Dangers of Ineffective Service – Claim Form Guidance

Introduction

A recurring theme in procedural judgments is the serious consequences of failures in respect of service of the claim form. In a recent case (Ideal Shopping Direct Ltd & Ors v Visa Europe Ltd & Ors [2020] EWHC 3399 (Ch)) Mr Justice Morgan denied the claimants’ various applications for relief and held that their service of unsealed amended claim forms (where the original sealed claim forms were provided to the defendants ‘for information and not by way of service’) was invalid – thus impacting some parts of their claims which will now fall foul of limitation.

This raises a further question to which we were alerted in practice recently: What is the correct approach when service has failed and a defendant wishes to ‘take’ this point?

Contrary to some degree of popular opinion, the correct route is via CPR Part 11 (rather than a strike out application under CPR 3.4/PD3A). The court has been generous to defendants in this regard, having previously rectified various failings in their approach (Caine v Advertiser And Times Ltd & Anor [2019] EWHC 39 (QB)).

Nevertheless, it is useful to be aware that the correct and safest procedure for defendants is to:

1. Challenge jurisdiction within the acknowledgement of service; and
2. Make an application (with evidence) within 14 days of filing the acknowledgment of service, for an order declaring that the court has no jurisdiction and/or should not exercise any discretion which it may have.

In the event of default of the above, the fact that jurisdiction is in issue should be made clear to the claimant at the earliest possible opportunity, then an application for relief from sanctions must be made for an extension of time to challenge jurisdiction.

For claimants, it can hardly be simpler (as the court is continually at pains to point out): Stop leaving service of the claim till the last minute, and make sure you are very clear on the rules when you do.

For those interested in the detail of Mr Justice Morgan’s judgment including the (lack of) application of CPR r6.15, r6.16 and r3.10, please read on.

Ideal Shopping Direct Ltd & Ors v Visa Europe Ltd & Ors – Case profile

Brief background facts

A total of 16 claims were involved in this litigation. The claimants prepared and issued (sealed) claim forms which were sent in copy to the defendants ‘for information and not by way of service’. It was agreed by all parties that extensions of time would be needed, the latest of which ran to 17^th July 2020. Judgment in an importantly related Supreme Court case (Sainsbury’s Supermarkets Ltd v Visa Europe Services LLC [2020] UKSC 24) was given on 17^th June 2020.

Following the Supreme Court’s judgment, the claimants’ solicitors had prepared particulars of claim and, most importantly, amended claim forms in light of the Supreme Court decision. The relevant partner at the claimants’ solicitor’s firm candidly accepted that the tasks to be completed in advance of the 17^th July 2020 were not too onerous given the available time.

By the end of the deadline day of 17^th July 2020 the claimants’ solicitors had electronically filed amended claim forms in all of the 16 claims, but not all of these were returned by the court as ‘accepted’ with the sealed version (some were ‘accepted’ later). As a result, before the deadline, they served unsealed amended claim forms on the defendants.

The relevant partner at the claimants’ solicitor’s firm gave evidence that it did not occur to her, or anyone on her team, that it was necessary for the sealed version of the amended claim form to be used to effect valid service. Had it so occurred she gave evidence that she would have either requested the court to expedite their sealing or, failing that, served the sealed original (un-amended) claim forms.

The defendants applied for orders that the claims were not served, that the claimants were out of time and that the court (therefore) did not have jurisdiction; the claimants sought essentially the opposite order or alternatively ‘relief’ pursuant to CPR r6.15, r6.16 or r3.10.

Legal analysis

Per CPR r7.5 the ‘thing’ that must be served within the time permitted for service is a “claim form”. Mr Justice Morgan rejected the claimants’ first submission that the provisions of PD51O concerning electronic working had affected the basic definition that a ‘claim form’ is only such (for the purpose of the rules) when it bears an original court seal (see Hills Contractors and Construction Ltd v Struth [2014] 1 WLR 1). He further rejected their submission that the existence of an original sealed claim form in this case had any impact on this issue. All that had been served was a claim form based upon an earlier original, which itself had not been served. Nor did the contemporary requirements for near-exclusive electronic working militate differently.

Thus the documents served were not claim forms and as such no claim form had been served by the deadline. The only way out for the claimants was via their various applications for ‘relief’ (their application under CPR r3.9 was not pursued, but they were effectively seeking any available route to avoid the consequences of their failure).

CPR 6.15 – Service by an alternative method

Mr Justice Morgan proceeded on the (perhaps generous) basis that this rule did, in principle, enable the court to render service of an unsealed amended claim form effective. However, this rule only applies where there is ‘good reason’ for the court to exercise the power so conferred. The ‘test’ which he applied was derived from Lord Sumption’s analysis in Barton v Wright Hassall LLP [2018] 1 WLR 1119:

1. Did the claimant take reasonable steps to effect service in accordance with the rules?
   1. No, the claimants had the original sealed claim forms available and ample time to have received sealed amended claim forms before the deadline. The claimants’ solicitor’s unreasonable belief as to the effect of the electronic working provisions did not change this.

• Were the defendants or their solicitors aware of the contents of the claim form at the time when the time for service expired?
  • Broadly yes, as the defendants had been sent both the original claim forms and unsealed amended versions, though the court found that they could not on the facts be said to know that the amended version had been submitted to the court in time. Mr Justice Morgan noted this was a necessary but not sufficient condition.

• What, if any, prejudice would the defendants suffer by the retrospective validation of a non-compliant service of the claim form, bearing in mind what the defendants knew about its contents?
  • Mr Justice Morgan noted that this question didn’t restrict the court to only consider prejudice ‘caused’ by the claimants’ ‘breach’ but rather the prejudice caused by the making of an order rectifying such, under this rule. As such it was relevant that the defendants could now take a limitation point in respect of some portions of the claimants’ claims, and this was not undermined by the suggestion that the defendants would likely have permitted a short extension if requested on the 17^th July 2020.

Taking all this into account Mr Justice Morgan considered that there was not a ‘good reason’ to retrospectively validate the claimants’ service under rule 6.15.

Rule 6.16 – Power to dispense with service of the claim form

Following the approach in Piepenbrock v Associated Newspapers Ltd [2020] EWHC 1708 (QB) ([69]), having considered all the circumstances under rule 6.15, and finding no ‘good reason’, there were similarly no grounds to find the ‘exceptional circumstances’ required under this rule.

Rule 3.10 – General power to rectify following error of procedure

The Court concluded that this rule did not enable it to rectify ineffective service of the claim form and remedy the claimants’ error.

There was a debate as to whether 3.10 applied in the present case. The claimants sought to rely on an obiter comment by Lord Brown in Phillips v Symes (No 3) [2008] 1 WLR 180 to the effect that the rule could be so used, in that case in relation to service of a translated claim form without the original. Mr Justice Morgan noted that they would not overrule the ratio of earlier Court of Appeal decisions, being obiter.

There is first instance authority applying Lord Brown’s comments, but Mr Justice Morgan focussed on Piepenbrock, which considered both these authorities and the earlier Court of Appeal authorities, concluding that the later first instance decisions could be distinguished. This was the approach which he adopted.

Conclusion

The result was that the claimants effectively ‘lost’ a portion of their claims which fell outside of limitation between their issuing the original claim form and whenever they issued their new claim.

Article by Samuel Irving, a Pupil of Farrar’s Building.

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