SERVICE OF THE CLAIM FORM AND SUBMISSIONS TO THE JURISDICTION: SOMETHING ABOUT RELIEF FROM SANCTIONS TOO

In  Moonbug Entertainment Ltd v CCM Touring LLC & Anor [2024] EWHC 793 (Comm) Mr Justice Andrew Baker found that the defendants had submitted to the jurisdiction by their conduct. Further the defendants required relief from sanctions. The judge held that, if it had been relevant, he would have refused the defendants’ application for an extension of time to dispute jurisdiction.  (These principles are of relevance to most issues relating to service of the claim form. CPR Part 11 is engaged in cases where mis-service is an issue).

“A defendant cannot dispute the jurisdiction of the court having freely submitted to it. Taking voluntarily a step consistent only with an acceptance that the court is to deal with the merits of the claim is a submission. That requires the step to be incapable of explanation except on the assumption that merits jurisdiction is accepted.”

THE CASE

The claimant brought an action against the defendants.  The defendants filed an acknowledgement of service which did not state that they intended to dispute jurisdiction.  The defendants sought, and obtained, an order extending time to file their defences.  The defendant then made an application (1) for relief from sanctions in order that they could (2) dispute jurisdiction.

THE JUDGE’S FINDINGS

The judge found that the defendants had, by their conduct, submitted to the jurisdiction and could not now attempt to dispute it.  Further, if it had been necessary to consider the issue, the court would not have granted the defendants an extension of time to allow the issue to be raised late.

THE JUDGMENT ON THESE ISSUES

Submission?

1. 1. I shall deal more briefly in the circumstances with the question of submission at common law.

1. 1. A defendant cannot dispute the jurisdiction of the court having freely submitted to it. Taking voluntarily a step consistent only with an acceptance that the court is to deal with the merits of the claim is a submission. That requires the step to be incapable of explanation except on the assumption that merits jurisdiction is accepted. A step capable of being explained on the basis that it was necessary or useful without merits jurisdiction being accepted is not a submission.

1. 1. In Global Multimedia International Ltd v ARA Media Services [2006] EWHC 3107 (Ch), at [30], Sir Andrew Morritt C noted that given the short period of time within which a decision must be made whether to contest jurisdiction, a party would be well advised in case of doubt to file an acknowledgment of service stating an intention to contest jurisdiction and obtain an extension of time to apply under CPR Part 11, in order to preserve a right to do so. That does not mean Global Multimedia is authority for the proposition that filing an acknowledgment of service that states instead an intention to defend and not an intention to contest jurisdiction is a submission. With respect, Dicey & Morris, “The Conflict of Laws“, 16^th Ed., is wrong to state otherwise, as it does in f.n.185 to para.11-066. To the contrary, in that case counsel for the claimant accepted that filing such an acknowledgment of service did not, on its own, amount to a submission (ibid at [28(ii)]), and the decision proceeded on that basis, not on the basis that counsel’s concession was wrong.

1. 1. Much more recently, in AELF MSN 242 LLC v Surinaamse Luchtvaart Maatschappij NV (Surinam Airways) [2021] EWHC 3482 (Comm), the deputy High Court judge treated an acknowledgment of service stating an intention to defend and not an intention to contest jurisdiction as relevant to the purport, assessed objectively, of later conduct, and not capable itself of being a submission to the jurisdiction, because of CPR rule 11(3). I leave to a case in which it will affect the outcome whether that is correct, or whether there is room to say that if an acknowledgment of service states an intention to defend the claim, and not an intention to contest jurisdiction, there is a submission because of that content, not because of the fact that an acknowledgment of service is filed, such that rule 11(3) is no answer, in which case Dicey & Morris‘s f.n.185 might be correct after all in the proposition it states even though it is wrong to suggest that Global Multimedia is authority for it. Like counsel in that case, Mr Mill KC for the claimant asked me to consider his argument that the defendants submitted on the basis that their acknowledgment of service was not, without more, a submission, and I now do so.

1. 1. The Acknowledgments of Service here, stating intentions to defend the claim and not any intention to contest jurisdiction, were filed on Friday 17 November 2023. On Monday 20 November, the defendants by their solicitors asked the claimant by its solicitors to agree a 28-day extension of time “to file and serve their defences“, but on the basis that their “position on service and jurisdiction is reserved“. The defendants had until 15 December 2023 to issue a Part 11 application if they wished to challenge jurisdiction notwithstanding what they had said in their Acknowledgments of Service. The claimant’s solicitors offered 14 days only, on condition that the defendants submitted to the jurisdiction. That condition was rejected, and a 14-day extension without it was ultimately agreed and notified to the court.

1. 1. On 15 December 2023, the deadline for any Part 11 application expired without the defendants making any application. The time for challenging jurisdiction having thus passed, on 19 December, the day before Defences were due, the defendants’ solicitors wrote to the claimant’s solicitors stating that the defendants would not be in a position to file and serve Defences by 20 December and asking the claimant to agree to time being extended to 24 January 2024. The letter contained no reference to any possible challenge to jurisdiction and no reservation of rights. It enclosed a draft application, to which the claimant was invited to consent, and which was issued the next day, consent having not been given overnight.

1. 1. The extension application did not state any reservation as to jurisdiction and sought the extension on the simple ground that the defendants were not in a position to file and serve their Defences on time. The unequivocal tenor of the explanation given to the court by Part C of the Application Notice was that the defendants had decided to defend on the merits and would be filing and serving Defences. The claimant objected to the extension sought, arguing that no proper basis had been provided for it, and that it would impact the date for the CMC. Correspondence on when the CMC should be scheduled followed, without mention or hint that there might yet be a challenge to jurisdiction and without reservation of rights.

1. 1. It should be noted that both the extension of time application and the CMC correspondence referred specifically and in some detail to the New York claim and the suggested possible overlap of issues, but yet the decision unequivocally conveyed by it was that the defendants would defend here on the merits.

1. 1. On 12 January 2024, Jacobs J considered on the papers, and granted, the application to extend time for Defences. The CMC correspondence continued, again without reference to any possible jurisdiction challenge and without reservation of rights.

1. 1. On 17 January, the claimant’s solicitors notified the defendants’ solicitors of the dates in March for which the defendants’ solicitors had confirmed availability for the CMC that the claimant’s solicitors intended to take to the Listing Office to obtain a fixture. For that purpose, they asked whether the claimant’s counsel’s 2-hr. time estimate accorded with the defendants’ counsel’s estimate. The defendants’ solicitors replied the following day, 18 January, initially just on CMC hearing dates and stating that they would revert on time estimate, and subsequently on time estimate, suggesting it was “likely that a jurisdictional issue will need to be determined at the CMC” so that a full day listing was appropriate, but also stating that “the defendants’ position on jurisdiction will have been finalised by the time their defences have been filed” and seeking to delay any listing of the CMC, therefore, until then, i.e. until after the defendants had filed their Defences. The claimant’s solicitors replied on 22 January, agreeing to leave the listing of the CMC until after Defences had been filed since they were by then due imminently.

1. 1. I agree with Mr Mill KC that, whatever the defendants’ solicitors had in mind by their reference to a “position on jurisdiction” being “finalised”, no reasonable recipient of the defendants’ correspondence on 18 January might have thought it meant that there might be a challenge to the jurisdiction, since that correspondence confirmed in terms that Defences were going to be filed. Earlier in the CMC correspondence, on 9 January, the defendants’ solicitors had reminded the claimant’s solicitors that the use of the Shorter Trials Scheme had not been agreed, and said that the defendants might yet apply to have the claim transferred out of it and that they, the defendants’ solicitors, felt that the claimant was unilaterally seeking, without due consideration for the defendants’ concerns, to press for “the STS forum“, which is the language of jurisdiction albeit that word was not used. In this correspondence, its subject matter the fixing of a CMC, and a possible challenge to the use of the Shorter Trial Scheme having been flagged, the reference to a “position on jurisdiction” that would be finalised with Defences that were going to be filed and might require a longer CMC hearing following those Defences could only sensibly have referred to that point.

1. 1. Against the background of Acknowledgments of Service stating an intention to defend and not an intention to contest jurisdiction, and the deadline for any challenge to jurisdiction having passed, the defendants thus sought and obtained from the court an extension of time for Defences, a step consistent only with an intention to defend on the merits, and required only if a decision had been made not to challenge jurisdiction, by an Application Notice justifying the application precisely on the basis that indeed the defendants had decided to defend on the merits but needed more time to plead to the merits, and then engaged in correspondence over the listing of a CMC that likewise was consistent only with an intention to defend on the merits, so that a CMC would be needed, getting the claimant’s solicitors to defer going to the Listing Office for a hearing date on the basis that Defences were going to be filed. Although one reference was made to a “position on jurisdiction” still being considered on the defendants’ side, it came late in the sequence and it was explicit that whatever was meant by it was not something that would hold up the filing of Defences. By that application and subsequent correspondence, in my judgment the defendants plainly submitted to the jurisdiction.

Conclusion

1. 1. This application therefore fails, because it is falsely premised on the notion that the claimant’s claim concerning clause 3.1 of the licence agreement is part of the New York claim, and in any event because the defendants submitted to the jurisdiction. On either basis, the claimant is entitled by clause 8.3 of the licence agreement, as the party bringing this claim, to have it determined under English law, exclusively by this court. In those circumstances, there is no arguable basis for a stay of these proceedings in favour of or pending the New York claim.

Relief from Sanctions?

1. 1. It is not necessary therefore to deal with the further issues that would arise over whether a retrospective extension of time should be granted, with relief from sanctions, to enable some arguable challenge to jurisdiction to proceed. There is no arguable challenge to pursue.

1. 1. In very brief summary only, therefore:

i) a 40-day default against the deliberately short timescale for issuing any challenge to the jurisdiction is a significant and substantial default. That it may have had limited impact in the event, because the claimant’s appeal to the judge in charge for an expedited listing of this hearing succeeded, does not detract from that conclusion, although it could be relevant to stage 3 of the Denton analysis;

ii) as to stage 2 of that analysis, the default is in substance unexplained in evidence. The supposed explanation put forward by Mr Evans is, with respect, nothing of the sort. He refers to commonly encountered practical problems that he says arose in this case over his firm getting going fully on it, but none of them explains how it came to be that decisions were made by the defendants (a) to acknowledge service stating that they would defend on the merits, not that they would contest jurisdiction, and then (b) having toyed with the possible thought of challenging jurisdiction nonetheless, to confirm to the court that the defendants would be defending on the merits, seeking and obtaining additional time to do so, all in full knowledge of the New York claim and what it involved, and yet (c) the New York claim and what it involved supposedly meant, this being the premise for the jurisdiction challenge belatedly issued, that the claimant’s claim here should never have been brought. Mr Evans’ evidence effectively proceeds as if what the defendants needed to explain was why an application it was evident was or might be made took until 24 January 2024 finally to put together, when what cried out for explanation was the volte face in the defendants’ attitude towards these proceedings;

iii) at stage 3 of a Denton analysis, then, the defendants’ actions and correspondence evidence that a decision was taken (as it happens, on my analysis of the case, a correct decision) that the claimant’s claim as brought had to be defended here on the merits, the New York claim not providing grounds to avoid doing so, but then, late in the day relative to the extended deadline that on that basis they had obtained to plead Defences, a decision was taken instead to issue this application in an attempt to avoid having to defend on the merits after all. I bear well in mind that thanks to Foxton J’s direction on the papers to give the application an expedited hearing date, it may be that it will now have been dealt with very little, if at all, later than it would have been if it had been issued in mid-December 2023. But I also bear in mind that the claim as brought is within a narrow compass that appears well suited to the Shorter Trials Scheme, and if the defendants were held to the submission arising by operation of CPR rule 11(5), it could satisfactorily be tried promptly under that Scheme whereby efficiently to resolve for the parties that element of their wider dispute, even if (contrary to my conclusion, but this would be the premise on which the Denton analysis would have arisen) it is also raised as an element of the New York claim such that in the absence of earlier determination here it might fall to be resolved later there as part of a trial dealing also with other matters between the parties. On that balance, I would not have said that justice required relief from sanctions to be granted, and I would have refused the application in any event.