WHY DEFENDANTS HAVE TO KNOW THE RULES ABOUT SERVICE AND JURISDICTION AND ACT PROMPTLY: YOU’LL FIND YOURSELVES MAKING AN APPLICATION FOR RELIEF FROM SANCTIONS
The judgment today in Babcock Marine (Clyde) Ltd v HS Barrier Coatings Ltd [2019] EWHC 1659 (TCC) highlights the need for defendants to be prompt if they are making an application in relation to service or jurisdiction. CPR 11 gives a very limited window of time to act.
THE CASE
The claimants were seeking to enforce an adjudication award. The defendant filed an acknowledgment of service and made an application to set aside service and/or stay on the grounds that the the appropriate jurisdiction was Scotland. The defendant’s application was made one day late.
THE JUDGMENT ON THE RELIEF FROM SANCTIONS ISSUE
The defendant required relief from sanctions. On the facts of this matter this was readily given.
Relief from sanctions
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CPR 11(1) provides that a defendant who wishes to dispute the court’s jurisdiction to try a claim may apply to the court for an order declaring that it has no such jurisdiction. CPR 11(2) provides that the defendant must first file an acknowledgement of service. CPR 11(4) provides that an application challenging jurisdiction must be made within 14 days after filing an acknowledgement of service. CPR 11(5) provides that if a defendant does not make an application within the 14 day period, he is to be treated as having accepted that the court has jurisdiction to try the claim.
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It is common ground that in this case the acknowledgement of service was filed on 14 May 2019. Therefore, the jurisdictional challenge application should have been filed by 28 May 2019. The application was issued on 29 May 2019, one day late.
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On 29 May 2019 HSBC applied for relief from sanctions pursuant to CPR 3.9.
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The test applicable in respect of an application for relief from sanctions is well-established and set out in the Court of Appeal decision in Denton v TH White Ltd [2014] EWCA Civ 906.
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In this case the failure to comply with CPR 11(4) was neither serious nor significant, given the short period of delay. The reason for the default was solicitor error. The circumstances of the case that the court should consider in order to deal justly with the application include the lack of any prejudice to Babcock, the absence of any impact on the conduct of the litigation and the disproportionate effect on HSBC’s case of refusing relief by precluding any challenge to jurisdiction. Quite properly, the application is not opposed by Babcock. In those circumstances, the court grants HSBC’s application for relief from sanctions and extends the time for issuing the application to challenge jurisdiction to 29 May 2019.
NO REASON FOR DEFENDANT’S TO BE COMPLACENT
The fact that relief from sanctions was readily granted should not give those defending cases any ground for complacency. I have been involved in several cases where defendants (who would have had a good ground for disputing service) were denied relief from sanctions when the point was taken late (admittedly later that one day). It highlights the fact that a defendant should also consider whether the claim form has been properly served and that the application should be made within the 14 days period allowed by CPR 11.
NOT AN UNCOMMON ISSUE
A similar issue occurred in Al-Zahra (PVT) Hospital & Ors v DDM [2019] EWCA Civ 1103, in that case the acknowledgement of service was late. The Court of Appeal observed
Acknowledgement of Service issue
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The Claimant contended that Master Cook erred in failing to deal with the Defendants’ application for an extension of time under CPR 11(1) to cure their late service of their Acknowledgments of Service prior to determining the Defendants’ application to set aside the Claimant’s second application for an extension.
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In my view, Foskett J was right, for the reasons he gave, to hold that relief from sanctions should have been granted and thus there was no jurisdictional bar to the Defendants’ application to set aside the Claimant’s second application for an extension”