Court of Appeal examines the requirements for an order for deemed service by an alternative method
After the grant of freezing orders in favour of the Claimant, the Claimant issued proceedings and purported to serve out of the jurisdiction, on the Defendants, in Turkey and Dubai. Although the Claim Form came to the notice of the Defendant, the Claimant failed to serve in either country bya valid method.
The English proceedings were then put on hold for some eight years while insolvency proceedings in Turkey continued (freezing orders were maintained throughout). The Defendants then applied to strike out the English proceedings and the Claimant applied for an order for deemed service by an alternative method (CPR r6.15), or an order dispensing with service (CPR r6.16). Popplewell J refused the Claimant's application and struck out the claim. The Claimant appealed.
At first instance, the judge had said that "negligence or incompetence on the part of the Claimant's legal advisers is ... a bad reason ... for declining relief". The Court of Appeal accepted that the judge had gone too far and, in the context of alternative service, it cannot be said that negligent legal advice is always a "bad reason" (although that does not necessarily make it a "good reason" either). However, it also held that this error by the judge was not enough to vitiate his evaluation of the case as a whole.
The judge had also concluded that a good reason is needed for an order under CPR r6.15, but exceptional circumstances are required if the good reason has not impacted on the expiry of the limitation period. The Court of Appeal rejected the Claimant's argument that it should be irrelevant whether the good reason impacted on the expiry of the limitation period. It held that "Once it is clear that the claim is (or is arguably) time-barred, that must be highly relevant to the exercise of the court's discretion. A failure to serve by the proper method may be permissible if ... the Claimant did not know he had a claim until close to the end of the limitation period but the requirement of a good reason for the purpose of CPR 6.15 must contemplate an inquiry into the reason for not achieving proper service before the expiry of the limitation period; otherwise limitation becomes irrelevant and that is not the law".
In Abela v Baadarani [2013], Lord Clarke appeared to suggest that it may be more difficult to obtain an order under CPR r6.15 where the country where the claim form is to be served is a signatory to a service treaty/convention to which the UK is also a signatory. He referred to the case of Cecil v Bayat [2011] in which the Court of Appeal held that "service on a party to the Hague Convention by an alternative method under CPR r6.15 should be regarded as exceptional, to be permitted in special circumstances only".
In this case, the Court of Appeal held that the court in Abela had said nothing about the situation in a Hague Convention case with the effect that Cecil v Bayat continued to apply such that exceptional circumstances were needed where service by an alternative method was sought in a case to which the Hague Convention applies (as was the case here). The Court of Appeal observed that it would require a Supreme Court decision to override that position. Accordingly, the judge had not erred in requiring exceptional circumstances and had been entitled to conclude that the Claimant was not entitled to an order under CPR r6.15.
In deciding whether a good or exceptional reason is needed for an order under CPR r31.15 where the Hague Convention applies, the Court of Appeal referred to Lord Clarke's judgment in Abela but not to that of Lord Sumption (with whom Lords Neuberger, Reed and Carnwath agreed) who appeared to be of the opinion that an order under CPR r6.15 should not be seen as exceptional even where there the Hague Convention applies. There was also no reference to the recent first instance decision of Koza v Akcil [2018] that only a "good reason" is needed.
One further issue in the case was whether the judge had erred in ordering an inquiry into damages pursuant to the cross-undertaking in the freezing orders (which were discharged by the judge). The Court of Appeal held that he had because "delay in asking for an inquiry is a hugely important consideration to which the judge has attributed inadequate weight".
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