SERVICE OF THE CLAIM FORM; RELIEF FROM SANCTIONS AND CHALLENGING THE JURISDICTION: A COMPLEX MIX?

The decision of Judge Hacon in Cant -v- Hertz Corporation [2015] EWHC 2617 (Ch) raises some interesting issues.  However, equally interesting, are the issues that were not addressed. In particular the issues relating to the applicability of CPR Part 11 in relation to alleged mis-service of the claim form.

THE CASE

The claimant amended a claim form to deleting a claim against two of the defendants. This claim form was then served. The defendant that was served then applied to strike out the action on several grounds, including a ground that the claim form had not been validly served.

KEY POINTS

  • It remains an open issue whether an amended claim form needs to be resealed before service on the defendant.
  • The court exercised its discretion to grant relief from sanctions after a claimant had served a claim form that had been amended but not re-sealed.
  • The court did not, however, consider issues of jurisdiction. If it had, and had the appropriate applications been made, the outcome may have different.
  • CPR Part 11 applies to applications to dispute service of the claim form.
  • A failure to make an application within Part 11 within the appropriate time leads the the defendant being deemed to accept jurisdiction.

THE DEFENDANT’S ARGUMENT IN RELATION TO THE CLAIM FORM

The defendant argued that the the claim form had to be sealed, relying on Hill Contracts -v- Struth [2013] EWHC 1693 (TCC). The amended claim form had not been sealed and, therefore, service was invalid.

THE ARGUMENTS IN RELATION TO SERVICE OF AN AMENDED CLAIM FORM

The judge found that:

  • There did not appear to be any rule in the Civil Procedure Rules which requires a claimant who amends his claim form to serve on the defendant a resealed version of the claim form.
  • In the current case the claim form the claimant relied upon for service was not an amended version of a claim form that had already been served.  The amended claim form had not been sealed by the court.
  • It was “at least arguable” that for good service to take place the claim form served must be the sealed version of the amended form.

RELIEF FROM SANCTIONS

The claimant argued that the court should rectify the error under CPR 3.10 and the issue of relief from sanctions did not arise. Alternatively service of the claim form should be dispensed with under CPR 6.16.

THE JUDGE’S DECISION: RELIEF FROM SANCTION GRANTED APPLYING 3.9 CRITERIA

The judge held that it would be inappropriate to apply these remedies if the court felt that it would not be appropriate to grant relief from sanctions for a failure to serve a claim form within the time required.

  • The breach was neither serious or significant.
  • The default occurred because the claimant’s solicitors did not believe there was a breach. The judge was not convicted they were wrong, but if they were then it is what not a fault for which they could be seriously criticised.
  • The breach made no effective difference at all to the conduct of the litigation.

The judge granted the claimant relief from sanctions and declared the claim form served.

THE JURISDICTION ISSUE

The judgment did not, however, address issues of jurisdiction and service of the claim form.

“Finally, by way of alternative relief, it is said by the claimant that in fact, Hertz UK submitted to the jurisdiction by serving an acknowledgment of service. In the application today, I have not had the opportunity, exhaustively or at all, to review what authorities there may be in the event that there is a failure by a claimant to effect good service under the rules yet, a defendant, misguidedly or otherwise, acknowledges good service. I take that no further”

THE ELEPHANT IN THE ROOM? HODDINOTT -V- PERSIMMON HOLDINGS

The reality is that the claimant’s submissions on jurisdiction were wrong. The defendant did not accept jurisdiction when it filed an acknowledgment of service. However it did accept jurisdiction when it failed to make an application under CPR 11 within 14 days of acknowledgment of service. In Hoddinott -v- Persimmon Homes (Wessex) Ltd [2007] EWCA Civ 1203 the Court of Appeal held that a defendant that wished to take a point as to service had to make an application under CPR 11.

“Is CPR 11 engaged?
  1. Mr Exall submits that CPR 11 has no relevance in the present context. He says that no issue of “jurisdiction” arises here. He argues that the claimants are in difficulty not because the court does not have jurisdiction to determine the claim, but because they have failed to comply with the rules of court as to service. A defendant who seeks to set aside an order made without notice or to argue that the claim form was served out of time is not challenging the court’s jurisdiction, but is merely applying the procedural rules. The court does have jurisdiction to deal with a claim even where the claim form is served out of time. For example, it has jurisdiction retrospectively to extend the time for service under CPR 7.6(3) and to make an order dispensing with service under CPR 6.9. Finally, Mr Exall draws attention to the definition of “jurisdiction” in CPR 2.3: it means “unless the context requires otherwise, England and Wales and any part of the territorial waters of the United Kingdom adjoining England and Wales”.
  2. In our judgment, CPR 11 is engaged in the present context. The definition of “jurisdiction” is not exhaustive. The word “jurisdiction” is used in two different senses in the CPR. One meaning is territorial jurisdiction. This is the sense in which the word is used in the definition in CPR 2.3 and in the provisions which govern service of the claim form out of the jurisdiction: see CPR 6.20 et seq.
  3. But in CPR 11(1) the word does not denote territorial jurisdiction. Here it is a reference to the court’s power or authority to try a claim. There may be a number of reasons why it is said that a court has no jurisdiction to try a claim (CPR 11(1)(a)) or that the court should not exercise its jurisdiction to try a claim (CPR 11(1)(b)). Even if Mr Exall is right in submitting that the court has jurisdiction to try a claim where the claim form has not been served in time, it is undoubtedly open to a defendant to argue that the court should not exercise its jurisdiction to do so in such circumstances. In our judgment, CPR 11(1)(b) is engaged in such a case. It is no answer to say that service of a claim form out of time does not of itself deprive the court of its jurisdiction, and that it is no more than a breach of a rule of procedure, namely CPR 7.5(2). It is the breach of this rule which provides the basis for the argument by the defendant that the court should not exercise its jurisdiction to try the claim.
  4. We would, therefore, hold that CPR 11 is engaged in the present context. This accords with what was said by Tugendhat J in Mason v First Leisure Corporation Plc [2003] EWHC 1814 (QB) para 11, HH Judge Havelock-Allan QC in The Burns-Anderson Independent Network Plc v Wheeler,(Bristol District Registry Mercantile List, unreported 28 January 2005) para 45 and Uphill v BRB (Residuary) Ltd [2005] EWCA Civ 60, [2005] 1 WLR 2070 para 34 (although in this last case, it was common ground that CPR 11 was engaged).”

CPR PART 11: DISPUTE JURISDICTION OR YOU ARE DEEMED TO HAVE ACCEPTED IT

CPR Part 11.

“(1) A defendant who wishes to –
(a) dispute the court’s jurisdiction to try the claim; or
(b) argue that the court should not exercise its jurisdiction
may apply to the court for an order declaring that it has no such jurisdiction or should not exercise any jurisdiction which it may have.
(2) A defendant who wishes to make such an application must first file an acknowledgment of service in accordance with Part 10.
(3) A defendant who files an acknowledgment of service does not, by doing so, lose any right that he may have to dispute the court’s jurisdiction.
(4) An application under this rule must –
(a) be made within 14 days after filing an acknowledgment of service; and
(b) be supported by evidence.
(5) If the defendant –
(a) files an acknowledgment of service; and
(b) does not make such an application within the period specified in paragraph (4),
he is to be treated as having accepted that the court has jurisdiction to try the claim.”

LOOKING AT THE CANT  -v- HERTZ CASE ON THE ISSUE OF JURISDICTION

Putting aside the question of whether an amended claim form needed to be resealed (which remains an open issue which claimants must be wary about).

  • There is no indication that the defendant made an application under CPR 11. Indeed the report states  that the defendant sought a “declaration that the claim form has not been validly served and for an order striking out the claimant’s claim on alternative grounds. These are that is no reasonable basis for bringing the claim or, alternatively, that the claim is an abuse of process”
  • The claimant was wrong to argue that acknowledgment of service led to acceptance of the jurisdiction (in fact the rules say exactly the opposite) .
  • The claimant did have a strong argument that, by failing to make an application under Part 11, the defendant had accepted the jurisdiction. Indeed the fact that the defendant made applications which were not under Part 11 indicated that they had accepted jurisdiction. The defendant was arguing that a valid claim form had not been served. The claim form, therefore, had not been served in time.
  • If the Defendant had made an application under Part 11 and the court held that the claim form had not been validly served (an outcome which is far from certain) then the claimant would have faced some considerable difficulty.
  • If the court finds it has no jurisdiction then it cannot begin to consider its powers under other parts of the CPR. The court simply has no jurisdiction.
  • However if the defendant has not made an application under Part 11 then it is deemed to have accepted the court has jurisdiction. The issues over invalid service may simply fall away. The defendant has accepted jurisdiction and the Court of Appeal has clearly held that “CPR Part 11 is engaged in the current context.”

It may be possible to construct an argument that Hoddinott only applies to late service of the claim form and not mis-service of the claim form.  However the judgment on this issue, which is set out above, is couched in very wide terms. CPR Part 11 is engaged.  It is a point both claimants and defendants need to be wary of.

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