SERVICE OF THE CLAIM FORM: E-MAILING A COPY IS NOT GOOD SERVICE (AND WON’T BE EXCUSED)

Service of the claim form raises its head for the second time in two days. In Dunbar Assets Plc -v- BCP Premier Limited [2014] EWHC 10 (Ch) Mr John Baldwin QC (sitting as a Deputy Judge) overturned an order that service of a claim form by e-mail was good service.

(A CAVEAT ON THE POST YESTERDAY)

For the sake of completeness I should point readers to the important caveat I have put on the post yesterday concerning service in Scotland. There may be an error in the initial place of service.

THE FACTS OF THE DUNBAR ASSETS CASE

The claimant issued a claim form on the 18th December 2013. On the 3rd March 2014 the claimant sent to the Defendant, by fax a copy of the sealed claim form and a notice of issue together with a request for certain documents.

  • The defendant then asked for the Particulars of Claim on the basis that the claim form had been served.
  • The claimant’s response was that the claim form was sent by fax for information purposes only and was not served.
  • The claimant then asked for an extension of time for service of the particulars of claim.
  • The defendant granted the extension of time for service of the particulars and agreed that the claim form had not been served.
  • A request for an extension of time for service of the claim form was declined by the defendant.
  • Instead of serving the claim form the claimant’s solicitor sent a copy by email to the defendant’s solicitors (who had stated they would accept service). A copy of the claim form was sent by DX to arrive the following day.

THE APPLICATION TO EXTEND TIME

  • On the 25th April 2014 the claimant made an application for an extension of time to serve the claim form and/or an application for relief from sanctions.
  • The matter came before a Deputy Master who granted an order under CPR 6.15.

KEY POINTS OF THE DUNBAR ASSETS DECISION

  • The judge overturned the decision of the Master under CPR 6.15 allowing service of the claim form by e-mail to constitute good service.
  • An order under CPR 6.15 required a “good explanation”.
  • There was no “good explanation”, indeed no application at all.
  • A party seeking indulgence from the court must put an explanation for the default before the court.
  • The absence of prejudice to the defendant was not decisive.
  • The defendant would suffer substantial prejudice in losing a limitation defence.  This was a significant factor in the exercise of the court’s discretion even if there had been a “good reason”.

CPR 6.15

Service of the claim form by an alternative method or at an alternative place

6.15

(1) Where it appears to the court that there is a good reason to authorise service by a method or at a place not otherwise permitted by this Part, the court may make an order permitting service by an alternative method or at an alternative place.

(2) On an application under this rule, the court may order that steps already taken to bring the claim form to the attention of the defendant by an alternative method or at an alternative place is good service.

(3) An application for an order under this rule –

(a) must be supported by evidence; and

(b) may be made without notice.

(4) An order under this rule must specify –

(a) the method or place of service;

(b) the date on which the claim form is deemed served; and

(c) the period for –

(i) filing an acknowledgment of service;

(ii) filing an admission; or

(iii) filing a defence.

THE JUDGE’S DECISION:ORDER UNDER CPR 6.15 SET ASIDE

An order permitting service will only succeed if:

  • If there is a good reason.
  • The court decides to exercise its discretion to permit such alternative service.

The judge considered the decision in Brown -v- Innovatorone plc [2009] EWHC 1376 where it was held that.

1. The fact that the CPR states that there must be a good reason emphasises that the power should not be exercised over-readily.

2. It is necessary in the interest of justice that a party should be allowed to depart from the rules about service only when there is a sufficiently compelling case to do so.

3. The court should adopt a rigorous approach to an application for indulgence and examine why it is being asked to make an order.

4. The mere absence of prejudice to a defendant is not, in itself, sufficient reason to make an order.

5. Exceptional circumstances were not required but there must be a good reason.

6. The expression “good reason” is a general one.

NO REAL EXPLANATION FOR THE DEFAULT

The judge held that the Deputy Master had fallen into error in that he failed properly to take into account or examine why it was he was being asked to make the order.

  • Had he done so he would have appreciated that the Claimant had provided no explanation whatsoever for not serving the Claim Form properly in accordance with the rules.
  • The court declined to draw an inference that this was a simple mistake. In a case where a party seeks an indulgence from the court an explanation should be provided.
  • The Deputy Master erred in finding there was no reason for the claim form to be served. Service was needed to begin the formal process of litigation.
  • The Master erred in finding that there was no prejudice to the defendant. The defendant lost a potential limitation defence.
  • There was no good reason why an order under 6.15 should be made. The defendant was expecting proper service on the 3rd April. The court giving retrospective approval to improper service did not constitute a good reason.

DISCRETION

The judge held that even if he had found a good reason he would not have exercised his discretion in favour of the claimant.

  • There was no explanation at all for the failure to serve with the rules. A litigant seeking indulgence of the court should give a candid explanation of the reason for the default.
  • It was insufficient to state “I have not done what I should have done, please put it right”, an explanation must be given.
  • It is only after an explanation is given that the court has material to enable it to form a view as to how the discretion should be exercised.
  • Secondly there was prejudice to the defendant in depriving it of a limitation defence.  The claimant asserted that it would be deprived of huge sums of money if the order were not made.  This indicated that the defendant would suffer real prejudice if the order was made.

THE DANGERS OF HOLDING ONTO A CLAIM FORM

The judge referred expressly to the judgment of the Court of Appeal in Kuenyehia -v- International Hospitals [2006] EWCA Civ 21, where Neuberger LJ   considered an application under CPR 6.16 (applications to dispense with service). he stated.

  1. Nor are we impressed with the fact that the claim form, or at least a faxed copy of the claim form, was received by the defendant within the four month period. That cannot make this an exceptional case. Otherwise, the facts of all the cases considered by this court in the five decisions discussed above would have been exceptional, and the claimants would have succeeded in each of the cases, and without difficulty (not least because they were all “pre-Anderton” cases). The fact that the offices in question contained the defendant’s legal department makes no difference.
  2. Despite Mr Birts’s contention to the contrary, we do not consider that the claimants can rely on the absence of prejudice to the defendant as a reason for letting the Judge’s decision stand. In our view, for the reasons given in Vinos’s, Godwin’s and Anderton’s cases, the time limits in the CPR, especially with regard to service of the claim form where the limitation period may have expired, are to be strictly observed, and extensions and other dispensations are to be sparingly accorded, especially when applied for after time has expired. While there may be exceptional cases, we consider that prejudice is only relevant in this sort of case to assist a defendant, where the court would otherwise think it right to dispense with service. In other words, prejudice to the defendant is a reason for not dispensing with service, but the absence of prejudice cannot usually, if ever, be a reason for dispensing with service.
  3. Mr Birts alternatively contended that, contrary to the conclusion of the Judge, the service of the claim form on the defendant’s solicitors could and should be treated as effective service sufficient to justify the court dispensing with service. On this issue, we agree with Crane J. We think he was right to conclude that the defendant’s solicitors could not be treated as being blameworthy or acting contrary to the spirit of the CPR, as the Master thought. Realistically, Mr Birts did not press the contrary view.
  4. Service on the defendant’s solicitors was ineffective under the CPR, and it cannot be said to have been a “minor departure” from the permitted methods of service to serve on solicitors who had not been nominated by the defendant. In any event, for the reasons already given, this would not have been an exceptional case. Quite apart from any other point, it can fairly be said that it would have been only too easy for the claimants’ solicitors to ask the defendant, with whom they had been in fairly close contact, to nominate its solicitors’ address as its address for service in accordance with r 6.5(2), but they never did so.
  5. In summary, this is a case of a claimant’s solicitor who waited until the very last day to serve a claim form, and then, despite knowing the address of the defendant’s offices and being able to effect service in accordance with a method permitted by r 6.2, failed to do so, and, after the time for service had expired sought the assistance of the court under its power to dispense with service. The court should not accord such relief, where there is nothing exceptional about the facts, and it is not even a case where there can be said to have been no more than a minor departure from a permitted method of service or that there was an ineffective attempt to serve by a permitted method within the time limit.

The judge held that these passages were as applicable to applications under CPR 6.15 and CPR 6.16.

PROBLEMS WITH SERVICE

This case highlights the very real dangers of holding onto a claim form and not having total certainty as to the correct place, time and method of service.

OTHER POSTS ON SERVICE OF THE CLAIM FORM

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