
“1. The Defendants seek an order (a draft of which is attached) pursuant to CPR 13 to set aside the Default Judgments entered on 16 March 2023 in respect of these proceedings.
2. The Defendants have a real prospect of successfully defending the claim, as set out in the witness statement and exhibit of Andrew Keeley dated 21 March 2023 in support of this application.
3. There are good reasons why the Default Judgments should be set aside or varied or why the Defendants should be permitted to defend the claim, as set out in the witness statement and exhibit of Andrew Keeley dated 21 March 2023 in support of this application.”
    1. The draft order attached to the application sought orders that:-
“1 The default judgments entered on 16 March 2023 be set aside on the grounds that the Defendants have a real prospect of defending the claim [and/or] there are good reasons why the judgments should be set aside or varied, or why the Defendants should be permitted to defend the claim.
2. The Defendants have 14 days from the date of this Order to file their Defence to the Claimant’s claim.
3. The Claimant has 14 days from the service of the Defence to file a Reply to the Defence.
4. Costs in the case.”

NO APPLICATION HAD BEEN MADE UNDER CPR 11

The defendants did not make any application under CPR Part 11.  It was not clear why this was done.  The defendants’ solicitor was, apparently, waiting for directions from the court.

    1. In paragraph 2.8 Mr Keeley gave the following explanation why no further procedural steps had been taken by the Defendants:-
“Given the lapse of time between the claim form being filed in September 2022 and receipt of the claim form by the Defendants in February 2023, CRS expected that the acknowledgement of serviced [sic] had itself been served out of time and awaited directions from the Court in relation to filing a defence.” (emphasis added).
    1. It is unclear why Mr Keeley expected that the Court would give directions in a Part 7 claim prior to either an application being made under CPR Part 11 or a defence being filed and served. In the former case, CPR r. 11(7) provides that:-
” If on an application under this rule the court does not make a declaration:-
..
(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 acknowledgement of service is filed.”
The statement by Mr Keeley that CRS awaited directions from the court in relation to the filing of a defence is not consistent with an intention to apply under Part 11 to contest jurisdiction.
    1. In paragraph 2.9, Mr Keeley said that no such directions were received, and no further correspondence was received from the Claimant, New Media, or the Court until CRS received the Default Judgments by e-mail on 16 March 2023.
    1. In paragraph 3.1 Mr Keeley states that [the Default Judgment Application] is made pursuant to CPR r.13.3. In paragraph 3.2 Mr Keeley set out the tests that the Court has to apply under CPR 13.3. In paragraph 3.3 Mr Keeley stated that the court was further required to have regard to whether the party seeking to set aside the judgment made an application to do so promptly.
    1. In paragraph 3.4 Mr Keeley stated his belief that there were good reasons why the Default Judgments should be set aside or varied, or why the Defendants should be permitted to defend the claim. In paragraph 3.4.1 Mr Keeley said:-
“There is a real prospect of successfully defending the claim on the basis of :-
(a) Invalid service of the claim form in circumstances where the limitation period has expired and/or
(b) Expiry of the limitation period; and/or
(c) The substantive defence to the claim.”
    1. In paragraph 4 of his witness statement Mr Keeley dealt with the issue of service. In paragraph 4.1 he quoted the part of CRS letter dated 27 January 2020 to the Claimant’s legal representatives confirming they were instructed to accept service of proceedings on behalf of the Defendants.
    1. In paragraph 4.2 Mr Keeley said:-
“Pursuant to CPR 6.7(1)(b):-
“where-(b) a solicitor acting for the defendant has notified the claimant in writing that the solicitor is instructed to accept service of the claim form on behalf of the defendant at a business address within the jurisdiction, the claim form must be served at the business address of that solicitor.”(emphasis added)”
    1. In paragraph 4.3 Mr Keeley said that the claim form was not served on CRS by the Claimant and accordingly the claim was not validly served.
    1. In paragraph 5 Mr Keeley dealt with limitation; in paragraph 6 he dealt with the merits of the claim. In paragraph 7 he said there was some other good reason why the Default Judgments should be set aside namely that the Claimant did not warn the Defendants that a claim had been issued. In paragraph 8 Mr Keely said that the Defendants had met the requirement to act promptly in making the application.
    1. A draft Defence was exhibited to the witness statement. The draft Defence is a fully pleaded defence dealing with every allegation in the Particulars of Claim. In paragraph 49 it is denied that the Claimant served the claim form validly in accordance with CPR Part 6. In paragraph 50 it is pleaded that “Accordingly, the Defendants reserve the right to strike out the claim on this basis”.
  1. On 27 March 2023 the court listed the Default Judgment Application for hearing on 5 July 2023.

 

THE JURISDICTION APPLICATION

The defendants woke up to the point that if they were going to take a point as to service they needed to make an application under CPR Part 11.  They issued a further application.

THE APPLICATION
(1)to order that the Default Judgment Application be treated as an application under CPR Part 11 challenging the Court’s jurisdiction in these proceedings by rectifying an error of procedure said to be capable of being rectified under CPR 3.10;
(2)to extend time and/or grant relief from the sanctions in CPR r. 11(4) and 11(5) in respect of making an application to challenge jurisdiction pursuant to CPR Part 11; and
(3)pursuant to CPR r. 11.1 to grant an order declaring that the court has no jurisdiction to try the claim or should not exercise any jurisdiction which it may have.
    1. The Jurisdiction Application was supported by the second witness statement of Andrew Keeley dated 28 June 2023. In paragraph 2.1 Mr Keeley said under the heading “Challenging Jurisdiction” that CRS expected that the acknowledgement of service had itself been served out of time. In paragraph 2.5 Mr Keeley said that CPR Part 11 appears to apply only to an acknowledgement of service filed in accordance with CPR Part 10.
    1. The Jurisdiction Application was listed to be heard alongside the Default Judgment Application. On 5 July 2023 the hearing of the two applications was adjourned to a hearing to be fixed with a time estimate of 1 day. In addition to the listing of the Jurisdiction Application alongside the Default Judgment Application, three witness statements had been filed on 30 June 2023 on behalf of the Claimant to which the Defendants had not had the opportunity to reply.
    1. The Applications were re-listed before me on 5 October 2023. On 2 October 2023 the Acknowledgement of Service extension of time application was issued. I directed it be listed alongside the two adjourned applications.
  1. At the hearing on 5 October, I was invited by Ms Conroy, counsel for the Defendants, to deal first with the Jurisdiction Application. It was submitted that if the Jurisdiction Application were to succeed, the Court would not need to deal with the Default Judgment Application.
    1. Ms Conroy took as her starting point that the claim form had not been validly served. She submitted that compliance with CPR r.6.7(1)(b) was mandatory. She submitted that there was no obligation on a defendant solicitor to re-notify a claimant that they are instructed to accept service where a claimant decides to change its solicitor. She submitted that in any event NML had notice that CRS was instructed to accept service as it expressly stated in its letter of 26 February 2021 that it had a copy of and was responding to CRS’s letter of the 27 January 2020.
    1. In his oral submissions, Mr Bishop, counsel for the Claimant, accepted that, as he put it, the service point was a good one. He accepted that CRS had notified the Claimant’s former legal representatives that CRS was willing to accept service of the claim form on behalf of the Defendant and that for this purpose no distinction could be made between the Claimant and its legal representatives. He also accepted that the position was not changed by the Claimant instructing new legal representatives. I note that CPR r. 6.7 (1) is expressed in mandatory terms. I observe that it was open to NML to have checked with CRS that they were still instructed to accept service on behalf of the Defendants.
    1. The issue which then arises is whether the Defendants have the right to challenge the court’s jurisdiction as a matter of procedure. It is accepted by the Defendants that the correct procedure for such a challenge to be raised is to notify that jurisdiction is being challenged in an acknowledgement of service filed in accordance with CPR Part 10 and to make an application within 14 days of the date of the acknowledgement of service. It is further accepted that whilst the jurisdictional issue was raised in the Defendants’ acknowledgement of service, no such application was made.
    1. The explanation given for no Part 11 application having been made is that CRS was aware or suspected that the acknowledgement of service had been filed out of time. In circumstances where the timing of the filing of the acknowledgement of service was on the Defendants’ evidence the result of the method of service of the claim form, it was open to them to apply for an extension of time for filing an acknowledgement of service and for an order relieving the defendant from sanctions in accordance with CPR 3.9: see AELF MSN 242 LLC v Surinam Airways [2021] EWHC 3482 (Comm); [2022] 1 WLR 2181 at [45]-[46]. If the application is successful, the right to challenge jurisdiction is retrieved provided that there has not been a submission to the jurisdiction.
    1. A defendant who files an acknowledgement of service stating an intention to contest jurisdiction, but does not apply under CPR r. 11.1 for an order declaring that the court has no jurisdiction or that the court should not exercise any jurisdiction it may have, is to be treated as accepting that the court has jurisdiction to try the claim: CPR r. 11(5).
    1. The Defendants accept that the Default Judgment application did not refer to CPR Part 11. They submit however that in substance it was a challenge to the court’s jurisdiction which they say the Claimant was put on notice of in the acknowledgement of service.
  1. The Defendants submit that it is open to the court to treat the matters set out in the Default Judgment Application as an application under CPR Part 11. In support of that submission they rely on the decision of Dingemans J. (as he then was) in Caine v Advertiser and Times Ltd [2019] EWHC 39 (QB).

THE DEFENDANT’S ACCEPTANCE OF THE JURISDICTION

Master Teverson reviewed the law relating to whether an application to set aside a default judgment could be viewed as an application under CPR Part 11.  On the facts of this case the application was clearly an application to set aside default judgment on the merits.  It could not be viewed as an application under CPR Part 11.

    1. In the present case, I am of the view that the Default Judgment Application was in substance an application inviting the court to permit the Defendants to defend the claim on its merits. The application was framed by reference to CPR r. 13.3. The draft order sought an order that the Defendants have 14 days from the date of the order to file their Defence to the Claimant’s claim. The witness statement in support of the application exhibited a draft defence in order to demonstrate that the Defendants had a real prospect of successfully defending the claim. The issue of service was relied upon in the witness statement but not as a ground for contesting jurisdiction but as one of the grounds for asserting that there was a real prospect of successfully defending the claim.
    1. In my view there was a fundamental inconsistency between the Default Judgment Application on the one hand and any intention to contest jurisdiction on the other. Applying to set aside the default judgments under CPR r.13.3 required the Defendants to show they had a real prospect of defending the claim. It involved taking a step in relation to the merits. The authorities indicate that there may be circumstances where steps taken to prevent a default judgment being entered are consistent with an intention to contest jurisdiction: see Winkler v Shamoon [2016] EWHC 217 (Ch) at [48] but in my view, in the present case, the substance of the Default Judgment Application was inconsistent with an intention to contest jurisdiction. This conclusion is consistent with the approach of Ms Sara Cockerill QC, as she then was, in Newland Shipping & Forwarding Ltd v Toba Trading FZC [2017] EWHC 1416 (Comm) when rejecting an argument that a defendant seeking to challenge jurisdiction should first have applied to set aside a default judgment entered against it.
    1. In my view, the Defendants are to be treated as having submitted to the jurisdiction both under CPR r.11(5) and at common law. Having issued the Default Judgment Application, it was no longer possible in my view for the Defendants to seek to retrieve the position by issuing a fresh application relying on CPR Part 11 and inviting the court to treat the applications together as being made under CPR Part 11, as in Caine, or by relying on CPR r.3.10 to rectify an error of procedure.
    1. In my view the facts in the present case are distinct from those in Caine and those in Pitalia. In neither of those cases did the Defendants allow a default judgment to be entered against them and then apply to have it set aside relying on the merits of their defence. In neither of those cases was there a common law waiver of the right to challenge the validity of service of the claim form. In Pitalia, the strike out application was made within the 14 days period from the filing of the acknowledgement of service. In Caine, the first application was made four days after the 14 day period had expired
    1. In my view on the facts in the present case it is not open to the court to treat the Default Judgment Application as an application under CPR Part 11 by treating it together with the Jurisdiction Application. The making of the Default Judgment Application amounted to a once and for all submission to the jurisdiction in these proceedings.
  1. No attempt was made by the Defendants to contest jurisdiction again until the issuing of the Jurisdiction Application on 28 June 2023 some 16 weeks after 6 March 2023 and some 14 weeks after the Default Judgment Application. I regard that delay as being serious and significant. It is not explained. In all the circumstances it was by 28 June 2023 far too late to allow the Defendants to revert to seeking to contest jurisdiction. For those reasons, I dismiss the Jurisdiction Application.
Tags: , , ,