A DEFENDANT IS ENTITLED TO SEEK TO AVOID SERVICE OF PROCEEDINGS: IT WON’T WIN YOU ANY HONOURS BUT IT IS NOT WRONG…

In Broom v Aguilar [2024] EWHC 1961 (Ch) HHJ Paul Matthews rejected an argument that a different costs order should be made because the defendant did not co-operate in relation to service of proceedings upon her.   Seeking to avoid service meant a party was unlikely to be recommended for an honour for civil solidarity, but it was not wrong.

“… the mere fact that a named defendant to originating process does not proffer herself to be served does not mean she is guilty of poor conduct potentially resulting in an adverse costs order. As I understand the law, no potential defendant within the jurisdiction has a duty to volunteer to be served, or to instruct solicitors to accept service. (The position of a potential defendant outside the jurisdiction is obviously even stronger.) Every potential defendant is entitled, within the law, to prefer his or her own interests to those of the claimant…Seeking to avoid service of proceedings in the first place is not conduct in relation to any proceedings that are eventually served. Of course, if you seek to avoid service, you are unlikely to be recommended for an honour for civic solidarity, but it is not wrong.”

WEBINAR ON SERVICE AND CLAIM FORM ISSUES IN 2024: 19th NOVEMBER 2024

There is a webinar on the 19th November  2024 reviewing the cases in 2024. Booking details are available here.

This webinar looks at claim form cases in 2024 including:

• Service by the wrong method
• Disputing jurisdiction
• Problems with serving abroad
• Claim failed when the claimant believed claim form would be served by the Court
• When the defendant fails to use the correct rule to dispute jurisdiction
• When can a claim form include multiple parties

THE CASE

The appellant defendant succeeded on appeal in setting aside a judgment against her.  The appeal succeeded because the judge found that she had not been properly served.  An order permitting an alternative method of service was made when she was living abroad and the court had no jurisdiction to make that order, the case was discussed in detail here. 

THE ISSUE BEING CONSIDERED

The unsuccessful respondent argued that it should not be liable to pay costs, or costs should be reduced.  One of the grounds being argued was that the appellant/defendant had avoided/not co-operated in relation to issues of service of proceedings.  The judge rejected that argument.

THE ARGUMENT AS TO SERVICE

Costs liability

The general rule

1. 1. I turn therefore to the question of costs liability. The rules on costs are well known. Under the general law, costs are in the discretion of the court: Senior Courts Act 1981, section 51(1); CPR rule 44.2(1). If the court decides to make an order about costs, the general rule is that the unsuccessful party in the proceedings pays the costs of the successful party: CPR rule 44.2(2)(a). However, the court may make a different order: CPR rule 44.2(2)(b). In deciding whether to make an order, and if so what, the court will have regard to all the circumstances, including “the conduct of all the parties” and any admissible offer to settle the case (not falling under CPR Part 36) which is drawn to the court’s attention: CPR rule 44.2(4).

1. 1. In my judgment, first of all, here the court should make a costs order. This was hard fought litigation, and cost a lot of money, in pursuance of a decision as to whether an order for the appellant to pay a significant sum should stand. So I need to consider which party, for the purposes of the “general rule”, was the successful party overall. In my judgment, this was the appellant, even if she did not succeed on all the grounds she put forward. The main victory was the decision, under ground 1, that the court had no jurisdiction over her. The other matters were comparative sideshows. So in principle I should make a costs order in favour of the appellant. The question is whether I should make a different order, and, if so, what.

A different order?

1. 1. The respondent says that I should make a different order, and points to various matters that I should take into account. The first is that the appellant’s conduct in the litigation was criticised by DJ Taylor. She was found by him to have sought to evade service, and some of the evidence given on her behalf (including by her) was rejected by the judge. By contrast, the respondent’s conduct was not criticised. Indeed, he brought these proceedings as “an officer of the court discharging a statutory function” and “is not an ordinary litigant”. The second matter was that she did not get permission to appeal on all six grounds advanced, but only five. And, of the five, she clearly lost on two of them, and on a third she did not do well enough to win the appeal by itself. A third matter was that she took points before the district judge on which she lost but did not appeal.

The appellant’s conduct

1. 1. I do not consider that any of these points makes a difference to the operation of the general costs rule. As to the first point, it has long been the case that a person does not become a party to proceedings until he or she is served with originating process. Thus, in Re Evans [1893] 1 Ch 252, 264, Lindley LJ said:

“The Defendant has not appeared, and it has been contended that he therefore is not a party to the action; but I think that he became such when he was served.”

1. 1. Moreover, as Bingham LJ (with whom Ralph Gibson LJ and Sir Stephen Brown P agreed) said in Dresser UK Ltd v Falcongate Freight Management Ltd [1991] 1 QB 502, 519H, a case under the former RSC,

“It is service of proceedings, not issue, which ordinarily activates the litigious process and imposes procedural obligations on the parties.”

Later in the same case, at 523C-D, he said that, before service:

“(5) the defendant is not obliged to respond to the plaintiff’s claim in any way, and … (7) the defendant has not become subject to the jurisdiction of the court.”

1. 1. The same thing was said more recently in different words by Lord Sumption (with whom Lords Wilson and Carnwath agreed) in Barton v Wright Hassall LLP [2018] 1 WLR 1119, a case under the CPR, when he said:

“8. … Although the court may dispense with service altogether or make interlocutory orders before it has happened if necessary, as a general rule service of originating process is the act by which the defendant is subjected to the court’s jurisdiction.”

That dictum was unanimously approved by the Supreme Court in the later case of Cameron v Liverpool Victoria Insurance Co Ltd [2019] 1 WLR 1471, [14].

1. 1. Accordingly, the mere fact that a named defendant to originating process does not proffer herself to be served does not mean she is guilty of poor conduct potentially resulting in an adverse costs order. As I understand the law, no potential defendant within the jurisdiction has a duty to volunteer to be served, or to instruct solicitors to accept service. (The position of a potential defendant outside the jurisdiction is obviously even stronger.) Every potential defendant is entitled, within the law, to prefer his or her own interests to those of the claimant. To put the matter another way, the “conduct” to be taken into account in rule 44.2(4), (5) is conduct in relation to the proceedings, whether before or during them. Seeking to avoid service of proceedings in the first place is not conduct in relation to any proceedings that are eventually served. Of course, if you seek to avoid service, you are unlikely to be recommended for an honour for civic solidarity, but it is not wrong.

1. 1. I accept, of course, that there are pre-action protocols which amount to codes of best pre-action practice in relation to certain types of litigation. But they do not impose legally enforceable duties on potential defendants. At most a failure to follow a protocol may be taken into account by the court in giving directions (CPR rule 3.1(4)) or ordering money to be paid into court (CPR rule 3.1(5)) and in deciding what order to make, if any, about costs (CPR rule 44.2(5)), in subsequent proceedings. However, I am not aware of any pre-action protocol (or, for that matter, in the Practice Direction for such protocols) which requires a potential defendant to volunteer to be served, or to instruct solicitors to accept service. In any event, there is no pre-action protocol applicable to insolvency proceedings. So the general principle applies intact to the present case.

1. 1. Moreover, the mere fact that some or even all of a party’s factual evidence is rejected by the judge does not mean that the party’s conduct of the proceedings is reprehensible for costs purposes. The court must find the facts necessary for its decision. A party’s evidence is that of the witness or witnesses that the party calls. Again, unless it is carried out in pursuance of a scheme deliberately to mislead the court, it is not the conduct of the proceedings themselves: cf Deutsche Bank AG v Sebastian Holdings Inc [2016] 4 WLR 171, [42]-[45], CA. And in any event the evidence may be rejected for reasons other than deliberate attempts to mislead. Here the judge did not find any such attempt to mislead.