When Ineffective Service Costs You £10,000,000

There are very stringent court rules governing how a claim form can be served, and a whole plethora of cases showing how easy it is to get this wrong.  Service is defined in the Civil Procedure Rules (“CPR”) as “steps required by rules of court to bring documents used in court proceedings to a person’s attention.”  Service can be ineffective if not done correctly and remain the case even if the other party actually has had sight of the claim form (i.e. it has been brought to their attention).

The recent case of LSREF 3 Tiger Falkirk Ltd I S.a.r.l & Anor v Paragon Building Consultancy Ltd (2021) highlight the dangers and how easy it is to fall foul of the rules.

Back to Basics – the Rules on Service

A claim form is a special type of court document which requires special methods of service.

CPR 6.3 states

(1) A claim form may be served by any of the following methods –

•  (a) personal service in accordance with rule 6.5;
•  (b) first class post, document exchange or other service which provides for delivery on the next business day, in accordance with Practice Direction 6A;
•  (c) leaving it at a place specified in rule 6.7, 6.8, 6.9 or 6.10;
•  (d) fax or other means of electronic communication in accordance with Practice Direction 6A; or
•  (e) any method authorised by the court under rule 6.15.

 A claim form can be served on a solicitor providing that in accordance with rule 6.7:

• (a) the defendant has given in writing the business address within the jurisdiction of a solicitor as an address at which the defendant may be served with the claim form; or
•  (b) a solicitor acting for the defendant has notified the claimant in writing that the solicitor is instructed by the defendant to accept service of the claim form on behalf of the defendant at a business address within the jurisdiction

Service by fax and other electronic means (i.e. e-mail) is governed by Practise Direction 6A which states:

4.1 Subject to the provisions of rule 6.23(5) and (6), where a document is to be served by fax or other electronic means –

 (1) the party who is to be served or the solicitor acting for that party must previously have indicated in writing to the party serving –

•  (a) that the party to be served or the solicitor is willing to accept service by fax or other electronic means; and
•  (b) the fax number, e-mail address or other electronic identification to which it must be sent; and

 (2) the following are to be taken as sufficient written indications for the purposes of paragraph 4.1(1) –

•  (a) a fax number set out on the writing paper of the solicitor acting for the party to be served;
•  (b) an e-mail address set out on the writing paper of the solicitor acting for the party to be served but only where it is stated that the e-mail address may be used for service; or
•  (c) a fax number, e-mail address or electronic identification set out on a statement of case or a response to a claim filed with the court.

 4.2 Where a party intends to serve a document by electronic means (other than by fax) that party must first ask the party who is to be served whether there are any limitations to the recipient’s agreement to accept service by such means (for example, the format in which documents are to be sent and the maximum size of attachments that may be received).

The fatal mistake which most people make is to ‘assume’ that if you have been in correspondence with a solicitor, they are automatically prepared to accept service on behalf of their client.  A solicitor can advise and assist a client but not accept service or come on the court record as acting for them because they do not have the authority to do so.  This is what happened in this recent case.

LSREF 3 Tiger Falkirk Ltd I S.a.r.l & Anor v Paragon Building Consultancy Ltd (2021)

A claim form was e-mailed to the Defendant’s solicitors in this case at 18.46 on 23 April 2021 – the deadline (which had been extended by agreement between the parties) expired at 12.00am on 23 April 2021.

The court found that neither had Paragon nominated their solicitors’ address (Clyde & Co) as an address for service, nor had Clyde & Co confirmed it was instructed to accept service (as it had not been asked by the Claimant’s solicitors despite the years of dealings between the parties).

The rules had simply been overlooked by the Claimant’s solicitors.

The court did find that Clyde & Co had confirmed it would accept service by e-mail but that CPR 4.2 had not been complied with – whether that was fatal to service by e-mail in this case was academic given the fundamental issue was that Clyde & Co did not have authority to accept service on behalf of the Defendant.

The Claimant’s asked the court to exercise their discretion to remedy the defective service but the court declined on the basis that things had been left to the last minute.  It did not help that the claim form was then not correctly served until 14 May 2021 – a further lapse of three weeks.

A harsh lesson?

The result was that a claim worth about £10,000,000 stood struck out.  The court were very critical of the solicitors who had “left the important act of serving the claim form to the last minute, and could therefore be said to have brought this situation upon themselves.”  It is not clear whether the solicitors were solely to blame and therefore whether their clients will now seek to recover their losses by way of a professional negligence claim against them.

Lessons learned? Do not take anything for granted when it comes to service of important court documents like a claim form and definitely do not (if you can help it) leave it until the last minute. If you have effected ineffective service, correct it immediately.