DEFENDANT’S APPLICATION FOR RELIEF FROM SANCTIONS REFUSED: AN APPLICATION TO DISPUTE JURISDICTION SHOULD BE DONE PROMPTLY

In Ibrahim v AXA Belgium [2024] EWHC 856 (KB) Master Fontaine refused the defendant’s application for an extension of time to dispute the jurisdiction.  The defendant should have applied within 14 days of acknowledging service, it took 30.  The defendant’s application was subject to the Denton test, and it failed on several of the relevant criteria.

“In these circumstances, even if the breach was not significant in that it has not caused any significant prejudice to the Claimant’s progression of the litigation, I consider that because of the lack of any good reason for the breach and the circumstances in which the breach came about, relief from sanction should not be granted, and an extension of time for making the stay application will not therefore be granted.”

THE CASE

The claimant was injured in a road traffic accident in Belgium.  He issued proceedings in England. The Defendant filed an acknowledgement of service and a defence.  The defendant made an application to challenge jurisdiction some 30 days after filing the acknowledgement of service.  CPR 11 requires such an application to be made within 14 days of acknowledgement. The defendant required relief from sanctions in order to be able to take the point.

THE JUDGMENT ON RELIEF FROM SANCTIONS

Master Fontaine refused the defendant’s application.  The breach was serious and significant, there was no good reason for the breach and all the circumstances of the case militated against granting the defendant relief. The Master also found that he would not have granted the application in any event – on forum non conveniens grounds).

1. 1. “The Defendant seeks a declaration that this court should not exercise jurisdiction over the claim on forum non conveniens grounds, and a stay of proceedings. CPR 11.1(4) applies to the application to challenge jurisdiction on forum non conveniens grounds, so the application must be made within 14 days of filing the acknowledgement of service. The application was made 30 days after filing the acknowledgement of service. The Defendant acknowledges that as it has not complied with the time limits for making an application under CPR 11 and it seeks an extension of time for making such an application. It is common ground that the same considerations apply to the application for an extension as those that apply to applications for relief from sanction under CPR 3.9, namely the guidance given by the Court of Appeal in Denton v T. H. White Limited [2014] EWCA Civ 906.

1. 1. The witness statement of Kim Bracewell deals with this application at ??4-11. The response of the Claimant to this evidence is at ??41-49 of Rigby 1. I will address the evidence and submissions in relation to each of the three strands of the guidance in Denton in order to determine whether the application should be granted.

1. 1. Ms Bracewell realistically accepts that the default is a significant one. Mr Doherty, Counsel for the Defendant, accepted that submitting that a delay of 30 days was capable of being a serious and significant default, but points to approaches taken in authorities to suggest that such a delay may not necessarily constitute a serious and significant default. In Le Gueval-Mouly v AIG Europe Ltd [2016] EWHC 328 (Comm) Hickinbottom J. held that a 22 day delay was not serious or significant at [36] – [37], stating that the question depended upon the context and the facts of the specific case. The Defendant points out that, similarly to the reasons relied upon in Le Gueval-Mouly, the progress of this litigation has not been affected by the 30 day delay.

1. 1. The Claimant originally relied upon a 114 day delay, clearly much more significant, from the date when the proceedings were originally served, 18 October 2023, following an agreement by Mr Murray of Clyde & Co, solicitors for the Defendant, to accept service by email. However, it became apparent that although Mr Murray had agreed in a telephone call with Mr Rigby to accept service at his personal email address, he had not done so in writing, and the wording on the end of the Clyde & Co email states that service by email, when agreed, must be at a particular dedicated email address, and that was not done in relation to the proceedings sent by email on 18 October 2023. Accordingly, applying CPR 6.3 (1)(d) and PD6A 4.1 (1) the purported service on 18 October 2023 was not good service. Ms Prager KC for the Claimant sensibly conceded this point when she became aware of it. Further there was an agreement by the Claimant to an extension of time for filing an acknowledgement of service and defence following the subsequent service on 10 January 2024, so the earlier period of delay from 18 October 2023 was effectively subject to that agreement.

1. 1. The Defendant also relies on the jurisprudence supporting the fact that an application for a stay on jurisdictional grounds can be made at any time in the proceedings, by contrast to an application seeking an order that the court has no jurisdiction. Here the Defendant accepts that the English court has jurisdiction over the claim, but seeks a stay on forum non conveniens ground, namely that there is another more appropriate jurisdiction for the claim. The distinction between an application making a challenge to the jurisdiction of this court and one seeking a stay on jurisdictional grounds was highlighted by the Privy Council in Texan Management v Limited v Pacific Electric Wire & Cable Company Limited [2009] UKPC 46.at [59] – [62] and [68]. At [70] – [71] Lord Collins said:

“70. But these provisions do not sit easily with applications for stays. For example, circumstances may change and a defendant may wish to apply for a stay well after the proceedings have commenced on the ground that the claimant has subsequently commenced proceedings in another jurisdiction for the same or similar relief, or the claimant may wish to apply for a stay of proceedings on grounds unconnected with the international character of the proceedings,…

71. In such cases the defendant will not have been in a position to apply for a stay at the outset of proceedings….”

And at [73]:

“The overall effect is this. A defendant served within the jurisdiction who has reasons for applying for a stay on forum non conveniens grounds at that time should normally make the application under…. CPR Part 11……The court has a power to extend the time for compliance with any rule.. even if the application for extension of time is made after the time for compliance has passed: …. CPR r.26.1(2)(k)……”

1. 1. However the Defendant accepts that CPR 11.1(4) applies to the time limit within such application must be made. In any event, as Ms Prager KC pointed out, in this case there had been no change of circumstances such as those envisaged in Texan Management at [70] above, and the Defendant was in a position to apply for a stay at the outset of proceedings. The Defendant relies on the fact that the Defendant was unaware of the English proceedings as a change of circumstances, but in my view it is unlikely that the Privy Council in Texan Management envisaged that a defendant’s own mistake or inefficiency would constitute a change in circumstances, particularly where the Defendant’s agent, AXA UK, was well aware of the English proceedings and had instructed English solicitors to act on behalf of the Defendant.

1. 1. My view is that that such a failure to abide with the strict time limit imposed by Part 11, relating to such an important issue as the jurisdiction of this court, is a serious or significant breach. A challenge to the jurisdiction of the court by a defendant, whether on substantive grounds or forum non conveniens grounds, would have serious consequences for a claimant if it succeeded. It would force a claimant in this jurisdiction to discard their claim, and potentially incur irrecoverable costs. They would have to pursue their claim in a jurisdiction which is likely to be unfamiliar to them and where the language may not be one they know. Although it is correct that the delay of 30 days did not overly prejudice the Claimant, who has been able to respond fully to the application, that is not a complete answer to the breach, as otherwise breaches of the time limit in Part 11 would be easily excused, which is not the intention, in my view, given the limited 14 day time limit. In this case the Defendant’s solicitors are a large city firm with an international practice. They had been instructed in the claim since 16 August 2023 and had agreed to accept service on 10 October 2023, and been aware that service would be made by email since 18 October 2023. In the event valid service was made on 10 January 2024, and an extension of time granted by the Claimant for filing and service of acknowledgement of service and defence, so they had ample notice. Those circumstances suggest that the breach was serious and significant. However, even if I am wrong in coming to that conclusion it is appropriate to consider the other stages of Denton.

1. 1. It is also accepted by the Defendant that there is no good reason for the breach. The explanation is that there was a misunderstanding or breakdown in communications between AXA UK, through whom Clyde & Co receive their instructions, and the Defendant AXA Belgium. No details are provided in the evidence as to how such a fundamental misunderstanding could have arisen, how the Defendant could have failed to alert their own solicitors in these proceedings that it had instigated proceedings in respect of the same accident in Belgium, or been unaware that proceedings had been brought in England. In the absence of any fuller explanation I do not conclude that there was a good reason for the failure.

1. 1. With regard to the third strand of the Denton guidance, all the circumstances, in my judgment the following circumstances are relevant:

(i) A defence has been filed, though that is a relatively neutral factor, in my view. There is no issue as to submission to the jurisdiction, as the fact that the English court has jurisdiction over the claim is not challenged, only whether it is the most appropriate forum for the proceedings.

(ii) The failure to notify the Claimant in advance of the intention to institute proceedings in Belgium when the Defendant had been corresponding with the Claimant or his English solicitors since March 2019, and when it should have been aware from August 2023 that proceedings had been commenced in England, when it had instructed English solicitors in that claim, had given no instructions to those solicitors to challenge jurisdiction or apply for a stay, and waited until January 2024 to bring proceedings in Belgium. The Defendant was also aware that the Claimant had undergone examination by English medical experts and had produced reports for the purpose of the proceedings, and had incurred costs in so doing.

(iii) The failure to notify Clyde & Co of the institution of proceedings in Belgium, as referred to above.

(iv) The lack of a proper explanation to this court as to how this situation has arisen. I note that Ms Bracewell says at ?9 c. i.: “The selection of the appropriate forum for the trial of the case is an important matter.” and refers to Mr Willems’ statement where he “sets out the importance Belgian law attaches to the exclusive jurisdiction of courts specified by Belgian law.” If that is the case it seems remarkable that no thought was apparently given to this during the period when the Defendant first corresponded with the Claimant in March 2019 until shortly before proceedings in Belgium were issued in January 2024.

(v) The fact that there are proceedings in the Police Court in Belgium, a specialist court dealing with road traffic accidents, and the other factors concerning the appropriate jurisdiction (which I consider below in relation to the Defendant’s application for a stay). It was submitted by the Defendant that this court should not shut out a foreign defendant from making an application to allow this court to consider which is the more appropriate jurisdiction. But the Defendant is shut out only by reason of its own conduct. It had the same opportunity as any other foreign defendant to make an application, and it had the advantage of having English solicitors already instructed and dealing with the English proceedings, so I cannot conclude that this is a factor which assists the Defendant.

1. In these circumstances, even if the breach was not significant in that it has not caused any significant prejudice to the Claimant’s progression of the litigation, I consider that because of the lack of any good reason for the breach and the circumstances in which the breach came about, relief from sanction should not be granted, and an extension of time for making the stay application will not therefore be granted.”