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Statutory service v CPR 6.7: some thoughts following Ashley v Tesco Stores

Back in early 2011, I was one of the editors involved in considering the then forthcoming April 2011 changes to CPR 6.7.

One of the key points of interest was the potential effect of the requirement to serve domestic proceedings (that is, proceedings issued for service within the jurisdiction) out of the jurisdiction in accordance with CPR 6.7(2) or CPR 6.7(3). CPR 6.7(2) is the provision dealing with service on a solicitor in Scotland or Northern Ireland or EEA state other than the United Kingdom. CPR 6.7(3) deals with service on a European Lawyer in any EEA state.

What, we wondered, would the position be where a UK defendant company had served a notice under CPR 6.7(2) or CPR 6.7(3) requiring domestic proceedings to be served out of the jurisdiction, but the claimant (understandably) wished to effect service within the jurisdiction instead under section 1139(1) of the Companies Act 2006?

Avoiding service

I think the reason why I find the issue so interesting is that it seems to me that CPR 6.7(2) and (3) almost invite the reluctant prospective defendant to use them, not only to hinder service, but potentially to frustrate it.

One way of doing this would perhaps be to wait into well into the four month period for serving the claim form and then give notice to serve on the defendant’s lawyer out of the jurisdiction.

In such circumstances, even with an additional two months, to which the claimant would presumably be entitled, effecting service in time might be a struggle without obtaining further time from the court (see the penultimate paragraph of note 6.7.1 in Volume 1 of the White Book).

Murphy v Staples

In this regard, Murphy v Staples (one of the appeals heard with, and reported as, Cranfield v Bridgegrove) was instructive. In that case, it was held that statutory service under the Companies Act was a true alternative to service under the CPR.

Murphy v Staples was, however, concerned only with service within the jurisdiction and there was no equivalent to CPR 6.7(2) or (3) in the predecessor provision (then numbered CPR 6.4).

In light of the cross-border policy reasons for the rule change, we concluded that service of a CPR 6.7 notice probably did not preclude statutory service, but that the position was not straightforward.

Ashley v Tesco Stores

I was therefore very interested to read the Court of Appeal’s decision in Ashley v Tesco Stores.

The main issue in that case was whether service of a claim form, under section 1139(1) of the Companies Act 2006, on a company registered in Scotland, was service out of the jurisdiction so that the time for service was six (rather than four) months.

On that issue, it was held that such service did constitute service out of the jurisdiction, so the claimant had six months in which to serve the claim form.

The main point of interest for me, however, is the relevance of the decision to the question of whether a CPR 6.7(2) or (3) notice could “trump” statutory service.

Before turning to consider the case, I note that the White Book notes at paragraph 6.7.1 state:

“Although Murphy v Staples was decided under a provision which corresponded only with the new r.6.7(1), there is no reason to believe that the reasoning in that decision, based as it is on the present r.6.3(2) and the fact that service on a solicitor or European Lawyer in accordance with r.6.7 is a method of service permitted by the this part, does not apply to all of paras (1), (2) and (3) of r.6.7, so that service on a company under s.1139 of the Companies Act 2006 would still be an available alternative even though service under the CPR would by r.6.7 require service on the company’s solicitor or European Lawyer”.

In Ashley v Tesco Stores, Arden LJ stated:

“In Cranfield v Bridgegrove Ltd [2003] 1 WLR 2441 this court had to consider whether the predecessor of section 1139 of the Companies Act 2006 (which was section 725 of the Companies Act 1985) could be used in preference to modes of service laid down in the Civil Procedure Rules (“CPR”). This court has held that section 1139 (as it now is) was a true alternative method of service to those modes of service permitted by the CPR. The claimant could decide which to use. That much is common ground” (emphasis added).

Arden LJ then considered CPR 6.3(2). She stated:

“This provides (and this is very important):
‘(2) A company may be served –
(a) by any method permitted under this Part; or
(b) by any of the methods of service permitted under the Companies Act 2006.'”

She noted that the respondent’s solicitors had given notice that they were authorised to accept service on the very last day of the four-month period for service of the claim form within the jurisdiction.

The respondents argued that, since both the CPR 6.7 and CPR 6.9 methods of service were specifically mentioned in CPR 6 Section II, they had to be used in preference to service under section 1139 of the 2006 Act.

Arden LJ, with whose judgment Kitchen LJ and Gloster LJ concurred, rejected the respondents’ arguments, stating:

“…as I read section 1139 it gives unqualified permission to use the method of service set out in that section.”

Approaching the matter from a different perspective than the Court of Appeal in Cranfield v Bridgegrove, Arden LJ opined that:

  • Statutory service under the 2006 Act is a method of service permitted by CPR 6.3(2).
  • This method of service has been incorporated into CPR 6 and has become a method of service permitted by section II of CPR 6.

Door still ajar…

Because of the parties’ “common ground” that statutory service and CPR 6 service were alternatives, and because the relevant CPR 6.7 notice in this case was a notice under CPR 6.7(1) to serve on the defendant’s lawyer within the jurisdiction, the question whether statutory service within the jurisdiction was permissible in circumstances in which a prior notice had been served under CPR 6.7(2) or (3) requiring service on the defendant’s lawyer outside the jurisdiction did not arise.

Perhaps the door does, however, remain open to an attempt to:

  • Distinguish Murphy v Staples on the ground that it pre-dated the April 2011 changes to CPR 6 (and the cross-border policy matters underpinning those changes).
  • Side-line Ashley v Tesco Stores on the basis that the “section 1139 v CPR 6.7” point was accepted without argument and the comments made about the interplay between the statutory provision and the structure of CPR 6 were made against the backdrop of a notice to serve on the defendant’s lawyers within the jurisdiction, so the policy decisions underpinning the April 2011 rule change, in particular the objective of not discriminating between lawyers within the EEA, did not arise for consideration.

Although there remain disadvantages to serving under the statute as opposed to serving under the CPR, where the defendant is a company this decision will presumably provide considerable comfort to claimants concerned about the service of a tactical CPR 6.7(1) notice, even though there still looks to be room for argument regarding the effect of CPR 6.7(2) and (3) notices on statutory service.

The risks of delaying service

This case does, however, also serve as a reminder of the general point made repeatedly in the cases on late service, namely, whenever you can, get on with service as soon as possible and close the door on tactical or strategic use of CPR 6.7 and other potential mishaps.

There will always be cases, however, where for commercial or pragmatic reasons, you are instructed to issue but not serve the claim form straight away. In these cases it may well be appropriate to advise the client, as a distinct risk of postponing, of the chance of being served with a tactical CPR 6.7 notice directing service out of the jurisdiction in the meantime.

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