There is a considerable amount of interest in the judgment of Master O’Hare in this case. Firstly was service by e-mail good service when a party had not complied with the Practice Direction on service by electric means? Secondly what are the appropriate criteria for setting aside a regular judgment and are these effected by the Mitchell criteria?
During an assessment of costs the claimant obtained a default costs certificate. A costs lawyer had, earlier in the action, served a notice of change, by e-mail, indicating that the cost lawyer’s address was the address for service of the notice of commencement. However the claimant served the notice of commencement at the defendant’s solicitors address (not the cost lawyers) and subsequently entered a default costs certificate.
WAS THE DEFAULT COSTS CERTIFICATE REGULAR? FAILURE TO COMPLY WITH THE PRACTICE DIRECTION ON ELECTRONIC SERVICE
The defendant argued that it had given valid notice of change by email before the bill was served. The claimant had acted irregularly in serving at the solicitor’s address and not the cost lawyers; consequently the default cost certificate was irregular and should be set aside. The claimant’s solicitors stated that they had never received the notice of change, (although they did accept that they had been having difficulties with their email system).
However, the claimant also argued that, service of the notice of change was not valid in any event. Notice of change was given by e-mail and, prior to service and the defendant never complied with Practice Direction 6A and asked whether service by electronic means was agreed.
SERVICE BY EMAIL CONSIDERED
The Master considered the rules relating to service.
“4. The breach of rules the claimant complains of is a breach of the service rule, Rule 6.20. It says that service by email must be in accordance with Practice Direction 6A. Practice Direction 6a, paragraph 4.2, says that a person intending to effect service by email must “first ask the party who is to be served whether there are any limitations to the recipient’s agreement” to accept service by email. It gives examples. Are there limitations as to the format in which documents are to be sent, or are there size limitations? It is accepted by both sides that, in this case, the defendant never asked any such questions of the claimant.
5. The defendant’s riposte to that is that it has regularly served documents on the solicitors acting for this claimant and on solicitors in other cases, and no complaints about noncompliance with PD6A, para 4.2 have ever been raised before. The defendant’s agents (Acumension Ltd) are themselves willing to accept service by email and they have never received phone calls from anybody else of any other contact with anyone else enquiring what size limitations or what other limitations there may be on their agreement to accept such service. Service amongst those who are willing to accept service by email is commonly done these days without any such formality. The defendant says that the real problem here is not that the defendant did not check whether, on this occasion, service of notice of change by email was permissible. The source of the problem here is the problem the claimant’s solicitors were having with their email address.”
THE DECISION: SERVICE BY EMAIL IN THIS CASE WAS VALID
It was held that the service of the notice of change by email was valid, and serving on the previous address for service was an irregularity therefore the cost certificate should be set aside:
“6. It seems to me that the service by email in this case was valid. The reason it had not got to the awareness of the claimant is something outside the defendant’s control and inside the claimant’s control. The fact that a telephone call pursuant to PD 6A, para 4.2 might have had the unintended benefit of notifying the Claimant’s solicitors of a forthcoming change of legal representative is not determinative. I do not think that such a phone call is a pre-requisite to service by email. I think PD 6A, para 4.2 is a recommendation of good practice only and a recommendation which has become a historic interest only. It dated back to a time when the court’s own preferred method of electronic delivery was, I think, WordPerfect, something which, at that time, few solicitors used as they had already moved on to Word. Since then, not only does everyone use Word, but everyone is using broadband also and so size limitations are not now a problem either. If PD 6A, para 4.2 has any continuing practical effect it would merely be to defeat mischief makers who want to send or receive emails on a system which nobody else can read or some similar inconvenience which amounts to an obvious abuse of service by email. That does not make it a pre-condition on everyone that these calls have to be made each time something is served by email”
THE MITCHELL PRINCIPLES WERE NOT APPLICABLE TO APPLICATIONS TO SET JUDGMENT ASIDE
The Judge then went on to consider the Mitchell principles and whether they were applicable to setting a judgment aside.
“10. If I am wrong to say that prior contact pursuant to PD 6A, para 4.2 is not required before using service by email then that would mean the default costs certificate was regularly obtained and I should consider whether I should set it aside or vary it under CPR rule 47.12(2) which states as follows:
…the court may set aside or vary a default costs certificate if it appears to the court that there is some good reason why the detailed assessment proceedings should continue.”
On that, the parties have locked horns as to whether the Mitchell guidance apply to default judgments as it does to applications for relief against sanction of a rule, practice direction, or court order.
11. We have recent case authority on this. In Samara v MBI & Partners, Silber J held that the Mitchell approach did apply and, having applied it, reached his decision on that basis, which was the same decision reached by the court below (a decision made before the Court of Appeal decision in Mitchell was known). Mr Justice Silber, applying the more robust approach of Mitchell upheld the pre-Mitchell decision which was that the default judgement entered in that case should not be set aside. The learned judge stated that he had looked for any express reference as to whether a new doctrine should apply to default judgments as it applies to elsewhere. He could find no specific reference save this: that it was a universal approach that the definition of the overriding objective has changed, which change must permeate through the whole of the CPR. I think he made that decision without spotting the difference in wording which applies in default judgement riles to the wording which applies to CPR rule 3.9,relief against sanctions.
12. The Mitchell doctrine requires us to refuse relief from sanctions unless some good reason for the breach is shown or unless the breach is trivial. The default judgement rules look at something different. Under those rules, the question to be asked, if there has been a failure to lodge an acknowledgement of service, a defence, or, as in this case Points of Dispute, is there a good reason for the case continuing? I think there is a difference in the approach I should take because of that difference in wording. That difference in wording is relevant because a failure to serve a document on time which leads to a default judgement or a default costs certificate ordinarily has no effect on other court users except the parties themselves. Of course, those parties may have a dispute about its consequences and may come to the court to resolve that dispute, as these parties have done in this case. However, the fact that this court is here to resolve disputes between parties is not, by itself, a reason for saying, “ You are in breach. You have caused another court hearing to occur and therefore the court should deal with you robustly”. I do not think that is the approach I should take.
13. It seems to me there is a difference between rule 3.9 and the default judgment rules which have been ruled upon by the Court of Appeal in the well-known case of Henry v News Group Newspapers Limited. One can see that difference in the approach the Court of Appeal took in Henry which concerned Practice Direction 51D under which costs judges conducting detailed assessments in defamation cases in which costs budgets have been approved, were enjoined from departing “from such approved budget unless satisfied that there is a good reason to do so. In Henry the Court of Appeal held that the Senior Costs Judge who heard that case and refused the claimant any forgiveness for exceeding her approved budget, was wrong. What he should have borne in mind was whether they were good reasons for the case continuing. There were in that case, and so there are in this case. In this case there are points of dispute which are in perfectly regular form and they raise substantial points and they are not obviously fanciful or spurious. It would be a heavy penalty upon the Defendant if it were to be forbidden the opportunity to take those points further.
14. There is another analogy I want to draw and that is the harsh approach the court takes in respect of claimants who make mistakes at the outset: mistakes as to service of the claim form. Those claimants are allowed to begin again if limitation periods permit them. If they have left it too late then, of course, that is their problem for leaving it too late. I think similarly with defendants who make mistakes at the start of litigation, they should not find the court taking a harsh attitude to forgiveness of those mistakes. If the court did, the defendant who suffered a default judgement cannot start again in the same way as a claimant who has failed to serve in time can issue a new claim form and resolve his unhappy position with a penalty only in costs. It is for those reasons I think I should apply a different test.”
IF MITCHELL HAD APPLIED
The Judge found that if he had been mistaken, and the Mitchell principles did apply he would have given relief from sanctions in any event:
- In a real sense it was not trivial because service is important and it had led to further expense and a court hearing.
- But in almost any other sense it was insignificant having regard to the current practice in this area of law between parties’ agents.
- The problem was caused by the reception by the claimant, not the problems of transmission by the defendant.
- Therefore it was a trivial breach and relief had been sought promptly.
SUMMARY: IT MAY BE DIFFICULT FOR PARTIES TO “STAND ON THEIR RIGHTS” IN RELATION TO ELECTRONIC SERVICE
This approach to setting aside judgment (which were obiter observations) given that the does not contradict earlier cases on setting aside default judgments.
- It is increasingly difficult for a party to stand on its rights so far as service by electronic means is concerned.
The Master’s observations on setting aside judgment (which were, strictly speaking, obiter observations) given that the does not contradict earlier cases on setting aside default judgments.
- There remains a debate about the criteria for setting aside a regular judgment.
- There is, however, no indication that the Mitchell criteria apply to the first issue to be considered on an application – whether or not the applicant has a “reasonable prospect of success”
- The court then considers whether the application has been made promptly. It may well be that the Mitchell criteria are relevant at this stage.
- In this case the application had been made promptly.